<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1996
Registration No. 333-1548
SECURITIES AND EXCHANGE COMMISSION
Washington , D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------------
FASCO AUTO TRUSTS
(Issuer with respect to the Securities)
FINANCIAL ASSET SECURITIES CORP.
(Originator of the Trusts described herein)
(Exact name of Registrant as specified in its charter)
Delaware Applied for
(State or other jurisdiction of incorporation or organization)(I.R.S.
Employer Identification No.)
600 Steamboat Road
Greenwich, Connecticut 06830
(203) 625-2700
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
Charles A. Forbes, Jr.
Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830
(203) 625-5673
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Daniel M. Rossner, Esq. John C. Anderson, Esq.
Brown & Wood Financial Asset Securities Corp.
One World Trade Center 600 Steamboat Road
New York, New York 10048 Greenwich, Connecticut 06830
- ----------------------------------
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration
Statement as determined by market conditions.
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, as amended, other than securities offered
only in connection with dividend or interest reinvestment plans,
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 of 1933, as
amended, please check the following box and list the Securities Act
of 1933, as amended, registration statement number of the earlier
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act of 1933, as amended, check the
following box and list the Securities Act of 1933, as amended,
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
<TABLE>
<CAPTION>
Title of Securities Amount to Be Proposed Maximum Proposed Maximum
to Be Registered Registered Offering Aggregate
Price Per Unit (1) Offering Price(1)
<S> <C> <C> <C>
Asset Backed $500,000,000 100% $500,000,000
Securities
Amount of
Registration Fees
<C>
$172,414
</TABLE>
(1) Estimated solely for the purpose of calculating the registration
fee.
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 THAT SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF
1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus
relating to the offering of Series of Asset Backed Notes and/or Asset
Backed Certificates by various FASCO Auto Trusts created from time to
time by Financial Asset Securities Corp. and (ii) two forms of
Prospectus Supplement relating to the offering by FASCO Auto Trust
199 - of the particular Series of Asset Backed Certificates or of
Asset Backed Notes and Asset Backed Certificates described therein.
Each form of Prospectus Supplement relates only to the securities
described therein and is a form that may be used, among others, by
Financial Asset Securities Corp. to offer Asset Backed Notes and/or
Asset Backed Certificates under this Registration Statement.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO
THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN
ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 29, 1996
PROSPECTUS
FASCO AUTO TRUSTS
Asset Backed Notes
Asset Backed Certificates
--------------------------
FINANCIAL ASSET SECURITIES CORP.
Depositor
--------------------------
The Asset Backed Notes (the "Notes") and the Asset Backed
Certificates (the "Certificates" and, together with the Notes, the
"Securities") described herein may be sold from time to time in one
or more series (each, a "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 (a "Prospectus Supplement"). Each
Series of Securities will be issued by a trust (each, a "Trust") to
be formed with respect to such Series and may include one or more
classes of Notes and/or one or more classes of Certificates. The
property of each Trust will include a pool of motor vehicle retail
installment sale contracts or motor vehicle installment loans secured
by new and used automobiles, vans and light duty trucks (the
"Receivables"), certain monies due or received thereunder on and
after the applicable cutoff date, security interests in the vehicles
financed thereby and certain other property, as more fully described
herein and in the related Prospectus Supplement. If so specified in
the related Prospectus Supplement, the property of a Trust will
include monies on deposit in a trust account, which will be used to
purchase additional Receivables after the Closing Date. The
Receivables will have been acquired by Financial Asset Securities
Corp. (the "Depositor"), either directly or indirectly, from one or
more institutions (each an "Originator"), which may be affiliates of
the Depositor. Each Originator will be an entity generally in the
business of originating or acquiring Receivables. Specific
information regarding the Receivables included in each pool and the
Originator or Originators thereof will be provided in the related
Prospectus Supplement. The Prospectus Supplement for each Series
will name the entity, which may be an affiliate of the Depositor,
that will act, directly or indirectly through one or more
Subservicers, as Master Servicer of the Receivables.
Each class of Securities of each Series will represent the right
to receive a specified amount of payments of principal and interest
on the related Receivables, at the rates, on the dates and in the
manner described herein and in the related Prospectus Supplement. As
more fully described herein and in the related Prospectus Supplement,
distributions on any class of Securities may be senior or subordinate
to distributions on one or more other classes of Securities of the
same Series, and payments on the Certificates of a Series may be
subordinated in priority to payments on the Notes of such Series. If
provided in the related Prospectus Supplement, a Series of Securities
may include one or more classes of Securities entitled to principal
distributions with disproportionate, nominal or no distributions in
respect of interest, or to interest distributions with
disproportionate, nominal or no distributions in respect of
principal.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" ON PAGE 12 OF THIS PROSPECTUS.
THE NOTES OF A SERIES WILL REPRESENT OBLIGATIONS OF, AND THE
CERTIFICATES OF A SERIES WILL REPRESENT BENEFICIAL INTERESTS IN, THE
RELATED TRUST ONLY, AND WILL NOT REPRESENT OBLIGATIONS OF OR
INTERESTS IN, AND ARE NOT GUARANTEED OR INSURED BY, FINANCIAL ASSET
SECURITIES CORP., GREENWICH CAPITAL MARKETS, INC. OR ANY OF THEIR
RESPECTIVE AFFILIATES.
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.
Retain this Prospectus for future reference. This Prospectus
may not be used to consummate sales of Securities of any Series
unless accompanied by a Prospectus Supplement.
-------------------------------
Greenwich Capital Markets, Inc.
<PAGE>
AVAILABLE INFORMATION
The Depositor, as originator of the Trusts, has filed with the
Securities and Exchange Commission (the "Commission") a Registration
Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the
Securities being offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement,
certain parts of which have been omitted in accordance with the rules
and regulations of the Commission. For further information,
reference is made to the Registration Statement, which is available
for inspection without charge at the public reference facilities of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and the regional offices of the Commission at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, and Seven World Trade Center, Suite 1300, New
York, New York 10048. Copies of such information can be obtained
from the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
UPON RECEIPT OF A REQUEST BY AN INVESTOR WHO HAS RECEIVED AN
ELECTRONIC PROSPECTUS SUPPLEMENT AND PROSPECTUS FROM AN UNDERWRITER
OR A REQUEST BY SUCH INVESTOR'S REPRESENTATIVE WITHIN THE PERIOD
DURING WHICH THERE IS AN OBLIGATION TO DELIVER A PROSPECTUS
SUPPLEMENT AND PROSPECTUS, THE DEPOSITOR OR THE UNDERWRITER WILL
PROMPTLY DELIVER, OR CAUSE TO BE DELIVERED, WITHOUT CHARGE, TO SUCH
INVESTOR A PAPER COPY OF THE PROSPECTUS SUPPLEMENT AND PROSPECTUS.
REPORTS TO SECURITYHOLDERS
With respect to each Series of Securities, on or prior to each
Distribution Date, the Master Servicer will prepare and forward, or
cause to be prepared and forwarded, to the related Indenture Trustee
or Trustee to be included with the distribution to each
Securityholder of record a statement setting forth for the related
Collection Period the information specified in the related Prospectus
Supplement.
In addition, within the prescribed period of time for tax
reporting purposes after the end of each calendar year during the
term of each Trust, the related Trustee or Indenture Trustee, as
applicable, will mail to each person who at any time during such
calendar year shall have been a registered Securityholder a statement
containing certain information for the purposes of such
Securityholder's preparation of federal income tax returns. See
"Certain Federal Income Tax Consequences".
Each Indenture Trustee will be required to mail each year to all
related Noteholders a brief report relating to its eligibility and
qualification to continue as Indenture Trustee under the related
Indenture, any amounts advanced by it under the Indenture, the amount,
interest rate and maturity date of certain indebtedness owing by the related
Owner Trust to such Indenture Trustee in its individual capacity, the
property and funds physically held by such Indenture Trustee as such
and any action taken by it that materially affects the related Notes and
that has not been previously reported.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Depositor with the Commission on
behalf of the Trust referred to in the accompanying Prospectus
Supplement pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, after the date of this
Prospectus and prior to the termination of the offering of the
Securities offered by such Trust shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the
dates of filing of such documents. Any statement contained herein or
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
2
<PAGE>
a statement contained herein (or in the accompanying Prospectus
Supplement) or in any subsequently filed document that also is or
is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed to constitute a part of this Prospectus, except as so
modified or superseded.
The Depositor will provide on behalf of each Trust without
charge to each person to whom a copy of this Prospectus is delivered,
on the written or oral request of such person, a copy of any or all
of the documents incorporated herein by reference, except the
exhibits to such documents. Requests for such copies should be
directed to Peter Sanchez, Operations Manager, Financial Asset
Securities Corp., 600 Steamboat Road, Greenwich, Connecticut 06830.
Telephone requests may be directed to Peter Sanchez at (203) 625-7909.
3
<PAGE>
SUMMARY OF TERMS
This 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 each Series of
Securities contained in the related Prospectus Supplement to be
prepared and delivered in connection with the offering of such
Securities. Certain capitalized terms used in this summary are
defined elsewhere in this Prospectus on the pages indicated in the
"Index of Principal Terms".
Issuer . . . . . . With respect to any Series of Securities, a
Trust formed pursuant to either (i) a pooling
and servicing agreement (a "Pooling and
Servicing Agreement") among the Depositor,
the Master Servicer, the Trustee for such
Trust and, if so specified in the related
Prospectus Supplement, one or more
Originators (as defined below) of the related
Receivables (each such Trust being referred
to herein as a "Grantor Trust") or (ii) a
trust agreement (a "Trust Agreement") among
the Depositor, an entity to be specified in
the related Prospectus Supplement (the
"Company") and the Trustee for such Trust
(each such Trust being referred to herein as
an "Owner Trust").
Depositor . . . . . Financial Asset Securities Corp. is a
Delaware corporation and an indirect limited
purpose finance subsidiary of The Long-Term
Credit Bank of Japan, Limited and an
affiliate of Greenwich Capital Markets, Inc.
See "The Depositor".
Master Servicer . . The entity, which may be an affiliate of the
Depositor, named as Master Servicer in the
related Prospectus Supplement (the "Master
Servicer"). Each Prospectus Supplement will
specify whether the Master Servicer will
service the Receivables in the related
Receivables Pool directly or indirectly
through one or more subservicers (each, a
"Subservicer").
Originators . . . . The Depositor will acquire the Receivables,
directly or indirectly, from one or more
institutions, which may be affiliates of the
Depositor (each an "Originator"). Each
Originator will be an entity generally in the
business of originating or acquiring
Receivables, or an affiliate of such an
entity. The Receivables will be either (i)
originated by the related Originator, (ii)
originated by various dealers ("Dealers") and
assigned to the Originator or (iii) acquired
by the related Originator from other
originators or owners of receivables.
Trustee . . . . . . With respect to each Owner Trust and each
Grantor Trust, the trustee specified in the
related Prospectus Supplement (the
"Trustee").
Indenture Trustee With respect to any Series of Securities that
is issued by an Owner Trust and includes one
or more classes of Notes, the indenture
trustee specified in the related Prospectus
Supplement (the "Indenture Trustee").
Securities Offered Each Series of Securities issued by an Owner
Trust may include one or more classes of
Certificates and/or one or more classes of
Notes. Each Series of Securities issued by a
Grantor Trust will include one or more
classes of Certificates, but will not include
any Notes. Each class of Notes will be
issued pursuant to an indenture (each, an
"Indenture") between the related Owner Trust
and the Indenture Trustee specified in the
related
4
<PAGE>
Prospectus Supplement. Each class of
Certificates will be issued pursuant to the
related Trust Agreement (in the case of
Certificates issued by an Owner Trust) or the
related Pooling and Servicing Agreement (in
the case of Certificates issued by a Grantor
Trust). The related Prospectus Supplement
will specify which class or classes of Notes
and/or Certificates of the related Series are
being offered thereby.
Notes . . . . . . Each class of Notes will have a stated
principal amount and will bear interest at a
specified rate or rates (with respect to each
class of Notes, the "Interest Rate") as set
forth in the related Prospectus Supplement.
Each class of Notes may have a different
Interest Rate, which may be a fixed, variable
or adjustable Interest Rate or any
combination of the foregoing. The related
Prospectus Supplement will specify the
Interest Rate, or the method for determining
the Interest Rate, for each class of Notes.
A Series of Securities issued by an Owner
Trust may include two or more classes of
Notes that differ as to timing and priority
of payments, seniority, allocations of
losses, Interest Rate or amount of payments
of principal or interest. Additionally,
payments of principal or interest in respect
of any such class or classes may or may not
be made upon the occurrence of specified
events or on the basis of collections from
designated portions of the Receivables Pool.
If specified in the related Prospectus
Supplement, one or more classes of Notes
("Strip Notes") may be entitled to (i)
principal payments with disproportionate,
nominal or no interest payments or (ii)
interest payments with disproportionate,
nominal or no principal payments. See
"Description of the Notes -- Distributions of
Principal and Interest".
Unless otherwise specified in the related
Prospectus Supplement, Notes will be
available for purchase in denominations of
$1,000 and integral multiples thereof and
will be available in book-entry form only.
Noteholders will be able to receive
Definitive Notes only in the limited
circumstances described herein or in the
related Prospectus Supplement. See "Certain
Information Regarding the Securities --
Definitive Securities".
If the Master Servicer exercises its option
to purchase the Receivables of a Trust (or if
not and, if and to the extent provided in the
related Prospectus Supplement, satisfactory
bids for the purchase of such Receivables are
received) in the manner and on the respective
terms and conditions described under
"Description of the Transfer and Servicing
Agreements -- Termination", all of the
outstanding Notes will be redeemed as set
forth in the related Prospectus Supplement.
In addition, if the related Prospectus
Supplement provides that the property of a
Trust will include monies in a Pre-Funding
Account or Collateral Reinvestment Account
that will be used to purchase additional
Receivables after the Closing Date, one or
more classes of the outstanding Notes may be
subject to partial redemption at or
immediately following the end of the period
specified in such Prospectus Supplement for
the purchase of such additional Receivables
in the manner and to the extent specified in
the related Prospectus Supplement.
The Each class of Certificates will have a stated
Certificates . . . certificate balance (the "Certificate
Balance") and will accrue interest on such
Certificate Balance
5
<PAGE> at a specified rate (with respect to each
class of Certificates, the "Pass-Through Rate")
as set forth in the related Prospectus
Supplement. Each class of Certificates may
have a different Pass-Through Rate, which may
be a fixed, variable or adjustable Pass-Through
Rate, or any combination of the foregoing. The
Related Prospectus Supplement will specify
The Pass-Through Rate, or the method for
determining the applicable Pass-Through Rate,
for each class of Certificates.
A Series of Securities may include two or
more classes of Certificates that differ as
to timing and priority of distributions,
seniority, allocations of losses, Pass-
Through Rate or amount of distributions in
respect of principal or interest.
Additionally, distributions in respect of
principal or interest in respect of any such
class or classes may or may not be made upon
the occurrence of specified events or on the
basis of collections from designated portions
of the related Receivables Pool. If
specified in the related Prospectus
Supplement, one or more classes of
Certificates ("Strip Certificates") may be
entitled to (i) principal distributions with
disproportionate, nominal or no interest
distributions or (ii) interest distributions
with disproportionate, nominal or no
principal distributions. See "Description of
the Certificates -- Distributions of
Principal and Interest". If a Series of
Securities issued by an Owner Trust includes
one or more classes of Notes, distributions
in respect of the Certificates may be
subordinated in priority of payment to
payments on the Notes to the extent specified
in the related Prospectus Supplement.
Unless otherwise specified in the related
Prospectus Supplement, Certificates will be
available for purchase in a minimum
denomination of $20,000 and in integral
multiples of $1,000 in excess thereof and
will be available in book-entry form only.
Certificateholders will be able to receive
Definitive Certificates only in the limited
circumstances described herein or in the
related Prospectus Supplement. See "Certain
Information Regarding the Securities --
Definitive Securities".
If the Master Servicer or any Subservicer
exercises its option to purchase the
Receivables of a Trust (or if not and, if and
to the extent provided in the related
Prospectus Supplement, satisfactory bids for
the purchase of such Receivables are
received), in the manner and on the
respective terms and conditions described
under "Description of the Transfer and
Servicing Agreements -- Termination", the
Certificates will be prepaid as set forth in
the related Prospectus Supplement. In
addition, if the related Prospectus
Supplement provides that the property of a
Trust will include a Pre-Funding Account or
Collateral Reinvestment Account that will be
used to purchase additional Receivables after
the Closing Date, one or more classes of
Certificates may be subject to a partial
prepayment of principal at or immediately
following the end of the period specified in
such Prospectus Supplement for the purchase
of such additional Receivables, in the manner
and to the extent specified in the related
Prospectus Supplement.
The Trust Property The property of each Trust will include a
pool of simple interest or precomputed
interest motor vehicle installment sale
contracts or motor vehicle installment loans
secured by new and used automobiles, vans and
light duty trucks (the "Receivables"),
including the right to receive
6
<PAGE>
payments received or due on or with respect to
such Receivables on and after the date or dates
specified in the related Prospectus
Supplement (each, a "Cutoff Date"), security
interests in the vehicles financed thereby
(the "Financed Vehicles"), and any proceeds
from claims under certain related insurance
policies. On the date of issuance of a
Series of Securities specified in the related
Prospectus Supplement (the "Closing Date"),
the Depositor will convey Receivables having
the aggregate principal balance specified in
such Prospectus Supplement as of the Cutoff
Date specified therein to such Trust pursuant
to either (i) a Pooling and Servicing
Agreement (in the case of a Grantor Trust) or
(ii) a sale and servicing agreement (a "Sale
and Servicing Agreement") among the
Depositor, the Master Servicer, such Trust
and, if so specified in the related
Prospectus Supplement, one or more
Originators of the related Receivables (in
the case of an Owner Trust). The property of
each Trust also will include amounts on
deposit in, or certain rights with respect
to, certain trust accounts, including the
related Collection Account, any Pre-Funding
Account, any Collateral Reinvestment Account
and any other account identified in the
applicable Prospectus Supplement. See
"Description of the Transfer and Servicing
Agreements -- Trust Accounts".
If the related Prospectus Supplement provides
that the property of a Trust will include
monies initially deposited into an account (a
"Pre-Funding Account") to purchase additional
Receivables after the Closing Date, the
Depositor will be obligated pursuant to the
Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, to sell
additional Receivables (the "Subsequent
Receivables") to the related Trust, subject
only to the availability thereof, having an
aggregate principal balance approximately
equal to the amount deposited to the Pre-
Funding Account on the Closing Date (the
"Pre-Funded Amount"), and the Trust will be
obligated to purchase such Subsequent
Receivables (subject to the satisfaction of
certain conditions set forth in such Sale and
Servicing Agreement or Pooling and Servicing
Agreement) from time to time during the
period (the "Funding Period") specified in
such Prospectus Supplement for the purchase
of such Subsequent Receivables. Any
Subsequent Receivables conveyed to a Trust
will have been acquired by the Depositor,
directly or indirectly, from the same
Originator or Originators from which the
Depositor acquired the Receivables conveyed
to such Trust on the related Closing Date
(the "Initial Receivables") and will meet all
of the credit and other criteria set forth
herein and in the related Prospectus
Supplement. See "Risk Factors -- Sales of
Subsequent Receivables", "The Receivables
Pools" and "Description of the Transfer and
Servicing Agreements -- Sale and Assignment
of Receivables" herein and "The Receivables
Pool" in the related Prospectus Supplement.
In addition, if so provided in the related
Prospectus Supplement, in lieu of a Funding
Period, during the period (the "Revolving
Period") from the Closing Date until the
first to occur of (i) such event or events as
are described in the related Prospectus
Supplement (each, an "Early Amortization
Event") or (ii) the last day of the
Collection Period preceding a Distribution
Date specified in the related Prospectus
Supplement, an account will be maintained in
the name of the Trustee, the Owner Trustee
or the Indenture Trustee (the "Collateral
Reinvestment Account"). The amount on
deposit in the Collateral Reinvestment
Account on the Closing
7
<PAGE>
Date may, if so specified in the related
Prospectus Supplement, include an amount
specified in the related Prospectus Supplement
(which will be deposited out of the net
proceeds of the sale of the related Securities)
and, during the Revolving Period principal
will not be distributed on the Securities of
the related series and principal collections,
together with (if and to the extent described
in the related Prospectus Supplement) interest
collections on the Receivables that are in
excess of amounts required to be distributed
therefrom will be deposited from time to time
in the Collateral Reinvestment Account and
will be used to purchase Subsequent
Receivables.
As used in this Prospectus, the term
Receivables will include the Initial
Receivables transferred to a Trust on the
Closing Date as well as any Subsequent
Receivables transferred to such Trust during
the related Funding Period or Revolving
Period, if any.
Amounts on deposit in any Pre-Funding Account
during the related Funding Period or in any
Collateral Reinvestment Account during the
related Revolving Period will be invested by
the Trustee (as directed by the Master
Servicer) in Eligible Investments, and any
resultant investment income, less any related
investment expenses ("Investment Income"),
will be added, on the Distribution Date
immediately following the date on which such
Investment Income is paid to the Trust, to
interest collections on the Receivables for
the related Collection Period and distributed
in the manner specified in the related
Prospectus Supplement. Any funds remaining
in a Pre-Funding Account at the end of the
related Funding Period or in a Collateral
Reinvestment Account at the end of the
related Revolving Period will be distributed
as a prepayment or early distribution of
principal to holders of one or more classes
of the Notes and/or Certificates of the
related Series of Securities, in the amounts
and in accordance with the payment priorities
specified in the related Prospectus
Supplement. In no event will a Funding
Period continue for more than one year after
the related Closing Date. See "Risk Factors
-- Pre-Funding Accounts", "-- Sales of
Subsequent Receivables" and "Description of
the Transfer and Servicing Agreements --
Trust Accounts -- Pre-Funding Accounts".
Credit and Cash Flow If and to the extent specified in the related
Enhancement . . Prospectus Supplement, credit enhancement
with respect to a Trust or any class or
classes of Securities may include any one or
more of the following: subordination of one
or more other classes of Securities of the
same Series, reserve funds, spread accounts,
surety bonds, insurance policies, letters of
credit, credit or liquidity facilities, cash
collateral accounts, over-collateralization,
guaranteed investment contracts, swaps or
other interest rate protection agreements,
repurchase obligations, other agreements with
respect to third party payments or other
support, cash deposits, or other
arrangements. To the extent specified in the
related Prospectus Supplement, a form of
credit enhancement with respect to a Trust or
a class or classes of Securities may be
subject to certain limitations and exclusions
from coverage thereunder.
Transfer and
Servicing
8
<PAGE>
Agreements . . . The Depositor will sell the related
Receivables to a Trust pursuant to a Sale and
Servicing Agreement or Pooling and Servicing
Agreement, as applicable. The rights and
benefits of an Owner Trust under any such
Sale and Servicing Agreement will, if such
Owner Trust issues Notes, be assigned to the
related Indenture Trustee as collateral for
such Notes pursuant to the Indenture. The
Master Servicer will agree with each Trust to
be responsible for servicing, managing,
maintaining custody of and making collections
on the Receivables, either directly or
indirectly through one or more Subservicers.
In addition, the Master Servicer may
undertake certain administrative duties under
an Administration Agreement with respect to
an Owner Trust.
Unless otherwise provided in the related
Prospectus Supplement, the Master Servicer
will advance scheduled payments under each
Precomputed Receivable that are not timely
made (a "Precomputed Advance") to the extent
that the Master Servicer, in its sole
discretion, expects to recoup such
Precomputed Advance from subsequent payments
on or with respect to such Receivable or from
other Precomputed Receivables. If so
provided in the related Prospectus
Supplement, with respect to Simple Interest
Receivables, the Master Servicer will advance
any interest shortfall (a "Simple Interest
Advance"). As used herein, "Advance" means
any Precomputed Advance or Simple Interest
Advance. The Master Servicer will be
entitled to reimbursement of Advances from
subsequent payments on or with respect to the
Receivables to the extent described in the
related Prospectus Supplement.
Unless otherwise specified in the related
Prospectus Supplement, the Master Servicer
will receive a fee for servicing the
Receivables of each Trust equal to the
percentage specified in the related
Prospectus Supplement of the aggregate
outstanding principal balance of the related
Receivables Pool, plus certain late fees,
prepayment charges and other administrative
fees or similar charges. Fees payable to any
Subservicer as compensation for performing
certain servicing functions with respect to
all or a portion of the Receivables in a
Receivables Pool will be the responsibility
of the Master Servicer and will not be an
additional expense of the Trust. See
"Description of the Transfer and Servicing
Agreements -- Servicing Compensation and
Payment of Expenses" herein.
Tax Considerations If a Prospectus Supplement specifies that the
related Trust will be a partnership or will
not issue any classes of Certificates, upon
the issuance of the related Series of
Securities (a) Federal Tax Counsel to such
Trust will deliver an opinion to the effect
that, for federal income tax purposes: (i)
any Notes of such Series will be
characterized as debt and (ii) such Trust
will not be characterized as an association
or a publicly traded partnership taxable as a
corporation and (b) local tax counsel to such
Trust will deliver an opinion to the effect
that the same characterizations apply for
applicable state income and business tax
purposes. In respect of any such Series,
each holder of a Note (each, a "Noteholder"),
by the acceptance of a Note of such Series,
will agree to treat such Note as
indebtedness, and each holder of a
Certificate, if any, (each, a
"Certificateholder"), by the acceptance of a
Certificate of such Series, will agree to
treat such Trust as a partnership in which
such Certificateholder is a partner for
federal income and for state income and
business tax
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purposes. Alternative characterizations of
such Trust and any such Certificates are
possible, but would not result in materially
adverse tax consequences to Certificateholders.
If a Prospectus Supplement specifies that the
related Trust will be a Grantor Trust, upon
the issuance of the related Series of
Certificates Federal Tax Counsel to such
Trust will deliver an opinion to the effect
that such Trust will be treated as a grantor
trust for federal income tax purposes and
will not be subject to federal income tax.
If a Prospectus Supplement specifies that the
related Trust will issue one or more classes
of Certificates treated as debt, upon the
issuance of the related Series of Securities
(a) Federal Tax Counsel to such Trust will
deliver an opinion to the effect that for
federal income tax purposes: (i) unless
provided otherwise in the Prospectus
Supplement, any Certificates of such Series
will be characterized as debt and (ii) such
Trust will not be characterized as an
association or a publicly traded partnership
taxable as a corporation and (b) local tax
counsel to such Trust will deliver an opinion
to the effect that the same characterizations
apply for applicable state income and
business tax purposes. In respect of any
such Series, each Certificateholder, by the
acceptance of a Certificate of such Series,
will agree to treat such Certificate as
indebtedness. Alternative characterizations
of such Trust and such Certificates are
possible, but would not result in materially
adverse tax consequences to
Certificateholders.
See "Certain Federal Income Tax Consequences"
for additional information regarding the
application of federal tax laws.
ERISA Considerations . . . . Subject to the considerations discussed under
"ERISA Considerations" herein and in the
related Prospectus Supplement, and if so
specified therein, (i) the Notes of any
Series issued by an Owner Trust and (ii) any
Certificates issued by an Owner Trust or a
Grantor Trust that meet certain Department of
Labor requirements are eligible for purchase
by employee benefit plans.
Unless otherwise specified in the related
Prospectus Supplement, the Certificates of
any Series that are subordinated to any other
Security of that Series may not be acquired
by any employee benefit plan subject to the
Employee Retirement Income Security Act of
1974, as amended, or by any individual
retirement account. See "ERISA
Considerations" herein and in the related
Prospectus Supplement.
Ratings . . . . . It is a condition to the issuance of the
Securities to be offered hereunder that they
be rated in one of the four highest rating
categories by at least one nationally
recognized statistical rating organization.
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.
Ratings of Securities will address the
likelihood of the payment of principal and
interest thereon pursuant to their terms.
The ratings of Securities will not address
the likelihood of an Early Amortization
Event. There can be no assurance that a
rating will remain for a given period of time
or that a rating will not be lowered or
withdrawn entirely by a rating
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agency if in its judgment circumstances in the
future so warrant. For more detailed informa-
tion regarding the ratings assigned to any
information regarding the ratings assigned
to any class of a particular Series of Securi-
ties, see "Summary of Terms -- Rating of the
Securities" and "Risk Factors -- Ratings of
the Securities" 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:
Pre-Funding Accounts and Collateral Reinvestment Accounts. If so
provided in the related Prospectus Supplement, on the Closing Date
the Depositor will deposit the Pre-Funded Amount specified in such
Prospectus Supplement into the Pre-Funding Account. In no event will
the Pre-Funded Amount exceed 40% of the initial aggregate principal
amount of the Notes and/or Certificates of the related Series of
Securities. In addition, if so specified in the related Prospectus
Supplement, on the Closing Date the Depositor will deposit the amount, if
any, specified in such Prospectus Supplement into the Collateral Reinvestment
Account and, during the Revolving Period, principal will not be distributed
on the Securities of the related Series and principal collections, together
with (if and to the extent described in the related Prospectus Supplement)
interest collections on the Receivables that are in excess of amounts required
to be distributed therefrom will be deposited from time to time in the
Collateral Reinvestment Account. The Pre-Funded Amount and the amounts on
deposit in the Collateral Reinvestment Account will be used to purchase
Subsequent Receivables from the Depositor (which, in turn, will acquire
such Subsequent Receivables from the Originator or Originators specified
in the related Prospectus Supplement) from time to time during the related
Funding Period or Revolving Period. During the related Funding Period or
Revolving Period and until such amounts are applied by the Trustee to purchase
Subsequent Receivables, amounts on deposit in the Pre-Funding Account or the
Collateral Reinvestment Account will be invested by the Trustee (as instructed
by the Master Servicer) in Eligible Investments, and any investment income
with respect thereto (net of any related investment expenses) will be added
to amounts received on or in respect of the Receivables during the related
Collection Period and allocated to interest and will be distributed on the
Distribution Date pursuant to the payment priorities specified in the related
Prospectus Supplement. No Funding Period will end more than one year after
the related Closing Date.
To the extent that the entire Pre-Funded Amount or the entire
amount on deposit in the Collateral Reinvestment Account has not been
applied to the purchase of Subsequent Receivables by the end of the
related Funding Period or Revolving Period, any amounts remaining in
the Pre-Funding Account or the Collateral Reinvestment Account will be
distributed as a prepayment of principal to Noteholders and
Certificateholders (collectively the "Securityholders") on the
Distribution Date at or immediately following the end of the Funding
Period or Revolving Period, in the amounts and pursuant to the
priorities set forth in the related Prospectus Supplement.
Sales of Subsequent Receivables. If so provided in the related
Prospectus Supplement, the Depositor will be obligated pursuant to the
Pooling and Servicing Agreement or Sale and Servicing Agreement, as
applicable, to sell Subsequent Receivables to the Trust, and the Trust will
be obligated to purchase such Subsequent Receivables, subject only to the
satisfaction of certain conditions set forth in the Pooling and Servicing
Agreement or Sale and Servicing Agreement, as applicable, and described in
the related Prospectus Supplement. If the principal amount of the eligible
Subsequent Receivables acquired by the Depositor from the applicable
Originator or Originators during a Funding Period or Revolving Period is less
than the Pre-Funded Amount or the amount on deposit in the Collateral
Reinvestment Account, as the case may be, the Depositor may have insufficient
Subsequent Receivables to transfer to a Trust and holders of one or more
classes of the related Series of Securities may receive a prepayment or early
distribution of principal at the end of the Funding Period or Revolving
Period as described above under "Pre-Funding Accounts and Collateral
Reinvestment Accounts".
Any conveyance of Subsequent Receivables to a Trust is subject to the
satisfaction, on or before the related transfer date (each, a
"Subsequent Transfer Date"), of the following conditions precedent,
among others: (i) each such Subsequent Receivable must satisfy the
eligibility criteria specified in the related Pooling and Servicing
Agreement or Sale and Servicing Agreement, as applicable; (ii) the
Depositor shall not have selected such Subsequent Receivables in a
manner that is adverse to the interests of holders of the related
Securities; (iii) as of the respective Cutoff Dates for
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<PAGE>
such Subsequent Receivables, all of the Receivables in the Trust, including the
Subsequent Receivables to be conveyed to the Trust as of such date, must
satisfy the parameters described under "The Receivables Pools" herein and "The
Receivables Pool" in the related Prospectus Supplement; and (iv) the
Depositor must execute and deliver to such Trust a written assignment
conveying such Subsequent Receivables to such Trust. In addition, as and to
the extent specified in the related Prospectus Supplement, the conveyance of
Subsequent Receivables to a Trust is subject to the satisfaction of the
condition subsequent, among others, which must be satisfied within the
applicable time period specified in the related Prospectus Supplement, that
the Depositor deliver certain legal opinions to the related Trustee with
respect to the validity of the conveyance of the Subsequent Receivables to the
Trust. If any such conditions precedent or conditions subsequent are not met
with respect to any Subsequent Receivables within the time period specified
in the related Prospectus Supplement, the Originator or the Depositor, as
specified in the related Prospectus Supplement, will be required to
repurchase such Subsequent Receivables from the related Trust, at a
purchase price equal to the related Repurchase Amounts therefor.
Except as described herein and in the related Prospectus
Supplement, there will be no other required characteristics of
Subsequent Receivables. Therefore, the characteristics of the entire
Receivables Pool included in any Trust may vary significantly as
Subsequent Receivables are conveyed to such Trust from time to time
during the Funding Period or Revolving Period. See "The Receivables
Pools" herein.
Certain Legal Aspects -- Security Interests in Financed Vehicles. In
connection with its transfer of Receivables to a Trust, the Originator of
such Receivables will transfer and assign its security interest in the
related Financed Vehicles to the Depositor, and the Depositor will transfer
and assign such security interest to the Trust. However, because of the
administrative burden and expense, neither the Originator nor the Depositor
will amend any certificates of title to identify such Trust as the new secured
party on the certificates of title relating to such Financed Vehicles. In
the absence of such amendments, such Trust may not have a perfected security
interest in such Financed Vehicles in certain states. As more fully described
in the related Prospectus Supplement, each Originator will make certain
representations and warranties with respect to its conveyance of a perfected
security interest in a Financed Vehicle to a related Trust and the Originator
will be obligated to repurchase the related Receivable from the Trust if
there is a breach of such representations and warranties that materially
adversely affects the interest of the Trust in such Receivable and such
breach has not been cured.
If a Trust does not have a perfected security interest in a
Financed Vehicle, its ability to realize on such Financed Vehicle in
the event of a default may be adversely affected. To the extent the
security interest is perfected, the Trust will have a prior claim over
subsequent purchasers of such Financed Vehicle and holders of
subsequently perfected security interests; however, the Trust could
lose its security interest or the priority of its security interest as
against liens for repairs of Financed Vehicles or for taxes unpaid
by an Obligor under a Receivable or through fraud or negligence. None of the
applicable Originator, the Depositor or the Master Servicer will have any
obligation to repurchase a Receivable in respect of which a Trust so loses
its security interest or the priority of its security interest in the related
Financed Vehicle after the date such security interest was conveyed to such
Trust. See "Certain Legal Aspects of the Receivables -- Security Interests
in Financed Vehicles".
Certain Legal Aspects -- Consumer Protection Laws. Federal and
state consumer protection laws impose requirements on creditors in
connection with extensions of credit and collections of retail
installment loans, and certain of these laws make an assignee of such
a loan (such as a Trust) liable to the obligor thereon for any
violation by the lender. To the extent specified herein and in the
related Prospectus Supplement, the Originator will be obligated to
repurchase any Receivable that fails to comply with such legal
requirements, and the Depositor and the Master Servicer will undertake to
enforce such obligation on behalf of the Trust. See "Certain Legal Aspects
of the Receivables -- Consumer Protection Laws".
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Certain Legal Aspects -- Insolvency Considerations. The
Depositor will take steps in structuring the transactions contemplated hereby
that are intended to ensure that the sale of the Receivables from each
Originator to the Depositor and from the Depositor to a Trust is, in each
such case, a valid sale of the Receivables. Notwithstanding the foregoing,
if an Originator or the Depositor were to become a debtor in a bankruptcy
case and a creditor or trustee-in-bankruptcy of such debtor or such debtor
itself were to take the position that the sale of Receivables by such debtor
should be treated as a pledge of such Receivables to secure a borrowing of
such debtor, then delays in payments of collections of Receivables to
Securityholders could occur or (should the court rule in favor of any
such trustee, creditor or debtor) reductions in the amounts of such
payments could result. If a transfer of Receivables by an Originator
or the Depositor is treated as a pledge instead of a sale by it, a tax or
government lien on its property arising before the transfer of
such Receivables by such debtor may have priority over the related Trust's
interest in such Receivables. If the transactions contemplated herein are
treated as a sale, the Receivables would not be part of the Originators' or
the Depositor's bankruptcy estate and would not be available to creditors of
the Originators or the Depositor.
Additionally, because the Originators may have purchased the
Receivables from other originators or dealers, it is possible that (as a
result of recourse retained against such other originators or dealers or
otherwise) the transfer of the Receivables from such originators or dealers
to the Originator could be treated as a pledge rather than a sale and the
corresponding negative implications for timing and receipt of payments by
a Trust could apply.
The U.S. Court of Appeals for the Tenth Circuit in its decision in
Octagon Gas Systems, Inc. v. Rimmer (In re Meridian Reserve, Inc.)
(decided May 27, 1993) determined that "accounts", a defined term under the
Uniform Commercial Code, would be included in the bankruptcy estate of a
transferor regardless of whether the transfer is treated as a sale or a
secured loan. Although the Receivables are likely to be viewed as "chattel
paper", as defined under the Uniform Commercial Code, rather than as accounts,
the Octagon holding is equally applicable to chattel paper. The circumstances
under which the Octagon ruling would apply are not fully known and the extent
to which the Octagon decision will be followed in other courts or outside of
the Tenth Circuit is not certain. If the holding in the Octagon case were
applied in a bankruptcy of an Originator, the Depositor, or an originator or
dealer which sells Receivables to the Originator, even if the transfer of
Receivables by it were treated as a sale, the Receivables would be part of its
bankruptcy estate and would be subject to claims of certain creditors, and
delays and reductions in payments to the Securityholders could result.
If so specified in the related Prospectus Supplement, with respect to
each Trust that is not a grantor trust, if an Insolvency Event occurs with
respect to the Company, the Indenture Trustee or Trustee for such Trust will
promptly sell, dispose or otherwise liquidate the related Receivables in a
commercially reasonable manner on commercially reasonable terms, except under
certain limited circumstances. The proceeds from any such sale, disposition
or liquidation of Receivables will be treated as collections on the Receivables
and deposited in the Collection Account of such Trust. If the proceeds from
the liquidation of the Receivables and any amounts on deposit in the Note
Distribution Account, if any, and the Certificate Distribution Account, if
any, with respect to any such Trust and any amounts available from any credit
enhancement are not sufficient to pay the Notes and/or the Certificates of
the related Series in full, the amount of principal returned to such
Noteholders and/or the Certificateholders will be reduced and such
Noteholders and/or Certificateholders will incur a loss. See "Description
of the Transfer and Servicing Agreements -- Insolvency Event".
Nature of Contracts and Obligors. If and to the extent specified in the
related Prospectus Supplement, the Obligors on the Receivables to be conveyed
to a Trust may include "sub-prime" borrowers who have a low income level
and/or limited or adverse credit histories. Typical "sub-prime" borrowers
include young borrowers (18 to 25 years old) who do not have a credit
history, previously bankrupt borrowers who desire to reestablish their credit
history, slow payers of credit cards and department store accounts and
borrowers who desire payment terms slightly longer than the maximum term
permitted by traditional sources of consumer credit. The average interest
rate charged by the Originators to such "sub-prime" borrowers is generally
higher than that charged to more creditworthy
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customers. The payment experience on receivables of obligors with this credit
profile is likely to be different from that on receivables of traditional auto
financing sources in that default rates are likely to be higher. In addition,
the payment experience on such receivables is likely to be more sensitive to
changes in the economic climate in the areas in which such obligors reside. As
a result of the credit profile of the obligors and the APRs of such
receivables, the historical credit loss and delinquency rates on such
receivables are generally higher than those experienced by banks and the
captive finance companies of the automobile manufacturers.
Social, Economic and Other Factors. The ability of the Obligors
to make payments on the Receivables, as well as the prepayment
experience thereon, will be affected by a variety of social and
economic factors. Economic factors include interest rates,
unemployment levels, the rate of inflation and consumer perceptions of
economic conditions generally. However, the Depositor is unable to determine
and has no basis to predict whether or to what extent economic or social
factors will affect the Receivables.
Limited Obligation of the Depositor. None of the Depositor, any
Originator or any of their affiliates will insure or be obligated to
make any payments in respect of the Notes, the Certificates or the
Receivables of a given Trust.
Subordination; Limited Assets. To the extent specified in the
related Prospectus Supplement, distributions of interest and principal on one
or more classes of Certificates of a Series may be subordinated in priority
of payment to interest and principal due on the Notes, if any, of such Series
or one or more classes of Certificates of such Series. Moreover, none of the
Trusts will have, nor will any Trust be permitted or expected to have, any
significant assets or sources of funds other than the Receivables and, to the
extent provided in the related Prospectus Supplement, a Pre-Funding Account,
a Collateral Reinvestment Account and reserve account or other form of credit
enhancement. The Notes, if any, of any Series will represent obligations
solely of, and the Certificates of any Series will represent interests solely
in, the related Trust, and neither the Notes nor the Certificates of any
such Series will represent obligations of or interests in, or be insured or
guaranteed by, the Depositor, any Originator, any of their affiliates or any
other entity. Consequently, holders of the Securities of any Series must
rely for repayment upon payments on the related Receivables and, if and to
the extent available, amounts available under any available form of credit
enhancement, all as specified in the related Prospectus Supplement.
Maturity and Prepayment Considerations. All of the Receivables
are prepayable at any time. When used herein with respect to any
Receivable, the term "prepayment" includes prepayments in full, partial
prepayments (including those related to rebates of extended warranty contract
costs and insurance premiums) and liquidations due to default, as well as
receipts of proceeds from physical damage, credit life and disability
insurance policies and Repurchase Amounts with respect to certain other
Receivables repurchased for administrative reasons. The rate of prepayments
on the Receivables may be influenced by a variety of economic, social and
other factors. The rate of prepayment on the Receivables also may be
influenced by the structure of the underlying loans. See "Weighted Average
Life of the Securities". In addition, the applicable Originator may be
obligated to repurchase Receivables in respect of which it is in breach of
certain representations, warranties or covenants. See "Description of the
Transfer and Servicing Agreements -- Sale and Assignment of Receivables". Any
reinvestment risks resulting from a faster or slower incidence of prepayment
of Receivables held by a Trust will be borne entirely by the holders of the
related Series of Securities. See also "Description of the Transfer and
Servicing Agreements -- Termination" regarding the Master Servicer's or one
or more Subservicers' option to purchase the Receivables of a given
Receivables Pool and "-- Insolvency Event" regarding the sale of the
Receivables by certain Owner Trusts if an Insolvency Event occurs with respect
to the Company.
Holders of Notes and Certificates should consider, in the case of
Securities purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Receivables could result in an
actual yield that is less than the anticipated yield and, in the case of any
Securities
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<PAGE>
purchased at a premium, the risk that a faster than anticipated
rate of principal payments on the Receivables could result in an actual yield
that is less than the anticipated yield.
Servicer Default. If so provided in the related Prospectus
Supplement with respect to a Series of Securities issued by an Owner
Trust that includes Notes, upon the occurrence of a Servicer Default
the related Indenture Trustee or Noteholders may remove the Master
Servicer without the consent of the related Trustee or any
Certificateholders. The Trustee or the Certificateholders with respect to
such Series that includes Notes will not have the ability to remove the
Master Servicer if a Servicer Default occurs. In addition, the Noteholders
with respect to each Series that includes Notes will have the ability, with
certain specified exceptions, to waive defaults by the Master Servicer,
including defaults that could materially and adversely affect the
Certificateholders of such Series. See "Description of the Transfer and
Servicing Agreements -- Waiver of Past Defaults".
Ratings of the Securities. It is a condition of the issuance of
the Securities to be offered hereunder that they be rated in one of the four
highest rating categories by at least one nationally recognized statistical
rating organization. A rating is not a recommendation to purchase, hold or
sell Securities inasmuch as a rating does not comment as to market price or
suitability for a particular investor. The ratings of the Securities will
address the likelihood of the payment of principal and interest thereon
pursuant to their terms. The ratings of the Securities will not address the
likelihood of an Early Amortization Event. There can be no assurance
that a rating will remain in effect 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. For more detailed
information regarding the ratings assigned to any class of a particular
Series of Certificates, see "Summary of Terms -- Rating of the Securities"
and "Risk Factors -- Ratings of the Securities" in the related Prospectus
Supplement.
Book-Entry Registration. If so specified in the related
Prospectus Supplement, each class of the Securities of a given Series
initially will be represented by one or more certificates registered in the
name of Cede & Co. ("Cede") or any other nominee of The Depository Trust
Company ("DTC") set forth in the related Prospectus Supplement, and will not
be registered in the names of the holders of the Securities of such Series
or their nominees. Because of this, unless and until Definitive
Securities for such Series are issued, holders of such Securities will not be
recognized by the applicable Trustee or Indenture Trustee as
"Certificateholders", "Noteholders" or "Securityholders", as the case may
be (as such terms are used herein or in the related Pooling and Servicing
Agreement or the related Indenture and Trust Agreement,
as applicable). Hence, until Definitive Securities are issued, holders of
such Securities will be able to exercise the rights of Securityholders only
indirectly through DTC and its participating organizations. See "Certain
Information Regarding the Securities -- Book-Entry Registration" and "--
Definitive Securities".
THE TRUSTS
With respect to each Series of Securities, the Depositor will
establish a separate Trust pursuant to a Trust Agreement or Pooling and
Servicing Agreement, as applicable, for the transactions described herein and
in the related Prospectus Supplement. The property of each Trust will
include a pool (a "Receivables Pool") of Receivables secured by new and used
automobiles, vans or light duty trucks and all payments due thereunder on and
after the applicable Cutoff Date in the case of Precomputed Receivables and
all payments received thereunder on and after the applicable Cutoff Date in
the case of Simple Interest Receivables. On the applicable Closing Date,
after the issuance of the Notes and/or Certificates of a given Series, the
Depositor will sell Receivables to the Trust in the outstanding principal
amount specified in the related Prospectus Supplement. If so provided in the
related Prospectus Supplement, the property of a Trust may also include a
Pre-Funded Amount, which the Depositor will deposit to the Pre-Funding Account
on the Closing Date and which will be used by the Trust to purchase Subsequent
Receivables from the Depositor during the related Funding Period. In
addition, if so provided in the related Prospectus Supplement, the property
of a Trust may also include monies deposited by the Depositor to the
Collateral Reinvestment Account on the Closing Date and, during the
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Revolving Period, principal will not be distributed on the Securities of the
related Series and principal collections, together with (if and to the extent
described in the related Prospectus Supplement) interest collections on the
Receivables that are in excess of amounts required to be distributed
therefrom will be deposited from time to time in the Collateral Reinvestment
Account and will be used by the Trust to purchase Subsequent Receivables during
the related Revolving Period. Any Subsequent Receivables so conveyed to a
Trust will also be assets of such Trust, subject, in the case of any Owner
Trust that issues Notes, to the prior rights therein of the related Indenture
Trustee and the Noteholders. The property of each Trust will also include
(i) such amounts as from time to time may be held in separate trust accounts
established and maintained pursuant to the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, and the proceeds
of such accounts, as described herein and in the related Prospectus
Supplement; (ii) security interests in the Financed Vehicles and any other
interest of the Depositor in such Financed Vehicles; (iii) the rights to
proceeds from claims on certain physical damage, credit life and disability
insurance policies covering the Financed Vehicles or the Obligors, as the case
may be; (iv) any property that shall have secured a Receivable and that shall
have been acquired by the applicable Trust; and (v) any and all proceeds of
the foregoing. To the extent specified in the related Prospectus Supplement,
a reserve account or other form of credit enhancement may be a part of the
property of a given Trust or may be held by the Trustee for the benefit of
holders of the related Securities.
If the protection provided to (i) holders of the Notes, if any,
issued by an Owner Trust by the subordination of the related
Certificates, if any, and by the reserve account, if any, or any other
available form of credit enhancement for such Series or (ii)
Certificateholders, if any, by any such reserve account or other form
of credit enhancement is insufficient, such Noteholders or
Certificateholders, as the case may be, will have to look to payments
by or on behalf of Obligors on the related Receivables and the proceeds from
the repossession and sale of Financed Vehicles that secure defaulted
Receivables for distributions of principal and interest on the Securities.
In such event, certain factors, such as the applicable Trust's not having
perfected security interests in all of the Financed Vehicles, may limit
the ability of a Trust to realize on the collateral securing the related
Receivables, or may limit the amount realized to less than the amount due
under the related Receivables. Securityholders may thus be subject to delays
in payment on, or may incur losses on their investment in, such Securities as
a result of defaults or delinquencies by Obligors and depreciation in the
value of the related Financed Vehicles. See "Description of the Transfer
and Servicing Agreements -- Credit and Cash Flow Enhancement" and "Certain
Legal Aspects of the Receivables".
The Master Servicer for each Trust will be responsible for the
servicing of the Receivables held by the Trust and will receive fees
for such services. The Master Servicer may subcontract all or any
portion of its obligations as Master Servicer to qualified
Subservicers, but the Master Servicer will not be relieved thereby of
its liability with respect to such obligations. Any fees due to any
such Subservicers will be the responsibility of the Master Servicer and will
not be an additional obligation of the related Trust. See
"Description of the Transfer and Servicing Agreements -- Servicing
Compensation and Payment of Expenses" herein.
THE TRUSTEE
The Trustee for each Trust 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 and Sale
and Servicing Agreement or the related Pooling and Servicing Agreement, as
applicable. A Trustee may resign at any time, in which event the Master
Servicer will be obligated to appoint a successor trustee. The Administrator
of any Owner Trust that issues Notes and the Master Servicer with respect to
any Grantor Trust may also remove the related Trustee if such Trustee ceases
to be eligible to continue as Trustee under the related Trust Agreement or
Pooling and Servicing Agreement, as applicable, or if the Trustee becomes
insolvent. In such circumstances, the Administrator or Master Servicer, as
applicable, will be obligated to appoint a successor trustee. Any resignation
or removal of a Trustee and
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appointment of a successor trustee will not become effective until acceptance
of the appointment by the successor trustee.
The principal offices of each Trust and the related Trustee will
be specified in the applicable Prospectus Supplement.
THE RECEIVABLES POOLS
GENERAL
The Receivables in each Receivables Pool have been or will be
originated or acquired by the Originators, and acquired by the
Depositor from such Originators, in the ordinary course of business.
The Depositor expects that each Receivable so acquired will have been
originated or acquired by the Originator thereof in accordance with the
underwriting criteria specified in the related Prospectus Supplement. Each
Originator will be an entity generally in the business of originating or
acquiring Receivables, or an affiliate of such an entity. The Depositor may
acquire Receivables from an Originator who is an affiliate.
If so provided in the related Prospectus Supplement, each
Receivable (i) will be secured by a new or used vehicle, (ii) will
provide for level monthly payments (except for the last payment, which may be
minimally different from the level payments or which, in
the case of a Balloon Payment Receivable, may be a final balloon payment )
that fully amortize the amount financed over the original term to maturity of
the related Contract (iii) will be a Precomputed Receivable or a Simple
Interest Receivable and (iv) will satisfy the other criteria, if any, set
forth in the related Prospectus Supplement.
"Precomputed Receivables" will consist of either (i) monthly
actuarial receivables ("Actuarial Receivables") or (ii) receivables
that provide for allocation of payments according to the "sum of
periodic balances" or "sum of monthly payments" method, similar to the "Rule
of 78's" ("Rule of 78's Receivables"). An Actuarial Receivable provides for
amortization of the loan over a series of fixed level monthly installment
payments. Each monthly installment, including the monthly installment
representing the final payment on the Receivable, consists of (x) an amount
of interest equal to 1/12 of the APR under the related Contract multiplied by
the unpaid principal balance of the loan, plus (y) and an amount allocable to
principal equal to the remainder of the monthly payment. A Rule of 78's
Receivable provides for the payment by the obligor of a specified total
amount of payments, payable in equal monthly installments on each due date,
which total represents the principal amount financed plus add-on interest in
an amount calculated at the stated APR for the term of the receivable. The
rate at which such amount of add-on interest is earned and, correspondingly,
the amount of each fixed monthly payment allocated to reduction of the
outstanding principal amount are calculated in accordance with the Rule of
78's.
"Balloon Payment Receivables" are receivables secured by new and
used automobiles or light duty trucks with a final payment which is
greater than the scheduled monthly payments. A Balloon Payment
Receivable provides for amortization of the loan over a series of fixed level
payment monthly installments like an Actuarial Receivable, but also provides
for a final "balloon" payment due after payment of such monthly installments,
which payment may be substantially larger than the regular scheduled payments
and may result in a balloon payment at maturity which may be equal to a high
percentage of the original amount financed. If so specified in the related
Prospectus Supplement, the final balloon payment on a Balloon
Payment Receivable may be satisfied by one or more of (i) payment in full in
cash of such amount, (ii) transfer of the vehicle to the Originator or its
assignee subject to certain conditions, or (iii) refinancing the balloon
payment in accordance with certain conditions. If so specified in the
related Prospectus Supplement, only the principal payments due prior to the
final balloon payment and not the final balloon payment will be included
initially in the related Trust.
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"Simple Interest Receivables" are receivables that provide for the
amortization of the amount financed thereunder over a series of fixed level
monthly payments; however, unlike the monthly payment under an Actuarial
Receivable, each monthly payment consists of an installment of interest that
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 (calculated as a fraction of a calendar year) since the preceding
payment of interest was made. As payments are received under a Simple
Interest Receivable, 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 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 may be increased or decreased as necessary to repay
the then outstanding principal balance.
In the event of the prepayment in full (voluntarily or by
acceleration) of a Rule of 78's Receivable, under the terms of the
contract a "refund" or "rebate" will be made to the obligor of the
portion of the total amount of payments then due and payable and
allocable to "unearned" add-on interest, calculated in accordance with a
method equivalent to the Rule of 78's. If an Actuarial Receivable is prepaid
in full, with minor variations based on state law, the Actuarial Receivable
requires that the rebate be calculated on the basis of a constant interest
rate. If a Simple Interest Receivable 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 78's Receivable generally
will be less than the amount of a rebate on an Actuarial Receivable and
generally will be less than the remaining scheduled payments of interest that
would have been due under a Simple Interest Receivable for which all payments
were made on schedule.
Unless otherwise provided in the related Prospectus Supplement,
each Trust will account for the Rule of 78's Receivables as if such
Receivables were Actuarial Receivables. Amounts received upon
prepayment in full of a Rule of 78's Receivable in excess of the then
outstanding principal balance of such Receivable and accrued interest
thereon (calculated pursuant to the actuarial method) will not be paid to
Noteholders or passed through to Certificateholders of the
applicable Series, but will be paid to the Master Servicer as
additional servicing compensation.
Information with respect to each Receivables Pool will be set
forth in the related Prospectus Supplement, including, to the extent
appropriate, the composition and distribution by annual percentage rate
("APR") and by states of origination of the Receivables, the portion of such
Receivables Pool consisting of Precomputed Receivables and of Simple Interest
Receivables, and the portion of such Receivables Pool secured by new vehicles
and by used vehicles.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Certain information concerning the experience of the applicable
Originator or Originators with respect to each Receivables Pool
pertaining to delinquencies, repossessions and net losses in respect of motor
vehicle retail installment sale contracts and installment loan contracts
(referred to herein collectively as "Contracts") will be set forth in each
Prospectus Supplement. There can be no assurance that the delinquency,
repossession and net loss experience on any Receivables Pool will be
comparable to prior experience of the applicable Originator or to such
information.
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WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the Notes, if any, and the
Certificates, if any, of any Series generally will be influenced by the rate
at which the principal balances of the related Receivables are paid, which
payment may be in the form of scheduled amortization or prepayments. (For
this purpose, the term "prepayments" includes prepayments in full, partial
prepayments (including those related to rebates of extended warranty contract
costs and insurance premiums), liquidations due to defaults, as well as
receipts of proceeds from physical damage, credit life and disability insurance
policies, and the Repurchase Amount of Receivables repurchased by the
applicable Originator or purchased by the Master Servicer for administrative
reasons.) The Receivables generally will be prepayable at any time without
penalty to the Obligor. The rate of prepayment of automotive receivables is
influenced by a variety of economic, social and other factors. The rate of
prepayment on the Receivables may also be influenced by the structure of the
loan. In addition, under certain circumstances, the applicable Originator
will be obligated to repurchase Receivables from a given Trust pursuant to the
related Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, as a result of breaches of representations and warranties
with respect to the Receivables, and the Master Servicer will be
obligated to purchase Receivables from such Trust pursuant to such Sale and
Servicing Agreement or Pooling and Servicing Agreement as a result of
breaches of certain covenants. See "Description of the Transfer and
Servicing Agreements -- Sale and Assignment of Receivables" and "-- Servicing
Procedures". See also "Description of the Transfer and Servicing Agreements
- -- Termination" regarding the Master Servicer's or one or more Subservicers'
option to purchase Receivables from a given Trust and "-- Insolvency Event"
regarding the sale of the Receivables owned by certain Owner Trusts if an
Insolvency Event occurs with respect to the Company. Also, in the case of
a Trust having a Funding Period or Revolving Period, the addition of
Receivables to the Trust during such period could affect the weighted
average life of the Securities of the related series.
In light of the above considerations, there can be no assurance as to
the amount of principal payments to be made on the Notes and/or
Certificates of a Series on each Distribution Date since such amount
will depend, in part, on the amount of principal collected on the
related Receivables Pool during the applicable Collection Period. Any
reinvestment risks resulting from a faster or slower incidence of
prepayment of Receivables will be borne entirely by the Noteholders and
Certificateholders. The related Prospectus Supplement may set forth certain
additional information with respect to the maturity and prepayment
considerations applicable to the particular Receivables Pool and the
related Series of Securities.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a
seven-digit decimal which the Master Servicer will compute prior to
each distribution with respect to such class of Notes indicating the
remaining outstanding principal balance of such class of Notes, as of
the applicable Distribution Date (after giving effect to payments to be made
on such Distribution Date), as a fraction of the initial outstanding
principal balance of such class of Notes. The "Certificate Pool Factor"
for each class of Certificates will be a seven-digit decimal which the
Master Servicer will compute prior to each distribution with respect to
such class of Certificates indicating the remaining Certificate Balance of
such class of Certificates, as of the applicable Distribution Date (after
giving effect to distributions to be made on such Distribution Date), as a
fraction of the initial Certificate Balance of such class of Certificates.
Each Note Pool Factor and each Certificate Pool Factor will be 1.0000000
as of the related Closing Date, and thereafter will decline to reflect
reductions in the outstanding principal balance of the applicable class of
Notes or the reduction of the Certificate Balance of the applicable class
of Certificates. A Noteholder's portion of the aggregate outstanding
principal balance of the related class of Notes will be the product of (i) the
original denomination of such Noteholder's Note and (ii) the applicable Note
Pool Factor at the time of determination. A Certificateholder's portion of
the aggregate outstanding Certificate Balance for the related class of
Certificates will be the product of (a) the original
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denomination of such Certificateholder's Certificate and (b) the applicable
Certificate Pool Factor at the time of determination.
Unless otherwise provided in the related Prospectus Supplement,
the Noteholders, if any, and the Certificateholders, if any, will
receive reports on or about each Distribution Date concerning payments
received on the Receivables, the Pool Balance and each Note Pool Factor or
Certificate Pool Factor, as applicable. 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. See
"Certain Information Regarding the Securities -- Statements to
Securityholders".
USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement,
the net proceeds from the sale of the Securities of a Series will be
applied by the applicable Trust to the purchase of the Receivables from the
Depositor and to make the deposit of the Pre-Funded Amount, if any, to the
Pre-Funding Account or the initial deposit, if any, to the Collateral
Reinvestment Account, if any. The Depositor will use the portion of such
proceeds paid to it for general corporate purposes.
THE DEPOSITOR
The Depositor was incorporated in the State of Delaware on August 2,
1995 and is an indirect, limited purpose finance subsidiary of The Long-Term
Credit Bank of Japan, Limited and an affiliate of Greenwich Capital Markets,
Inc. The Long-Term Credit Bank of Japan, Limited is a bank organized under
the laws of Japan conducting commercial banking, corporate finance, capital
markets and financial advisory services on a global basis. Greenwich Capital
Markets, Inc. is a registered broker-dealer engaged in the U.S. government
securities and related capital markets business. The principal executive
offices of the Depositor are located at 600 Steamboat Road, Greenwich,
Connecticut 06830; telephone (203) 625-2700.
As described herein under "Description of the Transfer and
Servicing Agreements -- Sale and Assignment of Receivables", the only
obligations, if any, of the Depositor with respect to a Series of
Securities may be pursuant to certain limited representations and
warranties and limited undertakings to repurchase or substitute
Receivables under certain circumstances. Unless otherwise specified in the
applicable Prospectus Supplement, the Depositor will have no
servicing obligations or responsibilities with respect to any Trust.
The Depositor does not have, nor is it expected in the future to have, any
significant assets.
If so provided in the related Prospectus Supplement, the Master
Servicer of a Series of Securities may be an affiliate of the
Depositor. As described herein, the Depositor may acquire Receivables from
an Originator who is an affiliate.
Neither the Depositor nor any of its affiliates, including
Greenwich Capital Markets, Inc., will insure or guarantee the
Securities of any Series.
THE ORIGINATORS
Information regarding the Originator or Originators of the
Receivables conveyed to a Trust will be provided in the related
Prospectus Supplement. One or more Originators with respect to a Trust may
be an affiliate of the Depositor.
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DESCRIPTION OF THE NOTES
GENERAL
Each Owner Trust will, if so specified in the related Prospectus
Supplement, issue one or more classes of Notes pursuant to an
Indenture, a form of which has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. The
following summary does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the provisions of the
related Notes and Indenture.
Unless otherwise specified in the related Prospectus Supplement,
each class of Notes will initially be represented by one or more
certificates registered in the name of the nominee of DTC (together
with any successor depository selected by the Trust, the "Depository").
Unless otherwise specified in the related Prospectus Supplement, the Notes
will be available for purchase in minimum denominations of $1,000 and
integral multiples thereof in book-entry form only. The Depositor has been
informed by DTC that DTC's nominee will be Cede unless another nominee is
specified in the related Prospectus Supplement. Accordingly, such nominee
is expected to be the holder of record of the Notes of each class. Unless
and until Definitive Notes are issued under the limited circumstances described
herein or in the related Prospectus Supplement, no Noteholder will be
entitled to receive a physical certificate representing a Note. All
references herein and in the related Prospectus Supplement to actions
by Noteholders refer to actions taken by DTC upon instructions from its
participating organizations, and all references herein and in the
related Prospectus Supplement to distributions, notices, reports and
statements to Noteholders refer to distributions, notices, reports and
statements to DTC or its nominee, as registered holder of the Notes, for
distribution to Noteholders in accordance with DTC's procedures with respect
thereto. See "Certain Information Regarding the Securities -- Book-Entry
Registration" and "-- Definitive Securities".
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of payment, seniority, allocations of
losses, Interest Rate and amount of or method of determining payments
of principal and interest on each class of Notes of a Series will be
described in the related Prospectus Supplement. The right of holders
of any class of Notes to receive payments of principal and interest may be
senior or subordinate to the rights of holders of one or more other class or
classes of Notes of such Series, as described in the related Prospectus
Supplement. If so provided in the related Prospectus Supplement, payments of
interest on the Notes will be made prior to payments of principal thereon.
If so provided in the related Prospectus Supplement, a Series of Notes may
include one or more classes of Strip Notes entitled to (i) principal payments
with disproportionate, nominal or no interest payments or (ii) interest
payments with disproportionate, nominal or no principal payments. Each class
of Notes may have a different Interest Rate, which may be a fixed,
variable or adjustable Interest Rate (and which may be zero for certain
classes of Strip Notes), or any combination of the foregoing.
The related Prospectus Supplement will specify the Interest Rate for each
class of Notes of a Series or the method for determining such Interest Rate.
One or more classes of Notes of a Series may be redeemable in whole or in
part under the circumstances specified in the related Prospectus Supplement,
including, if a Pre-Funding Account or Collateral Reinvestment Account has
been established with respect to the related Series, from amounts remaining
in the applicable account at the end of the Funding Period or Revolving
Period, as the case may be, or as a result of the exercise by the Master
Servicer, a Subservicer or such other party as may be specified in the
related Prospectus Supplement of its option to purchase the related
Receivables Pool. See "Description of the Transfer and Servicing Agreements
- -- Termination".
To the extent specified in any Prospectus Supplement, one or more
classes of Notes of a given Series may have fixed principal payment
schedules, as set forth in such Prospectus Supplement. Holders of any such
Notes will be entitled to receive payments of principal on any given
Distribution Date in the applicable amounts set forth on such schedule with
respect to such Notes, in the manner and to the extent set forth in the
related Prospectus Supplement.
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Unless otherwise specified in the related Prospectus Supplement,
payments of interest to Noteholders of all classes within a Series will have
the same priority. Under certain circumstances, the amount
available for such payments could be less than the amount of interest
payable on the Notes on a Distribution Date, in which case each class
of Notes will receive its ratable share (based on the aggregate amount of
interest due to such class of Notes) of the aggregate amount available to be
distributed on such date as interest on the Notes of such Series. See
"Description of the Transfer and Servicing Agreements -- Distributions"
and "-- Credit and Cash Flow Enhancement".
In the case of a Series of Securities issued by an Owner Trust
that includes two or more classes of Notes, the sequential order and
priority of payment in respect of principal and interest, and any
schedule or formula or other provisions applicable to the determination
thereof, of each such class will be set forth in the related Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
payments in respect of principal of and interest on any class of Notes will
be made on a pro rata basis among all the Noteholders of such class.
CERTAIN PROVISIONS OF THE INDENTURE
Events of Default; Rights upon Event of Default. "Events of
Default" in respect of a Series of Notes under the related
Indenture will consist of: (i) a default for five days or more in the
payment of any interest on any such Note; (ii) a default in the payment of
the principal of, or any installment of the principal of, any such Note when
the same becomes due and payable; (iii) a default in the observance or
performance in any material respect of any covenant or agreement of the
Related Trust made in such Indenture and the continuation of any such default
for a period of 30 days after notice thereof is given to the related Trust by
the applicable Indenture Trustee or to such Trust and the related Indenture
Trustee by the holders of 25% of the aggregate outstanding principal amount of
such Notes; (iv) any representation or warranty made by such Trust
in the related Indenture or in any certificate delivered pursuant thereto or
in connection therewith having been incorrect in a material respect as of the
time made, if such breach is not cured within 30 days after notice thereof is
given to such Trust by the applicable Indenture Trustee or to such Trust and
such Indenture Trustee by the holders of 25% of the aggregate outstanding
principal amount of such Notes; or (v) certain events of bankruptcy,
insolvency, receivership or liquidation with respect to such Trust. The
amount of principal required to be paid to Noteholders of each Series under
the related Indenture on any Distribution Date generally will be limited to
amounts available to be deposited in the applicable Note Distribution
Account; therefore, the failure to pay principal on a class of Notes
generally will not result in the occurrence of an Event of Default until the
applicable final scheduled Distribution Date for such class of Notes.
Unless otherwise specified in the related Prospectus Supplement,
if an Event of Default should occur and be continuing with respect to
the Notes of any Series, the related Indenture Trustee or holders of a
majority in principal amount of such Notes may declare the principal of such
Notes to be immediately due and payable. Such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal amount
of such Notes then outstanding.
If the Notes of any Series are declared due and payable following an
Event of Default, the related Indenture Trustee may institute proceedings to
collect amounts due thereon, foreclose on the property of the Trust, exercise
remedies as a secured party, sell the related Receivables or elect to have
the applicable Trust maintain possession of such Receivables and continue to
apply collections on such Receivables as if there had been no declaration of
acceleration. Unless otherwise specified in the related Prospectus Supplement,
however, the Indenture Trustee will be prohibited from selling the Receivables
following an Event of Default, other than a default in the payment of any
principal of, or a default for five days or more in the payment of any interest
on, any Note of such Series, unless (i) the holders of all such outstanding
Notes consent to such sale, (ii) the proceeds of such sale are sufficient to
pay in full the principal of and the accrued interest on such outstanding
Notes at the date of such sale or (iii) such Indenture Trustee determines
that the proceeds of the Receivables would not be sufficient on an ongoing
basis to make all payments on such Notes as such payments would become
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due if such obligations had not been declared due and payable, and such
Indenture Trustee obtains the consent of the holders of 662/3% of the
aggregate outstanding principal amount of such Notes.
Subject to the provisions of the applicable Indenture relating to the
duties of the related Indenture Trustee, if an Event of Default occurs and is
continuing with respect to a Series of Notes, such Indenture Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the holders of such Notes if it
reasonably believes it will not be adequately indemnified against the costs,
expenses and liabilities that might be incurred by it in complying with such
request. Subject to the provisions for indemnification and certain limitations
contained in the related Indenture, the holders of a majority of the aggregate
outstanding principal amount of the Notes of a Series will have the right to
direct the time, method and place of conducting any proceeding or exercising
any remedy available to the related Indenture Trustee; in addition, the holders
of Notes representing a majority of the aggregate outstanding principal amount
of such Notes may, in certain cases, waive any default with respect thereto,
except a default in the payment of principal of or interest on any Note or a
default in respect of a covenant or provision of such Indenture that cannot
be modified or amended without the waiver or consent of the holders of all
the outstanding Notes of such Series.
Unless otherwise specified in the related Prospectus Supplement,
no holder of a Note will have the right to institute any proceeding
with respect to the related Indenture, unless (i) such holder previously has
given to the applicable Indenture Trustee written notice of a continuing
Event of Default; (ii) the holders of not less than 25% of the outstanding
principal amount of such Notes have made written request to such Indenture
Trustee to institute such proceeding in its own name as Indenture Trustee;
(iii) such holder or holders have offered such Indenture Trustee reasonable
indemnity; (iv) such Indenture Trustee has for 60 days failed to institute
such proceeding; and (v) no direction inconsistent with such written request
has been given to such Indenture Trustee during such 60-day period by the
holders of a majority of the outstanding principal amount of the Notes of such
Series.
None of the related Indenture Trustee or the related Trustee in
its individual capacity, or any holder of a Certificate representing an
ownership interest in such Trust, or any of their respective owners,
beneficiaries, agents, officers, directors, employees, affiliates, successors
or assigns will, in the absence of an express agreement to the contrary, be
personally liable for the payment of the principal of or interest on the
related Notes or for the agreements of such Trust contained in the applicable
Indenture.
No Trust may engage in any activity other than as described herein or in
the related Prospectus Supplement. No Trust will incur, assume or guarantee
any indebtedness other than indebtedness incurred pursuant to the related Notes
and the related Indenture, pursuant to any Advances made to it by the Master
Servicer or otherwise in accordance with the Related Documents.
Certain Covenants. Each Indenture will provide that the related
Trust may not consolidate with or merge into any other entity, unless
(i) the entity formed by or surviving such consolidation or merger is
organized under the laws of the United States, any state or the
District of Columbia; (ii) such entity expressly assumes such Trust's
obligation to make due and punctual payments on the Notes of the
related Series and to perform or observe every agreement and covenant
of such Trust under the Indenture; (iii) no Event of Default shall have
occurred and be continuing immediately after such merger or
consolidation; (iv) such Trust shall have been advised by each Rating
Agency that such merger or consolidation will not result in the
qualification, reduction or withdrawal of its then-current rating of
any class of the Notes or Certificates of such Series; and (v) such
Trust shall have received an opinion of counsel to the effect that such
consolidation or merger will have no material adverse tax consequence to the
Trust or to any related Noteholder or Certificateholder.
No Owner Trust will (i) except as expressly permitted by the
applicable Indenture, the applicable Transfer and Servicing Agreements or
certain other documents with respect to such Trust (the "Related Documents"),
sell, transfer, exchange or otherwise dispose of any of the assets of the
Trust; (ii) claim
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any credit on or make any deduction from the principal and interest payable
in respect of the related Notes (other than amounts withheld under the Code
or applicable state tax laws) or assert any claim against any present or
former holder of such Notes because of the payment of taxes levied or assessed
upon the Trust; (iii) dissolve or liquidate in whole or in part; (iv) permit
the validity or effectiveness of the related Indenture to be impaired or permit
any person to be released from any covenants or obligations with respect to the
related Notes under such Indenture except as may be expressly permitted
thereby; (v) permit any lien, charge, excise, claim, security interest,
mortgage, or other encumbrance to be created on or extend to or otherwise
arise upon or burden the assets of the Trust or any part thereof, or any
interest therein or the proceeds thereof; or (vi) permit the lien of the
related Indenture not to constitute a valid first priority security interest
(other than with respect to a tax, mechanics' or similar lien) in the assets
of the Trust.
Each Indenture Trustee and the related Noteholders, by accepting
the related Notes, will covenant that they will not at any time
institute against the applicable Trust any bankruptcy,
reorganization or other proceeding under any federal or state
bankruptcy or similar law.
Modification of Indenture. Unless otherwise specified in the
related Prospectus Supplement, each Owner Trust and the related
Indenture Trustee may, with the consent of the holders of a majority of the
aggregate outstanding principal amount of the Notes of the related Series,
execute a supplemental indenture to add provisions to, change in any manner
or eliminate any provisions of, the related Indenture, or modify (except as
provided below) in any manner the rights of the related Noteholders.
However, unless otherwise specified in the related Prospectus Supplement,
without the consent of the holder of each outstanding Note affected thereby,
no supplemental indenture will: (i) change the due date of any installment of
principal of or interest on the Notes or reduce the principal amount thereof,
the interest rate specified thereon or the redemption price with respect
thereto or change any place of payment where or the coin or currency in which
the Notes or any interest thereon is payable; (ii) impair the right to
institute suit for the enforcement of certain provisions of the related
Indenture regarding payment; (iii) reduce the percentage of the aggregate
amount of the outstanding Notes of such Series, the consent of the holders of
which is required for any such supplemental indenture or for any waiver of
compliance with certain provisions of the related Indenture or of certain
defaults thereunder and their consequences as provided for in
such Indenture; (iv) modify or alter the provisions of the related Indenture
regarding the voting of Notes held by the applicable Owner Trust, any other
obligor on such Notes, the Depositor or an affiliate of any of them; (v)
reduce the percentage of the aggregate outstanding amount of such Notes,
the consent of the holders of which is required to direct the related
Indenture Trustee to sell or liquidate the Receivables if the proceeds of such
sale would be insufficient to pay the principal amount and accrued and unpaid
interest on the outstanding Notes of such Series; (vi) decrease the
percentage of the aggregate principal amount of such Notes required to amend
the sections of the related Indenture that specify the percentage of the
aggregate principal amount of the Notes of such Series necessary to amend
such Indenture or certain other related agreements; or (vii) permit the
creation of any lien ranking prior to or on a parity with the lien of the
related Indenture with respect to any of the collateral for the Notes or,
unless otherwise permitted or contemplated in such Indenture, terminate the
lien of the Indenture on the collateral or deprive any holder of the Notes of
the security afforded by the lien of such Indenture.
Unless otherwise provided in the applicable Prospectus Supplement, an
Owner Trust and the related Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of the Noteholders of the related
Series, for the purpose of, among other things, adding any provisions to or
changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of such Noteholders;
provided that such action does not materially and adversely affect the
interests of any such Noteholder.
Annual Compliance Statement. Each Owner Trust will be required to file
annually with the related Indenture Trustee a written statement as to the
fulfillment of its obligations under the Indenture.
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Indenture Trustee's Annual Report. Each Indenture Trustee will be
required to mail each year to all related Noteholders a brief report relating
to its eligibility and qualification to continue as Indenture Trustee under
the related Indenture, any amounts advanced by it under the Indenture, the
amount, interest rate and maturity date of certain indebtedness owing by the
related Owner Trust to such Indenture Trustee in its individual capacity, the
property and funds physically held by such Indenture Trustee as such and any
action taken by it that materially affects the related Notes and that has not
been previously reported.
Satisfaction and Discharge of Indenture. Each Indenture will be
discharged with respect to the collateral securing the related Notes
upon the delivery to the related Indenture Trustee for cancellation of all
such Notes or, with certain limitations, upon deposit with such Indenture
Trustee of funds sufficient for the payment in full of all such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a Series of Notes will be specified in
the related Prospectus Supplement. The Indenture Trustee for any
Series may resign at any time, in which event the related Owner Trust
will be obligated to appoint a successor Indenture Trustee for such
Series. An Owner Trust may also remove the related Indenture Trustee
if such Indenture Trustee ceases to be eligible to continue as such
under the related Indenture or if such Indenture Trustee becomes
insolvent. In such circumstances, such Owner Trust will be obligated
to appoint a successor Indenture Trustee for the applicable Series of
Notes. No resignation or removal of the Indenture Trustee and
appointment of a successor Indenture Trustee for a Series of Notes will
become effective until acceptance of the appointment by the successor
Indenture Trustee for such Series.
DESCRIPTION OF THE CERTIFICATES
GENERAL
Each Trust will, if so provided in the related Prospectus
Supplement, issue one or more classes of Certificates pursuant to a
Trust Agreement or Pooling and Servicing Agreement, as applicable. A
form of each of the Trust Agreement and the Pooling and Servicing
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. The following summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the provisions of the related Certificates and Trust Agreement or Pooling
and Servicing Agreement, as applicable.
Unless otherwise specified in the related Prospectus Supplement
and except for the Certificates, if any, of a Series purchased by the
Company, each class of Certificates will initially be represented by
one or more certificates registered in the name of the Depository.
Unless otherwise specified in the related Prospectus Supplement, the
Certificates will be available for purchase in minimum denominations of
$20,000 and integral multiples of $1,000 in excess thereof in
book-entry form only. The Depositor has been informed by DTC that
DTC's nominee will be Cede, unless another nominee is specified in the
related Prospectus Supplement. Accordingly, such nominee is expected to be
the holder of record of the Certificates of any Series
that are not purchased by the Company. Unless and until Definitive
Certificates are issued under the limited circumstances described herein or
in the related Prospectus Supplement, no Certificateholder (other than the
Company) will be entitled to receive a physical certificate representing a
Certificate. All references herein and in the related Prospectus Supplement
to actions by Certificateholders refer to actions taken by DTC upon
instructions from the Participants, and all references herein and in the
related Prospectus Supplement to distributions, notices, reports and
statements to Certificateholders refer to distributions, notices, reports and
statements to DTC or its nominee, as the case may be, as the registered holder
of the Certificates, for distribution to Certificateholders in accordance with
DTC's procedures with respect thereto. See "Certain Information Regarding the
Securities -- Book-Entry Registration" and "-- Definitive Securities".
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Any Certificate of a Series owned by the Company will be entitled to equal and
proportionate benefits under the applicable Trust Agreement or Pooling and
Servicing Agreement, as applicable, except that such Certificates will be
deemed not to be outstanding for the purpose of determining whether the
requisite percentage of Certificateholders has given any request, demand,
authorization, direction, notice, or consent or taken any other action under
the Related Documents (other than the commencement by the related Trust of
a voluntary proceeding in bankruptcy as described under "Description of the
Transfer and Servicing Agreements -- Insolvency Event").
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations
of losses, Pass-Through Rate and amount of or method of determining
distributions with respect to principal and interest on each class of
Certificates of a Series will be described in the related Prospectus
Supplement. Distributions of interest on such Certificates will be
made on the dates specified in the related Prospectus Supplement (the
"Distribution Date") and, if so specified in the related Prospectus
Supplement, will be made prior to distributions with respect to principal
of such Certificates. To the extent provided in the related Prospectus
Supplement, a Series of Certificates may include one or more classes of Strip
Certificates entitled to (i) principal distributions with
disproportionate, nominal or no interest distributions or (ii) interest
distributions with disproportionate, nominal or no principal
distributions. Each class of Certificates may have a different
Pass-Through Rate, which may be a fixed, variable or adjustable
Pass-Through Rate (and which may be zero for certain classes of Strip
Certificates) or any combination of the foregoing. The related
Prospectus Supplement will specify the Pass-Through Rate for each class of
Certificates of a Series or the method for determining such
Pass-Through Rate.
In the case of a Series of Securities that includes two or more
classes of Certificates, the timing, sequential order, priority of
payment or amount of distributions in respect of interest and
principal, and any schedule or formula or other provisions applicable
to the determination thereof, of each such class shall be as set forth in the
related Prospectus Supplement. In the case of Certificates issued by an
Owner Trust that also issues Notes, distributions in respect of such
Certificates may be subordinated to payments in respect of the Notes of such
Series as more fully described in the related Prospectus Supplement.
Distributions in respect of interest on and principal of any class of
Certificates will be made on a pro rata basis among all holders of
Certificates of such class.
CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Each class of Securities (other than certain classes of Strip
Notes or Strip Certificates) may bear interest at a fixed rate per
annum ("Fixed Rate Securities") or at a variable or adjustable rate per annum
("Floating Rate Securities"), as more fully described below and in the
applicable Prospectus Supplement. Each class of Fixed Rate Securities will
bear interest at the applicable per annum Interest Rate or Pass Through
Rate, as the case may be, specified in the applicable Prospectus
Supplement. Unless otherwise set forth in the applicable Prospectus
Supplement, interest on each class of Fixed Rate Securities will be computed
on the basis of a 360-day year of twelve 30-day months.
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear interest for each
applicable Interest Reset Period (as such term is defined in the
related Prospectus Supplement with respect to a class of Floating Rate
Securities, the "Interest Reset Period") at a rate per annum determined by
reference to an interest rate basis (the "Base Rate"), plus or minus the
Spread, if any, or multiplied by the Spread Multiplier, if any, in each case
as specified in the related Prospectus Supplement. The "Spread" is the
number of basis points (one basis point equals one one-hundredth of a
percentage point) that may be specified in the applicable Prospectus
Supplement as being applicable to such class, and the "Spread
Multiplier" is the
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percentage that may be specified in the applicable
Prospectus Supplement as being applicable to such class.
The applicable Prospectus Supplement will designate one of the
following Base Rates as applicable to a given Floating Rate Security:
(i) LIBOR (a "LIBOR Security"), (ii) the Commercial Paper Rate (a
"Commercial Paper Rate Security"), (iii) the Treasury Rate (a "Treasury Rate
Security"), (iv) the Federal Funds Rate (a "Federal Funds Rate Security"),
(v) the CD Rate (a CD Rate Security) or (vi) such other Base Rate as is set
forth in such Prospectus Supplement. The "Index Maturity" for any class of
Floating Rate Securities is the period of maturity of the instrument or
obligation from which the Base Rate is calculated. "H.15(5-19)" means the
publication entitled "Statistical Release H.15(519), Selected Interest Rates",
or any successor publication, published by the Board of Governors of the
Federal Reserve System. "Composite Quotations" means the daily statistical
release entitled "Composite 3:30 p.m. Quotations for U.S. Government
Securities" published by the Federal Reserve Bank of New York. "Interest
Reset Date" will be the first day of the applicable Interest Reset
Period, or such other day as may be specified in the related Prospectus
Supplement with respect to a class of Floating Rate Securities.
As specified in the applicable Prospectus Supplement, Floating
Rate Securities of a given class may also have either or both of the
following (in each case expressed as a rate per annum): (i) a maximum
limitation, or ceiling, on the rate at which interest may accrue during any
interest period and (ii) a minimum limitation, or floor, on the rate at which
interest may accrue during any interest period. In addition to any maximum
interest rate that may be applicable to any class of Floating Rate Securities,
the interest rate applicable to any class of Floating Rate Securities will in
no event be higher than the maximum rate permitted by applicable law, as the
same may be modified by United States law of general application.
Each Trust with respect to which a class of Floating Rate
Securities will be issued will appoint, and enter into agreements with, a
calculation agent (each, a "Calculation Agent") to calculate interest rates
on each such class of Floating Rate Securities issued with respect thereto.
The applicable Prospectus Supplement will set forth the identity of the
Calculation Agent for each such class of Floating Rate Securities of a given
series, which may be either the related Trustee or Indenture Trustee with
respect to such series. All determinations of interest by the Calculation
Agent shall, in the absence of manifest error, be conclusive for all purposes
and binding on the holders of Floating Rate Securities of a given class. All
percentages resulting from any calculation of the rate of interest on a
Floating Rate Security will be rounded, if necessary, to the nearest 1/100,000
of 1% (.0000001), with five one-millionths of a percentage point rounded upward.
CD Rate Securities. Each CD Rate Security will bear interest for each
Interest Reset Period at the interest rate calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any,
specified in such Security and in the applicable Prospectus Supplement.
The "CD Rate" for each Interest Reset Period shall be the rate as of the
second business day prior to the Interest Reset Date for such Interest Reset
Period (a "CD Rate Determination Date") for negotiable certificates of
deposit having the Index Maturity designated in the applicable Prospectus
Supplement as published in H.15(519) under the heading "CDs (Secondary
Market)". In the event that such rate is not published prior to 3:00 p.m.,
New York City time, on the Calculation Date (as defined below) pertaining to
such CD Rate Determination Date, then the "CD Rate" for such Interest Reset
Period will be the rate on such CD Rate Determination Date for negotiable
certificates of deposit of the Index Maturity designated in the applicable
Prospectus Supplement as published in Composite Quotations under the heading
"Certificates of Deposit". If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the CD Rate for such Interest Reset Period will be
calculated by the Calculation Agent for such CD Rate Security and will be the
arithmetic mean of the secondary market offered rates as of 10:00 a.m., New
York City time, on such CD Rate Determination Date, of three leading nonbank
dealers in negotiable U.S. dollar certificates of deposit in The City of New
York selected by the Calculation Agent for such
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CD Rate Security for negotiable certificates of deposit of major United States
money center banks of the highest credit standing (in the market for
negotiable certificates of deposit) with a remaining maturity closest to the
Index Maturity designated in the related Prospectus Supplement in a
denomination of $5,000,000; provided, however, that if the dealers selected
as aforesaid by such Calculation Agent are not quoting offered rates as
mentioned in this sentence, the CD Rate for such Interest Reset Period will
be the same as the CD Rate for the immediately preceding Interest Reset Period.
The "Calculation Date" pertaining to any CD Rate Determination
Date shall be the first to occur of (a) the tenth calendar day after
such CD Rate Determination Date or, if such day is not a business day, the
next succeeding business day or (b) the second business day
preceding the date any payment is required to be made for any period
following the applicable Interest Reset Date.
Commercial Paper Rate Securities. Each Commercial Paper Rate
Security will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Commercial
Paper Rate and the Spread or Spread Multiplier, if any, specified in
such Security and in the applicable Prospectus Supplement.
The "Commercial Paper Rate" for each Interest Reset Period will be
determined by the Calculation Agent for such Commercial Paper Rate
Security as of the second business day prior to the Interest Reset Date for
such Interest Reset Period (a "Commercial Paper Rate Determination Date") and
shall be the Money Market Yield (as defined below) on such Commercial Paper
Rate Determination Date of the rate for commercial paper having the Index
Maturity specified in the applicable Prospectus Supplement, as such rate
shall be published in H.15(519) under the heading "Commercial Paper". In the
event that such rate is not published prior to 3:00 p.m., New York City time,
on the Calculation Date (as defined below) pertaining to such Commercial
Paper Rate Determination Date, then the "Commercial Paper Rate" for such
Interest Reset Period shall be the Money Market Yield on such Commercial
Paper Rate Determination Date of the rate for commercial paper of the
specified Index Maturity as published in Composite Quotations under the
heading "Commercial Paper". If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the "Commercial Paper Rate" for such Interest
Reset Period shall be the Money Market Yield of the arithmetic mean of the
offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper
in The City of New York selected by the Calculation Agent for such Commercial
Paper Rate Security for commercial paper of the specified Index Maturity
placed for an industrial issuer whose bonds are rated "AA" or the equivalent
by a nationally recognized rating agency; provided, however, that if the
dealers selected as aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the "Commercial Paper Rate"
for such Interest Reset Period will be the same as the Commercial Paper
Rate for the immediately preceding Interest Reset Period.
"Money Market Yield" shall be a yield calculated in accordance
with the following formula:
D X 360
Money Market Yield = ---------------- X 100
360 -- (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the first to occur of (a) the tenth
calendar day after such Commercial Paper Rate Determination Date or, if such
day is not a business day, the next succeeding business day
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or (b) the second business day preceding the date any payment is required to
be made for any period following the applicable Interest Reset Date.
Federal Funds Rate Securities. Each Federal Funds Rate Security
will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any, specified in such Security and in the applicable
Prospectus Supplement.
The "Federal Funds Rate" for each Interest Reset Period shall be
the effective rate on the Interest Reset Date for such Interest Reset Period
(a "Federal Funds Rate Determination Date") for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)". In the event that
such rate is not published prior to 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such Federal Funds Rate
Determination Date, the "Federal Funds Rate" for such Interest Reset Period
shall be the rate on such Federal Funds Rate Determination Date as published
in Composite Quotations under the heading "Federal Funds/Effective Rate". If
by 3:00 p.m., New York City time, on such Calculation Date such rate is not
yet published in either H.15(519) or Composite Quotations, then the "Federal
Funds Rate" for such Interest Reset Period shall be the rate on such Federal
Funds Rate Determination Date made publicly available by the Federal Reserve
Bank of New York which is equivalent to the rate which appears in H.15(519)
under the heading "Federal Funds (Effective)"; provided, however, that if
such rate is not made publicly available by the Federal Reserve Bank of New
York by 3:00 p.m., New York City time, on such Calculation Date, the "Federal
Funds Rate" for such Interest Reset Period will be the same as the Federal
Funds Rate in effect for the immediately preceding Interest Reset Period.
In the case of a Federal Funds Rate Security that resets daily, the interest
rate on such Security for the period from and including a Monday to but
excluding the succeeding Monday will be reset by the Calculation Agent for
such Security on such second Monday (or, if not a business day, on the next
succeeding business day) to a rate equal to the average of the Federal Funds
Rates in effect with respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding business day.
LIBOR Securities. Each LIBOR Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to LIBOR
and the Spread or Spread Multiplier, if any, specified in such Security and
in the applicable Prospectus Supplement.
With respect to LIBOR indexed to the offered rates for U.S. dollar
deposits, "LIBOR" for each Interest Reset Period will be determined by the
Calculation Agent for any LIBOR Security as follows:
(i) On the second London Banking Day prior to the Interest
Reset Date for such Interest Reset Period (a "LIBOR Determination
Date"), the Calculation Agent for such LIBOR Security will determine the
arithmetic mean of the offered rates for deposits in U.S. dollars
for the period of the Index Maturity specified in the applicable Prospectus
Supplement, commencing on such Interest Reset Date, which appear on the
Reuters Screen LIBO Page at approximately 11:00 a.m., London time, on such
LIBOR Determination Date. For purposes of calculating LIBOR, "London Banking
Day" means any business day on which dealings in deposits in United States
dollars are transacted in the London interbank market and "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 interbank offered rates of major banks).
If at least two uch offered rates appear on the Reuters Screen LIBO Page,
"LIBOR" for such Interest Reset Period will be the arithmetic mean of such
offered rates as determined by the Calculation Agent for such LIBOR Security.
(ii) If fewer than two offered rates appear on the Reuters
Screen LIBO Page on such LIBOR Determination Date, the Calculation
Agent for such LIBOR Security will request the principal London
offices of each of four major banks in the London interbank market
selected
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by such Calculation Agent to provide such Calculation Agent with its
offered quotations for deposits in U.S. dollars for the period of the
specified Index Maturity, commencing on such Interest Reset Date, to prime
banks in the London interbank market at approximately 11:00 a.m., London
time, on such LIBOR Determination Date and in a principal amount equal to an
amount of not less than $1,000,000 that is representative of a single
transaction in such market at such time. If at least two such quotations are
provided, "LIBOR" for such Interest Reset Period will be the arithmetic mean
of such quotations. If fewer than two such quotations are provided, "LIBOR"
for such Interest Reset Period will be the arithmetic mean of rates quoted
by three major banks in The City of New York selected by the Calculation Agent
for such LIBOR Security at approximately 11:00 a.m., New York City time, on
such LIBOR Determination Date for loans in U.S. dollars to leading European
banks, for the period of the specified Index Maturity, commencing on such
Interest Reset Date, and in a principal amount equal to an amount of not less
than $1,000,000 that is representative of a single transaction in such market
at such time; provided, however, that if the banks selected as aforesaid by
such Calculation Agent are not quoting rates as mentioned in this sentence,
"LIBOR" for such Interest Reset Period will be the same as LIBOR for the
immediately preceding Interest Reset Period.
Treasury Rate Securities. Each Treasury Rate Security will bear
interest for each Interest Reset Period at the interest rate
calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any, specified in such Security and in the applicable
Prospectus Supplement.
The "Treasury Rate" for each Interest Period will be the rate for the
auction held on the Treasury Rate Determination Date (as defined below) for
such Interest Reset Period of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in the applicable
Prospectus Supplement, as such rate shall be published in H.15(519) under the
heading "U.S. Government Securities--Treasury bills--auction average
(investment)" or, in the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below) pertaining
to such Treasury Rate Determination Date, the auction average rate (expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) on such Treasury Rate Determination Date as
otherwise announced by the United States Department of the Treasury. In the
event that the results of the auction of Treasury bills having the specified
Index Maturity are not published or reported as provided above by 3:00 p.m.,
New York City time, on such Calculation Date, or if no such auction is held on
such Treasury Rate Determination Date, then the "Treasury Rate" for such
Interest Reset Period shall be calculated by the Calculation Agent for such
Treasury Rate Security and shall be the yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on such Treasury
Rate Determination Date, of three leading primary United States government
securities dealers selected by such Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the specified Index
Maturity; provided, however, that if the dealers selected as aforesaid by
such Calculation Agent are not quoting bid rates as mentioned in this
sentence, then the "Treasury Rate" for such Interest Reset Period
will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period.
The "Treasury Rate Determination Date" for each Interest Reset
Period will be the day of the week in which the Interest Reset Date for such
Interest Reset Period falls on which Treasury bills would normally be
auctioned. Treasury bills are normally sold at auction on Monday of each
week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held
on the preceding Friday. If, as the result of a legal holiday, an auction is
so held on the preceding Friday, such Friday will be the Treasury Rate
Determination Date pertaining to the Interest Reset Period commencing in the
next succeeding week. If an auction date shall fall on any day that would
otherwise be an Interest Reset Date for a Treasury Rate Security, then such
Interest Reset Date shall instead be the business day immediately following
such auction date.
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The "Calculation Date" pertaining to any Treasury Rate
Determination Date shall be the first to occur of (a) the tenth
calendar day after such Treasury Rate Determination Date or, if such a day is
not a business day, the next succeeding business day or (b) the second
business day preceding the date any payment is required to
be made for any period following the applicable Interest Reset Date.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement,
DTC will act as securities depository for each class of Securities
offered hereby. Each class of Securities initially will be represented by
one or more certificates registered in the name of Cede, the nominee of DTC.
As such, it is anticipated that the only "Noteholder" and/or
"Certificateholder" with respect to a Series of Securities will be Cede, as
nominee of DTC. Beneficial owners of the Securities ("Security Owners") will
not be recognized as "Noteholders" by the related Indenture Trustee, as such
term is used in each Indenture, or as "Certificateholders" by the relate
d Trustee, as such term is used in each Trust Agreement and Pooling and
Servicing Agreement, and Security Owners will be permitted to exercise the
rights of Noteholders or Certificateholders only indirectly through DTC and
its participating members ("Participants").
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a "banking organization" within the meaning
of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the Uniform Commercial
Code (the "UCC") in effect in the State of New York, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for the 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 certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations.
Indirect access to the DTC system also is available to banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly (the "Indirect
Participants").
Security Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or an interest
in, the Securities may do so only through Participants and Indirect
Participants. In addition, all Security Owners will receive all
distributions of principal and interest from the related Indenture Trustee or
the related Trustee, as applicable, through Participants. Under a book-entry
format, Security Owners may experience some delay in their receipt of
payments, since such payments will be forwarded by the applicable Trustee or
Indenture Trustee to DTC's nominee. DTC will then forward such payments to
the Participants, which thereafter will forward them to Indirect Participants
or Security Owners.
Under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry
transfers among Participants on whose behalf it acts with respect to the
Securities and to receive and transmit distributions of principal of and
interest on the Securities. Participants and Indirect Participants with
which Security Owners have accounts with respect to the Securities similarly
are required to make book-entry transfers and to receive and transmit such
payments on behalf of their respective Security Owners. Accordingly,
although Security Owners will not possess physical certificates representing
the Securities, the Rules provide a mechanism by which Participants and
Indirect Participants will receive payments and transfer interests, directly
or indirectly, on behalf of Security Owners.
Because DTC can act only on behalf of Participants, who in turn
act on behalf of Indirect Participants and certain banks, the ability
of a Security Owner to pledge Securities to persons or entities that do not
participate in the DTC system, or otherwise take actions with
respect to such Securities, may be limited due to the lack of a
physical certificate representing such Securities.
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DTC has advised the Depositor that it will take any action
permitted to be taken by a Security Owner under the Indenture, Trust
Agreement or Pooling and Servicing Agreement, as applicable, only at
the direction of one or more Participants to whose account with DTC the
Securities 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.
Except as required by law, neither the related Administrator or
the related Indenture Trustee, if any, nor the related Trustee will
have any liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of
Securities of any Series held by DTC's nominee, or for maintaining,
supervising or reviewing any records relating to such beneficial
ownership interests.
DEFINITIVE SECURITIES
Unless otherwise stated in the related Prospectus Supplement, the Notes
and/or Certificates of a given Series will be issued in fully registered,
certificated form ("Definitive Notes" and "Definitive Certificates",
respectively, and, collectively, "Definitive Securities") to Noteholders or
Certificateholders or their respective nominees, rather than to DTC or its
nominee, only if (i) the related Trustee determines that DTC is no longer
willing or able to discharge properly its responsibilities as Depository
with respect to the related Securities and such Administrator or Trustee,
as applicable, is unable to locate a qualified successor, (ii) the Trustee
elects, at its option, to terminate the book-entry system through DTC or (iii)
after the occurrence of an Event of Default or Servicer Default, Security
Owners representing at least a majority of the outstanding principal amount of
the Notes or Certificates, as applicable, of such Series, advise the related
Trustee through DTC that the continuation of a book-entry system through DTC
(or a successor thereto) is no longer in the best interests of the related
Security Owners.
Upon the occurrence of any of the events described in the
immediately preceding paragraph, the related Trustee or Indenture
Trustee, as applicable, will be required to notify the related Security
Owners, through Participants, of the availability of Definitive Securities.
Upon surrender by DTC of the certificates representing all Securities of any
affected class and the receipt of instructions for re-registration, the
Trustee will issue Definitive Securities to the related Security Owners.
Distributions on the related Definitive Securities will be made thereafter by
the related Trustee or Indenture Trustee, as applicable, directly to the
holders in whose name the related Definitive Securities are registered at the
close of business on the applicable record date, in accordance with the
procedures set forth herein and in the related Indenture or the related Trust
Agreement or Pooling and Servicing Agreement, as applicable. Distributions
will be made by check mailed to the address of such holders as they appear on
the register specified in the related Indenture, Trust Agreement or Pooling
and Servicing Agreement, as applicable; however, the final payment on any
Securities (whether Definitive Securities or Securities registered in
the name of a Depository or its nominee) will be made only upon presentation
and surrender of such Securities at the office or agency specified in the
notice of final distribution to Securityholders.
Definitive Securities will be transferable and exchangeable at the
offices of the related Trustee or Indenture Trustee (or any security
registrar appointed thereby), as applicable. No service charge will be
imposed for any registration of transfer or exchange, but such Trustee or
Indenture Trustee may require payment of a sum sufficient to cover any tax or
other governmental charge imposed in connection therewith.
STATEMENTS TO SECURITYHOLDERS
With respect to each Series of Securities, on or prior to each
Distribution Date, the Master Servicer will prepare and forward, or
cause to be prepared and forwarded, to the related Indenture Trustee or
Trustee to be included with the distribution to each Securityholder of record
a statement
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setting forth for the related Collection Period the information
specified in the related Prospectus Supplement.
In addition, within the prescribed period of time for tax
reporting purposes after the end of each calendar year during the term of
each Trust, the related Trustee or Indenture Trustee, as
applicable, will mail to each person who at any time during such
calendar year shall have been a registered Securityholder a statement
containing certain information for the purposes of such
Securityholder's preparation of federal income tax returns. See
"Certain Federal Income Tax Consequences".
LIST OF SECURITYHOLDERS
Unless otherwise provided in the related Prospectus Supplement,
three or more holders of the Notes of any Series or one or more holders of
such Notes evidencing not less than 25% of the aggregate outstanding
principal balance thereof may, by written request to the related Indenture
Trustee, obtain access to the list of all Noteholders maintained by such
Indenture Trustee for the purpose of communicating with other Noteholders
with respect to their rights under the related Indenture or under such Notes.
Such Indenture Trustee may elect not to afford the requesting Noteholders
access to the list of Noteholders if it agrees to mail the desired
communication or proxy, on behalf of and at the expense of the requesting
Noteholders, to all Noteholders of such Series.
Unless otherwise specified in the related Prospectus Supplement,
three or more holders of the Certificates of any Series or one or more
holders of such Certificates evidencing not less than 25% of the
Certificate Balance of such Certificates may, by written request to the
related Trustee, obtain access to the list of all Certificateholders
maintained by such Trustee for the purpose of communicating with other
Certificateholders with respect to their rights under the related Trust
Agreement or Pooling and Servicing Agreement, as applicable, or under such
Certificates.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of each purchase
agreement pursuant to which the Depositor will acquire the Receivables from
the Originators (each, a "Purchase Agreement"), each Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, pursuant to
which a Trust will purchase Receivables from the Depositor and the Master
Servicer will agree to be responsible for the servicing of such Receivables,
each Trust Agreement (or, in the case of a Grantor Trust, each Pooling and
Servicing Agreement) pursuant to which a Trust will be created and Certificates
will be issued, and each Administration Agreement pursuant to which the Master
Servicer will undertake certain administrative duties with respect to an Owner
Trust that issues Notes (collectively, the "Transfer and Servicing
Agreements"). Forms of the Transfer and Servicing Agreements have been filed
as exhibits to the Registration Statement of which this Prospectus forms a
part. The following summary does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the provisions of the related
Transfer and Servicing Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
The property of each Trust will include a pool of Receivables,
which will consist of Receivables that were originated or acquired by
one or more Originators and sold by such Originator or Originators to
the Depositor in the ordinary course of business. An Originator may be an
affiliate of the Depositor.
The Receivables included in a Receivables Pool will be sold by the
applicable Originator, directly or indirectly, to the Depositor
pursuant to a Purchase Agreement. The related Prospectus Supplement
will specify for the Initial Receivables to be included in each
Receivables Pool the weighted average APR, the weighted average
original and remaining terms to maturity, the geographic distribution
and distribution by APR, and the percentage of such Receivables that
are Precomputed Receivables or
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Simple Interest Receivables. Each Prospectus Supplement will also provide
information regarding the Originator or Originators of the related Receivables.
The Originator will make certain representations and warranties in each
Purchase Agreement regarding the related Receivables. Such representations
and warranties will generally include that, immediately prior to the transfer
and assignment of the Receivables, (i) the Originator has good title to, and
is the sole owner of, the Receivables, (ii) the Receivables are subject to no
offsets, defenses or counterclaims, (iii) each Receivable complies in all
material respect with applicable state and federal laws, including usury,
equal credit opportunity and disclosure laws, (iv) each Receivable is
secured by a valid first lien on the related Financed Vehicle, (v) no
Receivable is delinquent more than 90 days (or such longer period as
may be specified in the related Prospectus Supplement) and there are no tax
or mechanics' liens against the related Financed Vehicle, (vi) the related
Financed Vehicles are covered by physical damage and loss insurance, and
(vii) the information provided by the Originator with respect to the
Receivables is true and correct.
The terms of each Purchase Agreement, including the representations
and warranties of the Originator included therein, will apply to the
Initial Receivables as well as to any Subsequent Receivables to be
transferred to a Trust.
If so specified in the related Prospectus Supplement, the
representations and warranties of the Originator will not be made as of the
applicable Cutoff Date but as of the date on which the Originator sold the
Receivables to the Depositor or one of its affiliates. Under such
circumstances, a substantial period of time may have elapsed between such
date and the date of the initial issuance of the Series of Securities to
which such Receivables relate. If the representations and warranties of an
Originator do not address events that may have occurred following the sale of
the Receivables by such Originator, its repurchase obligation described below
would not arise if the relevant event that would otherwise have given rise to
such obligation with respect to a Receivable occurs after the date of sale of
such Receivable by the Originator to the Depositor or its affiliates. However,
the Depositor will not include any Receivable in a Trust for any Series of
Securities if anything has come to the Depositor's attention that would cause
it to believe that the representations and warranties of an Originator will
not be accurate and complete in all material respects in respect of such
Receivable as of the date of issuance of the related Series of Securities.
If the Master Servicer is also an Originator with respect to a particular
Series, such representations and warranties will be in addition to the
representations and warranties made by the Master Servicer in its capacity as
Master Servicer.
The Master Servicer or the Trustee, if the Master Servicer is the
Originator, will promptly notify the relevant Originator of any breach of any
representation or warranty made by it in respect of a Receivable which
materially and adversely affects the interests of the Trust in such
Receivable. Unless specified in the related Prospectus Supplement, if such
Originator does not cure such breach within 90 days after notice from the
Master Servicer or the Trustee, as the case may be, then such Originator will
be obligated to repurchase such Receivable from the Trust at a price (the
"Repurchase Amount") equal to 100% of the principal balance thereof as of the
date of the repurchase plus accrued interest thereon at the applicable APR to
the first day of the month in which the Purchase Amount is to be distributed.
Except in those cases in which the Master Servicer is the Originator, the
Master Servicer will be required to enforce this obligation for the benefit of
the Trustee and the holders of the Securities. This repurchase obligation will
constitute the sole remedy available to holders of the Securities or the
Trustee for a breach of representations and warranties by an Originator.
Neither the Depositor nor the Master Servicer (unless the Master
Servicer is the Originator) will be obligated to repurchase a
Receivable if an Originator defaults on its obligation to do so, and no
assurance can be given that Originators will carry out their respective
repurchase obligations with respect to Receivables.
On the related Closing Date, the Depositor will transfer and
assign to the related Trust, pursuant to a Sale and Servicing Agreement or
Pooling and Servicing Agreement, as applicable, without recourse,
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all of its right, title and interest in and to the related Receivables,
including its security interests in the related Financed Vehicles. Each
such Receivable will be identified in a schedule appearing as an exhibit to
the related Sale and Servicing Agreement or Pooling and Servicing Agreement.
Concurrently with the transfer and assignment of such Receivables to the
related Trust, the related Trustee or Indenture Trustee, as applicable, will
execute, authenticate and deliver the related Notes and/or Certificates. The
net proceeds from the sale of the Notes and/or Certificates will be applied to
the purchase of the related Receivables and, to the extent specified in the
related Prospectus Supplement, to the deposit of the Pre-Funded Amount to the
Pre-Funding Account and the initial deposit to the Collateral Reinvestment
Account. Each Prospectus Supplement will specify whether, and the terms,
conditions and manner under which, Subsequent Receivables will be sold by
the Depositor to the related Trust.
If the related Prospectus Supplement provides that the property of a
Trust will include a Pre-Funding Account or Collateral Reinvestment Account,
the applicable Originator or Originators will be obligated to sell and assign
to the Depositor pursuant to the related Purchase Agreement or Purchase
Agreements, as applicable, and the Depositor will be obligated to sell and
assign to the related Trust pursuant to the related Pooling and Servicing
Agreement or Sale and Servicing Agreement, as applicable, Subsequent
Receivables from time to time during the Funding Period or Revolving Period
in an aggregate outstanding principal amount approximately equal to the Pre-
Funded Amount or the amount on deposit in the Collateral Reinvestment
Account, as applicable Pre-Funded amount or the amount on deposit in the
Collateral Reinvestment Account, as applicable. The related Trust will be
obligated pursuant to the related Pooling and Servicing Agreement or Sale
and Servicing Agreement, as applicable, to purchase all such Subsequent
Receivables from the Depositor subject to the satisfaction, on or before the
related Subsequent Transfer Date, of the conditions precedent, among others,
that (i) each such Subsequent Receivable shall satisfy the eligibility criteria
specified in the related Pooling and Servicing Agreement or Sale and Servicing
Agreement, as applicable, and shall not have been selected from among the
eligible Receivables in a manner that the applicable Originator or the
Depositor deems adverse to the interests of the Securityholders; (ii) as of the
applicable Cutoff Date for such Subsequent Receivables, all of the Receivables
in the related Trust, including the Subsequent Receivables to be conveyed to
the Trust as of such date, must satisfy the parameters described under "The
Receivables Pools" herein and "The Receivables Pool" in the related
Prospectus Supplement; and (iii) the applicable Originator must execute and
deliver to the Depositor, and the Depositor must execute and deliver to such
Trust, a written assignment conveying such Subsequent Receivables to the
Depositor and the related Trust, respectively. In addition, as and to the
extent specified in the related Prospectus Supplement, the conveyance of
Subsequent Receivables to a Trust is subject to the satisfaction of the
condition subsequent, among others, which must be satisfied within the
applicable time period specified in the related Prospectus Supplement, that
the Depositor deliver certain opinions of counsel to the related Trustee with
respect to the validity of the conveyance of such Subsequent Receivables to
the Trust. If any such conditions precedent or conditions subsequent are not
met with respect to any Subsequent Receivables within the time period specified
in the related Prospectus Supplement, the Originator or the Depositor, as
specified in the related Prospectus Supplement, will be required to
repurchase such Subsequent Receivables from the related Trust, at a purchase
price equal to the related Repurchase Amounts therefor.
TRUST ACCOUNTS
With respect to each Owner Trust that issues Notes, the Master
Servicer will establish and maintain with the related Indenture Trustee
(a) one or more accounts, in the name of the Indenture Trustee on behalf of
the related Securityholders, into which all payments made on or in respect of
the related Receivables will be deposited (the "Collection Account") and
(b) an account, in the name of the Indenture Trustee on behalf of the
Noteholders, into which amounts released from the Collection Account and any
reserve account or other form of credit enhancement for payment to such
Noteholders will be deposited and from which all distributions to such
Noteholders will be made (the "Note Distribution Account"). With respect to
each Owner Trust that issues Certificates and each Grantor Trust, the Master
Servicer will establish and maintain an account with the related Trustee, in
the name of such Trustee on behalf of the Certificate-holders, into which
amounts released from the Collection Account and any reserve account or other
form of credit enhancement for distribution to such
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Certificateholders will be deposited and from which all distributions to such
Certificateholders will be made (the "Certificate Distribution Account"). With
respect to any Owner Trust that does not issue Notes or any Grantor Trust, the
Master Servicer will also establish and maintain the Collection Account and any
other Trust Account in the name of the related Trustee on behalf of the
related Certificateholders.
If so provided in the related Prospectus Supplement, the Master
Servicer will establish for each Series of Securities an additional
account (the "Payahead Account"), in the name of the related Indenture
Trustee (in the case of an Owner Trust that issues Notes) or Trustee (in the
case of an Owner Trust that does not issue Notes or a Grantor Trust), into
which, to the extent required in the related Sale and Servicing Agreement or
Pooling and Servicing Agreement, as applicable, early payments made by or on
behalf of Obligors on Precomputed Receivables will be deposited until such
time as such payments become due. Until such time as payments are transferred
from the Payahead Account to the Collection Account, they will not constitute
collected interest or collected principal and will not be available for
distribution to Noteholders or Certificateholders.
Pre-Funding Account and Collateral Reinvestment Account. If so
provided in the related Prospectus Supplement, the Servicer will
establish and maintain a Pre-Funding Account, in the name of the
related Trustee on behalf of the related Securityholders, into which
the Depositor will deposit the Pre-Funded Amount on the related Closing Date.
The Pre-Funded Amount will not exceed 40% of the initial aggregate principal
amount of the Notes and Certificates of the related Series. In addition, if
so provided in the related Prospectus Supplement, the Servicer will establish
and maintain a Collateral Reinvestment Account, in the name of the related
Trustee on behalf of the related Securityholders, into which the Depositor
will deposit the amount, if any, specified in such Prospectus Supplement,
and, during the Revolving Period, principal will not be distributed on the
Securities of the related Series and principal collections, together with
(if and to the extent described in the related Prospectus Supplement) interest
collections on the Receivables that are in excess of amounts required to be
distributed therefrom will be deposited from time to time in the Collateral
Reinvestment Account. The Pre-Funded Amount and the amounts on deposit in
the Collateral Reinvestment Account will be used by the related Trustee to
purchase Subsequent Receivables from the Depositor from time to time during
the Funding Period and Revolving Period, respectively. The amounts on deposit
in the Pre-Funding Account during the Funding Period and the amount on deposit
in the Collateral Reinvestment Account will be invested by the Trustee in
Eligible Investments. Any Investment Income received on the Eligible
Investments during a Collection Period will be included in the interest
distribution amount on the following Distribution Date. The Funding Period
or Revolving Period, if any, for a Trust will begin on the related Closing
Date and will end on the date specified in the related Prospectus Supplement,
which, in the case of the Funding Period, in no event will be later than the
date that is one year after the related Closing Date. Any amounts remaining
in the Pre-Funding Account at the end of the Funding Period or in the Collateral
Reinvestment Account at the end of the Revolving Period will be distri
buted to the related Securityholders in the manner and priority specified
in the related Prospectus Supplement, as a prepayment of principal
of the related Securities.
Any other accounts to be established with respect to a Trust will be
described in the related Prospectus Supplement.
For each Series of Securities, funds in the Collection Account,
Note Distribution Account, Certificate Distribution Account and any
Pre-Funding Account, Collateral Reinvestment Account, reserve account
or other accounts identified as such in the related Prospectus
Supplement (collectively, the "Trust Accounts") will be invested as
provided in the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, in Eligible Investments. "Eligible
Investments" means book-entry securities, negotiable instruments or
securities represented by instruments in bearer or registered form which
evidence (a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America; (b) qualifying demand
deposits, time deposits or certificates of deposit of any depository
institution or trust company incorporated under the laws of the United States
of America or any state thereof (or any domestic branch of a foreign bank)
and subject to supervision and
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examination by Federal or State banking or depository institution authorities;
(c) qualifying commercial paper; (d) qualifying investments in money market
mutual funds (including funds for which the related Indenture Trustee or the
related Owner Trustee or any of their respective affiliates is investment
manager or advisor); (e) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b); (f) repurchase
obligations with respect to any security that is a direct obligation of,
or fully guaranteed by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed by the full
faith and credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as principal)
described in clause (b); and (g) any other investment specified in the related
Prospectus Supplement or permitted by the rating agency rating the related
Series of Securities. Except as described hereafter or in the related
Prospectus Supplement, Eligible Investments will be limited to obligations or
securities that mature on or before the date of the next scheduled distribution
to Securityholders of such Series. Unless otherwise specified in the related
Prospectus Supplement, Investment Income on funds deposited in the Trust
Accounts will be deposited in the applicable Collection Account on each
Distribution Date and will 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 have
a credit rating from each rating agency rating the related Series of Securities
in one of its generic rating categories that signifies investment grade.
"Eligible Institution" means, with respect to a Trust, (a) the corporate
trust department of the related Indenture Trustee or 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) (i) that has a long-term or short-term
unsecured debt rating or a deposit rating acceptable to the rating agency
rating the related Series of Securities and (ii) whose deposits are insured by
the FDIC.
SERVICING PROCEDURES
If so specified in the related Prospectus Supplement, to assure
uniform quality in servicing the Receivables and to reduce
administrative costs, the Depositor and each Trust will designate the
Master Servicer, or another custodian specified in such Prospectus
Supplement, as custodian to maintain possession, as such Trust's agent, of
the related Contracts and any other documents relating to the Receivables.
The Depositor's and the Master Servicer's accounting records and computer
systems will be marked to reflect the sale and assignment of the related
Receivables to each Trust, and UCC financing statements reflecting such sale
and assignment will be filed.
The Master Servicer, directly or through one or more Subservicers, will
make reasonable efforts to collect all payments due with respect to the
Receivables and will, consistent with the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, follow such
collection procedures as it follows with respect to comparable Contracts it
services for itself and others. Consistent with its normal procedures, the
Master Servicer may, in its discretion, arrange with the Obligor on a
Receivable to extend or modify the payment schedule, but no such arrangement
will, for purposes of any Sale and Servicing Agreement or Pooling and Servicing
Agreement, modify the original due dates or the amount of the scheduled
payments or extend the final payment date of any Receivable beyond the Final
Scheduled Maturity Date (as such term is defined with respect to any
Receivables Pool in the related Prospectus Supplement). Some of such
arrangements may result in the Master Servicer purchasing the Receivable for
the Repurchase Amount, while others may result in the Master Servicer making
Advances. The Master Servicer may sell the related Financed Vehicle securing
any Receivable at a public or private sale, or take any other action
permitted by applicable law. See "Certain Legal Aspects of the Receivables".
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If so specified in the related Prospectus Supplement, a "backup
servicer" may be appointed and assigned certain oversight servicing
responsibilities with respect to the Receivables. The identity of any backup
servicer, as well as a description of such responsibilities, of any fees
payable to such backup servicer and the source of payment of such fees, will be
included in the related Prospectus Supplement.
COLLECTIONS
With respect to each Trust, the Master Servicer will deposit or
cause to be deposited all payments on the related Receivables (from
whatever source) and all proceeds of such Receivables collected during the
period specified in the related Prospectus Supplement (the
"Collection Period") into the related Collection Account not later than two
business days after receipt thereof.
Collections on a Precomputed Receivable received during any
Collection Period will be applied first to the repayment of any
outstanding Precomputed Advances made by the Master Servicer with
respect to such Receivable (as described below), and then to the
scheduled monthly payment due on such Receivable. Any portion of such
collections remaining after the scheduled monthly payment has been made (such
excess amounts, the "Payaheads") will, unless such remaining amount is
sufficient to prepay the Precomputed Receivable in full and if so provided in
the related Prospectus Supplement, generally will be transferred to and kept
in the Payahead Account until such later Distribution Date on which such
Payaheads may be applied either to the scheduled monthly payment
due during the related Collection Period or to prepay such Receivable
in full.
ADVANCES
If so provided in the related Prospectus Supplement, to the extent the
collections of interest and principal on a Precomputed Receivable for a
Collection Period fall short of the related scheduled payment, the Master
Servicer will make a Precomputed Advance of the shortfall. The Master
Servicer will be obligated to make a Precomputed Advance on a Precomputed
Receivable only to the extent that the Master Servicer, in its sole
discretion, expects to recoup such Advance from subsequent collections or
recoveries on such Receivable or other Precomputed Receivables in the related
Receivables Pool. The Master Servicer will deposit the Precomputed Advance in
the applicable Collection Account on or before the business day preceding the
applicable Distribution Date. The Master Servicer will recoup its Precomputed
Advance from subsequent payments by or on behalf of the related Obligor or from
insurance or liquidation proceeds with respect to the related Receivable and
will release its right to reimbursement in conjunction with its purchase of
the Receivable as Master Servicer or, upon determining that reimbursement
from the preceding sources is unlikely, will recoup its Precomputed Advance
from any collections made on other Precomputed Receivables in the related
Receivables Pool.
If so provided in the related Prospectus Supplement, on or before the
business day prior to each Distribution Date, the Master Servicer will
deposit into the related Collection Account as a Simple Interest Advance
an amount equal to the amount of interest that would have been due on the
related Simple Interest Receivables at their respective APRs for the related
Collection Period (assuming that such Simple Interest Receivables are paid on
their respective due dates) minus the amount of interest actually received on
such Simple Interest Receivables during the applicable Collection Period. If
such calculation results in a negative number, an amount equal to such amount
shall be paid to the Master Servicer in reimbursement of outstanding Simple
Interest Advances. In addition, in the event that a Simple Interest Receivable
becomes a Liquidated Receivable (as such term is defined in the related
Prospectus Supplement), the amount of accrued and unpaid interest thereon (but
not including interest for the then current Collection Period) will be
withdrawn from the Collection Account and paid to the Master Servicer in
reimbursement of outstanding Simple Interest Advances. If so provided in
the related Prospectus Supplement, no advances of principal will be made with
respect to Simple Interest Receivables.
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SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement,
with respect to each Trust the Master Servicer will be entitled to
receive, out of interest collected on or in respect of the related
Receivables, a fee for each Collection Period (the "Servicing Fee")
in an amount equal to the percentage per annum specified in the related
Prospectus Supplement (the "Servicing Fee Rate") of the Pool Balance as of
the first day of such Collection Period. If so specified in the related
Prospectus Supplement, the Servicing Fee (together with any portion of the
Servicing Fee that remains unpaid from prior Distribution Dates) will be
paid solely to the extent of the Interest Distribution Amount; however, the
Servicing Fee will be paid prior to the distribution of any portion of the
Interest Distribution Amount to the holders of the Notes or Certificates of
any Series. Any fees due to any Subservicer with respect to a Receivables
Pool will be the responsibility of the related Master Servicer and will not be
an additional expense of the Trust.
Unless otherwise provided in the related Prospectus Supplement,
the Master Servicer will also collect and retain any late fees,
prepayment charges 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 under the related Contracts and late fees and other charges in
accordance with the Master Servicer's normal practices and procedures.
The Servicing Fee will compensate the Master Servicer for
performing the functions of a third party servicer of motor vehicle
receivables as an agent for the related Trust, including collecting and
posting all payments, responding to inquiries of Obligors on the
Receivables, investigating delinquencies, sending payment statements
and reporting tax information to Obligors, paying costs of collections and
the disposition of defaulted Receivables and policing the collateral. The
Servicing Fee will also compensate the Master Servicer for administering the
related Receivables Pool, including making Advances, accounting for
collections, furnishing monthly and annual statements to the related Indenture
Trustee and/or Trustee, and generating federal income tax information for such
Trust and for the related Noteholders and/or Certificateholders. The Servicing
Fee also will reimburse the Master Servicer for certain taxes, the fees of the
related Indenture Trustee and/or Trustee, accounting fees, outside auditor
fees, data processing costs and other costs incurred in connection with
administering the applicable Receivables Pool.
DISTRIBUTIONS
With respect to each Series of Securities, beginning on the
Distribution Date specified in the related Prospectus Supplement,
distributions of principal and interest (or, where applicable, of
principal or interest only) on each class of Securities entitled
thereto will be made by the related Trustee or Indenture Trustee, as
applicable, to the Certificateholders and Noteholders of such Series.
The timing, calculation, allocation, order, source and priorities of,
and requirements for, all payments to the holders of each class of
Notes and/or distributions to holders of each class of Certificates
will be set forth in the related Prospectus Supplement.
With respect to each Trust, on each Distribution Date collections on or
in respect of the related Receivables will be transferred from the Collection
Account to the Note Distribution Account or Certificate Distribution Account,
as applicable, for distribution to the Noteholders and Certificateholders to
the extent provided in the related Prospectus Supplement. Credit
enhancement, such as a reserve account, will be available to cover shortfalls
in the amount available for distribution on such date to the extent specified
in the related Prospectus Supplement. If so provided in the related
Prospectus Supplement, distributions in respect of principal of a class of
Securities of a Series will be subordinate to distributions in respect of
interest on such class, and distributions in respect of one or more classes of
Certificates of such Series may be subordinate to payments in respect of the
Notes, if any, of such Series or other classes of Certificates.
Distributions of principal on the Securities of a Series may be
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based on the amount of principal collected or due, or the amount of realized
losses incurred, during a Collection Period.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of any credit and cash flow enhancement
arrangements and the provider thereof, if applicable, with respect to
each class of Securities of a Series will be set forth in the related
Prospectus Supplement. To the extent provided in the related
Prospectus Supplement, credit or cash flow enhancement may be in the
form of subordination of one or more classes of Securities, reserve
accounts, spread accounts, letters of credit, surety bonds, insurance
policies, over-collateralization, credit or liquidity facilities,
guaranteed investment contracts, swaps or other interest rate
protection agreements, repurchase obligations, other agreements with
respect to third party payments or other support, cash deposits, or
such other arrangements as may be described in the related Prospectus
Supplement, or any combination of the foregoing. Unless otherwise
specified in the applicable Prospectus Supplement, credit or cash flow
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 existence of a reserve account or other form of credit
enhancement for the benefit of any class or Series of Securities is
intended to enhance the likelihood of receipt by the Securityholders of 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.
If so specified 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 all principal and interest
thereon. If losses occur that exceed the amount covered by such credit
enhancement or that are not covered by such credit enhancement, Securityholders
will bear their allocable share of such losses, 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 may be exhausted by the claims
of Securityholders of other Series.
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement and Pooling and Servicing
Agreement will provide that a firm of independent public accountants
will furnish annually to the related Trust and Indenture Trustee and/or
Trustee a statement as to compliance by the Master Servicer during the
preceding twelve months (or, in the case of the first such statement, during
such shorter period that shall have elapsed since the applicable Closing Date)
with certain standards relating to the servicing of the Receivables, the Master
Servicer's accounting records and computer files with respect thereto and
certain other matters.
Each Sale and Servicing Agreement or Pooling and Servicing Agreement,
as applicable, will also provide for delivery to the related Trust
and Indenture Trustee and/or Trustee each year of a certificate signed by an
officer of the Master Servicer stating that the Master Servicer has fulfilled
its obligations under the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, throughout the preceding twelve months
(or, in the case of the first such certificate, during such shorter period
that shall have elapsed since the applicable Closing Date) or, if there has
been a default in the fulfillment of any such obligation, describing each such
default. The Master Servicer will agree to give each Indenture Trustee
and/or Trustee, as applicable, notice of certain Servicer Defaults under the
related Sale and ServicingAgreement or Pooling and ServicingAgreement, as
applicable.
Copies of the foregoing statements and certificates may be
obtained by Securityholders by a request in writing addressed to the
related Trustee or Indenture Trustee, as applicable, at the Corporate
Trust Office for such Trustee or Indenture Trustee specified in the
related Prospectus Supplement.
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STATEMENTS TO TRUSTEES AND THE TRUST
Prior to each Distribution Date with respect to each Series of
Securities, the Master Servicer will provide to the applicable
Indenture Trustee, if any, and the applicable Trustee as of the close
of business on the last day of the preceding 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 as described under
"Certain Information Regarding the Securities -- Statements to
Securityholders".
SERVICER DEFAULTS
Unless otherwise provided in the related Prospectus Supplement, a
"Servicer Default" under each Sale and Servicing Agreement and Pooling and
Servicing Agreement will consist of: (i) any failure by the Master Servicer
to deliver or cause to be delivered to the related Trustee or Indenture
Trustee, as applicable, for deposit in any of the Trust Accounts any required
payment or to direct the related Trustee or Indenture Trustee, as applicable,
to make any required distributions therefrom, which failure continues
unremedied for five business days after discovery by an officer of the Master
Servicer or written notice of such failure is given (a) to the Master
Servicer by the related Trustee or Indenture Trustee, as applicable, or (b)
to the Master Servicer and to the related Trustee or Indenture
Trustee, as applicable, by holders of Notes, if any, evidencing not less than
25% of the aggregate outstanding principal amount thereof or, in the event a
Series of Securities includes no Notes or if such Notes have been paid in
full, by holders of Certificates evidencing not less than 25% of the
Certificate Balance; (ii) any failure by the Master Servicer duly to observe
or perform in any material respect any covenant or agreement in the related
Sale and Servicing Agreement or Pooling and Servicing Agreement, as applicable,
which failure materially and adversely affects the rights of the related
Securityholders and which continues unremedied for 60 days after written
notice of such failure is given to the Master Servicer in the
same manner described in clause (i) above; and (iii) certain events of
bankruptcy, insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings and certain actions by the Master Servicer
indicating its insolvency, reorganization pursuant to bankruptcy proceedings
or inability to pay its obligations (each, an "Insolvency Event").
RIGHTS UPON SERVICER DEFAULT
Unless otherwise provided in the related Prospectus Supplement, in the
case of any Owner Trust that issues Notes, as long as a Servicer Default
under the related Sale and Servicing Agreement remains unremedied, the
related Indenture Trustee or holders of Notes of the related Series evidencing
not less than 25% of the aggregate principal amount of such Notes then
outstanding may terminate all the rights and obligations of the Master
Servicer, whereupon such Indenture Trustee or a successor servicer appointed
by such Indenture Trustee will succeed to all the responsibilities, duties and
liabilities of the Master Servicer and will be entitled to similar compensation
arrangements. In the case of any Owner Trust that does not issue Notes or
any Grantor Trust, unless otherwise provided in the related Prospectus
Supplement, as long as a Servicer Default under the related Trust Agreement
or Pooling and Servicing Agreement remains unremedied, the related Trustee or
holders of Certificates of the related Series evidencing not less than 25% of
the Certificate Balance may terminate all the rights and obligations of the
Master Servicer, whereupon such Trustee or a successor servicer appointed by
such Trustee will succeed to all the responsibilities, duties and liabilities
of the Master Servicer under such Pooling and Servicing Agreement and will be
entitled to similar compensation arrangements. If, however, a bankruptcy
trustee or similar official has been appointed for the Master Servicer, and no
Servicer Default other than such appointment has occurred, such trustee or
official may have the power to prevent any Indenture Trustee or the related
Noteholders or such Trustee or the related Certificateholders from effecting
a transfer of servicing. In the event that the related Indenture Trustee, if
any, or the related Trustee is unwilling or unable to act as successor to the
Master Servicer, such Indenture Trustee or Trustee, as applicable, may appoint,
or may petition a court of competent jurisdiction to appoint, a successor with a
net worth of at least $10,000,000 (or such other amount as is specified in
the related Prospectus Supplement) and whose regular business includes the
servicing
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of motor vehicle receivables. The Indenture Trustee, if any, or
the Trustee may arrange for compensation to be paid to such successor master
servicer, which in no event may be greater than the servicing compensation
paid to the Master Servicer under the related Sale and Servicing Agreement or
Pooling and Servicing Agreement, as applicable.
WAIVER OF PAST DEFAULTS
Unless otherwise provided in the related Prospectus Supplement,
(i) in the case of each Owner Trust that issues Notes, holders of the
related Notes evidencing not less than a majority of the aggregate
outstanding principal amount of the Notes (or of Certificates
evidencing not less than a majority of the outstanding Certificate
Balance, in the case of any default that does not adversely affect the
Indenture Trustee or Noteholders) and (ii) in the case of each Owner Trust
that does not issue Notes or each Grantor Trust, holders of Certificates
evidencing not less than a majority of the Certificate Balance may, on behalf
of all such Noteholders and Certificateholders, waive any default by the
Master Servicer in the performance of its obligations under the related Sale
and Servicing Agreement or Pooling and Servicing Agreement, as applicable,
and its consequences, except a default in making any required deposits to or
payments from any Trust Account or in respect of a covenant or provision of
the Master Servicer in the Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, that cannot be modified or amended
without the consent of each Securityholder (in which event the related waiver
will require the approval of holders of all of the Securities of such
Series). No such waiver will impair the Securityholders' rights with respect
to subsequent Servicer Defaults.
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AMENDMENT
Unless otherwise specified in the related Prospectus Supplement,
each of the Transfer and Servicing Agreements may be amended by the
parties thereto, without the consent of the related Noteholders or
Certificateholders, if any, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Transfer
and Servicing Agreements or of modifying in any manner the rights of such
Noteholders and Certificateholders; provided, that any such action will not,
in the opinion of counsel satisfactory to the related Trustee or Indenture
Trustee, as applicable, materially and adversely affect the interests of
any such Noteholder or Certificateholder.
Unless otherwise specified in the related Prospectus Supplement,
the Transfer and Servicing Agreements may also be amended from time to time
by the parties thereto with the consent of the holders of Notes evidencing at
least a majority of the aggregate principal amount of the then outstanding
Notes, if any, of the related Series and the holders of Certificates
evidencing at least a majority of the aggregate principal amount of such
Certificates then outstanding, if any, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of such
Transfer and Servicing Agreements or of modifying in any manner the rights of
such Noteholders or Certificateholders, as applicable; provided, that no such
amendment may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on or in respect
of the related Receivables or distributions that are required to be made for
the benefit of such Noteholders or Certificateholders or (ii) reduce the
aforesaid percentage of the Notes or Certificates of such Series that is
required to consent to any such amendment, without the consent of the holders
of all of the outstanding Notes or Certificates, as the case may be, of such
Series.
INSOLVENCY EVENT
With respect to any Owner Trust, unless otherwise provided in the
related Prospectus Supplement, if an Insolvency Event occurs with
respect to the Company, the Receivables comprising the related
Receivables Pool will be liquidated and such Trust will be terminated
90 days after the date of such Insolvency Event, unless, before the end of
such 90-day period, the related Trustee shall have received written
instructions from (i) holders of each class of Certificates, if any,
(excluding any Certificates held by the Company) representing
more than 50% of the aggregate outstanding principal amount of each such
class (not including the principal amount of such Certificates held by the
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Company) and (ii) holders of each class of Notes, if any,
representing more than 50% of the aggregate outstanding principal amount of
each such class of Notes, to the effect that each such party disapproves of
the liquidation of such Receivables and termination of such Trust. Promptly
after the occurrence of an Insolvency Event with respect to the Company, notice
thereof is required to be given to the related Securityholders; provided,
however, that any failure to give such notice will not prevent or delay the
termination of such Trust. Upon any such termination of a Trust, the related
Trustee shall, or shall direct the related Indenture Trustee to, promptly sell
the assets of such Trust (other than the Trust Accounts) in a commercially
reasonable manner and on commercially reasonable terms. The proceeds from any
such sale, disposition or liquidation of the Receivables of such Trust will be
treated as collections on such Receivables and deposited in the related
Collection Account. With respect to any Trust, if the proceeds from the
liquidation of the related Receivables and any amounts on deposit in the
related Trust Accounts and any available credit enhancement are not
sufficient to pay the related Notes and Certificates in full, the amount of
principal returned to the holders thereof will be reduced and some or all of
the related Securityholders will incur a loss.
Each Pooling and Servicing Agreement and each Trust Agreement will
provide that the related Trustee shall not have the power to commence a
voluntary proceeding in bankruptcy with respect to the related Trust without
the unanimous prior approval of all related Certificateholders (including the
Company) and the delivery to such Trustee by each such Certificateholder
(including the Company) of a certificate certifying that such
Certificateholder reasonably believes that such Trust is insolvent.
PAYMENT IN FULL OF THE NOTES
Upon the payment in full of all outstanding Notes of a given
Series and the satisfaction and discharge of the related Indenture, the
related Trustee will succeed to all the rights of the Indenture
Trustee, and the Certificateholders of such Series will succeed to all the
rights of the Noteholders of such Series under the related Sale and Servicing
Agreement, except as otherwise provided therein.
COMPANY LIABILITY
Unless otherwise provided in the related Prospectus Supplement, in the
case of an Owner Trust, the Company will agree in the related Trust Agreement
to be liable directly to any injured party for the entire amount of any
losses, claims, damages or liabilities (other than those incurred by a
Securityholder in the capacity of an investor with respect to such Owner
Trust) arising out of or based on the arrangement created by such Trust
Agreement as though such arrangement created a partnership under the
Delaware Revised Uniform Limited Partnership Act in which the Company was
a general partner.
TERMINATION
Unless otherwise specified in the related Prospectus Supplement,
the obligations of the Master Servicer, any Subservicer, the Depositor, each
Originator, the related Trustee and the related Indenture Trustee, if any,
with respect to the Trust pursuant to the related Transfer and Servicing
Agreements will terminate upon the earliest to occur of (i) the maturity or
other liquidation of the last Receivable in the related Receivables Pool and
the disposition of any amounts received upon liquidation of any such
remaining Receivables, (ii) the payment to Noteholders, if any, and
Certificateholders, if any, of all amounts required to be paid to them
pursuant to the Transfer and Servicing Agreements and (iii) the occurrence of
either event described below.
Unless otherwise specified in the related Prospectus Supplement,
in order to avoid excessive administrative expenses, the Master
Servicer will be permitted, at its option, to purchase from each Trust all
remaining Receivables in the related Receivables Pool as of
the end of any Collection Period, if the then outstanding Pool Balance is 10%
or less of the original Pool Balance (as defined in the related Prospectus
Supplement), at a purchase price equal to the aggregate of the Repurchase
Amounts thereof as of the end of such Collection Period.
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If and to the extent provided in the related Prospectus
Supplement, the Indenture Trustee or Trustee, as applicable, will,
within the period of time specified in such Prospectus Supplement
following a Distribution Date as of which the Pool Balance is equal to or
less than the percentage of the original Pool Balance specified
in such 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
Indenture Trustee or Trustee receives satisfactory bids as described in such
Prospectus Supplement, then the Receivables remaining in such Trust will be
sold to the highest bidder.
ADMINISTRATION AGREEMENT
The Master Servicer, in its capacity as administrator (the
"Administrator"), may enter into an agreement (each, an "Administration
Agreement") with an Owner Trust that issues Notes and the related Indenture
Trustee pursuant to which the Administrator will agree, to the extent provided
in such Administration Agreement, to provide the notices and to perform other
administrative obligations required by the related Indenture. If so specified
in the related Prospectus Supplement, as compensation for the performance of
the Administrator's obligations under the applicable Administration Agreement
and as reimbursement for its expenses related thereto, the Administrator will
be entitled to a monthly administration fee, which fee will be paid as
specified in the related Prospectus Supplement.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SECURITY INTERESTS IN VEHICLES
In states in which retail installment sale contracts such as the
Receivables evidence the credit sale of automobiles, light duty trucks and
vans by dealers to obligors, the contracts also constitute
personal property security agreements and include grants of security
interests in the vehicles under the applicable UCC. Perfection of security
interests in financed automobiles, light duty trucks and vans generally is
governed by the motor vehicle registration laws of the state in which the
vehicle is located. In all states in which the Receivables have been
originated, a security interest in automobiles and light duty trucks is
perfected by obtaining the certificate of title to the Financed Vehicle or
notation of the secured party's lien on the vehicles' certificate of title
(in addition, in Louisiana, a copy of the installment sale contract must be
filed with the appropriate governmental recording office).
Unless otherwise specified in the related Prospectus Supplement,
each Contract will name the applicable Originator as obligee or
assignee and as the secured party. Unless otherwise specified in the
related Prospectus Supplement, such Originator will have represented
and warranted that it has taken all actions necessary under the laws of the
state in which the Financed Vehicle is located to perfect the
Originator's security interest in the Financed Vehicle, including,
where applicable, having a notation of its lien recorded on such
vehicle's certificate of title. Unless otherwise specified in the
related Prospectus Supplement, the Obligors on the Contracts will not
be notified of the sale from the Originator, directly or indirectly, to the
Depositor, or the sale from the Depositor to the Trust, and no
action will be taken to record the transfer of the security interest
from the Originator, directly or indirectly, to the Depositor or from
the Depositor to the Trust by amendment of the certificates of title
for the Financed Vehicles or otherwise.
The Originator will transfer and assign its security interest in
the related Financed Vehicles directly or indirectly to the Depositor, and
the Depositor will transfer and assign its security interest in such Financed
Vehicles to the related Trust pursuant to a Sale and Servicing Agreement or
Pooling and Servicing Agreement. However, because of the administrative
burden and expense, neither the Originator nor the Depositor will amend the
certificates of title of such Financed Vehicles to identify the related Trust
as the new secured party.
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In most states, an assignment such as that under each Sale and
Servicing Agreement or Pooling and Servicing Agreement is an effective
conveyance of a security interest without amendment of any lien noted on a
vehicle's certificate of title, and the assignee succeeds thereby to the
assignor's rights as secured party. However, by not identifying such Trust
as the secured party on the certificate of title, the security interest of
such Trust in the vehicle could be defeated through fraud or negligence.
Under the laws of most states, the perfected security interest in a
vehicle will continue for four months after the vehicle is moved
to a state other than the state in which it is initially registered and
thereafter until the owner thereof re-registers the vehicle in the new state.
A majority of states generally require surrender of a certificate of
title to re-register a vehicle. Accordingly, a secured party must
surrender possession if it holds the certificate of title to the vehicle
or, in the case of a vehicle registered in a state providing for the notation
of a lien on the certificate of title but not possession by the secured
party, the secured party will receive notice of surrender if the security
interest is noted on the certificate of title. Thus, the secured party will
have the opportunity to re-perfect its security interest in the vehicle in the
state of relocation. In states that do not require a certificate of
title for registration of a motor vehicle, re-registration could defeat
perfection. Unless otherwise specified in the related Prospectus Supplement,
under each Sale and Servicing Agreement and Pooling and Servicing Agreement,
the Master Servicer will be obligated to take appropriate steps, at the
Master Servicer's expense, to maintain perfection of security interests in
the Financed Vehicles and will be obligated to purchase the related Receivable
if it fails to do so.
Under the laws of most states, liens for repairs performed on a
motor vehicle and liens for unpaid taxes take priority over even a
perfected security interest in a financed vehicle. The Code also
grants priority to certain federal tax liens over the lien of a secured
party. The laws of certain states and federal law permit the
confiscation of vehicles by governmental authorities under certain
circumstances if used in unlawful activities, which may result in the
loss of a secured party's perfected security interest in the
confiscated vehicle.
REPOSSESSION
In the event of default by vehicle purchasers, the holder of the
motor vehicle retail installment sale contract has all the remedies of a
secured party under the UCC, except where specifically limited by other state
laws. Among the UCC remedies, the secured party has the right to perform
self-help repossession unless such act would constitute a breach of the peace.
Unless otherwise specified in the related Prospectus Supplement, self-help is
the most likely method to be used by the Master Servicer and is accomplished
simply by retaking possession of the financed vehicle. In the event of default
by the obligor, some jurisdictions require that the obligor be notified of the
default and be given a time period within which he may cure the default prior
to repossession. Generally, the right of reinstatement may be exercised
on a limited number of occasions in any one-year period. In cases where
the obligor objects or raises a defense to repossession, or if otherwise
required by applicable state law, a court order must be obtained from
the appropriate state court, and the vehicle must then be repossessed in
accordance with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the 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.
The obligor has the right to redeem the collateral prior to actual sale by
paying the secured party the unpaid principal balance of the obligation plus
reasonable expenses for repossessing, holding and preparing the collateral for
disposition and arranging for its sale, plus, in some jurisdictions, reasonable
attorneys' fees, or, in some states, by payment of delinquent installments or
the unpaid balance.
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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. While some states impose
prohibitions or limitations on deficiency judgments if the net proceeds from
resale do not cover the full amount of the indebtedness, a deficiency
judgment can be sought in those states that do not prohibit or limit such
judgments. 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.
Occasionally, after resale of a vehicle and payment of all
expenses and all indebtedness, there is a surplus of funds. In that
case, the UCC requires the creditor to remit the surplus to any holder of a
lien with respect to the vehicle or if no such lienholder exists or there are
remaining funds, the UCC requires the creditor to
remit the surplus to the former owner of the vehicle.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers
involved in consumer finance, including requirements regarding the adequate
disclosure of loan terms (including finance charges and deemed finance
charges), and limitations on loan terms (including the permitted finance
charge or deemed finance charge), collection practices and creditor remedies.
The application of these laws to particular circumstances is not always certain
and some courts and regulatory authorities have shown a willingness to adopt
novel interpretations of such laws. These laws include the Truth-in-
Lending Act, the Equal Credit Opportunity Act, the Federal Trade
Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act,
the Fair Debt Collection Procedures Act, the Magnuson-Moss Warranty Act, the
Federal Reserve Board's Regulations B and Z, the Soldiers' and Sailors' Civil
Relief Act of 1940, the Texas Consumer Credit Code, state adoptions of the
National Consumer Act and of the Uniform Consumer Credit Code, and state
motor vehicle retail installment sales acts, retail installment sales acts
and other similar laws. Also, state laws impose finance charge ceilings and
other restrictions on consumer transactions and require contract disclosures
in addition to those required under federal law. These requirements impose
specific statutory liabilities upon creditors who fail to comply with their
provisions. In some cases, this liability could affect an assignee's ability
to enforce consumer finance contracts such as the Receivables.
Under the laws of certain states, finance charges with respect to motor
vehicle retail installment contracts may include the additional amount, if
any, that a purchaser pays as part of the purchase price for a vehicle solely
because the purchaser is buying on credit rather than for cash (a "cash sale
differential"). If a dealer charges such a differential, applicable finance
charge ceilings could be exceeded.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally
duplicated by the Uniform Consumer Credit Code, other statutes or the
common law, has the effect of subjecting an assignee of a seller of
goods in a consumer credit transaction (and certain related creditors) to all
claims and defenses that the obligor in the transaction could assert against
the seller of the goods. 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.
Most of the Receivables will be subject to the requirements of the FTC
Rule. Accordingly, each Trust, as holder of the related Receivables, will
be subject to any claims or defenses that the purchaser of the applicable
Financed Vehicle may assert against the seller of the Financed Vehicle.
Such claims are limited to a maximum liability equal to the amounts paid by
the Obligor on the Receivable. If an Obligor were successful in asserting any
such claim or defense, such claim or defense would constitute
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a breach of the Originator's warranties under the related Purchase Agreement
and would create an obligation of the Originator to repurchase the Receivable
unless the breach is cured. See "Description of the Transfer and Servicing
Agreements -- Sale and Assignment of Receivables".
Courts have applied general equitable principles to secured
parties pursuing repossession and litigation involving deficiency
balances. These equitable principles may have the effect of
relieving an obligor from some or all of the legal consequences of a
default.
In several cases, consumers have asserted that the self-help
remedies of secured parties under the UCC and related laws violate the due
process protections provided under the 14th Amendment to the
Constitution of the United States. Courts have generally upheld the
notice provisions of the UCC and related laws as reasonable or have
found that the repossession and resale by the creditor do not involve
sufficient state action to afford constitutional protection to
borrowers.
Under most state vehicle dealer licensing laws, sellers of
automobiles, minivans 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 Financed Vehicle, the Obligor may be able to
assert a defense against the seller of the Financed Vehicle. If an Obligor on
a Receivable were successful in asserting any such claim or defense, the
Master Servicer would pursue on behalf of the related Trust any reasonable
remedies against the seller or the manufacturer of the vehicle, subject to
certain limitations as to the expense of any such action to be specified in
the related Transfer and Servicing Agreements.
Under each Purchase Agreement, the Originator will have
represented and warranted that each Receivable complies with all
requirements of law in all material respects. Accordingly, if an
Obligor has a claim against a Trust for violation of any law and such
claim materially and adversely affects such Trust's interest in a
Receivable, such violation would constitute a breach of the warranties of the
Originator and would create an obligation of the Originator to repurchase the
Receivable unless the breach is cured.
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 secured party to realize upon collateral or to 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
vehicle and, as part of the rehabilitation plan, may reduce the amount of the
secured indebtedness to the market value of the vehicle at the time of
bankruptcy (as determined by the court), leaving the creditor as a
general unsecured creditor for the remainder of the indebtedness. A
bankruptcy court may also reduce the monthly payments due under a
contract or change the rate of interest and time of repayment of the
indebtedness.
CERTAIN MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain material federal
income tax consequences of the purchase, ownership and disposition of
the Notes and the Certificates. The summary does not purport to deal
with federal income tax consequences applicable to all categories of
holders, some of which may be subject to special rules. For example,
it does not discuss the tax treatment of Noteholders or
Certificateholders that are insurance companies, regulated investment
companies or dealers in
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securities. Moreover, there are no cases or Internal Revenue Service
("IRS") rulings on similar transactions involving both debt and/or equity
interests issued by a trust with terms similar to those of the Notes
and/or the Certificates. 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 particular to them with respect to their
purchase, ownership and disposition of the Notes and the Certificates.
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.
Each Trust will be provided with an opinion of special federal tax
counsel to the Trust specified in the related Prospectus Supplement
("Federal Tax Counsel") that the federal income tax matters discussed
below are accurate in all material respects. An 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 an election is made to treat the Trust as a
partnership under the Code, whether the Trust will be treated as a
grantor trust or whether the Trust will issue one or more classes of
Certificates treated as debt for federal income tax purposes. The
Prospectus Supplement for each Series of Certificates will specify
whether a partnership election will be made, whether the Trust will be
treated as a grantor trust or whether the Trust will issue one or more
classes of Certificates treated as debt for federal income tax
purposes.
TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE OR WHICH ISSUE NO
CLASSES OF CERTIFICATES
TAX CHARACTERIZATION OF THE TRUST
Federal Tax Counsel will deliver its opinion that a Trust for
which a partnership election is made or which issues no classes of
certificates 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 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.
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TAX CONSEQUENCES TO HOLDERS OF THE NOTES
General. The following discussion only applies to a Trust which
elects to be treated as a partnership and issues one or more classes of
Certificates. Furthermore, the following discussion assumes that all
payments on the Certificates are denominated in U.S. dollars and that any
such Certificates are sold to persons other than the Company. If these
conditions are not satisfied with respect to any given series of
Certificates, any additional tax consideration with respect to such
Certificates will be disclosed in the applicable Prospectus Supplement.
Treatment of the Notes as Indebtedness. The Depositor 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, if so provided in the related Prospectus Supplement,
advise the Trust that the Notes will be classified as debt for federal income
tax purposes. The discussion below assumes this characterization of the
Notes is correct.
OID, Indexed Securities, etc. 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., 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.
Interest Income on the Notes. Based on the above assumptions and
except as discussed in the following paragraph, although the matter is not
entirely clear, Federal Tax Counsel is of the opinion that the Notes will not
be considered issued with OID. In such case, 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
must include such OID in income, on a pro rata basis, as principal payments
are made on the Note. In the opinion of Federal Tax Counsel, a purchaser who
buys a Note for more or less than its principal amount will generally be
subject to the premium amortization or market discount rules, respectively,
of the Code.
In the opinion of Federal Tax Counsel, 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.
Sale or Other Disposition. In the opinion of Federal Tax
Counsel, 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
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particular Noteholder will equal the holder's cost for the Note, increased by
any market discount, acquisition discount, OID 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 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. In the opinion of Federal Tax Counsel, interest
payments made (or accrued) to a Noteholder who is a nonresident alien,
foreign corporation or other non-United States person (a "foreign person")
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 person and the foreign person (i) is not
actually or constructively a "10 percent shareholder" of the Trust or
the Depositor (including a holder of 10% of the outstanding Certificates) or
a "controlled foreign corporation" with respect to which the Trust or the
Depositor is a "related person" within the meaning of the Code and (ii)
provides the 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 person and providing the foreign
person'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 person 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.
In the opinion of Federal Tax Counsel, any capital gain realized
on the sale, redemption, retirement or other taxable disposition of a
Note by a foreign person will be exempt from United States federal
income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the
United States by the foreign person and (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.
Backup Withholding. In the opinion of Federal Tax Counsel, 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 its
status as a nonresident) will be required to provide, under penalties of
perjury, a certificate containing 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
amount withheld 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, and most likely in the view of Federal Tax Counsel,
the Trust might be treated as a publicly traded partnership that would not be
taxable as a corporation because it would meet 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 certain tax-exempt entities (including pension funds)
would be "unrelated business taxable income", income to foreign holders
generally would be subject to U.S. tax and U.S.
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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
Treatment of the Trust as a Partnership. The Depositor 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 (including the Company), and the Notes being debt of the
partnership. However, the proper characterization of the arrangement
involving the Trust, the Certificates, the Notes, the Depositor and the
Company is not clear because there is no authority on transactions closely
comparable to that contemplated herein.
A variety of alternative characterizations are possible. For
example, because the Certificates have certain features characteristic of
debt, the Certificates might be considered debt of the Company or the Trust.
Any such 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.
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. In the opinion of Federal Tax Counsel, 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 the opinion of Federal Tax Counsel, 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.
In the opinion of Federal Tax Counsel, 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; and (iii)
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. All remaining taxable income of the Trust will
be allocated to the Company. Based on the economic arrangement of the parties,
this approach for allocating Trust income should be permissible under
applicable Treasury regulations, although 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,
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
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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 although 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.
In the opinion of Federal Tax Counsel, all 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) will constitute "unrelated business
taxable income" generally taxable to such a holder under the Code.
In the opinion of Federal Tax Counsel, an individual taxpayer's
share of expenses of the Trust (including fees to the Master Servicer
but not interest expense) would be miscellaneous itemized deductions.
Such miscellaneous itemized deductions are only allowed to the extent
they exceed, in the aggregate, 2% of an individual's adjusted gross
income. Furthermore, Code Section 68 provides that itemized deductions
otherwise allowable for a taxable year of an individual taxpayer whose
adjusted gross income exceeds a specified amount will be reduced by the
lesser of (i) 3% of the excess, if any, of adjusted gross income over
such amount, or (ii) 80% of the amount of itemized deductions otherwise
allowable for such year. Accordingly, 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.
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 were
not 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 may be allocated to Certificateholders.
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
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.
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, because the
proper accounting for a Section 708 termination requires the Trust to be
aware of the Certificateholders' tax basis in their respective Certificates,
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. In the opinion of Federal Tax Counsel, 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
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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).
In the opinion of Federal Tax Counsel, 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.
In the opinion of Federal Tax Counsel, 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, in the opinion of Federal Tax Counsel, a holder
purchasing Certificates may be allocated tax items (which will affect
its tax liability and tax basis) attributable to periods before the
actual transaction.
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 Company will be 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 (loss), the purchasing
Certificateholder will have a higher (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 an accrual basis and the fiscal
year of the Trust will be the calendar year. The 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-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 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)
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the name, address and taxpayer identification number of the nominee and
(ii) as to each beneficial owner (x) the name, address and 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 Company 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. 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, 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.
Tax Consequences to Foreign Certificateholders. It is not clear
whether the Trust would 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 because there is no clear authority dealing with that issue
under facts substantially similar to those described herein. Although it is
not expected that the Trust would be engaged in a trade or business in the
United States for such purposes, the Trust will withhold as if it were so
engaged in order to protect the Trust from possible adverse consequences of a
failure to withhold. The Trust expects to withhold on the portion of
its taxable income that is allocable to foreign Certificateholders pursuant to
Section 1446 of the Code, as if such income were effectively connected to a
U.S. trade or business, at a rate of 35% for foreign holders that are taxable
as corporations and 39.6% for all other foreign holders. Subsequent adoption
of Treasury regulations or the issuance of other administrative
pronouncements may require the Trust to change its withholding procedures.
In determining a holder's withholding status, the Trust may rely on IRS Form
W-8, IRS Form W-9 or the holder's certification of nonforeign status signed
under penalties of perjury.
Each foreign holder might be required to file a U.S. 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. Each foreign holder
must obtain a taxpayer identification number from the IRS and submit that
number to the Trust on Form W-8 in order to assure appropriate crediting of
the taxes withheld. A foreign holder generally would be entitled to file
with the IRS a claim for refund with respect to taxes withheld by the Trust,
taking the position that no taxes were due because the Trust was not engaged
in a U.S. trade or business. However, interest payments made (or accrued) to
a Certificateholder who is a foreign person generally will be considered
guaranteed payments to the extent such payments are determined without regard
to the income of the Trust. If these interest payments are properly
characterized as guaranteed payments, then the interest will not be
considered "portfolio interest". As a result, Certificateholders will be
subject to United States federal income tax and withholding tax at a rate of
30 percent, unless reduced or eliminated pursuant to an applicable treaty.
In such case, a foreign holder would only be entitled to claim a refund for
that portion of the taxes in excess of the taxes that should be withheld with
respect to the guaranteed payments.
Backup Withholding. In the opinion of Federal Tax Counsel,
distributions made on the Certificates and proceeds from the sale of
the Certificates will be subject to a "backup" withholding tax
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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.
PENDING LEGISLATION
During 1995, the United States Congress passed the"Seven Year
Balanced Budget Act of 1995", H.R. 2491 (the "Bill"), which was vetoed by
President Clinton. The Bill would have created a new type of entity for
federal income tax purposes called a "financial asset securitization
investment trust" or "FASIT", and future legislation may include provisions
similar to the FASIT provisions of the Bill. If those provisions are
reintroduced and enacted in the form contained in the Bill, they generally
will enable certain arrangements similar to a Trust that is treated as
a partnership to elect to be treated as a FASIT. Under the FASIT
provisions of the Bill, a FASIT generally would avoid federal income
taxation and could issue securities substantially similar to the
Certificates and Notes, and those securities would be treated as debt
for federal income tax purposes. Upon satisfying certain conditions
set forth in the related Trust Agreement and Indenture, the Depositor
will be permitted to amend such Trust Agreement and Indenture in order to
enable all or a portion of the Trust to qualify as a FASIT and to permit a
FASIT election to be made with respect thereto, and to make such
modifications to such Trust Agreement and Indenture as may be permitted by
reason of the making of such an election. However, there can be no assurance
that FASIT provisions of the Bill will be reintroduced and enacted, that they
will be enacted in their present form, or that they will permit an election
to be made with respect to all or any portion of a Trust. There also can be
no assurance that the Depositor will or will not cause any permissible FASIT
election to be made with respect to a Trust or amend the related Trust
Agreement and Indenture in connection with any election. However, any such
election will be made only if an opinion of Federal Tax Counsel is rendered
that such election will not have material adverse consequences to any holder
of a Note or Certificate.
TRUSTS TREATED AS GRANTOR TRUSTS
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
If a partnership election is not made and the Trust does not issue one
or more classes of Certificates treated as debt for Federal income tax
purposes, 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. In the opinion of Federal Tax Counsel, 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.
In the opinion of Federal Tax Counsel, 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 Master 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
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payment charges retained by the Master Servicer, provided that such amounts are
reasonable compensation for services rendered to the Trust. Grantor Trust
Certificateholders that are individuals, estates or trusts will be entitled
to deduct their share of expenses only to the extent such expenses plus all
other Section 212 expenses exceed two percent of its adjusted gross income.
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 Master 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 Master Servicer, whichever is earlier.
If the servicing fees paid to the Master Servicer are deemed to exceed
reasonable servicing compensation, the amount of such excess could be
considered as an ownership interest retained by the Master Servicer (or any
person to whom the Master Servicer assigned for value 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 "coupon stripping" rules of the
Code discussed below.
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. In the opinion of Federal Tax Counsel, 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 not clear 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 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 acquires during the year of the election or
thereafter.
If a premium is not subject to amortization using a reasonable
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. If a reasonable prepayment assumption is used
to amortize such premium, it appears that such a loss would be available, if
at all, only if prepayments have occurred at a rate faster than the reasonable
assumed prepayment rate. It is not clear whether any other adjustments would
be required to reflect differences between an assumed prepayment rate and the
actual rate of prepayments.
STRIPPED BONDS AND STRIPPED COUPONS
Although the tax treatment of stripped bonds is not entirely
clear, based on recent guidance by the IRS, in the opinion of Federal
Tax Counsel, each purchaser of a Grantor Trust Certificate will be
treated as the purchaser of 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 recently issued Treasury regulations (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". Based on the preamble to the Section 1286 Treasury Regulations,
Federal Tax Counsel is of the opinion that, 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 will be treated as "qualified stated interest"
within the meaning of the Section 1286 Treasury Regulations and such income
will be so treated in the Trustee's tax information reporting.
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Original Issue Discount. The IRS has stated in published rulings that,
in circumstances similar to those described herein, the special rules of the
Code relating to "original issue discount" (currently Sections 1271 through
1273 and 1275) will be applicable to a Grantor Trust Certificateholder's
interest in those Receivables meeting the conditions necessary for these
sections to apply. Generally, a Grantor Trust Certificateholder that
acquires an undivided interest in a Receivable issued or acquired with OID
must include in gross income the sum of the "daily portions", as defined
below, of the OID on such Receivable for each day on which it owns a
Certificate, including the date of purchase but excluding the date of
disposition. In the case of an original Grantor Trust Certificateholder, the
daily portions of OID with respect to a Receivable generally would be
determined as follows. A calculation will be made of the portion of OID that
accrues on the Receivable 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 Receivable under the prepayment assumption used in respect
of the Receivables and (ii) any payments received during such accrual period,
and subtracting from that total the "adjusted issue price" of the Receivable
at the beginning of such accrual period. No representation is made that the
Receivables will prepay at any prepayment assumption. The "adjusted issue
price" of a Receivable 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 Receivable 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 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 Receivables, 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 Receivables. Subsequent purchasers that
purchase Receivables at more than a de minimis discount should consult
their tax advisors with respect to the proper method to accrue such OID.
Market Discount. In the opinion of Federal Tax Counsel, 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 Grantor Trust Certificate
will be considered to be zero if the amount allocable to the Grantor Trust
Certificate is less than 0.25% of the Grantor Trust Certificate'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.
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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.
While the Treasury Department has not yet issued regulations, rules described
in the relevant legislative history will apply. Under those rules, the holder
of a market discount bond may elect to accrue market discount either on the
basis of a constant interest rate or according to one of the following
methods. If a Grantor Trust Certificate is issued with OID, the amount of
market discount that accrues during any accrual period would be equal to the
product of (i) the total remaining market discount and (ii) a fraction, the
numerator of which is the OID accruing during the period and the denominator
of which is the total remaining OID at the beginning of the accrual period.
For Grantor Trust Certificates issued without OID, the amount of market
discount that accrues during a period is equal to the product of (i) the total
remaining market discount and (ii) a fraction, the numerator of which is the
amount of stated interest paid during the accrual period and the denominator of
which is the total amount of stated interest remaining to be paid at the
beginning of the accrual period. For purposes of calculating market discount
under any of the above methods in the case of instruments (such as the
Grantor Trust Certificates) that provide for payments that may be accelerated
by reason of prepayments of other obligations securing such instruments, the
same prepayment assumption applicable to calculating the accrual of OID will
apply. Because the regulations described above have not been issued, it is
impossible to predict what effect those regulations might have on the tax
treatment of a Grantor Trust Certificate purchased at a discount or premium
in the secondary market.
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 continued to purchase or carry such Grantor Trust
Certificate purchased with market discount. For these purposes, the de
minimis rule referred 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.
Premium. To the extent a Grantor Trust Certificateholder is
considered to have purchased an undivided interest in a Receivable for an
amount that is greater than its stated redemption price at maturity of such
Receivable, such Grantor Trust Certificateholder will be considered to have
purchased the Receivable with "amortizable bond premium" equal in amount to
such excess. In the opinion of Federal Tax Counsel, a Grantor Trust
Certificateholder (who does not hold the Certificate for sale to customers or
in inventory) may elect under Section 171 of the Code to amortize such premium.
Under the Code, premium is allocated among the interest payments on the
Receivables to which it relates and is considered as an offset against (and
thus a reduction of) such interest payments. With certain exceptions, such
an election would apply to all debt instruments held or subsequently acquired
by the electing holder. Absent such an election, the premium will be
deductible as an ordinary loss only upon disposition of the Certificate or pro
rata as principal is paid on the Receivables.
Election to Treat All Interest as OID. In the opinion of Federal Tax
Counsel, 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.
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Sale or Exchange of a Grantor Trust Certificate. In the opinion
of Federal Tax Counsel, a 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. Such gain or
loss 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).
In the opinion of Federal Tax Counsel, 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. Generally, 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 not a U.S. Person (as defined below) or (ii) a Grantor Trust
Certificateholder holding on behalf of an owner that is not a U.S.
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 not be subject to
withholding to the extent that a Grantor Trust Certificate evidences ownership
in Receivables issued after July 18, 1984, by natural persons 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 not a U.S. Person and providing the name and address
of such Grantor Trust Certificateholder). Additional restrictions apply to
Receivables of where the obligor is not a natural person in order to qualify
for the exemption from withholding.
As used herein, a "U.S. Person" means a citizen or resident of the
United States, a corporation or a 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 outside the United States is
includible in gross income for federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
Information Reporting and Backup Withholding. The Master 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.
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TRUSTS WHICH ISSUE ONE OR MORE CLASSES OF CERTIFICATES TREATED AS DEBT FOR
FEDERAL INCOME TAX PURPOSES
TAX CHARACTERIZATION OF THE TRUST
Federal Tax Counsel will deliver its opinion that a Trust which
issues one or more classes of Certificates treated as debt for federal income
tax purposes 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 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 Certificates.
Any such corporate income tax could materially reduce cash available to make
payments on the Certificates, and Certificateholders could be liable for any
such tax that is unpaid by the Trust. Alternative characterizations of such
Trust and such Certificates are possible, but would not result in materially
adverse tax consequences to Certificateholders.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
Treatment of the Certificates as Indebtedness. The Depositor
will agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Certificates as debt for federal income
tax purposes. Federal Tax Counsel will, if so provided in the related
Prospectus Supplement, advise the Trust that the Certificates
will be classified as debt for federal income tax purposes. The discussion
below assumes this characterization of the Certificates is
correct.
OID, Indexed Securities, etc. The discussion below assumes that all
payments on the Certificates are denominated in U.S. dollars, and that the
Certificates are not Indexed Securities or Strip Certificates. Moreover, the
discussion assumes that the interest formula for the Certificates 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 Certificates (i.e., any excess of the principal amount
of the Certificates over their issue price) does not exceed a de minimis
amount (i.e., 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
Certificates, additional tax considerations with respect to such Certificates
will be disclosed in the applicable Prospectus Supplement.
Interest Income on the Certificates. Based on the above
assumptions and except as discussed in the following paragraph,
although the matter is not entirely clear, Federal Tax Counsel is of
the opinion that the Certificates will not be considered issued with
OID. In such case, the stated interest thereon will be taxable to a
Certificateholder as ordinary interest income when received or accrued in
accordance with such Certificateholder's method of tax accounting. Under the
OID regulations, a holder of a Certificate issued with a de minimis amount of
OID must include such OID in income, on a pro rata basis, as principal
payments are made on the Certificate. In the opinion of Federal Tax Counsel,
a purchaser who buys a Certificate for more or less than its principal amount
will generally be subject to the premium amortization or market discount
rules, respectively, of the Code.
In the opinion of Federal Tax Counsel, a holder of a Certificate
that has a fixed maturity date of not more than one year from the issue date
of such Certificate (a "Short-Term Certificate") may be subject to special
rules. An accrual basis holder of a Short-Term Certificate (and certain cash
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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 Certificate would,
in general, be required to report interest income as interest is paid
(or, if earlier, upon the taxable disposition of the Short-Term Certificate).
However, a cash basis holder of a Short-Term Certificate 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 Certificate until the taxable disposition of the Short-Term
Certificate. 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 Certificate 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 Certificate is purchased for more
or less than its principal amount.
Sale or Other Disposition. In the opinion of Federal Tax
Counsel, if a Certificateholder sells a Certificate, 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
Certificate. The adjusted tax basis of a Certificate to a particular
Certificateholder will equal the holder's cost for the Certificate, increased
by any market discount, acquisition discount, OID and gain previously
included by such Certificateholder in income with respect to the Certificate
and decreased by the amount of bond premium (if any) previously amortized and
by the amount of principal payments previously received by such
Certificateholder with respect to such Certificate. Any such gain or loss
will be capital gain or loss if the Certificate 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. In the opinion of Federal Tax Counsel, interest
payments made (or accrued) to a Certificateholder who is a nonresident alien,
foreign corporation or other non-United States person (a "foreign person")
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 person and the foreign person (i) is not actually
or constructively a "10 percent shareholder" of the Trust or the Depositor
(including a holder of 10% of the outstanding Certificates) or a "controlled
foreign corporation" with respect to which the Trust or the Depositor is a
"related person" within the meaning of the Code and (ii) provides the Trustee
or other person who is otherwise required to withhold U.S. tax with respect to
the Certificates with an appropriate statement (on Form W-8 or a similar form),
signed under penalties of perjury, certifying that the beneficial owner of the
Certificate is a foreign person and providing the foreign person's name and
address. If a Certificate 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 person that owns the Certificate. 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.
In the opinion of Federal Tax Counsel, any capital gain realized
on the sale, redemption, retirement or other taxable disposition of a
Certificate 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 person and (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.
Backup Withholding. In the opinion of Federal Tax Counsel, each holder
of a Certificate (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 its
status as a nonresident) will be required to provide, under penalties of
perjury, a certificate containing
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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 Certificateholder 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 amount withheld to the IRS as a
credit against the holder's federal income tax liability.
Possible Alternative Treatments of the Certificates. If,
contrary to the opinion of Federal Tax Counsel, the IRS successfully
asserted that one or more of the Certificates did not represent debt
for federal income tax purposes, the Certificates 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 Certificates recharacterized as equity).
Alternatively, and most likely in the view of Federal Tax Counsel, the Trust
might be treated as a publicly traded partnership that would not be taxable
as a corporation because it would meet certain qualifying income tests.
Nonetheless, treatment of the Certificates as equity interests in such a
publicly traded partnership could have adverse tax consequences to certain
holders. For example, income to certain tax-exempt entities (including
pension funds) could be "unrelated business taxable income", income to
foreign holders 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.
* * *
THE FEDERAL TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
NOTEHOLDER'S OR CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE PARTICULAR TAX CONSEQUENCES TO THEM WITH RESPECT TO THEIR
PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES AND CERTIFICATES,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX
LAWS.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") and Section 4975 of the Code prohibit a
pension, profit-sharing or other employee benefit plan, as well as
individual retirement accounts and certain types of Keogh Plans (each
a "Benefit Plan"), from engaging in certain transactions with persons
that are "parties in interest" under ERISA or "disqualified persons"
under the Code with respect to such Benefit Plan. A violation of these
"prohibited transaction" rules may result in an excise tax or other penalties
and liabilities under ERISA and the Code for such persons.
Certain transactions involving a Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit
Plan that purchased Notes or Certificates if assets of the Trust were deemed
to be assets of the Benefit Plan. Under a regulation issued by the United
States Department of Labor (the "Plan Assets Regulation"), the assets of a
Trust would be treated as plan assets of a Benefit Plan for the purposes of
ERISA and the Code only if the Benefit Plan acquired an "equity interest" in
the Trust and none of the exceptions contained in the Plan Assets Regulation
was 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 likely treatment in this context of Notes and Certificates of
a given Series will be discussed in the related Prospectus Supplement.
Employee benefit plans that 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 ERISA requirements.
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A plan fiduciary considering the purchase of Securities of a given
Series should consult its tax and/or legal advisors regarding whether the
assets of the related Trust would be considered plan assets, the possibility
of exemptive relief from the prohibited transaction rules and other issues
and their potential consequences.
SENIOR CERTIFICATES
The following discussion applies only to nonsubordinated
Certificates (referred to herein as "Senior Certificates").
The U.S. Department of Labor has granted to the lead underwriter named
in the Prospectus Supplement an exemption (the "Exemption") from certain of
the prohibited transaction rules of ERISA with respect to the initial
purchase, the holding and the subsequent resale by Benefit Plans of
certificates representing interests in asset-backed pass-through trusts that
consist of certain receivables, loans and other obligations that meet the
conditions and requirements of the Exemption. The receivables covered by
the Exemption include motor vehicle installment sales contracts such as the
Receivables. The Exemption will apply to the acquisition, holding and
resale of the Senior Certificates by a Benefit Plan, provided that certain
conditions (certain of which are described below) are met.
Among the conditions which must be satisfied for the Exemption to apply
to the Senior Certificates are the following:
(1) The acquisition of the Senior Certificates by a Benefit Plan
is on terms (including the price for the Senior Certificates) that are
at least as favorable to the Benefit Plan as they would be in an arm's
length transaction with an unrelated party;
(2) The rights and interests evidenced by the Senior
Certificates acquired by the Benefit Plan are not subordinated to the
rights and interests evidenced by other certificates of the Trust;
(3) The Senior Certificates acquired by the Benefit Plan
have received a rating at the time of such acquisition that is in one
of the three highest generic rating categories from either Standard &
Poor's Corporation, Moody's Investors Service, Inc., Duff & Phelps Inc. or
Fitch Investors Service, Inc.;
(4) The Trustee is not an affiliate of any other member of
the Restricted Group (as defined below);
(5) The sum of all payments made to the underwriters in
connection with the distribution of the Senior Certificates represents not
more than reasonable compensation for underwriting the Senior Certificates;
the sum of all payments made to and retained by the Depositor pursuant to
the sale of the Contracts to the Trust represents not more than the fair
market value of such Contracts; and the sum of all payments made to and
retained by the Master Servicer represents not more than reasonable
compensation for the Master Servicer's services under the Agreement and
reimbursement of the Master Servicer's reasonable expenses in connection
therewith; and
(6) The Benefit Plan investing in the Senior Certificates is an
"accredited investor" as defined in Rule 501 (a)(1) of
Regulation D of the Securities and Exchange Commission under the
Securities Act.
Moreover, the Exemption would provide relief from certain self-
dealing/conflict of interest or prohibited transactions only if, among other
requirements, (i) in the case of the acquisition of Senior Certificates in
connection with the initial issuance, at least fifty (50) percent of the
Senior Certificates are acquired by persons independent of the Restricted
Group (as defined below), (ii) the Benefit Plan's
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investment in Senior Certificates does not exceed twenty-five (25) percent
of all of the Senior Certificates outstanding at the time of the acquisition,
and (iii) immediately after the acquisition, no more than twenty-five (25)
percent of the assets of the Benefit Plan are invested in certificates
representing an interest in one or more trusts containing assets sold or
serviced by the same entity. The Exemption does not apply to Plans sponsored
by the Depositor, any underwriter, the Trustee, the Master Servicer, any
obligor with respect to Contracts included in the Trust constituting more than
five percent of the aggregate unamortized principal balance of the assets in
the Trust, or any affiliate of such parties (the "Restricted Group").
The Depositor believes that the Exemption will apply to the
acquisition and holding by Benefit Plans of Senior Certificates sold by the
underwriter or underwriters named in the Prospectus Supplement
and that all conditions of the Exemption other than those within the
control of the investors have been met. In addition, as of the date
hereof, no obligor with respect to Contracts included in the Trust
constitutes more than five percent of the aggregate unamortized
principal balance of the assets of the Trust.
PLAN OF DISTRIBUTION
The Securities offered hereby and by the Prospectus Supplement
will be offered in Series. The distribution of the Securities may be
effected from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying
prices to be determined at the time of sale or at the time of
commitment therefor. If so specified in the related Prospectus
Supplement, the Securities will be distributed in a firm commitment
underwriting, subject to the terms and conditions of the underwriting
agreement, by Greenwich Capital Markets, Inc. ("GCM") acting as
underwriter with the other underwriters, if any, named therein. In
such event, the related Prospectus Supplement may also specify that the
underwriters will not be obligated to pay for any Securities agreed to be
purchased by purchasers pursuant to purchase agreements acceptable to the
Depositor. In connection with the sale of the Securities, underwriters may
receive compensation from the Depositor or from purchasers of the Securities
in the form of discounts, concessions or commissions. The related Prospectus
Supplement will describe any such compensation paid by the Depositor.
Alternatively, the related Prospectus Supplement may specify that the
Securities will be distributed by GCM acting as agent or in some cases as
principal with respect to Securities that it has previously purchased or
agreed to purchase. If GCM acts as agent in the sale of Securities, GCM will
receive a selling commission with respect to each Series of Securities,
depending on market conditions. The selling commission for each Series of
Securities will be disclosed in the related Prospectus Supplement. To the
extent that GCM elects to purchase Securities as principal, GCM may
realize losses or profits based upon the difference between its
purchase price and the sales price. The Prospectus Supplement with
respect to any Series offered other than through underwriters will
contain information regarding the nature of such offering and any
agreements to be entered into between the Depositor and purchasers of
Securities of such Series.
The Depositor will indemnify GCM and any underwriters against
certain civil liabilities, including liabilities under the Securities
Act, or will contribute to payments GCM and any underwriters may be
required to make in respect thereof.
In the ordinary course of business, GCM and the Depositor may
engage in various securities and financing transactions, including
repurchase agreements to provide interim financing of the Depositor's
Receivables pending the sale of such Receivables or interests therein,
including the Securities.
65
<PAGE>
LEGAL MATTERS
Certain legal matters relating to the Securities of any Series
will be passed upon for the related Trust and the Depositor by Brown & Wood,
New York, New York.
64
<PAGE>
INDEX OF PRINCIPAL TERMS
Set forth below is a list of certain of the more significant terms used
in this Prospectus and the pages on which the definitions of such terms may
be found herein.
Actuarial Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Administration Agreement . . . . . . . . . . . . . . . . . . . . . . . . 44
Administration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Base Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Calculation Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Calculation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
CD Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
CD Rate Determination Date . . . . . . . . . . . . . . . . . . . . . . . 27
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Certificate Distribution Account . . . . . . . . . . . . . . . . . . . . 36
Certificate Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . 19
Certificateholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Commercial Paper Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Commercial Paper Rate Determination Date . . . . . . . . . . . . . . . . 27
Commercial Paper Rate Security . . . . . . . . . . . . . . . . . . . . . 26
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commodity Indexed Securities . . . . . . . . . . . . . . . . . . . . . . 30
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Composite Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Currency Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . 30
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 32
Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
DTC Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Eligible Deposit Account . . . . . . . . . . . . . . . . . . . . . . . . 37
Eligible Institution . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Federal Funds Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
67
<PAGE>
Federal Funds Rate Determination Date . . . . . . . . . . . . . . . . . . 28
Federal Funds Rate Security . . . . . . . . . . . . . . . . . . . . . . . 26
Federal Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Financed Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Fixed Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Floating Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . 26
FTC Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Funding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
GCM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Grantor Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Grantor Trust Certificateholders . . . . . . . . . . . . . . . . . . . . 54
Grantor Trust Certificates . . . . . . . . . . . . . . . . . . . . . . . 54
H.15(5-19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Index Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Indexed Commodity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Indexed Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Indexed Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . 30
Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Indirect DTC Participants . . . . . . . . . . . . . . . . . . . . . . . . 31
Indirect Participants . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Initial Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Insolvency Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Interest Reset Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Interest Reset Period . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
LIBOR Determination Date . . . . . . . . . . . . . . . . . . . . . . . . 29
LIBOR Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
London Banking Day . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Money Market Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Note Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . 36
Note Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Noteholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
OID regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Originator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4
Owner Certificate Distribution Account . . . . . . . . . . . . . . . . . 36
Owner Collection Account . . . . . . . . . . . . . . . . . . . . . . . . 36
Owner Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Payahead Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Payaheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Plan Assets Regulation . . . . . . . . . . . . . . . . . . . . . . . . . 59
Pooling and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . 4
Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Precomputed Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Precomputed Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 17
68
<PAGE>
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Receivable Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 6
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Related Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Repurchase Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Required Deposit Ratings . . . . . . . . . . . . . . . . . . . . . . . . 37
Restricted Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Reuters Screen LIBO Page . . . . . . . . . . . . . . . . . . . . . . . . 29
Rule of 78's Receivables . . . . . . . . . . . . . . . . . . . . . . . . 17
Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1286 Treasury Regulations . . . . . . . . . . . . . . . . . . . . 55
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Security Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Servicer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Short-Term Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Simple Interest Advance . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Simple Interest Receivables . . . . . . . . . . . . . . . . . . . . . . . 17
Spread . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Spread Multiplier . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Stock Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Stock Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . 30
Strip Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Strip Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Subsequent Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . 11
Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Transfer and Servicing Agreements . . . . . . . . . . . . . . . . . . . . 33
Treasury Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Treasury Rate Determination Date . . . . . . . . . . . . . . . . . . . . 30
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
69
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the offering of the Securities being
registered herein are estimated as follows:
SEC registration fee . . . . . . . . . . . . . . . . . . . . $ 172,414
Legal fees and expenses . . . . . . . . . . . . . . . . . . $ 450,000
Accounting fees and expenses . . . . . . . . . . . . . $ 100,000
Rating agency fees . . . . . . . . . . . . . . . . . . $ 200,000
Trustees' fees and expenses . . . . . . . . . . . . . $ 37,500
Printing . . . . . . . . . . . . . . . . . . . . . . . $ 100,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . $ 100,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . $1,159,914
=========
____________
* To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Financial Asset Securities Corp. has undertaken in its certificate of
incorporation and bylaws to indemnify, to the maximum extent permitted by
the Delaware General Corporation Law as from time to time amended, any
currently acting or former director, officer, employee and agent of
Financial Asset Securities Corp. against any and all liabilities incurred in
connection with their services in such capacities.
II-1
<PAGE>
ITEM 16. EXHIBITS.
1.1 Form of Underwriting Agreement for Notes
1.2 Form of Underwriting Agreement for Certificates
3.1 Certificate of Incorporation of the Depositor
3.2 Bylaws of the Depositor
4.1 Form of Trust Agreement (including form of Certificates)
4.2 Form of Pooling and Servicing Agreement (including form of
Certificates)
4.3 Form of Indenture (including form of Notes)
5.1 Opinion of Brown & Wood with respect to legality
8.1 Opinion of Brown & Wood with respect to tax matters
10.1 Form of Sale and Servicing Agreement
10.2 Form of Administration Agreement
10.3 Form of Custodial Agreement
23.1 Consent of Brown & Wood (included in Exhibits 5.1 and 8.1)
24.1 Power of Attorney (included on Page II-4)
25.1 Statement of Eligibility and Qualification of Indenture Trustee
99.1 Form of Transfer Agreement
99.2 Form of Security Agreement
99.3 Form of Receivables Purchase Agreement
______________________
ITEM 17. UNDERTAKINGS.
The undersigned 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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective 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 to such information in the registration statement.
(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.
II-2
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statements required by Rule 3-19 of this chapter at the start of
any delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3) of the Act
need not be furnished, provided, that the registrant includes in the
prospectus, by means of a post-effective amendment, financial statements
required pursuant to this paragraph (a)(4) and other information necessary to
ensure that all other information in the prospectus is at least as current as
the date of those financial statements. Notwithstanding the foregoing, with
respect to registration statements on Form F-3, a post-effective amendment
need not be filed to include financial statements and information required by
Section 10(a)(3) of the Act or Rule 3-19 of this chapter if such financial
statements and information are contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the Form F-3.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, 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 its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(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 this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act 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 as that time shall be deemed to be the initial bona fide
offering thereof.
The undersigned 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 in accordance with the rules and regulations prescribed
by the Commission under Section 305(b)(2) of the Act.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, 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 City of
Greenwich, the State of Connecticut on the 23rd day of May, 1996.
FINANCIAL ASSET SECURITIES CORP.
By: /s/ Konrad R. Kruger
----------------------------------
Name: Konrad R. Kruger
Title: President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this amendment to the Registration Statement has been signed
by the following persons in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
Konrad R. Kruger* President & Director (Principal
___________________ Executive May 23, 1996
Officer and Principal Financial Officer)
Kevin C. Piccoli* Controller (Principal Financial Officer May 23, 1996
______________________
/s/Stephen M. Peet* Director May 23, 1996
- ---------------------
Kensaku Higashi* Director May 23, 1996
- --------------------
*By /s/Stephen M. Peet
--------------------------
Stephen M. Peet
Attorney-in-Fact
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
Financial Asset Securities Corp., a Delaware corporation, hereby constitutes
and appoints Stephen M. Peet, Charles A. Forbes, Jr., and John C. Anderson,
each with full power of substitution and resubstitution, his true and lawful
attorneys and agents to sign the name of the undersigned Director in the
capacity indicated below to the registration statement to which this Power
of Attorney is attached as an exhibit, and all amendments (including
post-effective amendments) and supplements thereto, and all instruments or
documents filed as a part thereof or in connection therewith, and to file
the same, with all exhibits thereto, and all other instruments or documents
in connection therewith, with the Securities and Exchange Commission; and the
undersigned hereby ratifies and confirms all that said attorneys,
agents or any of them shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this amendment to the Registration Statement has been signed
by the following person in the capacity and on the date indicated:
Signature Title Date
--------- ----- ----
/s/ David R. Jones Director May 23, 1996
- -----------------------
David R. Jones
II-4
<PAGE>
Registration No. 333-1548
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________
FASCO AUTO TRUSTS
(Issuer with respect to the Securities)
FINANCIAL ASSET SECURITIES CORP.
(Originator of the Trusts described herein)
(Exact name of Registrant as specified in its charter)
_____________________
EXHIBIT VOLUME
=============================================================================
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ------
1.1 Form of Underwriting Agreement for Notes
1.2 Form of Underwriting Agreement for Certificates
3.1 Certificate of Incorporation of the Depositor
3.2 Bylaws of the Depositor
4.1 Form of Trust Agreement (including form of Certificates)
4.2 Form of Pooling and Servicing Agreement (including form of
Certificates)
4.3 Form of Indenture (including form of Notes)
5.1 Opinion of Brown & Wood with respect to legality
8.1 Opinion of Brown & Wood with respect to certain tax matters
10.1 Form of Sale and Servicing Agreement
10.2 Form of Administration Agreement
10.3 Form of Custodial Agreement
23.1 Consent of Brown & Wood
(included in Exhibits 5.1 and 8.1)
24.1 Power of Attorney (included on Page II-4)
25.1 Statement of Eligibility and Qualification of Indenture Trustee
99.1 Form of Transfer Agreement
99.2 Form of Security Agreement
99.3 Form of Receivables Purchase Agreement
- -----------------------------------
i
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION
Prospectus Supplement to Prospectus dated , 1996
FASCO AUTO TRUST 199 -
$ % Asset Backed Notes, Class A-1
$ % Asset Backed Notes, Class A-2
$ % Asset Backed Certificates
FINANCIAL ASSET SECURITIES CORP., Depositor
( ), Servicer
FASCO Auto Trust 199 - (the "Trust") will be formed pursuant to a
Trust Agreement, to be dated as of , 199 (the
"Closing Date"), among Financial Asset Securities Corp., a Delaware
corporation, as Depositor, , a
corporation, as Servicer, and
, a banking corporation, as Trustee. The
Trust will issue $ aggregate principal amount
of % Asset Backed Notes, Class A-1 (the "Class A-1 Notes") and $
aggregate principal amount of % Asset Backed Notes,
Class A-2 (the "Class A-2 Notes" and, with the Class A-1 Notes, the
"Notes") pursuant to an Indenture, to be dated as of the Closing Date,
between the Trust and , a
banking corporation, as Indenture Trustee. The Trust also will issue $
aggregate principal amount of % Asset Backed
Certificates (the "Certificates"). The assets of the Trust will include a
pool of motor vehicle installment loan agreements and motor vehicle retail
installment sale contracts (the "Receivables") secured by the motor
vehicles financed thereby and certain monies due or received thereunder on
or after , 199 . The Receivables will be transferred
to the Trust by the Depositor as described herein. The Notes will be
secured by the assets of the Trust pursuant to the Indenture.
(Continued on following page)
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT
BENEFICIAL INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS
OF, OR INTERESTS IN, FINANCIAL ASSET SECURITIES CORP., GREENWICH CAPITAL
MARKETS, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES. NONE OF THE
NOTES, THE CERTIFICATES OR THE RECEIVABLES ARE INSURED OR GUARANTEED
FINANCIAL ASSET SECURITIES CORP., GREENWICH CAPITAL MARKETS, INC. OR ANY
OF THEIR RESPECTIVE AFFILIATES.
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.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" ON PAGE S-9 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 12 OF
THE ACCOMPANYING PROSPECTUS.
<TABLE>
<CAPTION>
Price to the Underwriting Proceeds to the
Public(1) Discount Depositor(1)(2)
------------ ------------ ----------------
<S> <C> <C> <C>
Per Class A-1 Note . . . . % % %
Per Class A-2 Note . . . . % % %
Per Certificate . . . . . % % %
Total . . . . . . . . . . $ $ $
</TABLE>
____________________
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $
----------------------------------
The Notes and the Certificates are offered subject to prior sale,
and subject to the Underwriter's right to reject orders in whole or in
part. It is expected that delivery of the Notes and the Certificates will
be made through the Same Day Funds System of The Depository Trust Company
on or about , 199 .
GREENWICH CAPITAL MARKETS, INC.
The date of this Prospectus Supplement is , 199 .
<PAGE>
Interest on the classes of Notes will accrue at the fixed per annum
rates specified above and generally will be payable on the day of
each month, commencing , 199 . Principal of the
Notes will be payable on each Distribution Date to the extent described
herein; however, no principal will be paid on the Class A-2 Notes until
the Class A-1 Notes have been paid in full. The Certificates represent
fractional undivided interests in the Trust. Interest, to the extent of
the Pass-Through Rate of % per annum, will be distributed to
<PAGE>
Certificateholders on each Distribution Date. No distributions of
principal will be made on the Certificates until all of the Notes have
been paid in full.
To the extent not previously paid, the Class A-1 Notes will be
payable in full on , the Class A-2 Notes will be payable
in full on , and the Certificates will be payable
in full on ; however, one or both classes of Notes
or the Certificates may be paid in full prior to the final scheduled
Distribution Date therefor, as described herein and in the Prospectus. In
addition, the Class A-2 Notes will be subject to early redemption, and the
Certificates will be subject to prepayment, in whole but not in part, on
any Distribution Date on which the Servicer exercises its option to
purchase the Receivables. The Servicer may purchase the Receivables when
the aggregate principal balance thereof is reduced to 10% or less of their
initial aggregate principal balance.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION
ABOUT THE OFFERING OF THE NOTES AND THE 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 NOTES OR CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE
PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
THIS PROSPECTUS SUPPLEMENT CONTAINS INFORMATION THAT IS SPECIFIC TO THE
TRUST AND THE SECURITIES OFFERED HEREBY AND, TO THAT EXTENT, SUPPLEMENTS
THE MORE GENERAL INFORMATION PROVIDED IN THE PROSPECTUS. INFORMATION
CONTAINED IN THIS PROSPECTUS SUPPLEMENT MAY ALSO REFLECT LEGAL, ECONOMIC
AND OTHER DEVELOPMENTS SINCE THE DATE OF THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
NOTES AND THE CERTIFICATES AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates are
issued, monthly and annual unaudited reports containing information
concerning the Receivables will be prepared by the
Servicer and sent on behalf of the Trust only to Cede & Co., as nominee of
The Depository Trust Company and registered holder of the Notes and the
Certificates. See "Certain Information Regarding the Securities --
Book-Entry Registration" and "-- 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 Depositor, as originator of 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, and the rules and regulations of the
Commission thereunder.
2
<PAGE>
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" or, to the extent not defined herein, have the meanings assigned to
such terms in the Prospectus.
Issuer . . . . . . . . . . . . . FASCO Auto Trust 199 - (the
"Trust"), a Delaware business
trust to be formed pursuant to a
Trust Agreement to be dated as of
, 199 (as
amended and supplemented from time
to time, the "Trust Agreement"),
among the Depositor,
, a
corporation (the "Company"),
and the Owner Trustee.
Depositor . . . . . . . . . . . Financial Asset Securities Corp.,
a Delaware corporation (the
"Depositor").
Originator and Servicer . . . .
, a
corporation (in its capacity as
originator of the Receivables, the
"Originator" and, in its capacity
as servicer of the Receivables,
the "Servicer"). The Servicer is
referred to in the Prospectus as
the Master Servicer.
Indenture Trustee . . . . . . . . , a
banking corporation, as trustee
under the Indenture (the
"Indenture Trustee").
Owner Trustee . . . . . . . . . . , a
banking corporation, as
trustee under the Trust Agreement
(the "Owner Trustee").
The Notes . . . . . . . . . . . . The Trust will issue the %
Asset Backed Notes, Class A-1 in
an aggregate principal amount of $
(the "Class A-1
Notes") and the % Asset
Backed Notes, Class A-2 in an
aggregate principal amount of $
(the "Class A-2
Notes" and, with the Class A-1
Notes, the "Notes") pursuant to an
Indenture to be dated as of
, 199 (as
amended and supplemented from time
to time, the "Indenture"), between
the Trust and the Indenture
Trustee.
Under the terms of the Indenture,
the Notes will be secured by the
assets of the Trust.
The Certificates . . . . . . . . The Trust will issue %
Asset-Backed Certificates (the
"Certificates" and, together with
the Notes, the "Securities") with
an aggregate initial Certificate
Balance of $
. The Certificates
represent fractional undivided
interests in the Trust and will be
issued pursuant to the Trust
Agreement.
The Receivables . . . . . . . . . On , 199
(the "Closing Date"), the
Depositor will purchase from the
Originator pursuant to a Purchase
Agreement dated as of
, 199 (the "Purchase
Agreement"), by and between the
Originator and the Depositor,
motor vehicle installment loan
agreements and motor vehicle
retail installment sale contracts
secured by new or used
automobiles, vans and light-duty
trucks (the "Receivables") having
an aggregate principal balance of
approximately $
as of ,
199 (the "Cutoff Date"). The
S-3
<PAGE>
Trust, in turn, will acquire the
Receivables from the Depositor
pursuant to a Sale and Servicing
Agreement to be dated as of
, 199 (as
amended and supplemented from time
to time, the "Sale and Servicing
Agreement"), among the Trust, the
Depositor and the Servicer, and
the Servicer will agree to service
the Receivables upon the terms set
forth in the Sale and Servicing
Agreement. The Originator will
make certain representations and
warranties concerning the
Receivables in the Purchase
Agreement, and the Depositor will,
in the Sale and Servicing
Agreement, assign its rights under
the Purchase Agreement to the
Trust, including its right to
cause the Originator to repurchase
Receivables with respect to which
the Originator is in breach of any
such representation and warranty
as of the Cutoff Date, if such
breach has a material and adverse
effect on the rights of the Trust
in such Receivables and such
breach is not cured in a timely
manner. The Depositor will have
no obligation to repurchase from
the Trust any Receivable with
respect to which the Originator is
in breach of a representation or
warranty, nor will it have any
other obligation with respect to
the Receivables or the Securities.
The Receivables have been selected
from the Originator's portfolio of
motor vehicle installment sale
contracts and motor vehicle
installment loan agreements based
on the criteria specified in the
Sale and Servicing Agreement and
described herein under "The
Receivables Pool" and in the
Prospectus under "The Receivables
Pools". As of the Cutoff Date,
the weighted average annual
percentage rate of the Receivables
was approximately %, the
weighted average remaining
maturity of the Receivables was
approximately months and
the weighted average original
maturity of the Receivables was
approximately months.
No Receivable has a scheduled
maturity later than
(the "Final
Scheduled Maturity Date").
The "Pool Balance" at any time
will equal the aggregate principal
balance of all of the outstanding
Receivables owned by the Trust at
the end of the preceding
Collection Period after giving
effect to (i) all payments (other
than Payaheads) received from
Obligors during such Collection
Period, (ii) all Advances and
Repurchase Amounts to be remitted
by the Servicer or the Originator,
as the case may be, for such
Collection Period and (iii) all
losses realized on Receivables
that were liquidated during such
Collection Period.
Terms of the Notes
A. Distribution Dates . . . . Payments of interest and principal
on the Notes will be made on the
day of each month or, if
any such day is not a Business
Day, on the next succeeding
Business Day (each, a
"Distribution Date") commencing
, 199 .
Payments will be made to holders
of record of the Notes (the
"Noteholders") as of the day
immediately preceding such
Distribution Date (each, a "Record
Date"). As used herein, "Business
Day" means a day that in New York
City or in the city in which the
corporate trust office of the
Indenture Trustee is located is
neither a legal holiday nor a day
on which banking institutions are
authorized by law, regulation or
executive order to be closed.
S-4
<PAGE>
B. Interest Rates . . . . . . Interest will be paid on the Class
A-1 Notes at a per annum rate of
% (the "Class A-1 Rate")
and on the Class A-2 Notes at a
per annum rate of % (the
"Class A-2 Rate"). The Class A-1
Rate and the Class A-2 Rate are
sometimes referred to herein
collectively as the "Interest
Rates".
C. Interest . . . . . . . . . Interest on the outstanding
principal amount of the Class A-1
Notes and the Class A-2 Notes in
respect of any Distribution Date
will accrue at the Class A-1 Rate
and the Class A-2 Rate,
respectively, from and including
the most recent Distribution Date
on which interest payments were
distributed to Noteholders (or, in
the case of the first Distribution
Date, from and including the
Closing Date) to but excluding
such Distribution Date. Interest
on the Notes will be calculated on
the basis of a 360-day year
consisting of twelve 30-day
months. See "Description of the
Notes -- Payments of Interest"
herein.
D. Principal . . . . . . . . For as long as the Class A-1 Notes
are outstanding, principal of the
Class A-1 Notes will be payable on
each Distribution Date in an
amount equal to 100% of the Total
Distribution Amount remaining
following payment of the Servicing
Fee and the Noteholders' Interest
Distributable Amount on such date.
On each Distribution Date from and
including the Distribution Date on
which the Class A-1 Notes are paid
in full and for as long as the
Class A-2 Notes are outstanding,
principal of the Class A-2 Notes
will be payable in an amount equal
to 100% of the Total Distribution
Amount remaining following payment
of the Servicing Fee, the
Noteholders' Interest
Distributable Amount and, on the
Distribution Date on which the
Class A-1 Notes are paid in full,
any amount distributed as
principal to holders of the Class
A-1 Notes. No principal payment
will be made on the Class A-2
Notes until the Class A-1 Notes
have been paid in full.
The outstanding principal amount,
if any, of the Class A-1 Notes
will be payable in full on
(the "Class
A-1 Final Scheduled Payment Date")
and the outstanding principal
amount, if any, of the Class A-2
Notes will be payable in full on
(the "Class A-2
Final Scheduled Payment Date").
See "Description of the Notes --
Payments of Principal" and
"Description of the Transfer and
Servicing Agreements --
Distributions" herein.
E. Optional Redemption . . . The Class A-2 Notes may be
redeemed in whole, but not in
part, on any Distribution Date on
which the Servicer exercises its
option to purchase the
Receivables. Under the terms of
the Sale and Servicing Agreement,
the Servicer may purchase the
Receivables when the aggregate
principal amount thereof has been
reduced to 10% or less of the
original Pool Balance. The
redemption price for the Class A-2
Notes will equal the unpaid
principal amount of the Class A-2
Notes plus accrued and unpaid
interest thereon. See
"Description of the Notes --
Optional Redemption" herein.
S-5
<PAGE>
Terms of the Certificates
A. Distribution Dates . . . . Distributions with respect to the
Certificates will be made on each
Distribution Date, commencing
, 199 .
Distributions will be made to
holders of record of the
Certificates (the
"Certificateholders", and,
together with the Noteholders, the
"Securityholders") as of the
related Record Date.
B. Pass-Through Rate . . . . % per annum (the "Pass-
Through Rate").
C. Interest . . . . . . . . . On each Distribution Date, the
Owner Trustee will distribute pro
rata to Certificateholders accrued
interest at the Pass-Through Rate
on the Certificate Balance as of
the preceding Distribution Date
(after giving effect to
distributions made on such
preceding Distribution Date)
generally to the extent of funds
available following payment of the
Servicing Fee and the Noteholders'
Distributable Amount from the
Total Distribution Amount and the
Reserve Account. Interest on the
Certificates in respect of any
Distribution Date will accrue from
the most recent Distribution Date
on which interest payments were
distributed to Certificateholders
(or, in the case of the first
Distribution Date, the Closing
Date) to but excluding such
Distribution Date and will be
calculated on the basis of a
360-day year consisting of twelve
30-day months. See "Description
of the Certificates --
Distributions of Interest" herein.
D. Principal . . . . . . . . On each Distribution Date on and
after the date on which the Class
A-2 Notes are paid in full,
principal of the Certificates will
be payable in an amount generally
equal to the Total Distribution
Amount remaining after payment of
the Servicing Fee, the
Noteholders' Distributable Amount
(on the Distribution Date on which
the outstanding principal amount
of the Class A-2 Notes is reduced
to zero) and the
Certificateholders' Interest
Distributable Amount.
The outstanding principal amount,
if any, of the Certificates will
be payable in full on
(the "Final
Scheduled Distribution Date").
See "Description of the
Certificates -- Distributions of
Principal" and "Description of the
Transfer and Servicing Agreements
-- Distributions" herein.
E. Optional Prepayment . . . If the Servicer exercises its
option to purchase the
Receivables, which it may do when
the aggregate principal amount of
the Receivables is 10% or less of
the original Pool Balance, the
Certificateholders will receive an
amount in respect of the
Certificates equal to the
Certificate Balance plus accrued
interest at the Pass-Through Rate,
and the Certificates will be
retired. See "Description of the
Certificates -- Optional
Prepayment" herein.
Reserve Account . . . . . . . . . On the Closing Date, the Depositor
will establish a separate reserve
account (the "Reserve Account")
with the Indenture Trustee and
will make an initial deposit
thereto of $
. Funds will be withdrawn from
the Reserve Account on any
Distribution Date on
S-7
<PAGE>
which, and to the extent that, the
Total Distribution Amount for the
related Collection Period
remaining after payment of the
Servicing Fee is less than the
Noteholders' Distributable Amount
and will be deposited in the Note
Distribution Account for
distribution to the Noteholders.
In addition, funds will be
withdrawn from the Reserve Account
to the extent that the portion of
the Total Distribution Amount
remaining after payment of the
Servicing Fee and the Noteholders'
Distributable Amount is less than
the Certificateholders'
Distributable Amount and will be
deposited in the Certificate
Distribution Account for
distribution to the
Certificateholders. On each
Distribution Date, the amount
available in the Reserve Account
will be reinstated up to the
Specified Reserve Account Balance
by the deposit thereto of amounts
remaining in the Collection
Account after payment on such date
of the Servicing Fee, the
Noteholders' Distributable Amount
and the Certificateholders'
Distributable Amount. Amounts on
deposit in the Reserve Account on
any Distribution Date (after
giving effect to all distributions
to be made on such Distribution
Date) in excess of the Specified
Reserve Account Balance will be
released to the Company. The
Reserve Account will be maintained
as an account in the name of the
Indenture Trustee. See
"Description of the Transfer and
Servicing Agreements -- Reserve
Account" herein.
Collection Account . . . . . . . Except under certain conditions
described herein, the Servicer
will be required to remit
collections received with respect
to the Receivables within two
Business Days of receipt thereof
to one or more accounts in the
name of the Indenture Trustee (the
"Collection Account"). Pursuant
to the Sale and Servicing
Agreement, the Servicer will have
the revocable power to instruct
the Indenture Trustee to withdraw
funds on deposit in the Collection
Account and to apply such funds on
each Distribution Date to the
following (in the priority
indicated): (i) the Servicing Fee
for the prior Collection Period
and any overdue Servicing Fees to
the Servicer, (ii) the
Noteholders' Interest
Distributable Amount and the
Noteholders' Principal
Distributable Amount to the Note
Distribution Account, (iii) the
Certificateholders' Interest
Distributable Amount and, after
the Class A-2 Notes have been paid
in full, the Certificateholders'
Principal Distributable Amount to
the Certificate Distribution
Account, and (iv) the remaining
balance, if any, to the Reserve
Account. See "Description of the
Transfer and Servicing Agreements
-- Distributions" and "-- Reserve
Account" herein.
Tax Status . . . . . . . . . . . In the opinion of Brown & Wood,
for federal income tax purposes,
the Notes will be characterized as
debt and the Trust will not be
characterized as an association
(or a publicly traded partnership)
that is taxable as a corporation.
In the opinion of
, the same
characterization will apply for
state income and business tax
purposes. Each Noteholder, by the
acceptance of a Note, will agree
to treat the Notes as
indebtedness, and each
Certificateholder, by the
acceptance of a Certificate, will
agree to treat the Trust as a
partnership in which the
Certificateholders are partners
for federal income and state
income and single business tax
purposes. Alternative
characterizations of the Trust and
the Certificates are possible, but
would not result in materially
adverse tax consequences to
Certificateholders. See "Certain
Material Federal Income Tax
Consequences" in the Prospectus
for
S-7
<PAGE>
additional information
concerning the application of
federal income tax laws to the
Trust and the Securities.
ERISA Considerations . . . . . . Subject to the considerations
discussed under "ERISA
Considerations" herein and in the
Prospectus, the Notes are eligible
for purchase by employee benefit
plans. The Certificates may not
be acquired by any employee
benefit plan subject to the
Employee Retirement Income
Security Act of 1974, as amended,
or by an individual retirement
account. See "ERISA
Considerations" herein and in the
Prospectus.
Rating of the Securities . . . . It is a condition to the issuance
of the Notes and Certificates that
the Notes be rated in the highest
rating category and the
Certificates be rated at least "
" or its equivalent, in each
case by at least two nationally
recognized statistical rating
agencies.
A rating is not a recommendation
to purchase, hold or sell the
Notes or Certificates, inasmuch as
such rating does not comment as to
market price or suitability for a
particular investor. A rating
addresses the likelihood that
principal of and interest on the
particular class of Notes or the
Certificates, as applicable, will
be paid pursuant to its terms.
There can be no assurance that a
rating will not be lowered or
withdrawn by a rating agency if
circumstances so warrant. See
"Risk Factors -- Limited Nature of
Ratings of the Securities" herein.
S-8
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus
Supplement and the Prospectus, prospective investors should carefully
consider the following risk factors before investing in the Securities.
Limited Liquidity. There is currently no secondary market for the
Securities. The Underwriter currently intends to make a market in the
Securities, but is under no obligation to do so. There can be no
assurance that a secondary market will develop or, if a secondary market
does develop, that it will provide Securityholders with liquidity of
investment or that it will continue for the life of the Securities.
Sub-prime Nature of Obligors; Servicing. The Obligors on the
Receivables are primarily "sub-prime" borrowers who are generally
relatively higher credit risks due to various factors, including their
past credit experience and the absence or limited extent of their credit
history. Typical "sub-prime" borrowers include young borrowers (18 to 25
years old) who are trying to establish an initial credit history,
borrowers who have a low income level, previously bankrupt borrowers who
desire to reestablish their credit history, slow payers of credit cards
and department store accounts, and borrowers who desire payment terms
slightly longer than the maximum term permitted by traditional sources of
consumer credit. The average interest rate charged by the Originator to
such "sub-prime" borrowers is generally higher than that charged by
commercial banks, financing arms of automobile manufacturers and other
traditional sources of consumer credit, which typically impose more
stringent credit requirements. The payment experience on receivables of
obligors with this credit profile is likely to be different from that on
receivables of traditional auto financing sources and is likely to be more
sensitive to changes in the economic climate in the areas in which such
obligors reside. As a result of the credit profile of the Obligors and
the APRs of the Receivables, the historical credit loss and delinquency
rates on the Receivables may be higher than those experienced by banks and
the captive finance companies of the automobile manufacturers. In the
event of a default under a Receivable, the only source of repayment may be
liquidation proceeds from the related Financed Vehicle. The Financed
Vehicles securing the Receivables will consist primarily of used vehicles
which may hot have a liquidation value sufficient to pay in full the
amount financed by the related Receivable. See "The Originator --
Description of Business".
The servicing of receivables of customers with such credit profiles
requires special skill and diligence. The Servicer believes that its
credit loss and delinquency experience reflect in part its trained staff
and collection procedures. If the Servicer resigns or is removed
following a Servicer Default, collections on the Receivables may be
adversely affected. See "Description of the Transfer and Servicing
Agreements -- Rights Upon Servicer Default" in the Prospectus.
Servicer Default. If a Servicer Default occurs, the Indenture
Trustee or the Noteholders may remove the Servicer without the consent of
the Owner Trustee or the Certificateholders, in the manner described in
the Prospectus under "Description of the Transfer and Servicing Agreements
- -- Rights upon Servicer Default". Neither the Owner Trustee nor the
Certificateholders will have the ability to remove the Servicer if a
Servicer Default occurs. In addition, the Noteholders have the ability,
with certain specified exceptions, to waive defaults by the Servicer,
including defaults that might have a materially adverse effect on
Certificateholders. See "Description of the Transfer and Servicing
Agreements -- Waiver of Past Defaults" in the Prospectus.
Subordination of the Class A-2 Notes. Payments of principal of the
Class A-2 Notes will be subordinated in priority of payment to principal
due on the Class A-1 Notes. Consequently, Class A-2 Noteholders will not
receive any payments of principal until after the Class A-1 Notes have
been paid in full. See "Description of the Transfer and Servicing
Agreements -- Distributions" herein.
Subordination of the Certificates. Distributions of interest on and
principal of the Certificates will be subordinated in priority of payment
to interest and principal due on the Notes. Consequently,
Certificateholders will not receive any distributions with respect to a
Collection Period until the full
S-9
<PAGE>
amount of interest on and principal of the Notes distributable on such
Distribution Date has been deposited in the Note Distribution Account.
The Certificateholders will not receive any distributions of principal
until after the Notes have been paid in full. See "Description of the
Transfer and Servicing Agreements -- Distributions" herein.
Limited Assets of the Trust. The Trust will not have, nor is it
permitted or expected to have, any significant assets or sources of funds
other than the Receivables and certain rights with respect to the Reserve
Account; therefore, 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. Although any funds available in the
Reserve Account on each Distribution Date will be applied to cover
shortfalls in distributions of interest and principal on the Notes and the
Certificates, the funds to be deposited in the Reserve Account are limited
in amount. If the Reserve Account is exhausted, the Trust will have to
rely solely on current distributions on the Receivables to make payments
on the Notes and the Certificates. See "The Trust" and "Description of
the Transfer and Servicing Agreements -- Reserve Account" herein.
Limited Nature of Ratings of the Securities. It is a condition to the
issuance of the Notes and the Certificates that the Notes be rated in the
highest rating category and the Certificates be rated " " or its
equivalent, in each case by at least two nationally recognized statistical
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
ratings of the Securities address the likelihood of the timely payment of
interest on, and the ultimate repayment of principal of, the Securities
pursuant to their terms. There can be 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. In the event that a rating is subsequently lowered
or withdrawn, no person or entity will be required to provide any additional
credit enhancement. The ratings of the Notes are based primarily on the
credit quality of the Receivables, the subordination provided by the
Certificates and the availability of funds in the Reserve Account. The
ratings of the Certificates are based primarily on the credit quality of the
Receivables and the availability of funds in the Reserve Account.
Limited Obligations of the Depositor and the Originator. Neither the
Depositor nor the Originator is generally obligated to make any payments
in respect of the Notes, the Certificates or the Receivables. In
connection with its sale of the Receivables to the Depositor, the
Originator will make certain representations and warranties and, in
certain circumstances, will be required to repurchase Receivables with
respect to which such representations and warranties are not true as of
the date made. There can be no assurance, however, that the Originator
will have the financial ability to effect any such repurchase. If the
Originator fails to repurchase any Receivable with respect to which it is
in breach of a representation or warranty, the Depositor will have no
obligation to purchase such Receivable from the Trust.
THE TRUST
GENERAL
The Trust is a business trust formed under the laws of the State of
Delaware pursuant to the Trust Agreement for the transactions described in
this Prospectus Supplement. After its formation, the Trust will not
engage in any activity other than (i) acquiring, holding and managing the
Receivables and the other assets of the Trust and the proceeds therefrom,
(ii) issuing the Notes and the Certificates, (iii) making payments on the
Notes and the Certificates and (iv) engaging in other activities that are
necessary, suitable or convenient to accomplish the foregoing or that are
incidental thereto or connected therewith.
S-10
<PAGE>
The Trust initially will be capitalized with equity equal to $
, excluding amounts in the Reserve Account.
Certificates with an original principal balance of $
(which represents approximately (1)% of the initial Certificate Balance)
will be sold to the Company and the remaining Certificates will be sold to
third party investors that are expected to be unaffiliated with the
Depositor, the Originator, the Servicer and the Trust. The proceeds from
the initial sale of the Notes and Certificates will be used by the Trust to
purchase the Receivables from the Depositor pursuant to the Sale and
Servicing Agreement. The Servicer will service the Receivables pursuant to
the Sale and Servicing Agreement and will be compensated for acting as
Servicer. See "Description of the Transfer and Servicing Agreements --
Servicing Compensation" herein. To facilitate servicing and to minimize
administrative burden and expense, the Servicer will be appointed custodian
of the Receivables by the Owner Trustee, but will not stamp the Receivables
to reflect their sale and assignment by the Originator to the Depositor or
by the Depositor to the Trust, or amend the certificates of title of the
related Financed Vehicles. In the absence of amendments to the certificates
of title, the Trust may not have perfected security interests in the
Financed Vehicles securing the Receivables in some states. See "Certain
Legal Aspects of the Receivables" in the Prospectus.
If the protection provided to the investment of the Securityholders
by the Reserve Account is insufficient, the Trust will look only to the
Obligors on the Receivables and the proceeds from the repossession and
sale of Financed Vehicles that secure defaulted Receivables to fund
distributions of principal and interest on the Securities. In such event,
certain factors, such as the Trust's not having a first priority perfected
security interest in some of the Financed Vehicles, may affect the Trust's
ability to realize on the collateral securing the Receivables and thus may
reduce the proceeds to be distributed to Securityholders with respect to
the Securities. See "Description of the Transfer and Servicing Agreements
- -- Distributions" and "-- Reserve Account" herein and "Certain Legal
Aspects of the Receivables" in the Prospectus.
The Trust's principal offices are located in
, Delaware, in care of
, as Owner Trustee, at the address listed below under "--
The Owner Trustee".
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of
the Cutoff Date, as if the issuance and sale of the Notes and the
Certificates had taken place on such date:
Class A-1 Notes . . . . . . . . . . . . . . $
Class A-2 Notes . . . . . . . . . . . . . .
Certificates . . . . . . . . . . . . . . --------------
Total ==============
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's liability in connection with the issuance and sale of the
Notes and Certificates is limited solely to the express obligations of the
Owner Trustee set forth in the Trust Agreement and the Sale and Servicing
Agreement. The Depositor and its affiliates may maintain normal
commercial banking relations with the Owner Trustee and its affiliates.
THE RECEIVABLES POOL
The Receivables were originated or purchased from Dealers by the
Originator in the ordinary course of business, and were selected from the
Originator's portfolio for inclusion in the Receivables Pool based on
several criteria, including the following: (i) on the Cutoff Date, each
Receivable had an
S-11
<PAGE>
outstanding gross balance of at least $
, (ii) as of the Cutoff Date, none of the Receivables was more than
days past due and (iii) as of the Cutoff Date, no Obligor on any
Receivable was noted in the Originator's records as being the subject of a
bankruptcy proceeding. Certain additional criteria that each Receivable
must meet are set forth in the Prospectus under "The Receivables Pools".
No selection procedures believed by either the Originator or the Depositor
to be adverse to Securityholders were used in selecting the Receivables.
The composition and distribution of the Receivables Pool as of the
Cutoff Date are as set forth in the following tables.
<TABLE>
COMPOSITION OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<CAPTION>
Weighted Aggregate Number of Weighted Average Weighted Average
Average APR Principal Balance Receivables Remaining Term Original Term
- ------------- ----------------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C>
% $ months months
Average
Principal Balance
- -----------------
<C>
$
</TABLE>
<TABLE>
DISTRIBUTION BY APR OF THE RECEIVABLES POOL AS OF THE INITIAL CUTOFF DATE
<CAPTION>
Percentage of
Number of Aggregate Aggregate
APR Range Receivables Principal Balance Principal Balance /(1)/
- ------------------ ------------- ----------------- -----------------------
(Dollars in Thousands)
<S> <C> <C> <C>
0.00% to 15.00% $ %
15.01% to 16.00%
16.01% to 17.00%
17.01% to 18.00%
18.01% to 19.00%
19.01% to 20.00%
20.01% to 21.00%
21.01% to 22.00%
22.01% to 23.00%
23.01% to 24.00%
24.01% to 25.00%
Greater than 25.00%
------------- ----------------- -----------------------
Total $ 100.00%
============= ================= =======================
</TABLE>
- ---------------------
/(1)/ Percentages may not add to 100.00% because of rounding.
S-12
<PAGE>
<TABLE>
DISTRIBUTION BY REMAINING PRINCIPAL BALANCE OF THE RECEIVABLES POOL AS
OF THE CUTOFF DATE
<CAPTION>
Percentage of
Range of Remaining Number of Aggregate Aggregate
Principal Balances Receivables Principal Balance Principal Balance/(1)/
- --------------- ----------- ----------------- ----------------------
(Dollars in Thousands)
<S> <C> <C> <C>
$ 1,000 to $ 2,499 . . $ %
$ 2,500 to $ 4,999 . .
$ 5,000 to $ 7,499 . .
$ 7,500 to $ 9,999 . .
$10,000 to $12,499 . .
$12,500 to $14,999 . .
$15,000 to $17,499 . .
$17,500 to $19,999 . .
$20,000 to $22,499 . .
$22,500 to $24,999 . .
$25,000 to $27,499 . .
$27,500 to $29,999 . .
$30,000 to $39,999 . .
$40,000 to $49,999 . . ----------- ----------------- --------------------
Total. . . . . . . $ 100.00%
=========== ================= ====================
</TABLE>
_____________
/(1)/ Percentages may not add to 100.00% because of rounding.
<TABLE>
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES POOL AS OF THE
CUTOFF DATE
<CAPTION>
Percentage of
Range of Number of Aggregate Aggregate
Remaining Terms Receivables Principal Balance Principal Balance/(1)/
- --------------- ----------- ----------------- ----------------------
<S> <C> <C> <C>
3 to 11 months . . $ %
12 to 17 months . .
18 to 23 months . .
24 to 29 months . .
30 to 35 months . .
36 to 41 months . .
42 to 47 months . .
48 to 53 months . .
54 to 59 months . .
60 to 65 months . .
66 to 72 months . .
----------- ----------------- ----------------------
Total. . . . . . $ 100.00%
=========== ================= ======================
</TABLE>
- ------------------------
/(1)/ Percentages may not add to 100.00% because of rounding.
S-13
<PAGE>
<TABLE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL AS OF THE
CUTOFF DATE
<CAPTION>
Percentage of
Number of Aggregate Aggregate
State/(1)/ Receivables Principal Balance Principal Balance/(2)/
- -------------- ----------- ----------------- ----------------------
<S> <C> <C> <C>
$ %
----------- ----------------- ----------------------
Total $ 100.00%
=========== ================= ======================
</TABLE>
_____________
(/(1)/ Based on billing addresses of the Obligors.)
/(2)/ Percentages may not add to 100.00% because of rounding.
As of the Cutoff Date, approximately % of the Receivables,
by aggregate principal balance, constitute Precomputed Receivables and
% of the Receivables constitute Simple Interest Receivables. See
"The Receivables Pools" in the Prospectus for a description of the
characteristics of Precomputed Receivables and Simple Interest
Receivables. As of the Cutoff Date, approximately % of the
aggregate principal balance of the Receivables, constituting %
of the number of Receivables, represent used vehicles.
THE DEPOSITOR
Information regarding the Depositor is set forth under "The
Depositor" in the Prospectus.
THE ORIGINATOR
(The data in this section to be provided with respect to each Originator)
DESCRIPTION OF BUSINESS
UNDERWRITING STANDARDS
SERVICING STANDARDS
CREDIT LOSS EXPERIENCE
DELINQUENCY EXPERIENCE
S-14
<PAGE>
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Information regarding certain maturity and prepayment considerations
with respect to the Securities is set forth under "Weighted Average Life
of the Securities" in the Prospectus. In addition, holders of the Class A-2
Notes will not receive any principal payments until the Class A-1 Notes are
paid in full, and holders of the Certificates will not receive any principal
payments until the Class A-1 Notes and the Class A-2 Notes have been paid in
full. See "Description of the Notes -- Payments of Principal" and
"Description of the Certificates -- Distributions of Principal" herein. As
the rate of payment of principal of each class of Notes and the Certificates
depends on the rate of payment (including prepayments) of the principal
balance of the Receivables, final payment of the Class A-1 Notes or the
Class A-2 Notes and the final distribution in respect of the Certificates
could occur significantly earlier than the Class A-1 Final Scheduled Payment
Date, the Class A-2 Final Scheduled Payment Date or the Final Scheduled
Distribution Date, as applicable. Securityholders will bear the risk of
being able to reinvest principal payments on the Securities at yields at
least equal to the yield on their respective Securities.
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.
A copy of the Indenture will be filed with the Commission following the
issuance of the Securities. 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. Where particular
provisions or terms used in the Indenture are referred to, the actual
provisions (including definitions of terms) are incorporated by reference
as part of this summary. The following summary supplements the
description of the general terms and provisions of the Notes of any given
Series and the description of the related Indenture set forth under the
headings "Description of the Notes" and "Certain Information Regarding the
Securities" in the Prospectus, to which descriptions reference is hereby
made. , a
banking corporation, will be the Indenture Trustee under the Indenture.
PAYMENTS OF INTEREST
Interest on the principal balance of the Class A-1 Notes and the
Class A-2 Notes will accrue at the Class A-1 Rate and Class A-2 Rate,
respectively, and will be payable to the holders of the Class A-1 Notes
and the Class A-2 Notes monthly on each Distribution Date commencing
, 199 . Interest with respect to any Distribution Date
will accrue from and including the most recent Distribution Date on which
interest was distributed to Noteholders (or, with respect to the first
Distribution Date, from and including the Closing Date) to but excluding
such Distribution Date. Interest on each class of Notes will be
calculated on the basis of a 360-day year 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
interest on such amount at the applicable Interest Rate (to the extent
lawful). Interest payments on the Notes will generally be derived from
the Total Distribution Amount remaining after the payment of the Servicing
Fee and from the Reserve Account. See "Description of the
Transfer and Servicing Agreements -- Distributions" and "-- Reserve
Account" herein. Interest payments to holders of both classes of Notes
will have the same priority. Under certain circumstances, the amount
available for such payments could be less than the amount of interest
payable on the Notes on any Distribution Date, in which case the holders
of each class of Notes will receive their ratable share (based on the
aggregate amount of interest due on such class of Notes) of the aggregate
amount available for distribution in respect of interest on the Notes.
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<PAGE>
PAYMENTS OF PRINCIPAL
On each Distribution Date for as long as the Class A-1 Notes are
outstanding, principal of the Class A-1 Notes will be distributed to
holders of the Class A-1 Notes in an amount equal to the Total
Distribution Amount remaining after payment of the Servicing Fee and the
Noteholders' Interest Distributable Amount for such date. On each
Distribution Date from and including the Distribution Date on which the
Class A-1 Notes are paid in full and for as long as the Class A-2 Notes
are outstanding, principal will be distributed to holders of the Class A-2
Notes in an amount equal to the Total Distribution Amount remaining after
payment of the Servicing Fee, the Noteholders' Interest Distributable
Amount and, on the Distribution Date on which the outstanding principal
amount of the Class A-1 Notes is reduced to zero, any amounts distributed
as principal to holders of the Class A-1 Notes and funds available, if
any, in the Reserve Account. No principal will be paid on the Class A-2
Notes until the Class A-1 Notes have been paid in full. See "Description
of the Transfer and Servicing Agreements -- Distributions" and "-- Reserve
Account" herein.
The principal balance of the Class A-1 Notes, to the extent not
previously paid, will be due on the Class A-1 Final Scheduled Payment Date
and the principal balance of the Class A-2 Notes, to the extent not
previously paid, will be due on the Class A-2 Final Scheduled Payment
Date. The actual date on which the aggregate outstanding principal amount
of either the Class A-1 Notes or the Class A-2 Notes is paid in full may
be earlier than the applicable Final Scheduled Payment Date set forth
above due to a variety of factors, including those described under
"Weighted Average Life of the Securities" herein and in the Prospectus.
OPTIONAL REDEMPTION
The Class A-2 Notes may be redeemed in whole, but not in part, on any
Distribution Date on which the Servicer exercises its option to purchase
the Receivables, which the Servicer may do after the aggregate outstanding
principal amount of the Receivables is reduced to 10% or less of the
original Pool Balance. See "Description of the Transfer and Servicing
Agreements -- Termination" in the Prospectus. The redemption price for
the Class A-2 Notes will equal the unpaid principal amount of the Class
A-2 Notes plus accrued and unpaid interest thereon.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the
Registration Statement. 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. This summary does not purport to be complete and is subject
to, and qualified in its entirety by reference to, all the provisions of
the Certificates and the Trust Agreement. The following summary
supplements the description of the general terms and provisions of the
Certificates of any given Series and the description of the related Trust
Agreement set forth in the Prospectus, to which descriptions reference is
hereby made.
DISTRIBUTIONS OF INTEREST
Certificateholders will be entitled to distributions of interest on
each Distribution Date beginning on , 199 .
Interest will accrue on the Certificates at the Pass-Through Rate on the
Certificate Balance as of the preceding Distribution Date, after giving
effect to distributions on such Distribution Date. Interest distributable
with respect to the Certificates on a Distribution Date will accrue from
and including the most recent Distribution Date on which interest was
distributed to Certificateholders (or, with respect to the first
Distribution Date, from and including the Closing Date) to but excluding
such Distribution Date and will be calculated on the basis of a 360-day
year of twelve
S-16
<PAGE>
30-day months. Interest distributions due but not
distributed on any Distribution Date will be due on the next Distribution
Date, with interest on such overdue interest at the Pass-Through Rate (to
the extent lawful). Interest distributions with respect to the
Certificates generally will be funded from the portion of the Total
Distribution Amount and 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
Certificateholders will not be entitled to distributions of principal
on any Distribution Date until the Notes have been paid in full. On each
Distribution Date on and after the Distribution Date on which the Class A-2
Notes are paid in full, the Certificateholders will be entitled to
distributions of principal in a maximum amount equal to the lesser of (i)
the Total Distribution Amount plus any funds in the Reserve Account
remaining after payment of the Servicing Fee, the Noteholders'
Distributable Amount (on the Distribution Date on which the outstanding
principal amount of the Class A-2 Notes is reduced to zero) and the
Certificateholders' Interest Distributable Amount and (ii) the outstanding
Certificate Balance. See "Description of the Transfer and Servicing
Agreements -- Distributions" and "-- Reserve Account" herein.
OPTIONAL PREPAYMENT
If the Servicer exercises its option to purchase the Receivables,
which it may do when the aggregate outstanding principal amount of the
Receivables is reduced to 10% or less of the original Pool Balance, the
Certificateholders will receive an amount in respect of the Certificates
equal to the outstanding Certificate Balance, together with accrued
interest thereon at the Pass-Through Rate, which distribution shall effect
an early retirement of the Certificates. See "Description of the Transfer
and Servicing Agreements -- Termination" in the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Purchase
Agreement, the Sale and Servicing Agreement, the Administration Agreement
and the Trust Agreement (collectively, the "Transfer and Servicing
Agreements"). Forms of the Transfer and Servicing Agreements have been
filed as exhibits to the Registration Statement. A copy of the Transfer
and Servicing Agreements will be filed with the Commission following the
issuance of the Securities. This summary does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all
the provisions of the Transfer and Servicing Agreements. The following
summary supplements the description of the general terms and provisions of
the Transfer and Servicing Agreements (as such term is used in the
Prospectus) set forth under the heading "Description of the Transfer and
Servicing Agreements" in the Prospectus, to which description reference is
hereby made.
SALE AND ASSIGNMENT OF RECEIVABLES
Certain information with respect to the conveyance of the Receivables
on the Closing Date by the Originator to the Depositor pursuant to the
Purchase Agreement and by the Depositor to the Trust pursuant to the Sale
and Servicing Agreement is set forth under "Description of the Transfer
and Servicing Agreements -- Sale and Assignment of Receivables" in the
Prospectus. See also "The Receivables Pool" herein and "The Receivables
Pools" in the Prospectus for additional information regarding the
Receivables and certain obligations of the Originator and the Servicer
with respect to the Receivables.
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<PAGE>
ACCOUNTS
In addition to the Accounts referred to under "Description of the
Transfer and Servicing Agreements -- Trust Accounts" in the Prospectus,
the Depositor will also establish and maintain the Reserve Account with
the Indenture Trustee, in the name of the Indenture Trustee on behalf of
the Noteholders and the Certificateholders.
SERVICING COMPENSATION
The Servicer will be entitled to receive the Servicing Fee for each
Collection Period in an amount equal to % per annum of the Pool
Balance as of the first day of such Collection Period. The Servicing Fee
(together with any portion of the Servicing Fee that remains unpaid from
prior Distribution Dates) will be paid on each Distribution Date solely to
the extent of the Interest Distribution Amount; however, the Servicing Fee
will be paid to the Servicer prior to the distribution of any portion of
the Interest Distribution Amount to Noteholders and Certificateholders.
See "Description of the Transfer and Servicing Agreements -- Servicing
Compensation and Payment of Expenses" in the Prospectus.
DISTRIBUTIONS
Deposits to Collection Account. On or about the Business Day
of each month, the Servicer will provide the Indenture Trustee with
certain information with respect to the related Collection Period,
including the amount of aggregate collections on the Receivables, the
aggregate Advances to be made by the Servicer and the aggregate Repurchase
Amount of Receivables to be repurchased by the Originator or to be
purchased by the Servicer.
On or before each Distribution Date, the Servicer will cause any
amounts held in the Payahead Account that became due during the related
Collection Period as scheduled payments under the related Contracts to be
transferred from the Payahead Account to the Collection Account.
On or before each Distribution Date, the Servicer will cause the
Total Distribution Amount to be deposited into the Collection Account.
The "Total Distribution Amount" for a Distribution Date will equal the sum
of the Interest Distribution Amount and the Principal Distribution Amount
(other than the portion thereof attributable to Realized Losses).
"Realized Losses" means the excess of the principal balance of any
Liquidated Receivable over Liquidation Proceeds to the extent allocable to
principal.
The "Interest Distribution Amount" for a Distribution Date will equal
the sum of the following amounts with respect to the related Collection
Period: (i) that portion of all collections on the Receivables (including
amounts withdrawn from the Payahead Account but excluding amounts deposited
into the Payahead Account) allocable to interest; (ii) all proceeds of the
liquidation of defaulted Receivables ("Liquidated Receivables"), net of
expenses incurred by the Servicer in connection with such liquidation and
any amounts required by law to be remitted to the related Obligor
("Liquidation Proceeds"), to the extent attributable to interest due thereon
in accordance with the Servicer's customary servicing procedures, and all
recoveries in respect of Liquidated Receivables that were written off in
prior Collection Periods; (iii) all Advances made by the Servicer of
interest due on the Receivables; (iv) the Repurchase Amount of each
Receivable that was repurchased by the Originator or purchased by the
Servicer during the related Collection Period, to the extent attributable to
accrued interest thereon; and (v) Investment Earnings for such Distribution
Date.
The "Principal Distribution Amount" for a Distribution Date will
equal the sum of the following amounts with respect to the related
Collection Period: (i) that portion of all collections on the Receivables
(including amounts withdrawn from the Payahead Account but excluding
amounts deposited into the Payahead Account) allocable to principal; (ii)
all Liquidation Proceeds attributable to the principal amount of
Receivables that became Liquidated Receivables during such Collection
Period in accordance with the Servicer's customary servicing procedures,
plus all Realized Losses with respect to such Liquidated Receivables;
(iii) all Precomputed Advances made by the Servicer of principal due
S-18
<PAGE>
on the Precomputed Receivables; (iv) to the extent attributable to principal,
the Repurchase Amount received with respect to each Receivable repurchased
by the Originator or purchased by the Servicer during the related
Collection Period; and (v) partial prepayments relating to refunds of
extended warranty protection plan costs or of physical damage, credit life
or disability insurance policy premiums, but only if such costs or
premiums were financed by the respective Obligor as of the date of the
original Contract.
The Interest Distribution Amount and the Principal Distribution
Amount on any Distribution Date shall exclude the following:
(i) amounts received on Precomputed Receivables to the extent
that the Servicer has previously made an unreimbursed Precomputed Advance;
(ii) Liquidation Proceeds with respect to a particular
Precomputed Receivable to the extent of any unreimbursed Precomputed
Advances thereon;
(iii) all payments and proceeds (including Liquidation
Proceeds) of any Receivables the Repurchase Amount of which has been
included in the Total Distribution Amount in a prior Collection Period; and
(iv) Liquidation Proceeds with respect to a Simple Interest
Receivable attributable to accrued and unpaid interest thereon (but
not including interest for the then current Collection Period) to the
extent of any unreimbursed Simple Interest Advances.
Deposits to the Distribution Accounts. On each Distribution Date,
the Servicer will instruct the Indenture Trustee to make the following
deposits and distributions, to the extent of the Total Distribution
Amount, in the following order of priority:
(i) to the Servicer, from the Interest Distribution Amount, the
Servicing Fee and all unpaid Servicing Fees from prior Collection Periods;
(ii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (i), the
Noteholders' Interest Distributable Amount;
(iii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i) and (ii),
the Noteholders' Principal Distributable Amount;
(iv) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i) through
(iii), the Certificateholders' Interest Distributable Amount;
(v) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i) through
(iv), the Certificateholders' Principal Distributable Amount; and
(vi) to the Reserve Account, the Total Distribution Amount
remaining after the application of clauses (i) through (v).
For purposes hereof, the following terms shall have the following
meanings:
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal Distributable Amount
and the Noteholders' Interest Distributable Amount.
S-19
<PAGE>
"Noteholders' Interest Distributable Amount" means, with respect
to any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders' Interest
Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, 30 days of interest (or, in the case of the
first Distribution Date, interest accrued from and including the Closing Date
to but excluding such Distribution Date) on the Class A-1 Notes and
the Class A-2 Notes at the Class A-1 Rate and the Class A-2 Rate,
respectively, on the outstanding principal balance of the Notes of such class
on the immediately preceding Distribution Date (or, in the case of the first
Distribution Date, on the Closing Date) after giving effect to all payments
of principal to the Noteholders of such class on or prior to such
Distribution Date.
"Noteholders' Interest Carryover Shortfall" means, with respect
to any Distribution Date, (i) the excess of the Noteholders' Monthly
Interest Distributable Amount for the preceding Distribution Date, plus any
outstanding Noteholders' Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that is actually
deposited in the Note Distribution Account on such preceding Distribution
Date, plus (ii) interest on the amount of interest due but not paid to
Noteholders on the preceding Distribution Date, to the extent permitted by
law, at the respective Interest Rates borne by each class of the Notes from
such preceding Distribution Date to but excluding such current Distribution
Date.
"Noteholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of the Noteholders' Monthly
Principal Distributable Amount for such Distribution Date and the
Noteholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the Noteholders'
Principal Distributable Amount shall not exceed the outstanding principal
balance of the Notes. In addition, (i) on the Class A-1 Final Scheduled
Payment Date, the Noteholder's Principal Distributable Amount will not be
less than the amount that is necessary (after giving effect to all other
amounts to be deposited in the Notes Distribution Account on such
Distribution Date and allocable to principal) to reduce the outstanding
principal balance of the Class A-1 Notes to zero; and (ii) on the Class A-2
Final Scheduled Payment Date the Noteholders' Principal Distributable
Amount will not be less than the amount that is necessary (after giving
effect to all other amounts to be deposited in the Note Distribution Account
on such Distribution Date and allocable to principal) to reduce the
outstanding principal balance of the Class A-2 Notes to zero.
"Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date for as long as the Class A-1 Notes or
the Class A-2 Notes are outstanding, 100% of the Principal Distribution
Amount; provided, however, that on the Distribution Date on which the
principal balance of the Class A-2 Notes is reduced to zero, the portion, if
any, of the Principal Distribution Amount that is not applied to the
principal of the Class A-2 Notes will be applied to the Certificate Balance.
"Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Noteholders' Monthly
Principal Distributable Amount and any outstanding Noteholders' Principal
Carryover Shortfall from the preceding Distribution Date over the amount in
respect of principal that is actually deposited in the Note Distribution
Account.
"Certificateholders' Distributable Amount" means, with respect
to any Distribution Date, the sum of the Certificateholders' Principal
Distributable Amount and the Certificateholders' Interest Distributable
Amount.
"Certificateholders' Interest Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders'
Monthly Interest Distributable Amount for
S-20
<PAGE>
such Distribution Date and the Certificateholders' Interest Carryover
Shortfall for such Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount"
means, with respect to any Distribution Date, 30 days of interest (or, in the
case of the first Distribution Date, interest accrued from and including the
Closing Date to but excluding such Distribution Date) at the
Pass-Through Rate on the Certificate Balance on the last day of the preceding
Collection Period (or, in the case of the first Distribution Date, on the
Closing Date) after giving effect to all distributions of principal to the
Certificateholders on or prior to such Distribution Date.
"Certificateholders' Interest Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Certificateholders'
Monthly Interest Distributable Amount for the preceding Distribution Date and
any outstanding Certificateholders' Interest Carryover Shortfall on such
preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Certificate Distribution Account on such
preceding Distribution Date, plus interest on such excess, to the extent
permitted by law, at the Pass-Through Rate from such preceding Distribution
Date to but excluding such current Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders'
Monthly Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the Certificateholders'
Principal Distributable Amount shall not exceed the Certificate Balance. In
addition, on the Final Scheduled Distribution Date, the principal required
to be distributed to Certificateholders will include the lesser of (a) (i)
any scheduled payments of principal due and remaining unpaid on each
Precomputed Receivable and (ii) any principal due and remaining unpaid on
each Simple Interest Receivable, in each case, in the Trust as of the Final
Scheduled Maturity Date or (b) the amount that is necessary (after giving
effect to the other amounts to be deposited in the Certificate Distribution
Account on such Distribution Date and allocable to principal) to reduce the
Certificate Balance to zero.
"Certificateholders' Monthly Principal Distributable Amount"
means, with respect to any Distribution Date prior to the Distribution Date
on which the Notes are paid in full, zero; and with respect to any
Distribution Date commencing on the Distribution Date on which the Notes are
paid in full, 100% of the Principal Distribution Amount (less, on the
Distribution Date on which the Notes are paid in full, the portion thereof
payable as principal of the Notes).
"Certificateholders' Principal Carryover Shortfall" means, as of
the close of any Distribution Date, the excess of the Certificateholders'
Monthly Principal Distributable Amount and any outstanding
Certificateholders' Principal Carryover Shortfall from the preceding
Distribution Date, over the amount in respect of principal that is actually
deposited in the Certificate Distribution Account.
"Certificate Balance" equals, initially, $
and, thereafter, equals the initial Certificate Balance,
reduced by all amounts allocable to principal previously distributed to
Certificateholders and all Realized Losses allocable to the Certificates.
On each Distribution Date, all amounts on deposit in the Note
Distribution Account generally will be paid in the following order of
priority:
(i) to the applicable Noteholders, accrued and unpaid interest
on the outstanding principal balance of the applicable class of Notes at the
applicable Interest Rate;
(ii) to the Class A-1 Noteholders in reduction of principal
until the principal balance of the Class A-1 Notes has been reduced to zero: and
S-21
(iii) to the Class A-2 Noteholders in reduction of principal
until the principal balance of the Class A-2 Notes has been reduced to zero.
On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders.
RESERVE ACCOUNT
The rights of the Certificateholders to receive distributions with
respect to the Receivables generally will be subordinated to the rights of
the Noteholders in the event of defaults or delinquencies on the
Receivables, as provided in the Sale and Servicing Agreement. The
protection afforded to the Noteholders through subordination will be
effected both by the preferential right of the Noteholders to receive
current distributions with respect to the Receivables and by the
establishment of the Reserve Account. The Reserve Account will be created
with an initial deposit by the Depositor on the Closing Date of $
. In addition, on each Distribution Date until the amount on
deposit in the Reserve Account equals (state amount or formula for
determining amount) (the "Specified Reserve Account Balance"), all amounts
remaining in the Collection Account after payment of the Servicing Fee,
the Noteholders' Distributable Amount and the Certificateholders'
Distributable Amount will be deposited into the Reserve Account.
Thereafter, the amount available in the Reserve Account will be reinstated
on each Distribution Date up to the Specified Reserve Account Balance by
the deposit thereto of any portion of the Total Distribution Amount
remaining after payment on such date of the Servicing Fee, the
Noteholders' Distributable Amount and the Certificateholders'
Distributable Amount. If the amount on deposit in the Reserve Account on
any Distribution Date (after giving effect to all deposits or withdrawals
therefrom on such Distribution Date) is greater than the Specified Reserve
Account Balance for such Distribution Date, the Servicer will instruct the
Indenture Trustee to distribute an amount equal to such excess to the
Depositor, subject to certain limitations set forth in the Sale and
Servicing Agreement. Upon any distribution to the Depositor of amounts
from the Reserve Account, neither the Noteholders nor the
Certificateholders will have any rights in, or claims to, such amounts.
Amounts held from time to time in the Reserve Account will continue
to be held for the benefit of the Noteholders and Certificateholders.
Funds will be withdrawn from cash in the Reserve Account to the extent
that the Total Distribution Amount (after the payment of the Servicing
Fee) with respect to any Collection Period is less than the Noteholders'
Distributable Amount and will be deposited to the Note Distribution
Account for distribution to the Noteholders. In addition, funds will be
withdrawn from cash in the Reserve Account to the extent that the portion
of the Total Distribution Amount remaining after the payment of the
Servicing Fee and the deposit of the Noteholders' Distributable Amount to
the Note Distribution Account is less than the Certificateholders'
Distributable Amount and will be deposited to the Certificate Distribution
Account for distribution to the Certificateholders.
If on any Distribution Date the entire Noteholders' Distributable
Amount for such Distribution Date (after giving effect to any amounts
withdrawn from the Reserve Account) is not deposited in the Note
Distribution Account, the Certificateholders generally will not
receive any distributions.
The subordination of the Certificates and the Reserve Account are
intended to enhance the likelihood of receipt by Noteholders of the full
amount of principal and interest due to them and to decrease the
likelihood that the Noteholders will experience losses. In addition, the
Reserve Account is intended to enhance the likelihood of receipt by
Certificateholders of the full amount of principal and interest due to
them and to decrease the likelihood that the Certificateholders will
experience losses. However, in certain circumstances, the Reserve Account
could be depleted.
ERISA CONSIDERATIONS
THE NOTES
The Notes 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 Internal Revenue Code of 1986, as amended (the "Code"). A
fiduciary of a Plan must determine that the purchase of a Note is
consistent with its fiduciary duties under ERISA and will not result in a
nonexempt prohibited transaction as defined in Section 406 of ERISA or
Section 4975 of the Code. For additional information regarding treatment
of the Notes under ERISA, see "ERISA Considerations" in the Prospectus.
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. By its acceptance of a Certificate,
each Certificateholder will be deemed to have represented and warranted
that it is not subject to the foregoing limitations. For additional
information regarding treatment of the Certificates under ERISA, see
"ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement relating to the Notes and the Certificates (the "Underwriting
Agreement"), the Depositor has agreed to cause the Trust to sell to
Greenwich Capital Markets, Inc. (the "Underwriter"), and the Underwriter
has agreed to purchase, all of the Securities.
The Depositor has been advised by the Underwriter that it proposes to
offer the Securities to the public initially at the public offering prices
set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such prices less a concession of % per Class A-1 Note,
% per Class A-2 Note and % per Certificate; that the
Underwriter and such dealers may allow a discount of % per Class
A-1 Note, % per Class A-2 Note and % per Certificate on
sales to certain other dealers; and that after the initial public offering
of the Securities, the public offering prices and the concessions and
discounts to dealers may be changed by the Underwriter.
The Underwriting Agreement provides that the Depositor will indemnify
the Underwriter against certain liabilities, including liabilities under
applicable securities laws, or contribute to payments the Underwriter may
be required to make in respect thereof.
The Trust may, from time to time, invest the funds in the Trust
Accounts in Eligible Investments acquired from the Underwriter.
The closing of the sale of the Certificates is conditioned on the
closing of the sale of the Notes, and the closing of the sale of the Notes
is conditioned on the closing of the sale of the Certificates.
Upon receipt of a request by an investor who has received an
electronic Prospectus Supplement and Prospectus from the Underwriter or of
such investor's representative within the period during which there is an
obligation to deliver a Prospectus Supplement and Prospectus, the
Depositor or the Underwriter will promptly deliver, or cause to be
delivered, without charge, a paper copy of the Prospectus Supplement and
the Prospectus.
S-23
<PAGE>
LEGAL MATTERS
Certain legal matters relating to the Securities will be passed upon
for the Trust and the Depositor by Brown & Wood, New York, New York.
Certain federal income tax and other matters will be passed upon for the
Trust by Brown & Wood and certain state income and business tax matters
will be passed upon for the Trust by .
S-24
<PAGE>
INDEX OF TERMS
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . . S-21
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Certificateholders' Distributable Amount . . . . . . . . . . . . . . . S-20
Certificateholders' Interest Carryover Shortfall . . . . . . . . . . . S-20
Certificateholders' Interest Distributable Amount . . . . . . . . . . . S-20
Certificateholders' Monthly Interest Distributable Amount . . . . . . . S-20
Certificateholders' Monthly Principal Distributable Amount . . . . . . S-21
Certificateholders' Principal Carryover Shortfall . . . . . . . . . . . S-21
Certificateholders' Principal Distributable Amount . . . . . . . . . . S-20
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Class A-1 Final Scheduled Payment Date . . . . . . . . . . . . . . . . . S-5
Class A-1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Class A-1 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Class A-2 Final Scheduled Payment Date . . . . . . . . . . . . . . . . . S-5
Class A-2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Class A-2 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-22
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-22
Federal Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Final Scheduled Distribution Date . . . . . . . . . . . . . . . . . . . . S-6
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . . . . S-4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Interest Distribution Amount . . . . . . . . . . . . . . . . . . . . . S-18
Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Liquidated Receivables . . . . . . . . . . . . . . . . . . . . . . . . S-18
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . S-18
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Noteholders' Distributable Amount . . . . . . . . . . . . . . . . . . . S-19
Noteholders' Interest Carryover Shortfall . . . . . . . . . . . . . . . S-19
Noteholders' Interest Distributable Amount . . . . . . . . . . . . . . S-19
Noteholders' Monthly Interest Distributable Amount . . . . . . . . . . S-19
Noteholders' Monthly Principal Distributable Amount . . . . . . . . . . S-20
Noteholders' Principal Carryover Shortfall . . . . . . . . . . . . . . S-20
Noteholders' Principal Distributable Amount . . . . . . . . . . . . . . S-20
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Originator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-22
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . S-18
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-18
S-25
<PAGE>
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . S-4
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Specified Reserve Account Balance . . . . . . . . . . . . . . . . . . . S-21
State Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Total Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . S-18
Transfer and Servicing Agreements . . . . . . . . . . . . . . . . . . . S-17
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-23
Underwriting Agreements . . . . . . . . . . . . . . . . . . . . . . . . S-23
S-26
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
No dealer, salesperson or other person has been
authorized to give any information or to make
any representations other than those contained
or incorporated by reference in this Prospectus FASCO AUTO TRUST
Supplement and the Prospectus in connection with 199 -
the offer made by this Prospectus Supplement and
the Prospectus and, if given or made, such $ %
information or representations must not be relied ASSET BACKED NOTES,
upon as having been authorized. This Prospectus CLASS A-1
Supplement and the Prospectus do not constitue an $ %
offer or solicitation by anyone in any state in ASSET BACKED NOTES,
in any state in which such offer or solicitation is CLASS A-1
unauthorized or in which the person making such offer $
or solicitation is not qualified to do so or to ASSET BACKED
anyone to whom it is unlawful to make CERTIFICATES
such offer or solicitation. Neither the delivery FINANCIAL ASSET
of this Prospectus Supplment and the Prospectus SECURITIES CORP.,
nor any sale made hereunder shall, under any Depositor
circumstances, create any implication that the
information contained herein or therein is
correct as of any time subsequent to the date of
this Prospectus Supplement or Prospectus. ( )
Servicer
TABLE OF CONTENTS Page
PROSPECTUS SUPPLEMENT
Reports to Securityholders . . . . . . . . . S-2
Summary of Terms . . . . . . . . . . . . . . S-3 PROSPECTUS
Risk Factors . . . . . . . . . . . . . . . . S-9 SUPPLEMENT
The Trust . . . . . . . . . . . . . . . . . . S-10
The Receivables Pool . . . . . . . . . . . . S-11
The Depositor . . . . . . . . . . . . . . . . S-14
The Originator . . . . . . . . . . . . . . . S-14
Weighted Average Life of the Securities . . . S-15
Description of the Notes . . . . . . . . . . S-15 GREENWICH CAPITAL
Description of the Certificates . . . . . . S-16 MARKETS, INC.
Description of the Transfer and Servicing
Agreements . . . . . . . . . . . . . . . . . S-17 36
ERISA Considerations. . . . . . . . . . . . . S-23
Underwriting . . . . . . . . . . . . . . . . . S-23
Legal Matters. . . . . . . . . . . . . . . . . S-24
Index of Terms. . . . . . . . . . . . . . . . . S-25
PROSPECTUS
Available Information. . . . . . . . . . . . . 2
Incorporation of Certain Documents by
Reference . . . . . . . . . . . . . . . . . . . 2
Summary of Terms . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . 10
The Trusts. . . . . . . . . . . . . . . . . . . 14
The Receivables Pools . . . . . . . . . . . . . 15
Weighted Average Life of the Securities . . . . 17
Pool Factors and Trading Information. . . . . . 17
Use of Proceeds . . . . . . . . . . . . . . . . 18
The Depositor . . . . . . . . . . . . . . . . . 18
The Originators . . . . . . . . . . . . . . . . 19
Description of the Notes. . . . . . . . . . . . 19
Description of the Certificates . . . . . . . . 23
Certain Information Regarding the Securities. . 24
Description of the Transfer and Servicing
Agreements. . . . . . . . . . . . . . . . . . . 32
Certain Legal Aspects of the Receivables. . . . 42
Certain Federal Income Tax Consequences . . . 45
ERISA Considerations. . . . . . . . . . . . . . 57
Plan of Distribution. . . . . . . . . . . . . . 59
Legal Matters . . . . . . . . . . . . . . . . . 59
Index of Principal Terms. . . . . . . . . . . . 60
Until 90 days after the date of this Prospectus
Supplement, all dealers effecting transactions
in the Certificates described in this
Prospectus Supplement, whether or not participating
in this distribution, may be required to deliver
this Prospectus Supplement and the Prospectus. This
is in addition to the obligation of dealers to deliver
this Prospectus Supplement and the Prospectus
when acting as underwriters and with respect to
their unsold allotments or subscriptions.
</TABLE>
S-27
<PAGE>
SUBJECT TO COMPLETION
Prospectus Supplement to Prospectus Dated , 1996
FASCO Auto Trust 199 -
$ % Asset Backed Certificates, Class A
$ % Asset Backed Certificates, Class B
FINANCIAL ASSET SECURITIES CORP., Depositor
( ), Servicer
FASCO Auto Trust 199 - (the "Trust") will be formed pursuant to a
Pooling and Servicing Agreement dated as of , 199 , among
Financial Asset Securities Corp., a Delaware corporation, as depositor
(the "Depositor"), , a
corporation, as originator (in such capacity, the "Originator") and
servicer of the Receivables, and , a
banking corporation, as trustee (the "Trustee"),
and will issue $ aggregate principal amount of %
Asset Backed Certificates, Class A (the "Class A Certificates") and
$ aggregate principal amount of % Asset Backed
Certificates, Class B (the "Class B Certificates" and, with the Class A
Certificates, the "Certificates").
The assets of the Trust will include a pool of motor vehicle
installment loan agreements and motor vehicle retail installment sale
contracts (the "Initial Receivables") secured by the new and used
automobiles, vans and light duty trucks financed thereby, certain monies
due or received thereunder on and after , 199 , and
certain other property, as described herein. The assets of the Trust also
will include a security interest in monies on deposit in a Pre-Funding
Account, which will be used by the Depositor to purchase additional
Receivables from the Originator from time to time on or before
, 199 . The Trust may also draw on funds on deposit in a Reserve
Account, to the extent described herein, to meet shortfalls in amounts due
to Certificateholders on any Distribution Date. The Reserve Account will
not be part of the Trust.
(Continued on following page)
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" ON PAGE S-13 OF THIS PROSPECTUS SUPPLEMENT AND ON PAGE 12
OF THE ACCOMPANYING PROSPECTUS.
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND
DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN FINANCIAL ASSET SECURITIES
CORP. OR ANY OF ITS AFFILIATES. NEITHER THE CERTIFICATES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY FINANCIAL ASSET SECURITIES CORP.
OR ANY OF ITS AFFILIATES.
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.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
Price to the Underwriting Proceeds to the
Public(1) Discount Sellers (1)(2)
------------ ------------ ---------------
Per Class A Certificate. . . % % %
Per Class B Certificate. . . % % %
Total $ $ $
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
------------------------
The Certificates are offered subject to prior sale and subject to the
Underwriter's right to reject orders in whole or in part. It is expected
that delivery of the Certificates will be made through the Same Day Funds
System of the Depository Trust Company on or about , 199
.
GREENWICH CAPITAL MARKETS, INC.
The date of this Prospectus Supplement is , 199 .
<PAGE>
The Class A Certificates will evidence in the aggregate an undivided
ownership interest in approximately % of the Trust. The Class B
Certificates will evidence in the aggregate an undivided ownership
interest in approximately % of the Trust. Principal and interest
at the applicable Pass-Through Rate generally will be distributed to
Certificateholders on the day of each month, commencing
, 199 . The rights of the Class B Certificateholders to receive
distributions are subordinated to the rights of the Class A
Certificateholders to the extent described herein. The outstanding
principal amount, if any, of the Certificates will be due and payable on
, 199 .
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION
ABOUT THE OFFERING OF THE 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
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED
BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS PROSPECTUS
SUPPLEMENT CONTAINS INFORMATION THAT IS SPECIFIC TO THE TRUST AND THE
SECURITIES OFFERED HEREBY AND, TO THAT EXTENT, SUPPLEMENTS THE MORE
GENERAL INFORMATION PROVIDED IN THE PROSPECTUS. INFORMATION CONTAINED IN
THIS PROSPECTUS SUPPLEMENT MAY ALSO REFLECT LEGAL, ECONOMIC AND OTHER
DEVELOPMENTS SINCE THE DATE OF THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
CERTIFICATES AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and
annual unaudited reports containing information concerning the Receivables
will be prepared by the Servicer and sent on behalf of the Trust only to
Cede & Co., as nominee of The Depository Trust Company and registered
holder of the Certificates. See "Certain Information Regarding the
Securities -- Book-Entry Registration" and "-- Statements to
Securityholders" in the accompanying Prospectus (the "Prospectus"). Such
reports will not constitute financial statements prepared in accordance
with generally accepted accounting principles. The Depositor, as
originator of 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, and the rules and
regulations of the Commission thereunder.
S-2
<PAGE>
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" or,
to the extent not defined herein, have the meanings assigned to such terms
in the Prospectus.
Issuer . . . . . . . . . . . . . FASCO Auto Trust 199 - , a
trust to be formed pursuant to a
Pooling and Servicing Agreement to
be dated as of
, 199 (the "Pooling
and Servicing Agreement"), among
the Depositor,
, as Originator and Servicer,
and the Trustee.
Depositor . . . . . . . . . . . . Financial Asset Securities Corp.,
a Delaware corporation (the
"Depositor").
Originator and
Servicer . . . . . . . . . . . . , a
corporation (in its capacity as
originator of the Receivables the
"Originator"; in its capacity as
servicer of the Receivables, the
"Servicer"). The Servicer is
referred to as the Master Servicer
in the Prospectus.
Trustee . . . . . . . . . . . . ,
a banking
corporation, as trustee under the
Pooling and Servicing Agreement
(the "Trustee").
The Certificates . . . . . . . . The Certificates will be issued on
(the
"Closing Date") pursuant to the
Pooling and Servicing Agreement
and will represent fractional
undivided interests in the Trust.
The Class A Certificates will be
issued in an initial aggregate
principal amount of $
(the "Initial Class A
Certificate Balance") and will
evidence in the aggregate an
undivided ownership interest in
approximately % of the
Trust (the "Class A Percentage").
The "Class A Certificate Balance"
on any date of determination will
equal the Initial Class A
Certificate Balance reduced by all
distributions made to the Class A
Certificateholders and allocable
to principal.
The Class B Certificates will be
issued in an initial aggregate
principal amount of $
(the "Initial Class
B Certificate Balance") and will
evidence in the aggregate an
undivided ownership interest in
approximately % of the
Trust (the "Class B Percentage").
The "Class B Certificate Balance"
on any date of determination will
equal the Initial Class B
Certificate Balance reduced by (i)
all distributions made to the
Class B Certificateholders and
allocable to principal and (ii)
Realized Losses allocable to the
Class B Certificates.
The Class B Certificates will be
subordinated to the Class A
Certificates to the extent
described herein.
See "Description of the
Certificates" herein.
S-3
<PAGE>
Each class of Certificates will be
represented initially by one or
more certificates registered in
the name of Cede & Co., as the
nominee of DTC. No person
acquiring a beneficial interest in
a Class A Certificate or a Class B
Certificate will be entitled to
receive a definitive certificate
representing such person's
interest in the Trust except in
the limited circumstances
described in the Prospectus.
Under the terms of the Pooling and
Servicing Agreement, unless and
until the Certificates are issued
in definitive form, the beneficial
owners thereof will not be
recognized as Certificateholders
and will be permitted to exercise
the rights of Certificateholders
only indirectly through DTC. See
"Certain Information Regarding the
Securities -- Book-Entry
Registration" and "-- Definitive
Securities" in the Prospectus.
The Receivables . . . . . . . . On the Closing Date, the Depositor
will purchase Receivables (the
"Initial Receivables") from the
Originator having an aggregate
principal balance of approximately
$ as of
, 199 (the
"Initial Cutoff Date"). The
Receivables will be purchased
pursuant to a purchase agreement
dated as of ,199
(the "Purchase Agreement"), between
the Originator and the Depositor.
The Trust, in turn, will purchase
the Initial Receivables on the
Closing Date from the Depositor, and
the Servicer will agree to service
the Receivables, pursuant to the
Pooling and Servicing Agreement.
In addition, the Originator will
be obligated under the terms of
the Purchase Agreement to sell
(subject only to the availability
thereof), and the Depositor will
be obligated to purchase (subject
only to the satisfaction of
certain conditions set forth
therein), additional Receivables
(the "Subsequent Receivables")
having an aggregate principal
balance of approximately $
, which is the amount
to be deposited to the Pre-Funding
Account on the Closing Date (the
"Pre-Funded Amount"). The
Depositor will be obligated under
a Transfer Agreement dated as of
, 199 (the "Transfer
Agreement"), between the Depositor
and the Trust, to transfer the
Subsequent Receivables to the
Trust. The Depositor will
designate as a cutoff date (each,
a "Subsequent Cutoff Date") each
date as of which particular
Subsequent Receivables are
conveyed by the Originator to the
Depositor and by the Depositor to
the Trust. Each date during the
Funding Period on which Subsequent
Receivables will be conveyed to
the Trust is referred to herein as
a "Subsequent Transfer Date". See
"Description of the Certificates -
- Sale and Assignment of
Receivables; Subsequent
Receivables" and "The Receivables
Pool" herein and "The Receivables
Pools" in the Prospectus.
The Receivables will consist of
sub-prime motor vehicle retail
installment sale contracts and
motor vehicle installment loan
agreements (the "Contracts")
secured by new or used
automobiles, light duty trucks,
vans and minivans, including the
right to receive certain payments
in respect thereof, security
interests in the vehicles financed
thereby (the "Financed Vehicles")
and the proceeds thereof. The
Receivables arise, or will arise,
from Contracts originated or
acquired from motor
S-4
<PAGE>
vehicle dealers (the "Dealers") by
the Originator in the ordinary course
of business. The Obligors on the
Contracts are primarily consumers
with limited access to traditional
sources of credit ("sub-prime"
borrowers), who are generally
relatively higher credit risks due
to various factors, including
their past credit experience and
the absence or limited extent of
their credit history. See "Risk
Factors -- Sub-Prime Nature of
Obligors; Servicing" and "The
Originator".
The Initial Receivables have been
selected, and the Subsequent
Receivables will be selected, from
the Contracts owned by the
Originator based on the criteria
specified in the Purchase
Agreement and the Pooling and
Servicing Agreement and described
herein under "The Receivables
Pool" and in the Prospectus under
"The Receivables Pools". As of
the Initial Cutoff Date, the
weighted average APR of the
Initial Receivables was
approximately %, the
weighted average remaining term to
maturity of the Initial
Receivables was approximately
months and the weighted average
original term to maturity of the
Initial Receivables was
approximately months. No
Initial Receivable has, and no
Subsequent Receivable will have, a
scheduled maturity later than
(the "Final
Scheduled Maturity Date").
Subsequent Receivables may be
originated or acquired from
Dealers by the Originator at a
later date using credit criteria
that differ from those that were
applied to the Initial Receivables
and may be of a different credit
quality and seasoning. In
addition, following the transfer
of Subsequent Receivables to the
Trust, the characteristics of the
entire pool of Receivables
included in the Trust may vary
significantly from those of the
Initial Receivables. See "Risk
Factors -- The Pre-Funding
Account", "-- Conveyance of
Subsequent Receivables to the
Trust", "The Receivables Pool" and
"Description of the Certificates -
- Sale and Assignment of
Receivables; Subsequent
Receivables" herein.
The Originator will make certain
representations and warranties
with respect to the Receivables in
the Purchase Agreement and will
undertake to repurchase any
Receivable with respect to which
an uncured breach of any such
representation or warranty exists
if such breach materially and
adversely affects the rights
therein of the Trustee and the
Certificateholders, as assignees
of the Depositor, if such breach
is not cured by the Originator in
a timely manner. See "Description
of the Certificates -- Sale and
Assignment of Receivables;
Subsequent Receivables" herein.
In the Pooling and Servicing
Agreement, the Depositor will
assign its rights under the
Purchase Agreement, including its
right to cause the Originator to
repurchase Receivables with
respect to which it is in breach
of a representation or warranty, to
the Trustee for the benefit of the
Certificateholders. The Depositor
will have no obligation to repurchase
from the Trust Receivables with
respect to which the Originator is
in breach of a representation or
S-5
<PAGE>
warranty, nor will it have any other
obligation with respect to the
Receivables or the Certificates.
Terms of the Certificates
A. Distribution Dates . . . . Distributions of interest and
principal on the Certificates will
be made on the day of each
month or, if any such day is not a
Business Day, on the next
succeeding Business Day (each, a
"Distribution Date"), commencing
, 199 .
Distributions will be made to
holders of record of the
Certificates (the
"Certificateholders") as of the
day immediately preceding such
Distribution Date (each, a "Record
Date"). A "Business Day" is a day
other than a Saturday, a Sunday or
day on which banking institutions
or trust companies in the City of
New York or the city in which the
corporate trust office of the
Trustee is located are authorized
by law, regulation or executive
order to be closed.
B. Pass-Through Rates . . . . Interest will accrue on the Class
A Certificates at the rate of
% per annum (the "Class A
Pass-Through Rate") and on the
Class B Certificates at the rate
of % per annum (the
"Class B Pass-Through Rate"),
calculated on the basis of a 360-
day year consisting of twelve 30-
day months.
C. Distributions . . . . . . Interest. On each Distribution
Date, the Trustee will distribute
interest (i) to holders of record
of the Class A Certificates (the
"Class A Certificateholders"), pro
rata, in a maximum amount equal to
the Class A Interest Distributable
Amount and (ii) to holders of
record of the Class B Certificates
(the "Class B Certificateholders"),
pro rata, in a maximum amount equal
to the Class B Interest Distributable
Amount.
The "Class A Interest
Distributable Amount" for each
Distribution Date will equal the
sum of (A) 30 days' interest (or,
in the case of the first
Distribution Date, interest
accrued from and including the
Closing Date to and including
, 199 ) at the Class A
Pass-Through Rate on the Class A
Certificate Balance on the
previous Distribution Date (or, in
the case of the first Distribution
Date, on the Closing Date) after
giving effect to all distributions
to Certificateholders on such date
and (B) any accrued and unpaid
interest due to Class A
Certificateholders from previous
Distribution Dates. The Class A
Interest Distributable Amount
generally will be payable to the
Class A Certificateholders on each
Distribution Date to the extent of
funds available therefor from, in
the following order of priority,
(i) the Class A Percentage of the
Interest Distribution Amount (as
reduced by Servicing Fees paid to
the Servicer on such date), (ii)
funds, if any, available in the
Reserve Account and (iii) that
portion of the Total Distribution
Amount otherwise distributable on
such date to Class B
Certificateholders.
The "Class B Interest
Distributable Amount" for each
Distribution Date will equal the
sum of (A) 30 days' interest (or,
in the case of the first
Distribution Date, interest
accrued from and including the
S-6
<PAGE>
Closing Date to and
including , 199 )
at the Class B Pass-Through Rate
on the Class B Certificate Balance
on the previous Distribution Date
(or, in the case of the first
Distribution Date, on the Closing
Date) after giving effect to all
distributions to
Certificateholders on such date
and (B) any accrued and unpaid
interest due to Class B
Certificateholders from previous
Distribution Dates. The Class B
Interest Distributable Amount
generally will be payable to the
Class B Certificateholders on each
Distribution Date to the extent of
funds available therefor from, in
the following order of priority,
(i) the Class B Percentage of the
Interest Distribution Amount (as
reduced by Servicing Fees paid to
the Servicer and amounts
distributed as interest to the
Class A Certificateholders on such
date) and (ii) funds, if any,
available in the Reserve Account
on such date after distribution to
the Class A Certificateholders of
the Class A Interest Distributable
Amount.
The rights of the Class B
Certificateholders to receive
distributions of interest will be
subordinated to the rights of the
Class A Certificateholders to
receive interest to the extent
described herein. See
"Description of the Certificates -
- Distributions" and "--
Subordination of the Class B
Certificates; Reserve Account".
Principal. Principal of the Class
A Certificates will be payable on
each Distribution Date, pro rata
to the Class A Certificateholders,
in a maximum amount equal to the
Class A Principal Distributable
Amount for such date. The "Class
A Principal Distributable Amount"
for any Distribution Date will
equal the sum of (i) the Class A
Percentage of the Principal
Distribution Amount for the
related Collection Period and (ii)
any outstanding principal amounts
due but not distributed to Class A
Certificateholders on previous
Distribution Dates. The Class A
Principal Distributable Amount
generally will be payable to Class
A Certificateholders to the extent
of funds available therefor from
(i) the Class A Percentage of the
Principal Distribution Amount
(exclusive of the portion thereof
attributable to Realized Losses),
(ii) funds, if any, available in
the Reserve Account on such date
after payment of the Class A
Interest Distributable Amount and
the Class B Interest Distributable
Amount and (iii) the Total
Distribution Amount remaining
after the payment on such date of
the Class A Interest Distributable
Amount and Class B Interest
Distributable Amount.
Principal of the Class B
Certificates will be payable on
each Distribution Date, pro rata
to the Class B Certificateholders,
in a maximum amount equal to the
Class B Principal Distributable
Amount for such date. The "Class
B Principal Distributable Amount"
for any Distribution Date will
equal the sum of (i) the Class B
Percentage of the Principal
Distribution Amount for the
related Collection Period and (ii)
any outstanding principal amounts
due but not distributed to Class B
Certificateholders on previous
Distribution Dates. The Class B
Principal Distributable Amount
generally will be payable to Class
B Certificateholders on each
Distribution Date to the extent of
funds available therefor from, in
the following order of priority
(i) any remaining portion of
S-7
<PAGE>
the Total Distribution Amount and
(ii) funds, if any, remaining in the
Reserve Account on such date after
payment of the Class A Interest
Distributable Amount, the Class A
Principal Distributable Amount and
the Class B Interest Distributable
Amount.
The "Collection Period" with
respect to each Distribution Date
will be the calendar month
immediately preceding the month in
which such Distribution Date
occurs (or, in the case of the
first Distribution Date, the
period from and including the
Initial Cutoff Date through and
including ,
199 ).
The outstanding principal amount
of the Class A Certificates and
the Class B Certificates, if any,
will be payable in full on the
Final Scheduled Distribution Date.
See "Description of the
Certificates -- Distributions".
Subordination of the Class B
Certificates; Reserve
Account . . . . . . . . . . . The rights of the Class B
Certificateholders to receive
distributions with respect to the
Receivables will be subordinated
to the rights of the Class A
Certificateholders to the extent
described herein. This
subordination is intended to
enhance the likelihood of timely
receipt by the Class A
Certificateholders of the full
amount of interest and principal
payable to them and to afford the
Class A Certificateholders limited
protection against losses in
respect of the Receivables.
No distribution of interest will
be made to the Class B
Certificateholders on any
Distribution Date until the full
amount of interest payable on the
Class A Certificates on such
Distribution Date has been
distributed to the Class A
Certificateholders, and no
distribution of principal will be
made to the Class B
Certificateholders on any
Distribution Date until the full
amount of interest on and
principal of the Class A
Certificates payable on such
Distribution Date has been
distributed to the Class A
Certificateholders. Distributions
of interest on the Class B
Certificates, to the extent of
collections on or in respect of
the Receivables allocable to
interest and amounts, if any,
available in the Reserve Account,
will not be subordinated to
distributions of principal of the
Class A Certificates.
The protection afforded to the
Class A Certificateholders by the
subordination feature described
above will be effected both by the
preferential right of the Class A
Certificateholders to receive, to
the extent described herein,
current distributions from
collections on or in respect of
the Receivables and by the
establishment on the Closing Date
of a segregated collateral account
held by and pledged to the
Trustee, as collateral agent, for
the benefit of the
Certificateholders (the "Reserve
Account"). The Reserve Account
will not be a part of the Trust.
S-8
<PAGE>
The Reserve Account will be funded
by the Depositor (i) on the
Closing Date with a deposit of
cash and/or Eligible Investments
having a value of approximately
$ and (ii) on each
Subsequent Transfer Date by a
deposit of cash and/or Eligible
Investments having a value equal
to % of the outstanding
principal amount of the Subsequent
Receivables conveyed to the Trust
on such date (collectively, the
"Reserve Account Initial
Deposit"). In addition, any
portion of the Total Distribution
Amount remaining in the Collection
Account on each Distribution Date
after payment of the Servicing
Fee, the Class A Distributable
Amount and the Class B
Distributable Amount will be
transferred to the Reserve
Account.
On each Distribution Date, funds
will be withdrawn from the Reserve
Account for distribution, first,
to Class A Certificateholders to
the extent of any shortfalls in
the Class A Interest Distributable
Amount, second, to Class B
Certificateholders to the extent
of any shortfalls in the Class B
Interest Distributable Amount,
third, to Class A Certificateholders
to the extent of any shortfalls in
the Class A Principal Distributable
Amount and, fourth, to Class B
Certificateholders to the extent
of any shortfalls in the Class B
Principal Distributable Amount.
On each Distribution Date, after
giving effect to all withdrawals
from and deposits to the Reserve
Account on such date, any amounts
remaining in the Reserve Account
in excess of the greater of (i)
% of the Pool Balance as of
the close of business on the last
day of the related Collection
Period and (ii) $
(the "Specified Reserve
Account Balance") will be
distributed to the Depositor, and
upon such distribution the
Certificateholders will have no
further rights in, or claims to,
such amounts.
See "Description of the
Certificates -- Subordination of
the Class B Certificates; Reserve
Account".
Optional Prepayment . . . . . . . If the Servicer exercises its
option to purchase the
Receivables, which it may do after
the aggregate principal balance of
the Receivables (the "Pool
Balance") declines to 10% or less
of the Initial Pool Balance, the
Class A Certificateholders will
receive an amount equal to the
Class A Certificate Balance
together with accrued interest at
the Class A Pass-Through Rate, the
Class B Certificateholders will
receive an amount equal to the
Class B Certificate Balance
together with accrued interest at
the Class B Pass-Through Rate, and
the Certificates will be retired.
The "Initial Pool Balance" will
equal the sum of (i) the aggregate
principal amount of the Initial
Receivables as of the Initial
Cutoff Date plus (ii) the
aggregate principal balances of
all Subsequent Receivables added
to the Trust as of their
respective Subsequent Cutoff
Dates. See "Description of the
Certificates -- Optional
Prepayment" herein.
Mandatory Repurchase . . . . . . The Certificates will be prepaid,
in part, pro rata on the basis of
their initial principal amounts,
on the Distribution Date on or
S-9
<PAGE>
immediately following the last day
of the Funding Period in the event
that any amount remains on deposit
in the Pre-Funding Account after
giving effect to the purchase of
all Subsequent Receivables,
including any such purchase on
such date. The aggregate
principal amount of Certificates
to be prepaid will be an amount
equal to the amount remaining on
deposit in the Pre-Funding
Account. See "-- Pre-Funding
Account" in this Summary of Terms,
"Risk Factors -- The Pre-Funding
Account" and "-- Conveyance of
Subsequent Receivables to the
Trust" herein and "Description of
the Certificates -- Sale and
Assignment of Receivables" in the
Prospectus.
Trust Accounts . . . . . . . . . The property of the Trust will
include all amounts on deposit
from time to time in the
Collection Account and a security
interest in the Pre-Funding
Account. See "Description of the
Transfer and Servicing Agreements
-- Trust Accounts" in the
Prospectus.
The Depositor will maintain the
Reserve Account with the Trustee
as a segregated trust account;
however, the Reserve Account will
not be property of the Trust. See
"Description of the Certificates -
- Subordination of the Class B
Certificates; Reserve Account" in
this Prospectus Supplement.
Pre-Funding Account . . . . . . During the period (the "Funding
Period") from and including the
Closing Date until the earliest to
occur of (a) the date on which the
amount on deposit in the Pre-
Funding Account is equal to
$100,000 or less, (b) an Event of
Default under the Pooling and
Servicing Agreement, (c) certain
events of insolvency with respect
to the Originator or (d) the
Distribution Date,
the Pre-Funded Amount will be
maintained in a separate
collateral account (the "Pre-
Funding Account"), which will be
established by the Depositor on
the Closing Date pursuant to a
Security Agreement dated as of
, 199 (the "Security
Agreement"), between the Depositor
and the Trustee, as collateral
agent. Amounts on deposit in the
Pre-Funding Account will be
pledged to the Trustee for the
benefit of the Certificateholders
and will be used to purchase
Subsequent Receivables from time
to time during the Funding Period
in accordance with the Pooling and
Servicing Agreement and the
Purchase Agreement. See
"Description of the Transfer and
Servicing Agreements -- Trust
Accounts -- Pre-Funding Account
and Collateral Reinvestment
Account" and "Description of the
Transfer and Servicing Agreements
-- Sale and Assignment of
Receivables" in the Prospectus.
Funds on deposit in the Pre-
Funding Account will be invested
by the Trustee, as collateral
agent, during the Funding Period
in Eligible Investments, and any
Investment Income with respect to
such Eligible Investments will be
treated as interest collections on
the Receivables and distributed on
the following Distribution Date.
The Certificates will be prepaid,
in part, pro rata on the basis of
their initial principal amounts,
on the Distribution Date on or
immediately following the last day
of the Funding Period in the
S-10
<PAGE>
event that any amount remains on
deposit in the Pre-Funding Account
after giving effect to the purchase
of all Subsequent Receivables,
including any such purchase on
such date. The aggregate
principal amount of Certificates
to be prepaid will be an amount
equal to the amount then on
deposit in the Pre-Funding
Account. See "Risk Factors -- The
Pre-Funding Account" herein and
"Description of the Transfer and
Servicing Agreements -- Sale and
Assignment of Receivables" in the
Prospectus.
Tax Status . . . . . . . . . . . In the opinion of Brown & Wood,
the Trust will be treated as a
grantor trust for federal income
tax purposes and will not be
subject to federal income tax.
Owners of beneficial interests in
the Certificates will report their
pro rata share of all income
earned on the Receivables (other
than amounts, if any, treated as
"stripped coupons") and, subject
to certain limitations in the case
of such owners who are
individuals, trusts or estates,
may deduct their pro rata share of
reasonable servicing and other
fees.
See "Certain Material Federal
Income Tax Consequences" in the
Prospectus for additional
information concerning the
application of federal income tax
laws to the Trust and the
Certificates. Persons considering
a purchase of Class B Certificates
should also consider and discuss
with their tax advisors the
information set forth in the
Prospectus under "Certain Material
Federal Income Tax Consequences --
Trusts Treated as Grantor Trusts".
ERISA Considerations . . . . . . During the Funding Period, not
more than 24.9% of the Class A
Certificates may be held by
"employee benefit plans" as
defined in Section 3 of the
Employee Retirement Income
Security Act of 1974, as amended
("ERISA"). After the termination
of the Funding Period and subject
to the considerations discussed
under "ERISA Considerations"
herein and in the Prospectus, the
Class A Certificates will be
eligible for purchase by employee
benefit plans subject to ERISA.
Because the Class B Certificates
are subordinated to the Class A
Certificates, employee benefit
plans subject to ERISA will not be
eligible to purchase Class B
Certificates.
Any benefit plan fiduciary
considering a purchase of
Certificates should, among other
things, consult with experienced
legal counsel in determining
whether all required conditions
for such purchase have been
satisfied. See "ERISA
Considerations" herein and in the
Prospectus.
Ratings of the Certificates . . It is a condition to the issuance
of the Certificates that the Class
A Certificates be rated at least
by (the
"Rating Agencies") and that the
Class B Certificates be rated at
least by .
The ratings of the Class A
Certificates will be based
primarily on the credit quality of
the Receivables, the subordination
of the Class B Certificates and
the availability of the Reserve
Account. The ratings of the Class
B Certificates will be
S-11
<PAGE>
based primarily on the credit
quality of the Receivables and
the availability of the Reserve
Account.
A rating is not a recommendation
to purchase, hold or sell the
Certificates, inasmuch as such
rating does not comment as to
market price or suitability for a
particular investor. The ratings
address the likelihood that
principal of and interest on the
Certificates will be paid pursuant
to their terms. There can be no
assurance that a rating will not
be lowered or withdrawn by a
rating agency if circumstances so
warrant. See "Risk Factors --
Limited Nature of Ratings of the
Certificates" herein.
S-12
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus
Supplement and the Prospectus, prospective investors should carefully
consider the following risk factors before investing in the Certificates.
Limited Liquidity. There is currently no secondary market for the
Class A Certificates or the Class B Certificates. The Underwriter
currently intends to make a market in the Class A Certificates and the
Class B Certificates, but is under no obligation to do so. There can be
no assurance that a secondary market will develop or, if a secondary
market does develop, that it will provide Certificateholders with
liquidity of investment or that it will continue for the life of the
Certificates.
Sub-Prime Nature of Obligors; Servicing. The Obligors on the
Receivables are primarily "sub-prime" borrowers who are generally
relatively higher credit risks due to various factors, including their
past credit experience and the absence or limited extent of their credit
history. Typical "sub-prime" borrowers include young borrowers (18 to 25
years old) who are trying to establish an initial credit history,
borrowers who have a low income level, previously bankrupt borrowers who
desire to reestablish their credit history, slow payers of credit cards
and department store accounts, and borrowers who desire payment terms
slightly longer than the maximum term permitted by traditional sources of
consumer credit. The average interest rate charged by the Originator to
such "sub-prime" borrowers is generally higher than that charged by
commercial banks, financing arms of automobile manufacturers and other
traditional sources of consumer credit, which typically impose more
stringent credit requirements. The payment experience on receivables of
obligors with this credit profile is likely to be different from that on
receivables of traditional auto financing sources and is likely to be more
sensitive to changes in the economic climate in the areas in which such
obligors reside. As a result of the credit profile of the Obligors and
the APRs of the Receivables, the historical credit loss and delinquency
rates on the Receivables may be higher than those experienced by banks and
the captive finance companies of the automobile manufacturers. In the
event of a default under a Receivable, the only source of repayment may be
liquidation proceeds from the related Financed Vehicle. The Financed
Vehicles securing the Receivables will consist primarily of used vehicles
which may not have a liquidation value sufficient to pay in full the
amount financed by the related Receivable. See "The Originator --
Description of Business".
The servicing of receivables of customers with such credit profiles
requires special skill and diligence. The Servicer believes that its
credit loss and delinquency experience reflect in part its trained staff
and collection procedures. If the Servicer resigns or is removed
following a Servicer Default, collections on the Receivables may be
adversely affected. See "Description of the Transfer and Servicing
Agreements -- Rights Upon Servicer Default" in the Prospectus.
The Pre-Funding Account. On the Closing Date, the Trustee will
deposit the Pre-Funded Amount into the Pre-Funding Account. The Pre-Funding
Account will be established in the name of the Trustee as
collateral agent and all amounts deposited thereto will be pledged to the
Trustee for the benefit of the Certificateholders. The Pre-Funded Amount
will be used only to purchase Subsequent Receivables, and prior to
withdrawal from the Pre-Funding Account as payment for the Subsequent
Receivables, funds on deposit in the Pre-Funding Account will be invested
in Eligible Investments. Any Investment Income from the investment of the
Pre-Funded Amount in Eligible Investments will be included in the Interest
Distribution Amount and distributed on the following Distribution Date
pursuant to payment priorities described in this Prospectus Supplement.
To the extent that amounts on deposit in the Pre-Funding Account have
not been fully applied to the purchase of Subsequent Receivables by the
end of the Funding Period, the Certificateholders will receive, on the
Distribution Date on or immediately following the last day of the Funding
Period, a prepayment of principal in an amount equal to the Pre-Funded
Amount remaining in the Pre-Funding Account following the purchase of any
Subsequent Receivables on such Distribution Date. It is
S-13
<PAGE>
anticipated that the principal amount of the Subsequent Receivables sold to the
Trust will not be exactly equal to the amount on deposit in the Pre-Funding
Account and, therefore, that there will be at least a nominal amount of
principal prepaid to the Certificateholders. See "Description of the
Certificates -- Mandatory Repurchase".
Conveyance of Subsequent Receivables to the Trust. On the Closing
Date, the Depositor will transfer Initial Receivables to the Trust having
an aggregate principal balance of $ , which Initial
Receivables the Depositor will purchase from the Originator using part of
the proceeds from the sale of the Certificates. The Depositor will pledge
$ , i.e., the remaining Certificate
proceeds (representing the Pre-Funded Amount) pursuant to the Security
Agreement in favor of the Trust, and such amount will be deposited into
the Pre-Funding Account. The Pre-Funded Amount will be used during the
Funding Period to purchase Subsequent Receivables from the Originator. If
the principal amount of eligible Receivables originated or acquired by the
Originator prior to the termination of the Funding Period is less than the
Pre-Funded Amount, the Originator will have insufficient Receivables to
sell to the Depositor, and the Depositor will have insufficient
Receivables to transfer to the Trust, thereby resulting in a prepayment of
principal to the Certificateholders as described above. In addition, any
conveyance of Subsequent Receivables by the Originator to the Depositor
and the Depositor to the Trust will be subject to the satisfaction, on or
before the applicable Subsequent Transfer Date, of the following
conditions, among others: (i) each such Subsequent Receivable must satisfy
the eligibility criteria specified in the Pooling and Servicing Agreement;
(ii) neither the Originator nor the Depositor shall have selected such
Subsequent Receivable in a manner that it believes is adverse to the
interests of the Certificateholders; (iii) as of the related Subsequent
Cutoff Date, the Receivables in the Trust, including the Subsequent
Receivables to be conveyed to the Trust on such date, must satisfy the
parameters described under "The Receivables Pool" herein and under "The
Receivables Pools" in the Prospectus; (iv) the applicable Reserve
Account Initial Deposit for such Subsequent Transfer Date shall have
been made; (v) the Originator shall have executed and delivered to
the Depositor, and the Depositor shall have executed and delivered to the
Trustee, a written assignment conveying such Subsequent Receivables to the
Depositor and the Trust, respectively (including a schedule identifying
such Subsequent Receivables); (vi) the Depositor shall have delivered
certain opinions of counsel to the Trustee and the Rating Agencies with
respect to the validity of the conveyance of the Subsequent Receivables to
the Trust; (vii) the Trustee shall have received written confirmation from
a firm of certified public accountants that the Receivables, including
such Subsequent Receivables, meet the criteria described herein under "The
Receivables Pool" and in the Prospectus under "The Receivables Pools"; and
(viii) the Rating Agencies shall have notified the Depositor in writing
that, following the conveyance of all the Subsequent Receivables to the
Trust, the Certificates will continue to be rated by the Rating Agencies
in the same rating categories in which they were rated on the Closing
Date. Such confirmation of the ratings of the Certificates may depend on
factors other than the characteristics of the Subsequent Receivables,
including the delinquency, repossession and net loss experience on the
automobile, van and light duty truck receivables in the portfolio serviced
by the Servicer.
The Originator is obligated under the Purchase Agreement and the
Pooling and Servicing Agreement to repurchase any Subsequent Receivable
that fails to satisfy the conditions listed in the preceding paragraph at
a purchase price equal to the Repurchase Amount therefor.
Each Subsequent Receivable, at the time it is conveyed to the Trust,
must satisfy the eligibility criteria specified in the Pooling and
Servicing Agreement. However, Subsequent Receivables may have been
originated or acquired by the Originator after the Closing Date using
credit criteria different from those that were applied to the Initial
Receivables and may be of a different credit quality and seasoning. In
addition, except as described herein and in the Prospectus, there will be
no other required characteristics of Subsequent Receivables. Therefore,
following the transfer of Subsequent Receivables to the Trust, the
characteristics of the entire Receivables Pool included in the Trust may
vary significantly from those of the Initial Receivables. See "The
Receivables Pool" herein and "Description
S-14
<PAGE>
of the Transfer and Servicing Agreements -- Sale and Assignment of
Receivables" and "The Receivables Pools" in the Prospectus.
Subordination. On each Distribution Date, distributions of interest
on the Class B Certificates will be subordinated to distributions of
interest on the Class A Certificates, and distributions of principal of
the Class B Certificates will be subordinated to distributions of interest
and principal due on the Class A Certificates. Consequently, the Class B
Certificateholders will not receive any distributions of interest on a
Distribution Date until the full amount of interest payable on the Class A
Certificates on such Distribution Date has been distributed to the Class A
Certificateholders, and Class B Certificateholders will not receive any
distributions of principal on a Distribution Date until the full amount of
interest on and principal of the Class A Certificates payable on such
Distribution Date has been distributed to the Class A Certificateholders.
Limited Assets of the Trust. The Trust will not have, nor is it
permitted or expected to have, any significant assets or sources of funds
other than the Receivables, its security interest in the Pre-Funding
Account and certain rights with respect to the Reserve Account, and
Certificateholders generally must rely on payments on the Receivables for
distributions of interest and principal on the Certificates. The
Pre-Funding Account will be available only during the Funding Period and
is designed solely to cover obligations of the Trust relating to funds not
invested in Receivables on the Closing Date and is not designed to cover
losses on the Receivables. Similarly, although funds in the Reserve
Account will be available on each Distribution Date to cover shortfalls in
distributions of interest and principal on the Certificates, amounts to be
deposited in the Reserve Account are limited in amount. If the Reserve
Account is exhausted, the Trust will depend solely on current
distributions on the Receivables to make distributions on the
Certificates. See "The Trust" and "Description of the Certificates --
Subordination of the Class B Certificates; Reserve Account" herein.
Limited Obligations of the Depositor and the Originator. The
Certificates are obligations of the Trust only, and neither the Depositor
nor the Originator is obligated to make any payments on the Certificates.
In addition, if the Originator fails to repurchase any Receivable with
respect to which it is in breach of a representation or warranty, the
Depositor will have no obligation to purchase such Receivable from the
Trust.
Limited Nature of Ratings of the Certificates. It is a condition to
the issuance of the Certificates that the Class A Certificates be rated at
least or its equivalent by , and the Class
B Certificates be rated at least or its equivalent by
. The ratings of the Class A Certificates
will be based primarily on the credit quality of the Receivables, the
subordination of the Class B Certificates and the availability of funds in
the Reserve Account. The ratings of the Class B Certificates will be
based primarily on the credit quality of the Receivables and the
availability of the Reserve Account.
A rating is not a recommendation to purchase, hold or sell the
Certificates, inasmuch as a rating does not comment as to market price or
suitability for a particular investor. The ratings of the Certificates
address the likelihood that principal of and interest on the Certificates
will be paid pursuant to their terms. There can be 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. In the event that a rating is
subsequently lowered or withdrawn, no person or entity will be required to
provide any additional credit enhancement.
THE ORIGINATOR
(The data in this section to be provided with respect to each Originator)
DESCRIPTION OF BUSINESS
S-15
<PAGE>
UNDERWRITING STANDARDS
SERVICING STANDARDS
CREDIT LOSS EXPERIENCE
DELINQUENCY EXPERIENCE
THE TRUST
GENERAL
The Depositor will establish the Trust by selling and assigning the
Trust property, as described below, to the Trustee in exchange for the
Certificates. The Servicer will service the Receivables pursuant to the
Pooling and Servicing Agreement and will be compensated for acting as the
Servicer. See "Description of the Transfer and Servicing Agreements --
Servicing Compensation and Payment of Expenses" in the Prospectus. To
facilitate servicing and to minimize administrative burden and expense,
the Servicer will be appointed custodian of the Receivables and the
related documents by the Trustee, but will not stamp the Receivables or
amend the certificates of title of the Financed Vehicles
S-16
<PAGE>
to reflect the sale and assignment of the Receivables by the Originator to
the Depositor or by the Depositor to the Trust. In the absence of
amendments to the certificates of title, the Trustee may not have perfected
security interests in the Financed Vehicles securing the Receivables in some
states. See "Certain Legal Aspects of the Receivables" in the Prospectus.
If the protection provided to Certificateholders by the Reserve
Account and, in the case of the Class A Certificateholders, the
subordination of the Class B Certificates is insufficient, the Trust will
look only to the Obligors on the Receivables and the proceeds from the
repossession and sale of Financed Vehicles that secure defaulted
Receivables to fund distributions of principal and interest on the
Certificates. In such event, certain factors, such as the Trust's not
having first priority perfected security interests in some of the Financed
Vehicles, may affect the Trust's ability to realize on the collateral
securing the Receivables and thus may reduce the proceeds to be
distributed to Certificateholders with respect to the Certificates. See
"Description of the Certificates -- Distributions" and "-- Subordination
of the Class B Certificates; Reserve Account" herein and "Certain Legal
Aspects of the Receivables" in the Prospectus.
Each Certificate represents a fractional undivided ownership interest
in the Trust. The Trust property includes the Receivables (including any
Subsequent Receivables) transferred by the Originator to the Depositor and
by the Depositor to the Trust and all payments due thereunder, in the case
of Precomputed Receivables, or received thereunder, in the case of Simple
Interest Receivables, on or after the Initial Cutoff Date or related
Subsequent Cutoff Date, as applicable. The Trust property also includes
(i) such amounts as from time to time may be held in the Collection
Account; (ii) security interests in the Financed Vehicles and any
accessions thereto; (iii) the rights to proceeds with respect to the
Receivables from claims on physical damage, credit life and disability
insurance policies covering the Financed Vehicles or the Obligors, as the
case may be; (iv) any property that shall have secured a Receivable and
that shall have been acquired by the Trustee; (v) a security interest in
all amounts on deposit in the Pre-Funding Account; and (vi) any and all
proceeds of the foregoing. The Reserve Account will be maintained by the
Trustee for the benefit of the Certificateholders, but will not be part of
the Trust.
THE TRUSTEE
is Trustee under the Pooling and Servicing
Agreement. is a banking corporation, and its
principal offices are located at . The Depositor and its
affiliates may maintain normal commercial banking relations with the
Trustee and its affiliates.
THE RECEIVABLES POOL
The pool of Receivables conveyed to the Trust (the "Receivables
Pool") will include the Initial Receivables purchased as of the Initial
Cutoff Date and any Subsequent Receivables purchased as of the applicable
Subsequent Cutoff Dates (the Initial Cutoff Date or any Subsequent Cutoff
Date being individually referred to herein as a "Cutoff Date").
The Initial Receivables were, and the Subsequent Receivables were or
will be, originated or acquired from Dealers by the Originator in the
ordinary course of business, and were or will be selected from the
Originator's portfolio for inclusion in the Receivables Pool based on
several criteria, including the following: (i) as of the applicable
Cutoff Date each Receivable had, or will have, an outstanding gross
balance of at least $ ; (ii) as of the applicable
Cutoff Date, none of the Receivables shall be more than days past
due; and (iii) as of the applicable Cutoff Date, no Obligor on any
Receivable was noted in the records of the applicable Originator as being
the subject of a bankruptcy proceeding. Certain additional criteria that
each Receivable must meet are set forth in the Prospectus under "The
Receivables Pools". No selection procedures believed by either the
Originator or the Depositor to be adverse to Certificateholders were or
will be used in selecting the Receivables.
S-17
<PAGE>
The obligation of the Trust to purchase Subsequent Receivables on a
Subsequent Transfer Date will be subject to the Receivables in the Trust,
including the Subsequent Receivables to be conveyed to the Trust on such
Subsequent Transfer Date, meeting the following criteria: (i) the weighted
average APR of the Receivables shall not be less than %; and
(ii) the weighted average remaining term of the Receivables shall not be
greater than months. Such criteria will be based on the
characteristics of the Initial Receivables on the Initial Cutoff Date and
any Subsequent Receivables on the related Subsequent Cutoff Dates.
The Initial Receivables will represent approximately % of
the aggregate initial principal balance of the Certificates. However,
except for the criteria described in the preceding paragraphs, the
Subsequent Receivables are not required to have any specific
characteristics; therefore, following the transfer of Subsequent
Receivables to the Trust, the aggregate characteristics of the entire
Receivables Pool, including the composition of the Receivables, the
distribution by APR and the geographic distribution, may vary
significantly from those of the Initial Receivables. The composition,
distribution by APR and geographic distribution of the Initial Receivables
as of the Initial Cutoff Date are as set forth in the following tables.
<TABLE>
COMPOSITION OF THE INITIAL RECEIVABLES AS OF THE INITIAL CUTOFF DATE
<CAPTION>
Weighted Aggregate Number of Weighted Average
Average APR Principal Balance Receivables Remaining Term
___________ ----------------- ----------- ----------------
<S> <C> <C> <C>
% $ months
Weighted Average Average
Original Term Principal Balance
- ---------------- -----------------
<C> <C>
months $
</TABLE>
<TABLE>
DISTRIBUTION OF INITIAL RECEIVABLES BY APR AS OF THE INITIAL CUTOFF DATE
<CAPTION>
Percentage of
Number of Aggregate Aggregate
APR Range Receivables Principal Balance Principal Balance /(1)/
- ------------------ ------------- ----------------- -----------------------
<S> <C> <C> <C>
0.00% to 15.00% $ %
15.01% to 16.00%
16.01% to 17.00%
17.01% to 18.00%
18.01% to 19.00%
19.01% to 20.00%
20.01% to 21.00%
21.01% to 22.00%
22.01% to 23.00%
23.01% to 24.00%
24.01% to 25.00%
Greater than 25.00%
------------- ----------------- -----------------------
Total $ 100.00%
============= ================= =======================
</TABLE>
- ---------------------
/(1)/ Percentages may not add to 100.00% because of rounding.
S-18
<PAGE>
<TABLE>
DISTRIBUTION BY REMAINING PRINCIPAL BALANCE OF THE INITIAL RECEIVABLES AS
OF THE INITIAL CUTOFF DATE
<CAPTION>
Percentage of
Range of Number of Aggregate Aggregate
Remaining Terms Receivables Principal Balance Principal Balance/(1)/
- --------------- ----------- ----------------- ----------------------
<S> <C> <C> <C>
$ 1,000 to $ 2,499 . . $ %
$ 2,500 to $ 4,999 . .
$ 5,000 to $ 7,499 . .
$ 7,500 to $ 9,999 . .
$10,000 to $12,499 . .
$12,500 to $14,999 . .
$15,000 to $17,499 . .
$17,500 to $19,999 . .
$20,000 to $22,499 . .
$22,500 to $24,999 . .
$25,000 to $27,499 . .
$27,500 to $29,999 . .
$30,000 to $39,999 . .
$40,000 to $49,999 . . ----------- ----------------- --------------------
Total. . . . . . . $ 100.00%
=========== ================= ====================
</TABLE>
_____________
/(1)/ Percentages may not add to 100.00% because of rounding.
<TABLE>
DISTRIBUTION BY REMAINING TERM OF THE INITIAL RECEIVABLES AS OF THE
INITIAL CUTOFF DATE
<CAPTION>
Percentage of
Range of Number of Aggregate Aggregate
Remaining Terms Receivables Principal Balance Principal Balance/(1)/
- --------------- ----------- ----------------- ----------------------
<S> <C> <C> <C>
3 to 11 months . . $ %
12 to 17 months . .
18 to 23 months . .
24 to 29 months . .
30 to 35 months . .
36 to 41 months . .
42 to 47 months . .
48 to 53 months . .
54 to 59 months . .
60 to 65 months . .
66 to 72 months . .
----------- ----------------- ----------------------
Total. . . . . . $ 100.00%
=========== ================= ======================
</TABLE>
- ------------------------
/(1)/ Percentages may not add to 100.00% because of rounding.
S-19
<PAGE>
<TABLE>
GEOGRAPHIC DISTRIBUTION OF THE INITIAL RECEIVABLES AS OF THE INITIAL
CUTOFF DATE
<CAPTION>
Percentage of
Number of Aggregate Aggregate
State/(1)/ Receivables Principal Balance Principal Balance/(2)/
- -------------- ----------- ----------------- ----------------------
<S> <C> <C> <C>
$ %
----------- ----------------- ----------------------
Total $ 100.00%
=========== ================= ======================
</TABLE>
_____________
(/(1)/ Based on billing addresses of the Obligors.)
/(2)/ Percentages may not add to 100.00% because of rounding.
As of the Initial Cutoff Date, approximately % of the
Initial Receivables, by aggregate principal balance, constitute
Precomputed Receivables and approximately % of the Initial
Receivables constitute Simple Interest Receivables. See "The Receivables
Pools" in the Prospectus for a description of the characteristics of
Precomputed Receivables and Simple Interest Receivables. As of the
Initial Cutoff Date, approximately % of the Initial Receivables by
aggregate principal balance, constituting approximately % of the
number of Initial Receivables, represent used vehicles.
THE DEPOSITOR
Information regarding the Depositor is set forth under "The
Depositor" in the Prospectus.
WEIGHTED AVERAGE LIFE OF THE CERTIFICATES
Information regarding certain maturity and prepayment considerations
with respect to the Certificates is set forth under "Weighted Average Life
of the Securities" in the Prospectus. As the rate of payment of principal
of the Certificates depends on the rate of payment (including prepayments)
of the principal balance of the Receivables, the final distribution in
respect of the Certificates could occur significantly earlier than the
Final Scheduled Distribution Date. Certificateholders will bear the risk
of being able to reinvest principal payments on the Certificates at yields
at least equal to the yield on the Certificates.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Pooling
and Servicing Agreement, a form of which has been filed as an exhibit to
the Registration Statement. A copy of the Pooling and Servicing Agreement
will be filed with the Commission following the issuance of the
Certificates. The following summary describes certain terms of the
Certificates and the Pooling and Servicing Agreement. 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 Certificates and the
Pooling and Servicing Agreement. The following summary supplements the
description of the general terms and provisions of the Certificates of any
given Series and the description of the related Pooling and Servicing
Agreement set forth in the Prospectus, to which descriptions reference is
hereby made.
S-20
<PAGE>
The Class A Certificate Balance initially will equal $
and, as of any date of determination thereafter, will equal the
Initial Class A Certificate Balance less all amounts previously
distributed to Class A Certificateholders and allocable to principal. The
Class B Certificate Balance initially will equal $
and, as of any date of determination thereafter, will equal the Initial
Class B Certificate Balance less the sum of all amounts previously
distributed to Class B Certificateholders and allocable to principal and
any Realized Losses allocable to the Class B Certificates. The Class A
Certificates will evidence in the aggregate an undivided ownership
interest in approximately % of the Trust, and the Class B
Certificates will evidence in the aggregate an undivided ownership
interest in approximately % of the Trust.
DISTRIBUTIONS
Collection of Receivables and Calculation of Distributable Amounts.
On or about the day of each month, the Servicer will provide
the Trustee with certain information with respect to the immediately
preceding Collection Period, including the aggregate amount of collections
on the Receivables, Advances and Repurchase Amounts, the Total
Distribution Amount, the Interest Distribution Amount, the Principal
Distribution Amount, the Class A Interest Distributable Amount, the Class
A Principal Distributable Amount, the Class B Interest Distributable
Amount and the Class B Principal Distributable Amount.
On or before each Distribution Date, the Servicer will cause the
Total Distribution Amount to be deposited into the Collection Account.
The "Total Distribution Amount" for any Distribution Date will equal the
sum of the Interest Distribution Amount plus the Principal Distribution
Amount for such date (other than the portion thereof attributable to
Realized Losses). "Realized Losses" means the excess of the principal
balance of a Liquidated Receivable over Liquidation Proceeds with respect
thereto, to the extent allocable to principal.
The "Interest Distribution Amount" for a Distribution Date generally
will equal the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
allocable to interest in accordance with the Servicer's customary
servicing procedures; (ii) all proceeds of the liquidation of defaulted
Receivables ("Liquidated Receivables"), net of expenses incurred by the
Servicer in connection with such liquidation and any amounts required by
law to be remitted to the Obligors on such Liquidated Receivables
("Liquidation Proceeds"), to the extent attributable to interest due
thereon in accordance with the Servicer's customary servicing procedures;
(iii) all recoveries in respect of Liquidated Receivables that were
written off in prior Collection Periods; (iv) all Advances made by the
Servicer of amounts allocable to interest; (v) the Repurchase Amount of
each Receivable that was repurchased by the Originator during the related
Collection Period, to the extent attributable to accrued interest thereon;
and (vi) Investment Earnings, if any, on amounts on deposit in the
Collection Account and the Pre-Funding Account.
The "Principal Distribution Amount" for a Distribution Date generally
will equal the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
allocable to principal in accordance with the Servicer's customary
servicing procedures; (ii) all Liquidation Proceeds attributable to the
principal amount of Receivables that became Liquidated Receivables during
such Collection Period in accordance with the Servicer's customary
servicing procedures, plus the amount of Realized Losses with respect to
such Liquidated Receivables; (iii) all Advances made by the Servicer on
Precomputed Receivables that are allocable to principal and (iv) the
Repurchase Amount of each Receivable that was repurchased by the Seller or
purchased by the Servicer during the related Collection Period, to the
extent attributable to principal.
On each Distribution Date the Trustee will distribute, pro rata, to
the Class A Certificateholders (i) interest on the Class A Certificates in
a maximum amount equal to the Class A Interest Distributable Amount and
(ii) principal in a maximum amount equal to the Class A Principal
Distributable Amount. In addition, on each Distribution Date the Trustee
will distribute, pro rata, to the Class B
S-21
<PAGE>
Certificateholders (i) interest on the Class B Certificates in a maximum
amount equal to the Class B Interest Distributable Amount and (ii) principal
in a maximum amount equal to the Class B Principal Distributable Amount.
The "Class A Interest Distributable Amount" for each Distribution
Date will equal the sum of the Class A Monthly Interest Distributable
Amount for such date plus any Class A Interest Carryover Shortfall on such
date. The "Class A Monthly Interest Distributable Amount" on each Distribution
Date will equal the product of (i) one-twelfth, (ii) the Class A Pass-Through
Rate and (iii) the Class A Certificate Balance on the previous Distribution
Date (or, in the case of the first Distribution Date, on the Closing Date)
after giving effect to all distributions to Certificateholders on such
date. The "Class A Interest Carryover Shortfall" on each Distribution
Date will equal the excess, if any, of the sum of the Class A Monthly
Interest Distributable Amount for the preceding Distribution Date and any
outstanding Class A Interest Carryover Shortfall on such preceding
Distribution Date over the amount of interest actually distributed to
Class A Certificateholders on such preceding Distribution Date.
The "Class A Principal Distributable Amount" on each Distribution
Date will equal the Class A Monthly Principal Distributable Amount plus
any Class A Principal Carryover Shortfall on such Distribution Date. The
"Class A Monthly Principal Distributable Amount" on each Distribution Date
will be the Class A Percentage of the Principal Distribution Amount. The
"Class A Principal Carryover Shortfall" on each Distribution Date will
equal the amount, if any, by which the Class A Monthly Principal
Distributable Amount for the preceding Distribution Date, plus any Class A
Principal Carryover Shortfall on such preceding Distribution Date,
exceeded the amount of principal actually distributed to Class A
Certificateholders on such date. In addition, on the Final Scheduled
Distribution Date, the Class A Principal Distributable Amount will include
the lesser of (a) the Class A Percentage of the outstanding principal
amount, if any, of the Receivables remaining in the Trust as of the Final
Scheduled Maturity Date and (b) the amount that is necessary (after giving
effect to the other amounts to be distributed to Class A
Certificateholders on such Distribution Date and allocable to principal)
to reduce the Class A Certificate Balance to zero.
The "Class B Interest Distributable Amount" for each Distribution
Date will equal the sum of the Class B Monthly Interest Distributable
Amount for such date plus any Class B Interest Carryover Shortfall on such
date. The "Class B Monthly Interest Distributable Amount" on each
Distribution Date will equal the product of (i) one-twelfth, (ii) the
Class B Pass-Through Rate and (iii) the Class B Certificate Balance on the
previous Distribution Date (or, in the case of the first Distribution
Date, on the Closing Date) after giving effect to all distributions to
Certificateholders on such date. The "Class B Interest Carryover
Shortfall" on each Distribution Date will equal the excess, if any, of the
sum of the Class B Monthly Interest Distributable Amount for the preceding
Distribution Date and any outstanding Class B Interest Carryover Shortfall
on such preceding Distribution Date over the amount of interest actually
distributed to Class B Certificateholders on such preceding Distribution
Date.
The "Class B Principal Distributable Amount" on each Distribution
Date will equal the Class B Monthly Principal Distributable Amount plus
any Class B Principal Carryover Shortfall on such Distribution Date. The
"Class B Monthly Principal Distributable Amount" on each Distribution Date
will equal the Class B Percentage of the Principal Distribution Amount.
The "Class B Principal Carryover Shortfall" on each Distribution Date will
equal the amount, if any, by which the Class B Monthly Principal
Distributable Amount for the preceding Distribution Date, plus any Class B
Principal Carryover Shortfall on such preceding Distribution Date,
exceeded the amount of principal actually distributed to Class B
Certificateholders on such date. In addition, on the Final Scheduled
Distribution Date, the Class B Principal Distributable Amount will include
the lesser of (a) the Class B Percentage of the outstanding principal
amount, if any, of the Receivables remaining in the Trust as of the Final
Scheduled Maturity Date and (b) the amount that is necessary (after giving
effect to the other amounts to be distributed to Class B
Certificateholders on such Distribution Date and allocable to principal)
to reduce the Class B Certificate Balance to zero.
S-22
<PAGE>
Distributions to Certificateholders. On each Distribution Date, the
Trustee will make the following distributions, in the priority indicated,
from the Total Distribution Amount and, if necessary and to the extent
provided below, from amounts on deposit in the Reserve Account:
(i) to the Servicer, from the Interest Distribution Amount, the
Servicing Fee and all unpaid Servicing Fees from prior Collection Periods;
(ii) to the Class A Certificateholders, from the Class A
Percentage of the Interest Distribution Amount (after payment therefrom of
amounts due to the Servicer pursuant to clause (i) above), the Class A
Interest Distributable Amount; provided, that, if the Class A Percentage of
the Interest Distribution Amount is less than the Class A Interest
Distributable Amount for such date, such deficiency shall be paid, to the
extent of available funds, first from the Reserve Account, then from that
portion of the Total Distribution Amount otherwise distributable to Class B
Certificateholders;
(iii) to the Class B Certificateholders, from the Class B
Percentage of the Interest Distribution Amount (after payment therefrom of
amounts due to the Servicer and to the Class A Certificateholders pursuant
to clauses (i) and (ii) above), the Class B Interest Distributable Amount;
provided, that, if the Class B Percentage of the Interest Distribution Amount
is less than the Class B Interest Distributable Amount for such date, such
deficiency shall be paid, to the extent of available funds (after payment of
the Class A Interest Distributable Amount), from the Reserve Account;
(iv) to the Class A Certificateholders, from the Class A
Percentage of the Principal Distribution Amount (exclusive of the portion
thereof attributable to Realized Losses), an amount equal to the Class A
Principal Distributable Amount; provided, that, if the Class A Percentage of
such Principal Distribution Amount is less than the Class A Principal
Distributable Amount for such date, such deficiency shall be paid, to the
extent of available funds, first from amounts available in the Reserve
Account on such date after payment of the Class A Interest Distributable
Amount and Class B Interest Distributable Amount and then from the Total
Distribution Amount remaining after payment therefrom of amounts due to the
Servicer, the Class A Interest Distributable Amount and the Class B Interest
Distributable Amount;
(v) to the Class B Certificateholders, from any remaining
portion of the Total Distribution Amount, an amount equal to the Class B
Principal Distributable Amount; provided, that, if such remaining portion of
the Total Distribution Amount is less than the Class B Principal
Distributable Amount for such date, such deficiency shall be paid from
amounts, if any, available in the Reserve Account after payment of the Class
A Distributable Amount and the Class B Interest Distributable Amount
on such date; and
(vi) after the payment of the amounts described in clauses (i)
through (v) above, any portion of the Total Distribution Amount remaining in
the Collection Account on any Distribution Date shall be deposited into
the Reserve Account.
SUBORDINATION OF THE CLASS B CERTIFICATES; RESERVE ACCOUNT
The rights of the Class B Certificateholders to receive distributions
with respect to the Receivables will be subordinated to such rights of the
Class A Certificateholders to the extent described herein. This subordi-
nation is intended to enhance the likelihood of timely receipt by the
Class A Certificateholders of the full amount of interest and principal
distributable to them on each Distribution Date, and to afford the Class A
Certificateholders limited protection against losses in respect of the
Receivables.
S-23
<PAGE>
No distribution of interest will be made to the Class B
Certificateholders on any Distribution Date until the full amount of
interest payable on the Class A Certificates on such Distribution Date has
been distributed to the Class A Certificateholders and no distribution of
principal will be made to the Class B Certificateholders on any
Distribution Date until the full amount of interest on and principal of
the Class A Certificates payable on such Distribution Date has been
distributed to the Class A Certificateholders. Distributions of interest
on the Class B Certificates will not be subordinated to distributions of
principal of the Class A Certificates. Because the rights of the Class B
Certificateholders to receive distributions of principal will be
subordinated to the rights of the Class A Certificateholders to receive
distributions of interest and principal, the Class B Certificates will be
more sensitive than the Class A Certificates to losses on the Receivables.
If the aggregate amount of losses on the Receivables exceeds the amount on
deposit in the Reserve Account, Class B Certificateholders may not recover
their initial investment in the Class B Certificates.
In the event of delinquencies or losses on the Receivables, the
protection afforded to the Class A Certificateholders will be effected
both by the preferential right of the Class A Certificateholders to
receive distributions on the Receivables in the manner and to the extent
described above and by the establishment of the Reserve Account.
The Reserve Account will be established on the Closing Date by the
Depositor and will be held by the Trustee, as collateral agent for the
Depositor, but will not be a part of or otherwise includible in the Trust.
On the Closing Date, the Depositor will deposit the Reserve Account
Initial Deposit into the Reserve Account, which shall consist of cash
and/or Eligible Investments having a value of approximately $
. On each Subsequent Transfer Date, the Depositor will direct
the Trustee to transfer an amount equal to % of the aggregate
principal amount of the Subsequent Receivables to be transferred to the
Trust on such date from the Pre-Funding Account to the Reserve Account.
In addition, on each Distribution Date thereafter, the Reserve Account
Initial Deposit will be augmented by the deposit thereto of any funds
remaining in the Distribution Account on such date after the payment of
the Servicing Fee, the Class A Distributable Amount and the Class B
Distributable Amount. The Specified Reserve Account Balance with respect
to any Distribution Date will equal the greater of (i) % of the
Pool Balance as of the close of business on the last day of the related
Collection Period and (ii) $ . In no
event will the Specified Reserve Account Balance exceed the sum of the
Class A Certificate Balance and the Class B Certificate Balance.
On each Distribution Date, funds available in the Reserve Account
will be withdrawn for distribution, first, to Class A Certificateholders
to the extent of shortfalls in the amounts available to make required
distributions of interest on the Class A Certificates, second, to Class B
Certificateholders to the extent of shortfalls in the amounts available to
make required distributions of interest on the Class B Certificates,
third, to Class A Certificateholders to the extent of shortfalls in the
amounts available to make required distributions of principal on the Class
A Certificates and, fourth, to Class B Certificateholders to the extent of
shortfalls in the amounts available to make required distributions of
principal on the Class B Certificates.
If the amount on deposit in the Reserve Account on any Distribution
Date (after giving effect to all deposits thereto or withdrawals therefrom
on such date) is greater than the Specified Reserve Account Balance, the
Trustee will release and distribute such excess to the Depositor. Upon
the release to the Depositor on any Distribution Date of amounts from the
Reserve Account in excess of the Specified Reserve Account Balance, the
Certificateholders will have no further rights in, or claims to, such
amounts.
OPTIONAL PREPAYMENT
On any Distribution Date following the Determination Date on which
the Pool Balance is determined to be 10% or less of the Initial Pool
Balance, the Servicer may elect to exercise its option to purchase all of
the Receivables for a purchase price equal to the aggregate Repurchase
Amounts of
S-24
<PAGE>
all the outstanding Receivables. Any such exercise of its option by the
Servicer will result in the prepayment of the Certificates and the early
termination of the Trust. See "Description of the Transfer and Servicing
Agreements -- Termination" in the Prospectus.
MANDATORY REPURCHASE
Principal distributions to Certificateholders will be made, on a pro
rata basis, on the Distribution Date on or immediately following the last
day of the Funding Period in the event that any amount remains on deposit
in the Pre-Funding Account after giving effect to the purchase of all
Subsequent Receivables, including any such purchase on such date. The
aggregate principal amount of the Certificates to be repurchased will be
the amount then on deposit in the Pre-Funding Account.
ERISA CONSIDERATIONS
During the Funding Period, not more than 24.9% of the Class A
Certificates may be held by "employee benefit plans" as defined in Section
3 of ERISA. After the termination of the Funding Period and subject to
the considerations set forth under "ERISA Considerations -- Senior
Certificates" in the Prospectus, the Class A Certificates may be purchased
by employee benefit plans or individual retirement accounts (each, a
"Plan") subject to ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended (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 will not result in a nonexempt prohibited
transaction as defined in Section 406 of ERISA or Section 4975 of the
Code. For additional information regarding treatment of the Class A
Certificates under ERISA, see "ERISA Considerations" in the Prospectus.
Because the Class B Certificates are subordinated to the Class A
Certificates, the Class B Certificates may not be purchased by Plans.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement relating to the Certificates (the "Underwriting Agreement")
between the Depositor and (Greenwich Capital Markets, Inc.), (as
representative of the underwriters,) the Depositor has agreed to cause the
Trust to sell to the underwriters listed below (the "Underwriters"), and
the Underwriters have agreed to purchase, the principal amount of Class A
Certificates and Class B Certificates set forth opposite each
Underwriter's name below:
CLASS A CERTIFICATES
Greenwich Capital Markets, Inc. . . . . . . . . . . . . . $
--------------
Total . . . . . . . . . . . . . . . . . . . . . . . $
=============
CLASS B CERTIFICATES
Greenwich Capital Markets, Inc. . . . . . . . . . . . . . . . $
------------
Total . . . . . . . . . . . . . . . . . . . . . . . . $
============
S-25
<PAGE>
The Depositor has been advised by the Underwriters that the
Underwriters propose to offer the Class A Certificates and the Class B
Certificates to the public initially at the public offering prices set
forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession of % per Class A
Certificate and % per Class B Certificate; that the Underwriters
and such dealers may allow a discount of % per Class A
Certificate and % per Class B Certificate on sales to certain
other dealers; and that after the initial public offering of the
Certificates, the public offering price and the concessions and discounts
to dealers may be changed by the Underwriters.
The Underwriting Agreement provides that the Depositor will indemnify
the Underwriters against certain liabilities under applicable securities
laws, or contribute to payments the Underwriters may be required to make
in respect thereof.
The Trust may, from time to time, invest the funds in the Collection
Account in Eligible Investments acquired from the Underwriters.
Upon receipt of a request by an investor who has received an
electronic Prospectus Supplement and Prospectus from the Underwriters or a
request by such investor's representative within the period during which
there is an obligation to deliver a Prospectus Supplement and Prospectus,
the Depositor or the Underwriters will promptly deliver, or cause to be
delivered, without charge, a paper copy of the Prospectus Supplement and
Prospectus.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed
upon for the Trust and the Depositor by Brown & Wood, New York, New York.
S-26
<PAGE>
INDEX OF TERMS
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class A Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . 3
Class A Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . 6
Class A Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class A Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . 22
Class A Interest Distributable Amount . . . . . . . . . . . . . . . . . . . 6
Class A Monthly Interest Distributable Amount . . . . . . . . . . . . . . 22
Class A Monthly Principal Distributable Amount . . . . . . . . . . . . . 22
Class A Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . 6
Class A Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Class A Principal Carryover Shortfall . . . . . . . . . . . . . . . . . . 22
Class A Principal Distributable Amount . . . . . . . . . . . . . . . . . . 7
Class B Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . 3
Class B Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . 6
Class B Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class B Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . 22
Class B Interest Distributable Amount . . . . . . . . . . . . . . . . . . . 6
Class B Monthly Interest Distributable Amount . . . . . . . . . . . . . . 22
Class B Monthly Principal Distributable Amount . . . . . . . . . . . . . 22
Class B Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . 6
Class B Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Class B Principal Carryover Shortfall . . . . . . . . . . . . . . . . . . 22
Class B Principal Distributable Amount . . . . . . . . . . . . . . . . . . 7
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . . . . . 5
Funding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Initial Class A Certificate Balance . . . . . . . . . . . . . . . . . . . . 3
Initial Class B Certificate Balance . . . . . . . . . . . . . . . . . . . . 3
Initial Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Initial Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest Distribution Amount . . . . . . . . . . . . . . . . . . . . . . 21
Liquidated Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 21
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Mandatory Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Originator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Pooling and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . 3
S-27
<PAGE>
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . . 21
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Reserve Account Initial Deposit . . . . . . . . . . . . . . . . . . . . . . 9
Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Specified Reserve Account Balance . . . . . . . . . . . . . . . . . . . . . 9
sub-prime borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Subsequent Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Subsequent Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . . 4
Total Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . 21
Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 25
S-28
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
No dealer, salesperson or other person has been
authorized to give any information or to make any
representations other than those contained or
incorporated by reference in this Prospectus FASCO AUTO TRUST
Supplement and the Prospectus in connection with 199 -
the offer made by this Prospectus Supplement and
the Prospectus and, if given or made, such $
information or representations must not be relied % ASSET BACKED NOTES,
upon as having been authorized. This Prospectus CLASS A
Supplement and the Prospectus do not constitute an $
solicitation by anyone in any state in which such % ASSET BACKED NOTES,
offer or solicitation is unauthorized or in which CLASS B
the person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful
to make such offer or solicitation. Neither the
delivery of this Prospectus Supplement and the FINANCIAL ASSET SECURI-
and the Prospectus nor any sale made hereunder TIES CORP.,
shall, under any circumstances, create any Depositor
implication that the information contained
herein or therein is correct as of any time
subsequent to the date of this Prospectus Supplement
or Prospectus. ( )
Servicer
TABLE OF CONTENTS Page
PROSPECTUS SUPPLEMENT
Reports to Certificateholders . . . . . . . . S-2
Summary of Terms . . . . . . . . . . . . . . S-3
Risk Factors . . . . . . . . . . . . . . . . S-13 PROSPECTUS SUPPLEMENT
The Originator. . . . . . . . . . . . . . . . S-15
The Trust . . . . . . . . . . . . . . . . . . S-16
The Receivables Pool . . . . . . . . . . . . S-17
The Depositor . . . . . . . . . . . . . . . S-20
Weighted Average Life of the Securities . . . S-20
Description of the Certificates . . . . . . S-20 GREENWICH CAPITAL
ERISA Considerations . . . . . . . . . . . . S-20 MARKETS INC.
Underwriting. . . . . . . . . . . . . . . . . S-25
Legal Matters . . . . . . . . . . . . . . . . S-26
Index of Terms. . . . . . . . . . . . . . . . S-27
Prospectus
Available Information . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference 2
Summary of Terms . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . 10
The Trusts. . . . . . . . . . . . . . . . . . . 14
The Receivables Pools . . . . . . . . . . . . . 15
Weighted Average Life of the Securities . . . . 17
Pool Factors and Trading Information. . . . . . 17
Use of Proceeds . . . . . . . . . . . . . . . . 18
The Depositor . . . . . . . . . . . . . . . . . 18
The Originators . . . . . . . . . . . . . . . . 19
Description of the Notes. . . . . . . . . . . . 19
Description of the Certificates . . . . . . . . 23
Certain Information Regarding the Securities. . 24
Description of the Transfer and Servicing
Agreements. . . . . . . . . . . . . . . . . . . 32
Certain Legal Aspects of the Receivables. . . . 42
Certain Federal Income Tax Consequences . . . 45
ERISA Considerations. . . . . . . . . . . . . . 57
Plan of Distribution. . . . . . . . . . . . . . 59
Legal Matters . . . . . . . . . . . . . . . . . 59
Index of Principal Terms. . . . . . . . . . . . 60
Until 90 days after the date of this Prospectus
Supplement, all dealers effecting transactions
in the Certificates described in this
Prospectus Supplement, whether or not participating
in this distribution, may be required to deliver
this Prospectus Supplement and the Prospectus. This
is in addition to the obligation of dealers to deliver
this Prospectus Supplement and the Prospectus
when acting as underwriters and with respect to
their unsold allotments or subscriptions.
</TABLE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1996
Registration No. 333-1548
SECURITIES AND EXCHANGE COMMISSION
Washington , D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
- ----------------------------------
FASCO AUTO TRUSTS
(Issuer with respect to the Securities)
FINANCIAL ASSET SECURITIES CORP.
(Originator of the Trusts described herein)
(Exact name of Registrant as specified in its charter)
Delaware Applied for
(State or other jurisdiction of incorporation or organization)(I.R.S.
Employer Identification No.)
600 Steamboat Road
Greenwich, Connecticut 06830
(203) 625-2700
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Charles A. Forbes, Jr.
Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830
(203) 625-5673
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
Daniel M. Rossner, Esq. John C. Anderson, Esq.
Brown & Wood Financial Asset Securities Corp.
One World Trade Center 600 Steamboat Road
New York, New York 10048 Greenwich, Connecticut 06830
- ----------------------------------
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
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, as amended, other than securities offered only in
connection with dividend or interest reinvestment plans, 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 of 1933, as
amended, please check the following box and list the Securities Act of
1933, as amended, registration statement number of the earlier
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, as amended, check the following
box and list the Securities Act of 1933, as amended, 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
<TABLE>
<CAPTION>
Title of Securities Amount to Be Proposed Maximum Proposed Maximum
to Be Registered Registered Offering Price Aggregate
Per Unit (1) Offering Price(1)
<S> <C> <C> <C>
Asset Backed Securities $500,000,000 100% $500,000,000
Amount of
Registration Fee
<C>
$172,414
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
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 THAT SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS
THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
1
<PAGE>
<PAGE> 2
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus
relating to the offering of Series of Asset Backed Notes and/or Asset
Backed Certificates by various FASCO Auto Trusts created from time to time
by Financial Asset Securities Corp. and (ii) two forms of Prospectus
Supplement relating to the offering by FASCO Auto Trust 199 - of the
particular Series of Asset Backed Certificates or of Asset Backed Notes
and Asset Backed Certificates described therein. Each form of Prospectus
Supplement relates only to the securities described therein and is a form
that may be used, among others, by Financial Asset Securities Corp. to
offer Asset Backed Notes and/or Asset Backed Certificates under this
Registration Statement.
3
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 29, 1996
PROSPECTUS
FASCO AUTO TRUSTS
Asset Backed Notes
Asset Backed Certificates
--------------------------
FINANCIAL ASSET SECURITIES CORP.
Depositor
--------------------------
The Asset Backed Notes (the "Notes") and the Asset Backed
Certificates (the "Certificates" and, together with the Notes, the
"Securities") described herein may be sold from time to time in one or
more series (each, a "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 (a "Prospectus Supplement"). Each Series of Securities will be
issued by a trust (each, a "Trust") to be formed with respect to such
Series and may include one or more classes of Notes and/or one or more
classes of Certificates. The property of each Trust will include a pool
of motor vehicle retail installment sale contracts or motor vehicle
installment loans secured by new and used automobiles, vans and light duty
trucks (the "Receivables"), certain monies due or received thereunder on
and after the applicable cutoff date, security interests in the vehicles
financed thereby and certain other property, as more fully described
herein and in the related Prospectus Supplement. If so specified in the
related Prospectus Supplement, the property of a Trust will include monies
on deposit in a trust account, which will be used to purchase additional
Receivables after the Closing Date. The Receivables will have been
acquired by Financial Asset Securities Corp. (the "Depositor"), either
directly or indirectly, from one or more institutions (each an
"Originator"), which may be affiliates of the Depositor. Each Originator
will be an entity generally in the business of originating or acquiring
Receivables. Specific information regarding the Receivables included in
each pool and the Originator or Originators thereof will be provided in
the related Prospectus Supplement. The Prospectus Supplement for each
Series will name the entity, which may be an affiliate of the Depositor,
that will act, directly or indirectly through one or more Subservicers, as
Master Servicer of the Receivables.
Each class of Securities of each Series will represent the right
to receive a specified amount of payments of principal and interest on the
related Receivables, at the rates, on the dates and in the manner
described herein and in the related Prospectus Supplement. As more fully
described herein and in the related Prospectus Supplement, distributions
on any class of Securities may be senior or subordinate to distributions
on one or more other classes of Securities of the same Series, and
payments on the Certificates of a Series may be subordinated in priority
to payments on the Notes of such Series. If provided in the related
Prospectus Supplement, a Series of Securities may include one or more
classes of Securities entitled to principal distributions with
disproportionate, nominal or no distributions in respect of interest, or
to interest distributions with disproportionate, nominal or no
distributions in respect of principal.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" ON PAGE ^ 12 OF THIS PROSPECTUS.
-
THE NOTES OF A SERIES WILL REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES
OF A SERIES WILL REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST
ONLY, AND WILL NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT
GUARANTEED OR INSURED BY, FINANCIAL ASSET SECURITIES CORP., GREENWICH
CAPITAL MARKETS, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES.
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.
Retain this Prospectus for future reference. This Prospectus may not
be used to consummate sales of Securities of any Series unless accompanied
by a Prospectus Supplement.
-------------------------------
Greenwich Capital Markets, Inc.
<PAGE>
AVAILABLE INFORMATION
The Depositor, as originator of the Trusts, has filed with the
Securities and Exchange Commission (the "Commission") a Registration
Statement on Form S-3 (together with all amendments and exhibits thereto,
the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Securities being offered
hereby. This Prospectus does not contain all of the information set forth
in the Registration Statement, certain parts of which have been omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is made to the Registration Statement, which is
available for inspection without charge at the public reference facilities
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and the regional offices of the Commission at Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and
Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of
such information can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
UPON RECEIPT OF A REQUEST BY AN INVESTOR WHO HAS RECEIVED AN
ELECTRONIC PROSPECTUS SUPPLEMENT AND PROSPECTUS FROM AN UNDERWRITER OR A
REQUEST BY SUCH INVESTOR'S REPRESENTATIVE WITHIN THE PERIOD DURING WHICH
THERE IS AN OBLIGATION TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS,
THE DEPOSITOR OR THE UNDERWRITER WILL PROMPTLY DELIVER, OR CAUSE TO BE
DELIVERED, WITHOUT CHARGE, TO SUCH INVESTOR A PAPER COPY OF THE PROSPECTUS
SUPPLEMENT AND PROSPECTUS.
REPORTS TO SECURITYHOLDERS
With respect to each Series of Securities, on or prior to each
Distribution Date, the Master Servicer will prepare and forward, or cause
to be prepared and forwarded, to the related Indenture Trustee or Trustee
to be included with the distribution to each Securityholder of record a
statement setting forth for the related Collection Period the information
specified in the related Prospectus Supplement.
In addition, within the prescribed period of time for tax reporting
purposes after the end of each calendar year during the term of each
Trust, the related Trustee or Indenture Trustee, as applicable, will mail
to each person who at any time during such calendar year shall have been a
registered Securityholder a statement containing certain information for
the purposes of such Securityholder's preparation of federal income tax
returns. See "Certain Federal Income Tax Consequences".
Each Indenture Trustee will be required to mail each year to all
related Noteholders a brief report relating to its eligibility and
qualification to continue as Indenture Trustee under the related
Indenture, any amounts advanced by it under the Indenture, the amount,
interest rate and maturity date of certain indebtedness owing by the
related Owner Trust to such Indenture Trustee in its individual capacity,
the property and funds physically held by such Indenture Trustee as such
and any action taken by it that materially affects the related Notes and
that has not been previously reported.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Depositor with the Commission on behalf of
the Trust referred to in the accompanying Prospectus Supplement pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, after the date of this Prospectus and prior to the
termination of the offering of the Securities offered by such Trust shall
be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the dates of filing of such documents. Any statement
contained herein or 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
<PAGE>
a statement contained herein (or in the accompanying Prospectus Supplement)
or in any subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed to constitute
a part of this Prospectus, except as so modified or superseded.
The Depositor will provide on behalf of each Trust without charge to
each person to whom a copy of this Prospectus is delivered, on the written
or oral request of such person, a copy of any or all of the documents
incorporated herein by reference, except the exhibits to such documents.
Requests for such copies should be directed to Peter Sanchez, Operations
Manager, Financial Asset Securities Corp., 600 Steamboat Road, Greenwich,
Connecticut 06830. Telephone requests may be directed to Peter Sanchez at
(203) 625-7909.
3
<PAGE>
SUMMARY OF TERMS
This 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 each Series of Securities
contained in the related Prospectus Supplement to be prepared and
delivered in connection with the offering of such Securities. Certain
capitalized terms used in this summary are defined elsewhere in this
Prospectus on the pages indicated in the "Index of Principal Terms".
Issuer . . . . . . . . . . . . . With respect to any Series of
Securities, a Trust formed
pursuant to either (i) a pooling
and servicing agreement (a
"Pooling and Servicing Agreement")
among the Depositor, the Master
Servicer, the Trustee for such
Trust and, if so specified in the
related Prospectus Supplement, one
or more Originators (as defined
below) of the related Receivables
(each such Trust being referred to
herein as a "Grantor Trust") or
(ii) a trust agreement (a "Trust
Agreement") among the Depositor,
an entity to be specified in the
related Prospectus Supplement (the
"Company") and the Trustee for
such Trust (each such Trust being
referred to herein as an "Owner
Trust").
Depositor . . . . . . . . . . . . Financial Asset Securities Corp.
is a Delaware corporation and an
indirect limited purpose finance
subsidiary of The Long-Term Credit
Bank of Japan, Limited and an
affiliate of Greenwich Capital
Markets, Inc. See "The
Depositor".
Master Servicer . . . . . . . . . The entity, which may be an
affiliate of the Depositor, named
as Master Servicer in the related
Prospectus Supplement (the "Master
Servicer"). Each Prospectus
Supplement will specify whether
the Master Servicer will service
the Receivables in the related
Receivables Pool directly or
indirectly through one or more
subservicers (each, a
"Subservicer").
Originators . . . . . . . . . The Depositor will acquire the
Receivables, directly or
indirectly, from one or more
institutions, which may be
affiliates of the Depositor (each
an "Originator"). Each Originator
will be an entity generally in the
business of originating or
acquiring Receivables, or an
affiliate of such an entity. The
Receivables will be either (i)
originated by the related
Originator, (ii) originated by
various dealers (" Dealers") and
assigned to the Originator or
(iii) acquired by the related
Originator from other originators
or owners of receivables.
Trustee . . . . . . . . . . . . . With respect to each Owner Trust
and each Grantor Trust, the
trustee specified in the related
Prospectus Supplement (the "
Trustee").
Indenture Trustee . . . . . . . With respect to any Series of
Securities that is issued by an
Owner Trust and includes one or
more classes of Notes, the
indenture trustee specified in the
related Prospectus Supplement (the
"Indenture Trustee").
Securities Offered . . . . . Each Series of Securities issued
by an Owner Trust may include one
or more classes of Certificates
and/or one or more classes of
Notes. Each Series of Securities
issued by a Grantor Trust will
include one or more classes of
Certificates, but will not include
any Notes. Each class of Notes
will be issued pursuant to an
indenture (each, an "Indenture")
between the related Owner Trust
and the Indenture Trustee
specified in the related
4
<PAGE>
Prospectus Supplement. Each class
of Certificates will be issued
pursuant to the related Trust
Agreement (in the case of
Certificates issued by an Owner
Trust) or the related Pooling and
Servicing Agreement (in the case
of Certificates issued by a
Grantor Trust). The related
Prospectus Supplement will specify
which class or classes of Notes
and/or Certificates of the related
Series are being offered thereby.
Notes . . . . . . . . . . . . . Each class of Notes will have a
stated principal amount and will
bear interest at a specified rate
or rates (with respect to each
class of Notes, the "Interest
Rate") as set forth in the related
Prospectus Supplement. Each class
of Notes may have a different
Interest Rate, which may be a
fixed, variable or adjustable
Interest Rate or any combination
of the foregoing. The related
Prospectus Supplement will specify
the Interest Rate, or the method
for determining the Interest Rate,
for each class of Notes.
A Series of Securities issued by
an Owner Trust may include two or
more classes of Notes that differ
as to timing and priority of
payments, seniority, allocations
of losses, Interest Rate or amount
of payments of principal or
interest. Additionally, payments
of principal or interest in
respect of any such class or
classes may or may not be made
upon the occurrence of specified
events or on the basis of
collections from designated
portions of the Receivables Pool.
If specified in the related
Prospectus Supplement, one or more
classes of Notes ("Strip Notes")
may be entitled to (i) principal
payments with disproportionate,
nominal or no interest payments or
(ii) interest payments with
disproportionate, nominal or no
principal payments. See
"Description of the Notes --
Distributions of Principal and
Interest".
Unless otherwise specified in
the related Prospectus Supplement,
Notes will be available for
purchase in denominations of
$1,000 and integral multiples
thereof and will be available in
book-entry form only. Noteholders
will be able to receive Definitive
Notes only in the limited
circumstances described herein or
in the related Prospectus
Supplement. See "Certain
Information Regarding the
Securities -- Definitive
Securities".
If the Master Servicer exercises
its option to purchase the
Receivables of a Trust (or if not
and, if and to the extent provided
in the related Prospectus
Supplement, satisfactory bids for
the purchase of such Receivables
are received) in the manner and on
the respective terms and
conditions described under
"Description of the Transfer and
Servicing Agreements --
Termination", all of the
outstanding Notes will be redeemed
as set forth in the related
Prospectus Supplement. In
addition, if the related
Prospectus Supplement provides
that the property of a Trust will
include monies in a Pre-Funding
Account or Collateral
Reinvestment Account that will be
used to purchase additional
Receivables after the Closing
Date, one or more classes of the
outstanding Notes may be subject
to partial redemption at or
immediately following the end of
the period specified in such
Prospectus Supplement for the
purchase of such additional
Receivables in the manner and to
the extent specified in the
related Prospectus Supplement.
The Certificates . . . . . . Each class of Certificates will
have a stated certificate balance
(the "Certificate Balance") and
will accrue interest on such
Certificate Balance
5
<PAGE> at a specified rate (with respect to
each class of Certificates, the
"Pass-Through Rate") as set forth
in the related Prospectus Supplement.
Each class of Certificates may have
a different Pass-Through Rate, which
may be a fixed, variable or
adjustable Pass-Through Rate, or
any combination of the foregoing.
The related Prospectus Supplement
will specify the Pass-Through
Rate, or the method for
determining the applicable Pass-
Through Rate, for each class of
Certificates.
A Series of Securities may include
two or more classes of
Certificates that differ as to
timing and priority of
distributions, seniority,
allocations of losses, Pass-
Through Rate or amount of
distributions in respect of
principal or interest.
Additionally, distributions in
respect of principal or interest
in respect of any such class or
classes may or may not be made
upon the occurrence of specified
events or on the basis of
collections from designated
portions of the related
Receivables Pool. If specified in
the related Prospectus Supplement,
one or more classes of
Certificates ("Strip
Certificates") may be entitled to
(i) principal distributions with
disproportionate, nominal or no
interest distributions or (ii)
interest distributions with
disproportionate, nominal or no
principal distributions. See
"Description of the Certificates -
- Distributions of Principal and
Interest". If a Series of
Securities issued by an Owner
Trust includes one or more classes
of Notes, distributions in respect
of the Certificates may be
subordinated in priority of
payment to payments on the Notes
to the extent specified in the
related Prospectus Supplement.
Unless otherwise specified in
the related Prospectus Supplement,
Certificates will be available for
purchase in a minimum denomination
of $20,000 and in integral
multiples of $1,000 in excess
thereof and will be available in
book-entry form only.
Certificateholders will be able to
receive Definitive Certificates
only in the limited circumstances
described herein or in the related
Prospectus Supplement. See
"Certain Information Regarding the
Securities -- Definitive
Securities".
If the Master Servicer or any
Subservicer exercises its option
to purchase the Receivables of a
Trust (or if not and, if and to
the extent provided in the related
Prospectus Supplement,
satisfactory bids for the purchase
of such Receivables are received),
in the manner and on the
respective terms and conditions
described under "Description of
the Transfer and Servicing
Agreements -- Termination", the
Certificates will be prepaid as
set forth in the related
Prospectus Supplement. In
addition, if the related
Prospectus Supplement provides
that the property of a Trust will
include a Pre-Funding Account or
Collateral Reinvestment Account
that will be used to purchase
additional Receivables after the
Closing Date, one or more classes
of Certificates may be subject to
a partial prepayment of principal
at or immediately following the
end of the period specified in
such Prospectus Supplement for the
purchase of such additional
Receivables, in the manner and to
the extent specified in the
related Prospectus Supplement.
The Trust Property . . . . . . . The property of each Trust will
include a pool of simple interest
or precomputed interest motor
vehicle installment sale contracts
or motor vehicle installment loans
secured by new and used
automobiles, vans and light duty
trucks (the "Receivables"),
including the right to receive
6
<PAGE>
payments received or due on or
with respect to such Receivables
on and after the date or dates
specified in the related
Prospectus Supplement (each, a
"Cutoff Date"), security interests
in the vehicles financed thereby
(the "Financed Vehicles"), and any
proceeds from claims under certain
related insurance policies. On
the date of issuance of a Series
of Securities specified in the
related Prospectus Supplement (the
"Closing Date"), the Depositor
will convey Receivables having the
aggregate principal balance
specified in such Prospectus
Supplement as of the Cutoff Date
specified therein to such Trust
pursuant to either (i) a Pooling
and Servicing Agreement (in the
case of a Grantor Trust) or (ii) a
sale and servicing agreement (a
"Sale and Servicing Agreement")
among the Depositor, the Master
Servicer, such Trust and, if so
specified in the related
Prospectus Supplement, one or more
Originators of the related
Receivables (in the case of an
Owner Trust). The property of
each Trust also will include
amounts on deposit in, or certain
rights with respect to, certain
trust accounts, including the
related Collection Account , any
Pre-Funding Account, any
Collateral Reinvestment Account
and any other account identified
in the applicable Prospectus
Supplement. See "Description of
the Transfer and Servicing
Agreements -- Trust Accounts".
If the related Prospectus
Supplement provides that the
property of a Trust will include
monies initially deposited into an
account (a "Pre-Funding Account")
to purchase additional Receivables
after the Closing Date, the
Depositor will be obligated
pursuant to the Sale and Servicing
Agreement or Pooling and Servicing
Agreement, as applicable, to sell
additional Receivables (the
"Subsequent Receivables") to the
related Trust, subject only to the
availability thereof, having an
aggregate principal balance
approximately equal to the amount
deposited to the Pre-Funding
Account on the Closing Date (the
"Pre-Funded Amount"), and the
Trust will be obligated to
purchase such Subsequent
Receivables (subject to the
satisfaction of certain conditions
set forth in such Sale and
Servicing Agreement or Pooling and
Servicing Agreement) from time to
time during the period (the
"Funding Period") specified in
such Prospectus Supplement for the
purchase of such Subsequent
Receivables. Any Subsequent
Receivables conveyed to a Trust
will have been acquired by the
Depositor, directly or indirectly,
from the same Originator or
Originators from which the
Depositor acquired the Receivables
conveyed to such Trust on the
related Closing Date (the "Initial
Receivables") and will meet all of
the credit and other criteria set
forth herein and in the related
Prospectus Supplement. See "Risk
Factors -- Sales of Subsequent
Receivables", "The Receivables
Pools" and "Description of the
Transfer and Servicing Agreements
-- Sale and Assignment of
Receivables" herein and "The
Receivables Pool" in the related
Prospectus Supplement.
In addition, if so provided in the
related Prospectus Supplement, in
lieu of a Funding Period, during
the period (the "Revolving
Period") from the Closing Date
until the first to occur of (i)
such event or events as are
described in the related
Prospectus Supplement (each, an
"Early Amortization Event") or
(ii) the last day of the
Collection Period preceding a
Distribution Date specified in the
related Prospectus Supplement, an
account will be maintained in the
name of the Trustee, the Owner
Trustee or the Indenture Trustee
(the "Collateral Reinvestment
Account"). The amount on deposit
in the Collateral Reinvestment
Account on the Closing Date
7
<PAGE>
may, if so specified in the related
Prospectus Supplement, include an
amount specified in the related
Prospectus Supplement (which will
be deposited out of the net
proceeds of the sale of the
related Securities) and, during
the Revolving Period principal
will not be distributed on the
Securities of the related series
and principal collections,
together with (if and to the
extent described in the related
Prospectus Supplement) interest
collections on the Receivables
that are in excess of amounts
required to be distributed
therefrom will be deposited from
time to time in the Collateral
Reinvestment Account and will be
used to purchase Subsequent
Receivables.
As used in this Prospectus, the
term Receivables will include the
Initial Receivables transferred to
a Trust on the Closing Date as
well as any Subsequent Receivables
transferred to such Trust during
the related Funding Period or
Revolving Period, if any.
Amounts on deposit in any Pre-
Funding Account during the related
Funding Period or in any
Collateral Reinvestment Account
during the related Revolving
Period will be invested by the
Trustee (as directed by the Master
Servicer) in Eligible Investments,
and any resultant investment
income, less any related
investment expenses ("Investment
Income"), will be added, on the
Distribution Date immediately
following the date on which such
Investment Income is paid to the
Trust, to interest collections on
the Receivables for the related
Collection Period and distributed
in the manner specified in the
related Prospectus Supplement.
Any funds remaining in a Pre-
Funding Account at the end of the
related Funding Period or in a
Collateral Reinvestment Account at
the end of the related Revolving
Period will be distributed as a
prepayment or early distribution
of principal to holders of one or
more classes of the Notes and/or
Certificates of the related Series
of Securities, in the amounts and
in accordance with the payment
priorities specified in the
related Prospectus Supplement. In
no event will a Funding Period
continue for more than one year
after the related Closing Date.
See "Risk Factors -- Pre-Funding
Accounts", "-- Sales of Subsequent
Receivables" and "Description of
the Transfer and Servicing
Agreements -- Trust Accounts --
Pre-Funding Accounts".
Credit and Cash Flow If and to the extent specified in
Enhancement . . . . . . . . . the related Prospectus Supplement,
credit enhancement with respect to
a Trust or any class or classes of
Securities may include any one or
more of the following:
subordination of one or more other
classes of Securities of the same
Series, reserve funds, spread
accounts, surety bonds, insurance
policies, letters of credit,
credit or liquidity facilities,
cash collateral accounts, over-
collateralization, guaranteed
investment contracts, swaps or
other interest rate protection
agreements, repurchase
obligations, other agreements with
respect to third party payments or
other support, cash deposits, or
other arrangements. To the extent
specified in the related
Prospectus Supplement, a form of
credit enhancement with respect to
a Trust or a class or classes of
Securities may be subject to
certain limitations and exclusions
from coverage thereunder.
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Transfer and Servicing
Agreements . . . . . . . . . . The Depositor will sell the
related Receivables to a Trust
pursuant to a Sale and Servicing
Agreement or Pooling and Servicing
Agreement, as applicable. The
rights and benefits of an Owner
Trust under any such Sale and
Servicing Agreement will, if such
Owner Trust issues Notes, be
assigned to the related Indenture
Trustee as collateral for such
Notes pursuant to the Indenture.
The Master Servicer will agree
with each Trust to be responsible
for servicing, managing,
maintaining custody of and making
collections on the Receivables,
either directly or indirectly
through one or more Subservicers.
In addition, the Master Servicer
may undertake certain
administrative duties under an
Administration Agreement with
respect to an Owner Trust.
Unless otherwise provided in the
related Prospectus Supplement, the
Master Servicer will advance
scheduled payments under each
Precomputed Receivable that are
not timely made (a "Precomputed
Advance") to the extent that the
Master Servicer, in its sole
discretion, expects to recoup such
Precomputed Advance from
subsequent payments on or with
respect to such Receivable or from
other Precomputed Receivables.
If so provided in the related
Prospectus Supplement, with
respect to Simple Interest
Receivables, the Master Servicer
will advance any interest
shortfall (a "Simple Interest
Advance"). As used herein, "
Advance" means any Precomputed
Advance or Simple Interest
Advance. The Master Servicer will
be entitled to reimbursement of
Advances from subsequent payments
on or with respect to the
Receivables to the extent
described in the related
Prospectus Supplement.
Unless otherwise specified in the
related Prospectus Supplement, the
Master Servicer will receive a fee
for servicing the Receivables of
each Trust equal to the percentage
specified in the related
Prospectus Supplement of the
aggregate outstanding principal
balance of the related Receivables
Pool, plus certain late fees,
prepayment charges and other
administrative fees or similar
charges. Fees payable to any
Subservicer as compensation for
performing certain servicing
functions with respect to all or a
portion of the Receivables in a
Receivables Pool will be the
responsibility of the Master
Servicer and will not be an
additional expense of the Trust.
See "Description of the Transfer
and Servicing Agreements --
Servicing Compensation and
Payment of Expenses" herein.
Tax Considerations . . . . . If a Prospectus Supplement
specifies that the related Trust
will be a partnership or will not
issue any classes of Certificates,
upon the issuance of the related
Series of Securities (a) Federal
Tax Counsel to such Trust will
deliver an opinion to the effect
that, for federal income tax
purposes: (i) any Notes of such
Series will be characterized as
debt and (ii) such Trust will not
be characterized as an association
or a publicly traded partnership
taxable as a corporation and (b)
local tax counsel to such Trust
will deliver an opinion to the
effect that the same
characterizations apply for
applicable state income and
business tax purposes. In respect
of any such Series, each holder of
a Note (each, a "Noteholder"), by
the acceptance of a Note of such
Series, will agree to treat such
Note as indebtedness, and each
holder of a Certificate, if any,
(each, a "Certificateholder"), by
the acceptance of a Certificate of
such Series, will agree to treat
such Trust as a partnership in
which such Certificateholder is a
partner for federal income and for
state income and business tax
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<PAGE>
purposes. Alternative
characterizations of such Trust
and any such Certificates are
possible, but would not result in
materially adverse tax
consequences to
Certificateholders.
If a Prospectus Supplement
specifies that the related Trust
will be a Grantor Trust, upon the
issuance of the related Series of
Certificates Federal Tax Counsel
to such Trust will deliver an
opinion to the effect that such
Trust will be treated as a grantor
trust for federal income tax
purposes and will not be subject
to federal income tax.
If a Prospectus Supplement
specifies that the related Trust
will issue one or more classes of
Certificates treated as debt, upon
the issuance of the related Series
of Securities (a) Federal Tax
Counsel to such Trust will deliver
an opinion to the effect that for
federal income tax purposes: (i)
unless provided otherwise in the
Prospectus Supplement, any
Certificates of such Series will
be characterized as debt and (ii)
such Trust will not be
characterized as an association or
a publicly traded partnership
taxable as a corporation and (b)
local tax counsel to such Trust
will deliver an opinion to the
effect that the same
characterizations apply for
applicable state income and
business tax purposes. In respect
of any such Series, each
Certificateholder, by the
acceptance of a Certificate of
such Series, will agree to treat
such Certificate as indebtedness.
Alternative characterizations of
such Trust and such Certificates
are possible, but would not result
in materially adverse tax
consequences to
Certificateholders.
See "Certain Federal Income Tax
Consequences" for additional
information regarding the
application of federal tax laws.
ERISA Considerations . . . . Subject to the considerations
discussed under "ERISA
Considerations" herein and in the
related Prospectus Supplement, and
if so specified therein, (i) the
Notes of any Series issued by an
Owner Trust and (ii) any
Certificates issued by an Owner
Trust or a Grantor Trust that meet
certain Department of Labor
requirements are eligible for
purchase by employee benefit
plans.
Unless otherwise specified in the
related Prospectus Supplement, the
Certificates of any Series that
are subordinated to any other
Security of that Series may not be
acquired by any employee benefit
plan subject to the Employee
Retirement Income Security Act of
1974, as amended, or by any
individual retirement account.
See "ERISA Considerations" herein
and in the related Prospectus
Supplement.
Ratings . . . . . . . . . . . It is a condition to the issuance
of the Securities to be offered
hereunder that they be rated in
one of the four highest rating
categories by at least one
nationally recognized statistical
rating organization. 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. Ratings of
Securities will address the
likelihood of the payment of
principal and interest thereon
pursuant to their terms. The
ratings of Securities will not
address the likelihood of an Early
Amortization Event. There can be
no assurance that a rating will
remain for a given period of time
or that a rating will not be
lowered or withdrawn entirely by a
rating
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<PAGE>
agency if in its judgment
circumstances in the future so
warrant. For more detailed
information regarding the ratings
assigned to any class of a
particular Series of Securities,
see "Summary of Terms -- Rating of
the Securities" and "Risk Factors
-- Ratings of the Securities" in
the related Prospectus Supplement.
<PAGE>
RISK FACTORS
Prospective Securityholders should consider, among other things, the
following factors in connection with the purchase of the Securities:
Pre-Funding Accounts and Collateral Reinvestment Accounts. If so
provided in the related Prospectus Supplement, on the Closing Date the
Depositor will deposit the Pre-Funded Amount specified in such Prospectus
Supplement into the Pre-Funding Account. In no event will the Pre-Funded
Amount exceed 40% of the initial aggregate principal amount of the Notes
and/or Certificates of the related Series of Securities. In addition, if
so specified in the related Prospectus Supplement, on the Closing Date the
Depositor will deposit the amount, if any, specified in such Prospectus
Supplement into the Collateral Reinvestment Account and, during the
Revolving Period, principal will not be distributed on the Securities of
the related Series and principal collections, together with (if and to the
extent described in the related Prospectus Supplement) interest
collections on the Receivables that are in excess of amounts required to be
distributed therefrom will be deposited from time to time in the Collateral
Reinvestment Account. The Pre-Funded Amount and the amounts on
deposit in the Collateral Reinvestment Account will be used to purchase
Subsequent Receivables from the Depositor (which, in turn, will acquire such
Subsequent Receivables from the Originator or Originators specified in the
related Prospectus Supplement) from time to time during the related
Funding Period or Revolving Period. During the related Funding Period or
Revolving Period and until such amounts are applied by the Trustee to
purchase Subsequent Receivables, amounts on deposit in the Pre-Funding
Account or the Collateral Reinvestment Account will be invested by the
Trustee (as instructed by the Master Servicer) in Eligible Investments, and
any investment income with respect thereto (net of any related investment
expenses) will be added to amounts received on or in respect of
the Receivables during the related Collection Period and allocated to
interest and will be distributed on the Distribution Date pursuant to the
payment priorities specified in the related Prospectus Supplement. No
Funding Period will end more than one year after the related Closing Date.
To the extent that the entire Pre-Funded Amount or the entire amount on
deposit in the Collateral Reinvestment Account has not been applied to the
purchase of Subsequent Receivables by the end of the related Funding Period
or Revolving Period, any amounts remaining in the Pre-Funding Account or the
Collateral Reinvestment Account will be distributed as a prepayment of
principal to Noteholders and Certificateholders (collectively the
"Securityholders") on the Distribution Date at or immediately following the
end of the Funding Period or Revolving Period, in the amounts and pursuant to
the priorities set forth in the related Prospectus Supplement.
Sales of Subsequent Receivables. If so provided in the related
Prospectus Supplement, the Depositor will be obligated pursuant to the
Pooling and Servicing Agreement or Sale and Servicing Agreement, as
applicable, to sell Subsequent Receivables to the Trust, and the Trust will
be obligated to purchase such Subsequent Receivables, subject only to
the satisfaction of certain conditions set forth in the Pooling and Servicing
Agreement or Sale and Servicing Agreement, as applicable, and described in
the related Prospectus Supplement. If the principal amount of the eligible
Subsequent Receivables acquired by the Depositor from the applicable
Originator or Originators during a Funding Period or Revolving Period is less
than the Pre-Funded Amount or the amount on deposit in the Collateral
Reinvestment Account, as the case may be, the Depositor may have insufficient
Subsequent Receivables to transfer to a Trust and holders of one or more
classes of the related Series of Securities may receive a prepayment or early
distribution of principal at the end of the Funding Period or Revolving
Period as described above under "Pre-Funding Accounts and Collateral
Reinvestment Accounts".
Any conveyance of Subsequent Receivables to a Trust is subject to the
satisfaction, on or before the related transfer date (each, a "Subsequent
Transfer Date"), of the following conditions precedent, among others: (i)
each such Subsequent Receivable must satisfy the eligibility criteria
specified in the related Pooling and Servicing Agreement or Sale and
Servicing Agreement, as applicable; (ii) the Depositor shall not have
selected such Subsequent Receivables in a manner that is adverse to the
interests of holders of the related Securities; (iii) as of the respective
Cutoff Dates for
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<PAGE>
such Subsequent Receivables, all of the Receivables in the Trust, including
the Subsequent Receivables to be conveyed to the Trust as of such date, must
satisfy the parameters described under "The Receivables Pools" herein and
"The Receivables Pool" in the related Prospectus Supplement; and (iv) the
Depositor must execute and deliver to such Trust a written assignment
conveying such Subsequent Receivables to such Trust. In addition, as and to
the extent specified in the related Prospectus Supplement, the conveyance of
Subsequent Receivables to a Trust is subject to the satisfaction of the
condition subsequent, among others, which must be satisfied within the
applicable time period specified in the related Prospectus Supplement, that
the Depositor deliver certain legal opinions to the related Trustee with
respect to the validity of the conveyance of the Subsequent Receivables to
the Trust. If any such conditions precedent or conditions subsequent are
not met with respect to any Subsequent Receivables within the time period
specified in the related Prospectus Supplement, the Originator or the
Depositor, as specified in the related Prospectus Supplement, will be
required to repurchase such Subsequent Receivables from the related Trust,
at a purchase price equal to the related Repurchase Amounts therefor.
Except as described herein and in the related Prospectus Supplement,
there will be no other required characteristics of Subsequent Receivables.
Therefore, the characteristics of the entire Receivables Pool included in any
Trust may vary significantly as Subsequent Receivables are conveyed to
such Trust from time to time during the Funding Period or Revolving Period.
See "The Receivables Pools" herein.
Certain Legal Aspects -- Security Interests in Financed Vehicles. In
connection with its transfer of Receivables to a Trust, the Originator of
such Receivables will transfer and assign its security interest in the
related Financed Vehicles to the Depositor, and the Depositor will transfer
and assign such security interest to the Trust. However, because of the
administrative burden and expense, neither the Originator nor the Depositor
will amend any certificates of title to identify such Trust as the new
secured party on the certificates of title relating to such Financed
Vehicles. In the absence of such amendments, such Trust may not have a
perfected security interest in such Financed Vehicles in certain states. As
more fully described in the related Prospectus Supplement, each Originator
will make certain representations and warranties with respect to its
conveyance of a perfected security interest in a Financed Vehicle to a
related Trust and the Originator will be obligated to repurchase the related
Receivable from the Trust if there is a breach of such representations and
warranties that materially adversely affects the interest of the Trust in
such Receivable and such breach has not been cured.
If a Trust does not have a perfected security interest in a Financed
Vehicle, its ability to realize on such Financed Vehicle in the event of a
default may be adversely affected. To the extent the security interest is
perfected, the Trust will have a prior claim over subsequent purchasers of
such Financed Vehicle and holders of subsequently perfected security
interests; however, the Trust could lose its security interest or the
priority of its security interest as against liens for repairs of Financed
Vehicles or for taxes unpaid by an Obligor under a Receivable or through
fraud or negligence. None of the applicable Originator, the Depositor or the
Master Servicer will have any obligation to repurchase a Receivable in
respect of which a Trust so loses its security interest or the priority of
its security interest in the related Financed Vehicle after the date such
security interest was conveyed to such Trust. See "Certain Legal Aspects of
the Receivables -- Security Interests in Financed Vehicles".
Certain Legal Aspects -- Consumer Protection Laws. Federal and state
consumer protection laws impose requirements on creditors in connection with
extensions of credit and collections of retail installment loans, and
certain of these laws make an assignee of such a loan (such as a Trust)
liable to the obligor thereon for any violation by the lender. To the extent
specified herein and in the related Prospectus Supplement, the Originator
will be obligated to repurchase any Receivable that fails to comply with such
legal requirements, and the Depositor and the Master Servicer will undertake
to enforce such obligation on behalf of the Trust.
See "Certain Legal Aspects of the Receivables -- Consumer Protection Laws".
13
<PAGE>
Certain Legal Aspects -- Insolvency Considerations. The Depositor
will take steps in structuring the transactions contemplated hereby that are
intended to ensure that the sale of the Receivables from each Originator to
the Depositor and from the Depositor to a Trust is, in each such case, a
valid sale of the Receivables. Notwithstanding the foregoing, if an
Originator or the Depositor were to become a debtor in a bankruptcy case and
a creditor or trustee-in-bankruptcy of such debtor or such debtor itself
were to take the position that the sale of Receivables by such debtor should
be treated as a pledge of such Receivables to secure a borrowing of such
debtor, then delays in payments of collections of Receivables to
Securityholders could occur or (should the court rule in favor of any such
trustee, creditor or debtor) reductions in the amounts of such payments
could result. If a transfer of Receivables by an Originator or the
Depositor is treated as a pledge instead of a sale by it, a tax or
government lien on its property arising before the transfer of such
Receivables by such debtor may have priority over the related Trust's
interest in such Receivables. If the transactions contemplated herein are
treated as a sale, the Receivables would not be part of the Originators' or
the Depositor's bankruptcy estate and would not be available to creditors of
the Originators or the Depositor.
Additionally, because the Originators may have purchased the
Receivables from other originators or dealers, it is possible that (as a
result of recourse retained against such other originators or dealers or
otherwise) the transfer of the Receivables from such originators or dealers
to the Originator could be treated as a pledge rather than a sale and the
corresponding negative implications for timing and receipt of payments by a
Trust could apply.
The U.S. Court of Appeals for the Tenth Circuit in its decision in
Octagon Gas Systems, Inc. v. Rimmer (In re Meridian Reserve, Inc.) (decided
May 27, 1993) determined that "accounts", a defined term under the Uniform
Commercial Code, would be included in the bankruptcy estate of a transferor
regardless of whether the transfer is treated as a sale or a secured loan.
Although the Receivables are likely to be viewed as "chattel paper", as
defined under the Uniform Commercial Code, rather than as accounts, the
Octagon holding is equally applicable to chattel paper. The circumstances
under which the Octagon ruling would apply are not fully known and the
extent to which the Octagon decision will be followed in other courts or
outside of the Tenth Circuit is not certain. If the holding in the Octagon
case were applied in a bankruptcy of an Originator , the Depositor, or an
originator or dealer which sells Receivables to the Originator, even if the
transfer of Receivables by it were treated as a sale, the Receivables would
be part of its bankruptcy estate and would be subject to claims of certain
creditors, and delays and reductions in payments to the Securityholders
could result.
If so specified in the related Prospectus Supplement, with respect to
each Trust that is not a grantor trust, if an Insolvency Event occurs with
respect to the Company, the Indenture Trustee or Trustee for such Trust will
promptly sell, dispose or otherwise liquidate the related Receivables in a
commercially reasonable manner on commercially reasonable terms, except
under certain limited circumstances. The proceeds from any such sale,
disposition or liquidation of Receivables will be treated as collections on
the Receivables and deposited in the Collection Account of such Trust. If
the proceeds from the liquidation of the Receivables and any amounts on
deposit in the Note Distribution Account, if any, and the Certificate
Distribution Account, if any, with respect to any such Trust and any amounts
available from any credit enhancement are not sufficient to pay the Notes
and/or the Certificates of the related Series in full, the amount of
principal returned to such Noteholders and/or the Certificateholders will be
reduced and such Noteholders and/or Certificateholders will incur a loss.
See "Description of the Transfer and Servicing Agreements -- Insolvency
Event".
Nature of Contracts and Obligors. If and to the extent specified in
the related Prospectus Supplement, the Obligors on the Receivables to be
conveyed to a Trust may include "sub -prime" borrowers who have a low
income level and/or limited or adverse credit histories. Typical
"sub-prime" borrowers include young borrowers (18 to 25 years old) who do
not have a credit history, previously bankrupt borrowers who desire to
reestablish their credit history, slow payers of credit cards and department
store accounts and borrowers who desire payment terms slightly longer than
the maximum term permitted by traditional sources of consumer credit. The
average interest rate charged by the Originators to such "sub-prime"
borrowers is generally higher than that charged to more creditworthy
14
<PAGE>
customers. The payment experience on receivables of obligors with this
credit profile is likely to be different from that on receivables of
traditional auto financing sources in that default rates are likely to be
higher. In addition, the payment experience on such receivables is likely
to be more sensitive to changes in the economic climate in the areas in
which such obligors reside. As a result of the credit profile of the
obligors and the APRs of such receivables, the historical credit loss and
delinquency rates on such receivables are generally higher than those
experienced by banks and the captive finance companies of the automobile
manufacturers.
Social, Economic and Other Factors. The ability of the Obligors to
make payments on the Receivables, as well as the prepayment experience
thereon, will be affected by a variety of social and economic factors.
Economic factors include interest rates, unemployment levels, the rate of
inflation and consumer perceptions of economic conditions generally. However,
the Depositor is unable to determine and has no basis to predict whether or to
what extent economic or social factors will affect the Receivables.
Limited Obligation of the Depositor. None of the Depositor, any Originator
or any of their affiliates will insure or be obligated to make any payments
in respect of the Notes, the Certificates or the Receivables of a given
Trust.
Subordination; Limited Assets. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on one or
more classes of Certificates of a Series may be subordinated in priority of
payment to interest and principal due on the Notes, if any, of such Series
or one or more classes of Certificates of such Series. Moreover, none of
the Trusts will have, nor will any Trust be permitted or expected to have,
any significant assets or sources of funds other than the Receivables and,
to the extent provided in the related Prospectus Supplement, a Pre-Funding
Account, a Collateral Reinvestment Account and reserve account or other form
of credit enhancement. The Notes, if any, of any Series will represent
obligations solely of, and the Certificates of any Series will represent
interests solely in, the related Trust, and neither the Notes nor the
Certificates of any such Series will represent obligations of or interests
in, or be insured or guaranteed by, the Depositor, any Originator, any of
their affiliates or any other entity. Consequently, holders of the
Securities of any Series must rely for repayment upon payments on the
related Receivables and, if and to the extent available, amounts available
under any available form of credit enhancement, all as specified in the
related Prospectus Supplement.
Maturity and Prepayment Considerations. All of the Receivables are
prepayable at any time. When used herein with respect to any Receivable,
the term "prepayment" includes prepayments in full, partial prepayments
(including those related to rebates of extended warranty contract costs and
insurance premiums) and liquidations due to default, as well as receipts of
proceeds from physical damage, credit life and disability insurance policies
and Repurchase Amounts with respect to certain other Receivables repurchased
for administrative reasons. The rate of prepayments on the Receivables may
be influenced by a variety of economic, social and other factors. The rate
of prepayment on the Receivables also may be influenced by the structure of
the underlying loans. See "Weighted Average Life of the Securities". In
addition, the applicable Originator may be obligated to repurchase
Receivables in respect of which it is in breach of certain representations,
warranties or covenants. See "Description of the Transfer and Servicing
Agreements -- Sale and Assignment of Receivables". Any reinvestment risks
resulting from a faster or slower incidence of prepayment of Receivables
held by a Trust will be borne entirely by the holders of the related Series
of Securities. See also "Description of the Transfer and Servicing
Agreements -- Termination" regarding the Master Servicer's or one or more
Subservicers' option to purchase the Receivables of a given Receivables Pool
and "-- Insolvency Event" regarding the sale of the Receivables by certain
Owner Trusts if an Insolvency Event occurs with respect to the Company.
Holders of Notes and Certificates should consider, in the case of
Securities purchased at a discount, the risk that a slower than anticipated
rate of principal payments on the Receivables could result in an actual
yield that is less than the anticipated yield and,
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<PAGE>
in the case of any Securities purchased at a premium, the risk that a faster
than anticipated rate of principal payments on the Receivables could result
in an actual yield that is less than the anticipated yield.
Servicer Default. If so provided in the related Prospectus Supplement
with respect to a Series of Securities issued by an Owner Trust that
includes Notes, upon the occurrence of a Servicer Default the related
Indenture Trustee or Noteholders may remove the Master Servicer without the
consent of the related Trustee or any Certificateholders. The Trustee or
the Certificateholders with respect to such Series that includes Notes will
not have the ability to remove the Master Servicer if a Servicer Default
occurs. In addition, the Noteholders with respect to each Series that
includes Notes will have the ability, with certain specified exceptions, to
waive defaults by the Master Servicer, including defaults that could
materially and adversely affect the Certificateholders of such Series. See
"Description of the Transfer and Servicing Agreements -- Waiver of Past
Defaults".
Ratings of the Securities. It is a condition of the issuance of the
Securities to be offered hereunder that they be rated in one of the four
highest rating categories by at least one nationally recognized statistical
rating organization. A rating is not a recommendation to purchase, hold or
sell Securities inasmuch as a rating does not comment as to market price or
suitability for a particular investor. The ratings of the Securities will
address the likelihood of the payment of principal and interest thereon
pursuant to their terms. The ratings of the Securities will not address the
likelihood of an Early Amortization Event. There can be no assurance that a
rating will remain in effect 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. For more detailed
information regarding the ratings assigned to any class of a particular
Series of Certificates, see "Summary of Terms -- Rating of the Securities"
and "Risk Factors -- Ratings of the Securities" in the related Prospectus
Supplement.
Book-Entry Registration. If so specified in the related Prospectus
Supplement, each class of the Securities of a given Series initially will be
represented by one or more certificates registered in the name of Cede & Co.
("Cede") or any other nominee of The Depository Trust Company ("DTC") set
forth in the related Prospectus Supplement, and will not be registered in
the names of the holders of the Securities of such Series or their nominees.
Because of this, unless and until Definitive Securities for such Series are
issued, holders of such Securities will not be recognized by the applicable
Trustee or Indenture Trustee as "Certificateholders", "Noteholders" or
"Securityholders", as the case may be (as such terms are used herein or in
the related Pooling and Servicing Agreement or the related Indenture and
Trust Agreement, as applicable). Hence, until Definitive Securities are
issued, holders of such Securities will be able to exercise the rights of
Securityholders only indirectly through DTC and its participating
organizations. See "Certain Information Regarding the Securities --
Book-Entry Registration" and "-- Definitive Securities".
THE TRUSTS
With respect to each Series of Securities, the Depositor will establish
a separate Trust pursuant to a Trust Agreement or Pooling and Servicing
Agreement, as applicable, for the transactions described herein and in the
related Prospectus Supplement. The property of each Trust will include a
pool (a " Receivables Pool") of Receivables secured by new and used
automobiles, vans or light duty trucks and all payments due thereunder on
and after the applicable Cutoff Date in the case of Precomputed Receivables
and all payments received thereunder on and after the applicable Cutoff Date
in the case of Simple Interest Receivables. On the applicable Closing Date,
after the issuance of the Notes and/or Certificates of a given Series, the
Depositor will sell Receivables to the Trust in the outstanding principal
amount specified in the related Prospectus Supplement. If so provided in
the related Prospectus Supplement, the property of a Trust may also include
a Pre-Funded Amount, which the Depositor will deposit to the Pre-Funding
Account on the Closing Date and which will be used by the Trust to purchase
Subsequent Receivables from the Depositor during the related Funding Period.
In addition, if so provided in the related Prospectus Supplement, the
property of a Trust may also include monies deposited by the Depositor to
the Collateral Reinvestment Account on the Closing Date and, during the
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Revolving Period, principal will not be distributed on the Securities of the
related Series and principal collections, together with (if and to the
extent described in the related Prospectus Supplement) interest collections
on the Receivables that are in excess of amounts required to be distributed
therefrom will be deposited from time to time in the Collateral Reinvestment
Account and will be used by the Trust to purchase Subsequent Receivables
during the related Revolving Period. Any Subsequent Receivables so conveyed
to a Trust will also be assets of such Trust, subject, in the case of any
Owner Trust that issues Notes, to the prior rights therein of the related
Indenture Trustee and the Noteholders. The property of each Trust will also
include (i) such amounts as from time to time may be held in separate trust
accounts established and maintained pursuant to the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, as applicable, and
the proceeds of such accounts, as described herein and in the related
Prospectus Supplement; (ii) security interests in the Financed Vehicles and
any other interest of the Depositor in such Financed Vehicles; (iii) the
rights to proceeds from claims on certain physical damage, credit life and
disability insurance policies covering the Financed Vehicles or the
Obligors, as the case may be; (iv) any property that shall have secured a
Receivable and that shall have been acquired by the applicable Trust; and
(v) any and all proceeds of the foregoing. To the extent specified in the
related Prospectus Supplement, a reserve account or other form of credit
enhancement may be a part of the property of a given Trust or may be held by
the Trustee for the benefit of holders of the related Securities.
If the protection provided to (i) holders of the Notes, if any, issued
by an Owner Trust by the subordination of the related Certificates, if any,
and by the reserve account, if any, or any other available form of credit
enhancement for such Series or (ii) Certificateholders, if any, by any such
reserve account or other form of credit enhancement is insufficient, such
Noteholders or Certificateholders, as the case may be, will have to look to
payments by or on behalf of Obligors on the related Receivables and the
proceeds from the repossession and sale of Financed Vehicles that secure
defaulted Receivables for distributions of principal and interest on the
Securities. In such event, certain factors, such as the applicable Trust's
not having perfected security interests in all of the Financed Vehicles, may
limit the ability of a Trust to realize on the collateral securing the
related Receivables, or may limit the amount realized to less than the
amount due under the related Receivables. Securityholders may thus be
subject to delays in payment on, or may incur losses on their investment in,
such Securities as a result of defaults or delinquencies by Obligors and
depreciation in the value of the related Financed Vehicles. See
"Description of the Transfer and Servicing Agreements -- Credit and Cash
Flow Enhancement" and "Certain Legal Aspects of the Receivables".
The Master Servicer for each Trust will be responsible for the
servicing of the Receivables held by the Trust and will receive fees for
such services. The Master Servicer may subcontract all or any portion of
its obligations as Master Servicer to qualified Subservicers, but the Master
Servicer will not be relieved thereby of its liability with respect to such
obligations. Any fees due to any such Subservicers will be the
responsibility of the Master Servicer and will not be an additional
obligation of the related Trust. See "Description of the Transfer and
Servicing Agreements -- Servicing Compensation and Payment of Expenses"
herein.
THE TRUSTEE
The Trustee for each Trust 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 and Sale and
Servicing Agreement or the related Pooling and Servicing Agreement, as
applicable. A Trustee may resign at any time, in which event the Master
Servicer will be obligated to appoint a successor trustee. The
Administrator of any Owner Trust that issues Notes and the Master Servicer
with respect to any Grantor Trust may also remove the related Trustee if
such Trustee ceases to be eligible to continue as Trustee under the related
Trust Agreement or Pooling and Servicing Agreement, as applicable, or if the
Trustee becomes insolvent. In such circumstances, the Administrator or
Master Servicer, as applicable, will be obligated to appoint a successor
trustee. Any resignation or removal of a Trustee and
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appointment of a successor trustee will not become effective until acceptance
of the appointment by the successor trustee.
The principal offices of each Trust and the related Trustee will be
specified in the applicable Prospectus Supplement.
THE RECEIVABLES POOLS
GENERAL
The Receivables in each Receivables Pool have been or will be
originated or acquired by the Originators, and acquired by the Depositor
from such Originators, in the ordinary course of business. The Depositor
expects that each Receivable so acquired will have been originated or
acquired by the Originator thereof in accordance with the underwriting
criteria specified in the related Prospectus Supplement. Each Originator
will be an entity generally in the business of originating or acquiring
Receivables, or an affiliate of such an entity. The Depositor may acquire
Receivables from an Originator who is an affiliate.
If so provided in the related Prospectus Supplement, each Receivable
(i) will be secured by a new or used vehicle, (ii) will provide for level
monthly payments (except for the last payment, which may be minimally
different from the level payments or which, in the case of a Balloon
Payment Receivable, may be a final balloon payment ) that fully amortize the
amount financed over the original term to maturity of the related Contract
(iii) will be a Precomputed Receivable or a Simple Interest Receivable and
(iv) will satisfy the other criteria, if any, set forth in the related
Prospectus Supplement.
"Precomputed Receivables" will consist of either (i) monthly actuarial
receivables ("Actuarial Receivables") or (ii) receivables that provide for
allocation of payments according to the "sum of periodic balances" or "sum
of monthly payments" method, similar to the "Rule of 78's" ("Rule of 78's
Receivables"). An Actuarial Receivable provides for amortization of the
loan over a series of fixed level monthly installment payments. Each
monthly installment, including the monthly installment representing the
final payment on the Receivable, consists of (x) an amount of interest equal
to 1/12 of the APR under the related Contract multiplied by the unpaid
principal balance of the loan, plus (y) and an amount allocable to principal
equal to the remainder of the monthly payment. A Rule of 78's Receivable
provides for the payment by the obligor of a specified total amount of
payments, payable in equal monthly installments on each due date, which
total represents the principal amount financed plus add-on interest in an
amount calculated at the stated APR for the term of the receivable. The
rate at which such amount of add-on interest is earned and, correspondingly,
the amount of each fixed monthly payment allocated to reduction of the
outstanding principal amount are calculated in accordance with the Rule of
78's.
"Balloon Payment Receivables" are receivables secured by new and used
automobiles or light duty trucks with a final payment which is greater than
the scheduled monthly payments. A Balloon Payment Receivable provides for
amortization of the loan over a series of fixed level payment monthly
installments like an Actuarial Receivable, but also provides for a final
"balloon" payment due after payment of such monthly installments, which
payment may be substantially larger than the regular scheduled payments and
may result in a balloon payment at maturity which may be equal to a high
percentage of the original amount financed. If so specified in the related
Prospectus Supplement, the final balloon payment on a Balloon Payment
Receivable may be satisfied by one or more of (i) payment in full in cash of
such amount, (ii) transfer of the vehicle to the Originator or its assignee
subject to certain conditions, or (iii) refinancing the balloon payment in
accordance with certain conditions. If so specified in the related
Prospectus Supplement, only the principal payments due prior to the final
balloon payment and not the final balloon payment will be included initially
in the related Trust.
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"Simple Interest Receivables" are receivables that provide for the
amortization of the amount financed thereunder over a series of fixed
level monthly payments; however, unlike the monthly payment under an
Actuarial Receivable, each monthly payment consists of an installment
of interest that 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 (calculated as a fraction of a calendar
year) since the preceding payment of interest was made. As
payments are received under a Simple Interest Receivable, 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 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 may be increased or decreased as necessary to repay
the then outstanding principal balance.
In the event of the prepayment in full (voluntarily or by acceleration)
of a Rule of 78's Receivable, under the terms of the contract a "refund" or
"rebate" will be made to the obligor of the portion of the total amount of
payments then due and payable and allocable to "unearned" add-on interest,
calculated in accordance with a method equivalent to the Rule of 78's. If
an Actuarial Receivable is prepaid in full, with minor variations based on
state law, the Actuarial Receivable requires that the rebate be calculated
on the basis of a constant interest rate. If a Simple Interest Receivable
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 78's Receivable generally will be less than the amount of a rebate on an
Actuarial Receivable and generally will be less than the remaining scheduled
payments of interest that would have been due under a Simple Interest
Receivable for which all payments were made on schedule.
Unless otherwise provided in the related Prospectus Supplement, each
Trust will account for the Rule of 78's Receivables as if such Receivables
were Actuarial Receivables. Amounts received upon prepayment in full of a
Rule of 78's Receivable in excess of the then outstanding principal balance
of such Receivable and accrued interest thereon (calculated pursuant to the
actuarial method) will not be paid to Noteholders or passed through to
Certificateholders of the applicable Series, but will be paid to the Master
Servicer as additional servicing compensation.
Information with respect to each Receivables Pool will be set forth in
the related Prospectus Supplement, including, to the extent appropriate, the
composition and distribution by annual percentage rate ("APR") and by states
of origination of the Receivables, the portion of such Receivables Pool
consisting of Precomputed Receivables and of Simple Interest Receivables,
and the portion of such Receivables Pool secured by new vehicles and by used
vehicles.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Certain information concerning the experience of the applicable
Originator or Originators with respect to each Receivables Pool pertaining
to delinquencies, repossessions and net losses in respect of motor vehicle
retail installment sale contracts and installment loan contracts (referred
to herein collectively as "Contracts") will be set forth in each Prospectus
Supplement. There can be no assurance that the delinquency, repossession
and net loss experience on any Receivables Pool will be comparable to prior
experience of the applicable Originator or to such information.
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WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the Notes, if any, and the Certificates,
if any, of any Series generally will be influenced by the rate at which the
principal balances of the related Receivables are paid, which payment may be
in the form of scheduled amortization or prepayments. (For this purpose,
the term "prepayments" includes prepayments in full, partial prepayments
(including those related to rebates of extended warranty contract costs and
insurance premiums), liquidations due to defaults, as well as receipts of
proceeds from physical damage, credit life and disability insurance
policies, and the Repurchase Amount of Receivables repurchased by the
applicable Originator or purchased by the Master Servicer for administrative
reasons.) The Receivables generally will be prepayable at any time without
penalty to the Obligor. The rate of prepayment of automotive receivables is
influenced by a variety of economic, social and other factors. The rate of
prepayment on the Receivables may also be influenced by the structure of the
loan. In addition, under certain circumstances, the applicable Originator
will be obligated to repurchase Receivables from a given Trust pursuant to
the related Sale and Servicing Agreement or Pooling and Servicing Agreement,
as applicable, as a result of breaches of representations and warranties
with respect to the Receivables, and the Master Servicer will be obligated
to purchase Receivables from such Trust pursuant to such Sale and Servicing
Agreement or Pooling and Servicing Agreement as a result of breaches of
certain covenants. See "Description of the Transfer and Servicing
Agreements -- Sale and Assignment of Receivables" and "-- Servicing
Procedures". See also "Description of the Transfer and Servicing Agreements
- -- Termination" regarding the Master Servicer's or one or more Subservicers'
option to purchase Receivables from a given Trust and "-- Insolvency Event"
regarding the sale of the Receivables owned by certain Owner Trusts if an
Insolvency Event occurs with respect to the Company. Also, in the case of a
Trust having a Funding Period or Revolving Period, the addition of
Receivables to the Trust during such period could affect the weighted
average life of the Securities of the related series.
In light of the above considerations, there can be no assurance as
to the amount of principal payments to be made on the Notes and/or Certificates
of a Series on each Distribution Date since such amount will depend, in part,
on the amount of principal collected on the related Receivables Pool during
the applicable Collection Period. Any reinvestment risks resulting from a
faster or slower incidence of prepayment of Receivables will be borne
entirely by the Noteholders and Certificateholders. The related Prospectus
Supplement may set forth certain additional information with respect to the
maturity and prepayment considerations applicable to the particular
Receivables Pool and the related Series of Securities.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit
decimal which the Master Servicer will compute prior to each distribution
with respect to such class of Notes indicating the remaining outstanding
principal balance of such class of Notes, as of the applicable Distribution
Date (after giving effect to payments to be made on such Distribution Date),
as a fraction of the initial outstanding principal balance of such class of
Notes. The "Certificate Pool Factor" for each class of Certificates will be
a seven-digit decimal which the Master Servicer will compute prior to each
distribution with respect to such class of Certificates indicating the
remaining Certificate Balance of such class of Certificates, as of the
applicable Distribution Date (after giving effect to distributions to be
made on such Distribution Date), as a fraction of the initial Certificate
Balance of such class of Certificates. Each Note Pool Factor and each
Certificate Pool Factor will be 1.0000000 as of the related Closing Date,
and thereafter will decline to reflect reductions in the outstanding
principal balance of the applicable class of Notes or the reduction of the
Certificate Balance of the applicable class of Certificates. A Noteholder's
portion of the aggregate outstanding principal balance of the related class
of Notes will be the product of (i) the original denomination of such
Noteholder's Note and (ii) the applicable Note Pool Factor at the time of
determination. A Certificateholder's portion of the aggregate outstanding
Certificate Balance for the related class of Certificates will be the
product of (a) the original
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denomination of such Certificateholder's Certificate and (b) the applicable
Certificate Pool Factor at the time of determination.
Unless otherwise provided in the related Prospectus Supplement, the
Noteholders, if any, and the Certificateholders, if any, will receive
reports on or about each Distribution Date concerning payments received on
the Receivables, the Pool Balance and each Note Pool Factor or Certificate
Pool Factor, as applicable. 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. See "Certain Information
Regarding the Securities -- Statements to Securityholders".
USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement, the net
proceeds from the sale of the Securities of a Series will be applied by the
applicable Trust to the purchase of the Receivables from the Depositor and
to make the deposit of the Pre-Funded Amount, if any, to the Pre-Funding
Account or the initial deposit, if any, to the Collateral Reinvestment
Account, if any. The Depositor will use the portion of such proceeds paid
to it for general corporate purposes.
THE DEPOSITOR
The Depositor was incorporated in the State of Delaware on August 2,
1995 and is an indirect, limited purpose finance subsidiary of The Long-Term
Credit Bank of Japan, Limited and an affiliate of Greenwich Capital Markets,
Inc. The Long-Term Credit Bank of Japan, Limited is a bank organized under
the laws of Japan conducting commercial banking, corporate finance, capital
markets and financial advisory services on a global basis. Greenwich
Capital Markets, Inc. is a registered broker-dealer engaged in the U.S.
government securities and related capital markets business. The principal
executive offices of the Depositor are located at 600 Steamboat Road,
Greenwich, Connecticut 06830; telephone (203) 625-2700.
As described herein under "Description of the Transfer and Servicing
Agreements -- Sale and Assignment of Receivables", the only obligations, if
any, of the Depositor with respect to a Series of Securities may be pursuant
to certain limited representations and warranties and limited undertakings
to repurchase or substitute Receivables under certain circumstances. Unless
otherwise specified in the applicable Prospectus Supplement, the Depositor
will have no servicing obligations or responsibilities with respect to any
Trust. The Depositor does not have, nor is it expected in the future to
have, any significant assets.
If so provided in the related Prospectus Supplement, the Master
Servicer of a Series of Securities may be an affiliate of the Depositor. As
described herein, the Depositor may acquire Receivables from an Originator
who is an affiliate.
Neither the Depositor nor any of its affiliates, including Greenwich
Capital Markets, Inc., will insure or guarantee the Securities of any Series.
THE ORIGINATORS
Information regarding the Originator or Originators of the Receivables
conveyed to a Trust will be provided in the related Prospectus Supplement.
One or more Originators with respect to a Trust may be an affiliate of the
Depositor.
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DESCRIPTION OF THE NOTES
GENERAL
Each Owner Trust will, if so specified in the related Prospectus
Supplement, issue one or more classes of Notes pursuant to an Indenture, a
form of which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. The following summary does not purport
to be complete and is subject to, and is qualified in its entirety by
reference to, the provisions of the related Notes and Indenture.
Unless otherwise specified in the related Prospectus Supplement, each class
of Notes will initially be represented by one or more certificates
registered in the name of the nominee of DTC (together with any successor
depository selected by the Trust, the "Depository"). Unless otherwise
specified in the related Prospectus Supplement, the Notes will be available
for purchase in minimum denominations of $1,000 and integral multiples
thereof in book-entry form only. The Depositor has been informed by DTC
that DTC's nominee will be Cede unless another nominee is specified in the
related Prospectus Supplement. Accordingly, such nominee is expected to be
the holder of record of the Notes of each class. Unless and until
Definitive Notes are issued under the limited circumstances described herein
or in the related Prospectus Supplement, no Noteholder will be entitled to
receive a physical certificate representing a Note. All references herein
and in the related Prospectus Supplement to actions by Noteholders refer to
actions taken by DTC upon instructions from its participating organizations,
and all references herein and in the related Prospectus Supplement to
distributions, notices, reports and statements to Noteholders refer to
distributions, notices, reports and statements to DTC or its nominee, as
registered holder of the Notes, for distribution to Noteholders in accordance
with DTC's procedures with respect thereto. See "Certain Information
Regarding the Securities -- Book-Entry Registration" and "-- Definitive
Securities".
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of payment, seniority, allocations of losses,
Interest Rate and amount of or method of determining payments of principal
and interest on each class of Notes of a Series will be described in the
related Prospectus Supplement. The right of holders of any class of Notes
to receive payments of principal and interest may be senior or subordinate
to the rights of holders of one or more other class or classes of Notes of
such Series, as described in the related Prospectus Supplement. If so
provided in the related Prospectus Supplement, payments of interest on the
Notes will be made prior to payments of principal thereon. If so provided
in the related Prospectus Supplement, a Series of Notes may include one or
more classes of Strip Notes entitled to (i) principal payments with
disproportionate, nominal or no interest payments or (ii) interest payments
with disproportionate, nominal or no principal payments. Each class of
Notes may have a different Interest Rate, which may be a fixed, variable or
adjustable Interest Rate (and which may be zero for certain classes of Strip
Notes), or any combination of the foregoing. The related Prospectus
Supplement will specify the Interest Rate for each class of Notes of a
Series or the method for determining such Interest Rate. One or more
classes of Notes of a Series may be redeemable in whole or in part under the
circumstances specified in the related Prospectus Supplement, including, if
a Pre-Funding Account or Collateral Reinvestment Account has been
established with respect to the related Series, from amounts remaining in
the applicable account at the end of the Funding Period or Revolving
Period, as the case may be, or as a result of the exercise by the Master
Servicer , a Subservicer or such other party as may be specified in the
related Prospectus Supplement of its option to purchase the related
Receivables Pool. See "Description of the Transfer and Servicing Agreements
- -- Termination".
To the extent specified in any Prospectus Supplement, one or more
classes of Notes of a given Series may have fixed principal payment
schedules, as set forth in such Prospectus Supplement. Holders of any such
Notes will be entitled to receive payments of principal on any given
Distribution Date in the applicable amounts set forth on such schedule with
respect to such Notes, in the manner and to the extent set forth in the
related Prospectus Supplement.
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Unless otherwise specified in the related Prospectus Supplement,
payments of interest to Noteholders of all classes within a Series will have
the same priority. Under certain circumstances, the amount available for
such payments could be less than the amount of interest payable on the Notes
on a Distribution Date, in which case each class of Notes will receive its
ratable share (based on the aggregate amount of interest due to such class
of Notes) of the aggregate amount available to be distributed on such date
as interest on the Notes of such Series. See "Description of the Transfer
and Servicing Agreements -- Distributions" and "-- Credit and Cash Flow
Enhancement".
In the case of a Series of Securities issued by an Owner Trust that
includes two or more classes of Notes, the sequential order and priority of
payment in respect of principal and interest, and any schedule or formula or
other provisions applicable to the determination thereof, of each such class
will be set forth in the related Prospectus Supplement. Unless otherwise
specified in the related Prospectus Supplement, payments in respect of
principal of and interest on any class of Notes will be made on a pro rata
basis among all the Noteholders of such class.
CERTAIN PROVISIONS OF THE INDENTURE
Events of Default; Rights upon Event of Default. "Events of Default"
in respect of a Series of Notes under the related Indenture will consist of:
(i) a default for five days or more in the payment of any interest on any
such Note; (ii) a default in the payment of the principal of, or any
installment of the principal of, any such Note when the same becomes due and
payable; (iii) a default in the observance or performance in any material
respect of any covenant or agreement of the related Trust made in such
Indenture and the continuation of any such default for a period of 30 days
after notice thereof is given to the related Trust by the applicable
Indenture Trustee or to such Trust and the related Indenture Trustee by the
holders of 25% of the aggregate outstanding principal amount of such Notes;
(iv) any representation or warranty made by such Trust in the related
Indenture or in any certificate delivered pursuant thereto or in connection
therewith having been incorrect in a material respect as of the time made,
if such breach is not cured within 30 days after notice thereof is given to
such Trust by the applicable Indenture Trustee or to such Trust and such
Indenture Trustee by the holders of 25% of the aggregate outstanding
principal amount of such Notes; or (v) certain events of bankruptcy,
insolvency, receivership or liquidation with respect to such Trust. The
amount of principal required to be paid to Noteholders of each Series under
the related Indenture on any Distribution Date generally will be limited to
amounts available to be deposited in the applicable Note Distribution
Account; therefore, the failure to pay principal on a class of Notes
generally will not result in the occurrence of an Event of Default until the
applicable final scheduled Distribution Date for such class of Notes.
Unless otherwise specified in the related Prospectus Supplement, if an
Event of Default should occur and be continuing with respect to the Notes of
any Series, the related Indenture Trustee or holders of a majority in
principal amount of such Notes may declare the principal of such Notes to be
immediately due and payable. Such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal amount
of such Notes then outstanding.
If the Notes of any Series are declared due and payable following an
Event of Default, the related Indenture Trustee may institute proceedings to
collect amounts due thereon, foreclose on the property of the Trust,
exercise remedies as a secured party, sell the related Receivables or elect
to have the applicable Trust maintain possession of such Receivables and
continue to apply collections on such Receivables as if there had been no
declaration of acceleration. Unless otherwise specified in the related
Prospectus Supplement, however, the Indenture Trustee will be prohibited
from selling the Receivables following an Event of Default, other than a
default in the payment of any principal of, or a default for five days or
more in the payment of any interest on, any Note of such Series, unless (i)
the holders of all such outstanding Notes consent to such sale, (ii) the
proceeds of such sale are sufficient to pay in full the principal of and the
accrued interest on such outstanding Notes at the date of such sale or (iii)
such Indenture Trustee determines that the proceeds of the Receivables would
not be sufficient on an ongoing basis to make all payments on such Notes as
such payments would become
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due if such obligations had not been declared due and payable, and such
Indenture Trustee obtains the consent of the holders of 662/3% of the
aggregate outstanding principal amount of such Notes.
Subject to the provisions of the applicable Indenture relating to the
duties of the related Indenture Trustee, if an Event of Default occurs and
is continuing with respect to a Series of Notes, such Indenture Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the holders of such Notes if
it reasonably believes it will not be adequately indemnified against the
costs, expenses and liabilities that might be incurred by it in complying
with such request. Subject to the provisions for indemnification and
certain limitations contained in the related Indenture, the holders of a
majority of the aggregate outstanding principal amount of the Notes of a
Series will have the right to direct the time, method and place of
conducting any proceeding or exercising any remedy available to the related
Indenture Trustee; in addition, the holders of Notes representing a majority
of the aggregate outstanding principal amount of such Notes may, in certain
cases, waive any default with respect thereto, except a default in the
payment of principal of or interest on any Note or a default in respect of a
covenant or provision of such Indenture that cannot be modified or amended
without the waiver or consent of the holders of all the outstanding Notes of
such Series.
Unless otherwise specified in the related Prospectus Supplement, no
holder of a Note will have the right to institute any proceeding with
respect to the related Indenture, unless (i) such holder previously has
given to the applicable Indenture Trustee written notice of a continuing
Event of Default; (ii) the holders of not less than 25% of the outstanding
principal amount of such Notes have made written request to such Indenture
Trustee to institute such proceeding in its own name as Indenture Trustee;
(iii) such holder or holders have offered such Indenture Trustee reasonable
indemnity; (iv) such Indenture Trustee has for 60 days failed to institute
such proceeding; and (v) no direction inconsistent with such written request
has been given to such Indenture Trustee during such 60-day period by the
holders of a majority of the outstanding principal amount of the Notes of
such Series.
None of the related Indenture Trustee or the related Trustee in its
individual capacity, or any holder of a Certificate representing an
ownership interest in such Trust, or any of their respective owners,
beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or
interest on the related Notes or for the agreements of such Trust contained
in the applicable Indenture.
No Trust may engage in any activity other than as described herein or
in the related Prospectus Supplement. No Trust will incur, assume or
guarantee any indebtedness other than indebtedness incurred pursuant to the
related Notes and the related Indenture, pursuant to any Advances made to it
by the Master Servicer or otherwise in accordance with the Related Documents.
Certain Covenants. Each Indenture will provide that the related Trust
may not consolidate with or merge into any other entity, unless (i) the
entity formed by or surviving such consolidation or merger is organized
under the laws of the United States, any state or the District of Columbia;
(ii) such entity expressly assumes such Trust's obligation to make due and
punctual payments on the Notes of the related Series and to perform or
observe every agreement and covenant of such Trust under the Indenture;
(iii) no Event of Default shall have occurred and be continuing immediately
after such merger or consolidation; (iv) such Trust shall have been advised
by each Rating Agency that such merger or consolidation will not result in
the qualification, reduction or withdrawal of its then-current rating of any
class of the Notes or Certificates of such Series; and (v) such Trust shall
have received an opinion of counsel to the effect that such consolidation or
merger will have no material adverse tax consequence to the Trust or to any
related Noteholder or Certificateholder.
No Owner Trust will (i) except as expressly permitted by the applicable
Indenture, the applicable Transfer and Servicing Agreements or certain other
documents with respect to such Trust (the "Related Documents"), sell,
transfer, exchange or otherwise dispose of any of the assets of the Trust;
(ii)
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claim any credit on or make any deduction from the principal and
interest payable in respect of the related Notes (other than amounts
withheld under the Code or applicable state tax laws) or assert any claim
against any present or former holder of such Notes because of the payment of
taxes levied or assessed upon the Trust; (iii) dissolve or liquidate in whole
or in part; (iv) permit the validity or effectiveness of the related Indenture
to be impaired or permit any person to be released from any covenants or
obligations with respect to the related Notes under such Indenture except as
may be expressly permitted thereby; (v) permit any lien, charge, excise,
claim, security interest, mortgage, or other encumbrance to be created on or
extend to or otherwise arise upon or burden the assets of the Trust or any
part thereof, or any interest therein or the proceeds thereof; or (vi)
permit the lien of the related Indenture not to constitute a valid first
priority security interest (other than with respect to a tax, mechanics' or
similar lien) in the assets of the Trust.
Each Indenture Trustee and the related Noteholders, by accepting the
related Notes, will covenant that they will not at any time institute
against the applicable Trust any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
Modification of Indenture. Unless otherwise specified in the related
Prospectus Supplement, each Owner Trust and the related Indenture Trustee
may, with the consent of the holders of a majority of the aggregate
outstanding principal amount of the Notes of the related Series, execute a
supplemental indenture to add provisions to, change in any manner or
eliminate any provisions of, the related Indenture, or modify (except as
provided below) in any manner the rights of the related Noteholders.
However, unless otherwise specified in the related Prospectus Supplement,
without the consent of the holder of each outstanding Note affected thereby,
no supplemental indenture will: (i) change the due date of any installment
of principal of or interest on the Notes or reduce the principal amount
thereof, the interest rate specified thereon or the redemption price with
respect thereto or change any place of payment where or the coin or currency
in which the Notes or any interest thereon is payable; (ii) impair the right
to institute suit for the enforcement of certain provisions of the related
Indenture regarding payment; (iii) reduce the percentage of the aggregate
amount of the outstanding Notes of such Series, the consent of the holders
of which is required for any such supplemental indenture or for any waiver
of compliance with certain provisions of the related Indenture or of certain
defaults thereunder and their consequences as provided for in such
Indenture; (iv) modify or alter the provisions of the related Indenture
regarding the voting of Notes held by the applicable Owner Trust, any other
obligor on such Notes, the Depositor or an affiliate of any of them; (v)
reduce the percentage of the aggregate outstanding amount of such Notes, the
consent of the holders of which is required to direct the related Indenture
Trustee to sell or liquidate the Receivables if the proceeds of such sale
would be insufficient to pay the principal amount and accrued and unpaid
interest on the outstanding Notes of such Series; (vi) decrease the
percentage of the aggregate principal amount of such Notes required to amend
the sections of the related Indenture that specify the percentage of the
aggregate principal amount of the Notes of such Series necessary to amend
such Indenture or certain other related agreements; or (vii) permit the
creation of any lien ranking prior to or on a parity with the lien of the
related Indenture with respect to any of the collateral for the Notes or,
unless otherwise permitted or contemplated in such Indenture, terminate the
lien of the Indenture on the collateral or deprive any holder of the Notes
of the security afforded by the lien of such Indenture.
Unless otherwise provided in the applicable Prospectus Supplement, an
Owner Trust and the related Indenture Trustee may also enter into
supplemental indentures, without obtaining the consent of the Noteholders of
the related Series, for the purpose of, among other things, adding any
provisions to or changing in any manner or eliminating any of the provisions
of the related Indenture or of modifying in any manner the rights of such
Noteholders; provided that such action does not materially and adversely
affect the interests of any such Noteholder.
Annual Compliance Statement. Each Owner Trust will be required to file
annually with the related Indenture Trustee a written statement as to the
fulfillment of its obligations under the Indenture.
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Indenture Trustee's Annual Report. Each Indenture Trustee will be
required to mail each year to all related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture
Trustee under the related Indenture, any amounts advanced by it under the
Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by the related Owner Trust to such Indenture Trustee in
its individual capacity, the property and funds physically held by such
Indenture Trustee as such and any action taken by it that materially affects
the related Notes and that has not been previously reported.
Satisfaction and Discharge of Indenture. Each Indenture will be
discharged with respect to the collateral securing the related Notes upon
the delivery to the related Indenture Trustee for cancellation of all such
Notes or, with certain limitations, upon deposit with such Indenture Trustee
of funds sufficient for the payment in full of all such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a Series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any Series may
resign at any time, in which event the related Owner Trust will be obligated
to appoint a successor Indenture Trustee for such Series. An Owner Trust
may also remove the related Indenture Trustee if such Indenture Trustee
ceases to be eligible to continue as such under the related Indenture or if
such Indenture Trustee becomes insolvent. In such circumstances, such Owner
Trust will be obligated to appoint a successor Indenture Trustee for the
applicable Series of Notes. No resignation or removal of the Indenture
Trustee and appointment of a successor Indenture Trustee for a Series of
Notes will become effective until acceptance of the appointment by the
successor Indenture Trustee for such Series.
DESCRIPTION OF THE CERTIFICATES
GENERAL
Each Trust will, if so provided in the related Prospectus Supplement,
issue one or more classes of Certificates pursuant to a Trust Agreement or
Pooling and Servicing Agreement, as applicable. A form of each of the Trust
Agreement and the Pooling and Servicing Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
The following summary does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the provisions of the
related Certificates and Trust Agreement or Pooling and Servicing Agreement,
as applicable.
Unless otherwise specified in the related Prospectus Supplement and
except for the Certificates, if any, of a Series purchased by the Company,
each class of Certificates will initially be represented by one or more
certificates registered in the name of the Depository. Unless otherwise
specified in the related Prospectus Supplement, the Certificates will be
available for purchase in minimum denominations of $20,000 and integral
multiples of $1,000 in excess thereof in book-entry form only. The
Depositor has been informed by DTC that DTC's nominee will be Cede, unless
another nominee is specified in the related Prospectus Supplement.
Accordingly, such nominee is expected to be the holder of record of the
Certificates of any Series that are not purchased by the Company. Unless
and until Definitive Certificates are issued under the limited circumstances
described herein or in the related Prospectus Supplement, no
Certificateholder (other than the Company) will be entitled to receive a
physical certificate representing a Certificate. All references herein and
in the related Prospectus Supplement to actions by Certificateholders refer
to actions taken by DTC upon instructions from the Participants, and all
references herein and in the related Prospectus Supplement to distributions,
notices, reports and statements to Certificateholders refer to
distributions, notices, reports and statements to DTC or its nominee, as the
case may be, as the registered holder of the Certificates, for distribution
to Certificateholders in accordance with DTC's procedures with respect
thereto. See "Certain Information Regarding the Securities -- Book-Entry
Registration" and "-- Definitive Securities".
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Any Certificate of a Series owned by the Company will be entitled to equal
and proportionate benefits under the applicable Trust Agreement or Pooling
and Servicing Agreement, as applicable, except that such Certificates will
be deemed not to be outstanding for the purpose of determining whether the
requisite percentage of Certificateholders has given any request, demand,
authorization, direction, notice, or consent or taken any other action under
the Related Documents (other than the commencement by the related Trust of a
voluntary proceeding in bankruptcy as described under "Description of the
Transfer and Servicing Agreements -- Insolvency Event").
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations of
losses, Pass-Through Rate and amount of or method of determining
distributions with respect to principal and interest on each class of
Certificates of a Series will be described in the related Prospectus
Supplement. Distributions of interest on such Certificates will be made on
the dates specified in the related Prospectus Supplement (the "Distribution
Date") and, if so specified in the related Prospectus Supplement, will be
made prior to distributions with respect to principal of such Certificates.
To the extent provided in the related Prospectus Supplement, a Series of
Certificates may include one or more classes of Strip Certificates entitled
to (i) principal distributions with disproportionate, nominal or no interest
distributions or (ii) interest distributions with disproportionate, nominal
or no principal distributions. Each class of Certificates may have a
different Pass-Through Rate, which may be a fixed, variable or adjustable
Pass-Through Rate (and which may be zero for certain classes of Strip
Certificates) or any combination of the foregoing. The related Prospectus
Supplement will specify the Pass-Through Rate for each class of Certificates
of a Series or the method for determining such Pass-Through Rate.
In the case of a Series of Securities that includes two or more classes
of Certificates, the timing, sequential order, priority of payment or amount
of distributions in respect of interest and principal, and any schedule or
formula or other provisions applicable to the determination thereof, of each
such class shall be as set forth in the related Prospectus Supplement. In
the case of Certificates issued by an Owner Trust that also issues Notes,
distributions in respect of such Certificates may be subordinated to
payments in respect of the Notes of such Series as more fully described in
the related Prospectus Supplement. Distributions in respect of interest on
and principal of any class of Certificates will be made on a pro rata basis
among all holders of Certificates of such class.
CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Each class of Securities (other than certain classes of Strip Notes or
Strip Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Securities") or at a variable or adjustable rate per annum ("Floating
Rate Securities"), as more fully described below and in the applicable
Prospectus Supplement. Each class of Fixed Rate Securities will bear
interest at the applicable per annum Interest Rate or Pass Through Rate, as
the case may be, specified in the applicable Prospectus Supplement. Unless
otherwise set forth in the applicable Prospectus Supplement, interest on
each class of Fixed Rate Securities will be computed on the basis of a
360-day year of twelve 30-day months.
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear interest for each
applicable Interest Reset Period (as such term is defined in the related
Prospectus Supplement with respect to a class of Floating Rate Securities,
the "Interest Reset Period") at a rate per annum determined by reference to
an interest rate basis (the "Base Rate"), plus or minus the Spread, if any,
or multiplied by the Spread Multiplier, if any, in each case as specified in
the related Prospectus Supplement. The "Spread" is the number of basis
points (one basis point equals one one-hundredth of a percentage point) that
may be specified in the applicable Prospectus Supplement as being applicable
to such class, and the "Spread Multiplier" is the
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percentage that may be specified in the applicable Prospectus Supplement as
being applicable to such class.
The applicable Prospectus Supplement will designate one of the
following Base Rates as applicable to a given Floating Rate Security: (i)
LIBOR (a "LIBOR Security"), (ii) the Commercial Paper Rate (a "Commercial
Paper Rate Security"), (iii) the Treasury Rate (a "Treasury Rate Security"),
(iv) the Federal Funds Rate (a "Federal Funds Rate Security"), (v) the CD
Rate (a CD Rate Security) or (vi) such other Base Rate as is set forth in
such Prospectus Supplement. The "Index Maturity" for any class of Floating
Rate Securities is the period of maturity of the instrument or obligation
from which the Base Rate is calculated. "H.15(5-19)" means the publication
entitled "Statistical Release H.15(519), Selected Interest Rates", or
any successor publication, published by the Board of Governors of the
Federal Reserve System. "Composite Quotations" means the daily statistical
release entitled "Composite 3:30 p.m. Quotations for U.S. Government
Securities" published by the Federal Reserve Bank of New York. "Interest
Reset Date" will be the first day of the applicable Interest Reset Period,
or such other day as may be specified in the related Prospectus Supplement
with respect to a class of Floating Rate Securities.
As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (i) a maximum limitation, or
ceiling, on the rate at which interest may accrue during any interest period
and (ii) a minimum limitation, or floor, on the rate at which interest may
accrue during any interest period. In addition to any maximum interest rate
that may be applicable to any class of Floating Rate Securities, the interest
rate applicable to any class of Floating Rate Securities will in no event be
higher than the maximum rate permitted by applicable law, as the same may be
modified by United States law of general application.
Each Trust with respect to which a class of Floating Rate Securities
will be issued will appoint, and enter into agreements with, a calculation
agent (each, a "Calculation Agent") to calculate interest rates on each such
class of Floating Rate Securities issued with respect thereto. The
applicable Prospectus Supplement will set forth the identity of the
Calculation Agent for each such class of Floating Rate Securities of a given
series, which may be either the related Trustee or Indenture Trustee
with respect to such series. All determinations of interest by the
Calculation Agent shall, in the absence of manifest error, be conclusive for
all purposes and binding on the holders of Floating Rate Securities of
a given class. All percentages resulting from any calculation of the rate
of interest on a Floating Rate Security will be rounded, if necessary, to the
nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage
point rounded upward.
CD Rate Securities. Each CD Rate Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to the
CD Rate and the Spread or Spread Multiplier, if any, specified in such
Security and in the applicable Prospectus Supplement.
The "CD Rate" for each Interest Reset Period shall be the rate as of
the second business day prior to the Interest Reset Date for such Interest
Reset Period (a "CD Rate Determination Date") for negotiable certificates of
deposit having the Index Maturity designated in the applicable Prospectus
Supplement as published in H.15(519) under the heading "CDs (Secondary
Market)". In the event that such rate is not published prior to 3:00 p.m.,
New York City time, on the Calculation Date (as defined below) pertaining to
such CD Rate Determination Date, then the "CD Rate" for such Interest Reset
Period will be the rate on such CD Rate Determination Date for negotiable
certificates of deposit of the Index Maturity designated in the applicable
Prospectus Supplement as published in Composite Quotations under the heading
"Certificates of Deposit". If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the CD Rate for such Interest Reset Period will
be calculated by the Calculation Agent for such CD Rate Security and will be
the arithmetic mean of the secondary market offered rates as of 10:00 a.m.,
New York City time, on such CD Rate Determination Date, of three leading
nonbank dealers in negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation Agent for such CD Rate Security
for negotiable certificates of deposit of major United States money center
banks of
28
the highest credit standing (in the market for negotiable certificates of
deposit) with a remaining maturity closest to the Index Maturity designated
in the related Prospectus Supplement in a denomination of $5,000,000;
provided, however, that if the dealers selected as aforesaid by such
Calculation Agent are not quoting offered rates as mentioned in this
sentence, the CD Rate for such Interest Reset Period will be the same as the
CD Rate for the immediately preceding Interest Reset Period.
The "Calculation Date" pertaining to any CD Rate Determination Date
shall be the first to occur of (a) the tenth calendar day after such CD Rate
Determination Date or, if such day is not a business day, the next succeeding
business day or (b) the second business day preceding the date any payment is
required to be made for any period following the applicable
Interest Reset Date.
Commercial Paper Rate Securities. Each Commercial Paper Rate Security
will bear interest for each Interest Reset Period at the interest
rate calculated with reference to the Commercial Paper Rate and the Spread
or Spread Multiplier, if any, specified in such Security and in the
applicable Prospectus Supplement.
The "Commercial Paper Rate" for each Interest Reset Period will be
determined by the Calculation Agent for such Commercial Paper Rate Security
as of the second business day prior to the Interest Reset Date for such
Interest Reset Period (a "Commercial Paper Rate Determination Date") and
shall be the Money Market Yield (as defined below) on such Commercial Paper
Rate Determination Date of the rate for commercial paper having the Index
Maturity specified in the applicable Prospectus Supplement, as such rate
shall be published in H.15(519) under the heading
"Commercial Paper". In the event that such rate is not published prior to
3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading "Commercial Paper". If by 3:00 p.m., New York
City time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean
of the offered rates, as of 11:00 a.m., New York City time, on such
Commercial Paper Rate Determination Date
of three leading dealers of commercial paper in The City of New York selected
by the Calculation Agent for such Commercial Paper Rate Security for
commercial paper of the specified Index Maturity placed for an industrial
issuer whose bonds are rated "AA" or the equivalent by a nationally
recognized rating agency; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the "Commercial Paper Rate" for
such Interest Reset Period will be the same as the Commercial Paper Rate for
the immediately preceding Interest Reset Period.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = X 100
360 -- (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers
to the actual number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the first to occur of (a) the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is
not a business day, the next succeeding business day or (b) the second
business day preceding the date any payment is required to be made for any
period following the applicable Interest Reset Date.
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Federal Funds Rate Securities. Each Federal Funds Rate Security will
bear interest for each Interest Reset Period at the interest rate calculated
with reference to the Federal Funds Rate and the Spread or Spread Multiplier,
if any, specified in such Security and in the applicable Prospectus
Supplement.
The "Federal Funds Rate" for each Interest Reset Period shall be
the effective rate on the Interest Reset Date for such Interest Reset Period
(a "Federal Funds Rate Determination Date") for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)". In the event that
such rate is not published prior to 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such Federal Funds Rate
Determination Date, the "Federal Funds Rate" for such Interest Reset Period
shall be the rate on such Federal Funds Rate Determination Date as published
in Composite Quotations under the heading "Federal Funds/Effective Rate". If
by 3:00 p.m., New York City time, on such Calculation Date such rate is not
yet published in either H.15(519) or Composite Quotations, then the "Federal
Funds Rate" for such Interest Reset Period shall be the rate on such Federal
Funds Rate Determination Date made publicly available by the Federal Reserve
Bank of New York which is equivalent to the rate which appears in H.15(519)
under the heading "Federal Funds (Effective)"; provided, however, that if
such rate is not made publicly available by the Federal Reserve Bank of New
York by 3:00 p.m., New York City time, on such Calculation Date, the "Federal
Funds Rate" for such Interest Reset Period will be the same as the Federal
Funds Rate in effect for the immediately preceding Interest Reset Period.
In the case of a Federal Funds Rate Security that resets daily, the interest
rate on such Security for the period from and including a Monday to but
excluding the succeeding Monday will be reset by the Calculation Agent for
such Security on such second Monday (or, if not a business day, on the
next succeeding business day) to a rate equal to the average of the Federal
Funds Rates in effect with respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding business day.
LIBOR Securities. Each LIBOR Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to LIBOR
and the Spread or Spread Multiplier, if any, specified in such Security and
in the applicable Prospectus Supplement.
With respect to LIBOR indexed to the offered rates for U.S. dollar
deposits, "LIBOR" for each Interest Reset Period will be determined by the
Calculation Agent for any LIBOR Security as follows:
(i) On the second London Banking Day prior to the Interest Reset
Date for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Security will determine the arithmetic
mean of the offered rates for deposits in U.S. dollars for the period of the
Index Maturity specified in the applicable Prospectus Supplement,
commencing on such Interest Reset Date, which appear on the Reuters Screen
LIBO Page at approximately 11:00 a.m., London time, on such LIBOR
Determination Date. For purposes of calculating LIBOR, "London Banking
Day" means any business day on which dealings in deposits in United States
dollars are transacted in the London interbank market and "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 interbank offered rates of major
banks). If at least two such offered rates appear on the Reuters Screen LIBO
Page, "LIBOR" for such Interest Reset Period will be the arithmetic mean of
such offered rates as determined by the Calculation Agent for such LIBOR
Security.
(ii) If fewer than two offered rates appear on the Reuters Screen
LIBO Page on such LIBOR Determination Date, the Calculation Agent for
such LIBOR Security will request the principal London offices of each of
four major banks in the London interbank market selected by such
Calculation Agent to provide such Calculation Agent with its offered
quotations for deposits in U.S. dollars for the period of the specified
Index Maturity, commencing on such Interest Reset Date, to prime banks
in the London interbank market at approximately 11:00
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a.m., London time, on such LIBOR Determination Date and in a principal
amount equal to an amount of not less than $1,000,000 that is
representative of a single transaction in such market at such time. If
at least two such quotations are provided, "LIBOR" for such Interest
Reset Period will be the arithmetic mean of such quotations. If fewer
than two such quotations are provided, "LIBOR" for such Interest Reset
Period will be the arithmetic mean of rates quoted by three major banks
in The City of New York selected by the Calculation Agent for such LIBOR
Security at approximately 11:00 a.m., New York City time, on such LIBOR
Determination Date for loans in U.S. dollars to leading European banks,
for the period of the specified Index Maturity, commencing on such
Interest Reset Date, and in a principal amount equal to an amount of
not less than $1,000,000 that is representative of a single transaction
in such market at such time; provided, however, that if the banks
selected as aforesaid by such Calculation Agent are not quoting rates as
mentioned in this sentence, "LIBOR" for such Interest Reset Period will
be the same as LIBOR for the immediately preceding Interest Reset Period.
Treasury Rate Securities. Each Treasury Rate Security will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Treasury Rate and the Spread or Spread Multiplier, if any,
specified in such Security and in the applicable Prospectus Supplement.
The "Treasury Rate" for each Interest Period will be the rate for the
auction held on the Treasury Rate Determination Date (as defined below) for
such Interest Reset Period of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in the applicable
Prospectus Supplement, as such rate shall be published in H.15(519) under the
heading "U.S. Government Securities--Treasury bills--auction average
(investment)" or, in the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Treasury Rate Determination Date, the auction average rate
(expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) on such
Treasury Rate Determination Date as otherwise announced by the United
States Department of the Treasury. In the event that the results of the
auction of Treasury bills having the specified Index Maturity are not
published or reported as provided above by 3:00 p.m., New York City time, on
such Calculation Date, or if no such auction is held on such Treasury Rate
Determination Date, then the "Treasury Rate" for such Interest Reset Period
shall be calculated by the Calculation Agent for such Treasury Rate
Security and shall be the yield to maturity (expressed as a bond equivalent
on the basis of a year of 365 or 366 days, as applicable, and applied on a
daily basis) of the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 p.m., New York City time, on such Treasury Rate
Determination Date, of three leading primary United States government
securities dealers selected by such Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the specified
Index Maturity; provided, however, that if the dealers selected as aforesaid
by such Calculation Agent are not quoting bid rates as mentioned
in this sentence, then the "Treasury Rate" for such Interest Reset Period
will be the same as the Treasury Rate for the immediately preceding Interest
Reset Period.
The "Treasury Rate Determination Date" for each Interest Reset Period
will be the day of the week in which the Interest Reset Date for such
Interest Reset Period falls on which Treasury bills would normally be
auctioned. Treasury bills are normally sold at auction on Monday of each
week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held
on the preceding Friday. If, as the result of a legal holiday, an auction is
so held on the preceding Friday, such Friday will be the Treasury Rate
Determination Date pertaining to the Interest Reset Period commencing in the
next succeeding week. If an auction date shall fall on any day that would
otherwise be an Interest Reset Date for a Treasury Rate
Security, then such Interest Reset Date shall instead be the business day
immediately following such auction date.
The "Calculation Date" pertaining to any Treasury Rate Determination
Date shall be the first to occur of (a) the tenth calendar day after such
Treasury Rate Determination Date or, if such a day is not a business day, the
next succeeding business day or (b) the second business day preceding the
date any payment is required to be made for any period following the
applicable Interest Reset Date.
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BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement, DTC
will act as securities depository for each class of Securities offered
hereby. Each class of Securities initially will be represented by one or
more certificates registered in the name of Cede, the nominee of DTC. As
such, it is anticipated that the only "Noteholder" and/or "Certificateholder"
with respect to a Series of Securities will be Cede, as nominee of DTC.
Beneficial owners of the Securities ("Security Owners") will not be
recognized as "Noteholders" by the related Indenture Trustee, as such term is
used in each Indenture, or as "Certificateholders" by the related Trustee, as
such term is used in each Trust Agreement and Pooling and Servicing
Agreement, and Security Owners will be permitted to exercise the rights of
Noteholders or Certificateholders only indirectly through DTC and its
participating members ("Participants").
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code (the "UCC")
in effect in the State of New York, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was
created to hold securities for the 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 certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations. Indirect access
to the DTC system also is available to banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (the "Indirect Participants").
Security Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or an interest
in, the Securities may do so only through Participants and Indirect
Participants. In addition, all Security Owners will receive all
distributions of principal and interest from the related Indenture Trustee
or the related Trustee, as applicable, through Participants. Under a book-
entry format, Security Owners may experience some delay in their receipt of
payments, since such payments will be forwarded by the applicable Trustee or
Indenture Trustee to DTC's nominee. DTC will then forward such payments to
the Participants, which thereafter will forward them to Indirect Participants
or Security Owners.
Under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry
transfers among Participants on whose behalf it acts with respect to the
Securities and to receive and transmit distributions of principal of and
interest on the Securities. Participants and Indirect Participants with
which Security Owners have accounts with respect to the Securities similarly
are required to make book-entry transfers and to receive and transmit such
payments on behalf of their respective Security Owners. Accordingly,
although Security Owners will not possess physical certificates representing
the Securities, the Rules provide a mechanism by which Participants and
Indirect Participants will receive payments and transfer interests, directly
or indirectly, on behalf of Security Owners.
Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Security
Owner to pledge Securities to persons or entities that do not participate in
the DTC system, or otherwise take actions with respect to such Securities,
may be limited due to the lack of a physical certificate representing such
Securities.
DTC has advised the Depositor that it will take any action permitted to
be taken by a Security Owner under the Indenture, Trust Agreement or Pooling
and Servicing Agreement, as applicable, only at the direction of one or more
Participants to whose account with DTC the Securities are credited.
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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.
Except as required by law, neither the related Administrator or the
related Indenture Trustee, if any, nor the related Trustee will have any
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of Securities of any Series held
by DTC's nominee, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
DEFINITIVE SECURITIES
Unless otherwise stated in the related Prospectus Supplement, the Notes
and/or Certificates of a given Series will be issued in fully registered,
certificated form ("Definitive Notes" and "Definitive Certificates",
respectively, and, collectively, "Definitive Securities") to Noteholders or
Certificateholders or their respective nominees, rather than to DTC or its
nominee, only if (i) the related Trustee determines that DTC is no longer
willing or able to discharge properly its responsibilities as Depository with
respect to the related Securities and such Administrator or Trustee, as
applicable, is unable to locate a qualified successor, (ii) the Trustee
elects, at its option, to terminate the book-entry system through DTC or
(iii) after the occurrence of an Event of Default or Servicer Default,
Security Owners representing at least a majority of the outstanding principal
amount of the Notes or Certificates, as applicable, of such Series, advise
the related Trustee through DTC that the continuation of a book-entry system
through DTC (or a successor thereto) is no longer in the best interests of
the related Security Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the related Trustee or Indenture Trustee, as applicable,
will be required to notify the related Security Owners, through Participants,
of the availability of Definitive Securities. Upon surrender by DTC of the
certificates representing all Securities of any affected class and the
receipt of instructions for re-registration, the Trustee will issue
Definitive Securities to the related Security Owners. Distributions on the
related Definitive Securities will be made thereafter
by the related Trustee or Indenture Trustee, as applicable, directly to the
holders in whose name the related Definitive Securities are registered
at the close of business on the applicable record date, in accordance with
the procedures set forth herein and in the related Indenture or the related
Trust Agreement or Pooling and Servicing Agreement, as applicable.
Distributions will be made by check mailed to the address of such holders as
they appear on the register specified in the related Indenture, Trust
Agreement or Pooling and Servicing Agreement, as applicable; however, the
final payment on any Securities (whether Definitive Securities or Securities
registered in the name of a Depository or its nominee) will be made only upon
presentation and surrender of such Securities at the office
or agency specified in the notice of final distribution to Securityholders.
Definitive Securities will be transferable and exchangeable at the
offices of the related Trustee or Indenture Trustee (or any security
registrar appointed thereby), as applicable. No service charge will be
imposed for any registration of transfer or exchange, but such Trustee or
Indenture Trustee may require payment of a sum sufficient to cover any tax
or other governmental charge imposed in connection therewith.
STATEMENTS TO SECURITYHOLDERS
With respect to each Series of Securities, on or prior to each
Distribution Date, the Master Servicer will prepare and forward, or cause to
be prepared and forwarded, to the related Indenture Trustee or Trustee to be
included with the distribution to each Securityholder of record a statement
setting forth for the related Collection Period the information specified in
the related Prospectus Supplement.
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In addition, within the prescribed period of time for tax reporting
purposes after the end of each calendar year during the term of each Trust,
the related Trustee or Indenture Trustee, as applicable, will mail to each
person who at any time during such calendar year shall have been a registered
Securityholder a statement containing certain information for the purposes of
such Securityholder's preparation of federal income tax returns. See
"Certain Federal Income Tax Consequences".
LIST OF SECURITYHOLDERS
Unless otherwise provided in the related Prospectus Supplement, three
or more holders of the Notes of any Series or one or more holders of such
Notes evidencing not less than 25% of the aggregate outstanding principal
balance thereof may, by written request to the related Indenture Trustee,
obtain access to the list of all Noteholders maintained by such Indenture
Trustee for the purpose of communicating with other Noteholders with respect
to their rights under the related Indenture or under such Notes. Such
Indenture Trustee may elect not to afford the requesting Noteholders access
to the list of Noteholders if it agrees to mail the desired communication or
proxy, on behalf of and at the expense of the requesting Noteholders, to all
Noteholders of such Series.
Unless otherwise specified in the related Prospectus Supplement, three
or more holders of the Certificates of any Series or one or more holders of
such Certificates evidencing not less than 25% of the Certificate Balance of
such Certificates may, by written request to the related Trustee, obtain
access to the list of all Certificateholders maintained by such Trustee for
the purpose of communicating with other Certificateholders with respect to
their rights under the related Trust Agreement or Pooling and Servicing
Agreement, as applicable, or under such
Certificates.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of each purchase agreement
pursuant to which the Depositor will acquire the Receivables from the
Originators (each, a "Purchase Agreement"), each Sale and Servicing Agreement
or Pooling and Servicing Agreement, as applicable, pursuant to which a Trust
will purchase Receivables from the Depositor and
the Master Servicer will agree to be responsible for the servicing of such
Receivables, each Trust Agreement (or, in the case of a Grantor Trust, each
Pooling and Servicing Agreement) pursuant to which a Trust will be created
and Certificates will be issued, and each Administration Agreement pursuant
to which the Master Servicer will undertake certain administrative duties
with respect to an Owner Trust that issues Notes (collectively, the "Transfer
and Servicing Agreements"). Forms of the Transfer and Servicing Agreements
have been filed as exhibits to the Registration Statement of which this
Prospectus forms a part. The following summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the provisions of the
related Transfer and Servicing Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
The property of each Trust will include a pool of Receivables, which
will consist of Receivables that were originated or acquired by one or more
Originators and sold by such Originator or Originators to the Depositor in
the ordinary course of business. An Originator may be an affiliate of the
Depositor.
The Receivables included in a Receivables Pool will be sold by the
applicable Originator, directly or indirectly, to the Depositor pursuant to a
Purchase Agreement. The related Prospectus Supplement will specify for the
Initial Receivables to be included in each Receivables Pool the weighted
average APR, the weighted average original and remaining terms to
maturity, the geographic distribution and distribution by APR, and the
percentage of such Receivables that are Precomputed Receivables or Simple
Interest Receivables. Each Prospectus Supplement will also provide
information regarding the Originator or Originators of the related
Receivables.
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The Originator will make certain representations and warranties in each
Purchase Agreement regarding the related Receivables. Such representations
and warranties will generally include that, immediately prior to the transfer
and assignment of the Receivables, (i) the Originator has good title to, and
is the sole owner of, the Receivables, (ii) the Receivables are subject to no
offsets, defenses or counterclaims, (iii) each Receivable complies in all
material respect with applicable state and federal laws, including usury,
equal credit opportunity and disclosure laws, (iv) each Receivable is secured
by a valid first lien on the related Financed Vehicle, (v) no Receivable is
delinquent more than 90 days (or such longer period as may be specified in
the related Prospectus Supplement) and there are no tax or mechanics' liens
against the related Financed Vehicle, (vi) the related Financed Vehicles are
covered by physical damage and loss insurance, and (vii) the information
provided by the Originator with respect to the Receivables is true and
correct.
The terms of each Purchase Agreement, including the representations and
warranties of the Originator included therein, will apply to the Initial
Receivables as well as to any Subsequent Receivables to be transferred to a
Trust.
If so specified in the related Prospectus Supplement, the
representations and warranties of the Originator will not be made as of the
applicable Cutoff Date but as of the date on which the Originator sold
the Receivables to the Depositor or one of its affiliates. Under such
circumstances, a substantial period of time may have elapsed between such
date and the date of the initial issuance of the Series of Securities to
which such Receivables relate. If the representations and warranties of an
Originator do not address events that may have occurred following the sale of
the Receivables by such Originator, its repurchase obligation described
below would not arise if the relevant event that would otherwise have given
rise to such obligation with respect to a Receivable occurs after the date
of sale of such Receivable by the Originator to the Depositor or its
affiliates. However, the Depositor will not include any Receivable in a
Trust for any Series of Securities if anything has come to the Depositor's
attention that would cause it to believe that the representations and
warranties of an Originator will not be accurate and complete in all material
respects in respect of such Receivable as of the date of issuance
of the related Series of Securities. If the Master Servicer is also an
Originator with respect to a particular Series, such representations and
warranties will be in addition to the representations and warranties made by
the Master Servicer in its capacity as Master Servicer.
The Master Servicer or the Trustee, if the Master Servicer is the
Originator, will promptly notify the relevant Originator of any breach of any
representation or warranty made by it in respect of a Receivable which
materially and adversely affects the interests of the Trust in such
Receivable. Unless specified in the related Prospectus Supplement, if such
Originator does not cure such breach within 90 days after notice from
the Master Servicer or the Trustee, as the case may be, then such Originator
will be obligated to repurchase such Receivable from the Trust at a price
(the "Repurchase Amount") equal to 100% of the principal balance thereof as
of the date of the repurchase plus accrued interest thereon at the applicable
APR to the first day of the month in which the Purchase Amount is to be
distributed. Except in those cases in which the Master Servicer is the
Originator, the Master Servicer will be required to
enforce this obligation for the benefit of the Trustee and the holders of the
Securities. This repurchase obligation will constitute the sole remedy
available to holders of the Securities or the Trustee for a breach of
representations and warranties by an Originator.
Neither the Depositor nor the Master Servicer (unless the Master
Servicer is the Originator) will be obligated to repurchase a Receivable if
an Originator defaults on its obligation to do so, and no assurance can
be given that Originators will carry out their respective repurchase
obligations with respect to Receivables.
On the related Closing Date, the Depositor will transfer and assign to
the related Trust, pursuant to a Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, without recourse, all of its right, title
and interest in and to the related Receivables, including
its security interests in the related Financed Vehicles. Each such
Receivable will be identified in a schedule appearing as an exhibit to the
related Sale and Servicing Agreement or Pooling and Servicing Agreement.
Concurrently with
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the transfer and assignment of such Receivables to the related Trust, the
related Trustee or Indenture Trustee, as applicable, will execute,
authenticate and deliver the related Notes and/or Certificates.
The net proceeds from the sale of the Notes and/or Certificates will be
applied to the purchase of the related Receivables and, to the extent
specified in the related Prospectus Supplement, to the deposit of the Pre-
Funded Amount to the Pre-Funding Account and the initial deposit to the
Collateral Reinvestment Account. Each Prospectus Supplement will specify
whether, and the terms, conditions and manner under which, Subsequent
Receivables will be sold by the Depositor to the related Trust.
If the related Prospectus Supplement provides that the property of a
Trust will include a Pre-Funding Account or Collateral Reinvestment Account,
the applicable Originator or Originators will be obligated to sell and assign
to the Depositor pursuant to the related Purchase Agreement or Purchase
Agreements, as applicable, and the Depositor will be
obligated to sell and assign to the related Trust pursuant to the related
Pooling and Servicing Agreement or Sale and Servicing Agreement, as
applicable, Subsequent Receivables from time to time during the Funding
Period or Revolving Period in an aggregate outstanding principal amount
approximately equal to the Pre-Funded Amount or the amount on deposit in the
Collateral Reinvestment Account, as applicable. The related Trust will be
obligated pursuant to the related Pooling and Servicing Agreement or Sale and
Servicing Agreement, as applicable, to purchase all such Subsequent
Receivables from the Depositor subject to the satisfaction, on or before the
related Subsequent Transfer Date, of the conditions precedent, among others,
that (i) each such Subsequent Receivable shall satisfy the eligibility
criteria specified in the related Pooling and Servicing Agreement or Sale and
Servicing Agreement, as applicable, and shall not have been selected from
among the eligible Receivables in a manner that the applicable Originator or
the Depositor deems adverse to the interests of the Securityholders; (ii) as
of the applicable Cutoff Date for such Subsequent Receivables, all of the
Receivables in the related Trust, including the Subsequent Receivables to be
conveyed to the Trust as of such date, must satisfy the parameters
described under "The Receivables Pools" herein and "The Receivables Pool"
in the related Prospectus Supplement; and (iii) the applicable Originator
must execute and deliver to the Depositor, and the Depositor must execute and
deliver to such Trust, a written assignment conveying such Subsequent
Receivables to the Depositor and the related Trust, respectively. In
addition, as and to the extent specified in the related Prospectus
Supplement, the conveyance of Subsequent Receivables to a Trust is subject to
the satisfaction of the condition subsequent, among others, which must be
satisfied within the applicable time period specified in the related
Prospectus Supplement, that the Depositor deliver certain opinions of
counsel to the related Trustee with respect to the validity of the conveyance
of such Subsequent Receivables to the Trust. If any such conditions
precedent or conditions subsequent are not met with respect to any
Subsequent Receivables within the time period specified in the related
Prospectus Supplement, the Originator or the Depositor, as specified in the
related Prospectus Supplement, will be required to repurchase such Subsequent
Receivables from the related Trust, at a purchase price equal to the related
Repurchase Amounts therefor.
TRUST ACCOUNTS
With respect to each Owner Trust that issues Notes, the Master Servicer
will establish and maintain with the related Indenture Trustee (a) one or
more accounts, in the name of the Indenture Trustee on behalf of the related
Securityholders, into which all payments made on or in respect of the related
Receivables will be deposited (the "Collection Account") and (b) an account,
in the name of the Indenture Trustee on behalf of the Noteholders, into which
amounts released from the Collection Account and any reserve account or other
form of credit enhancement for payment to such Noteholders will be deposited
and from which all distributions to such Noteholders will be made (the "Note
Distribution Account"). With respect to each Owner Trust that issues
Certificates and each Grantor Trust, the Master Servicer will establish and
maintain an account with the related Trustee, in the name of such Trustee on
behalf of the Certificateholders, into which amounts released from the
Collection Account and any reserve account or other form of credit
enhancement for distribution to such Certificateholders will be deposited and
from which all distributions to such Certificateholders will be made (the
"Certificate Distribution Account"). With respect to any Owner Trust that
does not issue Notes or any Grantor Trust, the Master Servicer will also
establish and maintain the Collection Account
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and any other Trust Account in the name of the related Trustee on behalf of
the related Certificateholders.
If so provided in the related Prospectus Supplement, the Master Servicer
will establish for each Series of Securities an additional account (the
"Payahead Account"), in the name of the related Indenture Trustee (in the
case of an Owner Trust that issues Notes) or Trustee (in the case of an
Owner Trust that does not issue Notes or a Grantor Trust), into which, to the
extent required in the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, early payments made by or on behalf of
Obligors on Precomputed Receivables will be deposited until such time as such
payments become due. Until such time as payments are transferred from the
Payahead Account to the Collection Account, they will not constitute collected
interest or collected principal and will not be available for distribution
to Noteholders or Certificateholders.
Pre-Funding Account and Collateral Reinvestment Account. If so provided
in the related Prospectus Supplement, the Servicer will establish
and maintain a Pre-Funding Account, in the name of the related Trustee on
behalf of the related Securityholders, into which the Depositor will deposit
the Pre-Funded Amount on the related Closing Date. The Pre-Funded
Amount will not exceed 40% of the initial aggregate principal amount of the
Notes and Certificates of the related Series. In addition, if so provided in
the related Prospectus Supplement, the Servicer will establish
and maintain a Collateral Reinvestment Account, in the name of the related
Trustee on behalf of the related Securityholders, into which the Depositor
will deposit the amount, if any, specified in such Prospectus Supplement,
and, during the Revolving Period, principal will not be distributed on the
Securities of the related Series and principal collections, together with (if
and to the extent described in the related Prospectus Supplement) interest
collections on the Receivables that are in excess of amounts required to be
distributed therefrom will be deposited from time to time in the Collateral
Reinvestment Account. The Pre-Funded Amount and the amounts on deposit in
the Collateral Reinvestment Account will be used by the related Trustee to
purchase Subsequent Receivables from the Depositor from time to time during
the Funding Period and Revolving Period, respectively. The amounts on
deposit in the Pre-Funding Account during the Funding Period and the amount
on deposit in the Collateral Reinvestment Account will be invested by the
Trustee in Eligible Investments. Any Investment Income received on the
Eligible Investments during a Collection Period will be included in the
interest distribution amount on the following Distribution Date. The Funding
Period or Revolving Period, if any, for a Trust will begin on the related
Closing Date and will end on the date specified in the related Prospectus
Supplement, which, in the case of the Funding Period, in no event will be
later than the date that is one year after the related Closing Date. Any
amounts remaining in the Pre-Funding Account at the end of the Funding Period
or in the Collateral Reinvestment Account at the end of the Revolving Period
will be distributed to the related Securityholders in the
manner and priority specified in the related Prospectus Supplement, as a
prepayment of principal of the related Securities.
Any other accounts to be established with respect to a Trust will be
described in the related Prospectus Supplement.
For each Series of Securities, funds in the Collection Account, Note
Distribution Account , Certificate Distribution Account and any Pre-Funding
Account, Collateral Reinvestment Account, reserve account or other
accounts identified as such in the related Prospectus Supplement
(collectively, the "Trust Accounts") will be invested as provided in the
related Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, in Eligible Investments. "Eligible Investments" means book-
entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form which evidence (a) direct
obligations of, and obligations fully guaranteed as to timely payment by, the
United States of America; (b) qualifying demand deposits, time deposits or
certificates of deposit of any depository institution or trust
company incorporated under the laws of the United States of America or any
state thereof (or any domestic branch of a foreign bank) and subject to
supervision and examination by Federal or State banking or depository
institution authorities; (c) qualifying commercial paper; (d) qualifying
investments in money market mutual funds (including funds for which the
related Indenture Trustee or the related Owner Trustee or any of their
respective affiliates is investment
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manager or advisor); (e) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b); (f) repurchase
obligations with respect to any security that is a direct obligation of, or
fully guaranteed by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed by the full
faith and credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as principal)
described in clause (b); and (g) any other investment specified in the
related Prospectus Supplement or permitted by the rating agency rating the
related Series of Securities. Except as described hereafter or in the
related Prospectus Supplement, Eligible Investments will be limited to
obligations or securities that mature on or before the date of the next
scheduled distribution to Securityholders of such Series. Unless otherwise
specified in the related Prospectus Supplement, Investment Income on funds
deposited in the Trust Accounts will be deposited in the applicable
Collection Account on each Distribution Date and will 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 have a credit rating
from each rating agency rating the related Series of Securities in one of
its generic rating categories that signifies investment grade. " Eligible
Institution" means, with respect to a Trust, (a) the corporate trust
department of the related Indenture Trustee or 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) (i) that has a long-term or
short-term unsecured debt rating or a deposit rating acceptable to the
rating agency rating the related Series of Securities and (ii) whose
deposits are insured by the FDIC.
SERVICING PROCEDURES
If so specified in the related Prospectus Supplement, to assure uniform
quality in servicing the Receivables and to reduce administrative costs, the
Depositor and each Trust will designate the Master Servicer, or
another custodian specified in such Prospectus Supplement, as custodian to
maintain possession, as such Trust's agent, of the related Contracts and any
other documents relating to the Receivables. The Depositor's and the Master
Servicer's accounting records and computer systems will be marked to reflect
the sale and assignment of the related Receivables to each Trust, and UCC
financing statements reflecting such sale and assignment will be filed.
The Master Servicer, directly or through one or more Subservicers, will
make reasonable efforts to collect all payments due with respect to the
Receivables and will, consistent with the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, follow such
collection procedures as it follows with respect to comparable Contracts it
services for itself and others. Consistent with its normal procedures,
the Master Servicer may, in its discretion, arrange with the Obligor on a
Receivable to extend or modify the payment schedule, but no such arrangement
will, for purposes of any Sale and Servicing Agreement or Pooling and
Servicing Agreement, modify the original due dates or the amount of the
scheduled payments or extend the final payment date of any Receivable beyond
the Final Scheduled Maturity Date (as such term is defined with respect to
any Receivables Pool in the related Prospectus Supplement). Some of such
arrangements may result in the Master Servicer purchasing the Receivable for
the Repurchase Amount, while others may result in the Master Servicer making
Advances. The Master Servicer may sell the related Financed Vehicle securing
any Receivable at a public or private sale, or take any other action
permitted by applicable law. See "Certain Legal Aspects of the Receivables".
If so specified in the related Prospectus Supplement, a "backup
servicer" may be appointed and assigned certain oversight servicing
responsibilities with respect to the Receivables. The identity of any
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backup servicer, as well as a description of such responsibilities, of any
fees payable to such backup servicer and the source of payment of such fees,
will be included in the related Prospectus Supplement.
COLLECTIONS
With respect to each Trust, the Master Servicer will deposit or cause
to be deposited all payments on the related Receivables (from whatever
source) and all proceeds of such Receivables collected during the period
specified in the related Prospectus Supplement (the "Collection Period") into
the related Collection Account not later than two business days after
receipt thereof.
Collections on a Precomputed Receivable received during any Collection
Period will be applied first to the repayment of any outstanding Precomputed
Advances made by the Master Servicer with respect to such Receivable (as
described below), and then to the scheduled monthly
payment due on such Receivable. Any portion of such collections remaining
after the scheduled monthly payment has been made (such excess amounts, the
"Payaheads") will, unless such remaining amount is sufficient to prepay the
Precomputed Receivable in full and if so provided in the related Prospectus
Supplement, generally will be transferred to and kept in the Payahead Account
until such later Distribution Date on which such Payaheads may be applied
either to the scheduled monthly payment due during the related Collection
Period or to prepay such Receivable in full.
ADVANCES
If so provided in the related Prospectus Supplement, to the extent the
collections of interest and principal on a Precomputed Receivable for a
Collection Period fall short of the related scheduled payment, the Master
Servicer will make a Precomputed Advance of the shortfall. The Master
Servicer will be obligated to make a Precomputed Advance on a Precomputed
Receivable only to the extent that the Master Servicer, in its
sole discretion, expects to recoup such Advance from subsequent collections
or recoveries on such Receivable or other Precomputed Receivables in the
related Receivables Pool. The Master Servicer will deposit the Precomputed
Advance in the applicable Collection Account on or
before the business day preceding the applicable Distribution Date. The
Master Servicer will recoup its Precomputed Advance from subsequent payments
by or on behalf of the related Obligor or from insurance or liquidation
proceeds with respect to the related Receivable and will release its right to
reimbursement in conjunction with its purchase of the
Receivable as Master Servicer or, upon determining that reimbursement from
the preceding sources is unlikely, will recoup its Precomputed Advance from
any collections made on other Precomputed Receivables in the related
Receivables Pool.
If so provided in the related Prospectus Supplement, on or before the
business day prior to each Distribution Date, the Master Servicer will
deposit into the related Collection Account as a Simple Interest Advance an
amount equal to the amount of interest that would have been due on the
related Simple Interest Receivables at their respective APRs for the related
Collection Period (assuming that such Simple Interest Receivables are paid on
their respective due dates) minus the amount of interest actually received on
such Simple Interest Receivables during the applicable Collection Period. If
such calculation results in a negative number, an amount equal to such amount
shall be paid to the Master Servicer in reimbursement of outstanding Simple
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Interest Advances. In addition, in the event that a Simple Interest
Receivable becomes a Liquidated Receivable (as such term is defined in the
related Prospectus Supplement), the amount of accrued and unpaid interest
thereon (but not including interest for the then current Collection Period)
will be withdrawn from the Collection Account and paid to the Master Servicer
in reimbursement of outstanding Simple Interest Advances.
If so provided in the related Prospectus Supplement, no advances of principal
will be made with respect to Simple Interest Receivables.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement, with
respect to each Trust the Master Servicer will be entitled to receive, out
of interest collected on or in respect of the related
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Receivables, a fee for each Collection Period (the "Servicing Fee") in an
amount equal to the percentage per annum specified in the related
Prospectus Supplement (the "Servicing Fee Rate") of the Pool Balance as of
the first day of such Collection Period. If so specified in the related
Prospectus Supplement, the Servicing Fee (together with any portion of the
Servicing Fee that remains unpaid from prior Distribution Dates) will be
paid solely to the extent of the Interest Distribution Amount; however, the
Servicing Fee will be paid prior to the distribution of any portion of the
Interest Distribution Amount to the holders of the Notes or Certificates of
any Series. Any fees due to any Subservicer with respect to a Receivables
Pool will be the responsibility of the related Master Servicer and will not
be an additional expense of the Trust.
Unless otherwise provided in the related Prospectus Supplement, the
Master Servicer will also collect and retain any late fees, prepayment
charges 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 under the related
Contracts and late fees and other charges in accordance with the Master
Servicer's normal practices and procedures.
The Servicing Fee will compensate the Master Servicer for performing the
functions of a third party servicer of motor vehicle receivables as an
agent for the related Trust, including collecting and posting all payments,
responding to inquiries of Obligors on the Receivables, investigating
delinquencies, sending payment statements and reporting tax information to
Obligors, paying costs of collections and the disposition of defaulted
Receivables and policing the collateral. The Servicing Fee will also
compensate the Master Servicer for administering the related Receivables
Pool, including making Advances, accounting for collections, furnishing
monthly and annual statements to the related Indenture Trustee and/or
Trustee, and generating federal income tax information for such Trust and for
the related Noteholders and/or Certificateholders. The Servicing Fee also
will reimburse the Master Servicer for certain taxes, the fees of the related
Indenture Trustee and/or Trustee, accounting fees,
outside auditor fees, data processing costs and other costs incurred in
connection with administering the applicable Receivables Pool.
DISTRIBUTIONS
With respect to each Series of Securities, beginning on the Distribution
Date specified in the related Prospectus Supplement, distributions of
principal and interest (or, where applicable, of principal or interest only)
on each class of Securities entitled thereto will be made by the related
Trustee or Indenture Trustee, as applicable, to the Certificateholders and
Noteholders of such Series. The timing, calculation, allocation, order,
source and priorities of, and requirements for, all payments to the holders
of each class of Notes and/or distributions to holders of each class of
Certificates will be set forth in the related Prospectus Supplement.
With respect to each Trust, on each Distribution Date collections on or
in respect of the related Receivables will be transferred from the Collection
Account to the Note Distribution Account or Certificate Distribution Account,
as applicable, for distribution to the Noteholders and Certificateholders to
the extent provided in the related Prospectus Supplement. Credit
enhancement, such as a reserve account, will be available to cover shortfalls
in the amount available for distribution on such date to the extent specified
in the related Prospectus Supplement. If so provided in the related
Prospectus Supplement, distributions in respect of principal of a class of
Securities of a Series will be subordinate to distributions in respect of
interest on such class, and distributions in respect of one or more classes
of Certificates of such Series may be subordinate to payments in respect of
the Notes, if any, of such Series or other classes of Certificates.
Distributions of principal on the Securities of a Series may be based on the
amount of principal collected or due, or the amount of realized losses
incurred, during a Collection Period.
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CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of any credit and cash flow enhancement
arrangements and the provider thereof, if applicable, with respect to each
class of Securities of a Series will be set forth in the related Prospectus
Supplement. To the extent provided in the related Prospectus Supplement,
credit or cash flow enhancement may be in the form of subordination of one or
more classes of Securities, reserve accounts, spread accounts, letters of
credit, surety bonds, insurance policies, over-collateralization, credit or
liquidity facilities, guaranteed investment contracts, swaps or other
interest rate protection agreements, repurchase obligations, other agreements
with respect to third party payments or other support, cash deposits, or such
other arrangements as may be described in the related Prospectus Supplement,
or any combination of the foregoing. Unless otherwise specified in the
applicable Prospectus Supplement, credit or cash flow 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.
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The existence of a reserve account or other form of credit enhancement
for the benefit of any class or Series of Securities is intended to enhance
the likelihood of receipt by the Securityholders of 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. If so
specified 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 all principal and interest
thereon. If losses occur that exceed the amount covered by such credit
enhancement or that are not covered by such credit enhancement, Securityholders
will bear their allocable share of such losses, 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 may be exhausted by the
claims of Securityholders of other Series.
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that a firm of independent public accountants will furnish
annually to the related Trust and Indenture Trustee and/or Trustee a
statement as to compliance by the Master Servicer during the preceding twelve
months (or, in the case of the first such statement, during such shorter
period that shall have elapsed since the applicable Closing Date) with
certain standards relating to the servicing of the Receivables, the Master
Servicer's accounting records and computer files with respect thereto and
certain other matters.
Each Sale and Servicing Agreement or Pooling and Servicing Agreement,
as applicable, will also provide for delivery to the related Trust and
Indenture Trustee and/or Trustee each year of a certificate signed by an
officer of the Master Servicer stating that the Master Servicer has fulfilled
its obligations under the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, throughout the preceding twelve months
(or, in the case of the first such certificate, during such shorter period
that shall have elapsed since the applicable Closing Date) or, if there has
been a default in the fulfillment of any such obligation, describing each
such default. The Master Servicer will agree to give each Indenture Trustee
and/or Trustee, as applicable, notice of certain Servicer Defaults under
the related Sale and Servicing Agreement or Pooling and Servicing Agreement,
as applicable.
Copies of the foregoing statements and certificates may be obtained by
Securityholders by a request in writing addressed to the related Trustee or
Indenture Trustee, as applicable, at the Corporate Trust Office
for such Trustee or Indenture Trustee specified in the related Prospectus
Supplement.
STATEMENTS TO TRUSTEES AND THE TRUST
Prior to each Distribution Date with respect to each Series of
Securities, the Master Servicer will provide to the applicable Indenture
Trustee, if any, and the applicable Trustee as of the close of
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business on the last day of the preceding 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
as described under "Certain Information Regarding the Securities --
Statements to Securityholders".
SERVICER DEFAULTS
Unless otherwise provided in the related Prospectus Supplement, a
"Servicer Default" under each Sale and Servicing Agreement and Pooling and
Servicing Agreement will consist of: (i) any failure by the Master Servicer
to deliver or cause to be delivered to the related Trustee or Indenture
Trustee, as applicable, for deposit in any of the Trust Accounts
any required payment or to direct the related Trustee or Indenture Trustee,
as applicable, to make any required distributions therefrom, which failure
continues unremedied for five business days after discovery by an officer of
the Master Servicer or written notice of such failure is given (a) to the
Master Servicer by the related Trustee or Indenture Trustee, as applicable,
or (b) to the Master Servicer and to the related Trustee or Indenture
Trustee, as applicable, by holders of Notes, if any, evidencing not less than
25% of the aggregate outstanding principal amount thereof or, in the event
a Series of Securities includes no Notes or if such Notes have been paid
in full, by holders of Certificates evidencing not less than 25% of the
Certificate Balance; (ii) any failure by the Master Servicer duly to
observe or perform in any material respect any covenant or agreement in the
related Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, which failure materially and adversely affects the rights of
the related Securityholders and which continues unremedied for 60
days after written notice of such failure is given to the Master Servicer in
the same manner described in clause (i) above; and (iii) certain events of
bankruptcy, insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings and certain actions by the Master
Servicer indicating its insolvency, reorganization pursuant to bankruptcy
proceedings or inability to pay its obligations (each, an "Insolvency Event").
RIGHTS UPON SERVICER DEFAULT
Unless otherwise provided in the related Prospectus Supplement, in the
case of any Owner Trust that issues Notes, as long as a Servicer Default
under the related Sale and Servicing Agreement remains unremedied,
the related Indenture Trustee or holders of Notes of the related Series
evidencing not less than 25% of the aggregate principal amount of such Notes
then outstanding may terminate all the rights and obligations of the
Master Servicer, whereupon such Indenture Trustee or a successor servicer
appointed by such Indenture Trustee will succeed to all the responsibilities,
duties and liabilities of the Master Servicer and will be entitled to similar
compensation arrangements. In the case of any Owner Trust that does not
issue Notes or any Grantor Trust, unless otherwise provided in the related
Prospectus Supplement, as long as a Servicer Default under the related Trust
Agreement or Pooling and Servicing Agreement remains unremedied, the related
Trustee or holders of Certificates of the related Series evidencing not less
than 25% of the Certificate Balance may terminate all the rights and
obligations of the Master Servicer, whereupon such Trustee or a successor
servicer appointed by such Trustee will succeed to all the responsibilities,
duties and liabilities of the Master Servicer under such Pooling and
Servicing Agreement and will be entitled to similar compensation
arrangements. If, however, a bankruptcy trustee or similar official has
been appointed for the Master Servicer, and no Servicer Default
other than such appointment has occurred, such trustee or
official may have the power to prevent any Indenture Trustee or the related
Noteholders or such Trustee or the related Certificateholders from
effecting a transfer of servicing. In the event that the related Indenture
Trustee, if any, or the related Trustee is unwilling or unable to act as
successor to the Master Servicer, such Indenture Trustee or Trustee, as
applicable, may appoint, or may petition a court of competent jurisdiction to
appoint, a successor with a net worth of at least $10,000,000 (or such other
amount as is specified in the related Prospectus Supplement) and whose
regular business includes the servicing of motor vehicle receivables. The
Indenture Trustee, if any, or the Trustee may arrange for compensation to be
paid to such successor master servicer, which in no event may be greater
than the servicing compensation paid to the Master Servicer under the
related Sale and Servicing Agreement or Pooling and Servicing Agreement,
as applicable.
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WAIVER OF PAST DEFAULTS
Unless otherwise provided in the related Prospectus Supplement, (i) in
the case of each Owner Trust that issues Notes , holders of the related
Notes evidencing not less than a majority of the aggregate outstanding
principal amount of the Notes (or of Certificates evidencing not less than
a majority of the outstanding Certificate Balance, in the case of any default
that does not adversely affect the Indenture Trustee or Noteholders) and (ii)
in the case of each Owner Trust that does not issue Notes or each Grantor
Trust, holders of Certificates evidencing not less than a majority of the
Certificate Balance may, on behalf of all such Noteholders and
Certificateholders, waive any default by the Master Servicer in the
performance of its obligations under the related Sale and Servicing Agreement
or Pooling and Servicing Agreement, as applicable, and its consequences,
except a default in making any required deposits to or payments from any
Trust Account or in respect of a covenant or provision of the Master
Servicer in the Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, that cannot be modified or amended without the
consent of each Securityholder (in which event the related waiver
will require the approval of holders of all of the Securities of such
Series). No such waiver will impair the Securityholders' rights with
respect to subsequent Servicer Defaults.
AMENDMENT
Unless otherwise specified in the related Prospectus Supplement, each
of the Transfer and Servicing Agreements may be amended by the parties
thereto, without the consent of the related Noteholders or
Certificateholders, if any, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Transfer
and Servicing Agreements or of modifying in any manner the rights
of such Noteholders and Certificateholders; provided, that any such action
will not, in the opinion of counsel satisfactory to the related Trustee or
Indenture Trustee, as applicable, materially and adversely affect the
interests of any such Noteholder or Certificateholder.
Unless otherwise specified in the related Prospectus Supplement, the
Transfer and Servicing Agreements may also be amended from time to time by
the parties thereto with the consent of the holders of Notes evidencing at
least a majority of the aggregate principal amount of the then outstanding
Notes, if any, of the related Series and the holders of Certificates
evidencing at least a majority of the aggregate principal amount of such
Certificates then outstanding, if any, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of such Transfer and Servicing Agreements or of modifying in any manner the
rights of such Noteholders or Certificateholders, as applicable; provided,
that no such amendment may (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments
on or in respect of the related Receivables or distributions that
are required to be made for the benefit of such Noteholders or
Certificateholders or (ii) reduce the aforesaid percentage of the Notes or
Certificates of such Series that is required to consent to
any such amendment, without the consent of the holders of all of the
outstanding Notes or Certificates, as the case may be, of such Series.
INSOLVENCY EVENT
With respect to any Owner Trust, unless otherwise provided in the
related Prospectus Supplement, if an Insolvency Event occurs with respect to
the Company, the Receivables comprising the related Receivables Pool will be
liquidated and such Trust will be terminated 90 days after the date of such
Insolvency Event, unless, before the end of such 90-day period, the related
Trustee shall have received written instructions from (i) holders of each
class of Certificates, if any, (excluding any Certificates held by the
Company) representing more than 50% of the aggregate outstanding principal
amount of each such class (not including the principal amount of such
Certificates held by the Company) and (ii) holders of each class of Notes, if
any, representing more than 50% of the aggregate outstanding principal amount
of each such class of Notes, to the effect that each such party disapproves of
the liquidation of such Receivables and termination of such Trust. Promptly
after the occurrence of an Insolvency Event with respect to the Company, notice
thereof is required to be given to the related Securityholders; provided,
however, that any failure to give such notice will not prevent
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or delay the termination of such Trust. Upon any such termination of a
Trust, the related Trustee shall, or shall direct the related Indenture
Trustee to, promptly sell the assets of such Trust (other than the Trust
Accounts) in a commercially reasonable manner and on commercially reasonable
terms. The proceeds from any such sale, disposition or liquidation of the
Receivables of such Trust will be treated as collections on such Receivables
and deposited in the related Collection Account. With respect
to any Trust, if the proceeds from the liquidation of the related Receivables
and any amounts on deposit in the related Trust Accounts and any available
credit enhancement are not sufficient to pay the related Notes and
Certificates in full, the amount of principal returned to the holders
thereof will be reduced and some or all of the related Securityholders will
incur a loss.
Each Pooling and Servicing Agreement and each Trust Agreement will
provide that the related Trustee shall not have the power to commence a
voluntary proceeding in bankruptcy with respect to the related Trust without
the unanimous prior approval of all related Certificateholders (including the
Company) and the delivery to such Trustee by each such Certificateholder
(including the Company) of a certificate certifying that such
Certificateholder reasonably believes that such Trust is insolvent.
PAYMENT IN FULL OF THE NOTES
Upon the payment in full of all outstanding Notes of a given Series and
the satisfaction and discharge of the related Indenture, the related Trustee
will succeed to all the rights of the Indenture Trustee, and the
Certificateholders of such Series will succeed to all the rights of the
Noteholders of such Series under the related Sale and Servicing Agreement,
except as otherwise provided therein.
COMPANY LIABILITY
Unless otherwise provided in the related Prospectus Supplement, in the
case of an Owner Trust, the Company will agree in the related Trust Agreement
to be liable directly to any injured party for the entire amount
of any losses, claims, damages or liabilities (other than those incurred by a
Securityholder in the capacity of an investor with respect to such Owner
Trust) arising out of or based on the arrangement created by such Trust
Agreement as though such arrangement created a partnership under the
Delaware Revised Uniform Limited Partnership Act in which the Company was a
general partner.
TERMINATION
Unless otherwise specified in the related Prospectus Supplement, the
obligations of the Master Servicer, any Subservicer, the Depositor, each
Originator, the related Trustee and the related Indenture Trustee, if any,
with respect to the Trust pursuant to the related Transfer and Servicing
Agreements will terminate upon the earliest to occur of (i) the maturity or
other liquidation of the last Receivable in the related Receivables Pool and
the disposition of any amounts received upon liquidation of any such
remaining Receivables, (ii) the payment to Noteholders, if any, and
Certificateholders, if any, of all amounts required to be paid to them
pursuant to the Transfer and Servicing Agreements and (iii) the occurrence
of either event described below.
Unless otherwise specified in the related Prospectus Supplement, in
order to avoid excessive administrative expenses, the Master Servicer will
be permitted, at its option, to purchase from each Trust all remaining
Receivables in the related Receivables Pool as of the end of any Collection
Period, if the then outstanding Pool Balance is 10% or less of the original
Pool Balance (as defined in the related Prospectus Supplement), at a purchase
price equal to the aggregate of the Repurchase Amounts thereof as of the end
of such Collection Period.
If and to the extent provided in the related Prospectus Supplement, the
Indenture Trustee or Trustee, as applicable, will, within the period of time
specified in such Prospectus Supplement following a Distribution Date as of
which the Pool Balance is equal to or less than the percentage of the
original Pool Balance specified in such Prospectus Supplement, solicit bids
for the purchase of the
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Receivables remaining in such Trust, in the manner and subject to the terms
and conditions set forth in such Prospectus Supplement. If such Indenture
Trustee or Trustee receives satisfactory bids as described in such Prospectus
Supplement, then the Receivables remaining in such Trust will be sold to the
highest bidder.
ADMINISTRATION AGREEMENT
The Master Servicer, in its capacity as administrator (the "
Administrator"), may enter into an agreement (each, an " Administration
Agreement") with an Owner Trust that issues Notes and the related Indenture
Trustee pursuant to which the Administrator will agree, to the extent
provided in such Administration Agreement, to provide the notices and to
perform other administrative obligations required by the related Indenture.
If so specified in the related Prospectus Supplement, as compensation for the
performance of the Administrator's obligations under the applicable
Administration Agreement and as reimbursement for its expenses related
thereto, the Administrator will be entitled to a monthly administration fee,
which fee will be paid as specified in the related Prospectus Supplement.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SECURITY INTERESTS IN VEHICLES
In states in which retail installment sale contracts such as the
Receivables evidence the credit sale of automobiles, light duty trucks and
vans by dealers to obligors, the contracts also constitute personal property
security agreements and include grants of security interests in the vehicles
under the applicable UCC. Perfection of security interests in financed
automobiles, light duty trucks and vans generally is governed by the motor
vehicle registration laws of the state in which the vehicle is located. In
all states in which the Receivables have been originated, a security interest
in automobiles and light duty trucks is perfected by obtaining the
certificate of title to the Financed Vehicle or notation of the secured
party's lien on the vehicles' certificate of title (in addition, in
Louisiana, a copy of the installment sale contract must be filed with the
appropriate governmental recording office).
Unless otherwise specified in the related Prospectus Supplement, each
Contract will name the applicable Originator as obligee or assignee and as
the secured party. Unless otherwise specified in the related Prospectus
Supplement, such Originator will have represented and warranted that it has
taken all actions necessary under the laws of the state in which the Financed
Vehicle is located to perfect the Originator's security interest in the
Financed Vehicle, including, where applicable, having a notation of
its lien recorded on such vehicle's certificate of title. Unless otherwise
specified in the related Prospectus Supplement, the Obligors on the Contracts
will not be notified of the sale from the Originator, directly or indirectly,
to the Depositor, or the sale from the Depositor to the Trust, and no action
will be taken to record the transfer of the security interest from the
Originator, directly or indirectly, to the Depositor or from the Depositor to
the Trust by amendment of the certificates of title for the Financed Vehicles
or otherwise.
The Originator will transfer and assign its security interest in the
related Financed Vehicles directly or indirectly to the Depositor, and the
Depositor will transfer and assign its security interest in such Financed
Vehicles to the related Trust pursuant to a Sale and Servicing Agreement or
Pooling and Servicing Agreement. However, because of the administrative
burden and expense, neither the Originator nor the Depositor will amend the
certificates of title of such Financed Vehicles to identify the related Trust
as the new secured party.
In most states, an assignment such as that under each Sale and Servicing
Agreement or Pooling and Servicing Agreement is an effective conveyance of a
security interest without amendment of any lien noted on a
vehicle's certificate of title, and the assignee succeeds thereby to the
assignor's rights as secured party. However, by not identifying such Trust
as the secured party on the certificate of
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title, the security interest of such Trust in the vehicle could be defeated
through fraud or negligence.
Under the laws of most states, the perfected security interest in a
vehicle will continue for four months after the vehicle is moved to a state
other than the state in which it is initially registered and thereafter until
the owner thereof re-registers the vehicle in the new state. A majority of
states generally require surrender of a certificate of title to re-register a
vehicle. Accordingly, a secured party must surrender possession if it holds
the certificate of title to the vehicle or, in the case of a vehicle
registered in a state providing for the notation of a lien on the certificate
of title but not possession by the secured party, the secured party will
receive notice of surrender if the security interest is noted on the
certificate of title. Thus, the secured party will have the opportunity to
re-perfect its security interest in the vehicle in the state of relocation.
In states that do not require a certificate of title for registration of a
motor vehicle, re-registration could defeat perfection. Unless otherwise
specified in the related Prospectus Supplement, under each Sale and Servicing
Agreement and Pooling and Servicing Agreement, the Master Servicer will be
obligated to take appropriate steps, at the Master Servicer's expense, to
maintain perfection of security interests in the Financed Vehicles and will
be obligated to purchase the related Receivable if it fails to do so.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes take priority over even a perfected
security interest in a financed vehicle. The Code also grants priority to
certain federal tax liens over the lien of a secured party. The laws of
certain states and federal law permit the confiscation of vehicles by
governmental authorities under certain circumstances if used in unlawful
activities, which may result in the loss of a secured party's perfected
security interest in the confiscated vehicle.
REPOSSESSION
In the event of default by vehicle purchasers, the holder of the motor
vehicle retail installment sale contract has all the remedies of a secured
party under the UCC, except where specifically limited by other state laws.
Among the UCC remedies, the secured party has the right to perform self-help
repossession unless such act would constitute a breach of the peace. Unless
otherwise specified in the related Prospectus Supplement, self-help is the
most likely method to be used by the Master Servicer and is accomplished
simply by retaking possession of the financed vehicle. In the event of
default by the obligor, some jurisdictions require that the obligor be
notified of the default and be given a time period within which he may cure
the default prior to repossession. Generally, the right of reinstatement
may be exercised on a limited number of occasions in any one-year period.
In cases where the obligor objects or raises a defense to repossession,
or if otherwise required by applicable state law, a court order must
be obtained from the appropriate state court, and the vehicle must then
be repossessed in accordance with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the 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. The obligor has the right to redeem the collateral prior to actual
sale by paying the secured party the unpaid principal balance of the
obligation plus reasonable expenses for repossessing, holding and preparing
the collateral for disposition and arranging for its sale, plus,
in some jurisdictions, reasonable attorneys' fees, or, in some states, by
payment of delinquent installments or the unpaid balance.
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. While some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in those
states that do not prohibit
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or limit such judgments. 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.
Occasionally, after resale of a vehicle and payment of all expenses and
all indebtedness, there is a surplus of funds. In that case, the UCC
requires the creditor to remit the surplus to any holder of a lien with
respect to the vehicle or if no such lienholder exists or there are remaining
funds, the UCC requires the creditor to remit the surplus to the
former owner of the vehicle.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers
involved in consumer finance, including requirements regarding the adequate
disclosure of loan terms (including finance charges and deemed finance
charges), and limitations on loan terms (including the permitted finance
charge or deemed finance charge), collection practices and creditor remedies.
The application of these laws to particular circumstances is not always
certain and some courts and regulatory authorities have shown a willingness
to adopt novel interpretations of such laws. These laws include the Truth-
in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade
Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act,
the Fair Debt Collection Procedures Act, the Magnuson-Moss Warranty Act,
the Federal Reserve Board's Regulations B and Z, the Soldiers' and Sailors'
Civil Relief Act of 1940, the Texas Consumer Credit Code, state adoptions of
the National Consumer Act and of the Uniform Consumer Credit Code, and state
motor vehicle retail installment sales acts, retail installment sales acts
and other similar laws. Also, state laws impose finance charge ceilings and
other restrictions on consumer transactions and require contract disclosures
in addition to those required under federal law. These requirements impose
specific statutory liabilities upon creditors who fail to comply with their
provisions. In some cases, this liability could affect an assignee's ability
to enforce consumer finance contracts such as the Receivables.
Under the laws of certain states, finance charges with respect to motor
vehicle retail installment contracts may include the additional amount, if
any, that a purchaser pays as part of the purchase price for a vehicle solely
because the purchaser is buying on credit rather than for cash (a "cash sale
differential"). If a dealer charges such a differential, applicable finance
charge ceilings could be exceeded.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally duplicated
by the Uniform Consumer Credit Code, other statutes or the common law, has
the effect of subjecting an assignee of a seller of goods in a consumer
credit transaction (and certain related creditors ) to all claims and
defenses that the obligor in the transaction could assert against the seller
of the goods. 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.
Most of the Receivables will be subject to the requirements of the FTC
Rule. Accordingly, each Trust, as holder of the related Receivables, will be
subject to any claims or defenses that the purchaser of the applicable
Financed Vehicle may assert against the seller of the Financed Vehicle. Such
claims are limited to a maximum liability equal to the amounts paid by the
Obligor on the Receivable. If an Obligor were successful in asserting any
such claim or defense, such claim or defense would constitute a breach of the
Originator's warranties under the related Purchase Agreement and would create
an obligation of the Originator to repurchase the Receivable unless the
breach is cured. See "Description of the Transfer and Servicing
Agreements -- Sale and Assignment of Receivables".
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Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some
or all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the
United States. Courts have generally upheld the notice provisions of the UCC
and related laws as reasonable or have found that the repossession and
resale by the creditor do not involve sufficient state action to afford
constitutional protection to borrowers.
Under most state vehicle dealer licensing laws, sellers of automobiles,
minivans 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 Financed Vehicle, the
Obligor may be able to assert a defense against the seller of the Financed
Vehicle. If an Obligor on a Receivable were successful in asserting
any such claim or defense, the Master Servicer would pursue on behalf of
the related Trust any reasonable remedies against the seller or the
manufacturer of the vehicle, subject to certain limitations as to the
expense of any such action to be specified in the related Transfer
and Servicing Agreements.
Under each Purchase Agreement, the Originator will have represented and
warranted that each Receivable complies with all requirements of law in all
material respects. Accordingly, if an Obligor has a claim against a Trust
for violation of any law and such claim materially and adversely affects such
Trust's interest in a Receivable, such violation would constitute a breach of
the warranties of the Originator and would create an obligation of the
Originator to repurchase the Receivable unless the breach is cured.
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 secured
party to realize upon collateral or to 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 vehicle and, as part of the
rehabilitation plan, may reduce the amount of the secured indebtedness
to the market value of the vehicle at the time of bankruptcy (as determined
by the court), leaving the creditor as a general unsecured creditor for the
remainder of the indebtedness. A bankruptcy court may also reduce the
monthly payments due under a contract or change the rate of interest and time
of repayment of the indebtedness.
CERTAIN MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain material federal income
tax consequences of the purchase, ownership and disposition of the Notes and
the Certificates. The summary does not purport to deal with federal income
tax consequences applicable to all categories of holders, some of which may
be subject to special rules. For example, it does not discuss the tax
treatment of Noteholders or Certificateholders that are insurance companies,
regulated investment companies or dealers in securities. Moreover, there are
no cases or Internal Revenue Service ("IRS") rulings on similar transactions
involving both debt and/or equity interests issued by a trust with terms
similar to those of the Notes and/or the Certificates. 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
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federal, state, local, foreign and any other tax consequences particular to
them with respect to their purchase, ownership and disposition of the Notes
and the Certificates.
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. Each Trust will be
provided with an opinion of special federal tax counsel to the Trust
specified in the related Prospectus Supplement ("Federal Tax Counsel") that
the federal income tax matters discussed below are accurate in all material
respects. An 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 an election is made to treat the Trust as a partnership
under the Code , whether the Trust will be treated as a grantor trust or
whether the Trust will issue one or more classes of Certificates treated as
debt for federal income tax purposes. The Prospectus Supplement for each
Series of Certificates will specify whether a partnership election will
be made , whether the Trust will be treated as a grantor trust or whether
the Trust will issue one or more classes of Certificates treated as debt
for federal income tax purposes.
TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE OR WHICH ISSUE NO CLASSES OF
CERTIFICATES
TAX CHARACTERIZATION OF THE TRUST ^
-
Federal Tax Counsel will deliver its opinion that a Trust for which a
partnership election is made or which issues no classes of certificates 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 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.
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TAX CONSEQUENCES TO HOLDERS OF THE NOTES
General. The following discussion only applies to a Trust which elects
to be treated as a partnership and issues one or more classes of
Certificates. Furthermore, the following discussion assumes that all
payments on the Certificates are denominated in U.S. dollars and that any
such Certificates are sold to persons other than the Company. If these
conditions are not satisfied with respect to any given series of
Certificates, any additional tax consideration with respect to such
Certificates will be disclosed in the applicable Prospectus Supplement.
Treatment of the Notes as Indebtedness. The Depositor 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,
if so provided in the related Prospectus Supplement, advise the Trust that
the Notes
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will be classified as debt for federal income tax purposes. The
discussion below assumes this characterization of the Notes is correct.
OID, Indexed Securities, etc. 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., 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.
Interest Income on the Notes. Based on the above assumptions and
except as discussed in the following paragraph, although the matter is not
entirely clear, Federal Tax Counsel is of the opinion that the Notes will not
be considered issued with OID. In such case, 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 must include such OID in income, on a pro rata basis, as principal
payments are made on the Note. In the opinion of Federal Tax Counsel, a
purchaser who buys a Note for more or less than its principal amount will
generally be subject to the premium amortization or market discount rules,
respectively, of the Code.
In the opinion of Federal Tax Counsel, 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.
Sale or Other Disposition. In the opinion of Federal Tax Counsel, 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 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 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. In the opinion of Federal Tax Counsel, interest
payments made (or accrued) to a Noteholder who is a nonresident alien,
foreign corporation or other non-United States person (a "foreign person")
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
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the conduct of a trade or business within the United States by the foreign
person and the foreign person (i) is not actually or constructively a
"10 percent shareholder" of the Trust or the Depositor (including a holder
of 10% of the outstanding Certificates) or a "controlled foreign corporation"
with respect to which the Trust or the Depositor is a "related person"
within the meaning of the Code and (ii) provides the 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 person and providing the foreign person'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 person 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.
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In the opinion of Federal Tax Counsel, any capital gain realized on the
sale, redemption, retirement or other taxable disposition of a Note by
a foreign person will be exempt from United States federal income and
withholding tax, provided that (i) such gain is not effectively connected
with the conduct of a trade or business in the United States by the foreign
person and (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.
Backup Withholding. In the opinion of Federal Tax Counsel, 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 its
status as a nonresident) will be required to provide, under penalties of
perjury, a certificate containing 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 amount withheld to the IRS as a credit against the
holder's federal income tax liability.
</R?
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, and most likely in the view of Federal Tax Counsel,
the Trust might be treated as a publicly traded partnership that would not be
taxable as a corporation because it would meet 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 certain tax-exempt entities (including
pension funds) would be "unrelated business taxable income", income to
foreign holders 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
Treatment of the Trust as a Partnership. The Depositor 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
(including the Company), and the Notes being debt of the partnership.
However, the proper characterization of the arrangement involving the Trust,
the Certificates, the Notes, the Depositor and the Company is not clear
because there is no authority on transactions closely comparable to that
contemplated herein.
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A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Company or the Trust. Any such
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. 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. In the opinion of Federal Tax Counsel, 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 the opinion of Federal Tax Counsel, 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.
In the opinion of Federal Tax Counsel, 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; and (iii) 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. All
remaining taxable income of the Trust will be allocated to the Company.
Based on the economic arrangement of the parties, this approach for
allocating Trust income should be permissible under applicable Treasury
regulations, although 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, 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 although
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.
In the opinion of Federal Tax Counsel, all 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) will constitute "unrelated business taxable income"
generally taxable to such a holder under the Code.
In the opinion of Federal Tax Counsel, an individual taxpayer's share
of expenses of the Trust (including fees to the Master Servicer but not
interest expense) would be miscellaneous itemized deductions. Such
miscellaneous itemized deductions are only allowed to the extent they exceed,
in the
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aggregate, 2% of an individual's adjusted gross income. Furthermore,
Code Section 68 provides that itemized deductions otherwise allowable for a
taxable year of an individual taxpayer whose adjusted gross income exceeds a
specified amount will be reduced by the lesser of (i) 3% of the excess, if
any, of adjusted gross income over such amount, or (ii) 80% of the amount of
itemized deductions otherwise allowable for such year. Accordingly, 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.
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 were not
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 may be allocated to
Certificateholders.
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 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.
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, because
the proper accounting for a Section 708 termination requires the Trust to be
aware of the Certificateholders' tax basis in their respective Certificates,
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. In the opinion of Federal Tax Counsel, 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).
In the opinion of Federal Tax Counsel, 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.
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In the opinion of Federal Tax Counsel, 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,
in the opinion of Federal Tax Counsel, a holder purchasing Certificates may
be allocated tax items (which will affect its tax liability and tax basis)
attributable to periods before the actual transaction.
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
Company will be 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 (loss), the purchasing Certificateholder will
have a higher (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 an accrual basis and the fiscal
year of the Trust will be the calendar year. The 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-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 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 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.
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The Company 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. 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, 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.
Tax Consequences to Foreign Certificateholders. It is not clear
whether the Trust would 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 because there is no clear authority dealing with that
issue under facts substantially similar to those described herein. Although
it is not expected that the Trust would be engaged in a trade or business in
the United States for such purposes, the Trust will withhold as if it were so
engaged in order to protect the Trust from possible adverse consequences of a
failure to withhold. The Trust expects to withhold on the portion of its
taxable income that is allocable to foreign Certificateholders pursuant to
Section 1446 of the Code, as if such income were effectively connected to a
U.S. trade or business, at a rate of 35% for foreign holders that are taxable
as corporations and 39.6% for all other foreign holders. Subsequent
adoption of Treasury regulations or the issuance of other administrative
pronouncements may require the Trust to change its withholding procedures.
In determining a holder's withholding status, the Trust may rely on IRS
Form W-8, IRS Form W-9 or the holder's certification of nonforeign status
signed under penalties of perjury.
Each foreign holder might be required to file a U.S. 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. Each foreign holder
must obtain a taxpayer identification number from the IRS and submit that
number to the Trust on Form W-8 in order to assure appropriate
crediting of the taxes withheld. A foreign holder generally would be
entitled to file with the IRS a claim for refund with respect to taxes
withheld by the Trust, taking the position that no taxes were due because the
Trust was not engaged in a U.S. trade or business. However, interest
payments made (or accrued) to a Certificateholder who is a foreign person
generally will be considered guaranteed payments to the extent such payments
are determined without regard to the income of the Trust. If these interest
payments are properly characterized as guaranteed payments, then the interest
will not be considered "portfolio interest". As a result, Certificateholders
will be subject to United States federal income tax and withholding tax at
a rate of 30 percent, unless reduced or eliminated pursuant to an applicable
treaty. In such case, a foreign holder would only be entitled to claim a
refund for that portion of the taxes in excess of the taxes that should be
withheld with respect to the guaranteed payments.
Backup Withholding. In the opinion of Federal Tax Counsel,
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.
PENDING LEGISLATION
During 1995, the United States Congress passed the"Seven Year Balanced
Budget Act of 1995", H.R. 2491 (the "Bill"), which was vetoed by President
Clinton. The Bill would have created a new type of entity for federal income
tax purposes called a "financial asset securitization investment trust" or
"FASIT", and future legislation may include provisions similar to the FASIT
provisions of the Bill. If those provisions are reintroduced and enacted in
the form contained in the Bill, they generally will enable certain
arrangements similar to a Trust that is treated as a partnership to elect
to be treated as a FASIT. Under the FASIT provisions of the Bill, a FASIT
generally would avoid federal income taxation and could issue securities
substantially similar to the Certificates and Notes, and those
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securities would be treated as debt for federal income tax purposes. Upon
satisfying certain conditions set forth in the related Trust Agreement and
Indenture, the Depositor will be permitted to amend such Trust Agreement and
Indenture in order to enable all or a portion of the Trust to qualify as a
FASIT and to permit a FASIT election to be made with respect thereto, and to
make such modifications to such Trust Agreement and Indenture as may be
permitted by reason of the making of such an election. However, there can be
no assurance that FASIT provisions of the Bill will be reintroduced and
enacted, that they will be enacted in their present form, or that they
will permit an election to be made with respect to all or any portion of
a Trust. There also can be no assurance that the Depositor will or will
not cause any permissible FASIT election to be made with respect to a Trust
or amend the related Trust Agreement and Indenture in connection with any
election. However, any such election will be made only if an opinion of
Federal Tax Counsel is rendered that such election will not have material
adverse consequences to any holder of a Note or Certificate.
TRUSTS TREATED AS GRANTOR TRUSTS
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
If a partnership election is not made and the Trust does not issue one
or more classes of Certificates treated as debt for Federal income tax
purposes, 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. In the opinion of Federal Tax Counsel, 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.
In the opinion of Federal Tax Counsel, 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 Master 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 Master Servicer, provided that such amounts are reasonable
compensation for services rendered to the Trust. Grantor Trust
Certificateholders that are individuals, estates or trusts will be entitled
to deduct their share of expenses only to the extent such expenses plus all
other Section 212 expenses exceed two percent of its adjusted gross income.
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 Master 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 Master Servicer, whichever is earlier. If the
servicing fees paid to the Master Servicer are deemed to exceed reasonable
servicing compensation, the amount of such excess could be considered as an
ownership interest retained by the Master Servicer (or any person to whom the
Master Servicer assigned for value 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 "coupon stripping"
rules of the Code discussed below.
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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. In the
opinion of Federal Tax Counsel, 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 not
clear 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 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 acquires during the
year of the election or thereafter.
If a premium is not subject to amortization using a reasonable
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. If a reasonable prepayment assumption is used to amortize
such premium, it appears that such a loss would be available, if at all, only
if prepayments have occurred at a rate faster than the reasonable assumed
prepayment rate. It is not clear whether any other adjustments would be
required to reflect differences between an assumed prepayment rate and the
actual rate of prepayments.
STRIPPED BONDS AND STRIPPED COUPONS
Although the tax treatment of stripped bonds is not entirely clear,
based on recent guidance by the IRS, in the opinion of Federal Tax Counsel,
each purchaser of a Grantor Trust Certificate will be treated as the
purchaser of 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 recently issued
Treasury regulations (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".
Based on the preamble to the Section 1286 Treasury Regulations, Federal Tax
Counsel is of the opinion that, 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 will be treated as "qualified
stated interest" within the meaning of the Section 1286 Treasury Regulations
and such income will be so treated in the Trustee's tax
information reporting.
Original Issue Discount. The IRS has stated in published rulings that,
in circumstances similar to those described herein, the special rules of the
Code relating to "original issue discount" (currently Sections 1271 through
1273 and 1275) will be applicable to a Grantor Trust
Certificateholder's interest in those Receivables meeting the conditions
necessary for these sections to apply. Generally, a Grantor Trust
Certificateholder that acquires an undivided interest in a Receivable issued
or acquired with OID must include in gross income the sum of the "daily
portions", as defined below, of the OID on such Receivable for each
day on which it owns a Certificate, including the date of purchase but
excluding the date of disposition. In the case of an original Grantor Trust
Certificateholder, the daily portions of OID with respect to a Receivable
generally would be determined as follows. A calculation will be made of the
portion of OID that accrues on the Receivable 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 Receivable under the prepayment assumption
used in respect of the Receivables and (ii) any payments received during such
accrual period, and subtracting from that total the "adjusted issue price" of
the Receivable at the beginning of such accrual period. No representation is
made that the
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Receivables will prepay at any prepayment assumption. The "adjusted issue
price" of a Receivable 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 Receivable 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 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 Receivables, 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 Receivables. Subsequent
purchasers that purchase Receivables at more than a de minimis discount
should consult their tax advisors with respect to the proper method to accrue
such OID.
Market Discount. In the opinion of Federal Tax Counsel, 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 Grantor Trust Certificate
will be considered to be zero if the amount allocable to the Grantor Trust
Certificate is less than 0.25% of the Grantor Trust Certificate'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.
While the Treasury Department has not yet issued regulations, rules described
in the relevant legislative history will apply. Under those rules, the
holder of a market discount bond may elect to accrue market discount either
on the basis of a constant interest rate or according to one of the following
methods. If a Grantor Trust Certificate is issued with OID, the amount of
market discount that accrues during any accrual period would be equal to the
product of (i) the total remaining market discount and (ii) a fraction, the
numerator of which is the OID accruing during the period and the denominator
of which is the total remaining OID at the beginning of the accrual period.
For Grantor Trust Certificates issued without OID, the amount of market
discount that accrues during a period is equal to the product of (i) the
total remaining market discount and (ii) a fraction, the numerator of which
is the amount of stated interest paid during the accrual period and the
denominator of which is the total amount of stated interest remaining to be
paid at the beginning of the accrual period. For purposes of calculating
market discount under any of the above methods in the case of instruments
(such as the Grantor Trust Certificates) that provide for payments that may
be accelerated by reason of prepayments
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of other obligations securing such instruments, the same prepayment
assumption applicable to calculating the accrual of OID will apply.
Because the regulations described above have not been issued, it is
impossible to predict what effect those regulations might have on
the tax treatment of a Grantor Trust Certificate purchased at a discount
or premium in the secondary market.
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 continued to
purchase or carry such Grantor Trust Certificate purchased
with market discount. For these purposes, the de minimis rule referred 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.
Premium. To the extent a Grantor Trust Certificateholder is considered
to have purchased an undivided interest in a Receivable for an amount that is
greater than its stated redemption price at maturity of such Receivable, such
Grantor Trust Certificateholder will be considered to have purchased the
Receivable with "amortizable bond premium" equal in amount to such excess.
In the opinion of Federal Tax Counsel, a Grantor Trust Certificateholder (who
does not hold the Certificate for sale to customers or in inventory) may
elect under Section 171 of the Code to amortize such premium. Under the
Code, premium is allocated among the interest payments on the Receivables to
which it relates and is considered as an offset against (and thus a reduction
of) such interest payments. With certain exceptions, such an election would
apply to all debt instruments held or subsequently acquired by the electing
holder. Absent such an election, the premium will be deductible as an
ordinary loss only upon disposition of the Certificate or pro rata as
principal is paid on the Receivables.
Election to Treat All Interest as OID. In the opinion of Federal Tax
Counsel, 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.
Sale or Exchange of a Grantor Trust Certificate. In the opinion of
Federal Tax Counsel, a 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. Such gain or loss 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).
In the opinion of Federal Tax Counsel, 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.
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Non-U.S. Persons. Generally, 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 not a U.S.
Person (as defined below) or (ii) a Grantor Trust Certificateholder holding
on behalf of an owner that is not a U.S. 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 not be subject to withholding to the extent
that a Grantor Trust Certificate evidences ownership in Receivables issued
after July 18, 1984, by natural persons 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 not a U.S. Person and providing the name and
address of such Grantor Trust Certificateholder). Additional restrictions
apply to Receivables of where the obligor is not a natural person in order to
qualify for the exemption from withholding.
As used herein, a "U.S. Person" means a citizen or resident of the
United States, a corporation or a 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 outside the United States is
includible in gross income for federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
Information Reporting and Backup Withholding. The Master 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.
TRUSTS WHICH ISSUE ONE OR MORE CLASSES OF CERTIFICATES TREATED AS DEBT FOR
FEDERAL INCOME TAX PURPOSES
Tax Characterization of the Trust
Federal Tax Counsel will deliver its opinion that a Trust which issues
one or more classes of Certificates treated as debt for federal income tax
purposes 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
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 Certificates.
Any such corporate income tax could materially reduce cash available to make
payments on the Certificates, and Certificateholders could be liable for any
such tax that is unpaid by the Trust. Alternative
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characterizations of such Trust and such Certificates are possible, but would
not result in materially adverse tax consequences to Certificateholders.
Tax Consequences to Holders of the Certificates
Treatment of the Certificates as Indebtedness. The Depositor will
agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Certificates as debt for federal income tax
purposes. Federal Tax Counsel will, if so provided in the related Prospectus
Supplement, advise the Trust that the Certificates will be classified as debt
for federal income tax purposes. The discussion below assumes this
characterization of the Certificates is correct.
OID, Indexed Securities, etc. The discussion below assumes that all
payments on the Certificates are denominated in U.S. dollars, and that the
Certificates are not Indexed Securities or Strip Certificates. Moreover, the
discussion assumes that the interest formula for the Certificates 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 Certificates (i.e., any excess of the principal amount of the
Certificates over their issue price) does not exceed a de minimis amount
(i.e., 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
Certificates, additional tax considerations with respect to such
Certificates will be disclosed in the applicable Prospectus Supplement.
Interest Income on the Certificates. Based on the above assumptions
and except as discussed in the following paragraph, although the matter is
not entirely clear, Federal Tax Counsel is of the opinion that the
Certificates will not be considered issued with OID. In such case, the
stated interest thereon will be taxable to a Certificateholder as ordinary
interest income when received or accrued in accordance with such
Certificateholder's method of tax accounting. Under the OID regulations, a
holder of a Certificate issued with a de minimis amount of OID must include
such OID in income, on a pro rata basis, as principal payments are
made on the Certificate. In the opinion of Federal Tax Counsel, a purchaser
who buys a Certificate for more or less than its principal amount will
generally be subject to the premium amortization or market discount rules,
respectively, of the Code.
In the opinion of Federal Tax Counsel, a holder of a Certificate that
has a fixed maturity date of not more than one year from the issue date of
such Certificate (a "Short-Term Certificate") may be subject to special
rules. An accrual basis holder of a Short-Term Certificate (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
Certificate would, in general, be required to report interest income as
interest is paid (or, if earlier, upon the taxable disposition of the Short-
Term Certificate). However, a cash basis holder of a Short-Term Certificate
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 Certificate until the taxable disposition of
the Short-Term Certificate. 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 Certificate 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 Certificate is purchased for more or less than its principal
amount.
Sale or Other Disposition. In the opinion of Federal Tax Counsel, if a
Certificateholder sells a Certificate, 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 Certificate. The
adjusted tax basis of a Certificate to a particular Certificateholder will
equal the holder's cost for the Certificate, increased by any market
discount, acquisition discount, OID and gain previously included by such
Certificateholder in income with respect to the Certificate and decreased by
the amount of bond
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premium (if any) previously amortized and by the amount of principal payments
previously received by such Certificateholder with respect to such
Certificate. Any such gain or loss will be capital gain or loss if the
Certificate 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. In the opinion of Federal Tax Counsel, interest
payments made (or accrued) to a Certificateholder who is a nonresident alien,
foreign corporation or other non-United States person (a "foreign person")
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 person and the foreign person (i) is
not actually or constructively a "10 percent shareholder" of the Trust or the
Depositor (including a holder of 10% of the outstanding Certificates) or a
"controlled foreign corporation" with respect to which the Trust or the
Depositor is a "related person" within the meaning of the Code and (ii)
provides the Trustee or other person who is otherwise required to withhold
U.S. tax with respect to the Certificates with an appropriate statement (on
Form W-8 or a similar form), signed under penalties of perjury, certifying
that the beneficial owner of the Certificate is a foreign person and
providing the foreign person's name and address. If a Certificate 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 person that owns the Certificate. 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.
In the opinion of Federal Tax Counsel, any capital gain realized on the
sale, redemption, retirement or other taxable disposition of a Certificate 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 person and (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.
Backup Withholding. In the opinion of Federal Tax Counsel, each holder
of a Certificate (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 its status as a nonresident) will be required to provide,
under penalties of perjury, a certificate containing 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
Certificateholder 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 amount withheld to the IRS as a credit
against the holder's federal income tax liability.
Possible Alternative Treatments of the Certificates. If, contrary to
the opinion of Federal Tax Counsel, the IRS successfully asserted that one or
more of the Certificates did not represent debt for federal income tax
purposes, the Certificates 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
Certificates recharacterized as equity). Alternatively, and most likely in
the view of Federal Tax Counsel, the Trust might be treated as a publicly
traded partnership that would not be taxable as a corporation because it
would meet certain qualifying income tests. Nonetheless, treatment of the
Certificates as equity interests in such a publicly traded partnership could
have adverse tax consequences to certain holders. For example, income to
certain tax-exempt entities (including pension funds) could be "unrelated
business taxable income", income to foreign holders 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.
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THE FEDERAL TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A NOTEHOLDER'S OR
CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO
THEM WITH RESPECT TO THEIR PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES AND
CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF
CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and Section 4975 of the Code prohibit a pension, profit-
sharing or other employee benefit plan, as well as individual retirement
accounts and certain types of Keogh Plans (each a "Benefit Plan"), from
engaging in certain transactions with persons that are "parties in interest"
under ERISA or "disqualified persons" under the Code with respect to such
Benefit Plan. A violation of these "prohibited transaction" rules may
result in an excise tax or other penalties and liabilities under ERISA
and the Code for such persons.
Certain transactions involving a Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit
Plan that purchased Notes or Certificates if assets of the Trust were deemed
to be assets of the Benefit Plan. Under a regulation issued by the
United States Department of Labor (the "Plan Assets Regulation"), the assets
of a Trust would be treated as plan assets of a Benefit Plan for the purposes
of ERISA and the Code only if the Benefit Plan acquired an "equity interest"
in the Trust and none of the exceptions contained in the Plan Assets
Regulation was 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 likely treatment in this context of Notes
and Certificates of a given Series will be discussed in the related
Prospectus Supplement.
Employee benefit plans that 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 ERISA requirements.
A plan fiduciary considering the purchase of Securities of a given
Series should consult its tax and/or legal advisors regarding whether the
assets of the related Trust would be considered plan assets, the possibility
of exemptive relief from the prohibited transaction rules and other issues
and their potential consequences.
SENIOR CERTIFICATES
The following discussion applies only to nonsubordinated Certificates
(referred to herein as "Senior Certificates") .
The U.S. Department of Labor has granted to the lead underwriter named
in the Prospectus Supplement an exemption (the "Exemption") from certain of
the prohibited transaction rules of ERISA with respect to the initial
purchase, the holding and the subsequent resale by Benefit Plans of
certificates representing interests in asset-backed pass-through trusts
that consist of certain receivables, loans and other obligations that meet
the conditions and requirements of the Exemption. The receivables covered
by the Exemption include motor vehicle installment sales contracts such as
the Receivables. The Exemption will apply to the acquisition, holding and
resale of the Senior Certificates by a Benefit Plan, provided that certain
conditions (certain of which are described below) are met.
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Among the conditions which must be satisfied for the Exemption to apply
to the Senior Certificates are the following:
(1) The acquisition of the Senior Certificates by a Benefit Plan
is on terms (including the price for the Senior Certificates) that are
at least as favorable to the Benefit Plan as they would be in an arm's
length transaction with an unrelated party;
(2) The rights and interests evidenced by the Senior Certificates
acquired by the Benefit Plan are not subordinated to the
rights and interests evidenced by other certificates of the Trust;
(3) The Senior Certificates acquired by the Benefit Plan have
received a rating at the time of such acquisition that is in one of the
three highest generic rating categories from either Standard & Poor's
Corporation, Moody's Investors Service, Inc., Duff & Phelps Inc. or Fitch
Investors Service, Inc.;
(4) The Trustee is not an affiliate of any other member of the
Restricted Group (as defined below);
(5) The sum of all payments made to the underwriters in connection
with the distribution of the Senior Certificates represents not more
than reasonable compensation for underwriting the Senior Certificates;
the sum of all payments made to and retained by the Depositor pursuant
to the sale of the Contracts to the Trust represents not more than the
fair market value of such Contracts; and the sum of all payments made to
and retained by the Master Servicer represents not more than reasonable
compensation for the Master Servicer's services under the Agreement
and reimbursement of the Master Servicer's reasonable expenses in
connection therewith; and
(6) The Benefit Plan investing in the Senior Certificates is an
"accredited investor" as defined in Rule 501 (a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act.
Moreover, the Exemption would provide relief from certain self-
dealing/conflict of interest or prohibited transactions only if, among other
requirements, (i) in the case of the acquisition of Senior Certificates in
connection with the initial issuance, at least fifty (50) percent of the
Senior Certificates are acquired by persons independent of the Restricted
Group (as defined below), (ii) the Benefit Plan's investment in Senior
Certificates does not exceed twenty-five (25) percent of all of the
Senior Certificates outstanding at the time of the acquisition, and
(iii) immediately after the acquisition, no more than twenty-five (25)
percent of the assets of the Benefit Plan are invested in certificates
representing an interest in one or more trusts containing assets
sold or serviced by the same entity. The Exemption does not apply to Plans
sponsored by the Depositor, any underwriter, the Trustee, the Master
Servicer, any obligor with respect to Contracts included in the Trust
constituting more than five percent of the aggregate unamortized principal
balance of the assets in the Trust, or any affiliate of such parties (the
"Restricted Group").
The Depositor believes that the Exemption will apply to the acquisition
and holding by Benefit Plans of Senior Certificates sold by the underwriter
or underwriters named in the Prospectus Supplement and that all conditions of
the Exemption other than those within the control of the investors have been
met. In addition, as of the date hereof, no obligor with respect to
Contracts included in the Trust constitutes more than five percent of the
aggregate unamortized principal balance of the assets of the Trust.
64
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PLAN OF DISTRIBUTION
The Securities offered hereby and by the Prospectus Supplement will be
offered in Series. The distribution of the Securities may be effected from
time to time in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices to be determined at the
time of sale or at the time of commitment therefor. If so specified in the
related Prospectus Supplement, the Securities will be distributed in a firm
commitment underwriting, subject to the terms and conditions of the
underwriting agreement, by Greenwich Capital Markets, Inc. ("GCM") acting as
underwriter with the other underwriters, if any, named therein. In such
event, the related Prospectus Supplement may also specify that the
underwriters will not be obligated to pay for any Securities agreed to be
purchased by purchasers pursuant to purchase agreements acceptable to the
Depositor. In connection with the sale of the Securities, underwriters may
receive compensation from the Depositor or from purchasers of the Securities
in the form of discounts, concessions or commissions. The related Prospectus
Supplement will describe any such compensation paid by the Depositor.
Alternatively, the related Prospectus Supplement may specify that the
Securities will be distributed by GCM acting as agent or in some cases as
principal with respect to Securities that it has previously purchased or
agreed to purchase. If GCM acts as agent in the sale of Securities, GCM will
receive a selling commission with respect to each Series of Securities,
depending on market conditions. The selling commission for each Series of
Securities will be disclosed in the related Prospectus Supplement. To the
extent that GCM elects to purchase Securities as principal, GCM may realize
losses or profits based upon the difference between its purchase price and
the sales price. The Prospectus Supplement with respect to any Series
offered other than through underwriters will contain information regarding
the nature of such offering and any agreements to be entered into between
the Depositor and purchasers of Securities of such Series.
The Depositor will indemnify GCM and any underwriters against certain
civil liabilities, including liabilities under the Securities Act, or will
contribute to payments GCM and any underwriters may be required to make in
respect thereof.
In the ordinary course of business, GCM and the Depositor may engage in
various securities and financing transactions, including repurchase
agreements to provide interim financing of the Depositor's Receivables
pending the sale of such Receivables or interests therein, including the
Securities.
LEGAL ^ MATTERS
-
Certain legal matters relating to the Securities of any Series will be
passed upon for the related Trust and the Depositor by Brown & Wood, New
York, New York.
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INDEX OF PRINCIPAL TERMS
Set forth below is a list of certain of the more significant terms used
in this Prospectus and the pages on which the definitions of such terms may
be found herein.
Actuarial Receivables . . . . . . . . . . . . . . . . . . . . . . . . 17
Administration Agreement . . . . . . . . . . . . . . . . . . . . . . . . 44
Administration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Base Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Calculation Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Calculation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
CD Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
CD Rate Determination Date . . . . . . . . . . . . . . . . . . . . . . . 27
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Certificate Distribution Account . . . . . . . . . . . . . . . . . . . . 36
Certificate Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . 19
Certificateholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Commercial Paper Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Commercial Paper Rate Determination Date . . . . . . . . . . . . . . . . 27
Commercial Paper Rate Security . . . . . . . . . . . . . . . . . . . . . 26
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commodity Indexed Securities . . . . . . . . . . . . . . . . . . . . . . 30
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Composite Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Currency Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . 30
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 32
Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
DTC Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Eligible Deposit Account . . . . . . . . . . . . . . . . . . . . . . . . 37
Eligible Institution . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Federal Funds Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Federal Funds Rate Determination Date . . . . . . . . . . . . . . . . . . 28
66
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Federal Funds Rate Security . . . . . . . . . . . . . . . . . . . . . . . 26
Federal Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Financed Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Fixed Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Floating Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . 26
FTC Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Funding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
GCM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Grantor Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Grantor Trust Certificateholders . . . . . . . . . . . . . . . . . . . . 54
Grantor Trust Certificates . . . . . . . . . . . . . . . . . . . . . . . 54
H.15(5-19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Index Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Indexed Commodity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Indexed Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Indexed Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . 30
Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Indirect DTC Participants . . . . . . . . . . . . . . . . . . . . . . . . 31
Indirect Participants . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Initial Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Insolvency Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Interest Reset Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Interest Reset Period . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
LIBOR Determination Date . . . . . . . . . . . . . . . . . . . . . . . . 29
LIBOR Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
London Banking Day . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Money Market Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Note Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . 36
Note Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Noteholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
OID regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Originator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4
Owner Certificate Distribution Account . . . . . . . . . . . . . . . . . 36
Owner Collection Account . . . . . . . . . . . . . . . . . . . . . . . . 36
Owner Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Payahead Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Payaheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Plan Assets Regulation . . . . . . . . . . . . . . . . . . . . . . . . . 59
Pooling and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . 4
Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Precomputed Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Precomputed Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 17
67
<PAGE>
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Receivable Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 6
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Related Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Repurchase Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Required Deposit Ratings . . . . . . . . . . . . . . . . . . . . . . . . 37
Restricted Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Reuters Screen LIBO Page . . . . . . . . . . . . . . . . . . . . . . . . 29
Rule of 78's Receivables . . . . . . . . . . . . . . . . . . . . . . . . 17
Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . 7
Section 1286 Treasury Regulations . . . . . . . . . . . . . . . . . . . . 55
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Security Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Servicer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Short-Term Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Simple Interest Advance . . . . . . . . . . . . . . . . . . . . . . . . . 8
Simple Interest Receivables . . . . . . . . . . . . . . . . . . . . . . 17
Spread . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Spread Multiplier . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Stock Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Stock Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . 30
Strip Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Strip Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Subsequent Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 7
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . 11
Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Transfer and Servicing Agreements . . . . . . . . . . . . . . . . . . . . 33
Treasury Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Treasury Rate Determination Date . . . . . . . . . . . . . . . . . . . . 30
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
68
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the offering of the Securities being
registered herein are estimated as follows:
SEC registration fee . . . . . . . . . . . . . . . . . . . . $ 172,414
Legal fees and expenses . . . . . . . . . . . . . . . . . . $ 450,000
Accounting fees and expenses . . . . . . . . . . . . . $ 100,000
Rating agency fees . . . . . . . . . . . . . . . . . . $ 200,000
Trustees' fees and expenses . . . . . . . . . . . . . $ 37,500
Printing . . . . . . . . . . . . . . . . . . . . . . . $ 100,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . $ 100,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . $1,159,914
____________
* To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Financial Asset Securities Corp. has undertaken in its certificate of
incorporation and bylaws to indemnify, to the maximum extent permitted by the
Delaware General Corporation Law as from time to time amended, any currently
acting or former director, officer, employee and agent of Financial Asset
Securities Corp. against any and all liabilities incurred in connection with
their services in such capacities.
II-1
<PAGE>
ITEM 16. EXHIBITS.
1.1 Form of Underwriting Agreement for Notes
1.2 Form of Underwriting Agreement for Certificates
3.1 Certificate of Incorporation of the Depositor
3.2 Bylaws of the Depositor
4.1 Form of Trust Agreement (including form of Certificates)
4.2 Form of Pooling and Servicing Agreement (including form of Certificates)
4.3 Form of Indenture (including form of Notes)
5.1 Opinion of Brown & Wood with respect to legality
8.1 Opinion of Brown & Wood with respect to tax matters
10.1 Form of Sale and Servicing Agreement
10.2 Form of Administration Agreement
10.3 Form of Custodial Agreement
23.1 Consent of Brown & Wood (included in Exhibits 5.1 and 8.1)
24.1 Power of Attorney (included on Page II- 4)
25.1 Statement of Eligibility and Qualification of Indenture Trustee
99.1 Form of Transfer Agreement
99.2 Form of Security Agreement
99.3 Form of Receivables Purchase Agreement
______________________
ITEM 17. UNDERTAKINGS.
The undersigned 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;
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(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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in
the effective 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 to such information in the registration statement.
(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.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) If the registrant is a foreign private issuer, to file a post-
effective amendment to the registration statement to include any financial
statements required by Rule 3-19 of this chapter at the start of any delayed
offering or throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Act need not be
furnished, provided, that the registrant includes in the prospectus, by means
of a post-effective amendment, financial statements required pursuant to this
paragraph (a)(4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not
be filed to include financial statements and information required by
Section 10(a)(3) of the Act or Rule 3-19 of this chapter if such
financial statements and information are contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the Form F-3.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, 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
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(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
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act 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 as
that time shall be deemed to be the initial bona fide offering thereof.
The undersigned 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 in accordance with
the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Act.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 City of Greenwich, the State of Connecticut
on the 23rd day of May, 1996.
FINANCIAL ASSET SECURITIES CORP.
By: /s/ Konrad R. Kruger
-----------------------------------------
- --------------------------------------------------------------------------
Name: Konrad R. Kruger
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
Konrad R. Kruger* President & Director May 23, 1996
----------------- (Principal Executive
Officer and Principal
Financial Officer)
Kevin C. Piccoli* Controller (Principal
- ------------------- Financial Officer) May 23, 1996
/s/Stephen M. Peet* Director May 23, 1996
- --------------------
Kensaku Higashi* Director May 23, 1996
- --------------------
*By /s/Stephen M. Peet
---------------------
Stephen M. Peet
Attorney-in-Fact
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
Financial Asset Securities Corp., a Delaware corporation, hereby constitutes
and appoints Stephen M. Peet, Charles A. Forbes, Jr., and John
C. Anderson, each with full power of substitution and resubstitution, his
true and lawful attorneys and agents to sign the name of the undersigned
Director in the capacity indicated below to the registration statement to
which this Power of Attorney is attached as an exhibit, and all amendments
(including post-effective amendments) and supplements thereto, and all
instruments or documents filed as a part thereof or in connection therewith,
and to file the same, with all exhibits thereto, and all other instruments or
documents in connection therewith, with the Securities and Exchange
Commission; and the undersigned hereby ratifies and confirms all that said
attorneys, agents or any of them shall do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the Registration Statement has been signed by the following
person in the capacity and on the date indicated:
Signature Title Date
--------- ----- ----
II-4
<PAGE>
/s/ David R. Jones Director May 23, 1996
- ------------------------
David R. Jones
II-5
<PAGE>
Registration No. 333-1548
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________
FASCO AUTO TRUSTS
(Issuer with respect to the Securities)
FINANCIAL ASSET SECURITIES CORP.
(Originator of the Trusts described herein)
(Exact name of Registrant as specified in its charter)
_____________________
EXHIBIT VOLUME
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
Page
- ----
1.1 Form of Underwriting Agreement for Notes
1.2 Form of Underwriting Agreement for Certificates
3.1 Certificate of Incorporation of the Depositor
3.2 Bylaws of the Depositor
4.1 Form of Trust Agreement (including form of Certificates)
4.2 Form of Pooling and Servicing Agreement (including form of
Certificates)
4.3 Form of Indenture (including form of Notes)
5.1 Opinion of Brown & Wood with respect to legality
8.1 Opinion of Brown & Wood with respect to certain tax matters
10.1 Form of Sale and Servicing Agreement
10.2 Form of Administration Agreement
10.3 Form of Custodial Agreement
- ---
23.1 Consent of Brown & Wood
(included in Exhibits 5.1 and 8.1)
24.1 Power of Attorney (included on Page II- 4)
25.1 Statement of Eligibility and Qualification of Indenture Trustee
^ 99.1 Form of Transfer Agreement
99.2 Form of Security Agreement
99.3 Form of Receivables Purchase Agreement
- -----------------------------------
i
<PAGE>
SUBJECT TO COMPLETION
Prospectus Supplement to Prospectus dated , 1996
FASCO AUTO TRUST 199 -
$ % Asset Backed Notes, Class A-1
$ % Asset Backed Notes, Class A-2
$ % Asset Backed Certificates
FINANCIAL ASSET SECURITIES CORP., Depositor
( ), Servicer
FASCO Auto Trust 199 - (the "Trust") will be formed pursuant to a
Trust Agreement, to be dated as of , 199 (the "Closing Date"),
among Financial Asset Securities Corp., a Delaware corporation, as
Depositor, , a corporation, as Servicer, and
, a banking corporation, as Trustee. The Trust will
issue $ aggregate principal amount of % Asset Backed Notes,
Class A-1 (the "Class A-1 Notes") and $ aggregate principal amount
of % Asset Backed Notes, Class A-2 (the "Class A-2 Notes" and, with the
Class A-1 Notes, the "Notes") pursuant to an Indenture, to be dated as of the
Closing Date, between the Trust and , a banking
corporation, as Indenture Trustee. The Trust also will issue $
aggregate principal amount of % Asset Backed Certificates (the
"Certificates"). The assets of the Trust will include a pool of motor
vehicle installment loan agreements and motor vehicle retail installment sale
contracts (the "Receivables") secured by the motor vehicles financed thereby
and certain monies due or received thereunder on or after , 199 .
The Receivables will be transferred to the Trust by the Depositor as
described herein. The Notes will be secured by the assets of the Trust
pursuant to the Indenture.
(Continued on following page)
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT
BENEFICIAL INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS
OF, OR INTERESTS IN, FINANCIAL ASSET SECURITIES CORP., GREENWICH CAPITAL
MARKETS, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES. NONE OF THE NOTES,
THE CERTIFICATES OR THE RECEIVABLES ARE INSURED OR GUARANTEED FINANCIAL
ASSET SECURITIES CORP., GREENWICH CAPITAL MARKETS, INC. OR ANY OF THEIR
RESPECTIVE AFFILIATES.
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.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" ON PAGE S-9 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 12 OF
THE ACCOMPANYING PROSPECTUS.
Price to the Underwriting Proceeds to the
Public(1) Discount Depositor(1)(2)
------------ ---------- ------------
Per Class A-1 Note . . . . % % %
Per Class A-2 Note . . . % % %
Per Certificate . . . . . % % %
Total . . . . . . . . . . $ $ $
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
----------------------
The Notes and the Certificates are offered subject to prior sale, and
subject to the Underwriter's right to reject orders in whole or in part. It
is expected that delivery of the Notes and the Certificates will be made
through the Same Day Funds System of The Depository Trust Company on or about
, 199 .
GREENWICH CAPITAL MARKETS, INC.
The date of this Prospectus Supplement is , 199 .
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN
WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
Interest on the classes of Notes will accrue at the fixed per annum rates
specified above and generally will be payable on the day of each month,
commencing , 199 . Principal of the Notes will be payable on each
Distribution Date to the extent described herein; however, no principal will
be paid on the Class A-2 Notes until the Class A-1 Notes have been paid in
full. The Certificates represent fractional undivided interests in the
Trust. Interest, to the extent of the Pass-Through Rate of % per annum,
will be distributed to Certificateholders on each Distribution Date. No
distributions of principal will be made on the Certificates until all of the
Notes have been paid in full.
To the extent not previously paid, the Class A-1 Notes will be payable
in full on , the Class A-2 Notes will be payable in full on
, and the Certificates will be payable in full on ; however, one or
both classes of Notes or the Certificates may be paid in full prior to the
final scheduled Distribution Date therefor, as described herein and in the
Prospectus. In addition, the Class A-2 Notes will be subject to early
redemption, and the Certificates will be subject to prepayment, in whole but
not in part, on any Distribution Date on which the Servicer exercises its
option to purchase the Receivables. The Servicer may purchase the
Receivables when the aggregate principal balance thereof is reduced to 10% or
less of their initial aggregate principal balance.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE NOTES AND THE 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 NOTES OR
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS PROSPECTUS SUPPLEMENT
CONTAINS INFORMATION THAT IS SPECIFIC TO THE TRUST AND THE SECURITIES OFFERED
HEREBY AND, TO THAT EXTENT, SUPPLEMENTS THE MORE GENERAL INFORMATION
PROVIDED IN THE PROSPECTUS. INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT MAY ALSO REFLECT LEGAL, ECONOMIC AND OTHER DEVELOPMENTS SINCE THE
DATE OF THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
AND THE CERTIFICATES AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates are issued,
monthly and annual unaudited reports containing information concerning the
Receivables will be prepared by the Servicer and sent on behalf of the Trust
only to Cede & Co., as nominee of The Depository Trust Company and registered
holder of the Notes and the Certificates. See "Certain Information Regarding
the Securities -- Book-Entry Registration" and "-- 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 Depositor, as originator of
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, and the rules and regulations of the
Commission thereunder.
S-2
<PAGE>
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" or, to
the extent not defined herein, have the meanings assigned to such terms in
the Prospectus.
Issuer . . . . . . . . . . . . . . . FASCO Auto Trust 199 - (the
"Trust"), a Delaware business trust
to be formed pursuant to a Trust
Agreement to be dated as of ,
199 (as amended and supplemented
from time to time, the "Trust
Agreement"), among the Depositor,
, a corporation (the
"Company"), and the Owner Trustee.
Depositor . . . . . . . . . . . . . Financial Asset Securities Corp., a
Delaware corporation (the
"Depositor").
Originator and Servicer . . . . . . , a
corporation (in its capacity as
originator of the Receivables, the
"Originator" and, in its capacity as
servicer of the Receivables, the
"Servicer"). The Servicer is
referred to in the Prospectus as the
Master Servicer.
Indenture Trustee . . . . . . . . . . , a banking
corporation, as trustee under the
Indenture (the "Indenture Trustee").
Owner Trustee . . . . . . . . . . . . , a banking
corporation, as trustee under the
Trust Agreement (the "Owner
Trustee").
The Notes . . . . . . . . . . . . . . The Trust will issue the % Asset
Backed Notes, Class A-1 in an
aggregate principal amount of $
(the "Class A-1 Notes") and the %
Asset Backed Notes, Class A-2 in an
aggregate principal amount of $
(the "Class A-2 Notes" and, with the
Class A-1 Notes, the "Notes")
pursuant to an Indenture to be dated
as of , 199 (as amended
and supplemented from time to time,
the "Indenture"), between the Trust
and the Indenture Trustee.
Under the terms of the Indenture, the
Notes will be secured by the assets
of the Trust.
The Certificates . . . . . . . . . . The Trust will issue % Asset-Backed
Certificates (the "Certificates"
and, together with the Notes, the
"Securities") with an aggregate
initial Certificate Balance of $
. The Certificates represent
fractional undivided interests in the
Trust and will be issued pursuant to
the Trust Agreement.
The Receivables . . . . . . . . . . . On , 199 (the "Closing
Date"), the Depositor will purchase
from the Originator pursuant to a
Purchase Agreement dated as of
, 199 (the "Purchase Agreement"),
by and between the Originator and the
Depositor, motor vehicle installment
loan agreements and motor vehicle
retail installment sale contracts
secured by new or used automobiles,
vans and light-duty trucks (the
"Receivables") having an aggregate
principal balance of approximately $
as of , 199 (the
"Cutoff Date"). The
S-3
<PAGE>
Trust, in turn,
will acquire the Receivables from the
Depositor pursuant to a Sale and
Servicing Agreement to be dated as
of , 199 (as amended and
supplemented from time to time, the
"Sale and Servicing Agreement"),
among the Trust, the Depositor and
the Servicer, and the Servicer will
agree to service the Receivables upon
the terms set forth in the Sale and
Servicing Agreement. The Originator
will make certain representations and
warranties concerning the Receivables
in the Purchase Agreement, and the
Depositor will, in the Sale and
Servicing Agreement, assign its
rights under the Purchase Agreement
to the Trust, including its right to
cause the Originator to repurchase
Receivables with respect to which the
Originator is in breach of any such
representation and warranty as of the
Cutoff Date, if such breach has a
material and adverse effect on the
rights of the Trust in such
Receivables and such breach is not
cured in a timely manner. The
Depositor will have no obligation to
repurchase from the Trust any
Receivable with respect to which the
Originator is in breach of a
representation or warranty, nor will
it have any other obligation with
respect to the Receivables or the
Securities.
The Receivables have been selected
from the Originator's portfolio of
motor vehicle installment sale
contracts and motor vehicle
installment loan agreements based on
the criteria specified in the Sale
and Servicing Agreement and described
herein under "The Receivables Pool"
and in the Prospectus under "The
Receivables Pools". As of the Cutoff
Date, the weighted average annual
percentage rate of the Receivables
was approximately %, the weighted
average remaining maturity of the
Receivables was approximately
months and the weighted average
original maturity of the Receivables
was approximately months. No
Receivable has a scheduled maturity
later than (the "Final
Scheduled Maturity Date").
The "Pool Balance" at any time will
equal the aggregate principal balance
of all of the outstanding Receivables
owned by the Trust at the end of the
preceding Collection Period after
giving effect to (i) all payments
(other than Payaheads) received from
Obligors during such Collection
Period, (ii) all Advances and
Repurchase Amounts to be remitted by
the Servicer or the Originator, as
the case may be, for such Collection
Period and (iii) all losses realized
on Receivables that were liquidated
during such Collection Period.
Terms of the Notes
A. Distribution Dates . . . . . . Payments of interest and principal on
the Notes will be made on the
day of each month or, if any such day
is not a Business Day, on the next
succeeding Business Day (each, a
"Distribution Date") commencing
, 199 . Payments will be made to
holders of record of the Notes (the
"Noteholders") as of the day
immediately preceding such
Distribution Date (each, a "Record
Date"). As used herein, "Business
Day" means a day that in New York
City or in the city in which the
corporate trust office of the
Indenture Trustee is located is
neither a legal holiday nor a day on
which banking institutions are
authorized by law, regulation or
executive order to be closed.
S-4
<PAGE>
B. Interest Rates . . . . . . . . Interest will be paid on the Class A-
1 Notes at a per annum rate of %
(the "Class A-1 Rate") and on the
Class A-2 Notes at a per annum rate
of % (the "Class A-2 Rate"). The
Class A-1 Rate and the Class A-2 Rate
are sometimes referred to herein
collectively as the "Interest Rates".
C. Interest . . . . . . . . . . . Interest on the outstanding principal
amount of the Class A-1 Notes and the
Class A-2 Notes in respect of any
Distribution Date will accrue at the
Class A-1 Rate and the Class A-2
Rate, respectively, from and
including the most recent
Distribution Date on which interest
payments were distributed to
Noteholders (or, in the case of the
first Distribution Date, from and
including the Closing Date) to but
excluding such Distribution Date.
Interest on the Notes will be
calculated on the basis of a 360-day
year consisting of twelve 30-day
months. See "Description of the
Notes -- Payments of Interest"
herein.
D. Principal . . . . . . . . . . For as long as the Class A-1 Notes
are outstanding, principal of the
Class A-1 Notes will be payable on
each Distribution Date in an amount
equal to 100% of the Total
Distribution Amount remaining
following payment of the Servicing
Fee and the Noteholders' Interest
Distributable Amount on such date.
On each Distribution Date from and
including the Distribution Date on
which the Class A-1 Notes are paid in
full and for as long as the Class A-2
Notes are outstanding, principal of
the Class A-2 Notes will be payable
in an amount equal to 100% of the
Total Distribution Amount remaining
following payment of the Servicing
Fee, the Noteholders' Interest
Distributable Amount and, on the
Distribution Date on which the Class
A-1 Notes are paid in full, any
amount distributed as principal to
holders of the Class A-1 Notes. No
principal payment will be made on the
Class A-2 Notes until the Class A-1
Notes have been paid in full.
The outstanding principal amount,
if any, of the Class A-1 Notes will
be payable in full on (the
"Class A-1 Final Scheduled Payment
Date") and the outstanding principal
amount, if any, of the Class A-2
Notes will be payable in full on
(the "Class A-2 Final Scheduled
Payment Date").
See "Description of the Notes --
Payments of Principal" and
"Description of the Transfer and
Servicing Agreements --
Distributions" herein.
E. Optional Redemption . . . . . The Class A-2 Notes may be redeemed
in whole, but not in part, on any
Distribution Date on which the
Servicer exercises its option to
purchase the Receivables. Under the
terms of the Sale and Servicing
Agreement, the Servicer may purchase
the Receivables when the aggregate
principal amount thereof has been
reduced to 10% or less of the
original Pool Balance. The
redemption price for the Class A-2
Notes will equal the unpaid principal
amount of the Class A-2 Notes plus
accrued and unpaid interest thereon.
See "Description of the Notes --
Optional Redemption" herein.
S-5
<PAGE>
Terms of the Certificates
A. Distribution Dates . . . . . . Distributions with respect to the
Certificates will be made on each
Distribution Date, commencing
, 199 . Distributions will be
made to holders of record of the
Certificates (the
"Certificateholders", and, together
with the Noteholders, the
"Securityholders") as of the related
Record Date.
B. Pass-Through Rate . . . . . . % per annum (the "Pass-Through
Rate").
C. Interest . . . . . . . . . . . On each Distribution Date, the Owner
Trustee will distribute pro rata to
Certificateholders accrued interest
at the Pass-Through Rate on the
Certificate Balance as of the
preceding Distribution Date (after
giving effect to distributions made
on such preceding Distribution Date)
generally to the extent of funds
available following payment of the
Servicing Fee and the Noteholders'
Distributable Amount from the Total
Distribution Amount and the Reserve
Account. Interest on the
Certificates in respect of any
Distribution Date will accrue from
the most recent Distribution Date on
which interest payments were
distributed to Certificateholders
(or, in the case of the first
Distribution Date, the Closing Date)
to but excluding such Distribution
Date and will be calculated on the
basis of a 360-day year consisting of
twelve 30-day months. See
"Description of the Certificates --
Distributions of Interest" herein.
D. Principal . . . . . . . . . . On each Distribution Date on and
after the date on which the Class A-2
Notes are paid in full, principal of
the Certificates will be payable in
an amount generally equal to the
Total Distribution Amount remaining
after payment of the Servicing Fee,
the Noteholders' Distributable Amount
(on the Distribution Date on which
the outstanding principal amount of
the Class A-2 Notes is reduced to
zero) and the Certificateholders'
Interest Distributable Amount.
The outstanding principal amount,
if any, of the Certificates will be
payable in full on
(the "Final Scheduled Distribution
Date").
See "Description of the Certificates
-- Distributions of Principal" and
"Description of the Transfer and
Servicing Agreements --
Distributions" herein.
E. Optional Prepayment . . . . . If the Servicer exercises its option
to purchase the Receivables, which it
may do when the aggregate principal
amount of the Receivables is 10% or
less of the original Pool Balance,
the Certificateholders will receive
an amount in respect of the
Certificates equal to the Certificate
Balance plus accrued interest at the
Pass-Through Rate, and the
Certificates will be retired. See
"Description of the Certificates --
Optional Prepayment" herein.
Reserve Account . . . . . . . . . . . On the Closing Date, the Depositor
will establish a separate reserve
account (the "Reserve Account") with
the Indenture Trustee and will make
an initial deposit thereto of $
. Funds will be withdrawn from
the Reserve Account on any
Distribution Date on
S-6
<PAGE> which, and to the extent that, the
Total Distribution Amount for the
related Collection Period remaining
after payment of the Servicing Fee
is less than the Noteholders'
Distributable Amount and will be
deposited in the Note Distribution
Account for distribution to the
Noteholders. In addition, funds
will be withdrawn from the Reserve
Account to the extent that the
portion of the Total Distribution
Amount remaining after payment of
the Servicing Fee and the
Noteholders' Distributable Amount is
less than the Certificateholders'
Distributable Amount and will be
deposited in the Certificate
Distribution Account for distribution
to the Certificateholders. On each
Distribution Date, the amount
available in the Reserve Account will
be reinstated up to the Specified
Reserve Account Balance by the
deposit thereto of amounts remaining
in the Collection Account after
payment on such date of the Servicing
Fee, the Noteholders' Distributable
Amount and the Certificateholders'
Distributable Amount. Amounts on
deposit in the Reserve Account on any
Distribution Date (after giving
effect to all distributions to be
made on such Distribution Date) in
excess of the Specified Reserve
Account Balance will be released to
the Company. The Reserve Account
will be maintained as an account in
the name of the Indenture Trustee.
See "Description of the Transfer and
Servicing Agreements -- Reserve
Account" herein.
Collection Account . . . . . . . . . Except under certain conditions
described herein, the Servicer will
be required to remit collections
received with respect to the
Receivables within two Business Days
of receipt thereof to one or more
accounts in the name of the Indenture
Trustee (the "Collection Account").
Pursuant to the Sale and Servicing
Agreement, the Servicer will have the
revocable power to instruct the
Indenture Trustee to withdraw funds
on deposit in the Collection Account
and to apply such funds on each
Distribution Date to the following
(in the priority indicated): (i) the
Servicing Fee for the prior
Collection Period and any overdue
Servicing Fees to the Servicer, (ii)
the Noteholders' Interest
Distributable Amount and the
Noteholders' Principal Distributable
Amount to the Note Distribution
Account, (iii) the
Certificateholders' Interest
Distributable Amount and, after the
Class A-2 Notes have been paid in
full, the Certificateholders'
Principal Distributable Amount to the
Certificate Distribution Account, and
(iv) the remaining balance, if any,
to the Reserve Account. See
"Description of the Transfer and
Servicing Agreements --
Distributions" and "-- Reserve
Account" herein.
Tax Status . . . . . . . . . . . . In the opinion of Brown & Wood, for
federal income tax purposes, the
Notes will be characterized as debt
and the Trust will not be
characterized as an association (or a
publicly traded partnership) that is
taxable as a corporation. In the
opinion of , the same
characterization will apply for state
income and business tax purposes.
Each Noteholder, by the acceptance of
a Note, will agree to treat the Notes
as indebtedness, and each
Certificateholder, by the acceptance
of a Certificate, will agree to treat
the Trust as a partnership in which
the Certificateholders are partners
for federal income and state income
and single business tax purposes.
Alternative characterizations of the
Trust and the Certificates are
possible, but would not result in
materially adverse tax consequences
to Certificateholders. See "Certain
Material Federal Income Tax
Consequences" in the Prospectus for
S-7
<PAGE>
additional information concerning the
application of federal income tax
laws to the Trust and the Securities.
ERISA Considerations . . . . . . . . Subject to the considerations
discussed under "ERISA
Considerations" herein and in the
Prospectus, the Notes are eligible
for purchase by employee benefit
plans. The Certificates may not be
acquired by any employee benefit plan
subject to the Employee Retirement
Income Security Act of 1974, as
amended, or by an individual
retirement account. See "ERISA
Considerations" herein and in the
Prospectus.
Rating of the Securities . . . . . . It is a condition to the issuance of
the Notes and Certificates that the
Notes be rated in the highest rating
category and the Certificates be
rated at least " " or its
equivalent, in each case by at least
two nationally recognized statistical
rating agencies.
A rating is not a recommendation
to purchase, hold or sell the Notes
or Certificates, inasmuch as such
rating does not comment as to market
price or suitability for a particular
investor. A rating addresses the
likelihood that principal of and
interest on the particular class of
Notes or the Certificates, as
applicable, will be paid pursuant to
its terms. There can be no
assurance that a rating will not be
lowered or withdrawn by a rating
agency if circumstances so warrant.
See "Risk Factors -- Limited Nature
of Ratings of the Securities" herein.
S-8
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus
Supplement and the Prospectus, prospective investors should carefully
consider the following risk factors before investing in the Securities.
Limited Liquidity. There is currently no secondary market for the
Securities. The Underwriter currently intends to make a market in the
Securities, but is under no obligation to do so. There can be no assurance
that a secondary market will develop or, if a secondary market does develop,
that it will provide Securityholders with liquidity of investment or that it
will continue for the life of the Securities.
Sub-prime Nature of Obligors ; Servicing. The Obligors on the
Receivables are primarily "sub-prime" borrowers who are generally relatively
higher credit risks due to various factors, including their past credit
experience and the absence or limited extent of their credit history.
Typical "sub-prime" borrowers include young borrowers (18 to 25 years old)
who are trying to establish an initial credit history, borrowers who have a
low income level, previously bankrupt borrowers who desire to reestablish
their credit history, slow payers of credit cards and department store
accounts, and borrowers who desire payment terms slightly longer than the
maximum term permitted by traditional sources of consumer credit. The
average interest rate charged by the Originator to such "sub-prime" borrowers
is generally higher than that charged by commercial banks, financing arms of
automobile manufacturers and other traditional sources of consumer credit,
which typically impose more stringent credit requirements. The payment
experience on receivables of obligors with this credit profile is likely to
be different from that on receivables of traditional auto financing sources
and is likely to be more sensitive to changes in the economic climate in the
areas in which such obligors reside. As a result of the credit profile of
the Obligors and the APRs of the Receivables, the historical credit loss and
delinquency rates on the Receivables may be higher than those experienced by
banks and the captive finance companies of the automobile manufacturers. In
the event of a default under a Receivable, the only source of repayment may
be liquidation proceeds from the related Financed Vehicle. The Financed
Vehicles securing the Receivables will consist primarily of used vehicles
which may hot have a liquidation value sufficient to pay in full the amount
financed by the related Receivable. See "The Originator -- Description of
Business".
The servicing of receivables of customers with such credit profiles
requires special skill and diligence. The Servicer believes that its credit
loss and delinquency experience reflect in part its trained staff and
collection procedures. If the Servicer resigns or is removed following a
Servicer Default, collections on the Receivables may be adversely affected.
See "Description of the Transfer and Servicing Agreements -- Rights Upon
Servicer Default" in the Prospectus.
Servicer Default. If a Servicer Default occurs, the Indenture Trustee or
the Noteholders may remove the Servicer without the consent of the Owner
Trustee or the Certificateholders, in the manner described in the Prospectus
under "Description of the Transfer and Servicing Agreements -- Rights upon
Servicer Default". Neither the Owner Trustee nor the Certificateholders will
have the ability to remove the Servicer if a Servicer Default occurs. In
addition, the Noteholders have the ability, with certain specified
exceptions, to waive defaults by the Servicer, including defaults that might
have a materially adverse effect on Certificateholders. See "Description of
the Transfer and Servicing Agreements -- Waiver of Past Defaults" in the
Prospectus.
Subordination of the Class A-2 Notes. Payments of principal of the
Class A-2 Notes will be subordinated in priority of payment to principal due
on the Class A-1 Notes. Consequently, Class A-2 Noteholders will not
receive any payments of principal until after the Class A-1 Notes have been
paid in full. See "Description of the Transfer and Servicing Agreements --
Distributions" herein.
Subordination of the Certificates. Distributions of interest on and
principal of the Certificates will be subordinated in priority of payment to
interest and principal due on the Notes. Consequently, Certificateholders
will not receive any distributions with respect to a Collection Period until
the full
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<PAGE>
amount of interest on and principal of the Notes distributable on
such Distribution Date has been deposited in the Note Distribution Account.
The Certificateholders will not receive any distributions of principal until
after the Notes have been paid in full. See "Description of the Transfer and
Servicing Agreements -- Distributions" herein.
Limited Assets of the Trust. The Trust will not have, nor is it
permitted or expected to have, any significant assets or sources of funds other
than the Receivables and certain rights with respect to the Reserve Account;
therefore, 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. Although any funds available in the Reserve Account on
each Distribution Date will be applied to cover shortfalls in distributions
of interest and principal on the Notes and the Certificates, the funds to be
deposited in the Reserve Account are limited in amount. If the Reserve
Account is exhausted, the Trust will have to rely solely on current
distributions on the Receivables to make payments on the Notes and the
Certificates. See "The Trust" and "Description of the Transfer and
Servicing Agreements -- Reserve Account" herein.
Limited Nature of Ratings of the Securities. It is a condition to the
issuance of the Notes and the Certificates that the Notes be rated in the
highest rating category and the Certificates be rated " " or its
equivalent, in each case by at least two nationally recognized statistical
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 ratings of
the Securities address the likelihood of the timely payment of interest on,
and the ultimate repayment of principal of, the Securities pursuant to their
terms. There can be 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.
In the event that a rating is subsequently lowered or withdrawn, no person or
entity will be required to provide any additional credit enhancement. The
ratings of the Notes are based primarily on the credit quality of the
Receivables, the subordination provided by the Certificates and the
availability of funds in the Reserve Account. The ratings of the
Certificates are based primarily on the credit quality of the Receivables and
the availability of funds in the Reserve Account.
Limited Obligations of the Depositor and the Originator. Neither the
Depositor nor the Originator is generally obligated to make any payments in
respect of the Notes, the Certificates or the Receivables. In connection
with its sale of the Receivables to the Depositor, the Originator will make
certain representations and warranties and, in certain circumstances, will be
required to repurchase Receivables with respect to which such representations
and warranties are not true as of the date made. There can be no assurance,
however, that the Originator will have the financial ability to effect any
such repurchase. If the Originator fails to repurchase any Receivable with
respect to which it is in breach of a representation or warranty, the
Depositor will have no obligation to purchase such Receivable from the
Trust.
THE TRUST
GENERAL
The Trust is a business trust formed under the laws of the State of
Delaware pursuant to the Trust Agreement for the transactions described in
this Prospectus Supplement. After its formation, the Trust will not engage
in any activity other than (i) acquiring, holding and managing the
Receivables and the other assets of the Trust and the proceeds therefrom,
(ii) issuing the Notes and the Certificates, (iii) making payments on the
Notes and the Certificates and (iv) engaging in other activities that are
necessary, suitable or convenient to accomplish the foregoing or that are
incidental thereto or connected therewith.
S-10
<PAGE>
The Trust initially will be capitalized with equity equal to $
, excluding amounts in the Reserve Account. Certificates with an original
principal balance of $ (which represents approximately (1)% of the
initial Certificate Balance) will be sold to the Company and the remaining
Certificates will be sold to third party investors that are expected to be
unaffiliated with the Depositor, the Originator, the Servicer and the Trust.
The proceeds from the initial sale of the Notes and Certificates will be used
by the Trust to purchase the Receivables from the Depositor pursuant to the
Sale and Servicing Agreement. The Servicer will service the Receivables
pursuant to the Sale and Servicing Agreement and will be compensated for
acting as Servicer. See "Description of the Transfer and Servicing
Agreements -- Servicing Compensation" herein. To facilitate servicing and to
minimize administrative burden and expense, the Servicer will be appointed
custodian of the Receivables by the Owner Trustee, but will not stamp the
Receivables to reflect their sale and assignment by the Originator to the
Depositor or by the Depositor to the Trust, or amend the certificates of
title of the related Financed Vehicles. In the absence of amendments to the
certificates of title, the Trust may not have perfected security interests in
the Financed Vehicles securing the Receivables in some states. See "Certain
Legal Aspects of the Receivables" in the Prospectus.
If the protection provided to the investment of the Securityholders by
the Reserve Account is insufficient, the Trust will look only to the Obligors
on the Receivables and the proceeds from the repossession and sale of Financed
Vehicles that secure defaulted Receivables to fund distributions of principal
and interest on the Securities. In such event, certain factors, such as the
Trust's not having a first priority perfected security interest in some of
the Financed Vehicles, may affect the Trust's ability to realize on the
collateral securing the Receivables and thus may reduce the proceeds to be
distributed to Securityholders with respect to the Securities. See
"Description of the Transfer and Servicing Agreements -- Distributions" and
"-- Reserve Account" herein and "Certain Legal Aspects of the Receivables" in
the Prospectus.
The Trust's principal offices are located in ,
Delaware, in care of , as Owner Trustee, at the address
listed below under "-- The Owner Trustee".
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Cutoff Date, as if the issuance and sale of the Notes and the Certificates
had taken place on such date:
Class A-1 Notes . . . . . . . . . . . . . . . . . . . . . $
Class A-2 Notes . . . . . . . . . . . . . . . . . . . . .
Certificates . . . . . . . . . . . . . . . . . . . . .
-----------------
Total . . . . . . . . . . . . . . . . . . . . . $
=================
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's liability in connection with the issuance and sale
of the Notes and Certificates is limited solely to the express obligations of
the Owner Trustee set forth in the Trust Agreement and the Sale and Servicing
Agreement. The Depositor and its affiliates may maintain normal commercial
banking relations with the Owner Trustee and its affiliates.
THE RECEIVABLES POOL
The Receivables were originated or purchased from Dealers by the
Originator in the ordinary course of business, and were selected from the
Originator's portfolio for inclusion in the Receivables Pool based on several
criteria, including the following: (i) on the Cutoff Date, each Receivable
had an
S-11
<PAGE>
outstanding gross balance of at least $ , (ii) as of the
Cutoff Date, none of the Receivables was more than days past due and (iii)
as of the Cutoff Date, no Obligor on any Receivable was noted in the
Originator's records as being the subject of a bankruptcy proceeding.
Certain additional criteria that each Receivable must meet are set forth in
the Prospectus under "The Receivables Pools". No selection procedures
believed by either the Originator or the Depositor to be adverse to
Securityholders were used in selecting the Receivables.
The composition and distribution of the Receivables Pool as of the Cutoff
Date are as set forth in the following tables.
<TABLE>
COMPOSITION OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<CAPTION>
Weighted Aggregate Number of Weighted Average
Average APR Principal Balance Receivables Remaining Term
----------- ----------------- ----------- ----------------
<S> <C> <C> <C>
% $ months
Weighted Average Average
Original Term Principal Balance
- ---------------- -----------------
<C> <C>
months $
</TABLE>
<PAGE>
<TABLE>
DISTRIBUTION BY APR OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<CAPTION>
Percentage of
Number of Aggregate Aggregate
APR Range Receivables Principal Balance Principal Balance/(1)/
--------- ----------- ----------------- ----------------------
(Dollars in Thousands)
<S> <C> <C> <C>
0.00% to 15.00% $ %
15.01% to 16.00%
16.01% to 17.00%
17.01% to 18.00%
18.01% to 19.00%
19.01% to 20.00%
20.01% to 21.00%
21.01% to 22.00%
22.01% to 23.00%
23.01% to 24.00%
24.01% to 25.00%
Greater than 25.00%
------------- ------------------ -----------------
100%
============= $=================== =================
</TABLE>
- ------------
/(1)/ Percentages may not add to 100.00% because of rounding.
S-12
<TABLE>
DISTRIBUTION BY REMAINING PRINCIPAL BALANCE OF THE RECEIVABLES POOL AS OF THE
CUTOFF DATE
<CAPTION>
Percentage of
Range of Remaining Number of Aggregate Aggregate
Principal Balances Receivables Principal Balance Principal Balance/(1)/
- ------------------ ----------- ----------------- ----------------------
(Dollars in Thousands)
<S> <C> <C> <C>
$ 1,000 to $ 2,499 $ %
$ 2,500 to $ 4,999
$ 5,000 to $ 7,499
$ 7,500 to $ 9,999
$10,000 to $12,499
$12,500 to $14,999
$15,000 to $17,499
$17,500 to $19,999
$20,000 to $22,499
$22,500 to $24,999
$25,000 to $27,499
$27,500 to $29,999
$30,000 to $39,999
$40,000 to $49,999
-------------- ------------ -----------------
Total $ 100.00%
</TABLE>
_____________
/(1)/ Percentages may not add to 100.00% because of rounding.
<TABLE>
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<CAPTION>
Percentage of
Range of Number of Aggregate Aggregate
Remaining Terms Receivables Principal Balance Principal Balance/(1)/
- ------------------ ----------- ----------------- ----------------------
(Dollars in Thousands)
<S> <C> <C> <C>
3 to 11 months $ %
12 to 17 months
18 to 23 months
24 to 29 months
30 to 35 months
36 to 41 months
42 to 47 months
48 to 53 months
54 to 59 months
60 to 65 months
66 to 72 months
------------ ----------------- -------------------
Total $ 100.00%
</TABLE>
- ------------
/(1)/ Percentages may not add to 100.00% because of rounding.
S-13
<PAGE>
<TABLE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<CAPTION>
Percentage of
Number of Aggregate Aggregate
State/(1)/ Receivables Principal Balance Principal Balance/(2)/
- ---------- ----------- ----------------- ----------------------
(Dollars in Thousands)
<S> <C> <C> <C>
------------- ----------------- ---------------
Total $ 100.00%
</TABLE>
_____________
/(1)/ Based on billing addresses of the Obligors.
/(2)/ Percentages may not add to 100.00% because of rounding.
As of the Cutoff Date, approximately % of the Receivables, by
aggregate principal balance, constitute Precomputed Receivables and % of
the Receivables constitute Simple Interest Receivables. See "The Receivables
Pools" in the Prospectus for a description of the characteristics of
Precomputed Receivables and Simple Interest Receivables. As of the Cutoff
Date, approximately % of the aggregate principal balance of the
Receivables, constituting % of the number of Receivables, represent used
vehicles.
THE DEPOSITOR
Information regarding the Depositor is set forth under "The Depositor" in
the Prospectus.
THE ORIGINATOR
(The data in this section to be provided with respect to each Originator)
9
<PAGE>
DESCRIPTION OF BUSINESS
UNDERWRITING STANDARDS
SERVICING STANDARDS
CREDIT LOSS EXPERIENCE
DELINQUENCY EXPERIENCE
S-14
<PAGE>
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Information regarding certain maturity and prepayment considerations with
respect to the Securities is set forth under "Weighted Average Life of the
Securities" in the Prospectus. In addition, holders of the Class A-2 Notes
will not receive any principal payments until the Class A-1 Notes are paid in
full, and holders of the Certificates will not receive any principal payments
until the Class A-1 Notes and the Class A-2 Notes have been paid in full.
See "Description of the Notes -- Payments of Principal" and "Description of
the Certificates -- Distributions of Principal" herein. As the rate of
payment of principal of each class of Notes and the Certificates depends on
the rate of payment (including prepayments) of the principal balance of the
Receivables, final payment of the Class A-1 Notes or the Class A-2 Notes and
the final distribution in respect of the Certificates could occur
significantly earlier than the Class A-1 Final Scheduled Payment Date, the
Class A-2 Final Scheduled Payment Date or the Final Scheduled Distribution
Date, as applicable. Securityholders will bear the risk of being able to
reinvest principal payments on the Securities at yields at least equal to the
yield on their respective Securities.
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. A
copy of the Indenture will be filed with the Commission following the
issuance of the Securities. 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. Where particular provisions or
terms used in the Indenture are referred to, the actual provisions (including
definitions of terms) are incorporated by reference as part of this summary.
The following summary supplements the description of the general terms and
provisions of the Notes of any given Series and the description of the
related Indenture set forth under the headings "Description of the Notes" and
"Certain Information Regarding the Securities" in the Prospectus, to which
descriptions reference is hereby made. , a banking
corporation, will be the Indenture Trustee under the Indenture.
PAYMENTS OF INTEREST
Interest on the principal balance of the Class A-1 Notes and the Class A-2
Notes will accrue at the Class A-1 Rate and Class A-2 Rate, respectively, and
will be payable to the holders of the Class A-1 Notes and the Class A-2 Notes
monthly on each Distribution Date commencing , 199 . Interest
with respect to any Distribution Date will accrue from and including the most
recent Distribution Date on which interest was distributed to Noteholders
(or, with respect to the first Distribution Date, from and including the
Closing Date) to but excluding such Distribution Date. Interest on each
class of Notes will be calculated on the basis of a 360-day year 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 interest on such amount at the applicable Interest Rate (to the extent
lawful). Interest payments on the Notes will generally be derived from the
Total Distribution Amount remaining after the payment of the Servicing Fee
and from the Reserve Account. See "Description of the Transfer and Servicing
Agreements -- Distributions" and "-- Reserve Account" herein. Interest
payments to holders of both classes of Notes will have the same priority.
Under certain circumstances, the amount available for such payments could be
less than the amount of interest payable on the Notes on any Distribution
Date, in which case the holders of each class of Notes will receive their
ratable share (based on the aggregate amount of interest due on such class of
Notes) of the aggregate amount available for distribution in respect of
interest on the Notes.
PAYMENTS OF PRINCIPAL
On each Distribution Date for as long as the Class A-1 Notes are
outstanding, principal of the Class A-1 Notes will be distributed to holders
of the Class A-1 Notes in an amount equal to the Total Distribution Amount
remaining after payment of the Servicing Fee and the Noteholders' Interest
Distributable Amount for such date. On each Distribution Date from and
including the Distribution Date on which the Class A-1 Notes are paid in full
and for as long as the Class A-2 Notes are outstanding, principal will be
distributed to holders of the Class A-2 Notes in an amount equal to the Total
Distribution Amount remaining after payment of the Servicing Fee, the
Noteholders' Interest Distributable Amount and, on the Distribution Date on
which the outstanding principal amount of the Class A-1 Notes is reduced to
zero, any amounts distributed as principal to holders of the Class A-1 Notes
and funds available, if any, in the Reserve Account. No principal will be
paid on the Class A-2 Notes until the Class A-1 Notes have been paid in full.
See "Description of the Transfer and Servicing Agreements -- Distributions"
and "-- Reserve Account" herein.
The principal balance of the Class A-1 Notes, to the extent not previously
paid, will be due on the Class A-1 Final Scheduled Payment Date and the
principal balance of the Class A-2 Notes, to the extent not previously paid,
will be due on the Class A-2 Final Scheduled Payment Date. The actual date
on which the aggregate outstanding principal amount of either the Class A-1
Notes or the Class A-2 Notes is paid in full may be earlier than the
applicable Final Scheduled Payment Date set forth above due to a variety of
factors, including those described under "Weighted Average Life of the
Securities" herein and in the Prospectus.
OPTIONAL REDEMPTION
The Class A-2 Notes may be redeemed in whole, but not in part, on any
Distribution Date on which the Servicer exercises its option to purchase the
Receivables, which the Servicer may do after the aggregate outstanding
principal amount of the Receivables is reduced to 10% or less of the original
Pool Balance. See "Description of the Transfer and Servicing Agreements --
Termination" in the Prospectus. The redemption price for the Class A-2 Notes
will equal the unpaid principal amount of the Class A-2 Notes plus accrued
and unpaid interest thereon.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. 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. This summary does
not purport to be complete and is subject to, and qualified in its entirety
by reference to, all the provisions of the Certificates and the Trust
Agreement. The following summary supplements the description of the general
terms and provisions of the Certificates of any given Series and the
description of the related Trust Agreement set forth in the Prospectus, to
which descriptions reference is hereby made.
DISTRIBUTIONS OF INTEREST
Certificateholders will be entitled to distributions of interest on each
Distribution Date beginning on , 199 . Interest will accrue on
the Certificates at the Pass-Through Rate on the Certificate Balance as of
the preceding Distribution Date, after giving effect to distributions on such
Distribution Date. Interest distributable with respect to the Certificates
on a Distribution Date will accrue from and including the most recent
Distribution Date on which interest was distributed to Certificateholders
(or, with respect to the first Distribution Date, from and including the
Closing Date) to but excluding such Distribution Date and will be calculated
on the basis of a 360-day year of twelve
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<PAGE>
30-day months. Interest distributions due but not distributed on any
Distribution Date will be due on the next Distribution Date, with interest
on such overdue interest at the Pass-Through Rate (to the extent lawful).
Interest distributions with respect to the Certificates generally will be
funded from the portion of the Total Distribution Amount and 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
Certificateholders will not be entitled to distributions of principal
on any Distribution Date until the Notes have been paid in full. On each
Distribution Date on and after the Distribution Date on which the Class A-2
Notes are paid in full, the Certificateholders will be entitled to
distributions of principal in a maximum amount equal to the lesser of (i) the
Total Distribution Amount plus any funds in the Reserve Account remaining
after payment of the Servicing Fee, the Noteholders' Distributable Amount (on
the Distribution Date on which the outstanding principal amount of the Class
A-2 Notes is reduced to zero) and the Certificateholders' Interest
Distributable Amount and (ii) the outstanding Certificate Balance. See
"Description of the Transfer and Servicing Agreements -- Distributions" and
"-- Reserve Account" herein.
OPTIONAL PREPAYMENT
If the Servicer exercises its option to purchase the Receivables, which it
may do when the aggregate outstanding principal amount of the Receivables is
reduced to 10% or less of the original Pool Balance, the Certificateholders
will receive an amount in respect of the Certificates equal to the
outstanding Certificate Balance, together with accrued interest thereon at
the Pass-Through Rate, which distribution shall effect an early retirement of
the Certificates. See "Description of the Transfer and Servicing Agreements
- -- Termination" in the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Purchase Agreement,
the Sale and Servicing Agreement, the Administration Agreement and the Trust
Agreement (collectively, the "Transfer and Servicing Agreements"). Forms of
the Transfer and Servicing Agreements have been filed as exhibits to the
Registration Statement. A copy of the Transfer and Servicing Agreements will
be filed with the Commission following the issuance of the Securities. This
summary does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Transfer and
Servicing Agreements. The following summary supplements the description of
the general terms and provisions of the Transfer and Servicing Agreements (as
such term is used in the Prospectus) set forth under the heading "Description
of the Transfer and Servicing Agreements" in the Prospectus, to which
description reference is hereby made.
SALE AND ASSIGNMENT OF RECEIVABLES
Certain information with respect to the conveyance of the Receivables
on the Closing Date by the Originator to the Depositor pursuant to the
Purchase Agreement and by the Depositor to the Trust pursuant to the Sale and
Servicing Agreement is set forth under "Description of the Transfer and
Servicing Agreements -- Sale and Assignment of Receivables" in the
Prospectus. See also "The Receivables Pool" herein and "The Receivables
Pools" in the Prospectus for additional information regarding the Receivables
and certain obligations of the Originator and the Servicer with respect to
the Receivables.
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<PAGE>
ACCOUNTS
In addition to the Accounts referred to under "Description of the
Transfer and Servicing Agreements -- Trust Accounts" in the Prospectus, the
Depositor will also establish and maintain the Reserve Account with the
Indenture Trustee, in the name of the Indenture Trustee on behalf of the
Noteholders and the Certificateholders.
SERVICING COMPENSATION
The Servicer will be entitled to receive the Servicing Fee for each
Collection Period in an amount equal to % per annum of the Pool Balance
as of the first day of such Collection Period. The Servicing Fee (together
with any portion of the Servicing Fee that remains unpaid from prior
Distribution Dates) will be paid on each Distribution Date solely to the
extent of the Interest Distribution Amount; however, the Servicing Fee will
be paid to the Servicer prior to the distribution of any portion of the
Interest Distribution Amount to Noteholders and Certificateholders. See
"Description of the Transfer and Servicing Agreements -- Servicing
Compensation and Payment of Expenses" in the Prospectus.
DISTRIBUTIONS
Deposits to Collection Account. On or about the Business Day of each
month, the Servicer will provide the Indenture Trustee with certain
information with respect to the related Collection Period, including the
amount of aggregate collections on the Receivables, the aggregate Advances to
be made by the Servicer and the aggregate Repurchase Amount of Receivables to
be repurchased by the Originator or to be purchased by the Servicer.
On or before each Distribution Date, the Servicer will cause any amounts
held in the Payahead Account that became due during the related Collection
Period as scheduled payments under the related Contracts to be transferred
from the Payahead Account to the Collection Account.
On or before each Distribution Date, the Servicer will cause the Total
Distribution Amount to be deposited into the Collection Account. The "Total
Distribution Amount" for a Distribution Date will equal the sum of the
Interest Distribution Amount and the Principal Distribution Amount (other
than the portion thereof attributable to Realized Losses). "Realized Losses"
means the excess of the principal balance of any Liquidated Receivable over
Liquidation Proceeds to the extent allocable to principal.
The "Interest Distribution Amount" for a Distribution Date will equal the
sum of the following amounts with respect to the related Collection Period:
(i) that portion of all collections on the Receivables (including amounts
withdrawn from the Payahead Account but excluding amounts deposited into the
Payahead Account) allocable to interest; (ii) all proceeds of the liquidation
of defaulted Receivables ("Liquidated Receivables"), net of expenses incurred
by the Servicer in connection with such liquidation and any amounts required
by law to be remitted to the related Obligor ("Liquidation Proceeds"), to the
extent attributable to interest due thereon in accordance with the Servicer's
customary servicing procedures, and all recoveries in respect of Liquidated
Receivables that were written off in prior Collection Periods; (iii) all
Advances made by the Servicer of interest due on the Receivables; (iv) the
Repurchase Amount of each Receivable that was repurchased by the Originator
or purchased by the Servicer during the related Collection Period, to the
extent attributable to accrued interest thereon; and (v) Investment Earnings
for such Distribution Date.
The "Principal Distribution Amount" for a Distribution Date will equal
thesum of the following amounts with respect to the related Collection Period:
(i) that portion of all collections on the Receivables (including amounts
withdrawn from the Payahead Account but excluding amounts deposited into the
Payahead Account) allocable to principal; (ii) all Liquidation Proceeds
attributable to the principal amount of Receivables that became Liquidated
Receivables during such Collection Period in accordance with the Servicer's
customary servicing procedures, plus all Realized Losses with respect to such
Liquidated Receivables; (iii) all Precomputed Advances made by the Servicer
of principal due
S-18
<PAGE>
on the Precomputed Receivables; (iv) to the extent attributable to principal,
the Repurchase Amount received with respect to each Receivable repurchased by
the Originator or purchased by the Servicer during the related Collection
Period; and (v) partial prepayments relating to refunds of extended warranty
protection plan costs or of physical damage, credit life or disability
insurance policy premiums, but only if such costs or premiums were financed by
the respective Obligor as of the date of the original Contract.
The Interest Distribution Amount and the Principal Distribution Amount on
any Distribution Date shall exclude the following:
(i) amounts received on Precomputed Receivables to the extent that
the Servicer has previously made an unreimbursed Precomputed Advance;
(ii) Liquidation Proceeds with respect to a particular Precomputed
Receivable to the extent of any unreimbursed Precomputed Advances thereon;
(iii) all payments and proceeds (including Liquidation Proceeds) of
any Receivables the Repurchase Amount of which has been included in the Total
Distribution Amount in a prior Collection Period; and
(iv) Liquidation Proceeds with respect to a Simple Interest
Receivable attributable to accrued and unpaid interest thereon (but not
including interest for the then current Collection Period) to the extent of
any unreimbursed Simple Interest Advances.
Deposits to the Distribution Accounts. On each Distribution Date, the
Servicer will instruct the Indenture Trustee to make the following deposits
and distributions, to the extent of the Total Distribution Amount, in the
following order of priority:
(i) to the Servicer, from the Interest Distribution Amount, the
Servicing Fee and all unpaid Servicing Fees from prior Collection Periods;
(ii) to the Note Distribution Account, from the Total Distribution
Amount remaining after the application of clause (i), the Noteholders'
Interest Distributable Amount;
(iii) to the Note Distribution Account, from the Total Distribution
Amount remaining after the application of clauses (i) and (ii), the
Noteholders' Principal Distributable Amount;
(iv) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i) through
(iii), the Certificateholders' Interest Distributable Amount;
(v) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i) through
(iv), the Certificateholders' Principal Distributable Amount; and
(vi) to the Reserve Account, the Total Distribution Amount remaining
after the application of clauses (i) through (v).
For purposes hereof, the following terms shall have the following
meanings:
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal Distributable Amount
and the Noteholders' Interest Distributable Amount.
"Noteholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders' Interest
Carryover Shortfall for such Distribution Date.
S-19
<PAGE>
"Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, 30 days of interest (or, in the case of the
first Distribution Date, interest accrued from and including the Closing Date
to but excluding such Distribution Date) on the Class A-1 Notes and the Class
A-2 Notes at the Class A-1 Rate and the Class A-2 Rate, respectively, on the
outstanding principal balance of the Notes of such class on the immediately
preceding Distribution Date (or, in the case of the first Distribution Date,
on the Closing Date) after giving effect to all payments of principal to the
Noteholders of such class on or prior to such Distribution Date.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date, (i) the excess of the Noteholders' Monthly Interest
Distributable Amount for the preceding Distribution Date, plus any
outstanding Noteholders' Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that is actually
deposited in the Note Distribution Account on such preceding Distribution
Date, plus (ii) interest on the amount of interest due but not paid to
Noteholders on the preceding Distribution Date, to the extent permitted by
law, at the respective Interest Rates borne by each class of the Notes from
such preceding Distribution Date to but excluding such current Distribution
Date.
"Noteholders' Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; provided, however, that the Noteholders' Principal Distributable Amount
shall not exceed the outstanding principal balance of the Notes. In
addition, (i) on the Class A-1 Final Scheduled Payment Date, the Noteholder's
Principal Distributable Amount will not be less than the amount that is
necessary (after giving effect to all other amounts to be deposited in the
Notes Distribution Account on such Distribution Date and allocable to
principal) to reduce the outstanding principal balance of the Class A-1 Notes
to zero; and (ii) on the Class A-2 Final Scheduled Payment Date the
Noteholders' Principal Distributable Amount will not be less than
the amount that is necessary (after giving effect to all other amounts to
be deposited in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the outstanding principal balance of the
Class A-2 Notes to zero.
"Noteholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date for as long as the Class A-1 Notes or the
Class A-2 Notes are outstanding, 100% of the Principal Distribution Amount;
provided, however, that on the Distribution Date on which the principal
balance of the Class A-2 Notes is reduced to zero, the portion, if any, of
the Principal Distribution Amount that is not applied to the principal of the
Class A-2 Notes will be applied to the Certificate Balance.
"Noteholders' Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account.
"Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount.
"Certificateholders' Interest Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders' Monthly
Interest Distributable Amount for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount" means,
with respect to any Distribution Date, 30 days of interest (or, in the case
of the first Distribution Date, interest accrued from and including the
Closing Date to but excluding such Distribution Date) at the Pass-Through
Rate on the Certificate Balance on the last day of the preceding Collection
Period (or, in the case of the first Distribution Date, on the Closing Date)
after giving effect to all distributions of principal to the
Certificateholders on or prior to such Distribution Date.
"Certificateholders' Interest Carryover Shortfall" means, with respect
to any Distribution Date, the excess of the Certificateholders' Monthly
Interest Distributable Amount for
S-20
the preceding Distribution Date and any outstanding Certificateholders'
Interest Carryover Shortfall on such preceding Distribution Date, over the
amount in respect of interest that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, plus interest on such
excess, to the extent permitted by law, at the Pass-Through Rate from such
preceding Distribution Date to but excluding such current Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders' Monthly
Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the Certificateholders'
Principal Distributable Amount shall not exceed the Certificate Balance. In
addition, on the Final Scheduled Distribution Date, the principal required to
be distributed to Certificateholders will include the lesser of (a) (i) any
scheduled payments of principal due and remaining unpaid on each Precomputed
Receivable and (ii) any principal due and remaining unpaid on each Simple
Interest Receivable, in each case, in the Trust as of the Final Scheduled
Maturity Date or (b) the amount that is necessary (after giving effect to the
other amounts to be deposited in the Certificate Distribution Account on such
Distribution Date and allocable to principal) to reduce the Certificate
Balance to zero.
"Certificateholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date prior to the Distribution Date on which
the Notes are paid in full, zero; and with respect to any Distribution Date
commencing on the Distribution Date on which the Notes are paid in full, 100%
of the Principal Distribution Amount (less, on the Distribution Date on which
the Notes are paid in full, the portion thereof payable as principal of the
Notes).
"Certificateholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Certificateholders' Monthly
Principal Distributable Amount and any outstanding Certificateholders'
Principal Carryover Shortfall from the preceding Distribution Date, over the
amount in respect of principal that is actually deposited in the Certificate
Distribution Account.
"Certificate Balance" equals, initially, $ and, thereafter,
equals the initial Certificate Balance, reduced by all amounts allocable to
principal previously distributed to Certificateholders and all Realized
Losses allocable to the Certificates.
On each Distribution Date, all amounts on deposit in the Note
Distribution Account generally will be paid in the following order of priority:
(i) to the applicable Noteholders, accrued and unpaid interest on the
outstanding principal balance of the applicable class of Notes at the
applicable Interest Rate;
(ii) to the Class A-1 Noteholders in reduction of principal until the
principal balance of the Class A-1 Notes has been reduced to zero; and
S-21
(iii) to the Class A-2 Noteholders in reduction of principal until
the principal balance of the Class A-2 Notes has been reduced to zero.
On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders.
RESERVE ACCOUNT
The rights of the Certificateholders to receive distributions with
respect to the Receivables generally will be subordinated to the rights of the
Noteholders in the event of defaults or delinquencies on the Receivables, as
provided in the Sale and Servicing Agreement. The protection afforded to the
Noteholders through subordination will be effected both by the preferential
right of the Noteholders to receive current distributions with respect to the
Receivables and by the establishment of the Reserve Account. The Reserve
Account will be created with an initial deposit by the Depositor on the
Closing Date of $ . In addition, on each Distribution Date until
the amount on deposit in the Reserve Account equals (state amount or formula
for determining amount) (the "Specified Reserve Account Balance"), all
amounts remaining in the Collection Account after payment of the Servicing
Fee, the Noteholders' Distributable Amount and the Certificateholders'
Distributable Amount will be deposited into the Reserve Account. Thereafter,
the amount available in the Reserve Account will be reinstated on each
Distribution Date up to the Specified Reserve Account Balance by the deposit
thereto of any portion of the Total Distribution Amount remaining after
payment on such date of the Servicing Fee, the Noteholders' Distributable
Amount and the Certificateholders' Distributable Amount. If the amount on
deposit in the Reserve Account on any Distribution Date (after giving effect
to all deposits or withdrawals therefrom on such Distribution Date) is
greater than the Specified Reserve Account Balance for such Distribution
Date, the Servicer will instruct the Indenture Trustee to distribute an
amount equal to such excess to the Depositor, subject to certain limitations
set forth in the Sale and Servicing Agreement. Upon any distribution to the
Depositor of amounts from the Reserve Account, neither the Noteholders nor
the Certificateholders will have any rights in, or claims to, such amounts.
Amounts held from time to time in the Reserve Account will continue to be
held for the benefit of the Noteholders and Certificateholders. Funds will
be withdrawn from cash in the Reserve Account to the extent that the Total
Distribution Amount (after the payment of the Servicing Fee) with respect
to any Collection Period is less than the Noteholders' Distributable Amount
and will be deposited to the Note Distribution Account for distribution to
the Noteholders. In addition, funds will be withdrawn from cash in the
Reserve Account to the extent that the portion of the Total Distribution
Amount remaining after the payment of the Servicing Fee and the deposit of
the Noteholders' Distributable Amount to the Note Distribution Account is
less than the Certificateholders' Distributable Amount and will be deposited
to the Certificate Distribution Account for distribution to the
Certificateholders.
If on any Distribution Date the entire Noteholders' Distributable Amount
for such Distribution Date (after giving effect to any amounts withdrawn from
the Reserve Account) is not deposited in the Note Distribution Account, the
Certificateholders generally will not receive any distributions.
The subordination of the Certificates and the Reserve Account are
intended to enhance the likelihood of receipt by Noteholders of the full
amount of principal and interest due to them and to decrease the likelihood
that the Noteholders will experience losses. In addition, the Reserve Account
is intended to enhance the likelihood of receipt by Certificateholders of the
full amount of principal and interest due to them and to decrease the
likelihood that the Certificateholders will experience losses. However, in
certain circumstances, the Reserve Account could be depleted.
S-22
<PAGE>
ERISA CONSIDERATIONS
THE NOTES
The Notes 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 Internal
Revenue Code of 1986, as amended (the "Code"). A fiduciary of a Plan must
determine that the purchase of a Note is consistent with its fiduciary duties
under ERISA and will not result in a nonexempt prohibited transaction as
defined in Section 406 of ERISA or Section 4975 of the Code. For additional
information regarding treatment of the Notes under ERISA, see "ERISA
Considerations" in the Prospectus.
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. By its acceptance of a Certificate, each
Certificateholder will be deemed to have represented and warranted that it is
not subject to the foregoing limitations. For additional information
regarding treatment of the Certificates under ERISA, see "ERISA
Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement relating to the Notes and the Certificates (the "Underwriting
Agreement"), the Depositor has agreed to cause the Trust to sell to Greenwich
Capital Markets, Inc. (the "Underwriter"), and the Underwriter has agreed to
purchase, all of the Securities.
The Depositor has been advised by the Underwriter that it proposes to
offer the Securities to the public initially at the public offering prices
set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such prices less a concession of % per Class A-1 Note, %
per Class A-2 Note and % per Certificate; that the Underwriter and such
dealers may allow a discount of % per Class A-1 Note, % per Class A-2
Note and % per Certificate on sales to certain other dealers; and that
after the initial public offering of the Securities, the public offering prices
and the concessions and discounts to dealers may be changed by the Underwriter.
The Underwriting Agreement provides that the Depositor will indemnify the
Underwriter against certain liabilities, including liabilities under
applicable securities laws, or contribute to payments the Underwriter may be
required to make in respect thereof.
The Trust may, from time to time, invest the funds in the Trust Accounts
in Eligible Investments acquired from the Underwriter.
The closing of the sale of the Certificates is conditioned on the closing
of the sale of the Notes, and the closing of the sale of the Notes is
conditioned on the closing of the sale of the Certificates.
Upon receipt of a request by an investor who has received an electronic
Prospectus Supplement and Prospectus from the Underwriter or of such
investor's representative within the period during which there is an
obligation to deliver a Prospectus Supplement and Prospectus, the Depositor
or the Underwriter will promptly deliver, or cause to be delivered, without
charge, a paper copy of the Prospectus Supplement and the Prospectus.
S-23
<PAGE>
LEGAL MATTERS
Certain legal matters relating to the Securities will be passed upon for
the Trust and the Depositor by Brown & Wood, New York, New York. Certain
federal income tax and other matters will be passed upon for the Trust by
Brown & Wood and certain state income and business tax matters will be passed
upon for the Trust by .
S-24
<PAGE>
INDEX OF TERMS
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . . S-21
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Certificateholders' Distributable Amount . . . . . . . . . . . . . . . S-20
Certificateholders' Interest Carryover Shortfall . . . . . . . . . . . S-20
Certificateholders' Interest Distributable Amount . . . . . . . . . . . S-20
Certificateholders' Monthly Interest Distributable Amount . . . . . . . S-20
Certificateholders' Monthly Principal Distributable Amount . . . . . . S-21
Certificateholders' Principal Carryover Shortfall . . . . . . . . . . . S-21
Certificateholders' Principal Distributable Amount . . . . . . . . . . S-20
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Class A-1 Final Scheduled Payment Date . . . . . . . . . . . . . . . . . S-5
Class A-1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Class A-1 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Class A-2 Final Scheduled Payment Date . . . . . . . . . . . . . . . . . S-5
Class A-2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Class A-2 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-22
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-22
Federal Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Final Scheduled Distribution Date . . . . . . . . . . . . . . . . . . . . S-6
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . . . . S-4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Interest Distribution Amount . . . . . . . . . . . . . . . . . . . . . S-18
Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Liquidated Receivables . . . . . . . . . . . . . . . . . . . . . . . . S-18
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . S-18
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Noteholders' Distributable Amount . . . . . . . . . . . . . . . . . . . S-19
Noteholders' Interest Carryover Shortfall . . . . . . . . . . . . . . . S-19
Noteholders' Interest Distributable Amount . . . . . . . . . . . . . . S-19
Noteholders' Monthly Interest Distributable Amount . . . . . . . . . . S-19
Noteholders' Monthly Principal Distributable Amount . . . . . . . . . . S-20
Noteholders' Principal Carryover Shortfall . . . . . . . . . . . . . . S-20
Noteholders' Principal Distributable Amount . . . . . . . . . . . . . . S-20
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Originator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-22
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . S-18
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-18
S-25
<PAGE>
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . S-4
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Specified Reserve Account Balance . . . . . . . . . . . . . . . . . . . S-21
State Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Total Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . S-18
Transfer and Servicing Agreements . . . . . . . . . . . . . . . . . . . S-17
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-23
Underwriting Agreements . . . . . . . . . . . . . . . . . . . . . . . . S-23
S-26
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
No dealer, salesperson or other person has been
authorized to give any information or to make any
representations other than those contained or
incorporated by reference in this Prospectus FASCO AUTO TRUST
Supplement and the Prospectus in connection with 199 -
the offer made by this Prospectus Supplement and
the Prospectus and, if given or made, such $ %
information or representations must not be relied ASSET BACKED NOTES,
upon as having been authorized. This Prospectus CLASS A-1
Supplement and the Prospectus do not constitute an $ %
solicitation by anyone in any state in which such ASSET BACKED NOTES,
offer or solicitation is unauthorized or in which CLASS A-1 $
the person making such offer or solicitation is not ASSET BACKED
qualified to do so or to anyone to whom it is unlawful CERTIFICATES
to make such offer or solicitation. Neither the
delivery of this Prospectus Supplement and the FINANCIAL ASSET
and the Prospectus nor any sale made hereunder SECURITIES CORP.,
shall, under any circumstances, create any Depositor
implication that the information contained
herein or therein is correct as of any time
subsequent to the date of this Prospectus Supplement
or Prospectus. ( )
Servicer
TABLE OF CONTENTS Page
PROSPECTUS SUPPLEMENT
Reports to Securityholders . . . . . . . . . S-2
Summary of Terms . . . . . . . . . . . . . . S-3
Risk Factors . . . . . . . . . . . . . . . . S-9 PROSPECTUS SUPPLEMENT
The Trust . . . . . . . . . . . . . . . . . . S-10
The Receivables Pool . . . . . . . . . . . . S-11
The Depositor . . . . . . . . . . . . . . . S- 14
The Originator . . . . . . . . . . . . . S-14
Weighted Average Life of the Securities . . S- 15
Description of the Notes . . . . . . . . . S- 15
Description of the Certificates . . . . . . S-16 GREENWICH CAPITAL
Description of the Transfer and Servicing MARKETS, INC.
Agreements . . . . . . . . . . . . . . . . . S-17
ERISA Considerations . . . . . . . . . . . S- 23
Underwriting. . . . . . . . . . . . . . . . . S- 23
Legal Matters . . . . . . . . . . . . . . . . S- 24
Index of Terms. . . . . . . . . . . . . . . . S- 25
Prospectus
Available Information . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference 2
Summary of Terms . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . 10
The Trusts. . . . . . . . . . . . . . . . . . . 14
The Receivables Pools . . . . . . . . . . . . . 15
Weighted Average Life of the Securities . . . . 17
Pool Factors and Trading Information. . . . . . 17
Use of Proceeds . . . . . . . . . . . . . . . . 18
The Depositor . . . . . . . . . . . . . . . . . 18
The Originators . . . . . . . . . . . . . . . . 19
Description of the Notes. . . . . . . . . . . . 19
Description of the Certificates . . . . . . . . 23
Certain Information Regarding the Securities. . 24
Description of the Transfer and Servicing
Agreements. . . . . . . . . . . . . . . . . . . 32
Certain Legal Aspects of the Receivables. . . . 42
Certain Federal Income Tax Consequences . . . 45
ERISA Considerations. . . . . . . . . . . . . . 57
Plan of Distribution. . . . . . . . . . . . . . 59
Legal Matters . . . . . . . . . . . . . . . . . 59
Index of Principal Terms. . . . . . . . . . . . 60
Until 90 days after the date of this Prospectus
Supplement, all dealers effecting transactions
in the Certificates described in this
Prospectus Supplement, whether or not participating
in this distribution, may be required to deliver
this Prospectus Supplement and the Prospectus. This
is in addition to the obligation of dealers to deliver
this Prospectus Supplement and the Prospectus
when acting as underwriters and with respect to
their unsold allotments or subscriptions.
</TABLE>
<PAGE>
Exhibit 1.1
Form of Note Underwriting Agreement
FASCO AUTO TRUST 199_-_
______% ASSET BACKED NOTES, CLASS A-1
______% ASSET BACKED NOTES, CLASS A-2
FINANCIAL ASSET SECURITIES CORP.
NOTE UNDERWRITING AGREEMENT
---------------------------
________, 199__
(Name of Underwriter),
as Representative of the Several Underwriters
(Address)
Ladies and Gentlemen:
1. Introductory. Financial Asset Securities Corp., a
------------
________ corporation ("____" or the "Depositor"), proposes to cause
FASCO Auto Trust 199_-_ (the "Trust") to issue and sell
$_______________ principal amount of its ____% Asset Backed Notes,
Class A-1 (the "Class A-1 Notes"), and $_____________ principal
amount of its ____% Asset Backed Notes, Class A-2 (the "Class A-2
Notes" and, together with the Class A-1 Notes, the "Notes"), to the
several Class A-1 Note Underwriters and Class A-2 Note Underwriters
named in Schedule I hereto (collectively, the "Underwriters"), for
whom you are acting as representative (the "Representative"). The
assets of the Trust will include, among other things, a pool of
motor vehicle retail installment sale contracts or motor vehicle
installment loans secured by new and used automobiles, vans and
light duty trucks (the "Receivables"). The Receivables will be
sold to the Trust by the Depositor. The Receivables will be
serviced for the Trust by (the Depositor) (in such capacity, the
"Servicer"). The Notes will be issued pursuant to an Indenture to
be dated as of ______________, 199_ (as amended and supplemented
from time to time, the "Indenture"), between the Trust and
____________, as indenture trustee (the "Indenture Trustee").
Simultaneously with the issuance and sale of the Notes as
contemplated herein, the Trust will issue $_______________ of its
_______% Asset Backed Certificates (the "Certificates"), each
representing a fractional undivided ownership interest in the
Trust, which will be sold pursuant to an underwriting agreement
dated the date hereof (the "Certificate Underwriting Agreement")
1
<PAGE>
between the Depositor and the underwriters named in Schedule I
thereto. The Notes and the Certificates are sometimes referred to
collectively herein as the "Offered Securities".
The Depositor acknowledges that it will have furnished to the
Underwriters, for distribution to potential investors in the
Offered Securities prior to the date on which the Prospectus (as
defined in Section 2(a) below) is made available to such potential
investors, a term sheet in the form of Exhibit A hereto (the
"Collateral Materials").
Capitalized terms used and not otherwise defined herein shall
have the meanings assigned thereto in the Sale and Servicing
Agreement to be dated as of ______________, 199_ (as amended and
supplemented from time to time, the "Sale and Servicing
Agreement"), among the Trust, (the Depositor), as Depositor, and
____________, as servicer, or, if not defined therein, in the
Indenture or in the Amended and Restated Trust Agreement to be
dated as of ______________, 199_ (as amended and supplemented from
time to time, the "Trust Agreement"), among the Depositor,
______________________, a ___________ corporation (the "Company"),
and ______________________, as owner trustee (the "Owner Trustee").
2. Representations and Warranties of the Depositor. The
-----------------------------------------------
Depositor represents and warrants to, and agrees with, each
Underwriter that:
(a) The Depositor meets the requirements for use of Form S-3
under the Securities Act of 1933, as amended (the "Act"), and has
filed with the Securities and Exchange Commission (the
"Commission") a registration statement (Registration No. 33-____________)
on such Form, including a related preliminary basic prospectus and a
preliminary prospectus supplement, for the registration under the Act
of the offering and sale of the Offered Securities. The Depositor
may have filed one or more amendments thereto, each of which amendments
has previously been furnished to you. The Depositor will next file with
the Commission (i) prior to the effectiveness of such registration
statement, an amendment thereto (including the form of final basic
prospectus and the form of final prospectus supplement relating to the
Offered Securities) or (ii) after effectiveness of such registration
statement, either (A) a final basic prospectus in accordance with Rules
430A and 424(b)(1) or (4) under the Act or (B) a final basic prospectus and
a final prospectus supplement relating to the Offered Securities in
accordance with Rules 415 and 424(b)(2) or (5). The Depositor has
filed with the Commission in a report on Form 8-K the Collateral
Materials within two business days after they were first delivered to an
Underwriter.
In the case of clauses (ii)(A) and (B) above, the Depositor
has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules thereunder to be included in the
Prospectus with respect to the Offered Securities and the offering
2
<PAGE>
thereof. As filed, such amendment and form of final prospectus
supplement, or such final prospectus supplement, shall include all
Rule 430A Information, together with all other such required
information, with respect to the Offered Securities and the
offering thereof and, except to the extent that the Underwriters
shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and
other changes (beyond that contained in the latest preliminary
basic prospectus and preliminary prospectus supplement, if any,
that have previously been furnished to you) as the Depositor has
advised you, prior to the Execution Time, will be included or made
therein. If the Registration Statement contains the undertaking
specified by Regulation S-K Item 512(a), the Registration
Statement, at the Execution Time, meets the requirements set forth
in Rule 415(a)(1)(x).
For purposes of this Agreement, "Effective Time" means the
date and time as of which such registration statement, or the most
recent post-effective amendment thereto, if any, was declared
effective by the Commission, and "Effective Date" means the date of
the Effective Time. "Execution Time" shall mean the date and time
that this Agreement is executed and delivered by the parties
hereto. Such registration statement, as amended at the Effective
Time, including all information deemed to be a part of such
registration statement as of the Effective Time pursuant to
Rule 430A(b) under the Act, and including the exhibits thereto and
any material incorporated by reference therein, is hereinafter
referred to as the "Registration Statement". "Basic Prospectus"
shall mean any prospectus referred to above contained in the
Registration Statement at the Effective Date, including any
Preliminary Prospectus Supplement. "Preliminary Prospectus
Supplement" shall mean the preliminary prospectus supplement, if
any, to the Basic Prospectus which describes the Offered Securities
and the offering thereof and is used prior to filing of the
Prospectus. "Prospectus" shall mean the prospectus supplement
relating to the Offered Securities that is first filed pursuant to
Rule 424(b) after the Execution Time, together with the Basic
Prospectus, as amended at the time of such filing, or, if no filing
pursuant to Rule 424(b) is required, shall mean the prospectus
supplement relating to the Offered Securities, including the Basic
Prospectus, included in the Registration Statement at the Effective
Date. "Rule 430A Information" means information with respect to
the Offered Securities and the offering of the Offered Securities
permitted to be omitted from the Registration Statement when it
becomes effective pursuant to Rule 430A. "Rule 415", "Rule 424",
"Rule 430A" and "Regulation S-K" refer to such rules or regulations
under the Act. Any reference herein to the Registration Statement,
the Basic Prospectus, a Preliminary Prospectus Supplement or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on or before the Effective Date of
the Registration Statement or the issue date of the Basic
3
<PAGE>
Prospectus, such Preliminary Prospectus Supplement or the
Prospectus, as the case may be; and any reference herein to the
terms "amend", "amendment" or "supplement" with respect to the
Registration Statement, the Basic Prospectus, any Preliminary
Prospectus Supplement or the Prospectus shall be deemed to refer to
and include the filing of any document under the Exchange Act after
the Effective Date of the Registration Statement or the issue date
of the Basic Prospectus, any Preliminary Prospectus Supplement or
the Prospectus, as the case may be, deemed to be incorporated
therein by reference.
(b) On the Effective Date and on the date of this Agreement,
the Registration Statement did or will, and, when the Prospectus is
first filed (if required) in accordance with Rule 424(b) and on the
Closing Date, the Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of
the Act, the Exchange Act and the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the respective rules and
regulations of the Commission thereunder (the "Rules and
Regulations"); on the Effective Date, the Registration Statement
did not or will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading;
and, on the Effective Date, the Prospectus, if not filed pursuant
to Rule 424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date, the Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or 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;
provided, however, that the Depositor makes no representations or
warranties as to the information contained in or omitted from the
Registration Statement or the Prospectus (or any supplement
thereto) in reliance upon and in conformity with information
furnished in writing to the Depositor by any Underwriter through
you specifically for use in connection with the preparation of the
Registration Statement or the Prospectus (or any supplement
thereto). As of the Closing Date, the Depositor's representations
and warranties in the Sale and Servicing Agreement and the Trust
Agreement will be true and correct.
(c) This Agreement has been duly authorized, executed and
delivered by the Depositor.
(d) The Depositor's assignment and delivery of the
Receivables to the Trust will vest in the Trust all of the
Depositor's right, title and interest therein, subject to no prior
lien, mortgage, security interest, pledge, adverse claim, charge or
other encumbrance.
(e) The Trust's assignment of the Receivables to the
Indenture Trustee pursuant to the Indenture will vest in the
Indenture Trustee, for the benefit of the Noteholders, a first
priority perfected security interest therein, subject to no prior
4
<PAGE>
lien, mortgage, security interest, pledge, adverse claim, charge or
other encumbrance.
(f) None of the Depositor, the Company or anyone acting on
behalf of the Depositor or the Company has taken any action that
would require qualification of the Trust Agreement under the Trust
Indenture Act or require registration of the Depositor, the Company
or the Trust under the Investment Company Act of 1940, as amended
(the "Investment Company Act"), nor will the Depositor or the
Company act, nor has either of them authorized, nor will either of
them authorize, any person to act in such a manner.
3. Purchase, Sale, and Delivery of the Offered Notes. On
-------------------------------------------------
the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set
forth, the Depositor agrees to cause the Trust to sell (i) to each
Class A-1 Note Underwriter, and each Class A-1 Note Underwriter
agrees, severally and not jointly, to purchase from the Trust, at
a purchase price of ____% of the principal amount thereof, the
respective principal amount of the Class A-1 Notes set forth
opposite the name of such Class A-1 Note Underwriter in Schedule I
hereto and (ii) to each Class A-2 Note Underwriter, and each Class
A-2 Note Underwriter agrees, severally and not jointly, to purchase
from the Trust, at a purchase price of ________% of the principal
amount thereof, the respective principal amount of the Class A-2
Notes set forth opposite the name of such Class A-2 Note
Underwriter in Schedule I hereto. Delivery of and payment for the
Offered Notes shall be made at the office of (Brown & Wood, One
World Trade Center, New York, New York 10048,) on ________ __,
199__ (the "Closing Date"). Delivery of the Offered Notes shall be
made against payment of the purchase price in immediately available
funds drawn to the order of the Depositor. The Notes to be so
delivered will be represented initially by one or more Notes
registered in the name of Cede & Co., the nominee of The Depository
Trust Company ("DTC"). The interests of beneficial owners of the
Offered Notes will be represented by book entries on the records of
DTC and participating members thereof. Definitive Notes will be
available only under limited circumstances.
4. Offering by Underwriters. It is understood that, after
------------------------
the Registration Statement becomes effective, the Underwriters
propose to offer the Offered Notes for sale to the public (which
may include selected dealers), as set forth in the Prospectus.
5. Covenants of the Depositor. The Depositor covenants and
--------------------------
agrees with each of the Underwriters that:
(a) The Depositor will use its best efforts to cause the
Registration Statement, and any amendment thereto, if not effective
at the Execution Time, to become effective. Prior to the
termination of the offering of the Offered Notes, the Depositor
will not file any amendment of the Registration Statement or
supplement to the Prospectus unless the Depositor has furnished you
a copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object.
5
<PAGE>
Subject to the foregoing sentence, if the Registration Statement
has become or becomes effective pursuant to Rule 430A, or filing of
the Prospectus is otherwise required under Rule 424(b), the
Depositor will file the Prospectus, properly completed, and any
supplement thereto, with the Commission pursuant to and in
accordance with the applicable paragraph of Rule 424(b) within the
time period prescribed and will provide evidence satisfactory to
you of such timely filing.
(b) The Depositor will advise you promptly of any proposal to
amend or supplement the Registration Statement as filed or the
related Prospectus and will not effect such amendment or supplement
without your consent, which consent will not unreasonably be
withheld; the Depositor will also advise you promptly of any
request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for any additional
information; and the Depositor also will advise you promptly of the
effectiveness of the Registration Statement (unless the
Registration Statement has become effective prior to Execution
Time) and any amendment thereto, when the Prospectus, and any
supplement thereto, shall have been filed with the Commission
pursuant to Rule 424(b) and of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or the institution or threat of any proceeding for that
purpose, and the Depositor will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible
the lifting of any issued stop order.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act, any event
occurs as a result of which the Prospectus as then amended or
supplemented would 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 the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend
the Registration Statement or supplement the Prospectus to comply
with the Act or the Exchange Act or the respective rules
thereunder, the Depositor promptly will notify you and will prepare
and file, or cause to be prepared and filed, with the Commission,
subject to the second sentence of paragraph (a) of this Section 6,
an amendment or supplement that will correct such statement or
omission or effect such compliance. Any such filing shall not
operate as a waiver or limitation of any right of any Underwriter
hereunder.
(d) As soon as practicable, but not later than fourteen
months after the Closing Date, the Depositor will cause the Trust
to make generally available to holders of the Offered Notes an
earnings statement of the Trust covering a period of at least
twelve months beginning after the Closing Date that will satisfy
the provisions of Section 11(a) of the Act.
(e) The Depositor will furnish to the Underwriters copies of
the Registration Statement (one of which will be signed and will
include all exhibits), each related preliminary prospectus
6
<PAGE>
(including the Preliminary Prospectus Supplement, if any), the
Prospectus and all amendments and supplements to such documents, in
each case as soon as available and in such quantities as the
Underwriters request.
(f) The Depositor will arrange for the qualification of the
Offered Notes for sale under the laws of such jurisdictions in the
United States as you may reasonably designate and will continue
such qualifications in effect so long as required for the
distribution.
(g) For a period from the date of this Agreement until the
retirement of the Offered Notes or until such time as the
Underwriters shall cease to maintain a secondary market in the
Offered Notes, whichever occurs first, the Depositor will deliver
to you the annual statements of compliance and the annual
independent certified public accountants' reports furnished to the
Indenture Trustee or the Owner Trustee pursuant to the Sale and
Servicing Agreement, as soon as such statements and reports are
furnished to the Indenture Trustee or the Owner Trustee.
(h) So long as any of the Offered Notes is outstanding, the
Depositor will furnish to you (i) as soon as practicable after the
end of the fiscal year all documents required to be distributed to
holders of the Offered Notes or filed with the Commission pursuant
to the Exchange Act or any order of the Commission thereunder and
(ii) from time to time, any other information concerning the
Depositor filed with any government or regulatory authority that is
otherwise publicly available, as you may reasonably request.
(i) On or before the Closing Date, (the Depositor) shall cause its
computer records relating to the Receivables to be marked
to show the Trust's absolute ownership of the Receivables and, from
and after the Closing Date, (the Depositor) shall not take any
action inconsistent with the Trust's ownership of such Receivables,
other than as permitted by the Sale and Servicing Agreement.
(j) To the extent, if any, that the ratings provided with
respect to the Offered Notes by the rating agency or agencies that
initially rate the Offered Notes are conditional upon the
furnishing of documents or the taking of any other actions by the
Depositor, the Depositor shall furnish such documents and take any
such other actions.
(k) For the period beginning on the date of this Agreement
and ending on the Closing Date, unless waived by the Underwriters,
neither the Depositor nor any trust originated, directly or
indirectly, by the Depositor will offer to sell or sell notes
(other than the Notes) collateralized by, or certificates (other
than the Certificates) evidencing an ownership interest in,
receivables generated pursuant to retail automobile or light duty
truck installment sale contracts in such a manner as would
constitute a public offering to persons in the United States.
7
<PAGE>
6. Payment of Expenses. The Depositor will pay all expenses
-------------------
incident to the performance of its obligations under this
Agreement, including (i) the printing and filing of the
Registration Statement as originally filed and of each amendment
thereto, (ii) the preparation of this Agreement, (iii) the
preparation, issuance and delivery of the Offered Notes to the
Underwriters, (iv) the fees and disbursements of the Depositor's
counsel and accountants, (v) the qualification of the Offered Notes
under securities laws in accordance with the provisions of
Section 6(f), including filing fees and the fees and disbursements
of counsel for you in connection therewith and in connection with
the preparation of any blue sky or legal investment survey,
(vi) the printing and delivery to the Underwriters of copies of the
Registration Statement as originally filed and of each amendment
thereto, (vii) the printing and delivery to the Underwriters of
copies of any blue sky or legal investment survey prepared in
connection with the Offered Notes, (viii) any fees charged by
rating agencies for the rating of the Notes, (ix) the fees and
expenses, if any, incurred with respect to any filing with the
National Association of Securities Dealers, Inc., and (x) the fees
and expenses of Brown & Wood in its role as counsel to the Trust
incurred as a result of providing the opinions required by
Section 7(g) and the second sentence of Section 7(h) hereof.
7. Conditions to the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the Underwriters to purchase and pay for the Offered
Notes will be subject to the accuracy of the representations and
warranties on the part of the Depositor herein, to the accuracy of
the statements of officers of the Depositor made pursuant to the
provisions hereof, to the performance by the Depositor of its
obligations hereunder and to the following additional conditions
precedent:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Underwriters agree in
writing to a later time, the Registration Statement shall have
become effective not later than (i) 6:00 P.M. New York City time on
the date of determination of the public offering price, if such
determination occurred at or prior to 3:00 P.M. New York City time
on such date or (ii) 12:00 noon on the business day following the
day on which the public offering price was determined, if such
determination occurred after 3:00 P.M. New York City time on such
date.
(b) The Prospectus and any supplements thereto shall have
been filed (if required) with the Commission in accordance with the
Rules and Regulations and Section 5(a) hereof, and prior to the
Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or, to the knowledge of
the Depositor or you, shall be contemplated by the Commission or by
any authority administering any state securities or blue sky law.
(c) On or prior to the Closing Date, you shall have received
a letter, dated as of the Closing Date, of _________________,
8
<PAGE>
certified public accountants, substantially in the form of the
drafts to which you have previously agreed and otherwise in form
and substance satisfactory to you and your counsel.
(d) Subsequent to the execution and delivery of this
Agreement or, if earlier, the dates as of which information is
given in the Registration Statement (exclusive of any amendment
thereto) and the Prospectus (exclusive of any supplement thereto),
there shall not have occurred (i) any change or any development
involving a prospective change in or affecting particularly the
business or properties of the Trust, the Depositor, or the Company
which, in the judgment of the Underwriters, materially impairs the
investment quality of the Offered Notes or makes it impractical or
inadvisable to market the Offered Notes; (ii) 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; (iii) any suspension of trading of any securities of the
Depositor on any exchange or in the over-the-counter market;
(iv) any banking moratorium declared by federal or New York
authorities; 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 or emergency if, in the judgment of the Underwriters, the
effect of any such outbreak, escalation, declaration, calamity or
emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Offered Notes.
(e) You shall have received an opinion of
___________________, _______________ and (General Counsel) of (the
Depositor) and the Company, addressed to you and the Indenture
Trustee, dated the Closing Date and satisfactory in form and
substance to you and your counsel, to the effect that:
(i) (the Depositor) has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of ____________ with full power and authority (corporate and
other) to own its properties and conduct its business as presently conducted
by it, and to enter into and perform its obligations under this Agreement,
the Certificate Underwriting Agreement, the Sale and Servicing Agreement, the
Purchase Agreement, the Trust Agreement, and the Administration Agreement,
and had at all times, and now has, the power, authority and legal right to
acquire, own, sell and service the Receivables.
(ii) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of ___________ with full power and authority
(corporate and other) to own its properties and conduct its
business as presently conducted by it and to enter into and perform
its obligations under the Trust Agreement and the Purchase Agreement,
and had at all times, and now has, the power, authority and legal
right to acquire, own, sell and hold the excess cash flow from the
Reserve Account.
9
<PAGE>
(iii) Each of (the Depositor) and the Company is duly
qualified to do business and is in good standing, and has obtained
all necessary licenses and approvals, in each jurisdiction in which
failure to qualify or to obtain such licenses or approvals would render any
Receivable unenforceable by the Depositor, the Owner Trustee or the
Indenture Trustee.
(iv) The direction by the Depositor to the Owner Trustee
to authenticate the Certificates has been duly authorized by the Depositor
and, when the Certificates have been duly executed, authenticated and
delivered by the Owner Trustee in accordance with the Trust Agreement and
delivered and paid for pursuant to the Certificate Underwriting Agreement,
the Certificates will be duly issued and entitled to the benefits and
security afforded by the Trust Agreement, subject as to the enforcement
of remedies (x) to applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
(y) to general principles of equity (regardless of whether the enforcement
of such remedies is considered in a proceeding in equity or at law).
(v) The direction by the Depositor to the Indenture Trustee
to authenticate the Notes has been duly authorized by the Depositor and, when
the Notes have been duly executed and delivered by the Owner Trustee and when
authenticated by the Indenture Trustee in accordance with the Indenture and
delivered and paid for pursuant to this Agreement, the Notes will be duly
issued and entitled to the benefits and security afforded by the
Indenture, subject as to the enforcement of remedies (x) to applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and (y) to general principles of equity
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(vi) The Purchase Agreement, the Trust Agreement, the
Sale and Servicing Agreement and the Administration Agreement have
been duly authorized, executed and delivered by (the Depositor), and are
legal, valid and binding obligations of (the Depositor) enforceable against
(the Depositor) in accordance with their terms, except (x) the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights and (y) 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.
(vii) This Agreement and the Certificate Underwriting
Agreement have been duly authorized, executed and delivered by (the
Depositor).
10
<PAGE>
(viii) The Purchase Agreement and the Trust Agreement
have been duly authorized, executed and delivered by the Company and are the
legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except (x) the enforceability thereof
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
(y) 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.
(ix) Neither the transfer of the Receivables from the Depositor to
the Trust, nor the assignment of the Owner Trust Estate to the Trust, nor the
grant of the security interest in the Collateral to the Indenture Trustee
pursuant to the Indenture, nor the execution and delivery of the
Certificate Underwriting Agreement, this Agreement, the Purchase Agreement,
the Trust Agreement, the Administration Agreement, or the Sale and Servicing
Agreement by (the Depositor), nor the execution and delivery of the
Trust Agreement and the Purchase Agreement by the Company, nor the
consummation of any transactions contemplated in the Certificate Underwriting
Agreement, this Agreement, the Purchase Agreement, the Trust Agreement, the
Indenture, the Administration Agreement or the Sale and Servicing Agreement
(such agreements, excluding the Certificate Underwriting Agreement and this
Agreement, being, collectively, the "Basic Documents"), nor the fulfillment
of the terms thereof by (the Depositor), the Company or the Trust, as the
case may be, will conflict with, or result in a breach, violation
or acceleration of, or constitute a default under, any term or provision of
the articles of incorporation or bylaws of the Depositor or the Company, or
of any indenture or other agreement or instrument to which (the Depositor) or
the Company is a party or by which either of them is bound, or result in a
violation of or contravene the terms of any statute, order or regulation
applicable to (the Depositor) or the Company of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
either of them.
(x) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due
inquiry, threatened before any court, administrative agency or
other tribunal (1) asserting the invalidity of the Trust or any of
the Basic Documents, (2) seeking to prevent the consummation of any
of the transactions contemplated by any of the Basic Documents or
the execution and delivery thereof, (3) that might materially and
adversely affect the performance by (the Depositor) of its obligations under,
or the validity or enforceability of, the Certificate Underwriting Agreement,
this Agreement, the Purchase Agreement, the Trust Agreement, the Sale and
Servicing Agreement, or the Administration Agreement, or (4) that might
materially and adversely affect the performance by the Company of its
obligations under, or
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the validity or enforceability of, the Purchase Agreement or
the Trust Agreement.
(xi) To the best knowledge of such counsel and except as
set forth in the Prospectus (and any supplement thereto), no
default exists and no event has occurred which, with notice, lapse
of time or both, would constitute a default in the due performance
and observance of any term, covenant or condition of any agreement
to which the Depositor or the Company is a party or by which either
of them is bound, which default is or would have a material adverse
effect on the financial condition, earnings, prospects, business or
properties of the Depositor and its subsidiaries, taken as a whole.
(xii) Nothing has come to such counsel's attention
that would lead such counsel to believe that the representations and
warranties of (x) the Company contained in the Purchase Agreement and the
Trust Agreement are other than as stated therein or (y) (the Depositor)
contained in this Agreement, the Certificate Underwriting Agreement, the
Trust Agreement, the Purchase Agreement or the Sale and Servicing Agreement
are other than as stated therein.
(xiii) The Depositor is the sole owner of all right, title and
interest in, and has good and marketable title to, the Receivables and the
other property to be transferred by it to the Trust. The assignment of the
Receivables, all documents and instruments relating thereto and all proceeds
thereof to the Trust, pursuant to the Sale and Servicing Agreement, vests
in the Trust all interests that are purported to be conveyed thereby,
free and clear of any liens, security interests or encumbrances except as
specifically permitted pursuant to the Sale and Servicing Agreement or any
other Basic Document.
(xiv) Immediately prior to the transfer of the
Receivables to the Trust, the Depositor's interest in the
Receivables, the security interests in the Financed Vehicles
securing the Receivables and the proceeds of each of the foregoing
was perfected and constituted a perfected first priority interest
therein.
(xv) The Indenture constitutes a grant by the Trust to the
Indenture Trustee of a valid security interest in the Receivables,
the security interests in the Financed Vehicles securing the Receivables
and the proceeds of each of the foregoing, which security interest will
be perfected upon the filing of the UCC-1 financing statements with the
Secretary of State of the State of ____________ and the State of ___________
and will constitute a first priority perfected security interest therein.
No filing or other action, other than the filing of the UCC-1 financing
statements with the Secretary of State of the State of ____________
and the State of ___________ referred to above, is necessary to perfect and
maintain the interest or the security interest of the
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Indenture Trustee in the Receivables, the security interests
in the Financed Vehicles securing the Receivables and the proceeds
of each of the foregoing against third parties.
(xvi) The Receivables are chattel paper as defined in
the UCC.
(xvii) The Sale and Servicing Agreement, the Trust
Agreement, the Indenture, the Purchase Agreement and the
Administration Agreement conform in all material respects with the
descriptions thereof contained in the Prospectus (and any
supplement thereto).
(xviii) The statements in the Prospectus under the
headings "Risk Factors -- Certain Legal Aspects -- Security
Interests in Financed Vehicles" and "-- Insolvency Considerations"
and "Certain Legal Aspects of the Receivables", to the extent they
constitute matters of law or legal conclusions with respect thereto, have
been reviewed by such counsel and are correct in all material respects.
(xix) The statements contained in the Prospectus and any
supplement thereto under the headings "Description of the Notes",
"Description of the Certificates" and "Description of the Transfer and
Servicing Agreements", insofar as such statements constitute a summary
of the Notes, the Certificates, the Indenture, the Administration Agreement,
the Purchase Agreement, the Sale and Servicing Agreement and the Trust
Agreement, constitute a fair summary of such documents.
(xx) No consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required
for the consummation of the transactions contemplated in the Basic
Documents, except such filings with respect to the transfer of the
Receivables to the Trust pursuant to the Sale and Servicing Agreement, the
grant of a security interest in the Collateral to the Indenture Trustee
pursuant to the Indenture and such other approvals as have been obtained and
filings as have been made.
(xxi) Such counsel is familiar with the Depositor's
standard operating procedures relating to the Depositor's
acquisition of a perfected first priority security interest in the
vehicles financed by the Depositor pursuant to retail automobile and light
duty truck installment sale contracts in the ordinary course of the
Depositor's business. Assuming that the Depositor's standard procedures
are followed with respect to the perfection of security interests in the
Financed Vehicles (and such counsel has no reason to believe that the
Depositor has not followed or will not continue to follow its standard
procedures in connection with the perfection of security interests in the
Financed Vehicles), the Depositor has acquired or will acquire a perfected
first priority security interest in the Financed Vehicles.
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<PAGE>
(xxii) All actions required to be taken and all
filings required to be made under the Act and the Exchange Act
prior to the sale of the Notes have been duly taken or made.
(xxiii) The Trust Agreement is not required to be
qualified under the Trust Indenture Act and the Trust is not
required to be registered under the Investment Company Act.
(xxiv) The Indenture has been duly qualified under the
Trust Indenture Act.
(xxv) The Depositor is not, and will not as a result
of the offer and sale of the Certificates as contemplated in the Prospectus
(and any supplement thereto) and the Certificate Underwriting Agreement or of
the Notes as contemplated in the Prospectus (and any supplement thereto) and
this Agreement become, an "investment company" as defined in the Investment
Company Act or a company "controlled by" an "investment company" within the
meaning of the Investment Company Act.
(xxvi) To the best of such counsel's knowledge and information,
there are no legal or governmental proceedings pending or threatened that
are required to be disclosed in the Registration Statement, other than those
disclosed therein.
(xxvii) To the best of such counsel's knowledge and information,
there are no contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed or incorporated by reference
as exhibits thereto, the descriptions thereof or references thereto are
correct, and no default exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument so described, referred to, filed or incorporated by
reference.
(xxviii) The Registration Statement has become effective
under the Act, any required filing of the Basic Prospectus, any preliminary
Basic Prospectus, any Preliminary Prospectus Supplement and the Prospectus,
and any supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b) and, to the best
knowledge of such counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings for that
purpose have been instituted or are pending or contemplated under the Act,
and the Registration Statement and the Prospectus, and each amendment
or supplement thereto, as of their respective effective or issue dates,
complied as to form in all material respects with the requirements of the
Act, the Exchange Act, the Trust Indenture Act and the Rules and Regulations.
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<PAGE>
(xxix) Such counsel has examined the Registration
Statement and the Prospectus and nothing has come to such counsel's
attention that would lead such counsel to believe that the Registration
Statement or the Prospectus or any amendment or supplement thereto as of the
respective dates thereof (other than the financial statements and other
financial and statistical information contained therein, as to which
such counsel need not express any view) contains an untrue statement of
a material fact or omits to state a material fact necessary in order to
make the statements therein not misleading.
(xxx) The Trust has been duly formed and is validly
existing as a statutory business trust and is in good standing
under the laws of the State of ___________, with full power and authority
to execute, deliver and perform its obligations under the Sale and
Servicing Agreement, the Indenture, the Administration Agreement,
and the Notes and the Certificates.
(xxxi) The Indenture, the Sale and Servicing Agreement and the
Administration Agreement have been duly authorized and, when duly executed
and delivered by the Owner Trustee, will constitute the legal, valid and
binding obligations of the Trust, enforceable against the Trust in
accordance with their terms, except (x) the enforceability thereof may be
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
and (y) 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.
(((f) You shall have received an opinion of
___________________, _______________ and (General Counsel) of (the
Depositor) and the Company, addressed to you and the Indenture
Trustee, dated the Closing Date and satisfactory in form and
substance to you and your counsel, to the effect that the
statements in the Basic Prospectus under the heading "Certain State
Tax Consequences with respect to Trusts for which a Partnership
Election Is Made" and in the Prospectus Supplement under the
heading "Summary of Terms -- Tax Status" (to the extent relating to
____________ tax consequences) accurately describe the material
____________ tax consequences to holders of the Securities.))
(g) You shall have received an opinion addressed to you of
Brown & Wood, in its capacity as federal tax counsel to the Trust,
to the effect that the statements in the Basic Prospectus under the
heading "Certain Federal Income Tax Consequences" and in the
Prospectus Supplement under the headings "Summary of Terms -- Tax
Status" (to the extent relating to federal income tax consequences)
and "Certain Federal Tax Consequences" accurately describe the
material federal income tax consequences to holders of the
Securities.
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<PAGE>
(h) You shall have received an opinion addressed to you of
Brown & Wood, in its capacity as special counsel to the
Underwriters, dated the Closing Date, with respect to the validity
of the Certificates and the Notes and such other related matters as
you shall require, and the Depositor shall have furnished or caused
to be furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon
such matters. Brown & Wood, in its capacity as special ERISA
counsel to the Trust, shall have delivered an opinion with respect
to the characterization of the transfer of the Receivables and to
the effect that the statements in the Basic Prospectus and in the
Prospectus Supplement under the heading "ERISA Considerations", to
the extent that they constitute statements of matters of law or
legal conclusions with respect thereto, have been prepared or
reviewed by such counsel and accurately describe the material
consequences to holders of the Securities under ERISA.
(i) You shall have received an opinion addressed to you and (the
Depositor) of ____________, counsel to the Indenture Trustee,
dated the Closing Date and satisfactory in form and substance to
you and your counsel, to the effect that:
(i) The Indenture Trustee is a banking corporation duly
incorporated and validly existing under the laws of the State of
____________.
(ii) The Indenture Trustee has the full corporate trust
power to accept the office of indenture trustee under the Indenture
and to enter into and perform its obligations under the Indenture,
the Sale and Servicing Agreement and the Administration Agreement.
(iii) The execution and delivery of the Indenture and
the Administration Agreement and the acceptance of the Sale and Servicing
Agreement and the performance by the Indenture Trustee of its obligations'
under the Indenture, the Sale and Servicing Agreement and the Administration
Agreement have been duly authorized by all necessary corporate action of the
Indenture Trustee and each has been duly executed and delivered by the
Indenture Trustee.
(iv) The Indenture, the Sale and Servicing Agreement and
the Administration Agreement constitute valid and binding
obligations of the Indenture Trustee enforceable against the
Indenture Trustee in accordance with their terms under the laws of
the State of ____________ and the federal law of the United States.
(v) The execution and delivery by the Indenture Trustee
of the Indenture and the Administration Agreement and the acceptance of
the Sale and Servicing Agreement do not require any consent, approval
or authorization of, or any registration or filing with, any ____________
or United States federal governmental authority, other than the
qualification of the Indenture Trustee under the Trust Indenture Act.
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(vi) Each of the Notes has been duly authenticated by the
Indenture Trustee.
(vii) Neither the consummation by the Indenture Trustee of the
transactions contemplated in the Sale and Servicing Agreement, the Indenture
or the Administration Agreement nor the fulfillment of the terms thereof by
the Indenture Trustee will conflict with, result in a breach or violation of,
or constitute a default under any law or the charter, bylaws or other
organizational documents of the Indenture Trustee or the terms of any
indenture or other agreement or instrument known to such counsel to which the
Indenture Trustee or any of its subsidiaries is a party or is bound or any
judgment, order or decree known to such counsel to be applicable to the
Indenture Trustee or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Indenture Trustee or any of its subsidiaries.
(viii) To the knowledge of such counsel there is no
action, suit or proceeding pending or threatened against the
Indenture Trustee (as trustee under the Indenture or in its
individual capacity) before or by any governmental authority that,
if adversely decided, would materially adversely affect the ability
of the Indenture Trustee to perform its obligations under the Indenture,
the Sale and Servicing Agreement or the Administration Agreement.
(ix) The execution, delivery and performance by the
Indenture Trustee of the Sale and Servicing Agreement, the
Indenture and the Administration Agreement will not subject any of
the property or assets of the Trust or any portion thereof to any lien
created by or arising under the Indenture Trustee that is unrelated to
the transactions contemplated in such Agreements.
(j) You shall have received an opinion addressed to you and
(the Depositor) of ______________________, counsel to the Owner
Trustee, dated the Closing Date and satisfactory in form and
substance to you and your counsel, to the effect that:
(i) The Owner Trustee is a banking corporation duly incorporated
and validly existing under the laws of the State of ___________.
(ii) The Owner Trustee has the full corporate trust power
to accept the office of owner trustee under the Trust Agreement and
to enter into and perform its obligations under the Trust Agreement
and, on behalf of the Trust, under the Indenture, the Sale and Servicing
Agreement and the Administration Agreement.
(iii) The execution and delivery of the Trust
Agreement and, on behalf of the Trust, of the Indenture, the Sale
and Servicing Agreement, the Administration Agreement,
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<PAGE>
the Certificates and the Notes and the performance by the Owner Trustee
of its obligations under the Trust Agreement, the Indenture, the Sale and
Servicing Agreement and the Administration Agreement have been duly
authorized by all necessary corporate action of the Owner Trustee
and each has been duly executed and delivered by the Owner Trustee.
(iv) The Trust Agreement, the Sale and Servicing
Agreement, the Indenture and the Administration Agreement constitute
valid and binding obligations of the Owner Trustee enforceable against
the Owner Trustee in accordance with their terms under the laws of the
State of ______________________, the State of ___________ and the federal
law of the United States.
(v) The execution and delivery by the Owner Trustee of the
Trust Agreement and, on behalf of the Trust, of the Indenture, the Sale
and Servicing Agreement and the Administration Agreement do not require
any consent, approval or authorization of, or any registration or filing
with, any ___________ or United States federal governmental authority.
(vi) Each of the Certificates has been duly executed and
delivered by the Owner Trustee as owner trustee and authenticating
agent. Each of the Notes has been duly executed and delivered by
the Owner Trustee, on behalf of the Trust.
(vii) Neither the consummation by the Owner Trustee
of the transactions contemplated in the Sale and Servicing
Agreement, the Indenture, the Trust Agreement or the Administration
Agreement nor the fulfillment of the terms thereof by the Owner Trustee will
conflict with, result in a breach or violation of, or constitute a
default under any law or the charter, bylaws or other organizational
documents of the Owner Trustee or the terms of any indenture or other
agreement or instrument known to such counsel to which the Owner Trustee
or any of its subsidiaries is a party or is bound, or any judgment,
order or decree known to such counsel to be applicable to the Owner
Trustee or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over the Owner Trustee or any of its subsidiaries.
(viii) To the knowledge of such counsel there is no
action, suit or proceeding pending or threatened against the Owner
Trustee (as owner trustee under the Trust Agreement or in its individual
capacity) before or by any governmental authority that, if adversely
decided, would materially adversely affect the ability of the Owner
Trustee to perform its obligations under the Trust Agreement.
(ix) The execution, delivery and performance by the Owner
Trustee (as trustee under the Trust Agreement or in its individual
capacity, as the case may be) of the Sale and Servicing Agreement,
the Indenture, the Trust Agreement or the
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Administration Agreement will not subject any of the property or assets
of the Trust or any portion thereof to any lien created by or arising under
the Owner Trustee that is unrelated to the transactions contemplated in
such Agreements.
(k) You shall have received a certificate dated the Closing
Date of any of the Chairman of the Board, the President, the
Executive Vice President, any Vice President, the Treasurer, any
Assistant Treasurer, the principal financial officer or the
principal accounting officer of each of the Depositor and the
Company, in which such officers shall state that, to the best of
their knowledge after reasonable investigation, (i) the
representations and warranties of (the Depositor) or the Company,
as the case may be, contained in the Trust Agreement, the Purchase
Agreement and the Sale and Servicing Agreement, as applicable, are true
and correct; that (the Depositor) or the Company, as the case
may be, has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied under such
agreements at or prior to the Closing Date; that no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
are contemplated by the Commission and (ii) since September 30,
1994, except as may be disclosed in the Prospectus (and any
supplement thereto) or, no material adverse change or any
development involving a prospective material adverse change in or
affecting particularly the business or properties of the Trust,
(the Depositor), or the Company has occurred.
(l) You shall have received evidence satisfactory to you
that, on or before the Closing Date, UCC-1 financing statements
have been or are being filed in the office of the Secretary of
State of the States of ____________ and ___________ reflecting the
transfer of the interest of the Depositor in the Receivables and
the proceeds thereof to the Trust and the grant of the security
interest by the Trust in the Receivables and the proceeds thereof
to the Indenture Trustee.
(m) The Offered Notes shall have been rated ________ by
___________ and ________ by ____________.
(n) The issuance of the Notes and the Certificates shall not
have resulted in a reduction or withdrawal by any Rating Agency of
the current rating of any outstanding securities issued or
originated by the Depositor or any of its affiliates.
(o) On the Closing Date, $__________________ aggregate
principal amount of the Certificates shall have been issued and sold.
The Depositor will provide or cause to be provided to you such
conformed copies of such opinions, certificates, letters and
documents as you reasonably request.
8. Indemnification and Contribution. (a) The Depositor
--------------------------------
will indemnify and hold each Underwriter harmless against any
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<PAGE>
losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or the Exchange
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the
preliminary Basic Prospectus, the Collateral Materials, the
Preliminary Prospectus Supplement (if any), the Basic Prospectus or
the Prospectus or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse
each 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 the Depositor 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 the Depositor by
any Underwriter through you specifically for use therein.
For all purposes contemplated hereby, the Depositor and the
Underwriters each acknowledge that the Collateral Materials were
prepared by the Depositor.
(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Depositor against any losses,
claims, damages or liabilities to which the Depositor may become
subject, under the Act or the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement, the preliminary Basic Prospectus,
Preliminary Prospectus Supplement (if any), the Basic Prospectus or
the Prospectus or any amendment or supplement thereto, 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 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
relating to such Underwriter furnished to the Depositor by such
Underwriter through you specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the
Depositor in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are
incurred.
(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
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<PAGE>
omission so to notify the indemnifying party will not relieve it
from any liability that 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 and approval by the indemnified party of the counsel
appointed by the indemnifying party, 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.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) 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 subsection (a) or (b) above (i) in such proportion
as is appropriate to reflect the relative benefits received by the
Depositor on the one hand and the Underwriters on the other from
the offering of the Offered 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 the Depositor on the one hand and the Underwriters on the
other in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received
by the Depositor on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by
the Depositor bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall
be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Depositor or by the Underwriters 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 subsection (d) 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 that is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), no Underwriter (except as
may be provided in the agreement among Underwriters relating to the
offering of the Offered Notes) shall be required to contribute any
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<PAGE>
amount in excess of the underwriting discount or commission
applicable to the Offered Notes purchased by such Underwriter
hereunder. 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.
(e) The obligations of the Depositor under this Section shall
be in addition to any liability the Depositor may otherwise have
and shall extend, upon the same terms and conditions, to each
person, if any, who controls any of the Underwriters within the
meaning of the Act; and the obligations of the Underwriters under
this Section shall be in addition to any liability that the
respective Underwriters may otherwise have and shall extend, upon
the same terms and conditions, to each director of the Depositor,
to each officer of the Depositor who has signed the Registration
Statement and to each person, if any, who controls the Depositor
within the meaning of the Act.
9. Defaults of Underwriters. If any Underwriter or
------------------------
Underwriters default in their obligations to purchase the Offered
Notes hereunder on the Closing Date and arrangements satisfactory
to the Representative and the Depositor for the purchase of such
Offered Notes by other persons are not made within 36 hours after
such default, this Agreement will terminate without liability on
the part of any nondefaulting Underwriter or the Depositor, except
as provided in Section 11. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter
under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
10. No Bankruptcy Petition. Each Underwriter 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 against, or join any other
Person in instituting against, the Depositor any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings
or other proceedings under any federal or state bankruptcy or
similar law.
11. Survival of Representations and Obligations. The
-------------------------------------------
respective indemnities, agreements, representations, warranties and
other statements of the Depositor or the Company or any of their
officers, and each of the Underwriters set forth in or made
pursuant to this Agreement or contained in certificates of officers
of the Depositor submitted pursuant hereto shall remain operative
and in full force and effect, regardless of any investigation or
statement as to the results thereof made by or on behalf of any
Underwriter or the Depositor or any of their respective
representatives, officers or directors or any controlling person,
and will survive delivery of and payment for the Offered Notes. If
for any reason the purchase of the Offered Notes by the
Underwriters is not consummated, the Depositor shall remain
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responsible for the expenses to be paid or reimbursed by the
Depositor pursuant to Section 6 and the respective obligations of
the Depositor and the Underwriters pursuant to Section 9 shall
remain in effect. If for any reason the purchase of the Offered
Notes by the Underwriters is not consummated (other than because of
a failure to satisfy the conditions set forth in items (ii), (iv)
and (v) of Section 7(d)), the Depositor will reimburse any
Underwriter, upon demand, for all out-of-pocket expenses (including
fees and disbursements of counsel) reasonably incurred by it in
connection with the offering of the Offered Notes. Nothing
contained in this Section 11 shall limit the recourse of the
Depositor against the Underwriters.
12. Notices. All communications hereunder will be in writing
-------
and, if sent to the Underwriters, will be mailed, delivered or
telegraphed and confirmed to the Representative at
____________________________________________, Attention:
______________________; if sent to the Depositor, will
be mailed, delivered or telegraphed, and confirmed to it at
Financial Asset Securities Corp., ________________________________________,
provided, however, that any notice to an Underwriter pursuant to Section 8
will be mailed, delivered or telegraphed and confirmed to such Underwriter.
Any such notice will take effect at the time of receipt.
13. Successors. This Agreement will inure to the benefit of
----------
and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons
referred to in Section 8, and no other person will have any right
or obligations hereunder.
14. Representation of Underwriters. You will act for the
------------------------------
several Underwriters in connection with the transactions
contemplated by this Agreement, and any action under this Agreement
taken by you will be binding upon all the Underwriters.
15. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one
and the same Agreement.
16. Applicable Law. This Agreement will be governed by, and
--------------
construed in accordance with, the laws of the State of New York.
23
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed duplicate
hereof, whereupon it will become a binding agreement among the
Depositor and the several Underwriters in accordance with its
terms.
Very truly yours,
FINANCIAL ASSET SECURITIES CORP.
By: _______________________________
Name:
Title:
The foregoing Note Underwriting Agreement
is hereby confirmed and accepted
as of the date first written above:
__________________________________________,
as Representative of the Several Underwriters
By: _______________________________________
Name:
Title:
<PAGE>
SCHEDULE I
CLASS A-1 NOTES
PRINCIPAL AMOUNT OF
CLASS A-1 NOTE UNDERWRITERS THE CLASS A-1 NOTES
- --------------------------- -------------------
Total . . . . . . . . . . . . $___________________
CLASS A-2 NOTES
PRINCIPAL AMOUNT OF
CLASS A-2 NOTE UNDERWRITERS THE CLASS A-2 NOTES
- --------------------------- -------------------
Total . . . . . . . $____________________
<PAGE>
Exhibit 1.2
Form of Certificate Underwriting Agreement
FASCO AUTO TRUST 199_-_
_____% ASSET BACKED CERTIFICATES
FINANCIAL ASSET SECURITIES CORP.
CERTIFICATE UNDERWRITING AGREEMENT
----------------------------------
_____________, 199_
(Name of Underwriter), as Representative of
the Several Underwriters
(Address)
Ladies and Gentlemen:
1. Introductory. Financial Asset Securities Corp., a
------------
__________ corporation ("___" or the "Depositor"), proposes to
cause FASCO Auto Trust 199_-_ (the "Trust") to issue and sell
$____________________ principal amount of its _____% Asset Backed
Certificates (the "Certificates") to the several Underwriters named
in Schedule I hereto (the "Underwriters"), for whom you are acting
as representative (the "Representative"). The assets of the Trust
will include, among other things, a pool of motor vehicle retail
installment sale contracts or motor vehicle installment loans
secured by new and used automobiles, vans and light duty trucks
(the "Receivables"). The Receivables will be serviced for the
Trust by ________________ (in such capacity, the "Servicer"). The
Certificates will be issued pursuant to the Amended and Restated
Trust Agreement to be dated as of ______________, 199_ (as amended
and supplemented from time to time, the "Trust Agreement"), among
the Depositor, as depositor, ____________________, a __________
corporation (the "Company"), and ___________________, as owner
trustee (the "Owner Trustee").
Simultaneously with the issuance and sale of the Certificates
as contemplated herein, the Trust will issue $___________ principal
amount of its _______% Asset Backed Notes, Class A-1 (the
"Class A-1 Notes") and $___________ principal amount of its ____%
Asset Backed Notes, Class A-2 (the "Class A-2 Notes") and, together
with the Class A-1 Notes, the "Notes"). The Notes will be sold
pursuant to an underwriting agreement dated the date hereof (the
"Note Underwriting Agreement") between the Depositor and the
1
<PAGE>
underwriters named in Schedule I thereto. The Notes and
Certificates are sometimes referred to collectively herein as the
"Offered Securities".
The Depositor acknowledges that it will have furnished to the
Underwriters, for distribution to potential investors in the
Certificates prior to the date on which the Prospectus (as defined
in Section 2(a) below) is made available to such potential
investors, a term sheet in the form of Exhibit A hereto (the
"Collateral Materials").
Capitalized terms used and not otherwise defined herein shall
have the meanings assigned thereto in the Sale and Servicing
Agreement to be dated as of ______________, 199_ (as amended and
supplemented from time to time, the "Sale and Servicing
Agreement"), among the Trust, the Depositor and, ___________, as
servicer, or, if not defined therein, in the Trust Agreement or in
the Indenture to be dated as of ______________, 199_ (as amended
and supplemented from time to time, the "Indenture"), between the
Trust and __________________, as indenture trustee (the "Indenture
Trustee").
2. Representations and Warranties of the Depositor. The
-----------------------------------------------
Depositor represents and warrants to, and agrees with, each
Underwriter that:
(a) The Depositor meets the requirements for use of Form S-3
under the Securities Act of 1933, as amended (the "Act"), and has
filed with the Commission a registration statement (Registration
No. 33-__________) on such Form, including a related preliminary
basic prospectus and a preliminary prospectus supplement, for the
registration under the Act of the offering and sale of the Offered
Securities. The Depositor may have filed one or more amendments
thereto, each of which amendments has previously been furnished to
you. The Depositor will next file with the Commission (i) prior to
the effectiveness of such registration statement, an amendment
thereto (including the form of final basic prospectus and the form
of final prospectus supplement relating to the Offered Securities)
or (ii) after the effectiveness of such registration statement,
either (A) a final basic prospectus and a final prospectus
supplement relating to the Offered Securities in accordance with
Rules 430A and 424(b)(1) or (4) under the Act or (B) a final basic
prospectus and a final prospectus supplement relating to the
Offered Securities in accordance with Rules 415 and 424(b)(2) or
(5).
In the case of clauses (ii) (A) and (B), the Depositor has
included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules thereunder to be included in the
Prospectus with respect to the Offered Securities and the offering
thereof. As filed, such amendment and form of final prospectus
supplement, or such final prospectus supplement, shall include all
Rule 430A Information, together with all other required
information, with respect to the Notes and the Certificates and the
2
<PAGE>
offering thereof and, except to the extent that the Underwriters
shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and
other changes (beyond that contained in the latest preliminary
basic prospectus and preliminary prospectus supplement, if any,
that have previously been furnished to you) as the Depositor has
advised you, prior to the Execution Time, will be included or made
therein. If the Registration Statement contains the undertaking
specified by Regulation S-K Item 512(a), the Registration
Statement, at the Execution Time, meets the requirements set forth
in Rule 415(a)(1)(x).
For purposes of this Agreement, "Effective Time" means the
date and time as of which such registration statement, or the most
recent post-effective amendment thereto, if any, was declared
effective by the Commission, and "Effective Date" means the date of
the Effective Time. "Execution Time" shall mean the date and time
that this Agreement is executed and delivered by the parties
hereto. Such registration statement, as amended at the Effective
Time, including all information deemed to be a part of such
registration statement as of the Effective Time pursuant to
Rule 430A(b) under the Act, and including the exhibits thereto and
any material incorporated by reference therein, is hereinafter
referred to as the "Registration Statement". "Basic Prospectus"
shall mean any prospectus referred to above contained in the
Registration Statement at the Effective Date, including any
Preliminary Prospectus Supplement. "Preliminary Prospectus
Supplement" shall mean the preliminary prospectus supplement, if
any, to the Basic Prospectus which describes the Offered Securities
and the offering thereof and is used prior to the filing of the
Prospectus. "Prospectus" shall mean the prospectus supplement
relating to the Offered Securities that is first filed pursuant to
Rule 424(b) after the Execution Time, together with the Basic
Prospectus, as amended at the time of such filing, or, if no filing
pursuant to Rule 424(b) is required, shall mean the prospectus
supplement relating to the Offered Securities, including the Basic
Prospectus, included in the Registration Statement at the Effective
Date. "Rule 430A Information" means information with respect to
the Offered Securities and the offering of the Offered Securities
permitted to be omitted from the Registration Statement when it
becomes effective pursuant to Rule 430A. "Rule 415", "Rule 424",
"Rule 430A" and "Regulation S-K" refer to such rules or regulations
under the Act. Any reference herein to the Registration Statement,
a Preliminary Prospectus Supplement or the Prospectus shall be
deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the Effective Date of the
Registration Statement or the issue date of the Basic Prospectus,
such Preliminary Prospectus Supplement or the Prospectus, as the
case may be; and any reference herein to the terms "amend",
"amendment" or "supplement" with respect to the Registration
Statement, the Basic Prospectus, any Preliminary Prospectus
3
<PAGE>
Supplement or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement or the issue date of
the Basic Prospectus, any Preliminary Prospectus Supplement or the
Prospectus, as the case may be, deemed to be incorporated therein
by reference.
(b) On the Effective Date and on the date of this Agreement,
the Registration Statement did or will, and, when the Prospectus is
first filed (if required) in accordance with Rule 424(b) and on the
Closing Date, the Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of
the Act, the Exchange Act and the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the respective rules and
regulations of the Commission thereunder (the "Rules and
Regulations"); on the Effective Date, the Registration Statement
did not or will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading;
and, on the Effective Date, the Prospectus, if not filed pursuant
to Rule 424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date, the Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or 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;
provided, however, that the Depositor makes no representations or
warranties as to the information contained in or omitted from the
Registration Statement or the Prospectus or any supplement thereto
in reliance upon and in conformity with information furnished in
writing to the Depositor by any Underwriter through you
specifically for use in connection with preparation of the
Registration Statement or the Prospectus or any supplement thereto.
As of the Closing Date, the Depositor's representations and
warranties in the Sale and Servicing Agreement and the Trust
Agreement will be true and correct.
(c) This Agreement has been duly authorized, executed and delivered
by the Depositor.
(d) The Depositor's assignment and delivery of the
Receivables to the Trust will vest in the Trust all of the
Depositor's right, title and interest therein, subject to no prior
lien, mortgage, security interest, pledge, adverse claim, charge or
other encumbrance.
(e) The Trust's assignment of the Receivables to the
Indenture Trustee pursuant to the Indenture will vest in the
Indenture Trustee, for the benefit of the Noteholders, a first
priority perfected security interest therein, subject to no prior
lien, mortgage, security interest, pledge, adverse claim, charge or
other encumbrance.
(f) None of the Depositor, the Company or anyone acting on
behalf of the Depositor or the Company has taken any action that
4
<PAGE>
would require qualification of the Trust Agreement under the Trust
Indenture Act, or require registration of the Depositor, the
Company or the Trust under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), nor will the Depositor, or
the Company act, nor has either of them authorized or will either
of them authorize any person to act, in such manner.
3. Purchase, Sale, and Delivery of the Certificates. On the
------------------------------------------------
basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set
forth, the Depositor agrees to cause the Trust to sell to each
Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Trust, at a purchase price of
________________% of the principal amount thereof, the respective
principal amount of the Certificates set forth opposite the name of
such Underwriter in Schedule I hereto. Delivery of and payment for
the Certificates shall be made at the office of (Brown & Wood, One
World Trade Center, New York, New York 10048,) on ____________,
199_ (the "Closing Date"). Delivery of the Certificates shall be
made against payment of the purchase price in immediately available
funds drawn to the order of the Depositor. The Certificates to be
so delivered will be initially represented by one or more
Certificates registered in the name of Cede & Co., the nominee of
The Depository Trust Company ("DTC"). The interests of beneficial
owners of the Certificates will be represented by book entries on
the records of DTC and participating members thereof. Definitive
Certificates will be available only under limited circumstances.
4. Offering by Underwriters. It is understood that, after
------------------------
the Registration Statement becomes effective, the Underwriters
propose to offer the Certificates for sale to the public (which may
include selected dealers), as set forth in the Prospectus.
5. Covenants of the Depositor. The Depositor covenants and
--------------------------
agrees with each of the Underwriters that:
(a) The Depositor will use its best efforts to cause the
Registration Statement, and any amendment thereto, if not effective
at the Execution Time, to become effective. Prior to the
termination of the offering of the Certificates, the Depositor will
not file any amendment to the Registration Statement or supplement
to the Prospectus unless the Depositor has furnished you a copy for
your review prior to filing and will not file any such proposed
amendment or supplement to which you reasonably object. Subject to
the foregoing sentence, if the Registration Statement has become or
becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Depositor
will file the Prospectus, properly completed, and any supplement
thereto, with the Commission pursuant to and in accordance with the
applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to you of such
timely filing.
(b) The Depositor will advise you promptly of any proposal to
amend or supplement the Registration Statement, as filed, or the
5
<PAGE>
related Prospectus and will not effect such amendment or supplement
without your consent, which consent will not unreasonably be
withheld; the Depositor will also advise you promptly of any
request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for any additional
information; and the Depositor will also advise you promptly of the
effectiveness of the Registration Statement (unless the
Registration Statement has become effective prior to Execution
Time) and any amendment thereto, when the Prospectus, and any
supplement thereto, shall have been filed with the Commission
pursuant to Rule 424(b) and of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or the institution or threat of any proceeding for that
purpose, and the Depositor will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible
the lifting of any issued stop order.
(c) If, at any time when a prospectus relating to the
Certificates and the Notes is required to be delivered under the
Act, any event occurs as a result of which the Prospectus as then
amended or supplemented would 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 the circumstances under
which they were made, not misleading, or if it is necessary at any
time to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, the Depositor promptly will notify you
and will prepare and file, or cause to be prepared and filed, with
the Commission, subject to the second sentence of paragraph (a) of this
Section 5, an amendment or supplement that will correct such
statement or omission or effect such compliance. Any such filing
shall not operate as a waiver or limitation of any right of any
Underwriter hereunder.
(d) As soon as practicable, but not later than sixteen months
after the Closing Date, the Depositor will cause the Trust to make
generally available to Certificateholders an earnings statement of
the Trust covering a period of at least twelve months beginning
after the Closing Date that will satisfy the provisions of
Section 11(a) of the Act.
(e) The Depositor will furnish to the Underwriters copies of
the Registration Statement (one of which will be signed and will
include all exhibits), each related preliminary prospectus
(including the Preliminary Prospectus Supplement, if any), the
Prospectus and all amendments and supplements to such documents, in
each case as soon as available and in such quantities as the
Underwriters request.
(f) The Depositor will arrange for the qualification of the
Certificates for sale under the laws of such jurisdictions in the
United States as you may reasonably designate and will continue
such qualifications in effect so long as required for the
distribution.
6
<PAGE>
(g) For a period from the date of this Agreement until the
retirement of the Certificates, or until such time as the
Underwriters shall cease to maintain a secondary market in the
Certificates, whichever occurs first, the Depositor will deliver to
you the annual statements of compliance and the annual independent
certified public accountants' reports furnished to the Indenture
Trustee or the Owner Trustee pursuant to the Sale and Servicing
Agreement, as soon as such statements and reports are furnished to
the Indenture Trustee or the Owner Trustee.
(h) So long as any of the Certificates is outstanding, the
Depositor will furnish to you (i) as soon as practicable after the
end of the fiscal year all documents required to be distributed to
Certificateholders or filed with the Commission pursuant to the
Exchange Act or any order of the Commission thereunder and
(ii) from time to time, any other information concerning the
Depositor filed with any government or regulatory authority that is
otherwise publicly available, as you may reasonably request.
(i) On or before the Closing Date, the Depositor shall cause
its computer records relating to the Receivables to be marked to
show the Trust's absolute ownership of the Receivables, and from
and after any Closing Date, the Depositor shall not take any action
inconsistent with the Trust's ownership of such Receivables, other
than as permitted by the Sale and Servicing Agreement.
(j) To the extent, if any, that the rating provided with
respect to the Certificates by the rating agency or agencies that
initially rate the Certificates is conditional upon the furnishing
of documents or the taking of any other actions by the Depositor,
the Depositor shall furnish such documents and take any such other
actions.
(k) For the period beginning on the date of this Agreement
and ending on the Closing Date, unless waived by the Underwriters,
neither the Depositor nor any trust originated, directly or
indirectly, by the Depositor will offer to sell or sell notes
(other than the Notes) collateralized by, or certificates (other
than the Certificates) evidencing an ownership interest in,
receivables generated pursuant to retail automobile or light duty
truck installment sale contracts in such a manner as would
constitute a public offering to persons in the United States.
6. Payment of Expenses. The Depositor will pay all expenses
-------------------
incident to the performance of its obligations under this
Agreement, including (i) the printing and filing of the
Registration Statement as originally filed and of each amendment
thereto, (ii) the preparation of this Agreement, (iii) the
preparation, issuance and delivery of the Certificates to the
Underwriters, (iv) the fees and disbursements of the Depositor's
counsel and accountants, (v) the qualification of the Certificates
under securities laws in accordance with the provisions of
Section 5(f), including filing fees and the fees and disbursements
of counsel for you in connection therewith and in connection with
the preparation of any blue sky or legal investment survey,
7
<PAGE>
(vi) the printing and delivery to the Underwriters of copies of the
Registration Statement as originally filed and of each amendment
thereto, (vii) the printing and delivery to the Underwriters of
copies of any blue sky or legal investment survey prepared in
connection with the Certificates, (viii) any fees charged by rating
agencies for the rating of the Certificates, (ix) the fees and
expenses, if any, incurred with respect to any filing with the
National Association of Securities Dealers, Inc., and (x) the fees
and expenses of Brown & Wood in its role as counsel to the Trust
incurred as a result of providing the opinions required by
Section 7(g) and the second sentence of Section 7(h) hereof.
7. Conditions to the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the Underwriters to purchase and pay for the
Certificates will be subject to the accuracy of the representations
and warranties on the part of the Depositor herein, to the accuracy
of the statements of officers of the Depositor made pursuant to the
provisions hereof, to the performance by the Depositor of its
obligations hereunder and to the following additional conditions
precedent:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Underwriters agree in
writing to a later time, the Registration Statement shall have
become effective not later than (i) 6:00 P.M. New York City time on
the date of determination of the public offering price, if such
determination occurred at or prior to 3:00 P.M. New York City time
on such date or (ii) 12:00 noon on the business day following the
day on which the public offering price was determined, if such
determination occurred after 3:00 P.M. New York City time on such
date.
(b) The Prospectus and any supplements thereto shall have
been filed (if required) with the Commission in accordance with the
Rules and Regulations and Section 5(a) hereof, and prior to the
Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or, to the knowledge of
the Depositor or you, shall be contemplated by the Commission or by
any authority administering any state securities or blue sky law.
(c) On or prior to the Closing Date, you shall have received
a letter, dated as of the Closing Date, of ____________, certified
public accountants, substantially in the form of the drafts to
which you have previously agreed and otherwise in form and
substance satisfactory to you and your counsel.
(d) Subsequent to the execution and delivery of this
Agreement or, if earlier, the dates as of which information is
given in the Registration Statement (exclusive of any amendment
thereto) and the Prospectus (exclusive of any supplement thereto),
there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting particularly the
business or properties of the Trust, the Depositor, or the Company
which, in the judgment of the Underwriters, materially impairs the
8
<PAGE>
investment quality of the Certificates or makes it impractical or
inadvisable to market the Certificates; (ii) 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; (iii) any suspension of trading of any securities of
Chrysler Corporation or the Depositor on any exchange or in the
over-the-counter market; (iv) any banking moratorium declared by
federal or New York authorities; 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 or emergency if, in the judgment of the
Underwriters, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the sale of and payment
for the Certificates.
(e) You shall have received an opinion of ____________,
____________ and (General Counsel) of (the Depositor) and the Company,
addressed to you and the Indenture Trustee, dated the Closing Date
and satisfactory in form and substance to you and your counsel, to
the effect that:
(i) (The Depositor) has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Michigan with full power and authority (corporate
and other) to own its properties and conduct its business as presently
conducted by it, and to enter into and perform its obligations under this
Agreement, the Note Underwriting Agreement, the Sale and Servicing
Agreement, the Purchase Agreement, the Trust Agreement and the
Administration Agreement, and had at all times, and now has, the power,
authority and legal right to acquire, own, sell and service the Receivables.
(ii) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of ____________ with full power and authority (corporate and
other) to own its properties and conduct its business as presently conducted
by it, and to enter into and perform its obligations under the Trust
Agreement and the Purchase Agreement, and had at all times, and now has,
the power, authority and legal right to acquire, own, sell and hold the
excess cash flow from the Reserve Account.
(iii) Each of (the Depositor) and the Company is duly
qualified to do business and is in good standing, and has obtained
all necessary licenses and approvals, in each jurisdiction in which
failure to qualify or to obtain such licenses or approvals would render any
Receivable unenforceable by the Depositor, the Owner Trustee or the
Indenture Trustee.
(iv) The direction by the Depositor to the Owner Trustee
to authenticate the Certificates has been duly authorized by
9
<PAGE>
the Depositor and, when the Certificates have been duly
executed, authenticated and delivered by the Owner Trustee in
accordance with the Trust Agreement and delivered and paid for
pursuant to this Agreement, the Certificates will be duly issued and
entitled to the benefits and security afforded by the Trust Agreement,
subject as to the enforcement of remedies (x) to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights generally and (y) to general principles of equity
(regardless of whether the enforcement of such remedies is considered
in a proceeding in equity or at law).
(v) The direction by the Depositor to the Indenture
Trustee to authenticate the Notes has been duly authorized by the
Depositor, and when the Notes have been duly executed and delivered
by the Owner Trustee and authenticated by the Indenture Trustee in
accordance with the Indenture and delivered and paid for pursuant
to the Note Underwriting Agreement, the Notes will be duly issued and
entitled to the benefits and security afforded by the Indenture, subject as
to the enforcement of remedies (x) to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and (y) to general principles of equity (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(vi) The Purchase Agreement, the Trust Agreement, the
Sale and Servicing Agreement, and the Administration Agreement have
been duly authorized, executed and delivered by (the Depositor) and
are legal, valid and binding obligations of (the Depositor) enforceable
against (the Depositor) in accordance with their terms, except (x) the
enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (y) 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.
(vii) This Agreement and the Note Underwriting Agreement
have been duly authorized, executed and delivered by the Depositor.
(viii) The Purchase Agreement and the Trust Agreement
have been duly authorized, executed and delivered by the Company and are the
legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except (x) the enforceability thereof
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
(y) the remedy of specific performance and injunctive and other forms of
equitable relief may be
10
<PAGE>
subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(ix) Neither the transfer of the Receivables from the
Depositor to the Trust, nor the assignment of the Owner Trust
Estate to the Trust, nor the grant of the security interest in the
Collateral to the Indenture Trustee pursuant to the Indenture, nor
the execution and delivery of the Note Underwriting Agreement, this
Agreement, the Purchase Agreement, the Trust Agreement, the Sale and
Servicing Agreement or the Administration Agreement by (the Depositor), nor
the execution and delivery of the Trust Agreement and the Purchase Agreement
by the Company, nor the consummation of any transactions contemplated in the
Note Underwriting Agreement, this Agreement, the Purchase Agreement, the
Trust Agreement, the Indenture, the Administration Agreement or the Sale and
Servicing Agreement (such agreements, excluding the Note Underwriting
Agreement and this Agreement, being, collectively, the "Basic Documents"),
nor the fulfillment of the terms thereof by (the Depositor), the
Company or the Trust, as the case may be, will conflict with, or
result in a breach, violation or acceleration of, or constitute a default
under, any term or provision of the articles of incorporation or bylaws
of the Depositor or the Company, or of any indenture or other agreement or
instrument to which the Depositor or the Company is a party or by which
either of them is bound, or result in a violation of or contravene the terms
of any statute, order or regulation applicable to the Depositor or
the Company of any court, regulatory body, administrative agency or
governmental body having jurisdiction over either of them.
(x) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due
inquiry, threatened before any court, administrative agency or
other tribunal (1) asserting the invalidity of the Trust or any of
the Basic Documents, (2) seeking to prevent the consummation of any
of the transactions contemplated by any of the Basic Documents or
the execution and delivery thereof, (3) that might materially and
adversely affect the performance by (the Depositor) of its obligations under,
or the validity or enforceability of, the Note Underwriting Agreement, this
Agreement, the Purchase Agreement, the Trust Agreement, the Sale and
Servicing Agreement, or the Administration Agreement, or, (4) that might
materially and adversely affect the performance by the Company of its
obligations under, or the validity or enforceability of, the Purchase
Agreement or the Trust Agreement.
(xi) To the best knowledge of such counsel and except as
set forth in the Prospectus (and any supplement thereto), no
default exists and no event has occurred which, with notice, lapse
of time or both, would constitute a default in the due performance
and observance of any term, covenant or condition of any agreement
to which the Depositor or the Company is a
11
<PAGE>
party or by which either of them is bound, which default is or
would have a material adverse effect on the financial condition, earnings,
prospects, business or properties of the Depositor and its subsidiaries,
taken as a whole.
(xii) Nothing has come to such counsel's attention that
would lead such counsel to believe that the representations and warranties of
(x) the Company contained in the Purchase Agreement and the Trust Agreement
are other than as stated therein or (y) (the Depositor) contained in this
Agreement, the Note Underwriting Agreement, the Trust Agreement or the Sale
and Servicing Agreement are other than as stated therein.
(xiii) The Depositor is the sole owner of all right,
title and interest in, and has good and marketable title to, the Receivables
and the other property to be transferred by it to the Trust. The assignment
of the Receivables, all documents and instruments relating thereto and all
proceeds thereof to the Trust, pursuant to the Sale and Servicing Agreement,
vests in the Trust all interests that are purported to be conveyed thereby,
free and clear of any liens, security interests or encumbrances except as
specifically permitted pursuant to the Sale and Servicing Agreement
or any other Basic Document.
(xiv) Immediately prior to the transfer of the
Receivables to the Trust, the Depositor's interest in the
Receivables, the security interests in the Financed Vehicles
securing the Receivables and the proceeds of each of the foregoing
was perfected and constituted a perfected first priority interest
therein.
(xv) The Indenture constitutes a grant by the Trust to
the Indenture Trustee of a valid security interest in the
Receivables, the security interests in the Financed Vehicles
securing the Receivables and the proceeds of each of the foregoing,
which security interest will be perfected upon the filing of the UCC-1
financing statements with the Secretary of State of the State
of ____________ and the State of ____________ and will constitute
a first priority perfected security interest therein. No filing or
other action, other than the filing of the UCC-1 financing statements with
the Secretary of State of the State of ____________ and the State of
____________ referred to above, is necessary to perfect and maintain the
interest or the security interest of the Indenture Trustee in the
Receivables, the security interests in the Financed Vehicles securing the
Receivables and the proceeds of each of the foregoing against third parties.
(xvi) The Receivables are chattel paper as defined in
the UCC.
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(xvii) The Sale and Servicing Agreement, the Trust
Agreement, the Indenture, the Purchase Agreement and the
Administration Agreement conform in all material respects with the
descriptions thereof contained in the Prospectus (and any
supplement thereto).
(xviii) The statements in the Prospectus under the
headings "Risk Factors -- Certain Legal Aspects -- Security
Interests in Financed Vehicles" and "-- Insolvency Considerations"
and "Certain Legal Aspects of the Receivables", to the extent they
constitute matters of law or legal conclusions with respect thereto, have
been reviewed by such counsel and are correct in all
material respects.
(xix) The statements contained in the Prospectus and any
supplement thereto under the headings "Description of the Notes",
"Description of the Certificates" and "Description of the Transfer
and Servicing Agreements", insofar as such statements constitute a
summary of the Certificates, the Notes, the Indenture, the Administration
Agreement, the Purchase Agreement, the Sale and Servicing Agreement and the
Trust Agreement, constitute a fair summary of such documents.
(xx) No consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required
for the consummation of the transactions contemplated in the Basic
Documents, except such filings with respect to the transfer of the
Receivables to the Trust pursuant to the Sale and Servicing Agreement, the
grant of a security interest in the Collateral to the Indenture Trustee
pursuant to the Indenture and such other approvals as have been obtained and
filings as have been made.
(xxi) Such counsel is familiar with the Depositor's
standard operating procedures relating to the Depositor's
acquisition of a perfected first priority security interest in the
vehicles financed by the Servicer pursuant to retail automobile and
light duty truck installment sale contracts in the ordinary course
of the Depositor's business. Assuming that the Depositor's standard
procedures are followed with respect to the perfection of
security interests in the Financed Vehicles (and such counsel has
no reason to believe that the Depositor has not followed or will not
continue to follow its standard procedures in connection with
the perfection of security interests in the Financed Vehicles), the
Depositor has acquired or will acquire a perfected first priority
security interest in the Financed Vehicles.
(xxii) All actions required to be taken and all filings
required to be made under the Act and the Exchange Act prior to the
sale of the Certificates have been duly taken or made.
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<PAGE>
(xxiii) The Trust Agreement is not required to be
qualified under the Trust Indenture Act and the Trust is not
required to be registered under the Investment Company Act.
(xxiv) The Indenture has been duly qualified under the
Trust Indenture Act.
(xxv) The Depositor is not, and will not as a result of
the offer and sale of the Certificates as contemplated in the
Prospectus (and any supplement thereto) and this Agreement or of the Notes as
contemplated in the Prospectus (and any supplement thereto) and the Note
Underwriting Agreement become, an "investment company" as defined in the
Investment Company Act or a company "controlled by" an "investment company"
within the meaning of the Investment Company Act.
(xxvi) To the best of such counsel's knowledge and
information, there are no legal or governmental proceedings pending
or threatened that are required to be disclosed in the Registration
Statement, other than those disclosed therein.
(xxvii) To the best of such counsel's knowledge and
information, there are no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed or incorporated by reference
as exhibits thereto, the descriptions thereof or references thereto are
correct, and no default exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument so described, referred to, filed or incorporated by reference.
(xxviii) The Registration Statement has become effective
under the Act, any required filing of the Basic Prospectus, any preliminary
Basic Prospectus, any Preliminary Prospectus Supplement and the Prospectus,
and any supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b), and, to the best
knowledge of such counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings for that
purpose have been instituted or are pending or contemplated under
the Act, and the Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective effective or issue
dates, complied as to form in all material respects with the requirements of
the Act, the Exchange Act, the Trust Indenture Act and the Rules and
Regulations.
(xxix) Such counsel has examined the Registration
Statement and the Prospectus and nothing has come to such counsel's
attention that would lead such counsel to believe that the Registration
Statement or the Prospectus or any
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<PAGE>
amendment or supplement thereto as of the respective dates thereof (other
than the financial statements and other financial and statistical
information contained therein, as to which such counsel need not express
any view) contains an untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements therein not
misleading.
(xxx) The Trust has been duly formed and is validly
existing as a statutory business trust and is in good standing
under the laws of the State of ____________, with full power and authority to
execute, deliver and perform its obligations under the
Sale and Servicing Agreement, the Indenture, the Administration Agreement,
and the Notes and the Certificates.
(xxxi) The Indenture, the Sale and Servicing Agreement
and the Administration Agreement have been duly authorized and, when duly
executed and delivered by the Owner Trustee, will constitute the legal, valid
and binding obligations of the Trust, enforceable against the Trust in
accordance with their terms, except (x) the enforceability thereof may be
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
(y) 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.
(((f) You shall have received an opinion of ____________,
____________ and (General Counsel) of CFC and the Company,
addressed to you and the Indenture Trustee, dated the Closing Date
and satisfactory in form and substance to you and your counsel, to
the effect that the statements in the Basic Prospectus under the
heading "Certain State Tax Consequences with respect to Trusts for
which a Partnership Election Is Made" and in the Prospectus
Supplement under the heading "Summary of Terms -- Tax Status" (to
the extent relating to ____________ tax consequences) accurately
describe the material ____________ tax consequences to holders of
the Securities.))
(g) You shall have received an opinion addressed to you of
Brown & Wood, in its capacity as federal tax counsel to the Trust,
to the effect that the statements in the Basic Prospectus under the
headings "Certain Federal Income Tax Consequences" and in the
Prospectus Supplement under the heading "Summary of Terms -- Tax
Status" (to the extent relating to federal income tax consequences)
and "Certain Federal Tax Consequences" accurately describe the
material federal income tax consequences to holders of the
Securities.
(h) You shall have received an opinion addressed to you of
Brown & Wood, in its capacity as special counsel to the
Underwriters, dated the Closing Date, with respect to the validity
of the Certificates and the Notes and such other related matters as
15
<PAGE>
you shall require, and the Depositor shall have furnished or caused
to be furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon
such matters. Brown & Wood, in its capacity as special ERISA
counsel to the Trust, shall also have delivered an opinion with
respect to the characterization of the transfer of the Receivables
and to the effect that the statements in the Basic Prospectus and
in the Prospectus Supplement under the heading "ERISA
Considerations", to the extent that they constitute statements of
matters of law or legal conclusions with respect thereto, have been
prepared or reviewed by such counsel and accurately describe the
material consequences to holders of the Securities under ERISA.
(i) You shall have received an opinion addressed to you and
(the Depositor) of ____________, counsel to the Owner Trustee,
dated the Closing Date and satisfactory in form and substance to
you and your counsel, to the effect that:
(i) The Owner Trustee is a banking corporation duly
incorporated and validly existing under the laws of the State of
________________.
(ii) The Owner Trustee has the full corporate trust power
to accept the office of owner trustee under the Trust Agreement and
to enter into and perform its obligations under the Trust Agreement
and, on behalf of the Trust, under the Indenture, the Sale and
Servicing Agreement and the Administration Agreement.
(iii) The execution and delivery of the Trust Agreement
and, on behalf of the Trust, of the Indenture, the Sale and
Servicing Agreement, the Administration Agreement, the Certificates
and the Notes and the performance by the Owner Trustee of its obligations
under the Trust Agreement, the Indenture, the Sale and Servicing Agreement
and the Administration Agreement have been duly authorized by all necessary
corporate action of the Owner Trustee and each has been duly executed and
delivered by the Owner Trustee.
(iv) The Trust Agreement, the Sale and Servicing
Agreement, the Indenture and the Administration Agreement
constitute valid and binding obligations of the Owner Trustee
enforceable against the Owner Trustee in accordance with their
terms under the laws of the State of ________________, the State of
____________ and the federal law of the United States.
(v) The execution and delivery by the Owner Trustee of
the Trust Agreement and, on behalf of the Trust, of the Indenture,
the Sale and Servicing Agreement and the Administration Agreement
do not require any consent, approval or authorization of, or any
registration or filing with, any ____________ or United States federal
governmental authority.
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(vi) Each of the Certificates has been duly executed and
delivered by the Owner Trustee as owner trustee and authenticating
agent. Each of the Notes has been duly executed and delivered by
the Owner Trustee, on behalf of the Trust.
(vii) Neither the consummation by the Owner Trustee
of the transactions contemplated in the Sale and Servicing
Agreement, the Indenture, the Trust Agreement or the Administration
Agreement nor the fulfillment of the terms thereof by the Owner Trustee will
conflict with, result in a breach or violation of, or constitute a default
under any law or the charter, bylaws or other organizational documents of
the Owner Trustee or the terms of any indenture or other agreement or
instrument known to such counsel to which the Owner Trustee or any of its
subsidiaries is a party or is bound, or any judgment, order or decree known
to such counsel to be applicable to the Owner Trustee or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Owner Trustee
or any of its subsidiaries.
(viii) To the knowledge of such counsel there is no
action, suit or proceeding pending or threatened against the Owner
Trustee (as owner trustee under the Trust Agreement or in its individual
capacity) before or by any governmental authority that, if adversely
decided, would materially adversely affect the ability of the Owner
Trustee to perform its obligations thereunder.
(ix) The execution, delivery and performance by the Owner
Trustee (as trustee under the Trust Agreement or in its individual
capacity, as the case may be) of the Sale and Servicing Agreement,
the Indenture, the Trust Agreement or the Administration Agreement
will not subject any of the property or assets of the Trust or any
portion thereof to any lien created by or arising under the Owner
Trustee that is unrelated to the transactions contemplated in such
Agreements.
(j) You shall have received a certificate dated the Closing
Date of any of the Chairman of the Board, the President, the
Executive Vice President, any Vice President, the Treasurer, any
Assistant Treasurer, the principal financial officer or the
principal accounting officer of each of the Depositor and the
Company ,in which such officers shall state that, to the best of
their knowledge after reasonable investigation, (i) the
representations and warranties of (the Depositor) or the Company,
as the case may be, contained in the Trust Agreement, the Purchase
Agreement and the Sale and Servicing Agreement, as applicable, are
true and correct, that (the Depositor) or the Company, as the case
may be, has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied under such
agreements at or prior to the Closing Date, that no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
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<PAGE>
are contemplated by the Commission and (ii) since ____________,
except as may be disclosed in the Prospectus (and any supplement
thereto) or, no material adverse change, or any development
involving a prospective material adverse change, in or affecting
particularly the business or properties of the Trust, (the
Depositor) or the Company has occurred.
(k) You shall have received evidence satisfactory to you
that, on or before the Closing Date, UCC-1 financing statements
have been or are being filed in the office of the Secretary of
State of the States of ________________ and ____________
reflecting the transfer of the interest of the Depositor in the
Receivables and the proceeds thereof to the Trust and the grant of
the security interest by the Trust in the Receivables and the
proceeds thereof to the Indenture Trustee.
(l) The Certificates shall have been rated "____" by
________________________ and by ________________________.
(m) The issuance of the Notes and the Certificates shall not
have resulted in a reduction or withdrawal by any Rating Agency of
the current rating of any outstanding securities issued or originated
by the Depositor or any of its affiliates.
(n) On the Closing Date, $______________ aggregate principal
amount of the Notes shall have been issued and sold.
The Depositor will provide or cause to be provided to you such
conformed copies of such opinions, certificates, letters and
documents as you reasonably request.
8. Indemnification and Contribution. (a) The Depositor
--------------------------------
will indemnify and hold each Underwriter harmless against any
losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or the Exchange
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the
preliminary Basic Prospectus, the Collateral Materials, the
Preliminary Prospectus Supplement (if any), the Basic Prospectus or
the Prospectus or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse
each 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 the Depositor 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 the Depositor by
any Underwriter through you specifically for use therein.
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For all purposes contemplated hereby, the Depositor and the
Underwriters each acknowledge that the Collateral Materials were
prepared by the Depositor.
(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Depositor against any losses,
claims, damages or liabilities to which the Depositor may become
subject, under the Act or the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement, the preliminary Basic Prospectus, the
Preliminary Prospectus Supplement (if any), the Basic Prospectus or
the Prospectus or any amendment or supplement thereto, 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 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
relating to such Underwriter furnished to the Depositor by such
Underwriter through you specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the
Depositor in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are
incurred.
(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 that 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 and approval by the indemnified party of the counsel
appointed by the indemnifying party, 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.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified
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<PAGE>
party as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above (i) in such proportion
as is appropriate to reflect the relative benefits received by the
Depositor on the one hand and the Underwriters 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 the Depositor on the one hand and the Underwriters on the
other in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received
by the Depositor on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by
the Depositor bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall
be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Depositor or by the Underwriters 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 subsection (d) 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 that is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), no Underwriter (except as
may be provided in the agreement among Underwriters relating to the
offering of the Certificates) shall be required to contribute any
amount in excess of the underwriting discount or commission
applicable to the Certificates purchased by such Underwriter
hereunder. 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.
(e) The obligations of the Depositor under this Section shall
be in addition to any liability that the Depositor may otherwise
have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any of the Underwriters within the
meaning of the Act; and the obligations of the Underwriters under
this Section shall be in addition to any liability that the
respective Underwriters may otherwise have and shall extend, upon
the same terms and conditions, to each director of the Depositor,
to each officer of the Depositor who has signed the Registration
Statement and to each person, if any, who controls the Depositor
within the meaning of the Act.
9. Defaults of Underwriters. If any Underwriter or
------------------------
Underwriters default in their obligations to purchase the
Certificates hereunder on the Closing Date and arrangements
satisfactory to the Representative and the Depositor for the
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<PAGE>
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 any nondefaulting Underwriter or the
Depositor, except as provided in Section 11. As used in this
Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section. Nothing herein will relieve
a defaulting Underwriter from liability for its default.
10. No Bankruptcy Petition. Each Underwriter 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 against, or join any other
Person in instituting against, the Depositor any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings
or other proceedings under any federal or state bankruptcy or
similar law.
11. Survival of Representations and Obligations. The
-------------------------------------------
respective indemnities, agreements, representations, warranties and
other statements of the Depositor or the Company or any of their
officers, and each of the Underwriters set forth in or made
pursuant to this Agreement or contained in certificates of officers
of the Depositor submitted pursuant hereto shall remain operative
and in full force and effect, regardless of any investigation or
statement as to the results thereof made by or on behalf of any
Underwriter or the Depositor or any of their respective
representatives, officers or directors or any controlling person,
and will survive delivery of and payment for the Certificates. If
for any reason the purchase of the Certificates by the Underwriters
is not consummated, the Depositor shall remain responsible for the
expenses to be paid or reimbursed by the Depositor pursuant to
Section 6 and the respective obligations of the Depositor and the
Underwriters pursuant to Section 8 shall remain in effect. If for
any reason the purchase of the Certificates by the Underwriters is
not consummated (other than because of a failure to satisfy the
conditions set forth in items (ii), (iv) and (v) of Section 7(d)),
the Depositor will reimburse any Underwriter, upon demand, for all
out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by it in connection with the offering
of the Certificates. Nothing contained in this Section 11 shall
limit the recourse of the Depositor against the Underwriters.
12. Notices. All communications hereunder will be in writing
-------
and, if sent to the Underwriters, will be mailed, delivered or
telegraphed and confirmed to the Representative at ________________
_____________________, Attention: ______________________; if sent
to the Depositor, will be mailed, delivered or telegraphed, and
confirmed to it at Financial Asset Securities Corp., ______________
___________________________, Attention: ______________________;
provided, however, that any notice to an Underwriter pursuant to
Section 8 will be mailed, delivered or telegraphed and confirmed to
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such Underwriter. Any such notice will take effect at the time of
receipt.
13. Successors. This Agreement will inure to the benefit of
----------
and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons
referred to in Section 8, and no other person will have any right
or obligations hereunder.
14. Representation. You will act for the several
--------------
Underwriters in connection with the transactions contemplated by
this Agreement, and any action under this Agreement taken by you
will be binding upon all the Underwriters.
15. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one
and the same Agreement.
16. Applicable Law. This Agreement will be governed by, and
--------------
construed in accordance with, the laws of the State of New York.
22
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed duplicate
hereof, whereupon it will become a binding agreement among the
Depositor and the several Underwriters in accordance with its
terms.
Very truly yours,
FINANCIAL ASSET SECURITIES CORP.
By: _________________________________
Name:
Title:
The foregoing Certificate Underwriting Agreement
is hereby confirmed and accepted
as of the date first written above:
____________________________________________,
as Representative of the Several Underwriters
By: ________________________________________
Name:
Title:
<PAGE>
SCHEDULE I
PRINCIPAL AMOUNT
CERTIFICATE UNDERWRITERS OF CERTIFICATES
- ------------------------ ----------------
<PAGE>
Exhibit 3.1
AMENDED RESTATED CERTIFICATE OF INCORPORATION
OF
FINANCIAL ASSET SECURITIES CORP.
Pursuant to Sections 241 and 245 of Title 8
of the Delaware Code of 1953, as Amended
Financial Asset Securities Corp., originally incorporated on
August 2, 1995 in the State of Delaware, hereby restates and
further amends its said Certificate of Incorporation.
I, the undersigned, on behalf of Greenwich Capital Holdings,
Inc., the sole shareholder of the Corporation, a corporation
organized under and by virtue of the General Corporation Law of the
State of Delaware, do hereby amend and restate the Certificate of
Incorporation of the Corporation and it is hereby
RESOLVED, that in accordance with Section 245 of Title 8 of
the Delaware Code of 1953, as amended, the Certificate of
Incorporation of this Corporation be amended and restated in its
entirety as follows:
ARTICLE I
NAME
The name of the Corporation is Financial Asset Securities
Corp.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The registered office of the Corporation in the State of
Delaware is located at 1013 Centre Road in the City of Wilmington,
County of New Castle 19805. The name of the Corporation's
registered agent is Corporation Service Company.
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ARTICLE III
CORPORATE PURPOSE
The purpose of the Corporation is to engage in the following
activities:
(a) to acquire, own, hold, sell, transfer, assign, pledge or
otherwise deal with securities, certificates, notes, loans,
receivables, accounts, sales contracts, royalties, leases,
lease payments or present or future rights to income or other payments
of any kind whatsoever (collectively, "Cash Flow Assets"),
together, in each case, with any related collateral security,
guarantees and other forms of support (collectively,
"Related Security");
(b) to loan the funds of the Corporation to any person
under loan agreements or other arrangements which may be secured,
in whole or in part, by collateral of any kind whatsoever;
(c) To establish trusts, partnerships or other entities
for the purpose of issuing or otherwise dealing with Cash Flow
Assets and Related Security; and
(d) to engage in any lawful act or activity for which
corporations may be organized under the laws of the State of
Delaware, so long as the same are incidental to or necessary or
convenient to accomplish the purposes specified in paragraphs (a),
(b) and (c) of this Article III.
ARTICLE IV
CAPITAL STOCK
The total number of shares of capital stock which the
Corporation shall have authority to issue one thousand (1,000)
shares designated as Common Stock and the par value of each such
share of Common Stock is one dollar ($1.00), amounting in the
aggregate to one thousand dollars ($1,000.00).
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ARTICLE V
INCORPORATOR
The name and mailing address of the sole incorporator is John
Anderson, care of Greenwich Capital Holdings, Inc., 600 Steamboat
Road, Greenwich, Connecticut 06830.
ARTICLE VI
CORPORATE GOVERNANCE
The following provisions shall govern management of the
business and the conduct of the affairs of the Corporation, and for
further definition, shall limit and regulate the powers of the
Corporation and the powers of its directors and stockholders:
(a) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
(b) In furtherance and not in limitation of the powers
conferred by statutes, the Board of Directors shall have concurrent
power with the stockholders to make, alter, amend, change, add to
or repeal the bylaws of the Corporation.
(c) The number of directors of the Corporation shall be
no fewer than one and no greater than six and the exact number
shall be as from time to time fixed by, or in the manner provided
in, the bylaws of the Corporation. Election of directors need not
be by written ballot unless the bylaws so provide. At all times,
at least one of the directors (the "Outside Director") serving on
the Board of Directors shall not be an officer or employee of the
Corporation or a director, officer or employee of any direct or
indirect parent of the Corporation or of any affiliate of any such
parent.
(d) In addition to the powers and authority hereinabove
or by statute expressly conferred upon them, the Board of Directors
is hereby empowered to exercise all such powers
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and do all such acts and things as may be exercised or done by
the Corporation, subject nevertheless to the provisions of the
General Corporation Law of the State of Delaware (the "General
Corporation Law"), this Certificate of Incorporation and the bylaws
of the Corporation; provided, however, that no bylaw hereafter adopted
------- ------
by the stockholders shall invalidate any prior act of the Board of
Directors that would have been valid if such bylaw had not been
adopted. The Corporation's Board of Directors shall duly authorize
all of the Corporation's actions. Notwithstanding any other provisions
of this Certificate of Incorporation, a vacancy in the directorship
filled by an Outside Director shall not limit or otherwise restrict
the Board of Directors from taking any action which it is otherwise
authorized to take hereunder or under applicable law, except any
action described in Article IX.
(e) The Corporation's funds and other assets will not be
commingled with those of any of its stockholders or of any direct
or indirect parent of the Corporation or of any affiliate of any
such parent.
(f) The Corporation will maintain separate corporate
records and books of account from those of any of its stockholders
or of any direct or indirect parent of the Corporation or of any
affiliate of any such parent.
ARTICLE VII
RESTRICTION ON THE ISSUANCE OF DEBT
The Corporation shall not issue, assume or guarantee any debt
securities or certificates without the Corporation having received
confirmation from each rating agency rating any outstanding debt
security or certificate issued by the Corporation that such action
by the Corporation shall not result in the termination or lowering
of the rating of such debt security or certificate.
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ARTICLE VIII
MERGERS, CONSOLIDATIONS AND ASSET TRANSFERS
The Corporation shall not merge or consolidate with any other
entity or convey or transfer all or substantially all of its
property or assets to another entity, if any of the securities
issued by such other entity is not rated at least as high as each
security issued by the Corporation that has been rated by the
rating agency.
ARTICLE IX
BANKRUPTCY
The Corporation shall not commence any case, proceeding or
other action relating to bankruptcy, insolvency, reorganization or
relief of debtors, or seek to have an order for relief entered with
respect to it, or seek to adjudicate it a bankrupt or insolvent, or
seek reorganization, arrangement, winding up, liquidation,
dissolution, composition or other relief with respect to it or its
debts or make a general assignment for the benefit of creditors
without the unanimous vote of the entire Board of Directors,
including the Outside Director. Notwithstanding any provisions of
this Certificate of Incorporation, a vacancy in the directorship
filled by an Outside Director shall limit and restrict the Board of
Directors from taking any action pursuant to this Article IX.
ARTICLE X
COMPROMISE OR ARRANGEMENT BETWEEN
CORPORATION AND ITS CREDITORS OR STOCKHOLDERS
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 stockholder or any class of them, any
court of equitable jurisdiction within the State of Delaware may,
on the application in 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
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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 8 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 a 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 of creditors and/or
on all the stockholder or class of stockholders of this
Corporation, as the case may be, and also on this Corporation.
ARTICLE XI
LIABILITY OF DIRECTORS
To the maximum extent permitted by the General Corporation Law
as from time to time amended, a director of this Corporation shall
not be liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.
ARTICLE XII
DURATION
The Corporation is to have perpetual existence.
ARTICLE XIII
AMENDMENTS
The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Certificate of
Incorporation in the manner now or hereafter prescribed by statute,
and all rights conferred upon stockholders herein are granted
subject to this reservation; provided, however, that no
------- -------
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such amendment of Article III, VI, VII, IX, X or XIII shall be
effective without the Corporation having received confirmation from
each rating agency rating any outstanding debt security or
certificate issued by the Corporation that such amendment shall not
result in the termination or lowering of the rating of such debt
security or certificate.
IN WITNESS WHEREOF, I have duly executed this Amended and
Restated Certificate of Incorporation this 21st day of March, A.D.
1996.
/s/ Konrad R. Kruger
-------------------------------
Konrad R. Kruger
Co-President, Greenwich Capital
Holdings, Inc.
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Exhibit 3.2
FINANCIAL ASSET SECURITIES CORP.
________________________________
BYLAWS
________________________________
The following Bylaws were adopted by the Sole Incorporator of the Corporation
on November 2, 1995.
ARTICLE I
OFFICES
SECTION 1. Principal Office. The principal office of the Corporation
----------------
shall be located at 600 Steamboat Road in Greenwich, Connecticut.
SECTION 2. Other Offices. The Corporation may also have offices at
-------------
such other places within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. Annual Meeting. An annual meeting of the shareholders shall
--------------
be held on the four Thursday of April each year, at such hour as may be fixed
from time to time by the Board of Directors and stated in the notice of such
meeting or waiver of notice thereof, at which meeting the shareholders shall
elect
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a Board of Directors and transact such other business as may properly come
before the meeting.
If such annual meeting is not held as herein provided for, it may be
held as soon thereafter as may be convenient. Such subsequent meeting shall
be called in the same manner as hereinafter provided for special meetings of
shareholders.
SECTION 2. Special Meetings. Special meetings of shareholders for any
----------------
purpose or purposes, unless otherwise prescribed by statute, by the
Certificate of Incorporation or by these bylaws, may be called at any time
by the President, the Secretary or the Board of Directors, and shall be
called by any of them at the written request of the holders of record of not
less than a majority of all the shares then outstanding and entitled to vote
thereat. Such request shall state the purpose or purposes of the proposed
meeting. The time and place for such special meeting shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof. The
business transacted at any special meeting of shareholders shall be limited
to the purposes stated in such notice.
SECTION 3. Place of Meeting. Meetings of shareholders shall be held
----------------
within or without the State of Delaware at such place as may be fixed from
time to time by the Board of Directors, or as shall be specified in the
notice of any meeting or a duly executed waiver of notice thereof. If no
place is otherwise fixed, such meetings shall be held at the principal office
of the Corporation.
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SECTION 4. Notice of Meetings. Written notice of each meeting of
------------------
shareholders, whether annual or special, stating the place, date and hour of
the meeting and, unless it is an annual meeting, the purpose or purposes of
the meeting and the name of the person by whom or at whose direction the
meeting is being called, shall be given either personally or by mail,
telegram, or cable to each shareholder of record entitled to vote, not less
than ten days nor more than sixty days prior to the date of the meeting,
unless a greater period of notice is required by law in a particular case.
SECTION 5. Quorum. The holders of record of a majority of the shares
------
of stock issued and outstanding and entitled to vote at any meeting of
shareholders, represented in person or by proxy, shall constitute a quorum
for the transaction of business thereat, except as otherwise provided by
statute or by the Certificate of Incorporation. When a quorum is once
present to organize a meeting, it is not broken by the subsequent withdrawal
of any shareholders. If, however, such quorum shall not be present or
represented at any meeting of shareholders, a majority of the shareholders
entitled to vote thereat, present in person or by proxy, or if no such
shareholder is present in person or by proxy, any officer entitled to preside
at or act as secretary of such meeting, shall have the power to adjourn the
meeting from time to time, without notice other than by announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or
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represented, any business may be transacted which might have been transacted
at the meeting as originally called.
SECTION 6. Proxies. Every shareholder entitled to vote at a meeting
-------
of shareholders, or to express consent to any proposal without a meeting, may
vote, or consent, as the case may be, in person or may authorize another
person or persons to so act for him by proxy.
SECTION 7. Voting. At each meeting of shareholders, each shareholder
------
of record entitled to vote at the meeting shall be entitled to one vote for
each share of stock registered in his name on the books of the Corporation
unless otherwise provided by law or by the Certificate of Incorporation.
At each meeting at which a quorum is present, the vote of the holders
of a majority of the shares of stock present, in person or by proxy, and
entitled to vote thereat, shall determine all corporate matters brought
before the meeting except as otherwise required by statute or by the
Certificate of Incorporation.
SECTION 8. Written Consent in Lieu of Meeting. Any action required or
----------------------------------
permitted to be taken by vote of the shareholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting which all shares
entitled to vote thereon were present and voted.
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ARTICLE III
DIRECTORS
SECTION 1. General Powers. The property, affairs and business of the
--------------
Corporation shall be managed by its Board of Directors which may adopt all
such rules and regulations for the conduct of its meetings and for the
management of the property, affairs and business of the Corporation as it may
deem proper, not inconsistent with applicable law, the Certificate of
Incorporation and these Bylaws, and may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute, by
the Certificate of Incorporation or by these Bylaws directed or required to
be exercised or done by the shareholders.
SECTION 2. Number and Qualifications. The number of directors shall
-------------------------
be three. The number of directors may be changed from time to time by
amendment to these Bylaws.
SECTION 3. Election and Term of Office. The directors, other than the
---------------------------
initial Board of Directors, shall be elected at the annual meeting of
shareholders. Each director shall serve until the next succeeding annual
meeting and until his successor has been elected and has qualified, or until
his prior resignation, death or removal. The initial Board of Directors
shall hold office until the first annual meeting of shareholders.
SECTION 4. Resignation. Any director may resign at any time by giving
-----------
written notice to the Board of Directors, the president or the secretary of
the Corporation. Unless otherwise
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specified in the notice, the resignation shall take effect upon receipt thereof
by the board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
SECTION 5. Removal. Any or all of the directors may be removed, with
-------
or without cause, at any time by the vote of the holders of record of a
majority of shares of stock issued and outstanding and entitled to vote
present, in person or by proxy, at a special meeting of shareholders called
for that purpose, unless otherwise prescribed by statute or by the
Certificate of Incorporation.
SECTION 6. Vacancies. All vacancies occurring in the Board of
---------
Directors, including vacancies caused by removal with or without cause, may
be filled, subject to the action of the shareholders in regard to vacancies
caused by removal described hereinafter, by majority vote of all remaining
directors in office, though less than a quorum. If death, resignation or
removal of a director or directors results in there being no remaining
directors or if the remaining directors are unable to fill a vacancy or
vacancies by majority vote, the vacancies shall be filled by election at a
special meeting of shareholders called for that purpose. A director elected
by the Board of Directors to fill a newly created directorship or vacancy
shall hold office until the next succeeding annual meeting of the
shareholders and until his successor has been elected and has qualified.
Notwithstanding any other provision of this section, any
vacancy on the Board of Directors resulting from removal with or
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without cause by vote of the shareholders at a special of the shareholders
called for that purpose may be filed at such meeting by a majority vote of
the shareholders present, in person or by proxy, and entitled to vote,
provided that in the event the shareholders do not fill such vacancy it
shall be filled by the Board of Directors as provided in this section.
A director elected by vote of the shareholders shall hold office for the
unexpired portion of the term of his predecessor in office and until the
election and qualification of his successor.
SECTION 7. Annual and Regular Meetings. An annual meeting of the Board
---------------------------
of Directors for the election of officers and for the transaction of any
other business shall be held in each year immediately following the annual
meeting of shareholders at the place of such annual meeting of shareholders
or as soon as practical after the annual meeting of shareholders at such
place and time as shall be fixed by the consent in writing of all the
directors.
Regular meetings of the Board of Directors may be held at such times as
the Board may from time to time determine by resolution duly adopted at any
meeting of the Board.
SECTION 8. Special Meetings. A special meeting of the Board of
----------------
Directors may be called at any time by the Chairman or the President and
shall be called by the President or Secretary on the written request of any
director.
SECTION 9. Place and Time of Regular and Special Meetings. The Board
----------------------------------------------
of Directors may hold any regular meeting without
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notice, at such time and place, either within or without the State of
Delaware, as the Board may from time to time determine by resolution
duly adopted at any meeting of the Board.
Special meetings of the Board of Directors shall be held at such time
and place, either within or without the State of Delaware, as may be fixed
by the Chairman or the President calling the meeting or by the Directors
requesting the meeting as specified in their request, as the case may be.
If no place is otherwise fixed, such regular and special meetings shall be
held at the principal office of the Corporation.
SECTION 10. Notice of Meetings. Notice of the time and place of each
------------------
special meeting of the Board of Directors shall be given to each director at
least two days prior to the date of such meeting personally or by mail,
telegram/cable or telephone. Neither the business to be transacted at, nor
the purpose of, any special meeting of the Board of Directors need be
specified in the notice of such meeting or waiver of notice thereof.
SECTION 11. Quorum and Voting. A majority of the directors in office
-----------------
shall constitute a quorum for the transaction of business at any meeting of
the Board of Directors and the affirmative vote of a majority of the
directors present at any meeting at which a quorum is present shall
constitute the act of the Board of Directors, except as may be otherwise
provided by statute or by the Certificate of Incorporation. If a quorum
shall not be present at any meeting of the Board of Directors, a majority of
the directors present may adjourn the meeting from
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time to time, without notice other than by announcement at the meeting,
until a quorum shall be present.
SECTION 12. Committees. The Board of Directors, by resolution, adopted
----------
by a majority of the entire Board, may designate one or more committees,
including an Executive Committee, each committee to consist of one or more
of the directors of the Corporation. Each committee shall serve at the
pleasure of the Board of Directors and each member of each such committee
shall hold office until the next annual meeting of the Board of Directors or
until he shall choose to be a director, or until his death, resignation or
removal, or until the Board of Directors shall dissolve the committee. Each
committee shall have and may exercise all the powers and authority of the
Board to the extent provided in the resolution, except as otherwise required
by law. Any member of any committee may be removed at any time, with or
without cause, by the vote of a majority of directors at any regular or
special meeting of the Board. Vacancies in the membership of any committee
shall be filed by the Board of Directors at a regular or special meeting of
the Board of Directors by the vote of a majority of directors. Such
committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of Directors. Each
committee shall keep regular minutes of its meetings and report the same
to the Board of Directors when required.
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SECTION 13. Meetings by Conference Call. At any meeting of the Board
---------------------------
of Directors, or any committee designated by the Board of Directors, any one
or more of the members thereof may participate in such meeting of the Board
or of such committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting
to hear each other at the same time. Participation in a meeting by such
means shall constitute presence in person at the meeting.
SECTION 14. Written Consent in Lieu of Meeting. Any action required
----------------------------------
or permitted to be taken by the Board of Directors or any committee thereof
may be taken without a meeting if a consent in writing to the adoption of a
resolution authorizing the action so taken shall be signed by all the
directors or the member of the committee, as the case may be.
SECTION 15. Compensation. The Board of Directors, irrespective of any
------------
personal interest of its members, shall have authority to establish
reasonable compensation, and allowances for expenses, of all directors for
services to the corporation as directors, committee members, officers, or
otherwise.
ARTICLE IV
NOTICES
SECTION 1. Notice by Mail. Whenever, under the provisions of any
--------------
statute or of the Certificate of Incorporation or of these
Bylaws, notice is required to be given to any director or shareholder and
such notice is given by mail, such notice shall
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be deemed to have been given when deposited in the United States mail,
with postage thereon prepaid, directed to the director or shareholder at
his address as it appears on the records of the Corporation, or if he
shall have filed a written request with the Secretary that notices intended
for him be mailed to some other address, then directed to him at such
other address.
SECTION 2. Waiver of Notice. Whenever under the provisions of any
----------------
statute or of the Certificate of Incorporation or of these Bylaws, any notice
of a meeting is required to be given to any director or shareholder, a
written waiver signed by the person or persons entitled to such notice,
either in person or by proxy if such person is a shareholder, whether before
or after the meeting, shall be deemed equivalent to the giving of such
notice.
SECTION 3. Attendance at Meetings. The attendance of a person at any
----------------------
meeting, whether a shareholder, in person or by proxy, or a director, shall
constitute a waiver of notice by him, unless he attends 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.
ARTICLE V
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a
------
President, a Secretary, and a Controller, and may include a
Chairman, one or more Executive Vice Presidents, one or more Senior Vice
Presidents, one or more Vice Presidents, one or more
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Assistant Secretaries, and such other officers as the Board of Directors
may from time to time determine. Two or more offices may be held by the
same person.
SECTION 2. Election and Term of Office. Tbe officers of the
---------------------------
Corporation shall be elected by the Board of Directors at any regular or
special meeting of the Board and each shall serve at the pleasure of the
Board.
SECTION 3. Resignations. Any officer may resign at any time by giving
------------
written notice to the Board of Directors, or to the Chairman, the President
or the Secretary of the Corporation. Any such resignation shall take effect
at the time of the receipt of such notice or at any later time specified
therein; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 4. The President. The President shall have supervision over
-------------
the business, direction and general management of the Corporation, and shall
perform such other duties as the Board of Directors may direct.
SECTION 5. Executive Vice Presidents; Senior Vice Presidents; Vice
-------------------------------------------------------
Presidents. The Executive Vice Presidents, Senior Vice Presidents and Vice
- ----------
Presidents shall exercise such powers and perform such duties as from time
to time may be assigned to them respectively by the Board or by any more
senior ranking officer.
SECTION 6. Secretary. The Secretary shall record all the votes of the
---------
stockholders and of the directors and shall maintain
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the minutes of the meetings of the stockholders and of the Board of
Directors; he shall see that notices of meetings of the Board and
stockholders are given and that all records and reports are properly kept
and filed by the Corporation as required by law; and, in general,
he shall perform all duties incident to the office of Secretary, and
such other duties as may from time to time be assigned to him by the
Board or the President.
SECTION 7. Assistant Secretaries. In the absence or disability of the
---------------------
Secretary or when so directed by the Secretary, any Assistant Secretary may
perform all the duties of the Secretary, and when so acting, shall have all
the powers of, and be subject to all the restrictions upon, the Secretary.
The Assistant Secretaries shall perform such other duties as from time to
time may be assigned to them respectively by the Board, the Chairman, the
President, or the Secretary.
SECTION 8. Controller. The Controller shall have charge of all
----------
financial records and reports of the Corporation and shall have or provide
for the custody of all funds and securities of the Corporation; and, in
general, he shall perform all duties incident to the office of Controller and
such other duties as may from time to time be assigned to him by the Board,
or the President.
SECTION 9. Compensation of Officers and Others. The compensation of
-----------------------------------
all officers shall be fixed from time to time by the Board of Directors or
any Committee or officer authorized by the Board to do so. No officer shall
be precluded from receiving
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such compensation by reason of the fact that he is also a director of
the Corporation.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. Indemnification. To the maximum extent permitted by the
---------------
Delaware General Corporation Law as from time to time amended, the
Corporation shall indemnify its currently acting and its former directors,
officers, employees, and agents and those persons who, at the request of the
Corporation, served or have served another corporation, partnership, joint
venture, trust or other enterprise in one or more such capacities against any
and all liabilities incurred in connection with their services in such
capacities.
SECTION 2. Insurance. The Corporation shall have power to purchase and
---------
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or 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
any liability asserted against him and incurred by him in any such capacity,
or arising out of his status as such, whether or not the Corporation would
have the power to indemnify him against such liability under the provisions
of these Bylaws.
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ARTICLE VII
BORROWING, DEPOSITS, PROXIES, ETC.
SECTION 1. Borrowing. No officer, agent or employee of the Corporation
---------
shall have any power or authority to borrow money on its behalf, to pledge
its credit, or to mortgage or pledge its real or personal property, except
within the scope and to the extent of the authority delegated by resolution
of the Board of Directors. Authority may be given by the Board for any of
the above purposes and may be general or limited to specific instances.
SECTION 2. Deposits. All funds of the Corporation shall be deposited
--------
from time to time to the credit of the Corporation in such banks, trust
companies, or other depositories as the Board of Directors may approve or
designate, and all such funds shall be withdrawn under such policies as the
Board shall from time to time determine.
SECTION 3. Proxies. Unless otherwise ordered by the Board of
-------
Directors, any officer of the Corporation may appoint an attorney or
attorneys (who may be or include such officer himself), in the name and on
behalf of the Corporation, to cast the votes which the Corporation may be
entitled to cast as a stockholder or otherwise in any other corporation any
of whose stock or other securities are held by or for the Corporation, at
meetings of the holders of the stock or other securities of such other
corporation, or, in connection with the ownership of such
stock or other securities, to consent in writing to any action by
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such other corporation, and may instruct the person or persons so appointed
as to the manner of casting such votes of giving such consent, and may
execute or cause to be executed in the name and on behalf of the Corporation
and under its seal such written proxies or other instruments as he may
deem necessary or proper in the premises.
SECTION 4. Separate Books and Records, etc. The Corporation shall at
--------------------------------
all times (a) maintain and keep the Corporation's assets separate and apart
from any affiliate of the Corporation, and under separate registration, and
(b) maintain the Corporation's books and records separate and apart from
those of any affiliate of the Corporation.
ARTICLE VIII
CERTIFICATES FOR SHARES
SECTION 1. Form and Execution of Certificates. The shares of the
----------------------------------
Corporation shall be represented by certificates in such form as required by
statute and as shall be adopted from time to time by the Board of Directors.
The certificates shall be numbered consecutively and registered in the books
of the Corporation in the order in which they are issued, together with the
number of shares represented by each certificate, the name of the person to
whom the certificate is issued and the date of issuance hereof. Each
certificate shall be signed by the Chairman, the President, an Executive Vice
President or a Senior Vice President and by the Secretary, may (but need not)
be sealed
16
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with a corporate seal or a facsimile hereof and shall be countersigned and
registered in such manner, if any, as the Board of Directors may prescribe.
The signatures of any such officers of the Corporation upon a certificate may
be facsimiles if the certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation itself or an employee
of the Corporation. No certificate shall be issued for any shares until such
share is fully paid. The certificate shall bear such legend thereon,
referring to such restrictions on transfer as may be required by law, as the
Secretary of the Corporation, on advice of counsel, may reasonably require.
SECTION 2. Lost, Stolen or Destroyed Certificates. The Board of
--------------------------------------
Directors, in its discretion, may direct a new certificate to be issued in
place of any certificate theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed. Prior to authorizing such issue of a
new certificate or as a condition precedent to the issue thereof, the Board
of Directors, in its discretion, may require satisfactory proof of loss,
theft or destruction or a bond of indemnity as it deems adequate against any
claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
SECTION 3. Transfers of Shares. The transfer or assignment of shares
-------------------
shall be made only upon the books of the Corporation by the registered owner
or by his duly authorized attorney. Upon surrender to the Corporation of
a certificate for shares duly
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endorsed or accompanied by proper evidence of succession, assignment
or authority to transfer, the Corporation shall issue a new certificate
to the person entitled thereto, and the older certificate shall be canceled
and the transaction recorded upon the books of the Corporation.
SECTION 4. Fixing Record Date. For the purpose of determining
------------------
shareholders entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or for the purpose of determining shareholders
entitled to receive payment of any dividend or other distribution or the
allotment of any rights, or for the purpose of determining shareholders
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 date as the record date for any such
determination of shareholders. Such date shall not be more than sixty days
prior to any other action. Only shareholders of record on the date so fixed
shall be entitled to receive notice of, or to vote at, such meeting or any
adjournment thereof, to give such consent, to receive payment of such
dividend or distribution or the allotment of such right, to exercise any such
rights, or to take any other such action, notwithstanding any transfer of any
shares on the books of the Corporation subsequent to the record date so
fixed. If no such record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of the
18
<PAGE>
stockholders shall be at the close of business on the tenth day preceding the
day on which the meeting is held; the record date for determining the
stockholders entitled to express consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is expressed;
and the record date 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.
SECTION 5. Registered Shareholders. The Corporation shall be entitled
-----------------------
to recognize the exclusive right of a person registered in its books as the
owner of shares to receive dividends and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by law.
ARTICLE IX
GENERAL PROVISION
SECTION 1. Dividends. Dividends on the outstanding shares of the
---------
Corporation may be declared by the Board of Directors in such amounts and at
such time or times as the Board may determine, subject to the provisions of
the Certificate of Incorporation and applicable law. Dividends may be paid
in cash, in shares of the Corporation's capital stock or bonds or in the
19
<PAGE>
Corporation's property, including the shares or bonds of other corporations,
subject to any provisions of law or of the Certificate of Incorporation.
SECTION 2. Execution of Instruments. All corporate instruments and
------------------------
documents, with the exception of certificates for shares of the Corporation
as provided in Section 1 of ARTICLE VIII, shall be signed by such officers,
agents or employees of the Corporation as from time to time may be designated
by the Board of Directors or by such officer or officers to whom the Board
of Directors may delegate the power to so designate.
SECTION 3. Fiscal Year. The fiscal year of the Corporation shall begin
-----------
on the first day of January in each year but may be changed from time to time
by resolution of the Board of Directors.
SECTION 4. Corporate Seal. The corporate seal shall have inscribed
--------------
thereon the name of the Corporation, the year of its organization and the
words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed, affixed, reproduced, engraved or printed.
ARTICLE X
AMENDMENTS
These Bylaws may be amended or repealed or new bylaws may be adopted at
any meeting of shareholders at which a quorum is present or represented by
the affirmative vote of the holders of a majority of shares issued and
outstanding and entitled to vote
20
<PAGE>
thereat, provided notice of the general nature of the proposed
change in the Bylaws be contained in the notice of such meeting. These
Bylaws may also be amended or repealed or new Bylaws may be adopted by
the Board of Directors at any meeting of the Board.
21
<PAGE>
Exhibit 4.1
Form of Trust Agreement
TRUST AGREEMENT
between
FINANCIAL ASSET SECURITIES CORP.,
as Depositor,
and
_______________________,
as Owner Trustee
Dated as of ___________, 199__
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
SECTION 1.01. Capitalized Terms . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions . . . . . . . . . . . . . . 3
ARTICLE II
Organization
SECTION 2.01. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02. Office . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.03. Purposes and Powers . . . . . . . . . . . . . . . . . . . 4
SECTION 2.04. Appointment of Owner Trustee . . . . . . . . . . . . . . . 5
SECTION 2.05. Initial Capital Contribution of Owner Trust
Estate . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.06. Declaration of Trust . . . . . . . . . . . . . . . . . . . 5
SECTION 2.07. Liability of the Owners . . . . . . . . . . . . . . . . . 6
SECTION 2.08. Title to Trust Property . . . . . . . . . . . . . . . . . 6
SECTION 2.09. Situs of Trust . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.10. Representations and Warranties of the
Depositor . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.11. Maintenance of the Demand Note . . . . . . . . . . . . . . 8
SECTION 2.12. Federal Income Tax Allocations . . . . . . . . . . . . . . 8
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.01. Initial Ownership . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.02. The Trust Certificates . . . . . . . . . . . . . . . . . . 9
SECTION 3.03. Authentication of Trust Certificates . . . . . . . . . . . 9
SECTION 3.04. Registration of Transfer and Exchange of
Trust Certificates . . . . . . . . . . . . . . . . . . . 10
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Trust
Certificates . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.06. Persons Deemed Owners . . . . . . . . . . . . . . . . . . 13
SECTION 3.07. Access to List of Certificateholders' Names
and Addresses . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.08. Maintenance of Office or Agency . . . . . . . . . . . . . 13
SECTION 3.09. Appointment of Paying Agent . . . . . . . . . . . . . . . 13
SECTION 3.10. Ownership by Depositor of Trust
Certificates . . . . . . . . . . . . . . . . . . . . . . 14
i
<PAGE>
ARTICLE IV
Actions by Owner Trustee
SECTION 4.01. Prior Notice to Owners with Respect to
Certain Matters . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.02. Action by Owners with Respect to Certain
Matters . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.03. Action by Owners with Respect to Bankruptcy . . . . . . . 15
SECTION 4.04. Restrictions on Owners' Power . . . . . . . . . . . . . . 16
SECTION 4.05. Majority Control . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.01. Establishment of Trust Account . . . . . . . . . . . . . . 16
SECTION 5.02. Application of Trust Funds . . . . . . . . . . . . . . . . 16
SECTION 5.03. Method of Payment . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.04. No Segregation of Moneys; No Interest . . . . . . . . . . 17
SECTION 5.05. Accounting and Reports to the Noteholders,
Owners, the Internal Revenue Service and
Others . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.06. Signature on Returns; Tax Matters Partner . . . . . . . . 18
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.01. General Authority . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.02. General Duties . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.03. Action upon Instruction . . . . . . . . . . . . . . . . . 19
SECTION 6.04. No Duties Except as Specified in this
Agreement or in Instructions . . . . . . . . . . . . . . 20
SECTION 6.05. No Action Except Under Specified Documents
or Instructions . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.06. Restrictions . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.01. Acceptance of Trusts and Duties . . . . . . . . . . . . . 21
SECTION 7.02. Furnishing of Documents . . . . . . . . . . . . . . . . . 22
SECTION 7.03. Representations and Warranties . . . . . . . . . . . . . . 22
SECTION 7.04. Reliance; Advice of Counsel . . . . . . . . . . . . . . . 23
SECTION 7.05. Not Acting in Individual Capacity . . . . . . . . . . . . 23
SECTION 7.06. Owner Trustee Not Liable for Trust
Certificates or Receivables . . . . . . . . . . . . . . 24
SECTION 7.07. Owner Trustee May Own Trust Certificates and
Notes . . . . . . . . . . . . . . . . . . . . . . . . . 24
ii
<PAGE>
ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.01. Owner Trustee's Fees and Expenses . . . . . . . . . . . . 24
SECTION 8.02. Indemnification . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8.03. Payments to the Owner Trustee . . . . . . . . . . . . . . 25
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01. Termination of Trust Agreement . . . . . . . . . . . . . . 25
SECTION 9.02. Dissolution upon Bankruptcy of the
Depositor . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.01. Eligibility Requirements for Owner Trustee . . . . . . . . 27
SECTION 10.02. Resignation or Removal of Owner Trustee . . . . . . . . . 27
SECTION 10.03. Successor Owner Trustee . . . . . . . . . . . . . . . . . 28
SECTION 10.04. Merger or Consolidation of Owner Trustee . . . . . . . . . 29
SECTION 10.05. Appointment of Co-Trustee or Separate
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE XI
Miscellaneous
SECTION 11.01. Supplements and Amendments . . . . . . . . . . . . . . . . 31
SECTION 11.02. No Legal Title to Owner Trust Estate in
Owners . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 11.03. Limitations on Rights of Others . . . . . . . . . . . . . 32
SECTION 11.04. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 11.05. Severability . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 11.06. Separate Counterparts . . . . . . . . . . . . . . . . . . 33
SECTION 11.07. Successors and Assigns . . . . . . . . . . . . . . . . . . 33
SECTION 11.08. Covenants of the Depositor . . . . . . . . . . . . . . . . 33
SECTION 11.09. No Petition . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.10. No Recourse . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.11. Headings . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.12. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.13. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.14. Depositor Payment Obligation . . . . . . . . . . . . . . . 34
EXHIBIT A Form of Trust Certificate
EXHIBIT B Form of Certificate of Trust
EXHIBIT C Form of Certificate Depository Agreement
iii
<PAGE>
TRUST AGREEMENT dated as of ___________, 199__, between FINANCIAL
ASSET SECURITIES CORP., a Delaware corporation, as depositor (the
"Depositor") and _______________________, a ______________ banking
corporation, as owner trustee (the "Owner Trustee").
ARTICLE I
Definitions
-----------
SECTION 1.01. Capitalized Terms. For all purposes of this
Agreement,
-----------------
the following terms shall have the meanings set forth below:
"Administration Agreement" shall mean the Administration Agreement
dated
------------------------
as of ___________, 199__, among the Trust, the Indenture Trustee and
Financial Asset Securities Corp., as Administrator.
"Agreement" shall mean this Trust Agreement, as the same may be
amended
---------
and supplemented from time to time.
"Basic Documents" shall mean the Sale and Servicing Agreement, the
---------------
Indenture, the Administration Agreement, the Custodial Agreement and the
other documents, instruments and certificates delivered in connection
therewith.
"Benefit Plan" shall have the meaning assigned to such term in
------------
Section 3.04.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
----------------------
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be
amended
---- ----
from time to time.
"Certificate Distribution Account" shall have the meaning assigned to
--------------------------------
such term in Section 5.01.
"Certificate of Trust" shall mean the Certificate of Trust in the
form
--------------------
of Exhibit B filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
-------------------- ---------------------
register mentioned in and the registrar appointed pursuant to
Section 3.04.
"Certificateholder" or "Holder" shall mean a Person in whose name a
----------------- ------
Trust Certificate is registered.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
----
Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee,
----------------------
the principal corporate trust office of the Owner Trustee
1
<PAGE>
located at ________________________________________, Attn: Corporate Trust
Administration, or at such other address as the Owner Trustee may
designate by notice to the Owners and the Depositor, or the principal
corporate trust office of any successor Owner Trustee at the address
designated by such successor Owner Trustee by notice to the Owners and the
Depositor.
"Custodial Agreement" shall mean the Custodial Agreement dated as of
-------------------
___________, 199__, between the Trust and _____________________________,
as Custodian.
"Demand Note" shall mean, in the case of the Depositor, the Demand Note
-----------
dated ____________, 199__, from _______ to the Depositor.
"Depositor" shall mean Financial Asset Securities Corp. in its capacity
---------
as depositor hereunder.
"ERISA" shall have the meaning assigned thereto in Section 3.04.
-----
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Expenses" shall have the meaning assigned to such term in Section 8.02.
--------
"Indemnified Parties" shall have the meaning assigned to such term in
-------------------
Section 8.02.
"Indenture" shall mean the Indenture dated as of ___________, 199__
---------
between the Trust and _________________, as Indenture Trustee.
"Initial Certificate Balance" shall mean $__________________
---------------------------
"Owner" shall mean each Holder of a Trust Certificate.
-----
"Owner Trust Estate" shall mean all right, title and interest of the
------------------
Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from
time to time in the Trust Accounts and the Certificate Distribution
Account and all other property of the Trust from time to time, including
any rights of the Owner Trustee and the Trust pursuant to the Sale and
Servicing Agreement and the Administration Agreement.
"Owner Trustee" shall mean _______________________, a ______________
-------------
banking corporation, not in its individual capacity but solely as owner
trustee under this Agreement, and any successor Owner Trustee hereunder.
2
<PAGE>
"Paying Agent" shall mean any paying agent or co-paying agent appointed
------------
pursuant to Section 3.09 and shall initially be _______________________.
"Person" shall mean any individual, corporation, estate, partnership,
------
joint venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization, or government or any
agency or political subdivision thereof.
"Record Date" shall mean, with respect to any Distribution Date, the
-----------
close of business on the last day of the month immediately preceding such
Distribution Date.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
----------------------------
Agreement dated as of ___________, 199__, among the Trust, as issuer, the
Depositor, as seller, __________________, as servicer and
___________________________, as Backup Servicer as the same may be amended
or supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the State of
------------------
Delaware.
"Treasury Regulations" shall mean regulations, including proposed or
--------------------
temporary Regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Trust" shall mean the trust established by this Agreement.
-----
"Trust Certificate" shall mean a certificate evidencing the beneficial
-----------------
interest of an Owner in the Trust, substantially in the form attached
hereto as Exhibit A.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized terms
-----------------------------
used and not otherwise defined herein have the meanings assigned to them
in the Sale and Servicing Agreement or, if not defined therein, in the
Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms
not defined in this Agreement or in any such certificate or other
document, and accounting terms partly defined in this Agreement or in any
such certificate or other document to the extent not defined, shall have
the respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in
this Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under generally accepted
accounting
3
<PAGE>
principles, the definitions contained in this Agreement or in any such
certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and
Exhibit references contained in this Agreement are references to Sections
and Exhibits in or to this Agreement unless otherwise specified; and the
term "including" shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to time
amended, modified or supplemented and includes (in the case of agreements
or instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
ARTICLE II
Organization
------------
SECTION 2.01. Name. The Trust created hereby shall be known as "FASCO
----
Auto Trust 199_-_," in which name the Owner Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.02. Office. The office of the Trust shall be in care of the
------
Owner Trustee at the Corporate Trust Office or at such other address in
_____________ as the Owner Trustee may designate by written notice to the
Owners and the Depositor.
SECTION 2.03. 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
Trust Certificates pursuant to this Agreement and to sell the Notes and the
Trust Certificates;
(ii) with the proceeds of the sale of the Notes and the Trust
Certificates, to purchase the Receivables, to fund the Reserve Account and
to pay the organizational, start-up and transactional expenses of the Trust;
4
<PAGE>
(iii) to assign, grant, transfer, pledge, mortgage and convey
the Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Owners pursuant to the terms of the Sale and Servicing
Agreement any portion of the Trust Estate released from the Lien of, and
remitted to the Trust pursuant to, the Indenture;
(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 Owner Trust Estate and the making of distributions to the
Owners and the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Basic Documents.
SECTION 2.04. Appointment of Owner Trustee. The Depositor hereby
----------------------------
appoints the Owner Trustee as trustee of the Trust effective as of the
date hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.05. Initial Capital Contribution of Owner Trust Estate.
The
--------------------------------------------------
Depositor hereby sells, assigns, transfers, conveys and sets over to the
Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee
hereby acknowledges receipt in trust from the Depositor, as of the date
hereof, of the foregoing contribution, which shall constitute the initial
Owner Trust Estate and shall be deposited in the Certificate Distribution
Account. The Depositor shall pay organizational expenses of the Trust as
they may arise or shall, upon the request of the Owner Trustee, promptly
reimburse the Owner Trustee for any such expenses paid by the Owner
Trustee.
SECTION 2.06. Declaration of Trust. The Owner Trustee hereby
declares
--------------------
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Owners, subject
to the obligations of the Trust under the Basic Documents. It is the
intention of the parties hereto that the Trust constitute a business trust
under the Business Trust Statute and that this Agreement constitute the
governing instrument of such business trust. It is the intention of the
parties hereto that, 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
5
<PAGE>
partners of the partnership being the Certificateholders (including the
Depositor, in its capacity as recipient of distributions from the Reserve
Account), and the Notes being 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
Owner Trustee shall have all rights, powers and duties set forth herein
and in the Business Trust Statute with respect to accomplishing the
purposes of the Trust.
SECTION 2.07. Liability of the Owners. (a) The Depositor shall be
-----------------------
liable directly to and will indemnify any injured party for all losses,
claims, damages, liabilities and expenses of the Trust (including
Expenses, to the extent not paid out of the Owner Trust Estate) to the
extent that the Depositor would be liable if the Trust were a partnership
under the Delaware Revised Uniform Limited Partnership Act in which the
Depositor were a general partner; provided, however, that the Depositor
shall not be liable for any losses incurred by a Certificateholder in the
capacity of an investor in the Trust Certificates, or by a Noteholder in
the capacity of an investor in the Notes. In addition, any third party
creditors of the Trust (other than in connection with the obligations
described in the preceding sentence for which the Depositor shall not be
liable) shall be deemed third party beneficiaries of this paragraph and
paragraph (c) below. The obligations of the Depositor under this
paragraph and paragraph (c) below shall be evidenced by the Trust
Certificates described in Section 3.10, which for purposes of the Business
Trust Statute shall be deemed to be a separate class of Trust Certificates
from all other Trust Certificates issued by the Trust; provided that the
rights and obligations evidenced by all Trust Certificates, regardless of
class, shall, except as provided in this Section, be identical.
(b) No Owner, other than to the extent set forth in paragraphs (a)
and (c), shall have any personal liability for any liability or obligation
of the Trust.
(c) The Depositor agrees to be liable directly to and will indemnify
any injured party for all losses, claims, damages, liabilities and
expenses (other than those incurred by a Certificateholder in the capacity
of an investor in the Trust Certificates and a Noteholder in the capacity
of an investor in the Notes) as though such arrangements were a
partnership under the Delaware Revised Uniform Limited Partnership Act in
which the Depositor were a general partner.
SECTION 2.08. Title to Trust Property. Legal title to all the Owner
-----------------------
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 Owner Trust Estate
6
<PAGE>
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 2.09. 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 ______________ or the State of New York. 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 ____________. Payments will be
received by the Trust only in __________ or New York, and payments will be
made by the Trust only from _________ or New York. The only office of the
Trust will be at the Corporate Trust Office in ____________.
SECTION 2.10. Representations and Warranties of the Depositor. The
-----------------------------------------------
Depositor hereby represents and warrants to the Owner Trustee that:
(a) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware, with
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
(b) The Depositor is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of its
property or the conduct of its business shall require such qualifications.
(c) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has full
power and authority to sell and assign the property to be sold and assigned
to and deposited with the Trust and the Depositor has duly authorized such
sale and assignment and deposit to the Trust by all necessary corporate
action; and the execution, delivery and performance of
this Agreement have been duly authorized by the Depositor by all necessary
corporate action.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the certificate
of incorporation or bylaws of the Depositor, or any indenture, agreement or
other instrument to which the Depositor is a party or by which it is bound;
nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate
any law or, to the best
7
<PAGE>
of the Depositor's knowledge, any order, rule or regulation
applicable to the Depositor of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its properties.
(e) There are no proceedings or investigations pending or, to
the Depositor's best knowledge, threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor 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 Depositor of its obligations under, or the validity or
enforceability of, this Agreement.
SECTION 2.11. Maintenance of the Demand Note. To the fullest extent
------------------------------
permitted by applicable law, the Depositor agrees that it shall not sell,
convey, pledge, transfer or otherwise dispose of the Demand Note.
SECTION 2.12. Federal Income Tax Allocations. Net income of the Trust
------------------------------
for any quarter as determined for federal income tax purposes (and each
item of income, gain, loss and deduction entering into the computation
thereof) shall be allocated:
(a) among the Certificateholders as of the first day following the
end of such month, in proportion to their ownership of principal amount of
Trust Certificates on such date, net income in an amount up to the sum of
(i) the Certificateholders' Quarterly Interest Distributable Amount for
such quarter, (ii) interest on the excess, if any, of the
Certificateholders' Interest Distributable Amount for the preceding
Distribution Date over the amount in respect of interest that is actually
deposited in the Certificate Distribution Account on such preceding
Distribution Date, to the extent permitted by law, at the Pass-Through
Rate from such preceding Distribution Date through the current
Distribution Date, (iii) the portion of the market discount on the
Receivables accrued during such quarter that is allocable to the excess,
if any, of the initial aggregate principal amount of the Trust
Certificates over their initial aggregate issue price and (iv) any other
amounts of income payable to the Certificateholders for such quarter; such
sum to 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; and
(b) to the Depositor, to the extent of any remaining net income.
If the net income of the Trust for any quarter is insufficient for the
allocations described in clause (a) above, subsequent net
8
<PAGE>
income shall first be allocated to make up such shortfall before being
allocated as provided in the preceding sentence. Net losses of the Trust,
if any, for any quarter as determined for federal income tax purposes (and
each item of income, gain, loss and deduction entering into the
computation thereof) shall be allocated to the Depositor to the extent the
Depositor is reasonably expected to bear the economic burden of such net
losses, and any remaining net losses shall be allocated among the
Certificateholders as of the first Record Date following the end of such
quarter in proportion to their ownership of principal amount of Trust
Certificates on such Record Date. The Depositor is authorized to modify
the allocations in this paragraph if necessary or appropriate, in its sole
discretion, for the allocations to fairly reflect the economic income,
gain or loss to the Depositor or to the Certificateholders, or as
otherwise required by the Code.
ARTICLE III
Trust Certificates and Transfer of Interests
--------------------------------------------
SECTION 3.01. Initial Ownership. Upon the formation of the Trust by
-----------------
the contribution by the Depositor pursuant to Section 2.05 and until the
issuance of the Trust Certificates, the Depositor shall be the sole
beneficiary of the Trust.
SECTION 3.02. The Trust Certificates. The Trust Certificates shall be
----------------------
issued in minimum denominations of $100,000 and in integral multiples of
$1,000 in excess thereof; provided, however, that the Trust Certificates
issued to the Depositor pursuant to Section 3.10 may be issued in such
denomination as required to include any residual amount. The Trust
Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of an authorized officer of the Owner Trustee. Trust
Certificates bearing the manual or facsimile signatures of individuals who
were, at the time when such signatures shall have been affixed, authorized
to sign on behalf of the Trust, shall be validly issued and entitled to
the benefit of this Agreement, notwithstanding that such individuals or
any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Trust Certificates or did not hold
such offices at the date of authentication and delivery of such Trust
Certificates.
A transferee of a Trust Certificate shall become a Certificateholder
and shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Trust
Certificate duly registered in such transferee's name pursuant to Section
3.04.
SECTION 3.03. Authentication of Trust Certificates. On the Closing
------------------------------------
Date, the Owner Trustee shall cause the Trust Certificates in an aggregate
principal amount equal to the Initial Certificate Balance to be executed
on behalf of the Trust, authenticated and
9
<PAGE>
delivered to or upon the written order of the Depositor, signed by its
chairman of the board, its president, any vice president, secretary or any
assistant treasurer, without further corporate action by the Depositor, in
authorized denominations. No Trust Certificate shall entitle its Holder
to any benefit under this Agreement or be valid for any purpose unless
there shall appear on such Trust Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed
by the Owner Trustee, by manual signature; such authentication shall
constitute conclusive evidence that such Trust Certificate shall have been
duly authenticated and delivered hereunder. All Trust Certificates shall
be dated the date of their authentication.
SECTION 3.04. Registration of Transfer and Exchange of Trust
----------------------------------------------
Certificates. The Certificate Registrar shall keep or cause to be kept, at
- ------------
the office or agency maintained pursuant to Section 3.08, a Certificate
Register in which, subject to such reasonable regulations as it may
prescribe, the Owner Trustee shall provide for the registration of Trust
Certificates and of transfers and exchanges of Trust Certificates as
herein provided. _______________________ shall be the initial Certificate
Registrar.
The Certificates have not been and will not be registered under the
Securities Act and will not be listed on any exchange. No transfer of a
Certificate shall be made unless such transfer is made pursuant to an
effective registration statement under the Securities Act and any
applicable state securities laws or is exempt from the registration
requirements under said Act and such state securities laws. In the event
that a transfer is to be made in reliance upon an exemption from the
Securities Act and state securities laws, in order to assure compliance
with the Securities Act and such laws, the Holder desiring to effect such
transfer and such Holder's prospective transferee shall each certify to
the Owner Trustee and the Depositor in writing the facts surrounding the
transfer in substantially the forms set forth in Exhibit C (the
"Transferor Certificate") and Exhibit D (the "Investment Letter"). Except
in the case of a transfer as to which the proposed transferee has provided
an Investment Letter with respect to a Rule 144A transaction, there shall
also be delivered to the Owner Trustee an opinion of counsel that such
transfer may be made pursuant to an exemption from the Securities Act and
state securities laws, which opinion of counsel shall not be an expense of
the Trust, the Owner Trustee or the Indenture Trustee (unless it is the
transferee from whom such opinion is to be obtained) or of the Depositor
or (the servicer); provided that such opinion of counsel in respect of the
applicable state securities laws may be a memorandum of law rather than an
opinion if such counsel is not licensed in the applicable jurisdiction.
The Depositor shall provide to any Holder of a Certificate and any
prospective transferee designated by any such Holder information regarding
the Certificates and the Receivables and such other information as shall
be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for transfer of any such Certificate
10
<PAGE>
without registration thereof under the Securities Act pursuant to the
registration exemption provided by Rule 144A. Each Holder of a
Certificate desiring to effect such a transfer shall, and does hereby
agree to, indemnify the Issuer, the Owner Trustee, the Indenture Trustee
and the Depositor against any liability that may result if the transfer is
not so exempt or is not made in accordance with federal and state
securities laws.
No transfer of a Trust Certificate shall be made to any Person unless
the Owner Trustee has received (A) a certificate in the form of paragraph
3 to the Investment Letter attached hereto as Exhibit D from such Person
to the effect that such Person is not (i) an employee benefit plan (as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) that is subject to the provisions of Title I
of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or
(iii) any entity whose underlying assets include plan assets by reason of
a plan's investment in the entity (each, a "Benefit Plan"), (B) an opinion
of counsel satisfactory to the Owner Trustee and the Depositor to the
effect that the purchase and holding of such Trust Certificate will not
constitute or result in the assets of the Issuer being deemed to be "plan
assets" subject to the prohibited transactions provisions of ERISA or
Section 4975 of the Code and will not subject the Owner Trustee, the
Indenture Trustee or the Depositor to any obligation in addition to those
undertaken in the Basic Documents or (C) if such Person is an insurance
company, a representation that such Person is an insurance company that is
purchasing such Certificates with funds contained in an "insurance company
general account" (as such term is defined in section v(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase
and holding of such Certificates and any deemed extension of credit from a
Certificateholder which is a party in interest to a Plan, the assets of
which are held by such "Insurance Company" are covered under PTCE 95-60;
provided, however, that the Owner Trustee will
-------- -------
not require such certificate or opinion in the event that, as a result of
a change of law or otherwise, counsel satisfactory to the Owner Trustee
has rendered an opinion to the effect that the purchase and holding of a
Trust Certificate by a Benefit Plan or a Person that is purchasing or
holding such a Trust Certificate with the assets of a Benefit Plan will
not constitute or result in a prohibited transaction under ERISA or
Section 4975 of the Code. The preparation and delivery of the certificate
and opinions referred to above shall not be an expense of the Issuer, the
Owner Trustee, the Indenture Trustee, the Servicer or the Depositor.
The Owner Trustee shall cause each Certificate to contain a legend
stating that transfer of the Certificates is subject to certain
restrictions and referring prospective purchasers of the Certificates to
the terms of this Agreement with respect to such restrictions.
11
<PAGE>
Upon surrender for registration of transfer of any Trust Certificate
at the office or agency maintained pursuant to Section 3.08, the Owner
Trustee shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Trust Certificates
in authorized denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent. At the
option of a Holder, Trust Certificates may be exchanged for other Trust
Certificates of authorized denominations of a like aggregate amount upon
surrender of the Trust Certificates to be exchanged at the office or
agency maintained pursuant to Section 3.08.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate
Registrar duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Trust Certificate surrendered for
registration of transfer or exchange shall be cancelled and subsequently
disposed of by the Owner Trustee in accordance with its customary
practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Trust Certificates.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make, and the Certificate Registrar shall not register
transfers or exchanges of, Trust Certificates for a period of 15 days
preceding the due date for any payment with respect to the Trust
Certificates.
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Trust Certificates.
-------------------------------------------------------
If (a) any mutilated Trust Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any
Trust Certificate and (b) there shall be delivered to the Certificate
Registrar and the Owner Trustee such security or indemnity as may be
required by them to save each of them harmless, then in the absence of
notice that such Trust Certificate has been acquired by a bona fide
purchaser, the Owner Trustee on behalf of the Trust shall execute and the
Owner Trustee shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Trust Certificate, a new
Trust Certificate of like tenor and denomination. In connection with the
issuance of any new Trust Certificate under this Section, the Owner
Trustee or the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Trust Certificate issued
pursuant to this Section shall constitute conclusive evidence of ownership
in the Trust, as
12
<PAGE>
if originally issued, whether or not the lost, stolen or destroyed Trust
Certificate shall be found at any time.
SECTION 3.06. Persons Deemed Owners. Prior to due presentation of a
---------------------
Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar or any Paying Agent may treat the Person in whose
name any Trust Certificate is registered in the Certificate Register as
the owner of such Trust Certificate for the purpose of receiving
distributions pursuant to Section 5.02 and for all other purposes
whatsoever, and none of the Owner Trustee, the Certificate Registrar or
any Paying Agent shall be bound by any notice to the contrary.
SECTION 3.07. Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
- ---------
Servicer and the Depositor, within 15 days after receipt by the Owner
Trustee of a written request therefor from the Servicer or the Depositor,
a list, in such form as the Servicer or the Depositor may reasonably
require, of the names and addresses of the Certificateholders as of the
most recent Record Date. If three or more Certificateholders or one or
more Holders of Trust Certificates evidencing not less than 25% of the
Certificate Balance apply in writing to the Owner Trustee, and such
application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or
under the Trust Certificates and such application is accompanied by a copy
of the communication that such applicants propose to transmit, then the
Owner Trustee shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business hours to
the current list of Certificateholders. Each Holder, by receiving and
holding a Trust Certificate, shall be deemed to have agreed not to hold
any of the Depositor, the Certificate Registrar or the Owner Trustee
accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 3.08. Maintenance of Office or Agency. The Owner Trustee shall
-------------------------------
maintain in the Borough of Manhattan, The City of New York, an office or
offices or agency or agencies where Trust Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to
or upon the Owner Trustee in respect of the Trust Certificates and the
Basic Documents may be served. The Owner Trustee initially designates
__________________________________, as its office for such purposes. The
Owner Trustee shall give prompt written notice to the Depositor and to the
Certificateholders of any change in the location of the Certificate
Register or any such office or agency.
SECTION 3.09. Appointment of Paying Agent. The Paying Agent shall make
---------------------------
distributions to Certificateholders from the Certificate Distribution
Account pursuant to Section 5.02 and shall report the amounts of such
distributions to the Owner Trustee. Any Paying Agent shall have the
revocable power to withdraw funds from the
13
<PAGE>
Certificate Distribution Account for the purpose of making the
distributions referred to above. The Owner Trustee may revoke such power
and remove the Paying Agent if the Owner Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its
obligations under this Agreement in any material respect. The Owner
Trustee will be the initial Paying Agent. In the event that the Owner
Trustee shall no longer be the Paying Agent, the Owner Trustee shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company). The Owner Trustee shall cause such successor Paying Agent or
any additional Paying Agent appointed by the Owner Trustee to execute and
deliver to the Owner Trustee an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Owner Trustee that,
as Paying Agent, such successor Paying Agent or additional Paying Agent
will hold all sums, if any, held by it for payment to the
Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders.
The Paying Agent shall return all unclaimed funds to the Owner Trustee and
upon removal of a Paying Agent such Paying Agent shall also return all
funds in its possession to the Owner Trustee. The provisions of
Sections 7.01, 7.03, 7.04 and 8.01 shall apply to the Owner Trustee also
in its role as Paying Agent, for so long as the Owner Trustee shall act as
Paying Agent and, to the extent applicable, to any other paying agent
appointed hereunder. Any reference in this Agreement to the Paying Agent
shall include any co-paying agent unless the context requires otherwise.
SECTION 3.10. Ownership by Depositor of Trust Certificates. The
--------------------------------------------
Depositor shall on the Closing Date retain Trust Certificates representing
at least (1)% of the Initial Certificate Balance and shall thereafter
retain beneficial and record ownership of Trust Certificates representing
at least (1)% of the Certificate Balance. Any attempted transfer of any
Trust Certificate that would reduce such interest of the Depositor below
(1)% of the Certificate Balance shall be void. The Owner Trustee shall
cause any Trust Certificate issued to the Depositor to contain a legend
stating "THIS CERTIFICATE IS NON-TRANSFERABLE".
ARTICLE IV
Actions by Owner Trustee
------------------------
SECTION 4.01. Prior Notice to Owners 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 Owners shall not have notified the Owner Trustee
in writing prior to the
14
<PAGE>
30th day after such notice is given that such Owners 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
Receivables) and the compromise of any action, claim or lawsuit brought by
or against the Trust (except with respect to the aforementioned claims or
lawsuits for collection of the Receivables);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under
the Business Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment would materially adversely affect the interests of the Owners;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner or add any provision that would not materially
adversely affect the interests of the Owners; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement
of a successor Certificate Registrar, or the consent to the assignment by
the Note Registrar, Paying Agent or Indenture Trustee or Certificate
Registrar of its obligations under the Indenture or this Agreement, as
applicable.
SECTION 4.02. Action by Owners with Respect to Certain Matters. The
------------------------------------------------
Owner Trustee shall not have the power, except upon the written direction
of the Owners, to (a) remove the Administrator under the Administration
Agreement pursuant to Section 8 thereof, (b) appoint a successor
Administrator under the Administration Agreement pursuant to Section 8
thereof, (c) remove the Servicer under the Sale and Servicing Agreement
pursuant to Section 8.01 thereof or (d) except as expressly provided in
the Basic Documents, sell the Receivables after the termination of the
Indenture. The Owner Trustee shall take the actions referred to in the
preceding sentence only upon written instructions signed by the Owners.
SECTION 4.03. Action by Owners with Respect to Bankruptcy. The Owner
-------------------------------------------
Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the unanimous prior approval of
all Owners and the delivery to the
15
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Owner Trustee by each such Owner of a certificate certifying that such
Owner reasonably believes that the Trust is insolvent.
SECTION 4.04. Restrictions on Owners' Power. The Owners shall not
-----------------------------
direct the Owner Trustee to take or to refrain from taking any action if
such action or inaction would be contrary to any obligation of the Trust
or the Owner Trustee under this Agreement or any of the Basic Documents or
would be contrary to Section 2.03 or contrary to applicable law, nor shall
the Owner Trustee be obligated to follow any such direction, if given.
SECTION 4.05. Majority Control. Except as expressly provided herein,
----------------
any action that may be taken by the Owners under this Agreement may be
taken by the Holders of Trust Certificates evidencing not less than a
majority of the Certificate Balance. Except as expressly provided herein,
any written notice of the Owners delivered pursuant to this Agreement
shall be effective if signed by Holders of Trust Certificates evidencing
not less than a majority of the Certificate Balance at the time of the
delivery of such notice.
ARTICLE V
Application of Trust Funds; Certain Duties
------------------------------------------
SECTION 5.01. Establishment of Trust Account. The Owner Trustee, for
------------------------------
the benefit of the Certificateholders, shall establish and maintain in the
name of the Trust an Eligible Deposit Account (the "Certificate
Distribution Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the
Certificateholders.
The Owner Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Certificate Distribution Account
and in all proceeds thereof. Except as otherwise expressly provided
herein, the Certificate Distribution Account shall be under the sole
dominion and control of the Owner Trustee for the benefit of the
Certificateholders. If, at any time, the Certificate Distribution Account
ceases to be an Eligible Deposit Account, the Owner Trustee (or the
Depositor on behalf of the Owner Trustee, if the Certificate Distribution
Account is not then held by the Owner Trustee or an affiliate thereof)
shall within 10 Business Days (or such longer period, not to exceed
30 calendar days, as to which each Rating Agency may consent) establish a
new Certificate Distribution Account as an Eligible Deposit Account and
shall transfer any cash and/or any investments to such new Certificate
Distribution Account.
SECTION 5.02. Application of Trust Funds. (a) On each Distribution
--------------------------
Date, the Owner Trustee will distribute to Certificateholders, on a pro
rata basis, amounts deposited in the Certificate Distribution Account
pursuant to Sections 5.05 and 5.06
16
<PAGE>
of the Sale and Servicing Agreement with respect to such Distribution
Date.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement or statements provided to the Owner
Trustee by the Servicer pursuant to Section 5.07 of the Sale and Servicing
Agreement with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the
amount otherwise distributable to the Owner in accordance with this
Section. The Owner Trustee is hereby authorized and directed to retain
from amounts otherwise distributable to the Owners sufficient funds for
the payment of any tax that is legally owed by the Trust (but such
authorization shall not prevent the Owner Trustee from contesting any such
tax in appropriate proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The amount of
any withholding tax imposed with respect to an Owner shall be treated as
cash distributed to such Owner at the time it is withheld by the Trust and
remitted to the appropriate taxing authority. If there is a possibility
that withholding tax is payable with respect to a distribution (such as a
distribution to a non-U.S. Owner), the Owner Trustee may in its sole
discretion withhold such amounts in accordance with this paragraph (c).
SECTION 5.03. Method of Payment. Subject to Section 9.01(c),
-----------------
distributions required to be made to Certificateholders on any
Distribution Date shall be made to each Certificateholder of record on the
preceding Record Date either (x) by wire transfer, in immediately
available funds, to the account of such Holder at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall
have provided to the Certificate Registrar appropriate written
instructions no later than the Record Date prior to such Distribution
Date, or (y) if such Holder does not qualify under clause (x), by check
mailed to such Certificateholder at the address of such holder appearing
in the Certificate Register.
SECTION 5.04. No Segregation of Moneys; No Interest. Subject to
-------------------------------------
Sections 5.01 and 5.02, moneys received by the Owner Trustee hereunder
need not be segregated in any manner except to the extent required by law
or the Sale and Servicing Agreement and may be deposited under such
general conditions as may be prescribed by law, and the Owner Trustee
shall not be liable for any interest thereon.
SECTION 5.05. Accounting and Reports to the Noteholders, Owners, the
------------------------------------------------------
Internal Revenue Service and Others. The Owner Trustee shall (a) maintain
- -----------------------------------
(or cause to be maintained) the books of the Trust on a calendar year
basis and the accrual method of accounting, (b) deliver to each Owner, as
may be required by the
17
<PAGE>
Code and applicable Treasury Regulations, such information as may be
required (including Schedule K-1) to enable each Owner to prepare its
federal and state income tax returns, (c) file such tax returns relating
to the Trust (including a partnership information return, IRS Form 1065)
and make such elections as from time to time may be required or
appropriate under any applicable state or federal statute or any rule or
regulation thereunder so as to maintain the Trust's characterization as a
partnership for federal income tax purposes, (d) cause such tax returns to
be signed in the manner required by law and (e) collect or cause to be
collected any withholding tax as described in and in accordance with
Section 5.02(c) with respect to income or distributions to Owners. The
Owner Trustee shall elect under Section 1278 of the Code to include in
income currently any market discount that accrues with respect to the
Receivables. The Owner Trustee shall not make the election provided under
Section 754 of the Code.
SECTION 5.06. Signature on Returns; Tax Matters Partner. (a) The
-----------------------------------------
Owner Trustee shall sign on behalf of the Trust the tax returns of the
Trust, unless applicable law requires an Owner to sign such documents, in
which case such documents shall be signed by the Depositor.
(b) The Depositor shall be designated the "tax matters partner" of
the Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable
Treasury Regulations.
ARTICLE VI
Authority and Duties of Owner Trustee
-------------------------------------
SECTION 6.01. General Authority. The Owner Trustee is authorized and
-----------------
directed to execute and deliver the Basic Documents to which the Trust is
to be a party and each certificate or other document attached as an
exhibit to or contemplated by the Basic Documents to which the Trust is to
be a party and, in each case, in such form as the Depositor shall approve,
as evidenced conclusively by the Owner Trustee's execution thereof. In
addition to the foregoing, the Owner Trustee is authorized, but shall not
be obligated, to take all actions required of the Trust pursuant to the
Basic Documents. The Owner Trustee is further authorized from time to
time to take such action as the Administrator recommends with respect to
the Basic Documents.
SECTION 6.02. General Duties. It shall be the duty of the Owner
--------------
Trustee 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 Owners, subject to the Basic Documents and in accordance
with the provisions of this Agreement. Notwithstanding the foregoing, the
Owner Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under
18
<PAGE>
the Basic Documents to the extent the Administrator has agreed in the
Administration Agreement to perform any act or to discharge any duty of
the Owner Trustee hereunder or under any Basic Document, and the Owner
Trustee shall not be held liable for the default or failure of the
Administrator to carry out its obligations under the Administration
Agreement.
SECTION 6.03. Action upon Instruction. (a) Subject to Article IV and
-----------------------
in accordance with the terms of the Basic Documents, the Owners may by
written instruction direct the Owner Trustee in the management of the
Trust. Such direction may be exercised at any time by written instruction
of the Owners pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Owner Trustee
or is contrary to the terms hereof or of any Basic Document or is
otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or under any Basic Document, the Owner Trustee shall promptly
give notice (in such form as shall be appropriate under the circumstances)
to the Owners 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 Owners received, the Owner
Trustee shall not be liable on account of such action to any Person. If
the Owner Trustee shall not have received appropriate instruction within
10 days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action not inconsistent with this Agreement or the Basic
Documents, as it shall deem to be in the best interests of the Owners, and
shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or
any such provision is ambiguous as to its application, or is, or appears
to be, in conflict with any other applicable provision, or in the event
that this Agreement permits any determination by the Owner Trustee or is
silent or is incomplete as to the course of action that the Owner Trustee
is required to take with respect to a particular set of facts, the Owner
Trustee may give notice (in such form as shall be appropriate under the
circumstances) to the Owners requesting instruction and, to the extent
that the Owner Trustee acts or refrains from acting in good faith in
accordance with any such instruction received, the Owner Trustee shall not
be liable, on account of such action or inaction, to any Person. If the
Owner Trustee shall not have received
19
<PAGE>
appropriate instruction within 10 days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or
may be necessary under the circumstances) it may, but shall be under no
duty to, take or refrain from taking such action not inconsistent with
this Agreement or the Basic Documents, as it shall deem to be in the best
interests of the Owners, and shall have no liability to any Person for
such action or inaction.
SECTION 6.04. No Duties Except as Specified in this Agreement or in
-----------------------------------------------------
Instructions. The Owner Trustee shall not have any duty or obligation to
- ------------
manage, make any payment with respect to, register, record, sell, dispose
of, or otherwise deal with the Owner Trust Estate, or to otherwise take or
refrain from taking any action under, or in connection with, any document
contemplated hereby to which the Owner Trustee is a party, except as
expressly provided by the terms of this Agreement or in any document or
written instruction received by the Owner Trustee pursuant to
Section 6.03; and no implied duties or obligations shall be read into this
Agreement or any Basic Document against the Owner Trustee. The Owner
Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Agreement or any Basic
Document. The Owner Trustee nevertheless agrees that it will, at its own
cost and expense, promptly take all action as may be necessary to
discharge any liens on any part of the Owner Trust Estate that result from
actions by, or claims against, the Owner Trustee that are not related to
the ownership or the administration of the Owner Trust Estate.
SECTION 6.05. No Action Except Under Specified Documents or
---------------------------------------------
Instructions. The Owner Trustee shall not manage, control, use, sell,
- ------------
dispose of or otherwise deal with any part of the Owner Trust Estate
except (i) in accordance with the powers granted to and the authority
conferred upon the Owner Trustee pursuant to this Agreement, (ii) in
accordance with the Basic Documents and (iii) in accordance with any
document or instruction delivered to the Owner Trustee pursuant to
Section 6.03.
SECTION 6.06. Restrictions. The Owner Trustee shall not take any
------------
action (a) that is inconsistent with the purposes of the Trust set forth
in Section 2.03 or (b) that, to the actual knowledge of the Owner Trustee,
would result in the Trust's becoming taxable as a corporation for federal
income tax purposes. The Owners shall not direct the Owner Trustee to
take action that would violate the provisions of this Section.
20
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ARTICLE VII
Concerning the Owner Trustee
----------------------------
SECTION 7.01. Acceptance of Trusts and Duties. The Owner Trustee
-------------------------------
accepts the trusts hereby created and agrees to perform its duties
hereunder with respect to such trusts, but only upon the terms of this
Agreement. The Owner Trustee also agrees to disburse all moneys actually
received by it constituting part of the Owner 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 negligence in the case of handling funds), (ii) for
liabilities arising from the failure by the Owner Trustee to perform
obligations expressly undertaken by it in the last sentence of Section
6.04 hereof, (iii) for any investments made by the Owner Trustee with
_______________________ (in its individual capacity) in its commercial
capacity, (iv) in the case of the inaccuracy of any representation or
warranty contained in Section 7.03 expressly made by the Owner Trustee or
(v) for federal or ___________ taxes, fees or other charges, based on or
measured by any fees, commissions or compensation received by the Owner
Trustee in connection with any of the transactions contemplated by this
Agreement or any of the Basic Documents. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) The Owner Trustee shall not be liable for any error of judgment
made by a Trust Officer of the Owner Trustee;
(b) The Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of
the Administrator or any Owner;
(c) No provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any Basic Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) Under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(e) The Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution
hereof by the Depositor or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate, or for or
in respect of the validity or sufficiency of the Basic Documents, other
than the certificate of
21
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authentication on the Trust Certificates, and the Owner Trustee shall in
no event assume or incur any liability, duty or obligation to any
Noteholder or to any Owner, other than as expressly provided for herein or
expressly agreed to in the Basic Documents;
(f) The Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Depositor, the Indenture Trustee, the
Servicer or the Backup Servicer under any of the Basic Documents or
otherwise, and the Owner Trustee shall have no obligation or liability to
perform the obligations of the Trust under this Agreement or the Basic
Documents that are required to be performed by the Administrator under the
Administration Agreement, the Indenture Trustee under the Indenture or the
Servicer or Financial Asset Securities Corp., as Depositor under the Sale
and Servicing Agreement; and
(g) The Owner Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Basic Document, at the request, order or
direction of any of the Owners, unless such Owners have offered to the
Owner Trustee security or indemnity satisfactory to it against the costs,
expenses and liabilities that may be incurred by the Owner Trustee therein
or thereby. The right of the Owner Trustee to perform any discretionary
act enumerated in this Agreement or in any Basic Document shall not be
construed as a duty, and the Owner Trustee shall not be answerable for
other than its negligence or willful misconduct in the performance of any
such act.
SECTION 7.02. Furnishing of Documents. The Owner Trustee shall furnish
-----------------------
to the Owners promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to
the Owner Trustee under the Basic Documents.
SECTION 7.03. Representations and Warranties. The Owner Trustee hereby
------------------------------
represents and warrants to the Depositor, for the benefit of the Owners,
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.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf.
22
<PAGE>
(c) Neither the execution or the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby, nor
compliance by it with any of the terms or provisions hereof will
contravene any federal or _____________ law, governmental rule or
regulation governing the banking or trust powers of the Owner Trustee or
any judgment or order binding on it, or constitute any default under its
charter documents or bylaws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound.
SECTION 7.04. Reliance; Advice of Counsel. (a) The Owner Trustee
---------------------------
shall incur no liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond, or other document or paper believed by it to be
genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee may accept a certified copy of a resolution of the board
of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that
the same is in full force and effect. As to any fact or matter the method
of determination of which is not specifically prescribed herein, the Owner
Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer or other authorized
officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any
action taken or omitted to be taken by it in good faith in reliance
thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Basic Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them,
and the Owner Trustee shall not be liable for the conduct or misconduct of
such agents or attorneys if such agents or attorneys shall have been
selected by the Owner Trustee with reasonable care, and (ii) may consult
with counsel, accountants and other skilled Persons to be selected with
reasonable care and employed by it. The Owner Trustee shall not be liable
for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such counsel, accountants or
other such Persons and not contrary to this Agreement or any Basic
Document.
SECTION 7.05. Not Acting in Individual Capacity. Except as provided
---------------------------------
in this Article VII, in accepting the trusts hereby created
_______________________ acts solely as Owner Trustee hereunder and not in
its individual capacity, and all Persons having any claim against the
Owner Trustee by reason of the transactions contemplated by this Agreement
or any Basic Document shall look only to the Owner Trust Estate for
payment or satisfaction thereof.
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SECTION 7.06. Owner Trustee Not Liable for Trust Certificates or
--------------------------------------------------
Receivables. The Owner Trustee makes no representations as to the validity
- -----------
or sufficiency of this Agreement, of any Basic Document or of the Trust
Certificates (other than the signature and countersignature of the Owner
Trustee on the Trust Certificates) or the Notes, or of any Receivable or
related documents. The Owner Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity
and enforceability of any Receivable, or the perfection and priority of
any security interest created by any Receivable in any Financed Vehicle or
the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Owner Trust Estate or its ability to
generate the payments to be distributed to Certificateholders under this
Agreement or the Noteholders under the Indenture, including, without
limitation: the existence, condition and ownership of any Financed
Vehicle; the existence and enforceability of any insurance thereon; the
existence and contents of any Receivable on any computer or other record
thereof; the validity of the assignment of any Receivable to the Trust or
of any intervening assignment; the completeness of any Receivable; the
performance or enforcement of any Receivable; the compliance by the
Depositor or the Servicer with any warranty or representation made under
any Basic Document or in any related document or the accuracy of any such
warranty or representation, or any action of the Administrator, the
Indenture Trustee or the Servicer or any subservicer taken in the name of
the Owner Trustee.
SECTION 7.07. Owner Trustee May Own Trust Certificates and Notes. The
--------------------------------------------------
Owner Trustee in its individual or any other capacity may become the owner
or pledgee of Trust Certificates or Notes and may deal with the Depositor,
the Administrator, the Indenture Trustee and the Servicer in banking
transactions with the same rights as it would have if it were not Owner
Trustee.
ARTICLE VIII
Compensation of Owner Trustee
-----------------------------
SECTION 8.01. Owner Trustee's Fees and Expenses. The Owner Trustee
---------------------------------
shall receive as compensation for its services hereunder such fees as have
been separately agreed upon before the date hereof between the Depositor
and the Owner Trustee, and the Owner Trustee shall be entitled to be
reimbursed by the Administrator pursuant to the Administration Agreement
for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
SECTION 8.02. Indemnification. Pursuant to the Administration
---------------
Agreement, the Administrator shall be liable as primary obligor for, and
shall indemnify the Owner Trustee and its successors,
24
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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 Owner Trust Estate, the administration
of the Owner Trust Estate or the action or inaction of the Owner Trustee
hereunder, except only that the Administrator shall not be liable for or
required to indemnify an Indemnified Party from and against Expenses
arising or resulting from any of the matters described in the third
sentence of Section 7.01. The indemnities contained in this Section shall
survive the resignation or termination of the Owner Trustee or the
termination of this Agreement. In any event of any claim, action or
proceeding for which indemnity will be sought pursuant to this Section,
the Owner Trustee's choice of legal counsel shall be subject to the
approval of the Administrator, which approval shall not be unreasonably
withheld.
SECTION 8.03. Payments to the Owner Trustee. Any amounts paid to the
-----------------------------
Owner Trustee pursuant to this Article VIII shall be deemed not to be a
part of the Owner Trust Estate immediately after such payment.
ARTICLE IX
Termination of Trust Agreement
------------------------------
SECTION 9.01. Termination of Trust Agreement. (a) This Agreement
------------------------------
(other than Article VIII) and the Trust shall terminate and be of no
further force or effect (i) upon the final distribution by the Owner
Trustee of all moneys or other property or proceeds of the Owner Trust
Estate in accordance with the terms of the Indenture, the Sale and
Servicing Agreement and Article V or (ii) at the time provided in
Section 9.02. The bankruptcy, liquidation, dissolution, death or
incapacity of any Owner, other than the Depositor as described in
Section 9.02, shall not (x) operate to terminate this Agreement or the
Trust or (y) entitle such Owner'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 Owner Trust
Estate or (z) otherwise affect the rights, obligations and liabilities of
the parties hereto.
(b) Except as provided in Section 9.01(a), neither the Depositor nor
any Owner shall be entitled to revoke or terminate the Trust.
25
<PAGE>
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which Certificateholders shall surrender their
Trust Certificates to the Paying Agent for payment of the final
distribution and cancellation, shall be given by the Owner Trustee by
letter to Certificateholders mailed within five Business Days of receipt
of notice of such termination from the Servicer given pursuant to
Section 9.01(c) of the Sale and Servicing Agreement, stating (i) the
Distribution Date upon or with respect to which final payment of the Trust
Certificates shall be made upon presentation and surrender of the Trust
Certificates at the office of the Paying Agent therein designated,
(ii) the amount of any such final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Trust Certificates
at the office of the Paying Agent therein specified. The Owner Trustee
shall give such notice to the Certificate Registrar (if other than the
Owner Trustee) and the Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Trust
Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date
pursuant to Section 5.02.
In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall
give a second written notice to the remaining Certificateholders to
surrender their Trust Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second
notice all the Trust Certificates shall not have been surrendered for
cancellation, the Owner Trustee may take appropriate steps, or may appoint
an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Trust Certificates, and
the cost thereof shall be paid out of the funds and other assets that
shall remain subject to this Agreement. Any funds remaining in the Trust
after exhaustion of such remedies shall be distributed by the Owner
Trustee to the Depositor.
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3810 of the Business Trust Statute.
SECTION 9.02. Dissolution upon Bankruptcy of the Depositor. In the
--------------------------------------------
event that an Insolvency Event shall occur with respect to the Depositor,
this Agreement shall be terminated in accordance with Section 9.01
90 days after the date of such Insolvency Event, unless, before the end of
such 90-day period, the Owner Trustee shall have received written
instructions from (a) Holders of Certificates (other than the Depositor)
representing more than 50% of the Certificate Balance (not including the
Certificate Balance of the Trust Certificates held by the Depositor) and
(b) each of
26
<PAGE>
the (i) Holders (as defined in the Indenture) of Class A-1 Notes
representing more than 50% of the Outstanding Amount of the Class A-1
Notes and (ii) Holders (as defined in the Indenture) of Class A-2 Notes
representing more than 50% of the Outstanding Amount of the Class A-2
Notes, to the effect that each such party disapproves of the liquidation
of the Receivables and termination of the Trust. Promptly after the
occurrence of any Insolvency Event with respect to the Depositor, (A) the
Depositor shall give the Indenture Trustee and the Owner Trustee written
notice of such Insolvency Event, (B) the Owner Trustee shall, upon the
receipt of such written notice from the Depositor, give prompt written
notice to the Certificateholders and the Indenture Trustee, of the
occurrence of such event and (C) the Indenture Trustee shall, upon receipt
of written notice of such Insolvency Event from the Owner Trustee or the
Depositor, 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
9.02. Upon a termination pursuant to this Section, the Owner Trustee
shall direct the Indenture Trustee promptly to sell the assets of the
Trust (other than the Trust Accounts and the Certificate Distribution
Account), 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 Sale and Servicing Agreement.
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
------------------------------------------------------
SECTION 10.01. Eligibility Requirements for Owner Trustee. The Owner
------------------------------------------
Trustee shall at all times be a corporation satisfying the provisions of
Section 3807(a) of the Business Trust Statute; authorized to exercise
corporate trust powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authorities. If such corporation shall publish reports of condition at
least annually pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section,
the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease
to be eligible in accordance with the provisions of this Section, the
Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.02.
SECTION 10.02. Resignation or Removal of Owner Trustee. The Owner
---------------------------------------
Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Administrator. Upon
receiving such notice of resignation, the
27
<PAGE>
Administrator shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered
to the resigning Owner Trustee and one copy to the successor Owner
Trustee. If no successor Owner Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice
of resignation, the resigning Owner Trustee may petition any court of
competent jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign
after written request therefor by the Administrator, or if at any time the
Owner Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Owner Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Owner Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Administrator may
remove the Owner Trustee. If the Administrator shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the
Administrator shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered
to the outgoing Owner Trustee so removed and one copy to the successor
Owner Trustee, and shall pay all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the
successor Owner Trustee pursuant to Section 10.03 and payment of all fees
and expenses owed to the outgoing Owner Trustee. The Administrator shall
provide notice of such resignation or removal of the Owner Trustee to each
Rating Agency.
SECTION 10.03. Successor Owner Trustee. Any successor Owner Trustee
-----------------------
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver
to the Administrator and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become
effective, and such successor Owner Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor under this Agreement, with like
effect as if originally named as Owner Trustee. The predecessor Owner
Trustee shall upon payment of its fees and expenses deliver to the
successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Administrator and the predecessor Owner
Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties
and obligations.
28
<PAGE>
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner
Trustee shall be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, the Administrator shall mail notice thereof to all
Certificateholders, the Indenture Trustee, the Noteholders and the Rating
Agencies. If the Administrator shall fail to mail such notice within
10 days after acceptance of such appointment by the successor Owner
Trustee, the successor Owner Trustee shall cause such notice to be mailed
at the expense of the Administrator.
SECTION 10.04. Merger or Consolidation of Owner Trustee. Any
----------------------------------------
corporation into which the Owner Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Owner Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Owner Trustee, shall be the successor of
the Owner Trustee hereunder, without the execution or filing of any
instrument or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, that such
corporation shall be eligible pursuant to Section 10.01 and, provided,
further, that the Owner Trustee shall mail notice of such merger or
consolidation to each Rating Agency.
SECTION 10.05. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Financed Vehicle may at the time
be located, the Administrator and the Owner Trustee acting jointly shall
have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Administrator and Owner Trustee to act
as co-trustee, jointly with the Owner Trustee, or as separate trustee or
separate trustees, of all or any part of the Owner Trust Estate, and to
vest in such Person, in such capacity, such title to the Trust or any part
thereof and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Administrator and the Owner
Trustee may consider necessary or desirable. If the Administrator shall
not have joined in such appointment within 15 days after the receipt by it
of a request so to do, the Owner Trustee alone shall have the power to
make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a
successor Owner Trustee pursuant to Section 10.01 and no notice of the
appointment of any co-trustee or separate trustee shall be required
pursuant to Section 10.03.
29
<PAGE>
Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(a) All rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not
authorized to act separately without the Owner Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Owner Trust Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Owner Trustee;
(b) No trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(c) The Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or co-
trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested
with the estates or property specified in its instrument of appointment,
either jointly with the Owner Trustee or separately, as may be provided
therein, subject to all the provisions of this Agreement, specifically
including every provision of this Agreement relating to the conduct of,
affecting the liability of, or affording protection to, the Owner Trustee.
Each such instrument shall be filed with the Owner Trustee and a copy
thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect
of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed,
all of its estates, properties, rights, remedies and trusts shall vest in
and be exercised by the Owner Trustee, to the extent permitted by law,
without the appointment of a new or successor co-trustee or separate
trustee.
30
<PAGE>
ARTICLE XI
Miscellaneous
-------------
SECTION 11.01. Supplements and Amendments. This Agreement may be
--------------------------
amended by the Depositor and the Owner Trustee, with prior written notice
to each Rating Agency, without the consent of any of the Noteholders or
the Certificateholders, to cure any ambiguity, to correct or supplement
any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions in this Agreement or of modifying in any manner the rights of
the Noteholders or the Certificateholders; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Noteholder or
Certificateholder.
This Agreement may also be amended from time to time by the Depositor
and the Owner Trustee, with prior written notice to each Rating Agency,
with the consent of the Holders (as defined in the Indenture) of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes
and the consent of the Holders of Certificates evidencing not less than a
majority of the Certificate Balance, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of
the Noteholders or the Certificateholders; provided, however, that no such
amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables
or distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders or (b) reduce the aforesaid
percentage of the Outstanding Amount of the Notes and the Certificate
Balance required to consent to any such amendment, without the consent of
the holders of all the outstanding Notes and Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and
each Rating Agency.
It shall not be necessary for the consent of Certificateholders,
Noteholders or the Indenture Trustee pursuant to this Section to approve
the particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents (and any other consents of
Certificateholders provided for in this Agreement or in any other Basic
Document) and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the
Owner Trustee may prescribe.
31
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Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement. The Owner Trustee
may, but shall not be obligated to, enter into any such amendment that
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
In connection with the execution of any amendment to this Trust
Agreement or any amendment of any other agreement to which the Issuer is a
party, the Owner Trustee shall be entitled to receive and conclusively
rely upon an Opinion of Counsel to the effect that such amendment is
authorized or permitted by the Basic Documents and that all conditions
precedent in the Basic Documents for the execution and delivery thereof by
the Issuer or the Owner Trustee, as the case may be, have been satisfied.
SECTION 11.02. No Legal Title to Owner Trust Estate in Owners. The
----------------------------------------------
Owners shall not have legal title to any part of the Owner Trust Estate.
The Owners shall be entitled to receive distributions with respect to
their undivided ownership interest therein only in accordance with
Articles V and IX. No transfer, by operation of law or otherwise, of any
right, title or interest of the Owners to and in their ownership interest
in the Owner 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 Owner Trust Estate.
SECTION 11.03. Limitations on Rights of Others. Except for
-------------------------------
Section 2.07, the provisions of this Agreement are solely for the benefit
of the Owner Trustee, the Depositor, the Owners, the Administrator and, to
the extent expressly provided herein, the Indenture Trustee and the
Noteholders, and nothing in this Agreement (other than Section 2.07
hereof), whether express or implied, shall be construed to give to any
other Person any legal or equitable right, remedy or claim in the Owner
Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 11.04. Notices. (a) Unless otherwise expressly specified or
-------
permitted by the terms hereof, all notices shall be in writing and shall
be deemed given upon receipt by the intended recipient or three Business
Days after mailing if personally delivered or mailed by certified mail,
return receipt requested and postage prepaid or by recognized overnight
courier or by facsimile confirmed by delivery or mail as described above
(except that notice to the Owner Trustee shall be deemed given only upon
actual receipt by the Owner Trustee), if to the Owner Trustee, addressed
32
<PAGE>
to the Corporate Trust Office; if to the Depositor, addressed to Financial
Asset Securities Corp.,
_______________________________________________________; or, as to each
party, at such other address as shall be designated by such party in a
written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at
the address of such Holder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION 11.05. Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 11.06. Separate Counterparts. This Agreement may be executed
---------------------
by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 11.07. Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon, and inure to the benefit of, each
of the Depositor and its permitted assignees, the Owner Trustee and its
successors and each Owner and its successors and permitted assigns, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by an Owner shall bind the successors and assigns of
such Owner.
SECTION 11.08. Covenants of the Depositor. In the event that
--------------------------
(a) Certificateholders' Principal Carryover Shortfalls shall occur or
(b) any litigation with claims in excess of $1,000,000 to which the
Depositor is a party which shall be reasonably likely to result in a
material judgment against the Depositor that the Depositor will not be
able to satisfy shall be commenced by an Owner, during the period
beginning nine months following the commencement of such litigation and
continuing until such litigation is dismissed or otherwise terminated
(and, if such litigation has resulted in a final judgment against the
Depositor, such judgment has been satisfied), ((the Depositor shall not
pay any dividend to _______, or make any distribution on or in respect of
its capital stock to _______, or repay the principal amount of any
indebtedness of the Depositor held by ______, unless)) (i) after giving
effect to such payment, distribution or repayment, the Depositor's liquid
assets shall not be less than the amount of actual damages claimed in such
litigation or (ii) the Rating Agency Condition shall have been satisfied
with respect to any such payment, distribution or
33
<PAGE>
repayment. The Depositor will not at any time institute against the Trust
any bankruptcy proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to
the Trust Certificates, the Notes, the Trust Agreement or any of the Basic
Documents.
SECTION 11.09. No Petition. The Owner Trustee, by entering into this
-----------
Agreement, each Certificateholder, by accepting a Trust Certificate, and
the Indenture Trustee and each Noteholder, by accepting the benefits of
this Agreement, hereby covenant and agree that they will not at any time
institute against the Depositor or the Trust, or join in any institution
against the Depositor or the Trust of, any bankruptcy proceedings under
any United States federal or state bankruptcy or similar law in connection
with any obligations relating to the Trust Certificates, the Notes, this
Agreement or any of the Basic Documents.
SECTION 11.10. No Recourse. Each Certificateholder by accepting a Trust
-----------
Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Trust only and do not represent
interests in or obligations of the Depositor, the Servicer, the
Administrator, the Owner Trustee, the Indenture 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 Trust Certificates or the Basic Documents.
SECTION 11.11. Headings. The headings of the various Articles and
--------
Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13. (Reserved.)
SECTION 11.14. Depositor Payment Obligation. The Depositor shall be
----------------------------
responsible for payment of the Administrator's fees under the
Administration Agreement and shall reimburse the Administrator for all
expenses and liabilities of the Administrator incurred thereunder. In
addition, the Depositor shall be responsible for the payment of all fees
and expenses of the Trust, the Owner Trustee and the Indenture Trustee
paid by any of them in connection with any of their obligations under the
Basic Documents to obtain or maintain any required license under the Motor
Vehicle Sales Finance Act.
* * * * * *
34
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
FINANCIAL ASSET SECURITIES CORP.,
as Depositor,
by:
-----------------------------
Name:
Title:
_______________________,
not in its individual capacity but solely as
Owner Trustee,
by:
-----------------------------
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF TRUST CERTIFICATE
-------------------------
THIS CERTIFICATE IS SUBORDINATED TO THE NOTES, AS SET FORTH IN THE SALE
AND SERVICING AGREEMENT.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE
SECURITIES OR BLUE SKY LAWS OF ANY STATE IN THE UNITED STATES OR ANY
FOREIGN SECURITIES LAWS. BY ITS ACCEPTANCE OF THIS CERTIFICATE THE HOLDER
HEREOF IS DEEMED TO REPRESENT TO THE DEPOSITOR AND THE OWNER TRUSTEE
(i) THAT IT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) OF REGULATION D PROMULGATED UNDER THE 1933 ACT (AN "ACCREDITED
INVESTOR") AND THAT IT IS ACQUIRING THIS CERTIFICATE FOR ITS OWN ACCOUNT
(AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS
(WHICH OTHERS ALSO ARE ACCREDITED INVESTORS UNLESS THE HOLDER IS A BANK
ACTING IN ITS FIDUCIARY CAPACITY) FOR INVESTMENT AND NOT WITH A VIEW TO,
OR FOR OFFER OR SALE IN CONNECTION WITH, THE PUBLIC DISTRIBUTION HEREOF
OR (ii) THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE 1933 ACT AND IS ACQUIRING SUCH CERTIFICATE FOR ITS OWN
ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT
FOR OTHERS (WHICH OTHERS ALSO ARE QUALIFIED INSTITUTIONAL BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE BY ANY
PERSON UNLESS EITHER (i) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO
THE DEPOSITOR, (ii) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO AN
ACCREDITED INVESTOR THAT EXECUTES A CERTIFICATE, SUBSTANTIALLY IN THE FORM
SPECIFIED IN THE TRUST AGREEMENT, TO THE EFFECT THAT IT IS AN ACCREDITED
INVESTOR ACTING FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR
AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE ACCREDITED
INVESTORS UNLESS THE HOLDER IS A BANK ACTING IN ITS FIDUCIARY CAPACITY),
(iii) SO LONG AS THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE 1933 ACT, SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO A
PERSON WHOM THE PROSPECTIVE TRANSFEROR REASONABLY BELIEVES AFTER DUE
INQUIRY IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A),
ACTING FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A
FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE QUALIFIED
INSTITUTIONAL BUYERS) TO WHOM NOTICE IS GIVEN THAT THE SALE, PLEDGE OR
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (iv) SUCH SALE, PLEDGE
OR OTHER TRANSFER IS OTHERWISE MADE IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT, IN WHICH CASE THE OWNER TRUSTEE
SHALL REQUIRE THAT BOTH THE PROSPECTIVE TRANSFEROR AND THE PROSPECTIVE
TRANSFEREE CERTIFY TO THE OWNER TRUSTEE AND THE DEPOSITOR IN WRITING THE
FACTS SURROUNDING SUCH TRANSFER, WHICH CERTIFICATION SHALL BE IN FORM AND
SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE AND THE DEPOSITOR. EXCEPT IN
THE CASE OF A TRANSFER DESCRIBED IN CLAUSES
A-1
<PAGE>
(i) OR (iii) ABOVE, THE OWNER TRUSTEE SHALL REQUIRE A WRITTEN OPINION OF
COUNSEL (WHICH SHALL NOT BE AT THE EXPENSE OF THE DEPOSITOR, ANY AFFILIATE
OF THE DEPOSITOR OR THE OWNER TRUSTEE) SATISFACTORY TO THE DEPOSITOR AND
THE OWNER TRUSTEE TO THE EFFECT THAT SUCH TRANSFER WILL NOT VIOLATE THE
1933 ACT. NO SALE, PLEDGE OR OTHER TRANSFER MAY BE MADE TO ANY ONE PERSON
FOR SECURITIES WITH A FACE AMOUNT OF LESS THAN $100,000 AND, IN THE CASE
OF ANY PERSON ACTING ON BEHALF OF ONE OR MORE THIRD PARTIES (OTHER THAN A
BANK (AS DEFINED IN SECTION 3(a)(2) OF THE 1933 ACT) ACTING IN ITS
FIDUCIARY CAPACITY), FOR SECURITIES WITH A FACE AMOUNT OF LESS THAN
$100,000 FOR EACH SUCH THIRD PARTY."
EACH SECURITYHOLDER, BY ITS ACCEPTANCE OF THIS SECURITY, COVENANTS AND
AGREES THAT SUCH SECURITYHOLDER, SHALL NOT, PRIOR TO THE DATE THAT IS ONE
YEAR AND ONE DAY AFTER THE TERMINATION OF THE TRUST AGREEMENT, ACQUIESCE,
PETITION OR OTHERWISE INVOKE OR CAUSE THE TRUST, THE DEPOSITOR OR THE
SELLER TO INVOKE THE PROCESS OF ANY COURT OR GOVERNMENTAL AUTHORITY FOR
THE PURPOSE OF COMMENCING OR SUSTAINING A CASE AGAINST THE TRUST, THE
DEPOSITOR OR THE SELLER UNDER ANY FEDERAL OR STATE BANKRUPTCY, INSOLVENCY,
REORGANIZATION OR SIMILAR LAW, OR APPOINTING A RECEIVER, LIQUIDATOR,
ASSIGNEE, TRUSTEE, CUSTODIAN, SEQUESTRATOR OR OTHER SIMILAR OFFICIAL OF
THE TRUST, THE DEPOSITOR OR THE SELLER OR ANY SUBSTANTIAL PART OF ITS
PROPERTY, OR ORDERING THE WINDING UP OR LIQUIDATION OF THE AFFAIRS OF THE
TRUST, THE DEPOSITOR OR THE SELLER.
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF (i) AN
"EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")), THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (ii) A PLAN DESCRIBED IN
SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") OR (iii) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF A PLAN'S INVESTMENT IN THE ENTITY. ACCORDINGLY, NO CERTIFICATE
WILL BE REGISTERED FOR TRANSFER UNLESS THE OWNER TRUSTEE RECEIVES EITHER
(1) A REPRESENTATION FROM THE TRANSFEREE OF SUCH CERTIFICATE TO THE
EFFECT THAT SUCH TRANSFEREE NEITHER IS NOR IS ACTING ON BEHALF OF A PLAN
AND IS NOT USING THE ASSETS OF A PLAN SUBJECT TO ERISA OR THE CODE TO
A-2
<PAGE>
INVEST IN THE CERTIFICATES, (2) IF THE TRANSFEREE IS A PLAN, OR IS ACTING
ON BEHALF OF A PLAN, OR IS USING THE ASSETS OF A PLAN, AN OPINION OF
COUNSEL SATISFACTORY TO THE OWNER TRUSTEE TO THE EFFECT THAT SUCH
TRANSFER WILL NOT RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE
"PLAN ASSETS" OR (3) IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY THAT IS
PURCHASING SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY
GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE
AND HOLDING OF SUCH CERTIFICATES AND ANY DEEMED EXTENSION OF CREDIT FROM A
CERTIFICATEHOLDER WHICH IS A PARTY IN INTEREST TO A PLAN, THE ASSETS OF
WHICH ARE HELD BY SUCH "INSURANCE COMPANY" ARE COVERED UNDER PTCE 95-60.
ANY PURPORTED TRANSFER OF A CERTIFICATE TO OR ON BEHALF OF A PLAN WITHOUT
THE DELIVERY OF AN OPINION OF COUNSEL REFERRED TO IN CLAUSE (2) ABOVE OR
THE REPRESENTATION REFERRED TO IN CLAUSE (3) ABOVE SHALL BE VOID AND OF NO
EFFECT.
(THIS CERTIFICATE IS NONTRANSFERABLE.)/F1/
- --------------------
/F1/To be included only on the Certificates representing the 1%
minimum required to be retained by the Depositor and any Certificates
issued in exchange therefor.
A-3
<PAGE>
NUMBER $_________
R- CUSIP NO.
FASCO AUTO TRUST 199_-_
_______% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which consists of retail installment sale contracts
for new and used automobiles and light duty trucks (collectively, the
"Receivables"), all monies received on or after the related Cutoff Date,
security interests in the vehicles financed thereby, certain bank accounts
and the proceeds thereof, proceeds from claims on certain insurance
policies and certain other rights under the Trust Agreement and the Sale
and Servicing Agreement and all proceeds of the foregoing.
THIS TRUST CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
FINANCIAL ASSET SECURITIES CORP., ____________________________ OR ANY OF
THEIR RESPECTIVE AFFILIATES.
THIS CERTIFIES THAT ________________ is the registered owner of
____________________________________________ DOLLARS nonassessable, fully-
paid, fractional undivided interest in FASCO Auto Trust 199_-_ (the
"Trust"), formed by FINANCIAL ASSET SECURITIES CORP., a Delaware
corporation (the "Depositor").
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned
Trust Agreement.
_______________________, not in its
individual capacity, but solely as Owner Trustee
by: ________________________
Authorized Signatory
A-4
<PAGE>
The Trust was created pursuant to a Trust Agreement dated as of
___________, 199__, (as so amended and restated and further amended or
supplemented from time to time, the "Trust Agreement"), among the
Depositor and _______________________, as owner trustee (the "Owner
Trustee"), a summary of certain of the pertinent provisions of which is
set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Trust Agreement or the Sale and Servicing Agreement dated as of
___________, 199__ (as amended and supplemented from time to time, the
"Sale and Servicing Agreement"), among the Trust, the Depositor,
_____________________________, as servicer (the "Servicer"), and
_____________________, as backup servicer, as applicable.
This Certificate is one of the duly authorized Certificates
designated as "_____% Asset Backed Certificates" (herein called the "Trust
Certificates"). Also issued under an Indenture dated as of ___________,
199__ (the "Indenture"), between the Trust and __________________________,
as indenture trustee, are the two classes of Notes designated as
"Class A-1 ________% Asset Backed Notes," and "Class A-2 ______% Asset
Backed Notes" (collectively, the "Notes"). This Trust Certificate is
issued under and is subject to the terms, provisions and conditions of the
Trust Agreement, to which Trust Agreement the Holder of this Trust
Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound. The property of the Trust consists of retail installment
sale contracts for new and used automobiles, light duty trucks and vans
(collectively, the "Receivables"), all monies received on or after the
Cutoff Date plus all Payaheads as of the Cutoff Date; any proceeds with
respect to the Receivables from claims on any physical damage, credit life
or disability, theft, mechanical breakdown or "guaranteed auto protection"
insurance policies relating to Financed Vehicles or Obligors; proceeds of
any recourse (but none of the obligations) to Dealers on Receivables; any
Financed Vehicle that shall have secured a Receivable and shall have been
acquired by or on behalf of the Depositor, the Servicer, or the Trust; the
Receivables Files; the Receivables Purchase Agreement, including the right
of the Depositor to cause __________ to purchase Receivables under certain
circumstances; the Trust Accounts; and certain other rights under the
Trust Agreement and the Sale and Servicing Agreement and all proceeds of
the foregoing. The rights of the Holders of the Trust Certificates are
subordinated to the rights of the Holders of the Notes, as set forth in
the Sale and Servicing Agreement.
Under the Trust Agreement, there will be distributed (monthly)
(quarterly) each year or, if such day is not a Business Day, the
immediately following Business Day (each, a "Distribution Date"),
commencing on __________, 199_, to the Person in whose name this Trust
Certificate is registered at the close of business on the last day of the
month immediately preceding such Distribution Date (the "Record Date"),
such
A-5
<PAGE>
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date. No
distributions of principal will be made on any Certificate until all of
the Notes have been paid in full.
The Holder of this Trust Certificate acknowledges and agrees
that its rights to receive distributions in respect of this Trust
Certificate are subordinated to the rights of the Noteholders as described
in the Sale and Servicing Agreement and the Indenture.
It is the intent of the Depositor, the Servicer and the
Certificateholders that, for purposes of federal income, state and local
income and single business tax and any other income taxes, the Trust will
be treated as a partnership and the Certificateholders (including the
Depositor) will be treated as partners in that partnership. The Depositor
and the other Certificateholders, by acceptance of a Trust Certificate,
agree to treat, and to take no action inconsistent with the treatment of,
the Trust Certificates for such tax purposes as partnership interests in
the Trust.
Each Certificateholder, by its acceptance of a Trust
Certificate, covenants and agrees that such Certificateholder 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, or other proceedings under any
United States federal or state bankruptcy or similar law in connection
with any obligations relating to the Trust Certificates, the Notes, the
Trust Agreement or any of the Basic Documents.
Distributions on this Trust Certificate will be made as provided
in the Trust Agreement by the Owner Trustee by wire transfer or check
mailed to the Certificateholder of record in the Certificate Register
without the presentation or surrender of this Trust Certificate or the
making of any notation hereon. Except as otherwise provided in the Trust
Agreement and notwithstanding the above, the final distribution on this
Trust 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 Trust Certificate at the office or agency maintained for that
purpose by the Owner Trustee in the Borough of Manhattan, The City of New
York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual
signature, this Trust Certificate shall not entitle the
A-6
<PAGE>
Holder hereof to any benefit under the Trust Agreement or the Sale and
Servicing Agreement or be valid for any purpose.
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ______________, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust
and not in its individual capacity, has caused this Trust Certificate to
be duly executed.
FASCO AUTO TRUST 199_-_
by: _______________________, not in
its individual capacity but solely as Owner Trustee
Dated: _____________ by: ________________________
Authorized Signatory
A-7
<PAGE>
(REVERSE OF TRUST CERTIFICATE)
The Trust Certificates do not represent an obligation of, or an
interest in, the Depositor, the Servicer, the Seller, the Owner Trustee or
any affiliates of any of them and no recourse may be had against such
parties or their assets, except as expressly set forth or contemplated
herein or in the Trust Agreement or the Basic Documents. In addition,
this Trust Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections
and recoveries with respect to the Receivables (and certain other
amounts), all as more specifically set forth herein and in the Sale and
Servicing Agreement. A copy of each of the Sale and Servicing Agreement
and the Trust Agreement may be examined by any Certificateholder upon
written request during normal business hours at the principal office of
the Depositor and at such other places, if any, designated by the
Depositor.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders
under the Trust Agreement at any time by the Depositor and the Owner
Trustee with the consent of the Holders of the Trust Certificates and the
Notes, each voting as a class, evidencing not less than a majority of the
Certificate Balance and the outstanding principal balance of the Notes of
each such class. Any such consent by the Holder of this Trust Certificate
shall be conclusive and binding on such Holder and on all future Holders
of this Trust Certificate and of any Trust 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 Trust Certificate. The Trust
Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Trust
Certificates.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Trust Certificate is
registerable in the Certificate Register upon surrender of this Trust
Certificate for registration of transfer at the offices or agencies of the
Certificate Registrar maintained by the Owner Trustee in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new Trust
Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee. The
initial Certificate Registrar appointed under the Trust Agreement is the
Owner Trustee.
Except as provided in the Trust Agreement, the Trust
Certificates are issuable only as registered Trust Certificates
A-8
<PAGE>
without coupons in denominations of $100,000 and in integral multiples of
$1,000 in excess thereof. As provided in the Trust Agreement and subject
to certain limitations therein set forth, Trust Certificates are
exchangeable for new Trust Certificates of authorized denominations
evidencing the same aggregate denomination, as requested by the Holder
surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
The Owner Trustee, 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 none of the Owner Trustee, the Certificate Registrar or any
such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust
Agreement and the Trust created thereby shall terminate upon the payment
to Certificateholders of all amounts required to be paid to them pursuant
to the Trust Agreement and the Sale and Servicing Agreement and the
disposition of all property held as part of the Owner Trust Estate. The
Servicer of the Receivables may at its option purchase the Owner Trust
Estate at a price specified in the Sale and Servicing Agreement, and such
purchase of the Receivables and other property of the Trust will effect
early retirement of the Trust Certificates; however, such right of
purchase is exercisable only as of the last day of any Collection Period
as of which the Pool Balance is less than or equal to 10% of the Original
Pool Balance.
A-9
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of
assignee)
the within Trust Certificate, and all rights thereunder, and hereby
irrevocably constitutes and appoints , attorney,
--------------------------
to transfer said Trust Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
________________________________________*/
-
Signature Guaranteed:
____________________________*/
-
_________________
*/ NOTICE: The signature to this assignment must correspond with the
name
- -
as it appears upon the face of the within Trust Certificate in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by a member firm of the New York Stock
Exchange or a commercial bank or trust company.
A-10
<PAGE>
EXHIBIT B
CERTIFICATE OF TRUST OF
FASCO AUTO TRUST 199_-_
-----------------------
THIS Certificate of Trust of FASCO AUTO TRUST 199_-_ (the
"Trust"), dated _________, 199_, is being duly executed and filed by
_______________________, a ______________ banking corporation, as trustee,
to form a business trust under the Delaware Business Trust Act (12 Del.
Code,
---------
Section 3801 et seq.).
1. Name. The name of the business trust formed hereby is FASCO
----
AUTO TRUST 199_-_.
2. __________ Trustee. The name and business address of the
------------------
trustee of the Trust in the State of Delaware is FASCO Auto Trust 199_-_,
c/o _______________________, ___________________________,
Attention: Corporate Trust Administration.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust as of the date first
above written.
_______________________,
not in its individual capacity but
solely as owner trustee under a Trust Agreement dated as of ___________, 199_
By:
----------------------
Name:
Title:
B-1
<PAGE>
EXHIBIT C
FORM OF TRANSFEROR CERTIFICATE
(DATE)
Financial Asset Securities Corp.
(address)
_______________________, as Owner Trustee
(address)
Re: FASCO Auto Trust 199_-_
_________% Asset Backed Certificates
------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above-referenced _______%
Asset Backed Certificates (the "Certificates") we certify that (a) we
understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being transferred
by us in a transaction that is exempt from the registration requirements
of the Act and (b) we have not offered or sold any Certificates to, or
solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner
that would be deemed, or taken any other action which would result in, a
violation of Section 5 of the Act.
Very truly yours,
(NAME OF TRANSFEROR)
By:
-------------------
Authorized Officer
C-1
<PAGE>
EXHIBIT D
FORM OF INVESTMENT LETTER
Financial Asset Securities Corp.
(address)
_______________________, as Owner Trustee
(address)
Ladies and Gentlemen:
In connection with our proposed purchase of $________________
aggregate principal amount of _______% Asset Backed Certificates (the
"Certificates") of FASCO Auto Trust 199_-_ (the "Issuer"), we confirm
that:
1. We understand that the Certificates have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), and
may not be sold except as permitted in the following sentence. We understand
and agree, on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, (x) that such Certificates are being offered
only in a transaction not involving any public offering within the meaning
of the 1933 Act and (y) that such Certificates may be resold, pledged or
transferred only (i) to the Depositor, (ii) to an "accredited investor" as
defined in Rule 501(a)(1),(2),(3) or (7) (an "Accredited Investor") under the
1933 Act acting for its own account (and not for the account of others) or
as a fiduciary or agent for others (which others also are Accredited
Investors unless the holder is a bank
acting in its fiduciary capacity) that executes a certificate
substantially in the form hereof, (iii) so long as such Certificate is
eligible for resale pursuant to Rule 144A under the 1933 Act ("Rule 144A"),
to a person whom we reasonably believe after due inquiry is a "qualified
institutional buyer" as defined in Rule 144A, acting for its own account (and
not for the account of others) or as a fiduciary or agent
for others (which others also are "qualified institutional buyers") to whom
notice is given that the resale, pledge or transfer is being made in reliance
on Rule 144A or (iv) in a sale, pledge or other transfer made in a
transaction otherwise exempt from the registration requirements of the 1933
Act, in which case the Owner Trustee shall require that both the prospective
transferor and the prospective transferee certify to the Owner
Trustee and the Depositor in writing the facts surrounding such transfer,
which certification shall be in form and substance
D-1
<PAGE>
satisfactory to the Owner Trustee and the Depositor. Except in the
case of a transfer described in clauses (i) or (iii) above, the Owner
Trustee shall require a written opinion of counsel (which will not be at the
expense of the Depositor, any affiliate of the Depositor or the Owner
Trustee) satisfactory to the Depositor and the Owner Trustee be delivered to
the Depositor and the Owner Trustee to the effect that such transfer will not
violate the 1933 Act, in each case in accordance with any applicable
securities laws of any state of the United States. We will notify any
purchaser of the Certificates from us of the above resale restrictions, if
then applicable. We further understand that in connection with any transfer
of the Certificates by us that the Depositor and the Owner Trustee may
request, and if so requested we will furnish such certificates and other
information as they may reasonably require to confirm that any such transfer
complies with the foregoing restrictions. We understand that no sale, pledge
or other transfer may be made to any one person of Certificates with a face
amount of less than $100,000 and, in the case of any person acting on behalf
of one or more third parties
(other than a bank (as defined in Section 3(a)((2) of the 1933 Act) acting
in its fiduciary capacity), of Certificates with a face amount of less than
$100,000 for each such third party.
2. (CHECK ONE)
(a) We are an "accredited investor" (as defined in Rule
501(a)(1),(2),(3) or (7) of Regulation D under the Certificates Act) acting
for our own account (and not for the account of others) or as a fiduciary or
agent for others (which others also are Accredited Investors unless we are
a bank acting in its fiduciary capacity). We have such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of our investment in the Certificates, and we and any
accounts for which we are acting are each able to bear the economic risk of
our or their investment for an
indefinite period of time. We are acquiring the Certificates for investment
and not with a view to, or for offer and sale in connection with, a public
distribution.
(b) We are a "qualified institutional buyer" as defined under
Rule 144A under the 1933 Act and are acquiring the Certificates for our own
account (and not for the account of others) or as a fiduciary or agent
for others (which others also are "qualified institutional buyers"). We are
familiar with Rule 144A under the 1933 Act and are aware that the seller of
the Certificates and other parties intend to rely on the statements made
herein and the exemption from the registration requirements of the 1933 Act
provided by Rule 144A.
D-2
<PAGE>
3. We are not (i) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) that is subject to the provisions of Title I of ERISA,
(ii) a plan described in Section 4975(e)(1) of the Code or (iii) any entity
whose underlying assets include plan assets by reason of a plan's investment
in the entity (each, a "Benefit Plan"). We hereby acknowledge that no
transfer of any Certificate shall be permitted to be made to any person
unless the Trustee has received (i) a certificate from such transferee to the
effect of the preceding sentence, (ii) an opinion of counsel satisfactory to
the Trustee to the effect that the purchase and holding of any such
Certificate will not constitute or result in the assets of the Issuer being
deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA or Section 4975 of the Code and
will not subject the Owner Trustee, the Indenture Trustee or the Depositor
to any obligation in addition to those undertaken in the Basic Documents with
respect to the Certificates (provided, however, that the Owner Trustee will
not require such certificate or opinion in the event that, as
a result of change of law or otherwise, counsel satisfactory to the Owner
Trustee has rendered an opinion to the effect that the purchase and holding
of any such Certificate by a Benefit Plan or a Person that is
purchasing or holding any such Certificate with the assets of a Benefit Plan
will not constitute or result in a prohibited transaction under ERISA
or Section 4975 of the Code) or (iii) if the transferee is an insurance
company, a representation that the transferee is an insurance company that
is purchasing such certificates with funds contained in an "Insurance Company
General Account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60)) and that the
purchase and holding of such Certificates and any deemed extension of
credit from a Certificateholder which is a party in interest to a Plan, the
assets of which are held by such "Insurance Company" are covered under
PTCE 95-60.
4. We understand that the Depositor, the Trust, Greenwich
Capital Financial Products, Inc. ("Greenwich") and others will rely upon the
truth and accuracy of the foregoing acknowledgments, representations and
agreements, and we agree that if any of the acknowledgments, representations
and warranties deemed to have been made by us by our purchase of the
Certificates, for our own account or for one or more accounts as to each of
which we exercise sole investment discretion, are no longer accurate, we
shall promptly notify the Depositor and Greenwich.
D-3
<PAGE>
5. You are entitled to rely upon this letter and you are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Very truly yours,
(NAME OF PURCHASER)
By:______________________________
Name:
Title:
Date:_________________________
D-4
<PAGE>
Exhibit 4.2
Form of Pooling and Servicing Agreement
=============================================================================
POOLING AND SERVICING AGREEMENT
among
FINANCIAL ASSET SECURITIES CORP.,
as Depositor,
______________________,
as Trustee,
______________________,
as Servicer,
and
______________________,
as Backup Servicer
Dated as of ____________
FASCO AUTO TRUST 199__-__
________% Asset Backed Certificates, Class A
________% Asset Backed Certificates, Class B
============================================================================
<PAGE>
TABLE OF CONTENTS
Page
____
ARTICLE I
Definitions
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitional Provisions . . . . . . . . . . . . . . 12
ARTICLE II
Creation of the Trust; Conveyance of Receivables
Section 2.01. Creation of Trust . . . . . . . . . . . . . . . . . . . . 12
Section 2.02. Conveyance of Initial Receivables . . . . . . . . . . . . 12
Section 2.03. Conveyance of Subsequent Receivables . . . . . . . . . . . 13
Section 2.04. Acceptance by Trustee . . . . . . . . . . . . . . . . . . 15
ARTICLE III
The Receivables
Section 3.01. Representations and Warranties of _____________ . . . . . 15
Section 3.02. Representations and Warranties of the Depositor . . . . . 16
Section 3.03. Repurchase upon Breach . . . . . . . . . . . . . . . . . . 16
Section 3.04. Custody of Receivable Files . . . . . . . . . . . . . . . 17
ARTICLE IV
Administration and Servicing of Receivables
Section 4.01. Duties of the Servicer . . . . . . . . . . . . . . . . . . 18
Section 4.02. Collection and Allocation of Receivable Payments . . . . . 18
Section 4.03. Realization upon Receivables . . . . . . . . . . . . . . . 18
Section 4.04. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.05. Maintenance of Security Interests in Financed
Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.06. Covenants of Servicer . . . . . . . . . . . . . . . . . . 19
Section 4.07. Purchase of Receivables upon Breach . . . . . . . . . . . 19
Section 4.08. Servicing Fee . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.09. Servicer's Certificate . . . . . . . . . . . . . . . . . . 19
Section 4.10. Annual Statement as to Compliance; Notice of
Default . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.11. Annual Independent Certified Public Accountants'
Report . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.12. Servicer Expenses . . . . . . . . . . . . . . . . . . . . 20
Section 4.13. Appointment of Subservicer . . . . . . . . . . . . . . . . 20
Section 4.14. Oversight of Servicing . . . . . . . . . . . . . . . . . . 21
Section 4.15. Duties of the Backup Servicer . . . . . . . . . . . . . . 21
ARTICLE V
Accounts; Application of Funds
Section 5.01. Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.02. Reserve Account . . . . . . . . . . . . . . . . . . . . . 22
Section 5.03. Account Property . . . . . . . . . . . . . . . . . . . . . 24
Section 5.04. Application of Collections . . . . . . . . . . . . . . . . 24
Section 5.05. Application of Payaheads . . . . . . . . . . . . . . . . . 24
Section 5.06. Purchase Amounts . . . . . . . . . . . . . . . . . . . . . 25
Section 5.07. Distributions . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.08. Statements to Certificateholders . . . . . . . . . . . . . 26
Section 5.09. Accounting and Tax Returns . . . . . . . . . . . . . . . . 26
i
<PAGE>
ARTICLE VI
The Certificates
Section 6.01. The Certificates . . . . . . . . . . . . . . . . . . . . . 27
Section 6.02. Registration of Transfer and Exchange . . . . . . . . . . 27
Section 6.03. Certain Transfer Restrictions . . . . . . . . . . . . . . 28
Section 6.04. Mutilated, Destroyed, Lost or Stolen Certificates . . . . 28
Section 6.05. Persons Deemed Owners . . . . . . . . . . . . . . . . . . 28
Section 6.06. Access to List of Certificateholders' Names and
Addresses. . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.07. Maintenance of Office or Agency . . . . . . . . . . . . . 29
Section 6.08. Book-Entry Certificates . . . . . . . . . . . . . . . . . 29
Section 6.09. Notices to Clearing Agency . . . . . . . . . . . . . . . . 30
Section 6.10. Definitive Certificates . . . . . . . . . . . . . . . . . 30
ARTICLE VII
The Depositor
Section 7.01. Depositor's Representations . . . . . . . . . . . . . . . 30
Section 7.02. Corporate Existence . . . . . . . . . . . . . . . . . . . 31
Section 7.03. Liabilities of Depositor . . . . . . . . . . . . . . . . . 32
Section 7.04. Merger or Consolidation of, or Assumption of the
Obligations of, Depositor. . . . . . . . . . . . . . . . . 32
Section 7.05. Limitation on Liability of Depositor and Others . . . . . 33
Section 7.06. Depositor May Own Certificates . . . . . . . . . . . . . . 33
Section 7.07. Sale of Receivables . . . . . . . . . . . . . . . . . . . 33
ARTICLE VIII
The Servicer; Backup Servicer
Section 8.01. Representations of Servicer . . . . . . . . . . . . . . . 33
Section 8.02. Indemnities of Servicer . . . . . . . . . . . . . . . . . 34
Section 8.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer . . . . . . . . . . . . . . . . . 35
Section 8.04. Limitation on Liability of Servicer and Others . . . . . . 35
Section 8.05. _____________ Not To Resign as Servicer . . . . . . . . . 36
Section 8.06. Representations of Backup Servicer . . . . . . . . . . . . 36
Section 8.07. Merger or Consolidation of, or Assumption of the
Obligations of, Backup Servicer. . . . . . . . . . . . . . 36
Section 8.08. Resignation as Backup Servicer . . . . . . . . . . . . . . 36
ARTICLE IX
Default
Section 9.01. Servicer Default . . . . . . . . . . . . . . . . . . . . . 37
Section 9.02. Appointment of Successor . . . . . . . . . . . . . . . . . 38
Section 9.03. Notification to Certificateholders . . . . . . . . . . . . 38
Section 9.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . 38
ARTICLE X
The Trustee
Section 10.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . 39
Section 10.02. Certain Matters Affecting Trustee . . . . . . . . . . . . 40
Section 10.03. Trustee Not Liable for Certificates or
Receivables . . . . . . . . . . . . . . . . . . . . . . . 40
Section 10.04. Trustee May Own Certificates . . . . . . . . . . . . . . . 41
Section 10.05. Trustee's Fees and Expenses . . . . . . . . . . . . . . . 41
Section 10.06. Eligibility Requirements for Trustee . . . . . . . . . . . 41
Section 10.07. Resignation or Removal of Trustee . . . . . . . . . . . . 41
ii
<PAGE>
Section 10.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . 42
Section 10.09. Merger or Consolidation of Trustee . . . . . . . . . . . . 42
Section 10.10. Appointment of Co-Trustee or Separate Trustee . . . . . . 42
Section 10.11. Representations and Warranties of Trustee . . . . . . . . 43
ARTICLE XI
Termination
Section 11.01. Termination of the Trust . . . . . . . . . . . . . . . . . 44
Section 11.02. Optional Purchase of All Receivables . . . . . . . . . . . 44
ARTICLE XII
Miscellaneous Provisions
Section 12.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 12.02. Protection of Title to Trust . . . . . . . . . . . . . . . 45
Section 12.03. Separate Counterparts . . . . . . . . . . . . . . . . . . 46
Section 12.04. Limitation on Rights of Certificateholders . . . . . . . . 46
Section 12.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . 47
Section 12.06. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 12.07. Severability of Provisions . . . . . . . . . . . . . . . . 47
Section 12.08. Assignment . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 12.09. Third-Party Beneficiaries . . . . . . . . . . . . . . . . 48
Section 12.10. Certificates Nonassessable and Fully Paid . . . . . . . . 48
Section 12.11. Limitations on Rights of Others . . . . . . . . . . . . . 48
Section 12.12. Headings . . . . . . . . . . . . . . . . . . . . . . . . . 48
SCHEDULE I Schedule of Receivables . . . . . . . . . . . . . . . . . I-1
SCHEDULE II Location of Receivables Files . . . . . . . . . . . . . II-1
EXHIBIT A Form of Class A Certificate . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B Form of Class B Certificate . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C Form Of Depository Agreement . . . . . . . . . . . . . . . . . C-1
EXHIBIT D Form of Servicer's Certificate . . . . . . . . . . . . . . . . D-1
EXHIBIT E Receivable Files Checklist . . . . . . . . . . . . . . . . . . E-1
EXHIBIT F Form of Depositor's Receivable Assignment . . . . . . . . . . . F-1
EXHIBIT G Form of Subsequent Transfer Assignment . . . . . . . . . . . . G-1
EXHIBIT H Representations and Warranties of ____________
under Section 3.02(b) of the Receivables Purchase
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1
iii
<PAGE>
POOLING AND SERVICING AGREEMENT dated as of ____________,
among FINANCIAL ASSET SECURITIES CORP., a Delaware corporation, as
depositor (the "Depositor"), ____________, a ____________
corporation, as servicer (the "Servicer"), and ____________, a
____________ banking corporation, as trustee and backup servicer
(in its capacity as trustee, the "Trustee"; and in its capacity as
backup servicer, the "Backup Servicer").
RECITALS
WHEREAS the Depositor has purchased a portfolio of receivables
arising in connection with motor vehicle retail installment sale
contracts originated or acquired from retail motor vehicle dealers
by ____________ in the ordinary course of its business;
WHEREAS the Depositor wishes to transfer and assign such
receivables to the Trust (as defined herein);
WHEREAS the Depositor intends to purchase from
______________________ additional receivables arising from motor
vehicle retail installment sale contracts and to transfer such
additional receivables to the Trust;
WHEREAS ______________________ is willing to service such
receivables, and ______________________ is willing to act as Backup
Servicer with respect to such receivables and as Trustee of the
Trust;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto agree
as follows:
ARTICLE I
Definitions
-----------
Section 1.01. Definitions. Whenever used in this Agreement,
-----------
the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
"Account Property" means any account established and
----------------
maintained pursuant to Article V, all amounts and investments held
from time to time in any such account (whether in the form of
deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise), and all proceeds of the
foregoing.
"Accounts" means the Collection Account, the Reserve Account
--------
and the Pre-Funding Account.
"Addition Notice" means a notice of the Depositor's election
---------------
to transfer Subsequent Receivables to the Trust, which notice shall
identify the applicable Subsequent Cutoff Date, Subsequent Transfer
Date and the approximate aggregate Principal Balance of the
Subsequent Receivables to be transferred to the Trust on such
Subsequent Transfer Date.
"Affiliate" means, with respect to any specified Person, any
---------
other Person controlling or controlled by or under common control
with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Agreement" means this Pooling and Servicing Agreement.
---------
<PAGE>
"Amount Financed" means, with respect to any Receivable, the
---------------
amount advanced under the related Contract toward the purchase
price of the Financed Vehicle.
"Annual Percentage Rate" or "APR" of a Receivable means the
---------------------- ---
annual rate of finance charges stated in the related Contract.
"Backup Servicer" means ______________________ or
--------------
its successor in interest pursuant to Section 8.07 or such other
Person as shall have been appointed as Backup Servicer hereunder.
"Basic Documents" means the Receivables Purchase Agreement,
---------------
this Agreement, the Transfer Agreement and the Security Agreement.
"Benefit Plan" has the meaning set forth in Section 6.03(b).
------------
"Book-Entry Certificates" means beneficial interests in the
-----------------------
Certificates, ownership and transfers of which shall be registered
through book entries by a Clearing Agency as described in Section
6.08.
"Certificate" means either a Class A Certificate or a Class B
-----------
Certificate.
"Certificate Balance" means the aggregate of the Class A
-------------------
Certificate Balance and the Class B Certificate Balance.
"Certificate Owner" means, with respect to a Book-Entry
-----------------
Certificate, the Person who is the beneficial owner of such
Book-Entry Certificate, as reflected on the books of the Clearing
Agency or on the books of a Person maintaining an account with the
Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of
the Clearing Agency).
"Certificate Pool Factor" means, with respect to each class of
-----------------------
Certificates as of the close of business on the last day of each
Collection Period, a seven-digit decimal figure equal to the
outstanding principal amount of such class of Certificates (after
giving effect to any reduction thereof to be made on the
immediately following Distribution Date) divided by the original
outstanding principal amount of such class of Certificates. The
Certificate Pool Factor for each class of Certificates will be
1.0000000 as of the Closing Date and, thereafter, will decline to
reflect reductions in the outstanding principal amount of such
class of Certificates.
"Certificate Register" and "Certificate Registrar" mean the
-------------------- ---------------------
register maintained and the registrar appointed pursuant to Section
6.02.
"Certificateholder" or "Holder" means a Person in whose name
----------------- ------
a Certificate is registered in the Certificate Register.
"Class A Certificate" means a ____% Asset Backed Certificate,
-------------------
Class A, evidencing a beneficial interest in the Trust,
substantially in the form of Exhibit A.
"Class A Certificate Balance" means, initially, $____________,
---------------------------
and, as of any date of determination thereafter, such initial Class
A Certificate Balance reduced by all amounts previously distributed
to Holders of the Class A Certificates and allocable to principal.
"Class A Distributable Amount" means, with respect to each
----------------------------
Distribution Date, the Class A Interest Distributable Amount plus
the Class A Principal Distributable Amount.
"Class A Interest Carryover Shortfall" means, with respect to
------------------------------------
any Distribution Date, the excess of the sum of the Class A Monthly
Interest Distributable Amount for the preceding Distribution Date
and any outstanding Class A Interest Carryover Shortfall on such
preceding Distribution Date, over the
2
<PAGE>
amount in respect of interest that Holders of the Class A
Certificates actually received on such preceding Distribution Date.
"Class A Interest Distributable Amount" means, with respect to
-------------------------------------
any Distribution Date, the sum of the Class A Monthly Interest
Distributable Amount for such Distribution Date and the Class A
Interest Carryover Shortfall with respect to such Distribution
Date.
"Class A Monthly Interest Distributable Amount" means, with
---------------------------------------------
respect to any Distribution Date, an amount equal to the product of
(i) one-twelfth, (ii) the Class A Pass-Through Rate and (iii) the
Class A Certificate Balance on the preceding Distribution Date (or,
in the case of the first Distribution Date, on the Closing Date)
after giving effect to any amount distributed to Holders of the
Class A Certificates on such preceding Distribution Date and
allocable to principal.
"Class A Monthly Principal Distributable Amount" means, with
----------------------------------------------
respect to any Distribution Date, the Class A Percentage of the
Principal Distribution Amount.
"Class A Pass-Through Rate" means ____% per annum, computed on
-------------------------
the basis of a 360-day year consisting of twelve 30-day months.
"Class A Percentage" means _____%.
------------------
"Class A Principal Carryover Shortfall" means the amount, if
-------------------------------------
any, as of the close of business on any Distribution Date, by which
(i) the Class A Monthly Principal Distributable Amount plus any
outstanding Class A Principal Carryover Shortfall from the
preceding Distribution Date exceeds (ii) the amount actually
distributed to Holders of the Class A Certificates and allocable to
principal on such date.
"Class A Principal Distributable Amount" means, with respect
--------------------------------------
to any Distribution Date, the sum of the Class A Monthly Principal
Distributable Amount for such Distribution Date and the Class A
Principal Carryover Shortfall as of the close of the preceding
Distribution Date; provided, however, that the Class A Principal
Distributable Amount shall not exceed the Class A Certificate
Balance. In addition, on the Final Scheduled Distribution Date,
the principal required to be included in the Class A Principal
Distributable Amount shall include the lesser of (a) the Class A
Percentage of any principal due and remaining unpaid on each
Receivable in the Trust as of the Final Scheduled Maturity Date and
(b) the amount that is necessary (after giving effect to the other
amounts to be distributed to Holders of the Class A Certificates on
such Distribution Date and allocable to principal) to reduce the
Class A Certificate Balance to zero.
"Class B Certificate" means a ____% Asset Backed Certificate,
-------------------
Class B, evidencing a beneficial interest in the Trust,
substantially in the form of Exhibit B.
"Class B Certificate Balance" means, initially, $____________,
---------------------------
and, as of any date of determination thereafter, will equal the
initial Class B Certificate Balance reduced by (i) all
distributions made to Holders of the Class B Certificates and
allocable to principal and (ii) Realized Losses allocable to Class
B Certificateholders.
"Class B Distributable Amount" means, with respect to each
----------------------------
Distribution Date, the Class B Interest Distributable Amount plus
the Class B Principal Distributable Amount.
"Class B Interest Carryover Shortfall" means, with respect to
------------------------------------
any Distribution Date, the excess of the sum of the Class B
Interest Distributable Amount for the preceding Distribution Date
and any outstanding Class B Interest Carryover Shortfall on such
preceding Distribution Date, over the amount in respect of interest
that Holders of the Class B Certificates actually received on such
preceding Distribution Date.
3
<PAGE>
"Class B Interest Distributable Amount" means, with respect
-------------------------------------
to any Distribution Date, the sum of the Class B Monthly Interest
Distributable Amount for such Distribution Date and the Class B
Interest Carryover Shortfall with respect to such Distribution
Date.
"Class B Monthly Interest Distributable Amount" means, with
---------------------------------------------
respect to any Distribution Date, an amount equal to the product of
(i) one-twelfth, (ii) the Class B Pass-Through Rate and (iii) the
Class B Certificate Balance on the preceding Distribution Date (or,
in the case of the first Distribution Date, on the Closing Date)
after giving effect to all distributions and allocations of losses
on such Distribution Date.
"Class B Monthly Principal Distributable Amount" means, with
----------------------------------------------
respect to any Distribution Date, the Class B Percentage of the
Principal Distribution Amount.
"Class B Pass-Through Rate" means ________% per annum(. The
-------------------------
distribution of interest received by Class B Certificateholders on
each Distribution Date will consist of (a) the Class A Pass-Through
Rate multiplied by the Class B Certificate Balance plus
(b) _______________; however, in no event shall the Class B Pass-
Through Rate exceed ________% per annum), computed on the basis of
a 360-day year consisting of twelve 30-day months.
"Class B Percentage" means ________%.
------------------
"Class B Principal Carryover Shortfall" means the amount, if
-------------------------------------
any, as of the close of business on any Distribution Date, by which
(i) the Class B Monthly Principal Distributable Amount plus any
outstanding Class B Principal Carryover Shortfall from the
preceding Distribution Date exceeds (ii) the amount actually
distributed to Holders of the Class B Certificates and allocable to
principal on such date.
"Class B Principal Distributable Amount" means, with respect
--------------------------------------
to any Distribution Date, the sum of the Class B Monthly Principal
Distributable Amount for such Distribution Date and the Class B
Principal Carryover Shortfall as of the close of the preceding
Distribution Date; provided, however, that the Class B Principal
Distributable Amount shall not exceed the Class B Certificate
Balance. In addition, on the Final Scheduled Distribution Date,
the principal required to be included in the Class B Principal
Distributable Amount shall include the lesser of (a) the Class B
Percentage of any principal due and remaining unpaid on each
Receivable in the Trust as of the Final Scheduled Maturity Date
and (b) the amount that is necessary (after giving effect to the other
amounts to be distributed to Holders of the Class B Certificates on
such Distribution Date and allocable to principal) to reduce the
Class B Certificate Balance to zero.
"Clearing Agency" means an organization registered as a
---------------
"clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended.
"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 _________________________________.
------------
"Code" means the Internal Revenue Code of 1986, as amended
----
from time to time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the account designated as such,
------------------
established and maintained pursuant to Section 5.01(a).
"Collection Period" means a calendar month (in the case of the
-----------------
first Distribution Date, the period from and including the Initial
Cutoff Date to and including ______________________). As used
herein, the
4
<PAGE>
"related Collection Period" with respect to any Distribution Date
or Determination Date means the calendar month immediately
preceding the calendar month in which such Distribution Date or
Determination Date, as applicable, occurs.
"Computer Tape" means a computer tape generated by the
-------------
Servicer which provides information relating to the Receivables.
"Contract" means a motor vehicle retail installment sale
--------
contract between a Dealer and one or more Obligors.
"Corporate Trust Office" means the office of the Trustee at
----------------------
which at any particular time its corporate trust business shall be
administered, which at the time of execution of this agreement is
located at _______________________________________________________,
or at such other address as the Trustee may designate from time to
time by notice to the Certificateholders and the Depositor, or the
principal corporate trust office of any successor Trustee (of which
address such successor Trustee shall notify the Certificateholders
and the Depositor).
"Custodial Agreement" means the Custodial Agreement dated as
-------------------
of ______________________, among the Trustee, the Servicer and
____________________________________________, as Custodian.
"Custodian" means ______________________, as Custodian under
---------
the Custodial Agreement and any successor Custodian pursuant to the
Custodial Agreement.
"Cutoff Date" means the Initial Cutoff Date or a Subsequent
-----------
Cutoff Date.
"Dealer" means a dealer that sold a Financed Vehicle to an
------
Obligor and sold and assigned the related Receivable to the
Originator under an existing agreement between it and the
Originator.
"Definitive Certificates" shall have the meaning specified in
-----------------------
Section 6.08.
"Delivery" when used with respect to Account Property means:
--------
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i)
of the UCC and are susceptible of physical delivery, transfer
thereof to the Trustee or its nominee or custodian by physical
delivery to the Trustee or its nominee or custodian endorsed to, or
registered in the name of, the Trustee or its nominee or custodian
or endorsed in blank, and, with respect to a certificated security
(as defined in Section 8-102 of the UCC) transfer thereof (i) by
delivery of such certificated security endorsed to, or registered
in the name of, the Trustee or its nominee or custodian or endorsed
in blank to a financial intermediary (as defined in Section 8-313
of the UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated
securities as belonging to the Trustee or its nominee or custodian
and the sending by such financial intermediary of a confirmation of
the purchase of such certificated security by the Trustee or its
nominee or custodian, or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102(3) of the UCC) and the
making by such clearing corporation of appropriate entries on its
books reducing the appropriate securities account of the transferor
and increasing the appropriate securities account of a financial
intermediary by the amount of such certificated security, the
identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by
such clearing corporation or a "custodian bank" (as defined in
Section 8-102(4) of the UCC) or the nominee of either, subject to
the clearing corporation's exclusive control, the sending of a
confirmation by the financial intermediary of the purchase by the
Trustee or its nominee or custodian of such securities and the
making by such financial intermediary of entries on its books and
records identifying such certificated securities as belonging to
the Trustee or its nominee or custodian (all of the foregoing,
"Physical Property"), and, in any event, any such Physical Property
in registered form shall be in the name of the Trustee or its
5
<PAGE>
nominee or custodian; and such additional or alternative procedures
as may hereafter become appropriate to effect the complete transfer
of ownership of any such Account Property to the Trustee or its
nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof;
(b) with respect to any securities issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the
Federal National Mortgage Association that are book-entry
securities held through the Federal Reserve System pursuant to
federal book-entry regulations, the following procedures, all in
accordance with applicable law, including applicable federal
regulations and Articles 8 and 9 of the UCC: book-entry
registration of such Account Property to an appropriate book-entry
account maintained with a Federal Reserve Bank by a financial
intermediary that is also a "depository" pursuant to applicable
federal regulations and issuance by such financial intermediary of
a deposit advice or other written confirmation of such book-entry
registration to the Trustee or its nominee or custodian of the
purchase by the Trustee or its nominee or custodian of such
book-entry securities; the making by such financial intermediary of
entries in its books and records identifying such book-entry
securities held through the Federal Reserve System pursuant to
federal book-entry regulations as belonging to the Trustee or its
nominee or custodian and indicating that such custodian holds such
Account Property solely as agent for the Trustee or its nominee or
custodian; and such additional or alternative procedures as may
hereafter become appropriate to effect complete transfer of
ownership of any such Account Property to the Trustee or its
nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records
of the issuer thereof in the name of a financial intermediary, the
sending of a confirmation by the financial intermediary of the
purchase by the Trustee or its nominee or custodian of such
uncertificated security, and the making by such financial
intermediary of entries on its books and records identifying such
uncertificated certificates as belonging to the Trustee or its
nominee or custodian.
"Depositor" means Financial Asset Securities Corp., a Delaware
---------
corporation, or its successors in interest to the extent permitted
hereunder.
"Depository Agreement" means the agreement dated ________,
--------------------
between the Trustee and The Depository Trust Company, as the
initial Clearing Agency, substantially in the form of Exhibit C.
"Determination Date" means, with respect to each Distribution
------------------
Date, the ______________________ business day preceding such
Distribution Date.
"Distribution Date" means, with respect to each Collection
-----------------
Period, the ________ day of the following calendar month or, if
such ________ day is not a business day, the next succeeding
business day, commencing on ______________________.
"Eligible Deposit Account" means either (a) a segregated
------------------------
account with an Eligible Institution or (b) a segregated trust
account with the corporate trust department of a depository
institution organized under the laws of the United States of
America or any State (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 shall have a credit rating from each Rating
Agency in one of its generic rating categories that signifies
investment grade.
"Eligible Institution" means (a) the corporate trust
--------------------
department of the Trustee or (b) a depository institution organized
under the laws of the United States of America or any State (or any
domestic branch of a foreign bank), which (1) has either (A) a
long-term unsecured debt rating of AAA or better by Standard &
Poor's and A1 or better by Moody's or (B) a certificate of deposit
rating of A-1+ or
6
<PAGE>
better by Standard & Poor's and P-1 or better by Moody's, or any
other long-term, short-term or certificate of deposit rating
acceptable to the Rating Agencies and (2) whose deposits are
insured by the Federal Deposit Insurance Corporation.
"Eligible Investments" mean book-entry securities, negotiable
--------------------
instruments or securities represented by instruments in bearer or
registered form which evidence:
(a) direct obligations of, and obligations fully guaranteed as
to the full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated under
the laws of the United States of America or any State (or any
domestic branch of a foreign bank) and subject to supervision and
examination by federal or state banking or depository institution
authorities; provided, however, that at the time of the investment
or contractual commitment to invest therein, the commercial paper
or other short-term unsecured debt obligations thereof (other than
such obligations the rating of which is based on the credit of a
Person other than such depository institution or trust company)
shall have a short-term credit rating from each of the Rating
Agencies in the highest investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the
Rating Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from
each of the Rating Agencies in the highest investment category
granted thereby;
(e) any other investment with respect to which the Depositor
or the Servicer has received written notification from the Rating
Agencies that the acquisition of such investment as an Eligible
Investment will not result in a withdrawal or downgrading of the
ratings of the Class A Certificates.
"ERISA" means the Employee Retirement Income Security Act of
-----
1974, as amended.
"Final Scheduled Distribution Date" means __________________.
---------------------------------
"Final Scheduled Maturity Date" means ______________________.
-----------------------------
"Financed Vehicle" means an automobile, light-duty truck, van
----------------
or minivan, together with all accessions thereto, securing an
Obligor's indebtedness under a Receivable.
"Funding Period" means the period beginning on and including
--------------
the Closing Date and ending on the earliest to occur of (i) the
Determination Date on which the amount on deposit in the Pre-Funding
Account is reduced to less than $100,000, (ii) the date on
which a Servicer Termination Event occurs, (iii) the date on which an
Insolvency Event occurs with respect to First Merchants or the
Depositor or (iv) the date that is 90 days after the Closing Date.
"Initial Cutoff Date" means ______________________.
-------------------
"Initial Receivable" means any Receivable transferred to the
------------------
Trust on the Closing Date and listed on Schedule I.
"Insolvency Event" means, with respect to a specified Person,
----------------
(a) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any
substantial part of its property in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator, or similar
official for such Person or for any substantial part of its
property, or
7
<PAGE>
ordering the winding-up or liquidation of such Person's affairs,
and such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in
effect, or the consent by such Person to the entry of an order for
relief in an involuntary case under any such law, or the consent by
such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator,
or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such
Person generally to pay its debts as such debts become due, or the
taking of action by such Person in furtherance of any of the
foregoing.
"Insurance Policies" means any physical damage, credit life,
------------------
disability, theft, mechanical breakdown, dual interest or
guaranteed auto-protection insurance policies or coverage relating
to the Financed Vehicles or Obligors.
"Interest Distribution Amount" means, with respect to any
----------------------------
Distribution Date, the sum of the following amounts in respect of
the related Collection Period, (a) that portion of all payments by
or on behalf of Obligors on Receivables allocable to interest; (b)
that portion of Liquidation Proceeds allocable to interest; (c)
that portion of the aggregate Purchase Amounts allocable to
interest; and (d) Investment Income for the related Collection
Period with respect to amounts in the Collection Account.
"Investment Income" means, with respect to any Distribution
-----------------
Date, the investment earnings (net of losses and investment
expenses) for the related Collection Period on amounts on deposit
in the Collection Account, the Reserve Account or the Pre-Funding
Account, as applicable.
"Lien" means a security interest, lien, charge, pledge,
----
equity, or encumbrance of any kind, other than tax liens,
mechanics' liens and other liens that attach to a Receivable by
operation of law as a result of any act or omission by the related
Obligor.
"Liquidated Receivable" means any defaulted Receivable with
---------------------
respect to which the Servicer has determined in good faith that all
amounts it expects to recover thereunder have been received or with
respect to which the related Financed Vehicle has been realized
upon and disposed of an the proceeds of such disposition have been
received; provided, that any Receivable that is 120 or more days
past due shall be deemed a Liquidated Receivable.
"Liquidation Proceeds" means, with respect to any Liquidated
--------------------
Receivable, all amounts realized on or with respect to such
Liquidated Receivable, net of (i) reasonable expenses incurred by
the Servicer in connection with the collection of the Receivable
and the repossession and disposition of the Financed Vehicle and
(ii) amounts that are required by law to be refunded to the Obligor
on such Receivable.
"Moody's" means Moody's Investors Service, Inc., or its
-------
successor.
"Obligor" on a Receivable means the purchaser or co-purchasers
-------
of the Financed Vehicle and any other Person or Persons who owes
payments under the Receivable.
"Officer's Certificate" means a certificate signed by the
---------------------
chairman of the board, the president, any executive vice president
or any vice president of the Depositor or the Servicer, as
appropriate.
"Opinion of Counsel" means one or more written opinions of
------------------
counsel, who may be an employee of or counsel to the Depositor, the
Servicer or the Backup Servicer, which counsel shall be acceptable
to the Trustee or each Rating Agent, as applicable.
"Payahead" means that portion of any payment received during
--------
a Collection Period from or on behalf of an Obligor on a
Precomputed Receivable that exceeds the scheduled monthly payment
but is less than the amount required to prepay such Receivable in
full.
8
<PAGE>
"Payahead Account" means the account designated as such,
----------------
established and maintained pursuant to Section 5.01(d).
"Person" means any legal person, including any individual,
------
corporation, estate, partnership, joint venture, association, joint
stock company, trust, unincorporated organization, or government or
any agency or political subdivision thereof.
"Physical Property" has the meaning assigned to such term in
-----------------
the definition of "Delivery" above.
"Pool Balance" means, with respect to each Determination Date,
------------
the aggregate Principal Balance of the Receivables (excluding
Purchased Receivables and Liquidated Receivables) as of the close
of business on the last day of the related Collection Period, after
giving effect to all collections for such Collection Period.
"Precomputed Receivable" means any Receivable under which the
----------------------
portion of each payment allocable to earned interest (which may be
referred to in the related Contract as an add-on finance charge)
and the portion allocable to the Amount Financed is determined
according to the sum of periodic balances or the sum of monthly
balances or any equivalent method or which is an actuarial
Receivable.
"Pre-Funded Amount" means, with respect to any date of
-----------------
determination during the Funding Period, $__________, which is the
amount to be deposited to the Pre-Funding Account on the Closing
Date, minus any amounts withdrawn from the Pre-Funding Account
during the Funding Period and applied by the Depositor to the
purchase from First Merchants of Subsequent Receivables.
Investment Income with respect to funds on deposit in the Pre-Funding
Account shall not constitute part of the Pre-Funded Amount,
but shall be transferred from the Pre-Funding Account to the
Collection Account at the end of each Collection Period and applied
on the Distribution Date as a distribution of interest to
Certificateholders.
"Pre-Funding Account" means the account designated as such,
-------------------
established and maintained pursuant to the Security Agreement.
"Principal Balance" means (a) with respect to any Precomputed
-----------------
Receivable as of the close of business on the last day of a
Collection Period, the Amount Financed minus the sum of (i) that
portion of all Scheduled Payments due on or prior to such day
allocable to principal using the actuarial or constant yield
method, (ii) any payment of the Purchase Amount with respect to the
Precomputed Receivable allocable to principal and (iii) any
prepayment in full applied to reduce the Principal Balance of the
Precomputed Receivable and (b) with respect to any Simple Interest
Receivable as of the close of business on the last day of a
Collection Period, the Amount Financed minus the sum of (i) the
portion of all payments made by or on behalf of the related Obligor
on or prior to such day and allocable to principal using the Simple
Interest Method and (ii) any payment of the Purchase Amount with
respect to the Simple Interest Receivable allocable to principal.
"Principal Distribution Amount" means, with respect to any
-----------------------------
Distribution Date, the sum of the following amounts with respect to
the preceding Collection Period: (a) that portion of all payments
by or on behalf of Obligors on Receivables allocable to principal,
including full and (with respect to Simple Interest Receivables
only) partial prepayments and including, with respect to
Precomputed Receivables, amounts withdrawn from the Payahead
Account and transferred to the Collection Account (but excluding
amounts deposited into the Payahead Account during such Collection
Period); (b) that portion allocable to principal of all Liquidation
Proceeds with respect to Receivables that became Liquidated
Receivables during such Collection Period, plus the amount of any
losses realized with respect to such Liquidated Receivables; and
(c) that portion allocable to principal of the aggregate Purchase
Amounts of all Receivables that became Purchased Receivables during
such Collection Period.
9
<PAGE>
"Purchase Amount" means the amount, as of the close of
---------------
business on the last day of a Collection Period, required to prepay
a Receivable in full under the terms thereof, including interest to
the end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of the
--------------------
close of business on the last day of a Collection Period by
______________________ pursuant to Section 3.03 or the Servicer
pursuant to Section 4.07.
"Rating Agency" means _________________________________.
-------------
"Rating Agency Condition" means, with respect to any action,
-----------------------
that each Rating Agency shall have been given 10 days' (or such
shorter period as shall be acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies shall have
notified the Depositor, the Servicer and the Trustee in writing
that such action will not result in a reduction or withdrawal of
the then current ratings of the Certificates.
"Receivable" means any Initial Receivable or Subsequent
----------
Receivable.
"Receivable File" means the documents, electronic entries,
---------------
instruments and writings with respect to a Receivable specified in
Section 3.04.
"Receivables Purchase Agreement" means the purchase agreement
------------------------------
dated as of ______________________, between ______________________
and the Depositor.
"Record Date" means, with respect to each Distribution Date,
-----------
the close of business on the day immediately preceding such
Distribution Date.
"Reserve Account" means the account designated as such,
---------------
established and maintained pursuant to the Section ______________.
"Responsible Officer" means the chairman of the board, the
-------------------
president, any executive vice president, any vice president, the
treasurer, any assistant treasurer, the secretary, or any assistant
secretary of the Servicer.
"Schedule of Receivables" means Schedule I to this Agreement,
-----------------------
as amended and supplemented on each Subsequent Transfer Date.
"Scheduled Payment" on a Precomputed Receivable means that
-----------------
portion of the payment required to be made by the Obligor during a
calendar month sufficient to amortize the Principal Balance under
the actuarial method over the term of the Receivable and to provide
interest at the APR.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Security Agreement" means the Security Agreement dated as of
------------------
________, between the Depositor and the Trustee.
"Servicer" means _________________________________,
--------
a ______________________ corporation, and each successor Servicer
pursuant to Section 8.03 or 9.02.
"Servicer Termination Event" means any event specified in
--------------------------
Section 9.01.
"Servicer's Certificate" means the certificate required to be
----------------------
delivered by the Servicer pursuant to Section 4.09, substantially
in the form attached hereto as Exhibit D.
10
<PAGE>
"Servicing Fee" means the fee payable to the Servicer for
-------------
services rendered during each Collection Period, determined
pursuant to Section 4.08.
"Servicing Rate" means ________% per annum.
--------------
"Simple Interest Method" means the method of allocating a
----------------------
fixed level payment to principal and interest, pursuant to which
the portion of such payment that is allocated to interest is equal
to the product of the fixed rate of interest multiplied by the
unpaid principal balance multiplied by the period of time elapsed
since the preceding payment of interest was made, and the remainder
of such payment is allocable to principal.
"Simple Interest Receivable" means a Receivable with respect
--------------------------
to which the portion of each payment allocable to interest or to
principal under the related Contract is determined in accordance
with the Simple Interest Method.
"Standard & Poor's" means Standard & Poor's Ratings Services,
-----------------
a Division of The McGraw-Hill Company, or its successor.
"State" means any one of the 50 States of the United States of
-----
America or the District of Columbia.
"Subsequent Cutoff Date" means a date as of which collections
----------------------
on or with respect to Subsequent Receivables are conveyed to the
Trust.
"Subsequent Purchase Agreement" means a duly executed written
-----------------------------
assignment delivered by ____________ to the Depositor in connection
with each transfer by ____________ to the Depositor of Subsequent
Receivables on a Subsequent Transfer Date, which shall be
substantially in the form of Exhibit B to the Receivables Purchase
Agreement and shall include a supplement to Schedule I to the
Receivables Purchase Agreement listing the Subsequent Receivables
transferred to the Depositor on such Subsequent Transfer Date.
"Subsequent Receivable" means any Receivable transferred to
---------------------
the Trust on a Subsequent Transfer Date and identified on Schedule
I to the related Subsequent Transfer Agreement.
"Subsequent Transfer Agreement" means the agreement described
-----------------------------
in Section 2.03(b)(iii).
"Subsequent Transfer Date" means a date on which Subsequent
------------------------
Receivables are conveyed to the Trust.
"Total Distribution Amount" means, with respect to each
-------------------------
Distribution Date, the Interest Distribution Amount plus the
Principal Distribution Amount, exclusive of that portion thereof
allocable to Realized Losses.
"Transfer Agreement" means the agreement to transfer
------------------
Subsequent Receivables to the Trust, dated as of ____________, from
the Depositor in favor of the Trustee for the benefit of the Trust.
"Trust" means the trust created by this Agreement.
-----
"Trustee" means _________________________________, a ________
-------
________ banking corporation, its successors in interest and any
successor Trustee hereunder.
"Trustee Officer" means any officer within the Corporate Trust
---------------
Office of the Trustee, including any vice president, any assistant
vice president, any senior trust officer, any trust officer or any
other officer of the Trustee customarily performing functions
similar to those performed by any of the above
11
<PAGE>
designated officers and also, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
"UCC" means the Uniform Commercial Code as in effect in the
---
relevant jurisdiction.
Section 1.02. Other Definitional Provisions. (a) All terms
-----------------------------
defined in this Agreement shall have the defined meanings when used
in any certificate or other document made or delivered pursuant
hereto or thereto unless otherwise defined therein.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not
defined herein or in any such certificate or other document, and
accounting terms partly defined herein or in any such certificate
or other document to the extent not defined, shall have the
respective meanings given to them under United States generally
accepted accounting principles. To the extent that the definitions
of accounting terms herein or in any such certificate or other
document are inconsistent with the meanings of such terms under
United States generally accepted accounting principles, the
definitions contained herein or in any such certificate or other
document shall control.
(c) The words "hereof", "herein", "hereunder" and words of
similar import when used herein shall refer to this Agreement as a
whole and not to any particular provision hereof; Article, Section,
Schedule and Exhibit references contained herein are references to
Articles, Sections, Schedules and Exhibits herein; and the term
"including" shall mean "including without limitation".
(d) 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 the feminine and neuter
genders of such terms.
(e) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instrument or statute as
from time to time amended, modified or supplemented and includes
(in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and
assigns.
ARTICLE II
Creation of the Trust; Conveyance of Receivables
------------------------------------------------
Section 2.01. Creation of Trust. (a) Upon the execution of
-----------------
this Agreement by the parties hereto, there is hereby created a
separate trust, which shall be known as FASCO Auto Trust 199__-__
(the "Trust"). The Trust shall be administered pursuant to the
provisions of this Agreement.
(b) It is the intention of the Trustee and the
Certificateholders, and the Trustee and the Certificateholders
agree, that the Trust will be treated as a grantor trust for
federal income tax purposes, and all transactions contemplated by
this Agreement will be reported, to the extent applicable, on all
applicable tax returns consistently with such treatment. The
provisions of this Agreement shall be construed, and the affairs of
the Trust shall be conducted, so as to achieve treatment of the
Trust as a grantor trust for federal income tax purposes.
Section 2.02. Conveyance of Initial Receivables. In
---------------------------------
consideration of the Trustee's delivery on the Closing Date to or
upon the order of the Depositor of Class A Certificates in an
initial aggregate principal amount of $____________ and Class B
Certificates in an initial aggregate principal amount of
$____________, the Depositor does hereby sell, transfer, assign,
set over and otherwise convey to the
12
<PAGE>
Trustee in trust for the benefit of the Certificateholders, without
recourse (subject to the obligations set forth herein):
(a) all right, title and interest of the Depositor in
and to the Initial Receivables and all moneys paid or payable
thereon or in respect thereof on and after the Initial Cutoff Date;
(b) all right, title and interest of the Depositor in
and to the security interests in the related Financed Vehicles and
any accessions thereto granted by Obligors pursuant to the Initial
Receivables and any other interest of the Depositor in such Financed
Vehicles;
(c) all right, title and interest of the Depositor in
and to any Liquidation Proceeds and any other proceeds with respect
to the Initial Receivables from claims on any physical damage, credit
life or disability insurance policies covering Financed Vehicles or
Obligors, including any vendor's single interest or other collateral
protection insurance policy;
(d) all right, title and interest of the Depositor in
and to any property that shall have secured an Initial Receivable
and shall have been acquired by or on behalf of the Depositor, the
Servicer or the Trustee;
(e) all right, title and interest of the Depositor in
and to all documents and other items contained in the related Receivable
Files;
(f) the Transfer Agreement;
(g) the Security Agreement;
(h) all of the Depositor's rights (but not obligations)
under the Receivables Purchase Agreement;
(i) all right, title and interest of the Depositor
in and to the Account Property; and
(j) the proceeds of any and all of the foregoing.
Although the Depositor and the Trustee agree that the transfer of
assets to the Trust pursuant to this Agreement is intended to be a
sale of such assets to the Trust, rather than the granting of a
security interest to secure a borrowing, and that such assets shall
not be property of the Depositor, in the event such transfer is
deemed to be of a mere security interest to secure a borrowing, the
Depositor shall be deemed to have granted to the Trustee for the
benefit of the Trust a perfected first priority security interest
in all such assets, and this Agreement shall constitute a security
interest under applicable law.
Section 2.03. Conveyance of Subsequent Receivables.
------------------------------------
(a) Subject to the conditions set forth in paragraph (b) below,
the Depositor, pursuant to the initially agreed upon terms
contained in the Transfer Agreement and pursuant to one or more
Subsequent Transfer Agreements, shall transfer, assign, set over
and otherwise convey to the Trustee, in trust for the benefit of
the Certificateholders, without recourse (subject to the
obligations set forth herein):
(i) all right, title and interest of the Depositor in
and to the Subsequent Receivables listed on Schedule I to the
related Subsequent Transfer Agreement and all moneys paid or
payable thereon or in respect thereof on or after the related
Subsequent Transfer Date;
(ii) all right, title and interest of the Depositor in
and to the security interests in the related Financed Vehicles and
any accessions thereto granted by Obligors pursuant to such Subsequent
Receivables and any other interest of the Depositor in such Financed
Vehicles;
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<PAGE>
(iii) all right, title and interest of the Depositor in
and to any Liquidation Proceeds and any other proceeds with respect
to the Subsequent Receivables from claims on any physical damage,
credit life or disability insurance policies covering the Financed Vehicles
or Obligors, including any vendor's single interest or other collateral
protection insurance policy;
(iv) all right, title and interest of the Depositor in
and to any property that shall have secured an Subsequent
Receivable and shall have been acquired by or on behalf of the
Depositor, the Servicer or the Trustee;
(v) all items contained in the related Receivable
Files;
(vi) all rights (but not the obligations) of the
Depositor under the Receivables Purchase Agreement with respect to
the Subsequent Receivables (to the extent not already conveyed under
Section 2.02) and the related Subsequent Purchase Agreements;
and
(vii) the proceeds of any and all of the foregoing.
(b) The Depositor shall transfer to the Trustee, for the
benefit of the Certificateholders, the Subsequent Receivables and
the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the
following conditions precedent on or prior to the related
Subsequent Transfer Date:
(i) the Funding Period shall not have terminated;
(ii) the Depositor shall have provided the Trustee and
the Rating Agencies with an Addition Notice not later than (ten)
days prior to such Subsequent Transfer Date and shall have provided
any information reasonably requested by any of the foregoing with
respect to such Subsequent Receivables;
(iii) the Depositor shall have delivered to the Trustee
a duly executed written assignment substantially in the form of
Exhibit G (each, a "Subsequent Transfer Agreement"), which shall
include a supplement to Schedule I listing the Subsequent Receivables
being transferred to the Trust on such Subsequent Transfer Date;
(iv) the Depositor shall have deposited or caused to be
deposited in the Collection Account all collections in respect of
the Subsequent Receivables received on or after the related
Subsequent Cutoff Date;
(v) as of each Subsequent Transfer Date, (A) neither
______________________ nor the Depositor shall be insolvent nor shall
either of them become insolvent as a result of the transfer
of Subsequent Receivables on such Subsequent Transfer Date,
(B) neither ______________________ nor the Depositor shall intend
to incur or believe that it shall incur debts that would be beyond its
ability to pay as such debts mature, (C) such transfer shall not have been
made with actual intent to hinder, delay or defraud any Person and (D) the
assets of neither ______________________ nor the Depositor shall constitute
unreasonably small capital to carry out its business as conducted;
((vi) an amount equal to _____% of the aggregate
Principal Balance of such Subsequent Receivables shall have been
deposited to the Reserve Account;)
(vii) after giving effect to any transfer of Subsequent
Receivables on a Subsequent Transfer Date, the Receivables in the
Trust shall meet the following criteria (based on the
characteristics of the Initial Receivables on the Initial Cutoff Date
and the Subsequent Receivables on their respective Subsequent
Cutoff Dates): (i) the weighted average APR of the Receivables shall
not be less than ___%, unless, with the prior consent of the
Rating Agencies, the Depositor
14
<PAGE>
increases the Reserve Account Initial Deposit by an amount
agreeable to the Rating Agencies; (ii) the weighted average
remaining term of the Receivables shall not be greater than ___ months; and
(iii) not more than ___% of the aggregate Principal Balance of the
Receivables shall have Obligors whose mailing addresses are in any one state
other than __________________ unless an Opinion of Counsel acceptable to
the Rating Agencies with respect to the security interest in the related
Financed Vehicles is furnished by the Depositor on or prior to such
Subsequent Transfer Date;
(viii) each of the representations and warranties made by
First Merchants pursuant to Section ______ of the Receivables
Purchase Agreement shall be true and correct with respect to the Subsequent
Receivables to be transferred on such Subsequent Transfer Date as of such
Subsequent Transfer Date, and ___________________ and the Depositor shall
have performed all of their respective obligations under the Receivables
Purchase Agreement and hereunder on or prior to such Subsequent Transfer
Date;
(ix) the Depositor shall, at its own expense, on or
prior to each Subsequent Transfer Date indicate in its computer files that
the Subsequent Receivables identified in the related Subsequent Transfer
Agreement have been transferred and assigned to the Trust pursuant to this
Agreement and the Transfer Agreement;
(x) the Depositor shall have taken any action required
to maintain the first perfected ownership interest of the Trust in
the Trust property;
(xi) no selection procedures adverse to the interests
of the Certificateholders shall have been utilized in selecting the
Subsequent Receivables;
(xii) the addition of any such Subsequent Receivables
shall not result in a material adverse tax consequence to the
Trust or the Certificateholders;
(xiii) the Depositor shall have delivered (A) to the
Rating Agencies an Opinion of Counsel with respect to the transfer
of such Subsequent Receivables substantially in the form of the
Opinion of Counsel delivered to the Rating Agencies on the Closing
Date and (B) to the Trustee the Opinion of Counsel required by
Section 12.02(i);
(xiv) each Rating Agency shall have confirmed in writing
that the rating of the Certificates shall not be withdrawn or
reduced as a result of the transfer of such Subsequent Receivables
to the Trust; and
(xv) the Depositor shall have delivered to the Trustee
an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b).
Section 2.04. Acceptance by Trustee. The Trustee hereby
---------------------
acknowledges the sale, transfer and assignment by the Depositor
pursuant to this Article II and declares that the Trustee holds and
will hold the Receivables and the other assets of the Trust in
trust, upon the terms herein set forth, for the use and benefit of
all present and future Certificateholders.
ARTICLE III
The Receivables
---------------
Section 3.01. Representations and Warranties of ____________.
----------------------------------------------
______________________ has made under the Receivables Purchase
Agreement, and upon execution of each Subsequent Purchase Agreement
shall be deemed to remake, each of the representations and
warranties set forth in Exhibit H and has consented to the
assignment by the Depositor to the Trust of the Depositor's rights
15
<PAGE>
with respect thereto. Such representations and warranties speak as
of the execution and delivery of this Agreement and as of the
Closing Date in the case of the Initial Receivables and as of the
applicable Subsequent Transfer Date in the case of the Subsequent
Receivables, but shall survive the sale, transfer and assignment of
the Receivables to the Trust. Pursuant to Sections 2.02 and 2.03
of this Agreement, the Depositor has sold, assigned, transferred
and conveyed to the Trust, as part of the assets of the Trust, its
rights under the Receivables Purchase Agreement, including the
representations and warranties of ______________________ therein as
set forth in Exhibit H, upon which the Trustee relies in accepting
the Receivables and delivering the Certificates, together with all
rights of the Depositor with respect to any breach thereof,
including any right to require ______________________ to repurchase
any Receivable in accordance with the Receivables Purchase
Agreement. It is understood and agreed that the representations
and warranties referred to in this Section shall survive the
delivery of the Receivable Files to the Trustee or any custodian.
Section 3.02. Representations and Warranties of the
-------------------------------------
Depositor. The Depositor makes the following representations and
- ---------
warranties as to the Receivables on which the Trustee relies in
acquiring the Receivables and delivering the Certificates. Such
representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date with respect
to the Initial Receivables and as of the applicable Subsequent
Transfer Date with respect to the Subsequent Receivables, but shall
survive the sale, transfer and assignment of the Receivables by the
Depositor to the Trustee.
(a) Title. It is the intention of the Depositor that (i) the
-----
transfer and assignment herein contemplated constitute a sale of
the Receivables from the Depositor to the Trust, conveying good
title thereto free and clear of any Liens or rights of other
Persons and (ii) the beneficial interest in and title to the
Receivables not be part of the debtor's estate in the event of the
filing of a bankruptcy petition by or against the Depositor under
any bankruptcy law. No Receivable has been sold, transferred,
assigned or pledged by the Depositor to any Person other than the
Trust. Immediately prior to the transfer and assignment herein
contemplated, the Depositor 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 Trust shall have good
and marketable title to each such Receivable, free and clear of all
Liens and rights of others; and the transfer has been perfected
under the UCC.
(b) All Filings Made. All filings (including UCC filings)
----------------
necessary in any jurisdiction to give the Trust a first perfected
ownership interest in the Receivables shall have been made.
Section 3.03. Repurchase upon Breach. The Depositor and the
----------------------
Servicer shall inform the other parties to this Agreement promptly,
in writing, upon the discovery of any breach of ____________'s
representations and warranties made pursuant to Section 3.01 of
this Agreement or Section 3.02(b) of the Receivables Purchase
Agreement or of the Depositor's representations and warranties made
pursuant to Section 3.02 above. Unless any such breach shall have
been cured by the last day of the second Collection Period
following the discovery or notice thereof by or to the Depositor or
the Servicer, the Depositor shall be obligated, and, if necessary, the
Depositor or the Trustee shall enforce the obligation of
______________________ under the Receivables Purchase Agreement, to
repurchase as of such last day any Receivable materially and
adversely affected by any such breach. In consideration of the
repurchase of any such Receivable, the Depositor shall remit the
Purchase Amount to the Collection Amount, in the manner specified
in Section 5.06; provided, however, that the obligation of the
Depositor to repurchase any Receivable arising solely as a result
of a breach of ______________________ 's representations and
warranties under Section 3.02(b) of the Receivables Purchase
Agreement is subject to the receipt by the Depositor of the
Purchase Amount from ______________________ . The sole remedy of
the Trustee or the Certificateholders with respect to a breach of
representations and warranties pursuant to Sections 3.01 and 3.02
and the agreement contained in this Section shall be to require the
Depositor to repurchase Receivables pursuant to this Section,
subject to the conditions contained herein, or to enforce
______________________ 's obligation to the Depositor to repurchase
such Receivables pursuant to the Receivables Purchase Agreement.
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<PAGE>
Section 3.04. Custody of Receivable Files. (a) In
---------------------------
connection with the sale and transfer of the Receivables pursuant
to this Agreement, the Trustee, simultaneously with the execution
and delivery of this Agreement, is entering into the Custodial
Agreement with the Custodian pursuant to which the Trustee appoints
the Custodian, and the Custodian accepts such appointment, to act
as the agent and bailee of the Trustee, for all purposes of Article
9 of the UCC, as Custodian of the following documents or
instruments, which are hereby constructively delivered (or in the
case of the Subsequent Receivables, will, as of the applicable
Subsequent Transfer Date, be constructively delivered) to the
Trustee, with respect to each Receivable:
(i) a list of Receivables in the form of Schedule
I hereto, identifying such Receivables, together with the Computer
Tape identifying such Receivables and a completed checklist in the
form of Exhibit E hereto (it being expressly understood and agreed
that the Custodian and Trustee have no duty or responsibility
to check or verify the accuracy or completeness of such checklist);
(ii) the fully executed original Receivable with manual
signatures and Dealer endorsements, together with executed
assignments thereof by ______________________ and the Depositor in
blank, which assignments shall be substantially in the form of
Exhibit F hereto;
(iii) a written confirmation from the Servicer
certifying as to the Insurance Policies covering the Receivables and
stating that they are in full force and effect;
(iv) the original certificate of title relating to the
Financed Vehicle or (a) a copy of the application for a certificate
of title and (b) a copy of the existing title, lien entry form or
receipt of registration or (c) a copy of the related letter guarantee,
in each case noting the lien of ______________________
or the Depositor; provided, however, that at any time during the term hereof
the Trustee may request and require that the Depositor cause the party in
whose name the lien is noted to transfer such lien to the Depositor;
(v) an original or copy of the credit application of the
Obligor; and
(vi) financing statements on Form UCC-1 listing the
Trustee as the secured party with respect to each Receivable and the other
items conveyed pursuant to Section 2.01 or 2.02, as applicable, stamped to
indicate filing with the Office of the Secretary of State of the State of
______________________.
(b) Access to Records. The Servicer or the Custodian, as the
-----------------
case may be, shall provide to (or in the case of the Custodian
shall be required pursuant to the Custodial Agreement to provide
to) the Trustee, the Backup Servicer, the Certificateholders and
their duly authorized representatives, attorneys or auditors access
to the Receivable Files in such cases where the Trustee, the Backup
Servicer or a Certificateholder is required by applicable statutes
or regulations to review the related accounts, records and computer
systems maintained by the Servicer or the Custodian, as the case
may be, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices
of the Servicer or the Custodian, as the case may be, designated by
the Servicer or the Custodian. Nothing in this Section shall
derogate from the obligation of the Servicer or the Custodian to
observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer or the
Custodian to provide access as provided in this Section as the
result of such obligation shall not constitute a breach of this
Section.
17
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ARTICLE IV
Administration and Servicing of Receivables
-------------------------------------------
Section 4.01. Duties of the Servicer. The Servicer, for the
----------------------
benefit of the Trust, shall manage, service, administer and make
collections on the Receivables (other than Purchased Receivables)
with reasonable care, acting prudently and in accordance with customary and
usual servicing procedures for other institutional servicers of receivables
of the type subject to this Agreement and applicable law, and to the degree
not inconsistent with the foregoing, using that degree of skill and
attention that the Servicer exercises with respect to all comparable
automotive receivables that it services for itself or others. The
Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on the Receivables, investigating
delinquencies, sending billing statements to Obligors, reporting tax
information to Obligors, accounting for collections, and furnishing monthly
and annual statements to the Trustee with respect to distributions.
Subject to the provisions of Section 4.02, the Servicer shall follow its
customary standards, policies and procedures in performing its duties as
Servicer. Without limiting the generality of the foregoing, the Servicer is
authorized and empowered to execute and deliver, on behalf of
itself, the Trustee, the Certificateholders or any of them, any and
all instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other comparable instruments, with
respect to the Receivables or to the Financed Vehicles securing the
Receivables. If the Servicer shall commence a legal proceeding to
enforce a Receivable, the Trustee (in the case of a Receivable
other than a Purchased Receivable) shall thereupon be deemed to
have automatically assigned, solely for the purpose of collection,
such Receivable to the Servicer. If in any enforcement suit or
legal proceeding it shall be held that the Servicer may not enforce
a Receivable on the ground that it is not a real party in interest
or a holder entitled to enforce such Receivable, the Trustee, at
the Servicer's expense and direction, shall take steps to enforce
such Receivable, including bringing suit in its name or the name of
the Trust. The Trustee shall (and the Custodian pursuant to the
Custodial Agreement shall be required to) furnish the Servicer,
upon the written request of the Servicer, with any powers of
attorney and other documents reasonably necessary or appropriate to
enable the Servicer to carry out its servicing and administrative
duties hereunder.
Section 4.02. Collection and Allocation of Receivable
---------------------------------------
Payments. The Servicer shall make reasonable efforts to collect
- --------
all payments called for under the terms and provisions of the
Receivables as and when the same shall become due and shall follow
such collection procedures as it follows with respect to all
comparable automotive receivables that it services for itself or
others. The Servicer may grant extensions, rebates or adjustments
on a Receivable or arrange with the Obligor to extend or modify the
payment schedule, which actions shall not, for the purposes of this
Agreement, modify the original due dates or amounts of the
Scheduled Payments on a Precomputed Receivable or the original due
dates or amounts of the originally scheduled payments of interest
on Simple Interest Receivables; provided, however, that if the
Servicer extends the date for final payment by the Obligor of any
Receivable beyond the Final Scheduled Maturity Date, it shall promptly
repurchase the Receivable from the Issuer in accordance
with the terms of Section 4.07. The Servicer may in its discretion
waive any late payment charge or any other fees that may be
collected in the ordinary course of servicing a Receivable. The
Servicer shall not agree to any alteration of the interest rate on
any Receivable or of the amount of any Scheduled Payment on
Precomputed Receivables or the originally scheduled payments on
Simple Interest Receivables.
Section 4.03. Realization upon Receivables. On behalf of the
----------------------------
Trust, the Servicer shall use its best efforts, consistent with its
customary servicing procedures, to repossess or otherwise convert
the ownership of and liquidate the Financed Vehicle securing any
Receivable as to which the Servicer shall have determined eventual
payment in full is unlikely. The Servicer shall follow such
customary and usual practices and procedures as it shall deem
necessary or advisable in its servicing of automotive receivables,
which may include reasonable efforts to realize upon any recourse
to Dealers and selling the Financed Vehicle at public or private
sale. The foregoing shall be subject to the provision that, in any
case in which the Financed Vehicle shall have suffered damage, the
Servicer shall not expend funds in connection with the repair or
the repossession of such Financed Vehicle unless it shall determine
in
18
<PAGE>
its discretion that such repair and/or repossession will increase
the Liquidation Proceeds by an amount greater than the amount of
such expenses.
Section 4.04. Insurance. The Servicer shall, in accordance
---------
with its customary servicing procedures, require that each Obligor
shall have obtained physical damage and theft insurance covering
the Financed Vehicle as of the execution of the Receivable. The
Servicer shall notify each insurer providing a "guaranteed auto
protection" insurance policy with respect to the Receivables to
include the Trustee as an additional insured and its payee on each
such policy. Upon receipt of notification that the insurance
required pursuant to the terms of any Receivable is not in place,
the Servicer shall obtain "dual interest" insurance chargeable to
the Obligor in accordance with its customary servicing procedures.
Section 4.05. Maintenance of Security Interests in Financed
---------------------------------------------
Vehicles. The Servicer shall, in accordance with its customary
- --------
servicing procedures, take such steps as are necessary to maintain
perfection of the security interest created by each Receivable in
the related Financed Vehicle. The Servicer is hereby authorized to
take such steps as are necessary to re-perfect such security
interest on behalf of the Trustee in the event of the relocation of
a Financed Vehicle or for any other reason.
Section 4.06. Covenants of Servicer. The Servicer shall not
---------------------
release the Financed Vehicle securing any Receivable from the
security interest granted by such Receivable in whole or in part
except in the event of payment in full by the Obligor thereunder or
repossession, nor shall the Servicer impair the rights of the
Trustee or the Certificateholders in such Receivable, nor shall the
Servicer (except in the case of an extension permitted pursuant to
Section 4.02) increase the number of scheduled payments due under
a Receivable.
Section 4.07. Purchase of Receivables upon Breach. The
-----------------------------------
Servicer shall inform the Trustee and the Depositor promptly, in
writing, upon the discovery of any breach pursuant to Section 4.02,
4.05 or 4.06. Unless the breach shall have been cured by the last
day of the Collection Period following such discovery, the Servicer
shall purchase as of such last day any Receivable with respect to
which such breach has occurred if such breach has a material and
adverse effect on the interests of the Depositor or the Trust in
and to such Receivable. If the Servicer takes any action during
any Collection Period pursuant to Section 4.02 that impairs the
rights of the Trustee or the Certificateholders in any Receivable
or as otherwise provided in Section 4.02, the Servicer shall
purchase such Receivable as of the last day of such Collection
Period. In consideration of the purchase of any such Receivable
pursuant to either of the two preceding sentences, the Servicer
shall remit the Purchase Amount in the manner specified in
Section 5.06. Subject to Section 8.02, the sole remedy of the
Trustee or the Certificateholders with respect to a breach pursuant
to Section 4.02, 4.05 or 4.06 shall be to require the Servicer to
purchase Receivables pursuant to this Section.
Section 4.08. Servicing Fee. The Servicing Fee for a
-------------
Distribution Date shall equal the product of (a) one-twelfth,
(b) the Servicing Fee Rate and (c) the Pool Balance as of the first
day of the preceding Collection Period. The Servicer shall also be
entitled to all late fees, prepayment charges (including, in the
case of a Receivable that provides for payments according to the
"Rule of 78s" and that is prepaid in full, the difference between
the Principal Balance of such Receivable (plus accrued interest to
the date of prepayment) and the principal balance of such
Receivable computed according to the "Rule of 78s"), and other
administrative fees or similar charges allowed by applicable law
with respect to the Receivables, collected (from whatever source)
on the Receivables, plus any reimbursement pursuant to the last
paragraph of Section 8.02.
Section 4.09. Servicer's Certificate. Not later than 11:00
----------------------
a.m. (New York time) on the ________ day of each month, or if such
________ day is not a business day, the next succeeding business
day, the Servicer shall deliver to the Trustee, the Backup Servicer (in
electronic media form acceptable to the Backup Servicer) and
the Depositor, with a copy to the Rating Agencies, a Servicer's
Certificate substantially in the form attached hereto as Exhibit D
setting forth the applicable information for each of the items set
forth therein. Receivables to be purchased by the Servicer or by
shall
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<PAGE>
be identified by the Servicer by account number with respect to
such Receivable (as specified in Schedule I).
Section 4.10. Annual Statement as to Compliance; Notice of
--------------------------------------------
Default. (a) The Servicer shall deliver to the Trustee, on or
- -------
before ______________________ of each year, beginning
______________________, an Officers' Certificate dated as of
(December 31 of the preceding year), stating that (i) a review of
the activities of the Servicer during the preceding 12-month period
(or such shorter period as shall have elapsed since the Closing
Date) and of its performance under this Agreement has been made
under such officers' supervision and (ii) to the best of such
officers' knowledge, based on such review, the Servicer 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 officers and
the nature and status thereof. The Trustee shall send a copy of
such certificate and the report referred to in Section 4.11 to each
Rating Agency. A copy of such certificate and the report referred
to in Section 4.11 may be obtained by any Certificateholder by a
request in writing to the Trustee addressed to the Corporate Trust
Office.
(b) The Servicer shall deliver to the Trustee, the Backup
Servicer and each Rating Agency, promptly after having obtained
knowledge thereof, but in no event later than five (5) business
days thereafter, written notice in an Officers' Certificate of any
event which with the giving of notice or lapse of time, or both,
would become a Servicer Termination Event under Section 9.01.
Section 4.11. Annual Independent Certified Public
-----------------------------------
Accountants' Report. The Servicer shall cause a firm of
- -------------------
independent certified public accountants, which may also render
other services to the Servicer, the Depositor or their Affiliates,
to deliver to the Trustee on or before ______________________ of
each year, beginning ______________________, a report addressed to
the Board of Directors of the Servicer, to the effect that such
firm has examined the financial statements of the Servicer for the
preceding twelve months (or in the case of the first such report,
during such shorter period that shall have elapsed since the
Closing Date) and issued its report thereon, and that such
examination (a) was made in accordance with generally accepted auditing
standards and accordingly included such tests of the accounting records
and such other auditing procedures as such firm considered necessary
in the circumstances; (b) included tests relating to automotive loans
serviced for others in accordance with the requirements of the Uniform
Single Audit Program for Mortgage Bankers (the "Program"), to the extent
the procedures in such Program are applicable to the servicing obligations
set forth in this Agreement; and (c) except as described in the report,
disclosed no exceptions or errors in the records relating to
automobile, light-duty truck and van loans serviced for others
that, in the firm's opinion, paragraph four of such Program
requires such firm to report.
Such report will also indicate that the firm is independent of
the Servicer within the meaning of the Code of Professional Ethics
of the American Institute of Certified Public Accountants.
Section 4.12. Servicer Expenses. The Servicer shall be
-----------------
required to pay all expenses incurred by it in connection with its
activities hereunder, including fees and disbursements of
independent accountants, taxes imposed on the Servicer and expenses
incurred in connection with distributions and reports to
Certificateholders.
Section 4.13. Appointment of Subservicer. The Servicer may
--------------------------
at any time appoint a subservicer to perform all or any portion of
its obligations as Servicer hereunder; provided, however, that the
Rating Agency Condition shall have been satisfied in connection
therewith and, provided, further, that the Servicer shall remain
obligated and be liable to the Trustee and the Certificateholders
for the servicing and administering of the Receivables in
accordance with the provisions of this Agreement without diminution
of such obligation and liability by virtue of the appointment of
such subservicer and to the same extent and under the same terms
and conditions as if the Servicer alone were servicing and
administering the Receivables. The fees and expenses of the
subservicer shall be as agreed between the Servicer and its
subservicer from time to time, and neither the Trustee nor the
Certificateholders shall have any responsibility therefor.
20
<PAGE>
Section 4.14. Oversight of Servicing.
----------------------
(a) Commencing on the date of execution of this Agreement and
continuing until the earlier of (i) the termination of the Trust
and (ii) the appointment of the Backup Servicer as Servicer under
this Agreement, the Servicer shall, on the last day of each
calendar month, deliver to the Backup Servicer in the Computer Tape
format acceptable to the Backup Servicer, such information as is
necessary to permit the Backup Servicer to service the Receivables
in accordance with the provisions of this Agreement. The Backup
Servicer shall accept and store, but shall not be required to
examine, such information. Upon notice that the Servicer has
resigned or upon the removal of the Servicer under this Agreement,
the Backup Servicer shall assume all responsibilities of the
Servicer (or of the Trustee or any other Person then acting as
successor to the Servicer in accordance with Sections 9.01 and
9.02) under this Agreement within thirty days of such notice or
removal. The Backup Servicer shall service the Receivables in
accordance with the provisions of this Agreement.
(b) On the date that each Servicer's Certificate is delivered
by the Servicer to the Trustee, the Servicer shall also deliver a
Computer Tape containing detailed information with respect to the
Receivables for the related Collection Period. The Backup Servicer
shall determine that (i) the Servicer's Certificate appears on its
face to be complete and (ii) that amounts credited to and withdrawn
from the Accounts and the balance of such Accounts are the same as
the amount set forth in such Servicer's Certificate. To the extent
verifiable using the information contained in the Servicer's
Certificate, the Backup Servicer shall calculate and check that the
calculations made by the Servicer in the Servicer's Certificate are
mathematically accurate.
(c) In the event of any discrepancies or exceptions noted by
the Backup Servicer in the Servicer's Certificate, the Backup
Servicer shall, within three business days of its receipt of the
Servicer's Certificate, notify the Servicer of such discrepancies
or exceptions. The Servicer shall consult with the Backup Servicer
and use its best efforts to ensure that such Servicer's Certificate
is corrected and that subsequent Servicer's Certificates are
accurate. If such discrepancies or exceptions cannot be reconciled
within 30 days, the Backup Servicer's interpretation shall prevail
for all subsequent Distribution Dates.
(d) The Backup Servicer will not be responsible for delays
attributable to the Servicer's failure to deliver information,
defects in the information supplied by Servicer or other
circumstances beyond the control of the Backup Servicer.
Section 4.15. Duties of the Backup Servicer.
-----------------------------
(a) The Backup Servicer shall 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
with respect to the Backup Servicer.
(b) In the absence of bad faith or negligence on its part,
the Backup Servicer 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 Backup Servicer and
conforming to the requirements of this Agreement.
(c) The Backup Servicer shall not be required 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 the repayment of such funds or
adequate written indemnity against such risk or liability is not
reasonably assured to it in writing prior to the expenditure or
risk of such funds or incurrence of financial liability.
(d) The Servicer shall indemnify, defend and hold harmless
the Backup Servicer, its agents, officers, directors or employees
from and against any claim, action, loss, damage, penalty, fine,
cost, expense, or other liability, including court costs and reasonable
attorney's fees and expenses, incurred
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as a result of its acts or omissions or its breach of its own
representations made in this Agreement or the Backup Servicer's
performance of the Servicer's duties under this Agreement. The right of
indemnification provided hereby shall survive the termination of this
Agreement. The Servicer shall not be liable to the Backup Servicer,
under this Section 4.15 or otherwise, for the improper acts, negligence or
bad faith of the Backup Servicer.
ARTICLE V
Accounts; Application of Funds
------------------------------
Section 5.01. Accounts. (a) On or prior to the Closing
--------
Date, the Servicer shall establish an account in the name of the
Trustee (the "Collection Account"), which shall be maintained as an
Eligible Deposit Account and shall bear a designation clearly
indicating that the amounts deposited thereto are held for the
benefit of the Trust. The Servicer shall deposit all amounts
received on or with respect to the Receivables into the Collection
Account as promptly as possible, but in no event later than the
second business day following receipt thereof.
(b) (i) Funds on deposit in the Collection Account
shall be invested by the Trustee in Eligible Investments selected
in writing by the Servicer. All Investment Income received during
each Collection Period with respect to Eligible Investments on deposit
in the Collection Account shall be included in the Interest
Distribution Amount for such Collection Period and distributed by
the Trustee on the related Distribution Date pursuant to Section 5.07.
Except as otherwise permitted by the Rating Agencies, funds
on deposit in the Collection Account shall be invested in Eligible
Investments that will mature not later than the business day
immediately preceding the next Distribution Date. Funds deposited
in the Collection Account on a day immediately preceding a Distribution
Date upon the maturity of an Eligible Investment are not required
to be invested overnight.
(ii) The Trustee shall not be held liable in any way by
reason of any insufficiency in the Collection Account resulting from
any loss on an Eligible Investment included therein, except for losses
attributable to the Trustee's failure to make payments on such
Eligible Investments issued by the Trustee, in its commercial
capacity as principal obligor and not as Trustee, in accordance with
their terms.
(c) The Trustee, for the benefit of the Certificateholders,
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 (including all income thereon). The Collection Account
shall be under the sole dominion and control of the Trustee for the
benefit of the Certificateholders. If, at any time, the Collection
Account ceases to be an Eligible Deposit Account, the Trustee (or
the Servicer on its behalf) shall establish, within 10 business
days (or such longer period, not to exceed 30 calendar days, as to
which each Rating Agency may consent), a new Collection Account as
an Eligible Deposit Account and shall transfer any cash and/or any
Eligible Investments to such new Collection Account.
(d) The Servicer shall establish and maintain with the
Trustee an Eligible Deposit Account (the "Payahead Account"). The
Payahead Account shall not be property of the Trust. The Servicer
shall, within two business days of their deposit to the Collection
Account, transfer all Payaheads from the Collection Account to the
Payahead Account.
Section 5.02. Reserve Account. (a) In order to effect the
---------------
subordination provided for herein and to assure that sufficient
amounts to make required distributions to Certificateholders will
be available, the Servicer shall establish and maintain the Reserve
Account as an Eligible Deposit Account in the name of the Trustee,
as collateral agent, and shall deposit thereto on the Closing Date
the Reserve Account Initial Deposit. The Reserve Account shall
bear a designation clearly indicating that the funds deposited therein
are held in trust for the benefit of the Certificateholders and shall
include
22
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the money and other property deposited and held therein pursuant to this
Section 5.02 and Section 5.07(b). The Reserve Account shall be established
initially with the Trustee.
The Reserve Account shall not be part of the Trust, but
instead will be held for the benefit of the Certificateholders.
The Seller hereby acknowledges that all funds on deposit in the
Reserve Account (and any investment earnings thereon) are owned
directly by the Seller, and the Seller hereby agrees to treat the
same as its assets (and earnings) for federal income tax and all
other purposes.
(b) In order to give effect to the subordination provided for
herein and to assure the availability of the amounts maintained in
the Reserve Account, the Depositor hereby sells, conveys and
transfers to the Trustee, as collateral agent, and its successors
and assigns, the Reserve Account Initial Deposit and all proceeds
thereof and hereby pledges to the Trustee, as collateral agent, and
its successors and assigns all other amounts deposited in or
credited to the Reserve Account from time to time under this
Agreement, all Eligible Investments made with amounts on deposit
therein, all earnings and distributions thereon and proceeds
thereof, subject, however, to the limitations set forth below and
solely for the purpose of securing and providing for payment of the
Class A Distributable Amount and the Class B Distributable Amount
in accordance with Section 5.07, to have and to hold all the
aforesaid property, rights and privileges unto the Trustee, its
successors and assigns, in trust for the uses and purposes, and
subject to the terms and provisions, set forth in this Section.
The Trustee hereby acknowledges such transfer and accepts the
trusts hereunder and shall hold and distribute the Reserve Account
Property in accordance with the terms and provisions of this
Section.
(c) Consistent with the limited purposes for which such trust
is granted, the amounts on deposit in the Reserve Account on each
Distribution Date shall be available for distribution as provided
in Section 5.07, in accordance with and subject to the following:
if the amount on deposit in the Reserve Account (after giving
effect to all deposits thereto and withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve Account
Balance, the Trustee shall release and distribute all such excess
amounts to the Depositor. Upon any such distribution to the
Depositor, the Certificateholders will have no further rights in,
or claims to, such amounts.
(d) Funds on deposit in the Reserve Account shall be invested
by the Trustee, as collateral agent, in Eligible Investments
selected in writing by the Depositor. Unless otherwise permitted
by the Rating Agencies, funds on deposit in the Reserve Account
shall be invested in Eligible Investments that will mature not
later than the Business Day immediately preceding the next
Distribution Date. Funds deposited in the Reserve Account upon the
maturity of any Eligible Investments on the day immediately
preceding a Distribution Date are not required to be invested
overnight. If, at any time, the Reserve Account ceases to be an
Eligible Deposit Account, the Trustee as collateral agent (or the
Servicer on its behalf) shall, within 10 business days (or such
longer period, not to exceed 30 calendar days, to which each Rating
Agency may consent), establish a new Reserve Account as an Eligible
Deposit Account and shall transfer any cash and/or any investments
to such new account.
(e) The Depositor and the Servicer agree to take or cause to
be taken, at their own expense, such further actions, to execute,
deliver and file, or cause to be executed, delivered and filed, such
further documents and instruments (including, without
limitation, any UCC financing statements or this Agreement) as may
be determined to be necessary in an Opinion of Counsel to the
Depositor delivered to the Trustee in order to perfect the
interests created by this Section and otherwise fully to effectuate
the purposes, terms and conditions of this Section. The Depositor
shall:
(1) promptly execute, deliver and file any financing
statements, amendments, continuation statements, assignments,
certificates, and other documents with respect to such interests and perform
all such other acts as may be necessary in order to perfect or to maintain
the perfection of the Trustee's security interest; and
(2) file the necessary financing statements or
amendments thereto within five days, and promptly notify the
Trustee of any such filing, after the occurrence of any of the
following: (A)
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any change in its corporate name or any trade name; (B) any change in the
location of its chief executive office or principal place of business;
and (C) any merger or consolidation or other change in its identity or
corporate structure and promptly notify the Trustee of any such filings.
(f) The Trustee shall not enter into any subordination or
intercreditor agreement with respect to the Reserve Account or any
amounts deposited thereto.
(g) Following the payment in full of the Certificate Balance
and of all other amounts owing or to be distributed under this
Agreement to Certificateholders and the termination of the Trust,
any amount remaining on deposit in the Reserve Account shall be
distributed to the Depositor.
Section 5.03. Account Property. With respect to the Account
----------------
Property, the Trustee agrees, by its acceptance hereof, that:
(a) any Account Property that is held in deposit
accounts shall be held solely in Eligible Deposit Accounts, subject
to the last sentence of Sections 5.01(c) and 5.02(d); and each such
Eligible Deposit Account shall be subject to the exclusive custody
and control of the Trustee, and the Trustee shall have sole signature
authority with respect thereto;
(b) any Account Property that constitutes Physical
Property shall be delivered to the Trustee in accordance with
paragraph (a) of the definition of "Delivery" and shall be held,
pending maturity or disposition, solely by the Trustee or a
financial intermediary (as such term is defined in Section 8-313(4)
of the UCC) acting solely for the Trustee;
(c) any Account Property that is a book-entry security
held hrough the Federal Reserve System pursuant to federal
book-entry regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery" and shall be
maintained by the Trustee, pending maturity or disposition, through
continued book-entry registration of such Account Property as
described in such paragraph; and
(d) any Account Property that is an "uncertificated
security" under Article VIII of the UCC and that is not governed by
clause (C) above shall be delivered to the Trustee in
accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by the Trustee, pending maturity or disposition,
through continued registration of the Trustee's (or its nominee's)
ownership of such security.
Section 5.04. Application of Collections. All amounts
--------------------------
received with respect to the Receivables during each Collection
Period shall be applied by the Servicer as follows:
With respect to each Simple Interest Receivable (other than a
Purchased Receivable), payments by or on behalf of the Obligor
shall be applied to interest and principal in accordance with the
Simple Interest Method. In the case of Precomputed Receivables
(other than Purchased Receivables), payments by or on behalf of the
Obligor shall be applied, first, to the Scheduled Payment and in
accordance with the Precomputed Method, with any excess amounts
being either (i) applied to prepay the Receivable in full or (ii)
if such excess amount is not sufficient to prepay the Receivable in
full, transferred to the Payahead Account as a Payahead.
Section 5.05. Application of Payaheads. Within two business
------------------------
days following each Determination Date, the Trustee shall cause to
be transferred from the Payahead Account to the Collection Account,
in immediately available funds, the aggregate Payaheads from
previous Collection Periods applicable as all or part of any
Scheduled Payments on Precomputed Receivables due during the
related Collection Period, in the amounts set forth in the
Servicer's Certificate for such Distribution Date.
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Section 5.06. Purchase Amounts. The Servicer and ________
----------------
____________ shall deposit or cause to be deposited in the
Collection Account, on or prior to (each Determination Date), the
aggregate Purchase Amount with respect to Purchased Receivables,
and the Servicer shall deposit therein all amounts to be paid under
Section 4.07.
Section 5.07. Distributions. (a) On each Distribution
-------------
Date, the Trustee (based on the information contained in the
Servicer's Certificate delivered on the related Determination Date
pursuant to Section 3.09) shall distribute amounts on deposit in
the Collection Account and, if applicable, the Reserve Account, in
the manner and priority set forth below:
(1) to the Servicer, from the Interest Distribution
Amount, the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods;
(2) to the Class A Certificateholders from the Class A
Percentage of the Interest Distribution Amount (after payment
of the Servicing Fee), the Class A Interest Distributable Amount;
provided that, if the Class A Percentage of such Interest Distribution
Amount is less than the Class A Interest Distributable
Amount for such date, such deficiency shall be paid, to the extent
of available funds, first from the Reserve Account, then from that
portion of the Total Distribution Amount otherwise distributable to
Holders of the Class B Certificates.
(3) to the Class B Certificateholders, from the Class B
Percentage of the Interest Distribution Amount (after payment
therefrom of amounts due to the Servicer and to the Class A
Certificateholders pursuant to clauses (1) and (2) above), the
Class B Interest Distributable Amount; provided that, if the Class
B Percentage of such Interest Distribution Amount is less than the
Class B Interest Distributable Amount for such date, such deficiency
shall be paid, to the extent of available funds, from the
Reserve Account after payment of the Class A Interest Distributable
Amount;
(4) to the Class A Certificateholders from the Class A
Percentage of that portion of the Total Distribution Amount
allocable to principal; provided that, if the Class A Percentage of
that portion of the Total Distribution Amount allocable to principal
is less than the Class A Principal Distributable Amount
for such date, such deficiency shall be paid, to the extent of
available funds, first from amounts available in the Reserve Account
on such date after payment of the Class A Interest Distributable
Amount and Class B Interest Distributable Amount and
then from the Total Distribution Amount remaining after the payment
of the Class A Interest Distributable Amount and the Class B Interest
Distributable Amount; and
(5) to the Class B Certificateholders, from any
remaining portion of the Total Distribution Amount, an amount equal
to the Class B Principal Distributable Amount; provided that, if such
remaining portion of the Total Distribution Amount is less than the
Class B Principal Distributable Amount for such date, such
deficiency shall be paid from amounts, if any, available in the
Reserve Account after payment of the Class A Distributable Amount
and Class B Interest Distributable Amount on such date.
(b) On each Distribution Date, the Trustee shall distribute
any portion of the Total Distribution Amount remaining after the
distributions described in clauses (a)(1) through (a)(5) above in
the following amounts and in the following order of priority: (1)
to the Reserve Account until the amount on deposit therein equals
the Specified Reserve Account Balance and (2) to the Depositor.
(c) The Trustee shall, if any Pre-Funded Amount remains on
deposit in the Pre-Funding Account at the end of the Funding
Period, immediately upon the expiration of the Funding Period,
transfer such amounts to the Collection Account and distribute such
amounts on such date (or, if such day is not a Distribution Date,
on the next succeeding Distribution Date) pro rata to the
Certificateholders as a prepayment of principal.
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(d) Subject to Section 11.01 respecting the final payment
upon retirement of each Certificate, the Servicer shall instruct
the Trustee on each Distribution Date to distribute to each
Certificateholder of record on the preceding Record Date the
interest and principal amounts to be distributed to such
Certificateholder on such Distribution Date. Such distributions by
the Trustee shall be made either (1) if such Holder holds
Certificates with a minimum initial aggregate principal amount of
$5,000,000 and has provided appropriate instructions to the
Servicer prior to such Distribution Date, by wire transfer in
immediately available funds to the account of such Holder at a bank
or other entity having appropriate facilities therefor or (2) by
check mailed to such Certificateholder at the address of such
Holder appearing in the Certificate Register.
Section 5.08. Statements to Certificateholders. On each
--------------------------------
Distribution Date, the Trustee shall provide to each Holder of
record of a Certificate as of the most recent Record Date a
statement setting forth at least the following information as to
the Certificates and such Distribution Date and/or the related
Collection Period:
(a) the amount distributed on such date and allocable to
principal of the Class A Certificates and the Class B Certificates;
(b) the amount distributed on such date and allocable to
interest on the Class A Certificates and the Class B Certificates;
(c) the Class A Certificate Balance and the Class B
Certificate Balance and the Certificate Pool Factor for the Class
A Certificates and the Class B Certificates after giving effect to
distributions allocated to principal reported under clause (i) above;
(d) the amount of the Servicing Fee paid to the Servicer;
(e) the Pool Balance as of the close of business on the
last day of the related Collection Period;
(f) the amount of funds withdrawn from the Reserve
Account and the amount on deposit in the Reserve Account after
giving effect to all deposits to and withdrawals from the Reserve
Account on such date;
(g) the amount of Realized Losses for the related
Collection Period;
(h) the aggregate outstanding Principal Balance of all
Receivables that became Liquidated Receivables or Purchased
Receivables during the related Collection Period; and
(i) the aggregate outstanding Principal Balance of
all Receivables that are ________ or more days delinquent.
The amounts set forth on each Distribution Date under clauses
(a), (b) and (d) above shall be expressed as a dollar amount per
$1,000 of original principal balance of Class A Certificates or
Class B Certificates, as applicable.
Section 5.09. Accounting and Tax Returns. The Trustee shall
--------------------------
(a) maintain (or cause to be maintained) the books of the Trust on
a calendar year basis and the accrual method (or on such other
basis or method as may be required by the Code and applicable
Treasury regulations) of accounting and (b) deliver to each Holder
such information as may be required by the Code and applicable
Treasury Regulations to enable each Holder to prepare its federal
and state income tax returns.
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ARTICLE VI
The Certificates
----------------
Section 6.01. The Certificates. The Class A Certificates
----------------
and the Class B Certificates shall be substantially in the form of
Exhibit A and Exhibit B, respectively. The Certificates shall be
issued in fully registered form in minimum denominations of
$____________ and integral multiples of $1,000 in excess thereof,
except that one Class A Certificate and one Class B Certificate may
be issued in a denomination representing the remainder of the Class
A Certificate Balance or Class B Certificate Balance, as
applicable. The Certificates shall be executed on behalf of the
Trust by manual or facsimile signature of an authorized officer of
the Trustee. Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the
Trustee shall be validly issued and entitled to the benefit of this
Agreement, notwithstanding the fact that such individuals or any of
them have ceased to be so authorized prior to the authentication
and delivery of such Certificates or did not hold such offices at
the date of authentication and delivery of such Certificates.
Section 6.02. Registration of Transfer and Exchange.
-------------------------------------
(a) The Trustee shall keep or cause to be kept a register (the
"Certificate Register") in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the
registration of Certificates and the registration of transfers of
Certificates. The Trustee shall be the initial "Certificate
Registrar" for the purpose of registering Certificates and
transfers of Certificates as herein provided. Upon the resignation
of any Certificate Registrar, the Trustee shall promptly appoint a
successor or, if it elects not to make such an appointment, assume
the duties of Certificate Registrar.
If a Person other than the Trustee is appointed as Certificate
Registrar, the Trustee shall give prompt written notice of the
appointment of such Certificate Registrar and of the location, and
any change in the location, of the Certificate Register, and the
Trustee shall have the right to inspect the Certificate Register at
all reasonable times, to obtain copies thereof and to rely upon a
certificate executed on behalf of the Certificate Registrar by an
authorized officer thereof as to the names and addresses of the
Certificateholders and the principal amounts and number of the
Certificates.
Upon surrender for registration of transfer of any Certificate
at the office or agency of the Trustee to be maintained as provided
in Section 6.07, the Trustee shall execute, authenticate and
deliver to the designated transferee or transferees, one or more
new Certificates in any authorized denominations of a like
aggregate principal amount.
At the option of the Holder, Certificates may be exchanged for
other Certificates in any authorized denominations of a like
aggregate principal amount. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute, authenticate
and deliver to the Holder the Certificates that the
Certificateholder making the exchange is entitled to receive.
(b) Every Certificate presented or surrendered for
registration of transfer or exchange shall be duly endorsed by, or
be accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by, the Holder thereof or
such Holder's 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 Trustee may require.
(c) No service charge shall be made to a Holder for any
registration of transfer or exchange of Certificates, but the
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 Certificates.
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Section 6.03. Certain Transfer Restrictions. (a) During the
-----------------------------
Funding Period, not more than 24.9% of the Class A Certificate
Balance may be held by "employee benefit plans" as defined in
Section 3 of ERISA. After the termination of the Funding Period,
the Class A Certificates may be held by such benefit plans.
(b) No registration of transfer of a Class B Certificate
shall be made unless the Trustee shall have received a
representation from the transferee of such Class B Certificate,
acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee
benefit plan, trust or account (each a "Benefit Plan") subject to
the fiduciary responsibility provisions of ERISA or Section 4975 of
the Code or a Person acting on behalf of any such Benefit Plan or
using assets of a Benefit Plan to acquire Class B Certificates.
Notwithstanding anything else to the contrary herein, any proposed
transfer of a Class B Certificate to or on behalf of a Benefit Plan
subject to ERISA or the Code without the delivery to the Trustee of
an Opinion of Counsel satisfactory to the Trustee shall be void and
of no effect. The Trustee shall be under no liability to any
Person for any registration of transfer of any Class B Certificate
that is in fact not permitted by this Section 6.03(b) or for making
any payments due on such Class B Certificate to the Holder thereof
or taking any other action with respect to such Holder under the
provisions of this Agreement so long as such transfer is registered
by the Trustee in accordance with the foregoing requirements. The
Trustee shall be entitled, but not obligated, to recover from any
Holder of a Class B Certificate that was in fact a Benefit Plan
subject to Section 406 of ERISA or Section 4975 of the Code, or a
Person acting on behalf of any such Benefit Plan at the time it
became a Holder or which subsequently became such a Benefit Plan or
Person acting on behalf of such a Benefit Plan, all payments made
on such Class B Certificate at and after either such time. Any
payments so recovered by the Trustee shall be paid and delivered by
the Trustee to the last preceding Holder of such Certificate that
is not, and was not at the time it held such Certificate, a Benefit
Plan or Person acting on behalf of a Benefit Plan.
(c) The Trustee shall cause each Class B Certificate to contain a
legend stating that transfer of the Class B Certificates
is subject to certain restrictions and referring prospective
purchasers of the Class B Certificates to this Section 6.03 with
respect to such restrictions.
(d) Unless otherwise set forth in this Agreement, no transfer
of a Class B Certificate or any interest therein shall be made
unless prior to such transfer the Holder of such Class B
Certificate delivers to the Depositor and the Trustee either a
ruling of the Internal Revenue Service or an Opinion of Counsel to
the effect that the proposed transfer will not result in the
arrangement contemplated by this Agreement being treated as an
association taxable as a corporation under either the Code or the
tax laws of the State of New York.
Section 6.04. Mutilated, Destroyed, Lost or Stolen
------------------------------------
Certificates. If (a) any mutilated Certificate shall be
- ------------
surrendered to the Certificate Registrar, or if the Certificate
Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall
be delivered to the Certificate Registrar and the Trustee such
security or indemnity as may be required by them to save each of
them harmless, then in the absence of notice that such Certificate
has been acquired by a bona fide purchaser, the Trustee on behalf
of the Trust shall execute, and the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like
tenor and denomination. In connection with the issuance of any new
Certificate under this Section, the Trustee and the Certificate
Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of ownership of a
beneficial interest in the Trust, as if originally issued, whether
or not the lost, stolen or destroyed Certificate shall be found at
any time.
Section 6.05. Persons Deemed Owners. Prior to due
---------------------
presentation of a Certificate for registration of transfer, the
Trustee or the Certificate Registrar may treat the Person in whose
name any Certificate shall be registered as the owner of such
Certificate for the purpose of receiving distributions
28
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pursuant to Section 5.07 and for all other purposes whatsoever, and
neither the Trustee nor the Certificate Registrar shall be bound by
any notice to the contrary.
Section 6.06. Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses. The Certificate Registrar shall furnish or cause to be
- ---------
furnished to the Trustee and the Servicer, within 15 days after
receipt by the Certificate Registrar of a request therefor from the
Trustee or the Servicer, as applicable, in writing, a list, in such
form as the Trustee or Servicer may reasonably require, of the
names and addresses of the Certificateholders as of the most recent
Record Date. If three or more Certificateholders, or one or more
Holders of Certificates evidencing not less than 25% of the
Certificate Balance apply in writing to the Trustee, and such
application states that the applicants desire to communicate with
other Certificateholders with respect to their rights under this
Agreement or under the Certificates, and such application is
accompanied by a copy of the communication that such applicants
propose to transmit, then the Trustee shall, within five business
days after the receipt of such application, afford such applicants
access during normal business hours to the current list of
Certificateholders. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed to hold neither the
Servicer nor the Trustee accountable by reason of the disclosure of
its name and address, regardless of the source from which such
information was derived.
Section 6.07. Maintenance of Office or Agency. The Trustee
-------------------------------
shall maintain in the Borough of Manhattan, The City of New York,
an office or offices or agency or agencies where Certificates may
be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Trustee in respect of the
Certificates and this Agreement may be served. The Trustee
initially designates its office located at ______________________
for such purposes. The Trustee shall give prompt written notice to
the Servicer and the Certificateholders of any change in the
location of the Certificate Register or any such office or agency.
Section 6.08. Book-Entry Certificates. The Certificates,
-----------------------
upon original issuance, will be issued in the form of one or more
typewritten Certificates representing Book-Entry Certificates, to
be delivered to the Depository Trust Company, the initial Clearing
Agency, by or on behalf of the Trust. The Certificates shall be
registered initially on the Certificate Register in the name of
Cede & Co., the nominee of the initial Clearing Agency, and no
Certificate Owner will receive a definitive certificate
representing such Certificate Owner's interest in the Certificates,
except as provided in Section 6.10. Unless and until definitive,
fully registered Certificates (the "Definitive Certificates") have
been issued to Certificate Owners pursuant to Section 6.10:
(a) the provisions of this Section shall be in full
force and effect;
(b) the Depositor, the Servicer, the Certificate
Registrar and the Trustee may deal with the Clearing Agency for all
purposes (including the making of distributions on the
Certificates) as the sole Holder of such Certificates and shall have
no obligation to the related Certificate Owners;
(c) to the extent that the provisions of this Section
conflict with any other provisions of this Agreement, the
provisions of this Section shall control;
(d) the rights of such Certificate Owners shall be
exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Certificate
Owners and the Clearing Agency and/or the Clearing Agency Participants
pursuant to the Depository Agreement. Unless and until Definitive
Certificates are issued pursuant to Section 6.10, the initial Clearing
Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit distributions of principal
and interest on the Certificates to such Clearing Agency Participants;
and
(e) whenever this Agreement requires or permits actions
to be taken based upon instructions or directions of Holders of
Certificates evidencing a specified percentage of the
29
<PAGE>
Certificate Balance, the Clearing Agency shall be deemed to
represent such percentage only to the extent that it has received
instructions to such effect from Certificate Owners and/or Clearing
Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Certificates
and has delivered such instructions to the Trustee.
Section 6.09. Notices to Clearing Agency. Whenever a notice
--------------------------
or other communication to Holders of the Certificates is required
under this Agreement, unless and until Definitive Certificates have
been issued to such Certificate Owners pursuant to Section 6.10,
the Trustee and the Servicer shall give all such notices and
communications specified herein to be given to Holders of
Certificates to the Clearing Agency.
Section 6.10. Definitive Certificates. If (a) the Depositor
-----------------------
advises the Trustee in writing that the Clearing Agency is no
longer willing or able to properly discharge its responsibilities
under the Depository Agreement and the Depositor and the Trustee
are unable to locate a qualified successor, (b) the Depositor at
its option advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (c)
after the occurrence of a Servicer Termination Event, Certificate
Owners representing beneficial interests aggregating not less than
a majority of the aggregate outstanding principal amount of the
Book-Entry Certificates advise the Trustee and 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
Certificate Owners, then the Clearing Agency shall notify all Certificate
Owners and the Trustee of the occurrence of such event
and of the availability of Definitive Certificates to Certificate
Owners requesting the same. Upon surrender to the Trustee of the
typewritten Certificates representing the Book-Entry Certificates
by the Clearing Agency, accompanied by registration instructions,
the Trustee shall execute and authenticate the Definitive
Certificates in accordance with the instructions of the Clearing
Agency. None of the Depositor, the Certificate Registrar or 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, the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder. The
Definitive Certificates may be printed, lithographed or engraved or
produced in any other manner that is reasonably acceptable to the
Trustee, as evidenced by its execution thereof.
ARTICLE VII
The Depositor
-------------
Section 7.01. Depositor's Representations. The Depositor
---------------------------
makes the following representations with respect to itself on which
the Trustee relies in accepting the Receivables in trust and
delivering the Certificates. The representations speak as of the
execution and delivery of this Agreement and as of the Closing Date
and each Subsequent Transfer Date with respect to the Initial
Receivables and as of the applicable Subsequent Transfer Date with
respect to the Subsequent Receivables, but shall survive the
transfer and assignment of the Receivables to the Trust.
(a) Organization and Good Standing. The Depositor is duly
------------------------------
organized and validly existing as a corporation in good standing
under the laws of the State of Delaware, with power and authority
to own its properties and to conduct its business as such
properties are currently owned and such business is presently
conducted, and had at all relevant times, and has, the corporate
power, authority and legal right to acquire, own, transfer and
assign the Receivables.
(b) Due Qualification. The Depositor is duly qualified to do
-----------------
business as a foreign corporation in good standing, and has
obtained all necessary licenses and approvals, in all jurisdictions
where the failure to do so would materially and adversely affect
the Depositor's ability to transfer the Receivables to the Trust
pursuant to this Agreement and the Transfer Agreement or the
validity or enforceability of the Receivables.
30
<PAGE>
(c) Power and Authority. The Depositor has the corporate
-------------------
power and authority to execute and deliver this Agreement and the
other Basic Documents to which it is a party and to carry out their
respective terms; the Depositor has full power and authority to
sell, transfer and assign the Receivables to the Trust and has duly
authorized such sale, transfer and assignment to the Trust by all
necessary corporate action; and the execution, delivery and
performance of this Agreement and the other Basic Documents to
which the Depositor is a party have been duly authorized by the
Depositor by all necessary corporate action.
(d) Valid Sale, Binding Obligations. This Agreement and
-------------------------------
other Basic Documents to which the Depositor is a party, when duly
executed and delivered by the other parties hereto and thereto,
shall constitute legal, valid and binding obligations of the
Depositor, enforceable against the Depositor in accordance with
their respective terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization and similar laws
now or hereafter in effect relating to or affecting creditors'
rights generally and to general principles of equity (whether
applied in a proceeding at law or in equity).
(e) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the other Basic Documents and
the fulfillment of the terms of this Agreement and the other Basic
Documents shall not conflict with, result in any breach of any of
the terms and provisions of, or constitute (with or without notice
or lapse of time, or both) a default under, the certificate of
incorporation or bylaws of the Depositor, or any indenture,
agreement, mortgage, deed of trust, or other instrument to which
the Depositor is a party or by which it is bound; or result in the
creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust, or other instrument, other than this Agreement and
the other Basic Documents; or violate any law, order, rule or
regulation applicable to the Depositor of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Depositor
or its properties.
(f) No Proceedings. There are no proceedings or
--------------
investigations pending or, to the Depositor's knowledge, threatened
against the Depositor, before any court, regulatory body,
administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Depositor or its
properties: (1) asserting the invalidity of this Agreement or any
other Basic Document; (2) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by
this Agreement or any other Basic Document; (3) seeking any determination
or ruling that might materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or enforceability of,
this Agreement or any other Basic Document; or (4) seeking to adversely
affect the federal income tax attributes of the Trust or the
Certificates.
(g) Principal Place of Business. The principal place of
---------------------------
business and chief executive office of the Depositor are located at
the place set forth in Section 12.06, and such location has not
changed since (the date the Depositor was incorporated).
(h) Use of Names. The legal name of Depositor is the name
------------
used by it in this Agreement, and Depositor has not changed its
name since (the date of its incorporation) and does not have trade
names, fictitious names, assumed names or "doing business" names.
(i) Solvency. The Depositor is solvent and will not become
--------
insolvent after giving effect to the transactions contemplated in
this Agreement; the Depositor is paying its debts, if any, as they
become due; the Depositor, after giving effect to the transactions
contemplated in this Agreement, will have adequate capital to
conduct its business.
Section 7.02. Corporate Existence. (a) During the term of
-------------------
this Agreement, the Depositor will keep in full force and effect
its existence, rights and franchises as a corporation under the
laws of the jurisdiction of its incorporation and will obtain and
preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the
validity and enforceability
31
<PAGE>
of this Agreement, the Basic Documents and each other instrument or
agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby.
(b) During the term of this Agreement, the Depositor shall
observe the applicable legal requirements for the recognition of
the Depositor as a legal entity separate and apart from its
Affiliates, including the following:
(i) the Depositor shall maintain corporate records
and books of account separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement, the
Depositor shall not commingle its assets and funds with
those of its Affiliates;
(iii) the Depositor shall hold such appropriate
meetings of its board of directors as are necessary to authorize
all the Depositor's corporate actions required by law to be authorized
by the board of directors, shall keep minutes of such meetings and
of meetings of its stockholders and observe all other
customary corporate formalities (and any successor Depositor that
is not a corporation shall observe similar procedures in accordance
with its governing documents and applicable law);
(iv) the Depositor shall at all times hold itself out to
the public under the Depositor's own name as a legal entity
separate and distinct from its Affiliates;
(v) all transactions and dealings between the Depositor
and its Affiliates will be conducted on an arm's-length basis; and
(vi) the Depositor shall at all times have at least one
director that is an "Independent Director" as such term is defined
in its certificate of incorporation.
Section 7.03. Liabilities of Depositor. The Depositor shall
------------------------
be liable hereunder only to the extent of the obligations in this
Agreement specifically undertaken by the Depositor and the
representations made by the Depositor.
Section 7.04. Merger or Consolidation of, or Assumption of
--------------------------------------------
the Obligations of, Depositor. Any Person (a) into which the
- -----------------------------
Depositor may be merged or consolidated, (b) which may result from
any merger or consolidation to which the Depositor shall be a party
or (c) which may succeed to the properties and assets of the
Depositor substantially as a whole, which Person in any of the
foregoing cases executes an agreement of assumption to perform
every obligation of the Depositor under this Agreement, shall be
the successor to the Depositor hereunder without the execution or
filing of any document or any further act by any of the parties to
this Agreement; provided, however, that (i) immediately after
giving effect to such transaction, no representation or warranty
made pursuant to Section 3.02 shall have been breached and no
Servicer Termination Event, and no event which, after notice or
lapse of time, or both, would become a Servicer Termination Event
shall have occurred and be continuing, (ii) the Depositor shall
have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this
Section and that all conditions precedent, if any, provided for in
this Agreement relating to such transaction have been complied
with, (iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction and (iv) the Depositor shall have
delivered to the Trustee an Opinion of Counsel stating that, in the
opinion of such counsel, either (A) all financing statements and
continuation statements and amendments thereto have been executed and filed
that are necessary fully to preserve and protect the interest of the
Trustee in the Receivables and reciting the details of such filings or
(B) no such action shall be necessary to preserve and protect such
interests. Notwithstanding anything herein to the contrary, the execution
of the foregoing agreement of assumption and compliance with clauses
(i), (ii), (iii) and (iv) above shall be conditions to the consummation
of the transactions referred to in clauses (a), (b) or (c) above.
32
<PAGE>
Section 7.05. Limitation on Liability of Depositor and
----------------------------------------
Others. The Depositor and any director, officer, employee or agent
- ------
of the Depositor may rely in good faith on the advice of counsel or
on any document of any kind, prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
The Depositor shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental
to its obligations under this Agreement and that in its opinion may
involve it in any expense or liability.
Section 7.06. Depositor May Own Certificates. The Depositor
------------------------------
and any Affiliate thereof may in its individual or any other
capacity become the owner or pledgee of Certificates with the same
rights as it would have if it were not the Depositor or an
Affiliate thereof, except as expressly provided herein or in any
Basic Document.
Section 7.07. Sale of Receivables. The Depositor shall take
-------------------
no actions inconsistent with the Trust's ownership of the
Receivables. The Depositor shall promptly respond to any third-party
inquiries regarding the Receivables by indicating that
ownership thereof has been transferred to the Trust.
ARTICLE VIII
The Servicer; Backup Servicer
-----------------------------
Section 8.01. Representations of Servicer. The Servicer
---------------------------
makes the following representations on which the Trustee relies in
acquiring the Receivables and issuing the Certificates. The
representations speak as of the execution and delivery of this
Agreement and as of the Closing Date with respect to the Initial
Receivables and as of the applicable Subsequent Transfer Date with
respect to the Subsequent Receivables and shall survive the
conveyance of the Receivables to the Trust.
(a) Organization and Good Standing. The Servicer is
------------------------------
duly organized and validly existing as a corporation in good
standing under the laws of the state of its incorporation, with the
corporate power and authority to own its properties and to conduct
its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and
has, the corporate power, authority and legal right to acquire, own,
sell and service the Receivables.
(b) Due Qualification. The Servicer is duly qualified
-----------------
to do business as a foreign corporation in good standing, and
has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of its property or
the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such
qualifications.
(c) Power and Authority. The Servicer has the corporate
-------------------
power and authority to execute and deliver this Agreement and
to carry out its terms; and the execution, delivery and performance
of this Agreement have been duly authorized by the Servicer by all
necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a
------------------
legal, valid and binding obligation of the Servicer
enforceable in accordance with its terms.
(e) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the fulfillment of the
terms hereof shall not conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Servicer, or any indenture, agreement
or other instrument to which the Servicer is a party
or by which it is bound, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than this Agreement),
or violate any law
33
<PAGE>
or any order, rule or regulation applicable to the Servicer
of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Servicer or its properties.
(f) No Proceedings. There are no proceedings or
--------------
investigations pending or, to the Servicer's best knowledge,
threatened, before any court, regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the
Servicer or its properties: (i) asserting the invalidity
of this Agreement, the Receivables Purchase Agreement, any of the
other Basic Documents, or the Certificates, (ii) seeking to prevent
the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Receivables
Purchase Agreement or any of the other Basic Documents,
(iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability of, this Agreement, the
Receivables Purchase Agreement, any of the other Basic Documents,
or the Certificates or (iv) relating to the Servicer and which
might adversely affect the federal or state income tax attributes
of the Certificates.
(g) No Insolvent Obligors. As of the applicable Cutoff
---------------------
Date, no Obligor on a Receivable is or will be shown on the
applicable Receivable Files as the subject of a bankruptcy
proceeding.
Section 8.02. Indemnities of Servicer. The Servicer shall be
-----------------------
liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Servicer under this Agreement:
(a) The Servicer shall indemnify, defend and hold
harmless the Trustee, the Backup Servicer, the Certificateholders,
the Depositor and their respective officers, directors, employees
and agents from and against any and all costs, expenses, losses,
damages, claims and liabilities arising out of or resulting from
the use, ownership or operation by the Servicer or any Affiliate or
agent thereof of a Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold
harmless the Trustee, the Backup Servicer, the Depositor and their
respective officers, directors, employees and agents from and
against any taxes that may at any time be asserted against any such
Person with respect to the transactions contemplated herein and in
the Basic Documents, including any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes
(but not including any taxes asserted with respect to, and as of the
date of, the sale of any Receivables to the Trust or the issuance and
original sale of the Certificates, or asserted with respect to
ownership of the Receivables, or federal or other income
taxes arising out of distributions on or transfers of the
Certificates and costs and expenses in defending against the same).
(c) The Servicer shall indemnify, defend and hold
harmless the Trustee, the Backup Servicer, the Depositor, the
Certificateholders and their respective officers, directors,
employees and agents from and against any and all costs, expenses,
losses, claims, damages, and liabilities to the extent that
such cost, expense, loss, claim, damage, or liability arose out of,
or was imposed upon any such Person through, the negligence, willful
misfeasance or bad faith of the Servicer in the performance of its
duties under this Agreement or by reason of reckless disregard of
its obligations and duties under this Agreement.
(d) The Servicer shall indemnify, defend and hold
harmless the Trustee and its officers, directors, employees and agents
from and against all costs, expenses, losses, claims, damages, and
liabilities arising out of or incurred in connection
with the acceptance or performance of the trusts and duties herein,
except to the extent that such cost, expense, loss, claim, damage,
or liability: (i) shall be due to the willful misfeasance, bad
faith or negligence of the Trustee or; (ii) shall arise from the
breach by the Trustee of any of its representations or warranties
set forth in Section 10.11.
34
<PAGE>
(e) The Servicer shall pay any and all taxes levied or
assessed upon all or any part of the assets of the Trust.
For purposes of this Section, in the event of the termination
of the rights and obligations of ______________________ (or any
successor thereto pursuant to Section 8.03) as Servicer pursuant to
Section 9.01, or a resignation by such Servicer pursuant to this
Agreement, such Servicer shall be deemed to be the Servicer pending
appointment of a successor Servicer (other than the Trustee)
pursuant to Section 9.02.
Indemnification under this Section shall survive the
resignation or removal of the Trustee or the termination of this
Agreement and shall include reasonable fees and expenses of counsel
and expenses of litigation. If the Servicer shall have made any
indemnity payments pursuant to this Section and the Person to or on
behalf of whom such payments are made thereafter collects any of
such amounts from others, such Person shall promptly repay such
amounts to the Servicer, without interest.
Section 8.03. Merger or Consolidation of, or Assumption of
--------------------------------------------
the Obligations of, Servicer. Any Person (a) into which the
- ----------------------------
Servicer may be merged or consolidated, (b) which may result from
any merger or consolidation to which the Servicer shall be a party,
(c) which may succeed to the properties and assets of the Servicer
substantially as a whole or (d) with respect to the Servicer's
obligations hereunder, which is a corporation 50% or more of the
voting stock of which is owned, directly or indirectly, by
______________________, which Person executed an agreement of
assumption to perform every obligation of the Servicer hereunder,
shall be the successor to the Servicer under this Agreement without
further act on the part of any of the parties to this Agreement;
provided, however, that (i) immediately after giving effect to such
transaction, no Servicer Termination Event and no event which,
after notice or lapse of time or both, would become a Servicer
Termination Event shall have occurred and be continuing, (ii) the
Servicer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions
precedent provided for in this Agreement relating to such
transaction have been complied with, (iii) the Rating Agency
Condition shall have been satisfied with respect to such
transaction and (iv) the Servicer shall have delivered to the
Trustee an Opinion of Counsel stating that, in the opinion of such
counsel, either (A) all financing statements and continuation
statements and amendments thereto have been executed and filed that
are necessary fully to preserve and protect the interest of the
Trustee in the Receivables and reciting the details of such filings
or (B) no such action shall be necessary to preserve and protect
such interests. Notwithstanding anything herein to the contrary,
the execution of the foregoing agreement of assumption and
compliance with clauses (i), (ii), (iii) and (iv) above shall be
conditions to the consummation of the transactions referred to in
clause (a), (b), (c) or (d) above.
Section 8.04. Limitation on Liability of Servicer and Others.
----------------------------------------------
Neither the Servicer nor any of the directors, officers, employees
or agents of the Servicer shall be under any liability to the
Trustee or the Certificateholders, except as provided under this
Agreement, for any action taken or for refraining from the taking
of any action pursuant to this Agreement or for errors in judgment;
provided, however, that this provision shall not protect the
Servicer or any such person against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless
disregard of obligations and duties under this Agreement. The
Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any person respecting any
matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not
be under any obligation to appear in, prosecute or defend any legal
action that shall not be incidental to its duties under this
Agreement and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect
of this Agreement and the Basic Documents and the rights and duties of the
parties to this Agreement and the Basic Documents and the interests
of the Certificateholders hereunder.
35
<PAGE>
Section 8.05. _____________ Not To Resign as Servicer.
---------------------------------------
Subject to the provisions of Section 8.03, ______________________
shall not resign from the obligations and duties hereby imposed on
it as Servicer under this Agreement except upon a determination
that the performance of its duties under this Agreement shall no
longer be permissible under applicable law. Notice of any such
determination permitting the resignation of ______________________
shall be communicated to the Trustee at the earliest practicable
time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee concurrently with or promptly after
such notice. No such resignation shall become effective until the
Trustee or a successor Servicer shall have assumed the
responsibilities and obligations of ______________________ in
accordance with Section 9.02.
Section 8.06. Representations of Backup Servicer. The Backup
----------------------------------
Servicer makes the following representations on which the Trustee
relies in acquiring the Receivables and issuing the Certificates.
The representations speak as of the execution and delivery of this
Agreement and as of the Closing Date and each Subsequent Transfer
Date and shall survive the sale of the Receivables to the Trust.
(a) Organization and Good Standing. The Backup Servicer
------------------------------
is duly organized and validly existing as a banking
corporation in good standing under the laws of the state of its
incorporation, with the corporate power and authority to own its
properties and to conduct its business as such properties are
currently owned and such business is presently conducted, and had
at all relevant times, and has, the corporate power, authority and
legal right to acquire, own, sell and service the Receivables.
(b) Due Qualification. The Backup Servicer is duly
-----------------
qualified to do business as a foreign corporation in good
standing, and has obtained all necessary licenses and approvals, in
all jurisdictions in which the ownership or lease of property or the
conduct of its business (including the servicing of the Receivables
as required by this Agreement) shall require such qualifications.
(c) Power and Authority. The Backup Servicer has the
-------------------
corporate power and authority to execute and deliver this
Agreement and to carry out its terms; and the execution, delivery
and performance of this Agreement have been duly authorized by the
Backup Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a
------------------
legal, valid and binding obligation of the Backup Servicer
enforceable in accordance with its terms.
Section 8.07. Merger or Consolidation of, or Assumption of
--------------------------------------------
the Obligations of, Backup Servicer. Any Person (a) into which the
- -----------------------------------
Backup Servicer may be merged or consolidated, (b) which may result
from any merger or consolidation to which the Backup Servicer shall
be a party or (c) which may succeed to the properties and assets of
the Backup Servicer substantially as a whole, which Person shall
have executed an agreement of assumption to perform every
obligation of the Backup Servicer hereunder, shall be the successor
to the Backup Servicer under this Agreement without further act on
the part of any of the parties to this Agreement; provided,
however, that (i) the Backup Servicer shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section and that all
conditions precedent provided for in this Agreement relating to
such transaction have been complied with and (ii) the Rating Agency
Condition shall have been satisfied with respect to such
transaction. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with
clauses (i) and (ii) above shall be conditions to the consummation of the
transactions referred to in clause (a), (b) or (c) above.
Section 8.08. Resignation as Backup Servicer. Subject to the
------------------------------
provisions of Section 8.07, the Backup Servicer may resign upon 30
days' written notice to the Trustee; provided, however, that no
such resignation shall become effective unless and until a
successor reasonably acceptable to the
36
<PAGE>
Trustee shall have assumed the responsibilities and obligations of the
Backup Servicer and the Rating Agency Condition shall have been satisfied
in connection therewith; provided, further, that if the Backup Servicer
shall have resigned after its determination that the performance of its
duties under this Agreement shall no longer be permissible under
applicable law as evidenced by an Opinion of Counsel to such effect
delivered to the Trustee, then, in the event a successor Backup
Servicer is not appointed within 30 days after such a resignation,
the Backup Servicer may petition a court for its removal.
ARTICLE IX
Default
-------
Section 9.01. Servicer Default. If any one of the following
----------------
events (each, a "Servicer Termination Event") shall occur and be
continuing:
(a) any failure by the Servicer to deliver or cause to
be delivered to the Trustee for deposit in any of the Accounts any
required payment or to direct the Trustee to make any required
distributions therefrom, which failure continues unremedied for a
period of five business days after discovery of such failure by an
officer of the Servicer or after the date on which written notice
of such failure shall have been given (A) to the Servicer by the
Trustee or (B) to the Servicer and to the Trustee by the Holders of
Certificates evidencing not less than 25% of the outstanding
Certificate Balance; or
(b) failure by the Servicer duly to observe or to
perform in any material respect any other covenants or agreements
of the Servicer set forth in this Agreement or any other Basic
Document, which failure shall (i) materially and adversely affect
the rights of Certificateholders and (ii) continue unremedied for
a period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given
(1) to the Servicer by the Trustee or (2) to the Servicer and
to the Trustee by the Holders of Certificates evidencing not less than
25% of the outstanding Certificate Balance; or
(c) the occurrence of an Insolvency Event with respect
to the Servicer;
then, and in each and every case, so long as the Servicer
Termination Event shall not have been remedied, either the Trustee
or the Holders of Certificates evidencing not less than 25% of the
outstanding Certificate Balance, by notice then given in writing to
the Servicer (and to the Trustee if given by the
Certificateholders) may terminate all the rights and obligations
(other than the obligations set forth in Section 8.02 hereof) of
the Servicer under this Agreement. On or after the receipt by the
Servicer of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to the
Certificates or the Receivables or otherwise, shall, without
further action, pass to and be vested in the Trustee or such
successor Servicer as may be appointed under Section 9.02; and,
without limitation, the Trustee is hereby authorized and empowered
to execute and deliver, for the benefit of the predecessor
Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and
endorsement of the Receivables and related documents or otherwise.
The predecessor Servicer shall cooperate with the successor
Servicer and the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this
Agreement, including the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be
held by the predecessor Servicer for deposit, or shall thereafter be
received by it with respect to any Receivable. All reasonable costs
and expenses (including attorneys' fees) incurred in connection with
transferring the Receivable Files to the successor Servicer and amending
this Agreement to reflect such succession as Servicer pursuant to this
Section shall be paid by the predecessor Servicer upon presentation
of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of a Servicer Termination
Event, the Trustee shall give notice thereof to each Rating Agency.
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Section 9.02. Appointment of Successor. (a) Upon the
------------------------
Servicer's receipt of notice of termination pursuant to
Section 9.01 or the Servicer's resignation in accordance with the
terms of this Agreement, the predecessor Servicer shall continue to
perform its functions as Servicer under this Agreement, in the case
of termination, only until the date specified in such termination
notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of resignation, until
the later of (i) the date 45 days from the delivery to the Trustee
and the Backup Servicer of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms
of this Agreement and (ii) the date upon which the predecessor
Servicer shall become unable to act as Servicer, as specified in
the notice of resignation and accompanying Opinion of Counsel. In
the event of the Servicer's termination hereunder, the Trustee
shall appoint a successor Servicer, and the successor Servicer
shall accept its appointment by a written assumption in form
acceptable to the Trustee. If the Trustee appoints the Backup
Servicer as successor Servicer in accordance with Section (4.14)
(after confirmation from each Rating Agency that such appointment
will not result in the withdrawal or downgrade of the then current
ratings of the Certificates), the Backup Servicer shall be the
successor in all respects to the Servicer in its capacity as
Servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on
the Servicer by the terms and provisions hereof; provided, however,
that the Backup Servicer shall not be liable for any acts or
omissions of the Servicer occurring prior to such succession or for
any breach by the Servicer of any of its representations and
warranties contained herein or in any related document or
agreement. Notwithstanding the above, if the Backup Servicer is
legally unable or unwilling to act as Servicer, the Trustee will
appoint a successor Servicer to act as Servicer. As compensation
for acting as successor Servicer, the Backup Servicer shall be
entitled to receive the Servicing Fee. In the event that a
successor Servicer has not been appointed at the time when the
predecessor Servicer has ceased to act as Servicer in accordance
with this Section, the Trustee without further action shall
automatically be appointed the successor Servicer and the Trustee
shall be entitled to the Servicing Fee. Notwithstanding the above, the
Trustee shall, if it shall be legally unable so to act, appoint
or petition a court of competent jurisdiction to appoint any
established institution, having a net worth of not less than
$50,000,000 and whose regular business shall include the servicing
of automotive receivables, as the successor to the Servicer under
this Agreement.
(b) Upon appointment, the successor Servicer (including the
Trustee acting as successor Servicer) shall be the successor in all
respects to the predecessor Servicer and shall be subject to all
the responsibilities, duties and liabilities arising thereafter
relating thereto placed on the predecessor Servicer and shall be
entitled to the Servicing Fee and all the rights granted to the
predecessor Servicer by the terms and provisions of this Agreement.
(c) The Servicer may not resign unless it is prohibited from
serving as such by law.
Section 9.03. Notification to Certificateholders. Upon any
----------------------------------
termination of the Servicer or appointment of a successor to the
Servicer pursuant to this Article IX, the Trustee shall give prompt
written notice thereof to Certificateholders and each Rating
Agency.
Section 9.04. Waiver of Past Defaults. The Holders of
-----------------------
Certificates evidencing not less than a majority of the outstanding
Certificate Balance may, on behalf of all Certificateholders, waive
in writing any default by the Servicer in the performance of its
obligations hereunder and its consequences, except a default in
making any required deposits to or payments from any of the
Accounts in accordance with this Agreement or in respect of a
covenant or the Servicer or provision herein that cannot be waived
without the consent of each Certificateholder (with respect to which
event the related waiver will require the approval of the Holders of all
Certificates). Upon any such waiver of a past default, such default shall
cease to exist, and any Servicer Default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair
any right consequent thereto.
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ARTICLE X
The Trustee
-----------
Section 10.01. Duties of Trustee. (a) Prior to the
------------------
occurrence of a Servicer Termination Event, and after the curing of
any such Servicer Termination Event that may have occurred, the
duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against
the Trustee.
(b) The Trustee, both prior to and after the occurrence of a
Servicer Termination Event, shall undertake to perform such duties
as are specifically set forth herein. If a Servicer Termination
Event has occurred and is continuing, the Trustee shall exercise
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, if the Trustee
shall have assumed the duties of the Servicer pursuant to Section
9.02, the Trustee, in performing such duties, shall use the degree
of skill and attention customarily exercised by a servicer with
respect to automobile receivables that it services for itself or
others.
(c) 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; provided, however, that the
Trustee shall examine such certificates and opinions to determine
whether or not they conform to the requirements of this Agreement.
(d) The Trustee shall take and maintain custody of the
Schedule of Receivables included as an exhibit to this Agreement
and to each Subsequent Transfer Agreement and shall retain all
Servicer's Certificates identifying Receivables that become
Purchased Receivables or Liquidated Receivables.
(e) The Trustee shall not be liable for any action taken,
suffered or omitted to be taken in good faith in accordance with
this Agreement or at the direction of the Holders of Certificates
evidencing not less than 25% of the Certificate Balance relating to
the time, method and place of conducting any proceeding for any
remedy available to the Trustee or the Trust, or exercising any
trust or power conferred upon the Trustee under this Agreement.
(f) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent actions,
its own negligent failure to act or its own bad faith or willful
misconduct; provided, however, that the Trustee shall not be liable
for any error of judgment made in good faith by a Trustee Officer
unless it is proved that the Trustee was negligent in ascertaining
the pertinent facts.
(g) Except to the extent the Trustee is acting as successor
Servicer pursuant to Section 9.02, no provision of this Agreement
shall require the 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
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(h) Except for actions expressly authorized by this
Agreement, the Trustee shall take no action reasonably likely to
impair the security interests created or existing under any
Receivable or to impair the value of any Receivable.
(i) The Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with its obligations hereunder
unless the Trustee obtains actual knowledge of such failure or
receives
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written notice of such failure from the Servicer or Holders of
Certificates representing in the aggregate not less than
25% of the Certificate Balance.
(j) None of the provisions contained in this Agreement shall
in any event require the Trustee to perform, or be responsible for
the manner of performance of, any of the obligations of the
Servicer under this Agreement, except during such time, if any, as
the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement.
Section 10.02. Certain Matters Affecting Trustee. Except as
---------------------------------
otherwise provided in Section 10.01:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in any
such document.
(b) The Trustee may consult with counsel, and the written
advice or opinion of counsel with respect to legal matters or
relating to this Agreement or the Certificates shall be full and
complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it under this Agreement in
good faith and in accordance with such advice or opinion of such
counsel.
(c) The 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 at
the request, order or direction of any of the Certificateholders
pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby; provided, however, nothing
contained in this Agreement shall relieve the Trustee of its
obligation, upon the occurrence of a Servicer Termination Event
(that shall not have been cured or waived), to exercise such of the
rights and powers vested in it by this Agreement, and to 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
that person's own affairs.
(d) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith which it believes to be
authorized or within its rights or powers conferred upon it by this
Agreement; provided, that such conduct does not constitute willful
misconduct, bad faith or negligence on the part of the Trustee.
(e) The Trustee may execute any of the trusts or powers or
perform any duties hereunder either directly or by or through
agents or attorneys or a custodian.
Section 10.03. Trustee Not Liable for Certificates or
--------------------------------------
Receivables. The recitals contained herein and in the Certificates
- -----------
(other than the certificate of authentication on the Certificates)
shall be taken as the statements of the Depositor or the Servicer,
as the case may be, and the Trustee assumes no responsibility for
the correctness thereof. The Trustee makes no representations as
to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the
Certificates), or of any Receivable or related document. The
Trustee shall at no time have any responsibility or liability for
or with respect to the legality, validity and enforceability of any
Receivable, or the perfection or priority of any security interest
created by any Receivable in any Financed Vehicle or the
maintenance of any such perfection and priority, or for or with
respect to the efficacy of the Trust or its ability to generate the
payments to be distributed to Certificateholders under this Agreement,
including: the existence, condition and ownership of any Financed Vehicle;
the existence and enforceability of any insurance thereon; the existence
and contents of any Receivable or any computer or other record thereof; the
validity of the assignment of any Receivable to the Trust or of any
intervening assignment; the completeness of any Receivable; the
performance or enforcement of any Receivable; the compliance by the
Depositor or the Servicer with any warranty or representation
40
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made under this Agreement or in any related document or the accuracy of
any such warranty or representation before receipt of notice or
other discovery of any breach thereof; or any action of the
Servicer taken in the name of the Trustee.
Section 10.04. Trustee May Own Certificates. The Trustee in
----------------------------
its individual or any other capacity may become the owner or
pledgee of Certificates and may deal with the Depositor and the
Servicer in banking transactions with the same rights that it would
have if it were not Trustee.
Section 10.05. Trustee's Fees and Expenses. The Servicer
---------------------------
shall pay to the Trustee, and the Trustee shall be entitled to
receive as compensation for its services hereunder, such fees as
have been separately agreed upon before the date hereof between the
Servicer and the Trustee, and the Trustee shall be entitled to
reimbursement by the Servicer for its reasonable expenses under
this Agreement, including the reasonable compensation, expenses and
disbursements of such agents, representatives, experts and counsel
as the Trustee may employ in connection with the exercise and
performance of its rights and duties under this Agreement, except
any such expenses and fees that may arise from the Trustee's
negligence, willful misfeasance or bad faith or that is the
responsibility of Certificateholders under this Agreement.
Section 10.06. Eligibility Requirements for Trustee. The
------------------------------------
Trustee shall at all times be a corporation having an office in the
same state as the location of the Corporate Trust Office; organized
and doing business under the laws of such state or the United
States of America; authorized under such laws to exercise corporate
trust powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or
state authorities; and having (or having a parent that has) a
rating of at least Baa3 by Moody's. If such corporation shall
publish reports of condition at least annually pursuant to law or
to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined
capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report
of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section,
the Trustee shall resign immediately in the manner and with the
effect specified in Section 10.07.
Section 10.07. Resignation or Removal of Trustee. The
---------------------------------
Trustee may resign at any time and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer.
Upon receiving such notice of resignation, the Servicer shall
promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor Trustee. 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.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 10.06 and shall fail to
resign after written request therefor by the Servicer, or if at any
time the Trustee shall be legally unable to act, or shall be
adjudged 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 Servicer may remove the Trustee. If the Servicer shall remove
the Trustee under the authority of the immediately preceding
sentence, the Servicer shall promptly appoint a successor Trustee
by written instrument, in duplicate, one copy of which instrument
shall be delivered to the outgoing Trustee so removed and one copy
to the successor Trustee, and shall pay all fees owed to the
outgoing Trustee.
Any resignation or removal of the Trustee and appointment of
a successor Trustee pursuant to any of the provisions of this
Section shall not become effective until acceptance of appointment
by the successor Trustee pursuant to Section 10.08. The Servicer
shall provide notice of any resignation or removal of the Trustee
to each of the Rating Agencies.
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Section 10.08. Successor Trustee. Any successor Trustee
-----------------
appointed pursuant to Section 10.07 shall execute, acknowledge and
deliver to the Servicer and to its predecessor Trustee an
instrument accepting its appointment as successor Trustee under
this Agreement, 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 under this Agreement, with like effect as if
originally named as Trustee. The predecessor Trustee shall deliver
to the successor Trustee all documents and statements and monies
held by it under this Agreement; and the Servicer and the
predecessor Trustee shall execute and deliver such instruments and
do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trustee all such
rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor
Trustee shall be eligible pursuant to Section 10.06.
Upon acceptance of appointment by a successor Trustee pursuant
to this Section, the Servicer shall mail notice thereof to all
Certificateholders and to the Rating Agencies. If the Servicer
shall fail 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 Servicer.
Section 10.09. 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 all or
substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided, that
such corporation is eligible to serve as Trustee pursuant to
Section 10.06, without the execution or filing of any instrument or
any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. The Trustee shall mail
notice of any such merger or consolidation to the Rating Agencies.
Section 10.10. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust or any Financed Vehicle
may at the time be located, the Servicer and the Trustee acting
jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee, jointly with the Trustee, or separate trustee
or separate trustees, of all or any part of the Trust, and to vest
in such Person, in such capacity and for the benefit of the
Certificateholders, such title to the Trust or any part thereof
and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall
not have joined in any such appointment within 15 days after the
receipt by it of a request to do so, the Trustee alone shall have
the power to make such appointment. No co-trustee or separate
trustee under this Agreement shall be required to meet the terms of
eligibility as a successor Trustee pursuant to Section 10.06 and no
notice of the appointment of any co-trustee or separate trustee
shall be required pursuant to Section 10.08.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following
provisions and conditions:
(a) All rights, powers, duties and obligations conferred
or imposed upon any such separate trustee or co-trustee shall be
conferred upon and exercised or performed by the 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 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 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
42
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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 Trustee;
(b) No trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under
this Agreement; and
(c) The Servicer and the 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 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 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
Trustee. Each such instrument shall be filed with the Trustee and
a copy thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the
Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful
act under or in respect of this Agreement on its behalf and in its
name. If any separate trustee or co-trustee shall die, become
incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor co-trustee or separate
trustee.
Section 10.11. Representations and Warranties of Trustee.
-----------------------------------------
The Trustee makes the following representations and warranties, on
which the Depositor and Certificateholders shall be deemed to rely:
(a) The Trustee is a ______________________ banking
corporation, validly existing and in good standing under the laws
of the State of ______________________ .
(b) The Trustee has full corporate power, authority and
legal right to execute and deliver, and to perform its obligations
under, this Agreement and each Basic Document to which it is a party,
and has taken all necessary action to authorize the execution and
delivery of, and the performance of its obligations
under, this Agreement and each Basic Document to which it is a party.
(c) This Agreement and each Basic Document to which it
is a party have been duly executed and delivered by the Trustee and
shall constitute legal, valid and binding obligations of the Trustee,
subject to applicable bankruptcy, insolvency, reorganization and
similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and to general principles of equity
(whether applied in a proceeding at law or in equity).
(d) The execution, delivery and performance by the
Trustee of this Agreement and each Basic Document to which the
Trustee is a party (i) shall not violate any provision of any law
governing the banking and trust powers of the Trustee or, to the best
of the Trustee's knowledge, any order, writ, judgment or decree of any
court, arbitrator or governmental authority applicable to the Trustee
or any of its assets, (ii) shall not violate any provision of the
corporate charter or bylaws of the Trustee and (iii) shall not
violate any provision of, or constitute, with or without notice or
lapse of time, a default under, or result in the creation or
imposition of any Lien on any properties included in the Trust
pursuant to the provisions of, any mortgage, indenture, contract,
agreement or other undertaking to which the Trustee is a party,
which violation, default or Lien could reasonably be expected to
materially and adversely affect the Trustee's performance or ability
to perform its duties under this Agreement or any Basic
43
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Document to which it is a party or the transactions contemplated in
this Agreement or any such Basic Document.
(e) The execution, delivery and performance by the
Trustee of this Agreement and each Basic Document to which the
Trustee is a party shall not require the authorization, consent,
approval of, or the giving of notice to or the filing or registration
with, or the taking of any other action in respect of,
any governmental authority or agency regulating the banking and
corporate trust activities of the Trustee.
ARTICLE XI
Termination
-----------
Section 11.01. Termination of the Trust. (a) The
------------------------
respective obligations and responsibilities of the Depositor, the
Servicer, the Backup Servicer and the Trustee hereunder and the
Trust created hereby shall terminate upon the earlier to occur of
(1) the payment to Certificateholders of all amounts required to be
paid to them pursuant to this Agreement and the disposition of all
property held as part of the Trust and (2) the time provided in
Section 11.02; provided, however, that in no event shall the trust
created by this Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants of
Joseph P. Kennedy, the late ambassador of the United States to the
Court of St. James, living on the date of this Agreement. The
Servicer shall promptly notify the Trustee and the Rating Agencies
of any prospective termination pursuant to this Section.
(b) Except as provided in Section 11.01(a), neither the
Depositor nor any Certificateholder or Certificate Owner shall be
entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which Certificateholders shall surrender
their Certificates to the Trustee for payment of the final
distribution and cancellation of the Certificates, shall be given
by the Trustee by letter to Certificateholders mailed not earlier
than the ___ day and not later than the ___ day of the calendar
month immediately preceding the calendar month in which such final
Distribution Date shall occur, stating (1) the Distribution Date
upon which final payment of the Certificates will be made upon
presentation and surrender of the Certificates at the office of the
Trustee therein designated, (2) the amount of such final payment
and (3) that the Record Date otherwise applicable to such
Distribution Date will not be applicable, payments being made only
upon presentation and surrender of the Certificates at the office
of the Trustee therein specified. The Trustee shall give such
notice to the Certificate Registrar (if other than the Trustee) at
the time such notice is given to Certificateholders. Upon
presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders amounts distributable
on such Distribution Date pursuant to Section 5.07.
In the event that all of the Certificateholders shall not have
surrendered their Certificates for cancellation within six months
after the date specified in the above mentioned written notice, the
Trustee shall give a second written notice to the remaining
Certificateholders requesting that such Certificateholders
surrender their Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after such
second notice all of the Certificates shall not have been
surrendered for cancellation, the 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 Trustee to the Depositor.
Section 11.02. Optional Purchase of All Receivables. On each
------------------------------------
Determination Date as of which the outstanding principal balance of
the Certificates is equal to or less than 10% of the initial
Certificate Balance, the Servicer shall have the option to purchase
the Receivables. To exercise such option, the
44
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Servicer shall deposit to the Collection Account pursuant to Section 5.06
an amount equal to the aggregate Purchase Amount for the Receivables
(including defaulted Receivables) and shall succeed to all
interests in and to the Receivables.
ARTICLE XII
Miscellaneous Provisions
------------------------
Section 12.01. Amendment. This Agreement may be amended by
---------
the Depositor, the Servicer, the Backup Servicer and the Trustee,
but without the consent of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions in this
Agreement or for the purpose of adding any provisions to, or
changing in any manner or eliminating any provision in, this
Agreement or of modifying in any manner the rights of the
Certificateholders; 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.
This Agreement may also be amended from time to time by the
Depositor, the Servicer, the Backup Servicer and the Trustee and
the consent of the Holders of Certificates evidencing not less than
a majority of the Certificate Balance, for the purpose of adding
any provisions to or changing in any manner or eliminating any of
the provisions of this Agreement, or of modifying in any manner the
rights of the Certificateholders; provided, however, that no such
amendment shall (a) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, collections of payments on
the Receivables or distributions that are required to be made on
any Certificate or (b) reduce the aforesaid percentage of the
Certificate Balance required to consent to any such amendment
without the consent of the Holders of all Certificates then
outstanding.
Promptly after the execution of any such amendment or consent,
the Trustee shall furnish written notification of the substance of
such amendment or consent to each Certificateholder and the Rating
Agencies.
It shall not be necessary for the consent of
Certificateholders pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall
be sufficient if such consent shall approve the substance thereof.
The manner of obtaining such consents (and any other consents of
Certificateholders provided for in this Agreement) and of evidencing the
authorization of any action by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized
or permitted by this Agreement and the Opinion of Counsel referred
to in Section 12.02(i). The Trustee may, but shall not be
obligated to, enter into any such amendment that affects the
Trustee's own rights, duties or immunities under this Agreement or
otherwise.
Section 12.02. Protection of Title to Trust. (a) The
----------------------------
Depositor and the Servicer shall execute and file such financing
statements and cause to be executed and filed such continuation
statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the
interest of the Certificateholders and the Trustee in the
Receivables and in the proceeds thereof. The Depositor and the
Servicer shall deliver (or cause to be delivered) to the Trustee
file-stamped copies of, or filing receipts for, any document filed
as provided above, as soon as available following such filing.
(b) Neither the Depositor nor the Servicer shall change its
name, identity or corporate structure in any manner that would,
could or might make any financing statement or continuation
statement filed in accordance with paragraph (a) above seriously
misleading within the meaning of Section 9-402(7) of the
45
<PAGE>
UCC, unless the Depositor or the Servicer, as the case may be, shall
have given the Trustee at least five days' prior written notice of
such change and shall have promptly filed appropriate amendments to
all previously filed financing statements or continuation
statements.
(c) The Depositor and the Servicer shall have an obligation
to give the Trustee at least 60 days' prior written notice of any
relocation of its principal executive office if, as a result of
such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement, and shall
promptly file any such amendment or new financing statement. The
Servicer shall at all times maintain its principal executive office
and each office from which it shall service Receivables within the
United States of America.
(d) The Servicer shall maintain accounts and records as to
each Receivable accurately and in sufficient detail to permit (1)
the reader thereof to know at any time the status of such
Receivable, including payments and recoveries made and payments owing (and
the nature of each) and (2) reconciliation between payments or recoveries
on (or with respect to) each Receivable and the amounts from time to time
deposited in the Collection Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that,
from and after the time of any transfer of Receivables under this
Agreement or the Transfer Agreement, the Servicer's master computer
records (including any back-up archives) that refer to a Receivable
shall indicate clearly the interest of the Trust in such Receivable
and that such Receivable is owned by the Trust. Indication of the
Trust's ownership of a Receivables shall be deleted from or
modified on the Servicer's computer systems when, and only when,
such Receivable shall have been paid in full or repurchased.
(f) If at any time the Depositor or the Servicer shall
propose to sell, grant a security interest in, or otherwise
transfer any interest in automotive receivables to, any prospective
purchaser, lender or other transferee, the Servicer shall give to
such prospective purchaser, lender or other transferee computer
tapes, records or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been
sold and is owned by the Trust.
(g) The Servicer shall permit the Trustee and its agents to
inspect, audit and make copies of and abstracts from the Servicer's
records regarding any Receivable at any time during normal business
hours upon reasonable notice.
(h) Upon request, the Servicer shall furnish to the Trustee,
within five business days, a list of all Receivables (by contract
number and name of Obligor) then held as part of the Trust,
together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished
before such request indicating removal of Receivables from the
Trust.
(i) The Servicer shall deliver to the Trustee, promptly after
the execution and delivery of this Agreement and of each amendment
hereto and on each Subsequent Transfer Date, an Opinion of Counsel
stating that, in the opinion of such Counsel, either (A) all
financing statements and continuation statements have been executed
and filed that are necessary fully to preserve and protect the
interest of the Trust in the Receivables, and reciting the details
of such filings or referring to prior Opinions of Counsel in which
such details are given, or (B) no such action is necessary to
preserve and protect such interest.
Section 12.03. Separate Counterparts. This Agreement may be
---------------------
executed by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be an original, but all
such counterparts shall together constitute but one and the same
instrument.
Section 12.04. Limitation on Rights of Certificateholders.
------------------------------------------
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust, or entitle such
46
<PAGE>
Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any
court for a partition or winding up of the Trust, or otherwise
affect the rights, obligations and liabilities of the parties to
this Agreement or any of them.
(b) No Certificateholder shall have any right to vote (except
as provided in Section 10.01(e) or 12.01) or in any manner
otherwise to control the operation and management of the Trust or
the obligations of the parties to this Agreement; nor shall any
provision in this Agreement or contained in the Certificates be
construed as to constitute the Certificateholders from time to time
as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by
reason of any action taken pursuant to any provision of this
Agreement.
(c) No Certificateholder shall have any right to institute
any suit, action or proceeding in equity or at law upon or under or
with respect to this Agreement unless: (1) such Holder previously
shall have given to the Trustee written notice of a continuing
Servicer Termination Event; (2) the Holders of Certificates
evidencing not less than 25% of the Certificate Balance shall have
made written request upon the Trustee to institute such action,
suit or proceeding in its own name as Trustee under this Agreement
and shall have offered the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be
incurred therein or thereby; (3) the Trustee, for 60 days after its
receipt of such notice, request and offer of indemnity shall have
neglected or refused to institute any such action, suit or
proceeding; and (4) during such 60-day period no request or waiver
inconsistent with such written request shall have been given to the
Trustee by Holders representing a majority of the Certificate
Balance. It is understood and intended that no one or more
Certificateholders shall have any right in any manner whatever by
virtue of, or by availing of, any provisions of this Agreement to
affect, disturb or prejudice the rights of any other
Certificateholder, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under
this Agreement, except in the manner provided in this Agreement.
Section 12.05. Governing Law. THIS AGREEMENT 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 UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.06. Notices. All demands, notices and
-------
communications upon or to the Depositor, the Servicer, the Backup
Servicer, the Trustee, or the Rating Agencies under this Agreement
shall be in writing, personally delivered or mailed by certified
mail, return receipt requested, and shall be deemed to have been
duly given upon receipt (a) in the case of the Depositor, to
______________________; (b) in the case of the Servicer, to
______________________; (c) in the case of the Backup Servicer, to
______________________; (d) in the case of the Trustee, to
______________________; (e) in the case of the Rating Agencies, to
______________________. Any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the
Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have
been duly given, whether or not the Certificateholder shall receive
such notice.
Section 12.07. Severability of Provisions. 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 of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
Section 12.08. Assignment. Notwithstanding anything to the
----------
contrary contained herein, except as provided in Sections 7.04 and
8.03 and as provided in the provisions of this Agreement concerning
the resignation of the Servicer and the Backup Servicer, this
Agreement may not be assigned by the Depositor or the Servicer
without the prior written consent of the Trustee.
47
<PAGE>
Section 12.09. Third-Party Beneficiaries. This Agreement
-------------------------
shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.
Nothing in this Agreement, express or implied, shall give to any
Person other than the parties hereto and their successors hereunder
and permitted assigns, any benefit or any legal or equitable right,
remedy or claim under this Agreement.
Section 12.10. Certificates Nonassessable and Fully Paid.
-----------------------------------------
Certificateholders shall not be personally liable for obligations
of the Trust. The interests represented by the Certificates shall
be nonassessable for any losses or expenses of the Trust or for any
reason whatsoever.
Section 12.11. Limitations on Rights of Others. The
-------------------------------
provisions of this Agreement are solely for the benefit of the
Depositor, the Servicer, the Backup Servicer, the Trustee, and the
Certificateholders, and nothing in this Agreement, whether express
or implied, shall be construed to give any other Person any legal
or equitable right, remedy or claim in respect of the Trust or
under or in respect of this Agreement or any covenants, conditions
or provisions contained herein.
Section 12.12. Headings. The headings of the various
--------
Articles and Sections herein are for convenience of reference only
and shall not define or limit any of the terms or provisions
hereof.
48
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Servicer, the Backup
Servicer and the Trustee have caused this Pooling and Servicing
Agreement to be duly executed by their respective officers as of
the day and year first above written.
FINANCIAL ASSET SECURITIES CORP.,
as Depositor
By: _________________________________
Name:
Title:
______________________, as Trustee
By: _________________________________
Name:
Title:
______________________, as Servicer
By: _________________________________
Name:
Title:
______________________, as Backup
Servicer
By: _________________________________
Name:
Title:
<PAGE>
SCHEDULE I
Schedule of Receivables
-----------------------
I-1
<PAGE>
SCHEDULE II
Location of Receivables Files
-----------------------------
II-1
<PAGE>
EXHIBIT A
Form of Class A Certificate
---------------------------
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS
CLASS A CERTIFICATE WILL BE MADE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT
OF THIS CLASS A CERTIFICATE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
NUMBER $
R-1 CUSIP NO.
FASCO AUTO TRUST 199__-__
________% ASSET BACKED CERTIFICATE, CLASS A
evidencing a fractional undivided interest in the Trust (as defined
below), the property of which includes a pool of motor vehicle
retail installment sale contracts (the "Contracts") secured by new
and used automobiles, vans and light duty trucks.
(This Class A Certificate does not represent an interest in, or an
obligation of, Financial Asset Securities Corp. or any of its
Affiliates, except to the extent described below.)
THIS CERTIFIES THAT CEDE & CO. is the registered owner of
______________________ DOLLARS nonassessable, fully-paid,
fractional undivided interest in FASCO Auto Trust 199__-__ (the
"Trust") formed pursuant to the Pooling and Servicing Agreement
dated as of ______________________ (the "Agreement"), among
Financial Asset Securities Corp., as Depositor,
______________________, as Trustee, ______________________, as
Servicer, and ______________________, as Backup Servicer, a summary
of certain of the pertinent provisions of which is set forth below.
To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Agreement.
This Certificate is one of a duly authorized series of
Certificates, designated as the ________% Asset Backed
Certificates, Class A (the "Class A Certificates"), all issued
under the Agreement, to which Agreement reference is hereby made
for a statement of the respective rights and obligations thereunder
of the Depositor, the Servicer, the Backup Servicer, the Trustee
and the Certificateholders. The Class A Certificates are subject
to all the terms of the Agreement.
The property of the Trust includes (i) a pool of motor vehicle
retail installment sale contracts secured by new and used
automobiles, vans and light duty trucks (the "Receivables"); (ii)
all moneys (including accrued interest) received thereunder on or
after the applicable Cutoff Date; (iii) a security interest in the
monies on deposit in the Pre-Funding Account; (iv) all amounts and
property from time to time held in or credited to the Collection
Account; (v) security interests in the Financed Vehicles and any
accessions thereto; (vi) the right to receive payments from the
Reserve Account, to the extent and under the circumstances set
forth in the Agreement; (vii) the right to receive all proceeds
from claims on physical damage, credit life and disability
insurance policies covering the Financed Vehicles or the
A-1
<PAGE>
Obligors, as the case may be; (viii) any property that shall have
secured a Receivable and that shall have been acquired by or on
behalf of the Depositor, the Servicer or the Trustee; (ix) all of
the Depositor's right to all documents contained in the Receivable
Files; (x) certain rights under the Security Agreement; and (xi)
any and all proceeds of the foregoing.
Under the Agreement, there will be distributed on the ________
day of each month or, if such ________ day is not a business day,
the next succeeding business day (each, a "Distribution Date"),
commencing on ______________________, to the Person in whose name
this Class A Certificate is registered at the close of business on
the day immediately preceding such Distribution Date (the "Record
Date"), such Certificateholder's fractional undivided interest in
the amount to be distributed to Class A Certificateholders on such
Distribution Date.
It is the intent of the Depositor, the Trustee and the
Certificateholders that, for purposes of federal income, state and
local income and single business tax and any other income taxes,
the Trust be treated as a grantor trust and the Certificates be
treated as interests in a grantor trust. The Depositor, the
Servicer, the Trustee and each Certificateholder or Certificate
Owner, by its acceptance of a Certificate or of a beneficial
interest in a Certificate, as the case may be, agree to treat, and
to take no action inconsistent with the treatment of, the
Certificates for such tax purposes as interests in a grantor trust.
Distributions on this Class A Certificate will be made as
provided in the Agreement by the Trustee by wire transfer or check
mailed to the Person identified as the Holder of record thereof in
the Certificate Register, without the presentation or surrender of
this Class A Certificate or the making of any notation hereon,
except that with respect to Class A Certificates 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 transfer in immediately available funds to the account
designated by such nominee. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on
this Class A Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon
presentation and surrender of this Class A Certificate at the
office or agency maintained for that purpose by the Trustee in the
Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this
Class A Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Trustee, by manual
signature, this Class A Certificate shall not entitle the Holder hereof
to any benefit under the Agreement or be valid for any purpose.
THIS CLASS A CERTIFICATE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-2
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Class A Certificate
to be duly executed.
Date: FASCO AUTO TRUST 199__-__
By: ______________________, not in
its individual capacity but solely as Trustee
By: _________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the
within-mentioned Agreement.
Date: ______________________ , not in its
individual capacity but solely as Trustee
By: _________________________________
Authorized Signatory
A-3
<PAGE>
(REVERSE OF CLASS A CERTIFICATE)
The Class A Certificates do not represent an obligation of, or
an interest in, the Depositor, the Servicer, the Backup Servicer,
the Trustee or any of their respective Affiliates, and no recourse
may be had against such parties or their assets except as expressly
set forth or contemplated herein or in the Agreement. In addition,
this Class A Certificate is not guaranteed by the Depositor, the
Servicer, the Backup Servicer, the Trustee, or any other entity, and is
limited in right of payment to certain collections and
recoveries with respect to the Receivables and certain other amounts,
all as more specifically set forth herein and in the Agreement.
A copy of the Agreement may be examined by any Certificateholder upon
written request during normal business hours at the principal office
of the Depositor and at such other places, if any, designated by the
Depositor.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights
and obligations of the Depositor, the Servicer, the Backup
Servicer, and the Trustee and the rights of the Certificateholders
at any time by the Depositor, the Servicer, the Backup Servicer,
and the Trustee with the consent of the Holders of Certificates
evidencing not less than a majority of the Certificate Balance.
Any such consent by the Holder of this Class A Certificate shall be
conclusive and binding on such Holder and on all future Holders of
this Certificate and of any Class A 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 Class A
Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders
of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Class A
Certificate is registerable in the Certificate Register upon
surrender of this Class A Certificate for registration of transfer
at the offices or agencies of the Certificate Registrar maintained
by the Trustee in the Borough of Manhattan, The City of New York,
accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly
executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class A
Certificates of authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the designated
transferee. The initial Certificate Registrar appointed under the
Agreement is the Trustee.
Except as provided in the Agreement, the Class A Certificates
are issuable only as registered certificates without coupons in a
minimum denomination of $______________________ and integral
multiples of $1,000 in excess thereof. As provided in the
Agreement and subject to certain limitations therein set forth, the
Class A Certificates are exchangeable for new Class A Certificates
of authorized denominations evidencing the same aggregate
denomination, as requested by the Holder surrendering the same. No
service charge will be made for any such registration of transfer
or exchange, but the Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.
The Trustee, the Certificate Registrar and any agent of the
Trustee or the Certificate Registrar may treat the Person in whose name
this Class A Certificate is registered as the owner hereof for
all purposes, and none of the Trustee, the Certificate Registrar or
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them
pursuant to the Agreement and the disposition of all property held
by the Trust. The Servicer of the Receivables may at its option
purchase the Trust property at a price specified in the Agreement,
and such purchase of the Receivables and other property of the
Trust will effect early retirement of the Certificates; provided,
however, that such right of purchase is exercisable only as of the
last day of any Collection Period as of which the Certificate
Balance is less than or equal to 10% of the initial Certificate
Balance.
A-4
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________________________________
(Please print or type name and address, including postal zip code,
of assignee)
the within Class A Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing ________________________
______________________, attorney, to transfer said Class A
Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated:
_________________________________*/
-
Signature Guaranteed:
______________________*/
-
______________________
*/ NOTICE: The signature to this assignment must correspond with
- -
the name as it appears on the face of the within Class A
Certificate in every particular, without alteration, enlargement or
any change whatever. Such signature must be guaranteed by a member
firm of the New York Stock Exchange or a commercial bank or trust
company.
A-5
<PAGE>
EXHIBIT B
Form of Class B Certificate
---------------------------
THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO
ANY PERSON THAT IS AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR
ANY GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA,
SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS, TO A
MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR
THE CODE (COLLECTIVELY, A "PLAN") OR ANY PERSON INVESTING THE
ASSETS OF A PLAN, EXCEPT AS PROVIDED IN THE AGREEMENT REFERRED TO
HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS
CLASS B CERTIFICATE WILL BE MADE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF
THIS CLASS B CERTIFICATE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
NUMBER $
R-1 CUSIP NO.
FASCO AUTO TRUST 199___-__
________% ASSET BACKED CERTIFICATE, CLASS B
evidencing a fractional undivided interest in the Trust (as defined
below), the property of which includes a pool of motor vehicle
retail installment sale contracts secured by new and used
automobiles, vans and light duty trucks.
(This Class B Certificate does not represent an interest in, or an
obligation of, Financial Asset Securities Corp. or any of its
Affiliates, except to the extent described below.)
THIS CERTIFIES THAT CEDE & CO. is the registered owner of
______________________ DOLLARS nonassessable, fully-paid,
fractional undivided interest in FASCO Auto Trust 199___-__ (the
"Trust") formed pursuant to the Pooling and Servicing Agreement
dated as of ______________________ (the "Agreement"), among
Financial Asset Securities Corp., as Depositor,
______________________, as Servicer, ______________________, as
Backup Servicer, and ______________________, as Trustee, a summary
of certain of the pertinent provisions of which is set forth below.
To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Agreement.
This Certificate is one of a duly authorized series of
Certificates, designated as the ________% Asset Backed
Certificates, Class B (the "Class B Certificates"), all issued
under the Agreement, to which Agreement reference is hereby made
for a statement of the respective rights and obligations thereunder
B-1
<PAGE>
of the Depositor, the Servicer, the Backup Servicer, the Trustee
and the Certificateholders. The Class B Certificates are subject
to all the terms of the Agreement.
The property of the Trust includes (i) a pool of motor vehicle
retail installment sale contracts secured by new and used
automobiles, vans and light duty trucks (the "Receivables"); (ii)
all moneys received thereunder on or after the applicable Cutoff
Date; (iii) a security interest in the monies on deposit in the
Pre-Funding Account; (iv) all amounts and property from time to
time held in or credited to the Collection Account; (v) security
interests in the Financed Vehicles and any accessions thereto; (vi)
the right to receive payments from the Reserve Account, to the
extent and under the circumstances set forth in the Agreement;
(vii) the right to receive all proceeds from claims on physical
damage, credit life and disability insurance policies covering the
Financed Vehicles or the Obligors, as the case may be; (viii) any
property that shall have secured a Receivable and that shall have
been acquired by or on behalf of the Depositor, the Servicer or the
Trustee; (ix) all of the Depositor's right to all documents contained
in the Receivable Files; (x) certain rights under the Security Agreement;
and (xi) any and all rights of the foregoing.
Under the Agreement, there will be distributed on the
________day of each month or, if such ________day is not a business
day, the next succeeding business day (each, a "Distribution
Date"), commencing on ______________________, to the Person in
whose name this Class B Certificate is registered at the close of
business on the day immediately preceding such Distribution Date
(the "Record Date"), such Certificateholder's fractional undivided
interest in the amount to be distributed to Class B
Certificateholders on such Distribution Date.
The Holder of this Class B Certificate acknowledges and agrees
that its right to receive distributions in respect of this
Certificate are subordinated to the rights of Holders of the Class
A Certificates, to the extent set forth in the Agreement.
It is the intent of the Depositor, the Servicer, the Trustee
and the Certificateholders that, for purposes of federal income,
state and local income and single business tax and any other income
taxes, the Trust be treated as a grantor trust and the Certificates
be treated as interests in a grantor trust. The Depositor, the
Servicer, the Trustee and each Certificateholder or Certificate
Owner, by its acceptance of a Certificate or of a beneficial
interest in a Certificate, as the case may be, agree to treat, and
to take no action inconsistent with the treatment of, the
Certificates for such tax purposes as interests in a grantor trust.
Distributions on this Class B Certificate will be made as
provided in the Agreement by the Trustee by wire transfer or check
mailed to the Person identified as the Holder of Record hereof in
the Certificate Register, without the presentation or surrender of
this Class B Certificate or the making of any notation hereon,
except that with respect to Class B Certificates 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 transfer in immediately available funds to the account
designated by such nominee. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on
this Class B Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon
presentation and surrender of this Class B Certificate at the
office or agency maintained for that purpose by the Trustee in the
Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this
Class B Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Trustee, by manual
signature, this Class B Certificate shall not entitle the Holder hereof to
any benefit under the Agreement or be valid for any purpose.
B-2
<PAGE>
THIS CLASS B CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Class B Certificate
to be duly executed.
FASCO AUTO TRUST 199__-__
By: ________, not in its individual
capacity but solely as Trustee
Date: By: _______________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Agreement.
Date: ______________________, not in
its individual capacity but solely as Trustee
By: ________________________________
Authorized Signatory
B-3
<PAGE>
(REVERSE OF CLASS B CERTIFICATE)
The Class B Certificates do not represent an obligation of, or
an interest in, the Depositor, the Servicer, the Backup Servicer,
the Trustee or any of their respective Affiliates, and no recourse
may be had against such parties or their assets except as expressly
set forth or contemplated herein or in the Agreement. In addition,
this Class B Certificate is not guaranteed by the Depositor, the Servicer,
the Backup Servicer, the Trustee, or any other entity, and is limited in
right of payment to certain collections and recoveries with respect to the
Receivables and certain other amounts, all as more specifically set forth
herein and in the Agreement. A copy of the Agreement may be examined by
any Certificateholder upon written request during normal business hours
at the principal office of the Depositor and at such other places,
if any, designated by the Depositor.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights
and obligations of the Depositor, the Servicer, the Backup
Servicer, and the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, the
Backup Servicer, and the Trustee with the consent of the Holders of
Certificates evidencing not less than a majority of the Certificate
Balance. Any such consent by the Holder of this Class B
Certificate shall be conclusive and binding on such Holder and on
all future Holders of this Class B Certificate and of any Class B
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 Class B Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
No registration of transfer of this Class B Certificate will
be made unless the Trustee first receives either a representation
letter, in the form described in Section 6.03 of the Agreement,
stating that the transferee is not a Benefit Plan and is not acting
on behalf of a Benefit Plan or using the assets of a Benefit Plan
to effect such purchase. Any transfer of this Class B Certificate
that does not satisfy the requirements set forth in Section 6.03 of
the Agreement shall be void and of no effect.
Except as provided in the Agreement, the Class B Certificates
are issuable only as registered certificates without coupons in a
minimum denomination of $______________________ and integral
multiples of $1,000 in excess thereof; provided that one Class B
Certificate may be issued in such denomination as is required to
include any residual amount. As provided in the Agreement and
subject to certain limitations therein set forth and described in
the preceding paragraph, Class B Certificates are exchangeable for
new Class B Certificates of authorized denominations evidencing the
same aggregate denomination, as requested by the Holder
surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Trustee or the
Certificate Registrar may require payment of a sum sufficient to
cover any tax or governmental charge payable in connection
therewith.
The Trustee, the Certificate Registrar and any agent of the
Trustee or the Certificate Registrar may treat the Person in whose
name this Class B Certificate is registered as the owner hereof for
all purposes, and none of the Trustee, the Certificate Registrar or
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them
pursuant to the Agreement and the disposition of all property held
by the Trust. The Servicer of the Receivables may at its option
purchase the Trust property at a price specified in the Agreement,
and such purchase of the Receivables and other property of the
Trust will effect early retirement of the Class B Certificates;
provided, however, that such right of purchase is exercisable only
as of the last day of any Collection Period as of which the
Certificate Balance is less than or equal to 10% of the initial
Certificate Balance.
B-4
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________________________________
(Please print or type name and address, including postal zip code,
of assignee)
the within Class B Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing ______________________,
attorney, to transfer said Class B Certificate on the books of the
Certificate Registrar, with full power of substitution in the
premises.
Dated:
______________________________*/
-
Signature Guaranteed:
______________________*/
-
_________________________________
*/ NOTICE: The signature to this assignment must correspond with
- -
the name as it appears on the face of the within Class B
Certificate in every particular, without alteration, enlargement or
any change whatever. Such signature must be guaranteed by a member
firm of the New York Stock Exchange or a commercial bank or trust
company.
B-5
<PAGE>
EXHIBIT C
Form Of Depository Agreement
Letter of Representations
(To be Completed by Issuer and Trustee)
__________________________________________________
(Name of Issuer)
__________________________________________________
(Name of Trustee)
__________________
(Date)
Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: _______________________________________________________
_______________________________________________________
_______________________________________________________
(Issue Description)
Ladies and Gentlemen:
This letter sets forth our understanding with respect to
certain matters relating to the above-referenced issue (the
"Securities"). Trustee will act as trustee with respect to the
Securities pursuant to a trust indenture dated _________________,
199__ (the "Document"). ______________________ (the "Underwriter")
is distributing the Securities through The Depository Trust Company
("DTC").
To induce DTC to accept the Securities as eligible for deposit
at DTC, and to act in accordance with its Rules with respect to the
Securities, Issuer and Trustee make the following representations
to DTC:
1. Prior to closing on the Securities on ______________________,
199__, there shall be deposited with DTC one Security certificate'
registered in the name of DTC's nominee, Cede & Co., for each stated
maturity of the Securities in the face amounts set forth on Schedule I
hereto, the total of which represents 100% of the principal amount of such
Securities. If, however, the aggregate principal amount of any maturity
exceeds $150 million, one certificate will be issued with respect to each
$150 million of principal amount and an additional certificate will
be issued with respect to any remaining principal amount. Each
$150 million certificate shall bear the following legend:
C-1
<PAGE>
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to Issuer or its agent for registration of
transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.
2. In the event of any solicitation of consents from or
voting by holders of the Securities, Issuer or Trustee shall
establish a record date for such purposes (with no provision for
revocation of consents or votes by subsequent holders) and shall,
to the extent possible, send notice of such record date to DTC not
less than 15 calendar days in advance of such record date. Notices
to DTC pursuant to this Paragraph by telecopy shall be sent to
DTC's Reorganization Department at (212) 709-6896 or (212)
709-6897, and receipt of such notices shall be confirmed by
telephoning (212) 709-6870. Notices to DTC pursuant to this
Paragraph by mail or by any other means shall be sent to DTC's
Reorganization Department as indicated in Paragraph 4.
3. In the event of a full or partial redemption, Issuer or
Trustee shall send a notice to DTC specifying: (a) the amount of
the redemption or refunding; (b) in the case of a refunding, the
maturity date(s) established under the refunding; and (c) the date
such notice is to be mailed to Security holders or published (the
"Publication Date"). Such notice shall be sent to DTC by a secure
means (e.g., legible telecopy, registered or certified mail,
overnight delivery) in a timely manner designed to assure that such
notice is in DTC's possession no later than the close of business
on the business day before or, if possible, two business days
before the Publication Date. Issuer or Trustee shall forward such
notice either in a separate secure transmission for each CUSIP
number or in a secure transmission for multiple CUSIP numbers (if
applicable) which includes a manifest or list of each CUSIP number
submitted in that transmission. (The party sending such notice
shall have a method to verify subsequently the use of such means
and the timeliness of such notice.) The Publication Date shall be not less
than 30 days nor more than 60 days prior to the redemption
date or, in the case of an advance refunding, the date that the
proceeds are deposited in escrow. Notices to DTC pursuant to this
Paragraph by telecopy shall be sent to DTC's Call Notification
Department at (516) 227-4039 or (516) 227-4190. If the party
sending the notice does not receive a telecopy receipt from DTC
confirming that the notice has been received, such party shall
telephone (516) 227-4070. Notices to DTC pursuant to this
Paragraph by mail or by any other means shall be sent to:
Manager; Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
4. In the event of an invitation to tender the Securities,
notice by Issuer or Trustee to Security holders specifying the
terms of the tender and the Publication Date of such notice shall
be sent to DTC by a secure means in the manner set forth in the
preceding Paragraph. Notices to DTC pursuant to this Paragraph and
notices of other corporate actions (including mandatory tenders,
exchanges, and capital changes) by telecopy shall be sent to DTC's
Reorganization Department at (212) 709-1093 or (212) 709-1094, and
receipt of such notices shall be confirmed by telephoning (212)
709-6884. Notices to DTC pursuant to the above by mail or by any
other means shall be sent to:
Manager; Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
C-2
<PAGE>
5. All notices and payment advances sent to DTC shall
contain the CUSIP number of the Securities.
6. Trustee shall send DTC written notice with respect to the
dollar amount per $1,000 original face value (or other minimum
authorized denomination if less than $1,000 face value) payable on
each payment date allocated as to the interest and principal
portions thereof preferably 5, but not less than 2, business days
prior to such payment date. Such notices, which shall also contain
the current pool factor and Trustee contact's name and telephone
number, shall be sent by telecopy to DTC's Dividend Department at
(212) 709-1723, or if by mail or by any other means to:
Manager; Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
7. (NOTE: ISSUER MUST REPRESENT ONE OF THE FOLLOWING, AND
----
CROSS OUT THE OTHER:) (The interest accrual period is record date
- ---------
to record date.) (The interest accrual period is payment date to
payment date.)
8. Interest payments and principal payments that are part of
periodic principal-and-interest payments shall be received by Cede
& Co., as nominee of DTC, or its registered assigns in same-day
funds on each payment date (or the equivalent in accordance with
existing arrangements between Issuer or Trustee and DTC). Such
payments shall be made payable to the order of Cede & Co. Absent
any other existing arrangements, such payments shall be addressed
as follows:
Manager; Cash Receipts
Dividend Department
The Depository Trust Company
7 Hanover Square; 24th Floor
New York, NY 10004-2695
9. (NOTE: ISSUER MUST REPRESENT ONE OF THE FOLLOWING, AND
----
CROSS OUT THE OTHER:)
- ---------
Securities Eligible for DTC's Same-Day Funds Settlement
-------------------------------------------------------
("SDFS") System.
- ---------------
Other principal payments (redemption payments) shall be made
in same-day funds by Trustee in the manner set forth in the SDFS
Paying Agent Operating Procedures, a copy of which previously has
been furnished to Trustee.
Securities Eligible for DTC's Next-Day Funds Settlement
-------------------------------------------------------
("NDFS") System.
- ---------------
Other principal payments (redemption payments) shall be made
in next-day funds by Trustee to Cede & Co., as nominee of DTC, or
its registered assigns, on each payment date. Such payments shall be made
payable to the order of Cede & Co., and shall be addressed
as follows:
NDFS Redemptions Manager
Reorganization/Redemptions Department
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
10. DTC may direct Issuer or Trustee to use any other number
or address as the number or address to which notices or payments of
interest or principal may be sent.
11. In the event of a redemption, acceleration, or any other
similar transaction (e.g., tender made and accepted in response to
Issuer's or Trustee's invitation) necessitating a reduction in the
C-3
<PAGE>
aggregate principal amount of Securities outstanding or an advance
refunding of part of the Securities outstanding, DTC, in its
discretion: (a) may request Issuer or Trustee to issue and
authenticate a new Security certificate; or (b) may make an
appropriate notation on the Security certificate indicating the
date and amount of such reduction in principal except in the case
of final maturity, in which case the certificate will be presented to
Issuer or Trustee prior to payment, if required.
12. In the event that Issuer determines that beneficial
owners of Securities shall be able to obtain certificated
Securities, Issuer or Trustee shall notify DTC of the availability
of certificates. In such event, Issuer or Trustee shall issue,
transfer, and exchange certificates in appropriate amounts, as
required by DTC and others.
13. DTC may discontinue providing its services as securities
depository with respect to the Securities at any time by giving
reasonable notice to Issuer or Trustee (at which time DTC will
confirm with Issuer or Trustee the aggregate principal amount of
Securities outstanding). Under such circumstances, at DTC's
request Issuer and Trustee shall cooperate fully with DTC by taking
appropriate action to make available one or more separate
certificates evidencing Securities to any DTC Participant having
Securities credited to its DTC accounts.
14. Issuer: (a) understands that DTC has no obligation to,
and will not, communicate to its Participants or to any person
having an interest in the Securities any information contained in
the Security certificate(s); and (b) acknowledges that neither
DTC's Participants nor any person having an interest in the Securities
shall be deemed to have notice of the provisions of the
Security certificates by virtue of submission of such
certificate(s) to DTC.
15. Nothing herein shall be deemed to require Trustee to
advance funds on behalf of Issuer.
C-4
<PAGE>
Notes: Very truly yours,
- -----
A. If there is a Trustee (as defined
in this Letter of Representations), _________________________________
Trustee as well as Issuer must sign (Issuer)
this Letter. If there is no Trustee,
in signing this Letter Issuer itself
undertakes to perform all of the By: _______________________________
obligations set forth herein. (Authorized Officer's Signature)
B. Schedule B contains statements
that DTC believes accurately describe ___________________________________
DTC, the method of effecting book- (Trustee)
entry transfers of securities
distributed through DTC, and certain
related matters. By: ________________________________
(Authorized Officer's Signature)
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By:_________________________________
cc: Underwriter
Underwriter's Counsel
C-5
<PAGE>
SCHEDULE I
----------
(Describe Issue)
CUSIP Principal Amount Maturity Date Interest Rate
- ----- ---------------- ------------- -------------
C-6
<PAGE>
SCHEDULE B
----------
SAMPLE OFFERING DOCUMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
-----------------------------------
(PREPARED BY DTC--BRACKETED MATERIAL MAY BE APPLICABLE ONLY TO CERTAIN
ISSUES)
1. The Depository Trust Company ("DTC"), New York, NY, will
act as securities depository for the securities (the "Securities").
The Securities will be issued as fully-registered securities
registered pin the name of Cede & Co. (DTC's partnership nominee).
One fully-registered Security certificate will be issued for (each
issue of the Securities, (each) in the aggregate principal amount
of such issue, and will be deposited with DTC. (If, however, the
aggregate principal amount of (any) issue exceeds $150 million, one
certificate will be issued with respect to each $150 million of
principal amount and an additional certificate will be issued with
respect to any remaining principal amount of such issue.)
2. DTC is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning
of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities
certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain
other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks, and trust companies
that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect
Participants"). The Rules applicable to DTC and its Participants
are on file with the Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for
the Securities on DTC's records. The ownership interest of each
actual purchaser of each Security ("Beneficial Owner") is in turn
to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of
their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well
as periodic statements of their holdings, from the Direct or
Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests in the
Securities are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership
interests in Securities, except in the event that use of the
book-entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities
deposited by Participants with DTC are registered in the name of
DTC's partnership nominee, Cede & Co. The deposit of Securities
with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Securities; DTC's records reflect only the
identity of the Direct Participants to whose accounts such
Securities are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of
their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants
to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in
effect from time to time.
C-7
<PAGE>
(6. Redemption notices shall be sent to Cede & Co. If less
than all of the Securities within an issue are being redeemed,
DTC's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.)
7. Neither DTC nor Cede & Co. will consent or vote with
respect to Securities. Under its usual procedures, DTC mails an
Omnibus Proxy to the Issuer as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the
Securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
8. Principal and interest payments on the Securities will be
made to DTC. DTC's practice is to credit Direct Participants'
accounts on payable date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payment on payable date. Payments by
Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
Participant and not of DTC, the Agent, or the Issuer, subject to
any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal and interest to DTC is the
responsibility of the Issuer or the Agent, disbursement of such
payments to Direct Participants shall be the responsibility of DTC,
and disbursement of such payments to the Beneficial Owners shall be
the responsibility of Direct and Indirect Participants.
(9. A Beneficial Owner shall give notice to elect to have its
Securities purchased or tendered, through its Participant, to the
(Tender/Remarketing) Agent, and shall effect delivery of such
Securities by causing the Direct Participant to transfer the
Participant's interest in the Securities, on DTC's records, to the
(Tender/Remarketing) Agent. The requirement for physical delivery
of Securities in connection with a demand for purchase or a
mandatory purchase will be deemed satisfied when the ownership rights in
the Securities are transferred by Direct Participants on DTC's records.)
10. DTC may discontinue providing its services as securities
depository with respect to the Securities at any time by giving
reasonable notice to the Issuer or the Agent. Under such
circumstances, in the event that a successor securities depository
is not obtained, Security certificates are required to be printed
and delivered.
11. The Issuer may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities
depository). In that event, Security certificates will be printed
and delivered.
12. The information in this section concerning DTC and DTC's
book-entry system has been obtained from sources that the Issuer
believes to be reliable, but the Issuer takes no responsibility for
the accuracy thereof.
C-8
<PAGE>
EXHIBIT D
FORM OF SERVICER'S CERTIFICATE
D-1
<PAGE>
EXHIBIT E
RECEIVABLE FILES CHECKLIST
E-1
<PAGE>
EXHIBIT F
FORM OF DEPOSITOR'S RECEIVABLE ASSIGNMENT
F-1
<PAGE>
EXHIBIT G
FORM OF SUBSEQUENT TRANSFER ASSIGNMENT
TRANSFER No. ________ OF SUBSEQUENT RECEIVABLES dated as of
______________________, between FINANCIAL ASSET SECURITIES CORP.,
as depositor (the "Depositor"), ______________________, as trustee
(the "Trustee"), ______________________, as servicer, and
______________________, as backup servicer, pursuant to the Pooling
and Servicing Agreement referred to below.
Recitals
WHEREAS the Depositor, the Trustee, the Servicer and the
Backup Servicer are parties to a Pooling and Servicing Agreement
dated as of ___________________ (as amended or supplemented from
time to time, the "Pooling and Servicing Agreement");
WHEREAS pursuant to the Pooling and Servicing Agreement, the
Depositor has agreed to convey the Subsequent Receivables to the
Trust; and
WHEREAS, the Trustee, on behalf of the Certificateholders and
the Trust, is willing to accept such conveyance, and the Servicer
and Backup Servicer are willing to act as servicer and backup
servicer, respectively, of the Subsequent Receivables, subject to
the terms and conditions hereof;
NOW, THEREFORE, the Depositor, the Trustee, the Servicer and
the Backup Servicer hereby agree as follows:
1. Defined Terms. Capitalized terms used herein shall have
-------------
the meanings ascribed to them in the Pooling and Servicing
Agreement unless otherwise defined herein.
"Subsequent Cutoff Date" shall mean, with respect to the
----------------------
Subsequent Receivables conveyed hereby, _________________________.
"Subsequent Transfer Date" shall mean, with respect to the
-------------------------
Subsequent Receivables conveyed hereby, ____________________.
2. Schedule of Receivables. Annexed hereto is a supplement
-----------------------
to Schedule I to the Pooling and Servicing Agreement listing the
Receivables that constitute the Subsequent Receivables to be
conveyed pursuant to this Agreement on the Subsequent Transfer
Date.
3. Conveyance of Subsequent Receivables. In consideration
------------------------------------
of the Trustee's delivery to or upon the order of the Depositor of
$______________________, the Depositor does hereby sell, transfer,
assign, set over and otherwise convey to the Trustee, for the
benefit of the Certificateholders, without recourse (except as
provided in the Pooling and Servicing Agreement), all right, title
and interest of the Depositor in and to (but none of the
obligations of the Depositor with respect to):
(a) the Subsequent Receivables and all moneys received
thereon on or after the Subsequent Cutoff Date plus all related
Payaheads as of the Subsequent Cutoff Date;
(b) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Subsequent Receivables, any
other right to realize upon property securing any Subsequent
Receivable and any other interest of the Depositor in such Financed
Vehicles;
(c) any proceeds with respect to the Subsequent
Receivables from claims on any Insurance Policies relating to the
Financed Vehicles or Obligors;
G-1
<PAGE>
(d) proceeds of any recourse (but none of the
obligations) to Dealers on Subsequent Receivables;
(e) any Financed Vehicle that shall have secured a
Subsequent Receivable and shall have been acquired by or on behalf
of the Depositor, the Trust or the Servicer;
(f) the related Receivable Files; and
(g) the proceeds of any and all of the foregoing.
4. Representations and Warranties of the Depositor. The
-----------------------------------------------
Depositor hereby represents and warrants to the Trustee as of the
date of this Agreement and as of the Subsequent Transfer Date that:
(a) Legal, Valid and Binding Obligation. This Agreement
-----------------------------------
constitutes a legal, valid and binding obligation of the
Depositor, enforceable against the Depositor in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may
be limited by general principles of equity (whether considered in
a suit at law or equity).
(b) Organization and Good Standing. The Depositor has
------------------------------
been duly organized and is validly existing as a corporation
in good standing under the laws of the State of ____________________,
with the power and authority to own its properties and to conduct
its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and
has, the power, authority and legal right to acquire, own, sell,
transfer and assign the Receivables.
(c) Due Qualification. The Depositor is duly qualified
-----------------
to do business as a foreign corporation in good standing, and
has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of its property or the
conduct of its business shall require such qualifications.
(d) Power and Authority. The Depositor has the power
-------------------
and authority to execute and deliver this Agreement and to
carry out its terms; the Depositor has full power and authority to
sell and assign the property sold and assigned to the Trust hereby
and has duly authorized such sale and assignment to the Trust
by all necessary corporate action; and the execution, delivery and
performance of this Agreement has been duly authorized by the
Depositor by all necessary corporate action.
(e) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the fulfillment of the
terms hereof shall not conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Depositor, or any indenture,
agreement or other instrument to which the Depositor is a party or
by which it is bound, or 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), or violate any law or, to the best of the Depositor's
knowledge, any order, rule or regulation applicable to the Depositor
of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties.
(f) No Proceedings. There are no proceedings or
--------------
investigations pending or, to the Depositor's best knowledge,
threatened, before any court, regulatory body, administrative
agency or other governmental instrumentality having jurisdiction
over the Depositor or its properties (i) asserting the invalidity of
this Agreement, (ii) seeking to prevent the
G-2
<PAGE>
consummation of any of the transactions contemplated by this Agreement
or (iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Depositor of its obligations
under, or the validity or enforceability of, this Agreement.
(g) Insolvency. As of the Subsequent Cutoff Date and
----------
the Subsequent Transfer Date, neither the Depositor nor
______________________ is insolvent nor will either of them have been
made insolvent after giving effect to the conveyance set forth
in Section 3 of this Agreement, nor is either of them aware of any
pending insolvency.
(h) Principal Balance. The aggregate Principal Balance
-----------------
of the Subsequent Receivables listed on the supplement to
Schedules I annexed hereto and conveyed to the Trust pursuant this
Agreement as of the Subsequent Cutoff Date is
$______________________.
5. Conditions Precedent. The obligation of the Trust to
--------------------
acquire the Receivables hereunder is subject to the satisfaction,
on or prior to the Subsequent Transfer Date, of the following
conditions precedent:
(a) Representations and Warranties. Each of the
------------------------------
representations and warranties made by the Depositor in
Section 4 of this Agreement and in the Pooling and Servicing
Agreement shall be true and correct as of the date of this
Agreement and as of the Subsequent Transfer Date.
(b) Purchase Agreement Conditions. Each of the
-----------------------------
conditions set forth in the Pooling and Servicing Agreement
applicable to the conveyance of Subsequent Receivables shall have
been satisfied.
(c) Collections. The Depositor shall have deposited to
-----------
the Collection Account all collections in respect of
Subsequent Receivables required to be deposited by the Depositor to
the Collection Account pursuant to the Pooling and Servicing Agreement.
(d) Delivery of Assignment. The Depositor shall have
----------------------
delivered an Assignment substantially in the form of Exhibit
A to the Pooling and Servicing Agreement.
(e) Additional Information. The Depositor shall have
----------------------
delivered to the Trustee such information as was reasonably
requested by the Trustee to satisfy itself as to (i) the accuracy
of the representations and warranties set forth in Section 4 of this
Agreement and the Pooling and Servicing Agreement and (ii) the
satisfaction of the conditions set forth in this Section 5.
6. Ratification of Agreement. As supplemented by this
-------------------------
Agreement, the Pooling and Servicing Agreement is in all respects
ratified and confirmed and the Pooling and Servicing Agreement as
so supplemented by this Agreement shall be read, taken and
construed as one and the same instrument.
7. Counterparts. This Agreement may be executed in two or
------------
more counterparts (and by different parties in separate
counterparts), each of which shall be an original but all of which
together shall constitute one and the same instrument
8. Governing Law. This Subsequent Purchase Agreement shall
-------------
be construed in accordance with the laws of the State of New York,
without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.
G-3
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Trustee, the Servicer
and the Backup Servicer have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers
as of the day and the year first above written.
FINANCIAL ASSET SECURITIES CORP.,
as Depositor
By: _________________________________
Name:
Title:
____________, as Trustee
By: _________________________________
Name:
Title:
____________, as Servicer
By: _________________________________
Name:
Title:
____________, as Backup Servicer
By: _________________________________
Name:
Title:
G-4
<PAGE>
EXHIBIT H
REPRESENTATIONS AND WARRANTIES OF ____________
UNDER SECTION 3.02(B) OF THE RECEIVABLES PURCHASE AGREEMENT
H-1
<PAGE>
Exhibit 4.3
Form of Indenture
INDENTURE
between
FASCO AUTO TRUST 199 - ,
--- ---
as Issuer
and
--------------------------------------------------
as Indenture Trustee
Dated as of , 199
---------------- ---
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Rules of Construction. . . . . . . . . . . . . . . . . . . 9
ARTICLE II
The Notes
SECTION 2.01. Form. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.02. Execution, Authentication and Delivery . . . . . . . . . . 9
SECTION 2.03. Temporary Notes . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.04. Limitations on Transfer of the Notes . . . . . . . . . . . 10
SECTION 2.05. Registration; Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Notes . . . . . . . . 14
SECTION 2.07. Persons Deemed Owner . . . . . . . . . . . . . . . . . . . 15
SECTION 2.08. Payment of Principal and Interest; Defaulted
Interest . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.09. Cancellation . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.10. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE III
Covenants
SECTION 3.01. Payment of Principal and Interest . . . . . . . . . . . . 17
SECTION 3.02. Maintenance of Office or Agency . . . . . . . . . . . . . 17
SECTION 3.03. Money for Payments To Be Held in Trust . . . . . . . . . . 18
SECTION 3.04. Existence . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.05. Protection of Trust Estate . . . . . . . . . . . . . . . . 20
SECTION 3.06. Opinions as to Trust Estate . . . . . . . . . . . . . . . 20
SECTION 3.07. Performance of Obligations; Servicing of
Receivables . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.08. Negative Covenants . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.09. Annual Statement as to Compliance . . . . . . . . . . . . 24
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain
Terms . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.11. Successor or Transferee . . . . . . . . . . . . . . . . . 26
SECTION 3.12. No Other Business . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.13. No Borrowing . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.14. Servicer's Obligations . . . . . . . . . . . . . . . . . . 26
SECTION 3.15. Guarantees, Loans, Advances and Other
Liabilities . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.16. Capital Expenditures . . . . . . . . . . . . . . . . . . . 26
SECTION 3.17. Removal of Administrator . . . . . . . . . . . . . . . . . 26
SECTION 3.18. Restricted Payments . . . . . . . . . . . . . . . . . . . 27
SECTION 3.19. Notice of Events of Default . . . . . . . . . . . . . . . 27
SECTION 3.20. Further Instruments and Acts . . . . . . . . . . . . . . . 27
i
<PAGE>
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01. Satisfaction and Discharge of Indenture . . . . . . . . . 27
SECTION 4.02. Application of Trust Money . . . . . . . . . . . . . . . . 28
SECTION 4.03. Repayment of Moneys Held by Paying Agent . . . . . . . . . 29
ARTICLE V
Remedies
SECTION 5.01. Events of Default . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. . . . . . . . . . . 31
SECTION 5.04. Remedies; Priorities . . . . . . . . . . . . . . . . . . . 33
SECTION 5.05. Optional Preservation of the Receivables . . . . . . . . . 35
SECTION 5.06. Limitation of Suits . . . . . . . . . . . . . . . . . . . 35
SECTION 5.07. Unconditional Rights of Noteholders To Receive
Principal and Interest. . . . . . . . . . . . . . . . 36
SECTION 5.08. Restoration of Rights and Remedies . . . . . . . . . . . . 36
SECTION 5.09. Rights and Remedies Cumulative . . . . . . . . . . . . . . 37
SECTION 5.10. Delay or Omission Not a Waiver . . . . . . . . . . . . . . 37
SECTION 5.11. Control by Noteholders . . . . . . . . . . . . . . . . . . 37
SECTION 5.12. Waiver of Past Defaults . . . . . . . . . . . . . . . . . 38
SECTION 5.13. Undertaking for Costs . . . . . . . . . . . . . . . . . . 38
SECTION 5.14. Waiver of Stay or Extension Laws . . . . . . . . . . . . . 38
SECTION 5.15. Action on Notes . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.16. Performance and Enforcement of Certain
Obligations . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VI
The Indenture Trustee
SECTION 6.01. Duties of Indenture Trustee . . . . . . . . . . . . . . . 40
SECTION 6.02. Rights of Indenture Trustee . . . . . . . . . . . . . . . 41
SECTION 6.03. Individual Rights of Indenture Trustee . . . . . . . . . . 41
SECTION 6.04. Indenture Trustee's Disclaimer . . . . . . . . . . . . . . 42
SECTION 6.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.06. Reports by Indenture Trustee to Holders . . . . . . . . . 42
SECTION 6.07. Compensation and Indemnity . . . . . . . . . . . . . . . . 42
SECTION 6.08. Replacement of Indenture Trustee . . . . . . . . . . . . . 43
SECTION 6.09. Successor Indenture Trustee by Merger . . . . . . . . . . 44
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee. . . . . . . . . . . . . . . . . . 45
SECTION 6.11. Eligibility; Disqualification . . . . . . . . . . . . . . 46
ii
<PAGE>
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders. . . . . . . . . . . . . . . 46
SECTION 7.02. Preservation of Information; Communications to
Noteholders . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.01. Collection of Money . . . . . . . . . . . . . . . . . . . 47
SECTION 8.02. Trust Accounts . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.03. General Provisions Regarding Accounts . . . . . . . . . . 48
SECTION 8.04. Release of Trust Estate . . . . . . . . . . . . . . . . . 49
SECTION 8.05. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 49
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.02. Supplemental Indentures with Consent of
Noteholders . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.03. Execution of Supplemental Indentures . . . . . . . . . . . 52
SECTION 9.04. Effect of Supplemental Indenture . . . . . . . . . . . . . 53
SECTION 9.05. Reference in Notes to Supplemental Indentures . . . . . . 53
ARTICLE X
Redemption of Notes
SECTION 10.01. Redemption . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.02. Form of Redemption Notice . . . . . . . . . . . . . . 54
SECTION 10.03. Notes Payable on Redemption Date . . . . . . . . . . 54
ARTICLE XI
Miscellaneous
SECTION 11.01. Compliance Certificates and Opinions, etc . . . . . . 55
SECTION 11.02. Form of Documents Delivered to Indenture
Trustee . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.03. Acts of Noteholders . . . . . . . . . . . . . . . . . 56
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer
and Rating Agencies . . . . . . . . . . . . . . 57
SECTION 11.05. Notices to Noteholders; Waiver . . . . . . . . . . . 58
SECTION 11.06. Alternate Payment and Notice Provisions . . . . . . . 58
SECTION 11.07. (Reserved) . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.08. Effect of Headings and Table of Contents . . . . . . 58
SECTION 11.09. Successors and Assigns . . . . . . . . . . . . . . . 59
SECTION 11.10. Separability . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.11. Benefits of Indenture . . . . . . . . . . . . . . . . 59
iii
<PAGE>
SECTION 11.12. Legal Holidays . . . . . . . . . . . . . . . . . . . 59
SECTION 11.13. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.14. Counterparts . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.15. Recording of Indenture . . . . . . . . . . . . . . . 59
SECTION 11.16. Trust Obligation . . . . . . . . . . . . . . . . . . 60
SECTION 11.17. No Petition . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.18. Inspection . . . . . . . . . . . . . . . . . . . . . 60
SCHEDULE I Schedule of Receivables
EXHIBIT A - 1 Form of Class A-1 Note
EXHIBIT A - 2 Form of Class A-2 Note
EXHIBIT B (Reserved)
EXHIBIT C Transferor Certificate
EXHIBIT D Investment Letter
EXHIBIT E Form of Depository Agreement
iv
<PAGE>
INDENTURE dated as of ___________________________, 199__, between
FASCO AUTO TRUST 199__-__, a Delaware business trust (the "Issuer"), and
_________________________________, a ____________________________ banking
corporation, as trustee (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
% Asset Backed Notes (the "Class A-1 Notes") and Class A-2
___
- ------------
____________
% Asset Backed Notes (the "Class A-2 Notes" and, together with the
_______
Class A-1 Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing
Date, as Indenture Trustee for the benefit of the Holders of the Notes,
all of the Issuer's right, title and interest in and to (but none of the
obligations with respect to) (a) the Receivables and all moneys received
thereon on or after the Cutoff Date plus all Payaheads as of the Cutoff
Date; (b) the security interests in the Financed Vehicles granted by
Obligors pursuant to such Receivables, any other right to realize upon
property securing a Receivable, and any other interest of the Issuer in
such Financed Vehicles including the Issuer's right, title and interest in
the lien on the Financed Vehicles held in the name of the Depositor's
agents, __________________________; (c) any proceeds with respect to the
Receivables from claims on any Insurance Policies relating to the Financed
Vehicles or Obligors; (d) proceeds of any recourse (but none of the
obligations) to Dealers on Receivables; (e) any Financed Vehicle that
shall have secured a Receivable and that shall have been acquired by or on
behalf of the Seller, the Depositor, the Servicer, or the Issuer; (f) the
Receivables Files; (g) the Trust Accounts; (h) the Sale and Servicing
Agreement and the Receivables Purchase Agreement, including the right of
the Issuer to cause ___________ to purchase Receivables under certain
circumstances; and (i) all present and future claims, demands, causes of
action 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 thereof, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and
every kind, and other forms of obligations, and receivables, instruments
and other property that at any time constitute all or part of, or are
included in the proceeds of, any of the foregoing (collectively, the
"Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of,
the Notes, equally and ratably without prejudice,
<PAGE>
priority or distinction, and to secure compliance with 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, accepts the trusts under this
Indenture in accordance with the provisions of this Indenture and agrees
to perform its duties required in this Indenture to the best of its
ability to the end that the interests of the Holders of the Notes may be
adequately and effectively protected.
ARTICLE I
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions. (a) Except as otherwise specified
-----------
herein or as the context may otherwise require, the following terms have
the respective meanings set forth below for all purposes of this
Indenture.
"Act" has the meaning specified in Section 11.03(a).
---
"Administration Agreement" means the Administration Agreement dated
------------------------
as of _______________________, 199__, among the Administrator, the Issuer
and the Indenture Trustee.
"Administrator" means _______________________, a ____________
-------------
corporation, or any successor Administrator under the Administration
Agreement.
"Affiliate" means, with respect to any specified Person, any other
---------
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer
------------------
of the Owner Trustee who is authorized to act for the Owner Trustee in
matters relating to the Issuer and who is identified on the list of
Authorized Officers delivered by the Owner Trustee to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented
from time to time thereafter) and, so long as the Administration Agreement
is in effect, any Vice President or more senior officer of the
Administrator who is authorized to act for the Administrator in matters
relating to the Issuer and to be acted upon by the Administrator pursuant
to the Administration Agreement and who is identified on the list of
Authorized Officers delivered by the Administrator to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented
from time to time thereafter).
2
<PAGE>
"Basic Documents" means the Certificate of Trust, the Trust
---------------
Agreement, the Sale and Servicing Agreement, the Receivables Purchase
Agreement, the Administration Agreement, and other documents and
certificates delivered in connection therewith.
"Business Day" means any day other than a Saturday, a Sunday or a day
------------
on which banking institutions or trust companies in the cities of
New York, New York, ____________________ or ___________________ are
authorized or obligated by law, regulation or executive order to remain
closed.
"Certificate of Trust" means the certificate of trust of the Issuer
--------------------
substantially in the form of Exhibit B to the Trust Agreement.
"Class A-1 Interest Rate" means ______________% per annum (computed
-----------------------
on the basis of a 360-day year consisting of twelve 30-day months).
"Class A-1 Notes" means the Class A-1 ______________% Asset Backed
---------------
Notes, substantially in the form of Exhibit A-1.
"Class A-2 Interest Rate" means ______________% per annum (computed
-----------------------
on the basis of a 360 day year consisting of twelve 30-day months).
"Class A-2 Notes" means the Class A-2 ______________% Asset Backed
---------------
Notes, substantially in the form of Exhibit A-2.
"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.
"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 at the date of execution of this Agreement
is located at ___________________, ____________________; Attention:
______________________________ _________________________, 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
3
<PAGE>
office of any successor Indenture Trustee at the address designated by
such successor Indenture Trustee by notice to 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.
"Depositor" means Financial Asset Securities Corp., a Delaware
---------
corporation, and any successor in interest.
"Depository Agreement" means the agreement dated _______________, 199__,
--------------------
among the Issuer, the Trustee, and The Depository Trust Company, as the
initial Clearing Agency, substantially in the form of Exhibit E.
"Event of Default" has the meaning specified in Section 5.01.
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Executive Officer" means, with respect to any corporation, the Chief
-----------------
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary, or
the Treasurer of such corporation; and with respect to any partnership,
any general partner thereof.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
-----
remise, release, convey, assign, transfer, create, and grant a lien upon
and a security interest in and a right of set-off against, deposit, set
over, and confirm pursuant to this Indenture. A Grant of the Collateral
or of any other agreement or instrument shall include all rights, powers
and options (but none of the obligations) of the granting party
thereunder, including the immediate and continuing right to claim for,
collect, receive and give receipt for principal and interest payments in
respect of the Collateral and all other moneys payable thereunder, to give
and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring Proceedings in
the name of the granting party or otherwise, and generally to do and
receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
------ ----------
registered on the Note Register.
"Indenture Trustee" means __________________, a ___________ banking
-----------------
corporation, solely as trustee under this Indenture and not in its
individual capacity, 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 on the Notes, the Depositor and any Affiliate
4
<PAGE>
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 11.01, made by an Independent appraiser or other expert appointed
by an Issuer Order and approved by the Indenture Trustee in the exercise
of reasonable care, and such opinion or certificate shall state that the
signer has read the definition of "Independent" in this Indenture and that
the signer is Independent within the meaning thereof.
"Interest Rate" means the Class A-1 Interest Rate and the Class A-2
-------------
Interest Rate.
"Issuer" means FASCO Auto Trust 199___-___ until a successor replaces
------
it and, thereafter, means the successor and, for purposes of any provision
contained herein and required by the TIA, each other obligor on the Notes.
"Issuer Order" or "Issuer Request" means a written order or request
------------ --------------
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Note" means a Class A-1 Note or a Class A-2 Note.
----
"Note Owner" means, with respect to any Note held in book-entry form,
----------
the Person who is the beneficial owner of such Note, as reflected on the
books of the 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 2.05.
"Officer's Certificate" means a certificate signed by any Authorized
---------------------
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and
delivered to the Indenture Trustee. Unless otherwise specified, any
reference in this Indenture to an Officer's Certificate shall be to an
Officer's Certificate of any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel
------------------
who may, except as otherwise expressly provided in this Indenture, be an
employee of or counsel to the Issuer and who shall be satisfactory to the
Indenture Trustee, which opinion or opinions shall be addressed to the
Indenture Trustee as Indenture
5
<PAGE>
Trustee, shall comply with any applicable requirements of Section 11.01
and shall be in form and substance satisfactory to the Indenture Trustee.
"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 with the Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision for
such notice has been made, satisfactory to the Indenture Trustee); and
(iii) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided, that in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or under any
Basic Document, Notes owned by the Issuer, any other obligor 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 a Responsible Officer of the Indenture Trustee
actually knows to be so owned shall be so disregarded. Notes so owned
that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee
is not the Issuer, any other obligor 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 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 Trust Agreement, or any
successor Owner Trustee under the Trust Agreement.
"Paying Agent" means the Indenture Trustee or any other Person that
------------
meets the eligibility standards for the Indenture
6
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Trustee specified in Section 6.11 and is authorized by the Issuer to make
payments to and distributions from the Collection Account and the Note
Distribution Account, including payments of principal of or interest on
the Notes on behalf of the Issuer.
"Payment Date" means a Distribution Date.
------------
"Person" means any individual, corporation, estate, partnership,
------
joint venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization, or government or any
agency or political subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
----------------
previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this
definition, any Note authenticated and delivered under Section 2.06 in
lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other
----------
judicial or administrative proceeding.
"Rating Agency Condition" means, with respect to any action, that the
-----------------------
Rating Agency shall have been given 10 days (or such shorter period as is
acceptable to the Rating Agency) prior notice thereof and that the Rating
Agency shall 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.
"Receivables Purchase Agreement" means the Receivables Purchase
------------------------------
Agreement dated as of _______________________, 199___, among
___________________, as seller, and ______________________, as purchaser.
"Record Date" means, with respect to a Distribution Date or
-----------
Redemption Date, the close of business on the last day of the preceding
month.
"Redemption Date" means in the case of a redemption of the Notes
---------------
pursuant to Section 10.01(a) or a payment to Noteholders pursuant to
Section 10.01(b), the Distribution Date specified by the Servicer or the
Issuer pursuant to Section 10.01(a) or (b), as applicable.
"Redemption Price" means in the case of a redemption of the Notes
----------------
pursuant to Section 10.01(a), an amount equal to the unpaid principal
amount of the Notes redeemed plus accrued and unpaid interest thereon to
and including the last day of the month preceding the month of such
Redemption Date at the weighted average of the Interest Rates for each
Class of Notes being so redeemed or (b) in the case of a payment made to
Noteholders pursuant to Section 10.01(b), the amount on deposit in the
Note
7
<PAGE>
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 ______________________ of the Indenture Trustee,
including any Vice President, Assistant Vice President, Assistant
Treasurer, Assistant Secretary, Managing Director or any other officer of
the Indenture Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
----------------------------
dated as of __________________, 199___, among the Issuer, ________________,
the Back-up Servicer and ______.
"Schedule of Receivables" means the list of the Receivables set forth
-----------------------
in Schedule I (which Schedule may be in the form of microfiche).
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Seller" means __________________, in its capacity as seller under
------
the Receivables Purchase Agreement, and its successor in interest.
"Servicer" means _________ in its capacity as servicer under the Sale
--------
and Servicing Agreement, and any Successor Servicer thereunder.
"State" means any one of the 50 States of the United States of
-----
America or the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.07(e).
------------------
"TIA" means the Trust Indenture Act of 1939, as amended.
---
"Trust Estate" means all money, instruments, chattel paper, general
------------
intangibles, rights and other property that are subject or intended to be
subject to the lien and security interest of this Indenture for the
benefit of the Noteholders (including, without limitation, all property
and interests Granted to the Indenture Trustee), including all proceeds
thereof.
"UCC" means, unless the context otherwise requires, the Uniform
---
Commercial Code, as in effect in the relevant jurisdiction, as amended
from time to time.
8
<PAGE>
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used but not otherwise defined herein
have the respective meanings set forth in the Sale and Servicing Agreement
for all purposes of this Indenture.
SECTION 1.02. Rules of Construction. Unless the context
----------------------
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular; and
(vi) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to time
amended, modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
ARTICLE II
The Notes
---------
SECTION 2.01. Form. The Class A-1 Notes and the Class A-2 Notes,
-----
in each case together with the Indenture Trustee's certificate of
authentication, shall be in substantially the form set forth in
Exhibit A-1 and Exhibit A-2, respectively, with such appropriate
insertions, omissions, substitutions and other variations as are required
or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed
thereon as may, consistently herewith, be determined by the officers
executing 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.
Each Note shall be dated the date of its authentication. The terms
of the Notes set forth in Exhibit A-1 and Exhibit A-2 are part of the
terms of this Indenture.
SECTION 2.02. Execution, Authentication and Delivery. The Notes
--------------------------------------
shall be executed on behalf of the Issuer by any of its
9
<PAGE>
Authorized Officers. The signature of any such Authorized Officer on the
Notes may be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Notes.
The Indenture Trustee shall upon its receipt of an Issuer Order
authenticate and deliver Class A-1 Notes for original issue in an
aggregate principal amount of $____________________________ and Class A-2
Notes for original issue in an aggregate principal amount of $____________.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of
($100,000) and in integral multiples of ($1,000) in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
SECTION 2.03. Temporary Notes. Pending the preparation of
---------------
definitive Notes, the Issuer may execute, and upon receipt of an Issuer
Order the Indenture Trustee shall authenticate and deliver, temporary
Notes that are printed, lithographed, typewritten, mimeographed, or
otherwise produced, of the tenor of the definitive Notes in lieu of which
they are issued and with such variations not inconsistent with the terms
of this Indenture as the officers executing such Notes may determine, as
evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer shall cause definitive
Notes to be prepared without unreasonable delay. After the preparation of
definitive Notes, the temporary Notes shall be exchangeable for definitive
Notes upon surrender of the temporary Notes at the office or agency of the
Issuer to be maintained as provided in Section 3.02, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Notes, the Issuer shall execute, and the Indenture Trustee shall
authenticate and deliver in exchange therefor, a like principal amount of
definitive Notes of authorized denominations. Until so exchanged, the
temporary Notes shall in all respects be entitled to the same benefits
under this Indenture as definitive Notes.
SECTION 2.04. Limitations on Transfer of the Notes. The Notes
------------------------------------
have not been and will not be registered under the
10
<PAGE>
Securities Act and will not be listed on any exchange. No transfer of a
Note shall be made unless such transfer is made pursuant to an effective
registration statement under the Securities Act and any applicable state
securities laws or is exempt from the registration requirements under said
Act and such state securities laws. In the event that a transfer is to be
made in reliance upon an exemption from the Securities Act and state
securities laws, in order to assure compliance with the Securities Act and
such laws, the Holder desiring to effect such transfer and such Holder's
prospective transferee shall each certify to the Indenture Trustee and the
Issuer in writing the facts surrounding the transfer in substantially the
forms set forth in Exhibit C (the "Transferor Certificate") and Exhibit D
(the "Investment Letter"). Except in the case of a transfer as to which
the proposed transferee has confirmed that it is a "qualified
institutional buyer" as provided in Section 2(b) of the Investment Letter,
there shall also be delivered to the Indenture Trustee an opinion of
counsel that such transfer may be made pursuant to an exemption from the
Securities Act and state securities laws, which opinion of counsel shall
not be an expense of the Trust, the Owner Trustee or the Indenture Trustee
(unless it is the transferee from whom such opinion is to be obtained) or
of the Depositor or _______; provided that such opinion of counsel in
respect of the applicable state securities laws may be a memorandum of law
rather than an opinion if such counsel is not licensed in the applicable
jurisdiction. The Depositor shall provide to any Holder of a Note and any
prospective transferee designated by any such Holder information regarding
the Notes and the Receivables and such other information as shall be
necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for transfer of any such Note without registration thereof
under the Securities Act pursuant to the registration exemption provided
by Rule 144A. Each Holder of a Note desiring to effect such a transfer
shall, and does hereby agree to, indemnify the Issuer, the Owner Trustee,
the Indenture Trustee and the Depositor against any liability that may
result if the transfer is not so exempt or is not made in accordance with
federal and state securities laws.
If an election is made to hold a Note in book-entry form, the Note
shall be registered in the name of a nominee designated by the Clearing
Agency (and may be aggregated as to denominations with other Notes held by
the Clearing Agency). With respect to Notes held in book-entry form:
(i) the Note Registrar and the Trustee will 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;
(ii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this
Section shall control;
11
<PAGE>
(iii) the rights of Note Owners will be exercised only through
the Clearing Agency and will 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;
(vi) 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 will 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 Trustee; and
(iv) without the consent of the Issuer and the Trustee, no such
Note may be transferred by the Depository except to a successor Depository
that agrees to hold such Note for the account of the Owners or except upon
the election of the Owner thereof or a subsequent transferee to hold such
Note in physical form.
Neither the Trustee nor the Registrar shall have any responsibility to
monitor or restrict the transfer of beneficial ownership in any Note an
interest in which is transferable through the facilities of the
Depository.
If (i) the Administrator advises the Indenture Trustee in writing
that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities with respect to the Notes held in book-entry
form and the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Indenture
Trustee in writing that it elects to terminate the book-entry system
through the Clearing Agency or (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
such Notes advise the Clearing Agency in writing that the continuation of
a book-entry system through the Clearing Agency is no longer in the best
interests of such Note Owners, then the Clearing Agency shall notify all
Note Owners and the Indenture Trustee of the occurrence of any such event
and of the availability of definitive Notes to Note Owners requesting the
same. Upon surrender to the Indenture Trustee of the typewritten Notes
representing the Notes held in book-entry form by the Clearing Agency,
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate the definitive Notes in accordance
with the instructions of the Clearing Agency. None of the Issuer, the
Note Registrar or the Indenture Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of
12
<PAGE>
definitive Notes, the Indenture Trustee shall recognize the Holders of the
definitive Notes as Noteholders.
The Issuer shall cause each Note to contain a legend stating that
transfer of the Notes is subject to certain restrictions and referring
prospective purchasers of the Notes to this Section 2.4 with respect to
such restrictions.
SECTION 2.05. Registration; Registration of Transfer and Exchange.
---------------------------------------------------
The Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe and the
restrictions on transfers of the Notes set forth herein, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee initially shall be the "Note Registrar" for
the purpose of registering Notes and transfers of Notes as herein
provided. Upon any resignation of any Note Registrar, the Issuer shall
promptly appoint a successor or, if it elects not to make such an
appointment, assume the duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, the Issuer will give the Indenture Trustee
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.
Subject to the limitations on transfer set forth herein, upon
surrender for registration of transfer of any Note at the office or agency
of the Issuer to be maintained as provided in Section 3.02, if the
requirements of Section 8-401(1) of the UCC are met, the Issuer shall
execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes of the same Class in any
authorized denominations, of a like aggregate principal amount.
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 shall 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
13
<PAGE>
this Indenture, as the Notes surrendered upon such registration of
transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the Holder thereof or such Holder's attorney duly authorized
in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities
Transfer Agent's Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Note Registrar in addition
to, or in substitution for, STAMP, all in accordance with the Exchange
Act.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 2.03 or 9.05 not involving
any transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make, and the Note Registrar need not register,
transfers or exchanges of Notes selected for redemption or of any Note for
a period of 15 days preceding the due date for any payment with respect to
the Note.
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Notes. If
------------------------------------------
(i) any mutilated Note is surrendered to the Indenture Trustee, or the
Indenture Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, and (ii) there is delivered to the
Indenture Trustee such security or indemnity as may be required by it to
hold the Issuer and the Indenture Trustee harmless, then, in the absence
of written 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 written request the Indenture Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note 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
14
<PAGE>
such replacement Note (or such payment) from the Person to whom it was
delivered or any Person taking such replacement Note from such Person to
whom such replacement Note was delivered or any assignee of such Person,
except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage,
cost or expense incurred by the Issuer or the Indenture Trustee in
connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including
the fees and expenses of the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not
the mutilated, destroyed, lost or stolen Note shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.07. Persons Deemed 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 on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and none of the Issuer, the Indenture
Trustee or any agent of the Issuer or the Indenture Trustee shall be
affected by notice to the contrary.
SECTION 2.08. Payment of Principal and Interest; Defaulted
--------------------------------------------
Interest. (a) The Class A-1 Notes and the Class A-2 Notes shall accrue
- --------
interest at the Class A-1 Interest Rate and the Class A-2 Interest Rate
respectively, as set forth in Exhibits A-1 and A-2, respectively, and such
interest shall be payable on each Distribution Date as specified therein,
subject to Section 3.01. Any installment of interest or principal payable
on a Note that is punctually paid or duly provided for by the Issuer on
the applicable Distribution Date shall be paid to the Person in whose name
such Note (or one or more Predecessor Notes) is registered on the Record
Date by check mailed first-class postage prepaid to such Person's address
as it appears on the Note Register on such Record Date, except that (i)
upon written request of a Noteholder to the Paying Agent not later
15
<PAGE>
than the Record Date prior to the related Distribution Date or (ii) if the
registered Noteholder is the nominee of the Clearing Agency, payment will
be made by wire transfer in immediately available funds to the account
designated by such Holder and except for the final installment of
principal payable with respect to such Note on a Distribution Date or on
the Class A-1 Final Scheduled Distribution Date or Class A-2 Final
Scheduled Distribution Date, as applicable, which shall be payable as
provided below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on
each Distribution Date as provided in the forms of the Notes set forth in
Exhibit A-1 and Exhibit A-2. 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 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. All principal payments on each Class of
Notes shall be made pro rata to the Noteholders of such Class entitled
thereto. The Indenture Trustee shall notify the Person in whose name a
Note is registered at the close of business on the Record Date preceding
the Distribution 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 or transmitted by facsimile prior to such final
Distribution 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 10.02.
(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) at the applicable Interest Rate 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 15 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 2.09. 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
16
<PAGE>
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 and such Issuer Order is timely and the Notes
have not been previously disposed of by the Indenture Trustee.
SECTION 2.10. Tax Treatment. The Issuer has entered into this
-------------
Indenture, and the Notes will be issued, with the intention that, for
federal, state and local income, single business and franchise tax
purposes, the Notes will qualify as indebtedness of the Issuer secured by
the Trust Estate. The Issuer, by entering into this Indenture, and each
Noteholder, by its acceptance of a Note (and each Note Owner by its
acceptance of a beneficial interest in a Note held in book-entry form),
agree to treat the Notes for federal, state and local income, single
business and franchise tax purposes as indebtedness of the Issuer.
ARTICLE III
Covenants
---------
SECTION 3.01. 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, subject to Section 8.02(c), the Issuer
will cause to be distributed all amounts on deposit in the Note
Distribution Account on a Distribution Date deposited therein pursuant to
the Sale and Servicing Agreement (i) for the benefit of the Class A-1
Notes, to the Class A-1 Noteholders and (ii) for the benefit of the
Class A-2 Notes, to the Class A-2 Noteholders. 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 3.02. Maintenance of Office or Agency. The Issuer will
-------------------------------
maintain in the Borough of Manhattan, The City of New York, an office or
agency where Notes may be surrendered for registration of transfer or
exchange, and where notices and demands to or upon the Issuer in respect
of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the Indenture Trustee 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
17
<PAGE>
Issuer shall fail to maintain any such office or agency or shall fail to
furnish the Indenture Trustee with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust Office,
and the Issuer hereby appoints the Indenture Trustee as its agent to
receive all such surrenders, notices and demands.
SECTION 3.03. Money for Payments To Be Held in Trust. 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.
On or before the Business Day preceding each Distribution 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 all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein
provided;
(ii) give the Indenture Trustee written notice of any default by
the Issuer (or any other obligor upon the Notes) of which it has actual
knowledge in the making of any payment required to be made with respect to
the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet
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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 trusts as those upon which the sums were
held by such Paying Agent; and upon such payment by any Paying Agent to
the Indenture Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any
money held by the Indenture Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Note and remaining unclaimed
for two years after such amount has become due and payable shall be
discharged from such trust and be paid 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, shall
at the expense and written direction of the Issuer cause to be published
once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of
New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will
be repaid to the Issuer. The Indenture Trustee shall also adopt and
employ, at the expense and written direction of the Issuer, any other
reasonable means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to Holders whose Notes have
been called but have not been surrendered for redemption or whose right to
or interest in moneys due and payable but not claimed is determinable from
the records of the Indenture Trustee or of any Paying Agent, at the last
address of record for each such Holder).
SECTION 3.04. Existence. The Issuer will keep in full effect its
---------
existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless 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,
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rights and franchises under the laws of such other jurisdiction) and will
obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the
validity and enforceability of this Indenture, the Notes, the Collateral
and each other instrument or agreement included in the Trust Estate.
SECTION 3.05. Protection of Trust Estate. The Issuer will from
--------------------------
time to time execute and deliver all such supplements and amendments
hereto and all such financing statements, continuation statements,
instruments of further assurance and other instruments, and will take such
other action necessary or advisable to:
(i) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee and the Noteholders in such Trust Estate
against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and attorney-in-
fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 3.05.
SECTION 3.06. Opinions as to Trust Estate. (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 any other requisite documents, and
with respect to the execution and filing of any financing statements and
continuation statements, as are necessary to perfect and make effective
the lien and security interest of this Indenture and reciting the details
of such action, or stating that, in the opinion of such counsel, no such
action is necessary to make such lien and security interest effective.
(b) On or before ____________________ 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
20
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this Indenture and reciting the details of such action, or stating that in
the opinion of such counsel no such action is necessary to maintain such
lien and security interest. Such Opinion of Counsel shall also describe
the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation
statements that will, in the opinion of such counsel, be required to
maintain the lien and security interest of this Indenture until
_______________ in the following calendar year.
SECTION 3.07. Performance of Obligations; Servicing of
----------------------------------------
Receivables. (a) The Issuer will not take any action and will use its
- -----------
best efforts not to permit any action to be taken by others that would
release any Person from any of such Person's material covenants or
obligations under any instrument or agreement included in the Trust Estate
or that would result in the amendment, hypothecation, subordination,
termination or discharge of, or impair the validity or effectiveness of,
any such instrument or agreement, except as expressly provided in this
Indenture, the Sale and Servicing Agreement or such other instrument or
agreement.
(b) The Issuer may contract with other Persons 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 Officer's
Certificate of the Issuer shall be deemed to be action taken by the
Issuer. Initially, the Issuer has contracted with the Servicer and the
Administrator to assist the Issuer in performing its duties under this
Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic
Documents and in the instruments and agreements included in the Trust
Estate, including but not limited to filing or causing to be filed all UCC
financing statements and continuation statements required to be filed by
the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and
therein. Except as otherwise expressly provided therein, the Issuer shall
not waive, amend, modify, supplement or terminate any Basic Document or
any provision thereof without the consent of the 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 Sale 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
the Sale and Servicing Agreement with respect to the Receivables, the
Issuer shall take all reasonable steps available to it to remedy such
failure.
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(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 8.01 of the Sale 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.
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
Sale 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 $50,000,000 and whose regular business
includes the servicing of Contracts and (ii) enter into a servicing
agreement with the Issuer having substantially the same provisions as the
provisions of the Sale 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 Sale and Servicing Agreement, and in accordance
with Section 8.02 of the Sale 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 individual capacity 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.
(f) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee in writing. 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
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agrees (i) that it will not, without the prior written consent of the
Indenture Trustee or the Holders of at least a majority in Outstanding
Amount of the Notes, amend, modify, waive, supplement, terminate or
surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms of any Collateral (except
to the extent otherwise provided in the Sale and Servicing Agreement) or
the Basic Documents, or waive timely performance or observance by the
Servicer or the Depositor under the Sale and Servicing Agreement; and (ii)
that any such amendment shall not (A) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, distributions that are
required to be made for the benefit of the Noteholders or (B) reduce the
aforesaid percentage of the Notes that is required to consent to any such
amendment, without the consent of the Holders of all 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 deem necessary or appropriate in the circumstances.
SECTION 3.08. Negative Covenants. So long as any Notes are
------------------
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or the Sale
and Servicing Agreement, sell, transfer, exchange or otherwise dispose of any
of the properties or assets of the Issuer, including those included in
the Trust Estate, unless directed to do so by the 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 such payments under the Code) or assert any claim
against any present or former Noteholder by reason of the payment of the
taxes levied or assessed upon any part of the Trust Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person
to be released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (B) permit
any lien, charge, excise, claim, security interest, mortgage or other
encumbrance (other than the lien of this Indenture) to be created on
or extend to or otherwise arise upon or burden the Trust Estate or any part
thereof or any interest therein or the proceeds thereof (other than tax
liens, mechanics' liens and other liens that arise by operation of law, in
each case on any of the Financed Vehicles and arising solely as a result of
an action or omission of the related Obligor) or (C) permit the lien of this
Indenture not to constitute a valid first
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priority (other than with respect to any such tax, mechanics' or
other lien) security interest in the Trust Estate.
SECTION 3.09. Annual Statement as to Compliance. The Issuer will
---------------------------------
deliver to the Indenture Trustee, within 120 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year 199___), an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year
and of its performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a default
in its compliance with any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
---------------------------------------------------
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any State and
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, 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 Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
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(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating
to such transaction have been complied with (including any filing required
by the Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person,
unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which is
hereby restricted (A) shall be a United States citizen or a Person organized
and existing under the laws of the United States of America or any State,
(B) expressly assumes, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, 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, and (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;
(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 Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; 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
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such transaction have been complied with (including any filing
required by the Exchange Act).
SECTION 3.11. Successor or Transferee. (a) Upon any
-----------------------
consolidation or merger of the Issuer in accordance with Section 3.10(a),
the Person formed by or surviving such consolidation or merger (if other
than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with
the same effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties
of the Issuer pursuant to Section 3.10(b), FASCO Auto Trust 199___-___
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 of written notice to the Indenture Trustee
stating that FASCO Auto Trust 199___-___ is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in
-----------------
any business other than financing, purchasing, owning, selling and
managing the Receivables in the manner contemplated by this Indenture and
the Basic Documents and 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 4.09, 4.10, 4.11 and Article IX of the
Sale and Servicing Agreement.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities.
-------------------------------------------------
Except as contemplated by the Sale and Servicing Agreement or this
Indenture, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability
of so doing or otherwise), endorse or otherwise become contingently
liable, directly or indirectly, in connection with the obligations, stocks
or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or
any other interest in, or make any capital contribution to, any 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, (x) distributions to the
Servicer, the Owner Trustee and the Certificateholders as contemplated by,
and to the extent funds are available for such purpose under, the Sale and
Servicing Agreement or the Trust Agreement and (y) payments to the
Indenture Trustee pursuant to Section 1(a)(ii) of the Administration
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 shall give
---------------------------
the Indenture Trustee and the Rating Agencies prompt written notice of
each Event of Default hereunder and each default on the part of the
Servicer of its obligations under the Sale and Servicing 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 4.01. Satisfaction and Discharge of Indenture. This Indenture
---------------------------------------
shall cease to be of further effect with respect to the Notes except as to
(i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon,
(iv) Sections 3.03, 3.04, 3.05, 3.08, 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 6.07 and the obligations
of the Indenture Trustee under Section 4.02) and (vi) the rights of
Noteholders as beneficiaries hereof with respect to the property so
deposited with the Indenture Trustee payable to all or any of them, and
the Indenture Trustee, on demand of and at the expense of the Issuer,
shall execute proper
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instruments acknowledging satisfaction and discharge of this Indenture
with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.06 and (ii) Notes for 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 3.03) have been delivered to the Indenture
Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
a. have become due and payable,
b. are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of notice
of redemption by the Indenture Trustee in the name, and at the expense, of
the Issuer,
and the Issuer, in the case of a. or b. 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 to the applicable final
scheduled Distribution Date or Redemption Date, 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
Officer's Certificate, an Opinion of Counsel and (if required by the
Indenture Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.01(a)
and, subject to Section 11.02, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
SECTION 4.02. Application of Trust Money. All moneys deposited
--------------------------
with the Indenture Trustee pursuant to Section 4.01 hereof shall be held
in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through any Paying
Agent, as the
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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 Sale and Servicing
Agreement or required by law.
SECTION 4.03. Repayment of Moneys Held by Paying Agent. In
----------------------------------------
connection with the satisfaction and discharge of this Indenture with
respect to the Notes, all moneys then held by any Paying Agent other than
the Indenture Trustee under the provisions of this Indenture with respect
to such Notes shall, upon demand of the Issuer, be paid to the Indenture
Trustee to be held and applied according to Section 3.03 and thereupon
such Paying Agent shall be released from all further liability with
respect to such moneys.
ARTICLE V
Remedies
--------
SECTION 5.01. Events of Default. "Event of Default," wherever
-----------------
used herein, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation of any administrative
or governmental body):
(i) default in the payment of any interest on any Note when the
same becomes due and payable, and such default shall continue for a period
of five days; 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
elsewhere in this Section specifically dealt with), or any representation or
warranty of the Issuer made in this Indenture or in any certificate or other
writing delivered pursuant hereto or in connection herewith proving to have
been incorrect in any material respect as of the time when the same shall
have been made, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such misrepresentation or
warranty was incorrect shall not have been eliminated or otherwise cured,
for a period of 30 days after there shall have been given, by registered
or certified mail, to the Issuer by the Indenture Trustee or to the Issuer
and the Indenture Trustee by the Holders of at
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least 25% of the Outstanding Amount of the Notes, a written notice
specifying such default or incorrect representation or warranty and
requiring it to be remedied and stating that such notice is a notice of
Default hereunder; 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 of 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 60 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
any 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 Officer's
Certificate of any event which with the giving of notice and the lapse of
time would become an Event of Default under clause (iii), its status and
what action the Issuer is taking or proposes to take with respect thereto.
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
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 not
less than 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 such 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
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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 payments of principal of and interest on all Notes
and all other amounts that would then be due hereunder or upon such Notes if
the Event of Default giving rise to such acceleration had not occurred;
and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee and its agents and counsel; and
(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 5.03. 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 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 on the overdue
principal, and, to the extent payment at such rate of interest shall be
legally enforceable, on overdue installments of interest, at the 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
Trustee may, as more particularly provided in Section 5.04, in its
discretion, proceed to protect and enforce its
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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, or liquidator, sequestrator or
similar official shall have been appointed for or taken possession of the
Issuer or its property or such other obligor or Person, or in case of any
other comparable judicial Proceedings relative to the Issuer or other
obligor upon the Notes, or to the creditors or property of the Issuer or
such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Indenture
Trustee shall have made any demand pursuant to the provisions of this
Section, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor Indenture Trustee,
and their respective agents, attorneys and counsel, and for reimbursement of
all expenses 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
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allowed in any 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
vote for the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture
Trustee without the possession of any of the Notes or the production
thereof in any trial or other Proceedings relative thereto, and any such
action or Proceedings instituted by the Indenture Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and
compensation of the Indenture Trustee, each predecessor Indenture Trustee
and their respective agents and attorneys, shall be for the ratable
benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Indenture Trustee (and also
any Proceedings involving the interpretation of any provision of this
Indenture to which the Indenture Trustee shall be a party), the Indenture
Trustee shall be held to represent all the Holders of the Notes, and it
shall not be necessary to make any Noteholder a party to any such
Proceedings.
SECTION 5.04. Remedies; Priorities. (a) If an Event of Default
--------------------
shall have occurred and be continuing, the Indenture Trustee may do one or
more of the following (subject to Section 5.05):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes or
under this Indenture with respect thereto, whether by declaration or
otherwise, enforce any judgment obtained and collect from the Issuer and any
other obligor upon such Notes moneys adjudged due;
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(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 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, which opinion shall be conclusive
evidence as to such feasibility or sufficiency.
(b) If the Indenture Trustee collects any money or property pursuant
to this Article V, it shall pay out the money or property in the following
order:
FIRST: to the Indenture Trustee for amounts due under
Section 6.07;
SECOND: to Holders of the Class A-1 Notes for amounts due and
unpaid on the Class A-1 Notes for interest (including any premium),
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Class A-1 Notes for interest (including any
premium);
THIRD: to Holders of the Class A-2 Notes for amounts due and
unpaid on the Class A-2 Notes for interest (including any premium),
notably, without preference of priority of any kind, according to the
amounts due and
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payable on the Class A-2 Notes for interest (including any premium);
FOURTH: to Holders of the Class A-1 Notes for amounts due and
unpaid on the Class A-1 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-1 Notes for principal, until the Outstanding Amount of the Class A-1
Notes is reduced to zero;
FIFTH: to Holders of the Class A-2 Notes for amounts due and
unpaid on the Class A-2 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-2 Notes for principal, until the Outstanding Amount of the Class A-2
Notes is reduced to zero;
SIXTH: to the Issuer for amounts required to be distributed to
the Certificateholders pursuant to the Trust Agreement.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least 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 5.05. Optional Preservation of the Receivables. If the
----------------------------------------
Notes have been declared to be due and payable under Section 5.02
following an Event of Default and such declaration and its consequences
have not been rescinded and annulled, the Indenture Trustee may, but need
not, elect to maintain possession of the Trust Estate. It is the desire
of the parties hereto and the Noteholders that there be at all times
sufficient funds for the payment of principal of and interest on the
Notes, and the Indenture Trustee shall take such desire into account when
determining whether or not to maintain possession of the Trust Estate. In
determining whether 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 proposed action and as to the sufficiency of
the Trust Estate for such purpose, which opinion shall be conclusive
evidence as to such sufficiency.
SECTION 5.06. Limitation of Suits. No Holder of any Note shall
-------------------
have any right to institute any Proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
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(ii) the Holders of not less than 25% of the Outstanding Amount
of the Notes have made written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its own name
as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture
Trustee indemnity reasonably satisfactory to it 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 is understood and intended that no one or more Holders of Notes 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 Holders of Notes or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of
Notes, each representing less than a majority of the Outstanding Amount of
the Notes, the Indenture Trustee in its sole discretion may determine what
action, if any, shall be taken, notwithstanding any other provisions of
this Indenture.
SECTION 5.07. Unconditional Rights of Noteholders To Receive
----------------------------------------------
Principal and Interest. Notwithstanding any other provisions in this
- ----------------------
Indenture, the Holder of any Note shall have the right, which is absolute
and unconditional, to receive payment of the principal of and interest, if
any, on such Note on or after the respective due dates thereof expressed
in such Note or in this Indenture (or, in the case of redemption, on or
after the Redemption Date) and to institute suit for the enforcement of
any such payment, and such right shall not be impaired without the consent
of such Holder.
SECTION 5.08. Restoration of Rights and Remedies. If the
----------------------------------
Indenture Trustee 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
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all rights and remedies of the Indenture Trustee and the Noteholders shall
continue as though no such Proceeding had been instituted.
SECTION 5.09. Rights and Remedies Cumulative. No right or remedy
------------------------------
herein conferred upon or reserved to the Indenture Trustee 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:
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) subject to the express terms of Section 5.04, any direction
to the Indenture Trustee to sell or liquidate the Trust Estate shall be by
Holders of Notes representing not less than 100% of the Outstanding Amount
of the Notes;
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Indenture Trustee elects to retain the Trust Estate
pursuant to such Section, then any direction to the Indenture Trustee by
Holders of Notes representing less than 100% of the Outstanding Amount of the
Notes to sell or liquidate the Trust Estate shall be of no force and effect;
and
(iv) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction.
Notwithstanding the rights of Noteholders set forth in this Section,
subject to Section 6.01, the Indenture Trustee need not
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take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting
to such action.
SECTION 5.12. Waiver of Past Defaults. Prior to the declaration
-----------------------
of the acceleration of the maturity of the Notes as provided in Section
5.02, the 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 a Note by such Holder's acceptance
thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Indenture Trustee for any
action taken, suffered or omitted by it as Indenture Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section
shall not apply to (a) any suit instituted by the Indenture Trustee,
(b) any suit instituted by any Noteholder, or group of Noteholders, in
each case holding in the aggregate more than 10% of the Outstanding Amount
of the Notes or (c) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption
Date).
SECTION 5.14. Waiver of Stay or Extension Laws. The Issuer
--------------------------------
covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Issuer (to the extent that it
may lawfully do
38
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so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Indenture Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 5.15. Action on Notes. The Indenture 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 5.04(b).
SECTION 5.16. Performance and Enforcement of Certain Obligations.
--------------------------------------------------
(a) Promptly following a request from the Indenture Trustee to do so and
at the Administrator's expense, the Issuer shall take all such lawful
action as the Indenture Trustee may request to compel or secure the
performance and observance by the Depositor, the Servicer or ____________,
as applicable, of each of their obligations to the Issuer under or in
connection with the Sale and Servicing Agreement and the Receivable
Purchase Agreement and to exercise any and all rights, remedies, powers
and privileges lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement or the Receivables Purchase
Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of
the Depositor, the Servicer, or ____________ 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 Sale and Servicing Agreement or the Receivables
Purchase Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in
writing or by telephone (confirmed in writing promptly thereafter)) of the
Holders of 66-2/3% 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 Sale and
Servicing Agreement and the Receivables Purchase Agreement including the
right or power to take any action to compel or secure performance or
observance by the Depositor, the Servicer or ____________, as the case may
be, of each of their obligations to the Issuer thereunder and to give any
consent, request, notice, direction, approval, extension or waiver under
the Sale and Servicing Agreement and the Receivables Purchase Agreement,
as the case may be, and any right of the Issuer to take such action shall
be suspended.
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ARTICLE VI
The Indenture Trustee
---------------------
SECTION 6.01. Duties of Indenture Trustee. (a) If an Event of
---------------------------
Default has occurred and is continuing of which a Responsible Officer of
the Indenture Trustee shall have actual knowledge, the Indenture Trustee
shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent
person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture against
the Indenture Trustee; and
(ii) in the absence of bad faith 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 to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved that
the Indenture Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section.
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(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 Sale 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 repayment of such funds or indemnity reasonably
satisfactory to it against such risk or liability is not reasonably
assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture
Trustee shall be subject to the provisions of this Section.
SECTION 6.02. Rights of Indenture Trustee. (a) The Indenture
---------------------------
Trustee may conclusively rely, as to the truth of the statements or the
correctness of the opinions expressed therein, 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 Officer's Certificate or an Opinion of Counsel. The
Indenture Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on an Officer's Certificate or Opinion of
Counsel.
(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 willful misconduct, negligence or
bad faith.
(e) The Indenture Trustee may consult with counsel, including
Issuer's 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
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suffered by it hereunder in good faith and in accordance with the advice
or opinion of such counsel.
SECTION 6.03. Individual Rights of Indenture Trustee. The
--------------------------------------
Indenture Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Issuer or its
Affiliates with the same rights it would have if it were not Indenture
Trustee. Any Paying Agent, Note Registrar, co-registrar or co-paying
agent may do the same with like rights. However, the Indenture Trustee
must comply with Section 6.11.
SECTION 6.04. Indenture Trustee's Disclaimer. The Indenture
------------------------------
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Issuer's use of the proceeds from the Notes, and it
shall not be responsible for any statement of the Issuer in the Indenture
or in any document issued in connection with the sale of the Notes or in
the Notes other than the Indenture Trustee's certificate of
authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and is
------------------
continuing and if it is either actually known or written notice of the
existence thereof has been delivered to a Responsible Officer of the
Indenture Trustee, the Indenture Trustee shall promptly mail to each
Noteholder and each Rating Agency notice of the Default. Except in the
case of a Default in payment of principal of or interest on any Note
(including payments pursuant to the mandatory redemption provisions of
such Note), the Indenture Trustee may withhold the notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders. To the extent
that a Responsible Officer has actual knowledge thereof or receives
written notice thereof, the Indenture Trustee shall provide each Rating
Agency promptly with notice in the event that any Event of Default is
cured or waived, including a description of the nature and extent of such
Event of Default and the actions taken to cure or waive it.
SECTION 6.06. Reports by Indenture Trustee to Holders. The
---------------------------------------
Indenture Trustee shall deliver to each Noteholder such information as may
be required to enable such holder to prepare its federal and state income
tax returns.
SECTION 6.07. Compensation and Indemnity. The Issuer shall, or
--------------------------
shall cause the Administrator 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 Administrator
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,
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counsel, accountants and experts. The Issuer shall, or shall cause the
Administrator to, indemnify the Indenture Trustee against any and all
loss, liability or expense (including attorneys' fees and expenses)
incurred by it in connection with the administration of this trust and the
performance of its duties hereunder. The Indenture Trustee shall notify
the Issuer and the Administrator promptly of any claim for which it may
seek indemnity. Failure by the Indenture Trustee to so notify the Issuer
and the Administrator shall not relieve the Issuer or the Administrator of
its obligations hereunder. The Issuer shall, or shall cause the
Administrator to, defend any such claim, and the Indenture Trustee may
have separate counsel and the Issuer shall, or shall cause the
Administrator to, pay the fees and expenses of such counsel. Neither the
Issuer nor the Administrator need reimburse any expense or indemnify
against any loss, liability or expense incurred by the Indenture Trustee
through the Indenture Trustee's own willful misconduct, negligence or bad
faith.
The Issuer's obligations to the Indenture Trustee pursuant to this
Section shall survive the discharge of this Indenture, the maturity of the
Notes and the resignation or removal of the Indenture Trustee. When the
Indenture Trustee incurs expenses after the occurrence of a Default
specified in Section 5.01(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.
SECTION 6.08. Replacement of Indenture Trustee. No resignation
--------------------------------
or removal of the Indenture Trustee and no appointment of a successor
Indenture Trustee shall become effective until the acceptance of
appointment by the successor Indenture Trustee pursuant to this
Section 6.08. The Indenture Trustee may resign at any time by so
notifying the Issuer. 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
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retiring Indenture Trustee), the Issuer shall promptly appoint a successor
Indenture Trustee.
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 of the Issuer, including all property in the Trust
Estate, 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 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 and the Administrator's obligations under
Section 6.07 shall continue for the benefit of the retiring Indenture
Trustee. The Indenture Trustee shall not be liable for the acts or
omissions of any successor Indenture Trustee.
SECTION 6.09. Successor Indenture Trustee by Merger. If the
-------------------------------------
Indenture Trustee consolidates with, merges or converts into, or transfers
all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee corporation without any further act shall be the successor
Indenture Trustee; provided, that such corporation or banking association
shall be otherwise qualified and eligible under Section 6.11. The
Indenture Trustee shall provide the Rating Agencies prior written notice
of any such transaction.
In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the
trusts created by this Indenture any of the Notes shall have been
authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor
trustee and deliver such Notes so authenticated; and in case at that time
any of the Notes shall not have been authenticated, any successor to the
Indenture Trustee may authenticate such Notes either in the name of any
predecessor hereunder or in the name of the successor to the
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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-Indenture Trustee or Separate
-----------------------------------------------
Indenture Trustee. (a) Notwithstanding any other provisions of this
- -----------------
Indenture, at any time, for the purpose of meeting any legal requirement
of any jurisdiction in which any part of the Trust Estate may at the time
be located, the Indenture Trustee shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as a co-trustee
or co-trustees, or separate trustee or separate trustees, of all
or any part of the Trust, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders, such title to the Trust
Estate, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the
Indenture Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 6.11 and no notice to
Noteholders of the appointment of any co-trustee or separate trustee shall
be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or co-
trustee is not authorized to act separately without the Indenture Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Indenture Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations (including
the holding of title to the Trust Estate or any portion thereof
in any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the Indenture
Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if
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given to each of them. Every instrument appointing any separate trustee
or co-trustee shall refer to this Agreement and the conditions of this
Article VI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to
all the provisions of this Indenture, specifically including every
provision of this Indenture relating to the conduct of, affecting the
liability of, or affording protection to, the Indenture Trustee. Every
such instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Indenture Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under
or in respect of this Agreement on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Indenture Trustee, to the
extent permitted by law, without the appointment of a new or successor
trustee.
SECTION 6.11. Eligibility; Disqualification. The Indenture
-----------------------------
Trustee shall at all times be a financial institution organized and doing
business under the laws of the United States of America or any state, be
authorized under such laws to exercise corporate trust powers, be subject
to supervision and examination by Federal or state authority, and have a
combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition.
ARTICLE VII
Noteholders' Lists and Reports
------------------------------
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and
---------------------------------------------
Addresses of Noteholders. The Issuer will furnish or cause to be
- ------------------------
furnished to the Indenture Trustee (a) not more than five days after the
earlier of (i) each Record Date and (ii) three months after the last
Record Date, a list, in such form as the Indenture Trustee may reasonably
require, of the names and addresses of the Holders of Notes as of such
Record Date, and (b) at such other times as the Indenture Trustee may
request in writing, within 30 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than
10 days prior to the time such list is furnished; provided, however, that
so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished.
SECTION 7.02. Preservation of Information; Communications to
----------------------------------------------
Noteholders. (a) The Indenture Trustee shall preserve, in as current a
- -----------
form as is reasonably practicable, the names and
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addresses of the Holders of Notes contained in the most recent list
furnished to the Indenture Trustee as provided in Section 7.01 and the
names and addresses of Holders of Notes received by the Indenture Trustee
in its capacity as Note Registrar. The Indenture Trustee may destroy any
list furnished to it as provided in such Section 7.01 upon receipt of a
new list so furnished.
(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).
ARTICLE VIII
Accounts, Disbursements and Releases
------------------------------------
SECTION 8.01. Collection of Money. Except as otherwise expressly
-------------------
provided herein, the Indenture Trustee may demand payment or delivery of,
and shall receive and collect, directly and without intervention or
assistance of any fiscal agent or other intermediary, all money and other
property payable to or receivable by the Indenture Trustee pursuant to
this Indenture. The Indenture Trustee shall apply all such money received
by it as provided in this Indenture. Except as otherwise expressly
provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of
the Trust Estate, the Indenture Trustee may take such action as may be
appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action
shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as
provided in Article V.
SECTION 8.02. Trust Accounts. (a) On or prior to the Closing
--------------
Date, the Issuer shall 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 Sale and Servicing Agreement.
(b) On or before each Distribution Date, all amounts required to be
deposited in the Note Distribution Account with respect to the preceding
Collection Period pursuant to Sections 5.05 and 5.06 of the Sale and
Servicing Agreement will be transferred from the Collection Account and/or
the Reserve Account to the Note Distribution Account.
(c) On each Distribution Date and Redemption Date, the Indenture
Trustee shall distribute all amounts on deposit in the Note Distribution
Account to Noteholders in respect of the Notes
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to the extent of amounts due and unpaid on the Notes for principal and
interest (including any premium) in the following amounts and in the
following order of priority (except as otherwise provided in
Section 5.04(b)):
(i) to the Holders of the Class A-1 Notes, accrued and unpaid
interest on the Class A-1 Notes;
(ii) to the Holders of the Class A-2 Notes, accrued and unpaid
interest on the Class A-2 Notes;
(iii) to the Holders of the Class A-1 Notes on account of
principal until the Outstanding Amount of the Class A-1 Notes is reduced to
zero;
(iv) to the Holders of the Class A-2 Notes on account of
principal until the Outstanding Amount of the Class A-2 Notes is reduced to
zero.
SECTION 8.03. General Provisions Regarding Accounts. (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 (other
than the Note Distribution Account) 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 Sale and Servicing
Agreement. All income or other gain from investments of moneys deposited
in the Trust Accounts (other than the Dealer Reserve Account) shall be
deposited by the Indenture Trustee in the Collection Account, and any loss
resulting from such investments shall be charged to such account. All
income and other gain from investment of monies in the Dealer Reserve
Account (net of any losses and investment expenses) will be payable on
each Distribution Date to the Depositor. 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 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 6.01(c), the Indenture Trustee shall not in
any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included
therein except for losses attributable to the Indenture Trustee's failure
to make payments on such Eligible Investments issued by the Indenture
Trustee, in its commercial capacity as principal obligor and not as
trustee, in accordance with their terms.
(c) If (i) the Issuer (or the Servicer) shall have failed to give
investment directions for any funds on deposit in the
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Trust Accounts to the Indenture Trustee by 10:00 a.m. Eastern 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 5.02 or (iii) if such
Notes shall have been declared due and payable following an Event of
Default and amounts collected or received from the Trust Estate are being
applied in accordance with Section 5.05 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 8.04. Release of Trust Estate. (a) Subject to the
-----------------------
payment of its fees and expenses pursuant to Section 6.07, the Indenture
Trustee may, and when required by the provisions of this Indenture shall,
execute instruments to release property from the lien of this Indenture,
or convey the Indenture Trustee's interest in the same, in a manner and
under circumstances that are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Indenture
Trustee as provided in this Article VIII shall be bound to ascertain the
Indenture Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to
Section 6.07 have been paid, release any remaining portion of the Trust
Estate that secured the Notes from the lien of this Indenture and release
to the Issuer or any other Person entitled thereto any funds then on
deposit in the Trust Accounts. The Indenture Trustee shall release
property from the lien of this Indenture pursuant to this Section 8.04(b)
only upon receipt of an Issuer Request accompanied by an Officer's
Certificate and an Opinion of Counsel meeting the applicable requirements
of Section 11.01.
SECTION 8.05. 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 8.04(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
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validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
ARTICLE IX
Supplemental Indentures
-----------------------
SECTION 9.01. Supplemental Indentures Without Consent of
------------------------------------------
Noteholders. (a) Without the consent of the Holders of any Notes but
- -----------
with 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 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 that may be inconsistent
with any other provision herein or in any supplemental indenture or to make
any other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided, that such
action shall not adversely affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes and
to add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more
than one trustee, pursuant to the requirements of Article VI; or
(vii) if required by law, 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
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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, that
such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Noteholder.
SECTION 9.02. Supplemental Indentures with Consent of Noteholders.
---------------------------------------------------
The Issuer and the Indenture Trustee, when authorized by an Issuer Order,
also may, with prior notice to the Rating Agencies and with the consent of
the Holders of not less than a majority of the Outstanding Amount of the
Notes, by Act of such Holders delivered to the Issuer and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in
any manner the rights of the Holders of the Notes under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto, change
the provisions of this Indenture relating to the application of collections
on, or the proceeds of the sale of, the Trust Estate to payment of principal
of or interest on the Notes, or change any place of payment where, or the
coin or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of
this Indenture requiring the application of funds available therefor, as
provided in Article V, to the payment of any such amount due on the Notes on
or after the respective due dates thereof (or, in the case of redemption, on
or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required
for any waiver of compliance with certain provisions of this Indenture or
certain
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defaults hereunder and their consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Indenture Trustee to direct the Issuer to sell
or liquidate the Trust Estate pursuant to Section 5.04;
(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each Outstanding Note affected
thereby;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Distribution Date (including the
calculation of any of the individual components of such calculation) or to
affect the rights of the Holders of Notes to the benefit of any provisions
for the mandatory redemption of the Notes contained herein; or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the Trust
Estate or, except as otherwise permitted or contemplated herein, terminate
the lien of this Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security provided by the lien of this
Indenture.
The Indenture Trustee may, but shall in no way be obligated to, in its
sole 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.
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SECTION 9.03. Execution of Supplemental Indentures. In
------------------------------------
executing, or permitting the additional trusts created by, any
supplemental indenture permitted by this Article IX or the modification
thereby of the trusts created by this Indenture, the Indenture Trustee
shall be entitled to receive, and subject to Sections 6.01 and 6.02, shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by
this Indenture, which opinion shall be conclusive evidence as to such
authorization or permission. 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 9.04. Effect of Supplemental Indenture. Upon the
--------------------------------
execution of any supplemental indenture pursuant to the provisions hereof,
this Indenture shall be and shall be deemed to be modified and amended in
accordance therewith with respect to the Notes affected thereby, and the
respective rights, limitations of rights, obligations, duties, liabilities
and immunities under this Indenture of the Indenture Trustee, the Issuer
and the Holders of the Notes shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of
this Indenture for any and all purposes.
SECTION 9.05. Reference in Notes to Supplemental Indentures.
---------------------------------------------
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee 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 10.01. Redemption. (a) The Notes are subject to
----------
redemption in whole, but not in part, at the direction of the Servicer
pursuant to Section 9.01(a) of the Sale and Servicing Agreement, on any
Distribution Date on which the Servicer exercises its option to purchase
the Trust Estate pursuant to said Section 9.01(a), for a purchase price
equal to the Redemption Price; provided, that the Issuer has available
funds
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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 20 days prior to the Redemption Date, and the Issuer shall
deposit by 10:00 A.M. New York City time on the Redemption Date with the
Indenture Trustee in the Note Distribution Account the Redemption Price of
the 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 10.02 to each Holder of the Notes.
(b) In the event that the assets of the Trust are sold pursuant to
Section 9.02 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 10.01(b), the Servicer or the Issuer shall, to the extent
practicable, furnish notice of such event to the Indenture Trustee not
later than 20 days prior to the Redemption Date, whereupon all such
amounts shall be payable on the Redemption Date.
SECTION 10.02. Form of Redemption Notice. (a) Notice of
-------------------------
redemption under Section 10.01(a) shall be given by the Indenture Trustee
by first-class mail, postage prepaid, or by facsimile mailed or
transmitted not later than 10 days prior to the applicable Redemption Date
to each Holder of Notes as of the close of business on the Record Date
preceding the applicable Redemption Date, at such Holder's address or
facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price.
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.
(b) Prior notice of redemption under Section 10.01(b) is not
required to be given to Noteholders.
SECTION 10.03. Notes Payable on Redemption Date. The Notes or
--------------------------------
portions thereof to be redeemed shall, following notice of redemption as
required by Section 10.02 (in the case of redemption pursuant to
Section 10.01(a)), become due and payable
54
<PAGE>
at the Redemption Price on the Redemption Date and (unless the Issuer
shall default in the payment of the Redemption Price) no interest shall
accrue on the Redemption Price for any period after the date to which
accrued interest is calculated for purposes of calculating the Redemption
Price.
ARTICLE XI
Miscellaneous
-------------
SECTION 11.01. Compliance Certificates and Opinions, etc. 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 Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to
the proposed action have been complied with, and (ii) an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, 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:
(1) 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;
(2) 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;
(3) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
SECTION 11.02. Form of Documents Delivered to Indenture Trustee.
------------------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one
such Person, or that they be so certified or covered by only one document,
but one such Person
55
<PAGE>
may certify or give an opinion with respect to some matters and one or
more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which such
officer's certificate or opinion is based are erroneous. Any such
certificate of an Authorized Officer or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an officer or officers of the Servicer, the
Depositor, the Issuer or the Administrator, stating that the information
with respect to such factual matters is in the possession of the Servicer,
the Depositor, the Issuer or the Administrator, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term
hereof, it is intended that the truth and accuracy, at the time of the
granting of such application or at the effective date of such certificate
or report (as the case may be), of the facts and opinions stated in such
document shall in such case be conditions precedent to the right of the
Issuer to have such application granted or to the sufficiency of such
certificate or report. The foregoing shall not, however, be construed to
affect the Indenture Trustee's right to rely upon the truth and accuracy
of any statement or opinion contained in any such document as provided in
Article VI.
SECTION 11.03. Acts of Noteholders. (a) Any request, demand,
-------------------
authorization, direction, notice, consent, waiver or other action provided
by this Indenture to be given or taken by Noteholders may be embodied in
and evidenced by one or more instruments of substantially similar tenor
signed by such Noteholders in person or by agents duly appointed in
writing; and except as herein otherwise expressly provided such action
shall become effective when such instrument or instruments are delivered
to the Indenture Trustee and, where it is hereby expressly required, to
the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Noteholders signing such instrument or instruments. Proof of
56
<PAGE>
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to
Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture
Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of
every Note issued upon the registration thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be
done by the Indenture Trustee or the Issuer in reliance thereon, whether
or not notation of such action is made upon such Note.
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer and
-----------------------------------------------
Rating Agencies. Any request, demand, authorization, direction, notice,
- ---------------
consent, waiver or Act of Noteholders or other documents provided or
permitted by this Indenture shall be in writing and if such request,
demand, authorization, direction, notice, consent, waiver or act of
Noteholders is to be made upon, given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Indenture Trustee at its Corporate Trust
Office, or
(ii) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and
personally delivered or mailed postage prepaid or by recognized overnight
courier or by facsimile confirmed by delivery or mail as described above to
the Issuer addressed to: FASCO Auto Trust 199___-___
_________________________________________________________________________,
in care of ________________, as Owner Trustee, ___________________
__________________________________________________________; facsimile:
__________; Attention of _____________________ ______________, or at any
other address previously furnished in writing to the Indenture Trustee by
the Issuer or the Administrator. 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 Fitch's Investors Service, L.P., at the following address:
One State Street Plaza, New York, N.Y. 10004, and (ii) in the case of Duff
& Phelps Inc.
57
<PAGE>
at the following address: 55 E. Monroe Street (35th Floor), Chicago,
Illinois 60603; or as to each of the foregoing, at such other address as
shall be designated by written notice to the other parties.
SECTION 11.05. Notices to Noteholders; Waiver. Where this
------------------------------
Indenture provides for notice to Noteholders of any event, such notice
shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class, postage prepaid to each Noteholder
affected by such event, at such Holder's address as it appears on the Note
Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case
where notice to Noteholders is given by mail, neither the failure to mail
such notice nor any defect in any notice so mailed to any particular
Noteholder shall affect the sufficiency of such notice with respect to
other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent
of such notice. Waivers of notice by Noteholders shall be filed with the
Indenture Trustee but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture
Trustee shall be deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or
obligations created hereunder, and shall not under any circumstance
constitute a Default or Event of Default.
SECTION 11.06. Alternate Payment and Notice Provisions.
---------------------------------------
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a
Note providing for a method of payment, or notice by the Indenture Trustee
or any Paying Agent to such Holder, that is different from the methods
provided for in this Indenture for such payments or notices. The Issuer
will furnish to the Indenture Trustee a copy of each such agreement and
the Indenture Trustee will cause payments to be made and notices to be
given in accordance with such agreements.
SECTION 11.07. (Reserved)
----------
58
<PAGE>
SECTION 11.08. 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 11.09. Successors and Assigns. All covenants and
----------------------
agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of
the Indenture Trustee in this Indenture shall bind its successors, co-
trustees and agents.
SECTION 11.10. 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, and no interest shall accrue for the period
from and after any such nominal date.
SECTION 11.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO
ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. 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.
59
<PAGE>
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 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 in writing
(it being understood that the Indenture Trustee and the Owner Trustee have
no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to
such entity. For all purposes of this Indenture, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions
of Article VI, VII and VIII of the Trust Agreement.
SECTION 11.17. 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 Issuer, or join in any institution against the Depositor
or the Issuer 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, all at such reasonable times and
as often as may be reasonably requested. The Indenture Trustee shall, and
shall cause its representatives to, hold in confidence all such
information; provided, however, that the foregoing shall not be construed
to prohibit (i) disclosure of any and all information that is or becomes
publicly known, or information obtained by the Indenture Trustee from
sources other than the Issuer, Administrator, Seller or Servicer,
(ii) disclosure of any and all information (A) if required to do so by any
applicable statute, law, rule or regulation, (B) to any government agency
or
60
<PAGE>
regulatory or self-regulatory body having or claiming authority to
regulate or oversee any aspects of the Indenture Trustee's business or
that of its Affiliates, (C) pursuant to any subpoena, civil investigative
demand or similar demand or request of any court, regulatory authority,
arbitrator or arbitration to which the Indenture Trustee or an Affiliate
or an officer, director, employer or shareholder thereof is a party,
(D) in any preliminary or final offering circular, registration statement
or contract or other document pertaining to the transactions contemplated
by this Agreement approved in advance by the Issuer or (E) to any
Affiliate, independent or internal auditor, agent, employee or attorney of
the Indenture Trustee having a need to know the same, provided that the
Indenture Trustee advises such recipient of the confidential nature of the
information being disclosed, (iii) any other disclosure authorized by the
Seller, Administrator, Issuer or Servicer or (iv) disclosure to the other
parties to the transactions contemplated by this Agreement.
61
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto
duly authorized and duly attested, all as of the day and year first above
written.
FASCO AUTO TRUST 199 - ,
--- ---
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:
62
<PAGE>
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 FASCO AUTO TRUST 199___-___, a Delaware business trust, and that she
executed the same as the act of said business trust for the purpose and
consideration therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ___________ day of _______
____________________________________________________________
___________, 199___.
---------------------------------------
Notary Public in and for the State of New York.
My commission expires:
____________________________________
63
<PAGE>
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
________________ _____________, a ____________ banking corporation, and
that she executed the same as the act of said corporation for the purpose
and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this __________ day of ___________
_______________________________________________________
______________, 199___.
----------------------------------
Notary Public in and for the State of New York.
My commission expires:
________________________________________
64
<PAGE>
SCHEDULE 1
65
<PAGE>
EXHIBIT A-1
(FORM OF CLASS A-1 NOTE)
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE SECURITIES OR BLUE
SKY LAWS OF ANY STATE IN THE UNITED STATES OR ANY FOREIGN SECURITIES LAWS.
BY ITS ACCEPTANCE OF THIS NOTE THE HOLDER HEREOF IS DEEMED TO REPRESENT TO
THE DEPOSITOR AND THE INDENTURE TRUSTEE (i) THAT IT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D
PROMULGATED UNDER THE 1933 ACT (AN "ACCREDITED INVESTOR") AND THAT IT IS
ACQUIRING THIS NOTE FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF
OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE
ACCREDITED INVESTORS UNLESS THE HOLDER IS A BANK ACTING IN ITS FIDUCIARY
CAPACITY) FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, THE PUBLIC DISTRIBUTION HEREOF OR (ii) THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE 1933 ACT
AND IS ACQUIRING SUCH NOTE FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF
OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE
QUALIFIED INSTITUTIONAL BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS NOTE MAY BE MADE BY ANY PERSON
UNLESS EITHER (i) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO THE
DEPOSITOR, (ii) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO AN
ACCREDITED INVESTOR THAT EXECUTES A CERTIFICATE, SUBSTANTIALLY IN THE FORM
SPECIFIED IN THE INDENTURE, TO THE EFFECT THAT IT IS AN ACCREDITED
INVESTOR ACTING FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR
AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE ACCREDITED
INVESTORS UNLESS THE HOLDER IS A BANK ACTING IN ITS FIDUCIARY CAPACITY),
(iii) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE 1933 ACT, SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO A
PERSON WHOM THE PROSPECTIVE TRANSFEROR REASONABLY BELIEVES AFTER DUE
INQUIRY IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A),
ACTING FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A
FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE QUALIFIED
INSTITUTIONAL BUYERS) TO WHOM NOTICE IS GIVEN THAT THE SALE, PLEDGE OR
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (iv) SUCH SALE, PLEDGE
OR OTHER TRANSFER IS OTHERWISE MADE IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT, IN WHICH CASE THE INDENTURE
TRUSTEE SHALL REQUIRE THAT BOTH THE PROSPECTIVE TRANSFEROR AND THE
PROSPECTIVE TRANSFEREE CERTIFY TO THE INDENTURE TRUSTEE AND THE DEPOSITOR
IN WRITING THE FACTS SURROUNDING SUCH TRANSFER, WHICH CERTIFICATION SHALL
BE IN FORM AND SUBSTANCE SATISFACTORY TO THE INDENTURE TRUSTEE AND THE
DEPOSITOR. EXCEPT IN THE CASE OF A TRANSFER DESCRIBED IN CLAUSES (i) OR
(iii) ABOVE, THE INDENTURE TRUSTEE SHALL REQUIRE A WRITTEN OPINION OF
COUNSEL (WHICH SHALL NOT BE AT THE EXPENSE OF THE DEPOSITOR, ANY AFFILIATE
OF THE DEPOSITOR OR THE INDENTURE TRUSTEE) SATISFACTORY TO THE DEPOSITOR
AND THE INDENTURE TRUSTEE TO THE EFFECT THAT SUCH TRANSFER WILL NOT
VIOLATE THE 1933 ACT.
A-1-1
<PAGE>
NO SALE, PLEDGE OR OTHER TRANSFER MAY BE MADE TO ANY ONE PERSON FOR
SECURITIES WITH A FACE AMOUNT OF LESS THAN $100,000 AND, IN THE CASE OF
ANY PERSON ACTING ON BEHALF OF ONE OR MORE THIRD PARTIES (OTHER THAN A
BANK (AS DEFINED IN SECTION 3(a)(2) OF THE 1933 ACT) ACTING IN ITS
FIDUCIARY CAPACITY), FOR SECURITIES WITH A FACE AMOUNT OF LESS THAN
$100,000 FOR EACH SUCH THIRD PARTY.
SECTION 2.4 OF THE INDENTURE CONTAINS FURTHER RESTRICTIONS ON THE TRANSFER
AND RESALE OF THIS NOTE. EACH TRANSFEREE OF THIS NOTE, BY ACCEPTANCE
HEREOF, IS DEEMED TO HAVE ACCEPTED THIS NOTE SUBJECT TO THE FOREGOING
RESTRICTIONS ON TRANSFERABILITY.
EACH NOTEHOLDER OR NOTE OWNER, BY ITS ACCEPTANCE OF THIS SECURITY,
COVENANTS AND AGREES THAT SUCH NOTEHOLDER OR NOTE OWNER SHALL NOT, PRIOR
TO THE DATE THAT IS ONE YEAR AND ONE DAY AFTER THE TERMINATION OF THE
TRUST AGREEMENT, ACQUIESCE, PETITION OR OTHERWISE INVOKE OR CAUSE THE
TRUST, THE DEPOSITOR OR THE SELLER TO INVOKE THE PROCESS OF ANY COURT OR
GOVERNMENTAL AUTHORITY FOR THE PURPOSE OF COMMENCING OR SUSTAINING A CASE
AGAINST THE TRUST, THE DEPOSITOR OR THE SELLER UNDER ANY FEDERAL OR STATE
BANKRUPTCY, INSOLVENCY, REORGANIZATION OR SIMILAR LAW, OR APPOINTING A
RECEIVER, LIQUIDATOR, ASSIGNEE, TRUSTEE, CUSTODIAN, SEQUESTRATOR OR OTHER
SIMILAR OFFICIAL OF THE TRUST, THE DEPOSITOR OR THE SELLER OR ANY
SUBSTANTIAL PART OF ITS PROPERTY, OR ORDERING THE WINDING UP OR
LIQUIDATION OF THE AFFAIRS OF THE TRUST, THE DEPOSITOR OR THE SELLER.
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.
(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.)
REGISTERED $________________
No. R- CUSIP NO. ___________
FASCO AUTO TRUST 199 -
--- ---
CLASS A-1 % ASSET BACKED NOTES
--------------
FASCO Auto Trust 199___-___, a business trust organized and existing
under the laws of the State of Delaware (herein referred
A-1-2
<PAGE>
to as the "Issuer"), for value received, hereby promises to pay to
, or registered assigns, the principal sum of
___________
- -----------------
_________________
____________ DOLLARS payable on each Distribution Date in an amount equal
to the result obtained by multiplying (i) a fraction the numerator of
which is $_______________________________ 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 3.01 of the Indenture dated as of
_______, 199___ (the "Indenture"), between the Issuer and
_________________, a _____________ banking corporation, as Indenture
Trustee (the "Indenture Trustee"); provided, however, that the entire
unpaid principal amount of this Note shall be due and payable on the
earlier of the _________ Distribution Date (the "Class A-1 Final Scheduled
Distribution Date") and the Redemption Date, if any, pursuant to
Section 10.01 of the Indenture. Capitalized terms used but not defined
herein are defined in Article I of the Indenture, which also contains
rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution 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 Distribution Date (or, in the case of the
first Distribution Date, the Closing Date) after giving effect to all
payments of principal made on the preceding Distribution Date, subject to
certain limitations contained in Section 3.01 of the Indenture. Interest
on this Note for each Distribution Date will accrue from and including the
first day of the preceding Collection Period (or, in the case of the first
Distribution Date, from and including the Cutoff Date). Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such
principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States 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, or be valid
or obligatory for any purpose.
A-1-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the
date set forth below.
Date: _________________ FASCO AUTO TRUST 199 - ,
--- ---
by: ________________________________________, not
in its individual capacity but solely as Owner Trustee under the Trust
Agreement,
by:
----------------------------------
Authorized Signatory
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
Date: ____________ ____________________________________, not in
its individual capacity but solely as Indenture Trustee,
by: _________________________________
Authorized Signatory
A-1-4
<PAGE>
Reverse
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-1 _______________% Asset Backed Notes (herein
called the "Class A-1 Notes"), all issued 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 Class A-1
Notes are subject to all terms of the Indenture.
The Class A-1 Notes and the Class A-2 Notes (collectively, the
"Notes") are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture but subject, as
between the Class A-1 and Class A-2 Notes, to the distribution priorities
set forth in Sections 5.04 and 8.02 of the Indenture.
Principal of the Class A-1 Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means
the _______________ day of each March, June, September and December 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 the Class A-1 Final Scheduled
Distribution Date and the Redemption Date, if any, pursuant to
Section 10.01 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 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 Class A-1 Notes shall be
made pro rata to the Class A-1 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each
Distribution 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, unless either (i) such Person notifies the
Paying Agent in writing not later than the Record Date prior to a
Distribution Date or (ii) the Registered Holder of this Note is the
nominee of the Clearing Agency, in which case, payments are to be made by
wire transfer in immediately available funds to the account designated by
such Person. Payments by check 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
A-1-5
<PAGE>
any one or more Predecessor Notes) effected by any payments made on any
Distribution 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
Distribution 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 Distribution Date by notice
mailed or transmitted by facsimile prior to such Distribution 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 City of _______________.
The Issuer shall pay interest on overdue installments of interest at
the Class A-1 Interest Rate to the extent lawful.
As provided in the Indenture and subject to the limitations set forth
therein and on the face hereof, 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 such Holder's attorney duly authorized
in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities
Transfer Agent's Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Note Registrar in addition
to, or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended, 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.
Each Noteholder or Note Owner, by acceptance of 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
A-1-6
<PAGE>
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 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 covenants and
agrees by accepting the benefits of the Indenture that such Noteholder
will not at any time institute against the Depositor, the Seller or the
Issuer, or join in any institution against the Depositor, the Seller or
the Issuer 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.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single
business and franchise tax purposes, the Notes will qualify as
indebtedness of the Issuer secured by the Trust Estate. Each Noteholder
or Note Owner, by acceptance of a Note, agrees to treat the Notes for
federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
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 none of the Issuer, the Indenture Trustee or
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 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
A-1-7
<PAGE>
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 in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of _________________ its individual
capacity, ______________________ in its individual capacity, any owner of
a beneficial interest in the Issuer, or 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 this Note or
performance of, or failure to perform, any of the covenants, obligations
or indemnifications contained in the Indenture. The Holder of this Note
by its 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.
A-1-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- ------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
_________________________________________________________________
_________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints
, attorney, to transfer said Note on the books kept
- ----------------------
for registration thereof, with full power of substitution in the premises.
Dated:
_______________________________
------------------------------
_____________________________________
*/
________________________________
Signature Guaranteed:
*/
- -----
________________________
*/ NOTICE: 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
whatever. Such signature must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-1-9
<PAGE>
EXHIBIT A-2
(FORM OF CLASS A-2 NOTE)
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE SECURITIES OR BLUE
SKY LAWS OF ANY STATE IN THE UNITED STATES OR ANY FOREIGN SECURITIES LAWS.
BY ITS ACCEPTANCE OF THIS NOTE THE HOLDER HEREOF (A) IS DEEMED TO
REPRESENT TO THE DEPOSITOR AND THE INDENTURE TRUSTEE (i) THAT IT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D PROMULGATED UNDER THE 1933 ACT (AN "ACCREDITED INVESTOR") AND
THAT IT IS ACQUIRING THIS NOTE FOR ITS OWN ACCOUNT (AND NOT FOR THE
ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS
ALSO ARE ACCREDITED INVESTORS UNLESS THE HOLDER IS A BANK ACTING IN ITS
FIDUCIARY CAPACITY) FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR OFFER OR
SALE IN CONNECTION WITH, THE PUBLIC DISTRIBUTION HEREOF OR (ii) THAT IT
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
1933 ACT AND IS ACQUIRING SUCH NOTE FOR ITS OWN ACCOUNT (AND NOT FOR THE
ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS
ALSO ARE QUALIFIED INSTITUTIONAL BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS NOTE MAY BE MADE BY ANY PERSON
UNLESS EITHER (i) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO THE
DEPOSITOR, (ii) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO AN
ACCREDITED INVESTOR THAT EXECUTES A CERTIFICATE, SUBSTANTIALLY IN THE FORM
SPECIFIED IN THE INDENTURE, TO THE EFFECT THAT IT IS AN ACCREDITED
INVESTOR ACTING FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR
AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE ACCREDITED
INVESTORS UNLESS THE HOLDER IS A BANK ACTING IN ITS FIDUCIARY CAPACITY),
(iii) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE 1933 ACT, SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO A
PERSON WHOM THE PROSPECTIVE TRANSFEROR REASONABLY BELIEVES AFTER DUE
INQUIRY IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A),
ACTING FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A
FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE QUALIFIED
INSTITUTIONAL BUYERS) TO WHOM NOTICE IS GIVEN THAT THE SALE, PLEDGE OR
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (iv) SUCH SALE, PLEDGE
OR OTHER TRANSFER IS OTHERWISE MADE IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT, IN WHICH CASE THE INDENTURE
TRUSTEE SHALL REQUIRE THAT BOTH THE PROSPECTIVE TRANSFEROR AND THE
PROSPECTIVE TRANSFEREE CERTIFY TO THE INDENTURE TRUSTEE AND THE DEPOSITOR
IN WRITING THE FACTS SURROUNDING SUCH TRANSFER, WHICH CERTIFICATION SHALL
BE IN FORM AND SUBSTANCE SATISFACTORY TO THE INDENTURE TRUSTEE AND THE
DEPOSITOR EXCEPT IN THE CASE OF A TRANSFER DESCRIBED IN CLAUSES (i) OR
(iii) ABOVE, THE INDENTURE TRUSTEE SHALL REQUIRE A WRITTEN OPINION OF
COUNSEL (WHICH SHALL NOT BE AT THE EXPENSE OF THE DEPOSITOR, ANY AFFILIATE
OF THE DEPOSITOR OR THE INDENTURE TRUSTEE) SATISFACTORY TO THE DEPOSITOR
AND THE INDENTURE TRUSTEE TO THE EFFECT THAT SUCH TRANSFER WILL NOT
VIOLATE THE 1933 ACT.
A-2-1
<PAGE>
NO SALE, PLEDGE OR OTHER TRANSFER MAY BE MADE TO ANY ONE PERSON FOR
SECURITIES WITH A FACE AMOUNT OF LESS THAN $100,000 AND, IN THE CASE OF
ANY PERSON ACTING ON BEHALF OF ONE OR MORE THIRD PARTIES (OTHER THAN A
BANK (AS DEFINED IN SECTION 3(a)(2) OF THE 1933 ACT) ACTING IN ITS
FIDUCIARY CAPACITY), FOR SECURITIES WITH A FACE AMOUNT OF LESS THAN
$100,000 FOR EACH SUCH THIRD PARTY.
SECTION 2.4 OF THE INDENTURE CONTAINS FURTHER RESTRICTIONS ON THE TRANSFER
AND RESALE OF THIS NOTE. EACH TRANSFEREE OF THIS NOTE, BY ACCEPTANCE
HEREOF, IS DEEMED TO HAVE ACCEPTED THIS NOTE SUBJECT TO THE FOREGOING
RESTRICTIONS ON TRANSFERABILITY.
EACH NOTEHOLDER OR NOTE OWNER, BY ITS ACCEPTANCE OF THIS SECURITY,
COVENANTS AND AGREES THAT SUCH NOTEHOLDER OR NOTE OWNER SHALL NOT, PRIOR
TO THE DATE THAT IS ONE YEAR AND ONE DAY AFTER THE TERMINATION OF THE
TRUST AGREEMENT, ACQUIESCE, PETITION OR OTHERWISE INVOKE OR CAUSE THE
TRUST, THE DEPOSITOR OR THE SELLER TO INVOKE THE PROCESS OF ANY COURT OR
GOVERNMENTAL AUTHORITY FOR THE PURPOSE OF COMMENCING OR SUSTAINING A CASE
AGAINST THE TRUST, THE DEPOSITOR OR THE SELLER UNDER ANY FEDERAL OR STATE
BANKRUPTCY, INSOLVENCY, REORGANIZATION OR SIMILAR LAW, OR APPOINTING A
RECEIVER, LIQUIDATOR, ASSIGNEE, TRUSTEE, CUSTODIAN, SEQUESTRATOR OR OTHER
SIMILAR OFFICIAL OF THE TRUST, THE DEPOSITOR OR THE SELLER OR ANY
SUBSTANTIAL PART OF ITS PROPERTY, OR ORDERING THE WINDING UP OR
LIQUIDATION OF THE AFFAIRS OF THE TRUST, THE DEPOSITOR OR THE SELLER.
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.
(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.)
REGISTERED $______________
No. R- CUSIP NO. \51\
FASCO AUTO TRUST 199___-___
CLASS A-2 __________________% ASSET BACKED NOTES
FASCO Auto 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
A-2-2
<PAGE>
____________________, or registered assigns, the principal sum of
DOLLARS payable on each Distribution Date in an amount equal
to the result obtained by multiplying (i) a fraction the numerator of which
is $ _________________________ 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 3.01 of the Indenture dated as of _________________________, 199__
(the "Indenture"), between the Issuer and __________________, a
_______________ banking corporation, as Indenture Trustee (the "Indenture
Trustee"); provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the earlier of the ______________________
Distribution Date (the "Class A-2 Final Scheduled Distribution Date") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture.
Capitalized terms used but not defined herein are defined in Article I of the
Indenture, which also contains rules as to construction that shall be
applicable herein.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution 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 Distribution Date (or, in the case of the first Distribution
Date, the Closing Date) after giving effect to all payments of principal made
on the preceding Distribution Date, subject to certain limitations contained
in Section 3.01 of the Indenture. Interest on this Note for each
Distribution Date will accrue from and including the first day of the
preceding Collection Period (or, in the case of the first Distribution Date,
from and including the Cutoff Date). Interest will be computed on the basis
of a 360-day year of twelve 30-day months. Such principal of and interest
on this Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States 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, or be valid or
obligatory for any purpose.
A-2-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date: _________________ FASCO AUTO TRUST 199___-___,
by: ______________________, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement,
by: _______________________________
Authorized Signatory
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
Date: _________________ _______________________, not in its individual
capacity but solely as Indenture Trustee,
by: ______________________________
Authorized Signatory
A-2-4
<PAGE>
Reverse
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-2 ____________% Asset Backed Notes (herein
called the "Class A-2 Notes"), all issued 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 Class A-2
Notes are subject to all terms of the Indenture.
The Class A-1 Notes and the Class A-2 Notes (collectively, the "Notes")
are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture but subject, as between the
Class A-1 and Class A-2 Notes, to the distribution priorities set forth in
Sections 5.04 and 8.02 of the Indenture.
Principal of the Class A-2 Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means
the 15th day of each March, June, September and December 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 the Class A-2 Final Scheduled
Distribution Date and the Redemption Date, if any, pursuant to Section 10.01
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 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 Class A-2 Notes shall be made pro rata to the
Class A-2 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Distribution
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, unless (i) such Person notifies the Paying Agent in writing not
later than the Record Date prior to a Distribution Date or (ii) the
Registered Holder of this Note is the nominee of the Clearing Agency, in
which case, payments are to be made by wire transfer in immediately available
funds to the account designated by such Person. Payments by check 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 Distribution Date shall
A-2-5
<PAGE>
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 Distribution 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
Distribution Date by notice mailed or transmitted by facsimile prior to such
Distribution 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 City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-2 Interest Rate to the extent lawful.
As provided in the Indenture and subject to the limitations set forth
therein and on the face hereof, 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
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements
of the Note Registrar, which requirements include membership or participation
in the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, 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.
Each Noteholder or Note Owner, by acceptance of 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 may have expressly agreed and except that
any such
A-2-6
<PAGE>
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 covenants and agrees by accepting the
benefits of the Indenture that such Noteholder will not at any time institute
against the Depositor, the Seller or the Issuer, or join in any institution
against the Depositor, the Seller or the Issuer 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.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder or Note Owner, by acceptance
of a Note, agrees to treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness of the Issuer.
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 none of the Issuer, the Indenture Trustee or 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 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.
A-2-7
<PAGE>
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 in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of ________________ ___________ in its
individual capacity, ____________________ in its individual capacity, any
owner of a beneficial interest in the Issuer, or 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 this Note or
performance of, or failure to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note by its
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.
A-2-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- ------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
________________________________________________________________
________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints
_________________________, attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated:
_______________________________
------------------------------
_____________________________________
*/
________________________________
Signature Guaranteed:
*/
- -----
________________________
*/ NOTICE: 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
whatever. Such signature must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-2-9
<PAGE>
EXHIBIT C
FORM OF TRANSFEROR CERTIFICATE
(DATE)
(Depositor)
(Depositor Address)
(Owner Trustee)
(Owner Trustee Address)
(Indenture Trustee)
(Indenture Trustee Address)
Re: FASCO Auto Trust 199___-___
Class A-( ) ( )% Asset Backed Notes
------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above-referenced
Class A-( ) ( )% Asset Backed Notes (the "Notes") we certify that (a) we
understand that the Notes have not been registered under the Securities
Act of 1933, as amended (the "Act"), and are being transferred by us in a
transaction that is exempt from the registration requirements of the Act
and (b) we have not offered or sold any Notes to, or solicited offers to
buy any Notes from, any person, or otherwise approached or negotiated with
any person with respect thereto, in a manner that would be deemed, or
taken any other action which would result in, a violation of Section 5 of
the Act.
Very truly yours,
(NAME OF TRANSFEROR)
By:
- ------
Authorized Officer
C-1
<PAGE>
FORM OF INVESTMENT LETTER EXHIBIT D
Depositor
(Address)
Owner Trustee
(Address)
(Indenture Trustee)
(Address)
Ladies and Gentlemen:
In connection with our proposed purchase of $ aggregate
principal amount of _____ % Asset Backed Notes (the "Securities") of FASCO
Auto Trust 199___-___ (the "Issuer"), we confirm that:
1. We understand that the Securities have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), and may not
be sold except as permitted in the following sentence. We understand and
agree, on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, (x) that such Securities are being offered
only in a transaction not involving any public offering within the meaning
of the 1933 Act and (y) that such Securities may be resold, pledged or
transferred only (i) to the Depositor, (ii) to an "accredited investor" as
defined in Rule 501(a)(1),(2),(3) or (7) (an "Accredited Investor") under the
1933 Act acting for its own account (and not for the account of others) or as
a fiduciary or agent for others (which others also are Accredited Investors
unless the holder is a bank acting in its fiduciary capacity) that executes
a certificate substantially in the form hereof, (iii) so long as such
Security is eligible for resale pursuant to Rule 144A under the 1933 Act
("Rule 144A"), to a person whom we reasonably believe after due inquiry is a
"qualified institutional buyer" as defined in Rule 144A, acting for its own
account (and not for the account of others) or as a fiduciary or agent for
others (which others also are "qualified institutional buyers") to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A or (iv) in a sale, pledge or other transfer made in a
transaction otherwise exempt from the registration requirements of the
1933 Act, in which case (A) the Indenture Trustee shall require that both
the prospective transferor and the prospective transferee certify to the
Indenture Trustee and the Depositor in writing the facts surrounding such
transfer, which certification shall be in form and substance satisfactory
to the Indenture Trustee and the Depositor and (B) the Indenture Trustee
shall require a written opinion of counsel (which will not be at the
expense of the Depositor,
D-1
<PAGE>
any affiliate of the Depositor or the Indenture Trustee) satisfactory
to the Depositor and the Indenture Trustee to the effect that such
transfer will not violate the 1933 Act, in each case in accordance with any
applicable securities laws of any state of the United States. We will
notify any purchaser of the Security from us of the above resale
restrictions, if then applicable. We further understand that in connection
with any transfer of the Security by us that the Depositor and the Indenture
Trustee may request, and if so requested we will furnish such certificates
and other information as they may reasonably require to confirm that any such
transfer complies with the foregoing restrictions. We understand that no
sale, pledge or other transfer may be made to any one person of Securities
with a face amount of less than $100,000 and, in the case of any person
acting on behalf of one or more third parties (other than a bank (as defined
in Section 3(a)((2) of the 1933 Act) acting in its fiduciary capacity), of
Securities with a face amount of less than $100,000 for each such third
party.
2. (CHECK ONE)
(a) We are an "accredited investor" (as defined in Rule
501(a)(1),(2),(3) or (7) of Regulation D under the Securities Act) acting for
our own account (and not for the account of others) or as a fiduciary or
agent for others (which others also are Accredited Investors unless we are a
bank acting in its fiduciary capacity). We have such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of our investment in the Security, and we
and any accounts for which we are acting are each able to bear the economic
risk of our or their investment for an indefinite period of time.
We are acquiring the Security for investment and not with a view to, or for
offer and sale in connection with, a public distribution.
(b) We are a "qualified institutional buyer" as defined under
Rule 144A under the 1933 Act and are acquiring the Security for our own
account (and not for the account of others) or as a fiduciary or agent for
others (which others also are "qualified institutional buyers"). We are
familiar with Rule 144A under the 1933 Act and are aware that the seller of
the Security and other parties intend to rely on the statements made herein
and the exemption from the registration requirements of the 1933 Act provided
by Rule 144A.
3. We understand that the Depositor, the Trust, Greenwich
Capital Markets, Inc. ("Greenwich") and others will rely upon the truth and
accuracy of the foregoing acknowledgments, representations and agreements,
and we agree that if any of the acknowledgments, representations and
warranties deemed to have been made by us by our
D-2
<PAGE>
purchase of the Securities, for our own account or for one or more
accounts as to each of which we exercise sole investment discretion, are no
longer accurate, we shall promptly notify the Depositor and Greenwich.
4. You are entitled to rely upon this letter and you are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Very truly yours,
________________________________
(Name of Purchaser)
By: ___________________________
Date: __________________________
D-3
<PAGE>
Exhibit 5.1
May 29, 1996
Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830
Re: Financial Asset Securities Corp.
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as special counsel to the trusts referred to below in
connection with the filing by Financial Asset Securities Corp., a Delaware
corporation (the "Registrant"), of a Registration Statement on Form S-3 (such
registration statement, together with the exhibits and any amendments
thereto, the "Registration Statement") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act") for the
registration under the Act of asset backed notes (the "Notes") and asset
backed certificates (the "Certificates") in an aggregate principal amount of
up to $500,000,000. As described in the Registration Statement, the Notes
and/or the Certificates will be issued from time to time in series. Each
series of asset backed securities will be issued by either (a) a trust (each,
an "Owner Trust") formed by the Registrant pursuant to a trust agreement
(each, a "Trust Agreement") between the Registrant and a trustee or (b) a
trust (each, a "Grantor Trust") formed pursuant to a pooling and servicing
agreement (each, a "Pooling and Servicing Agreement") among the Registrant, a
servicer, and a trustee. Each series of securities issued by an Owner Trust
may include one or more classes of Notes, which will be issued pursuant to an
indenture (each, an "Indenture") between the related Owner Trust and an
indenture trustee. Each series may include one or more classes of
Certificates, which will be issued pursuant to a Trust Agreement or a Pooling
and Servicing Agreement. The Certificates and the Notes will be sold from
time to time pursuant to certain underwriting agreements (the "Underwriting
Agreements") between the Registrant and various underwriters named therein.
We have examined and relied upon the Registration Statement and, in each
case as filed with the Registration Statement, the
<PAGE>
form of Indenture (including the forms of Notes included as exhibits
thereto), the form of Trust Agreement or Pooling and Servicing Agreement
(including the forms of Certificates included as an exhibit thereto and,
with respect to the Trust Agreement, the form of Certificate of Trust to
be filed pursuant to the Delaware Business Trust Act) and the forms
of Underwriting Agreements relating to the Notes and the Certificates
(collectively, the "Operative Documents"). In addition, we have examined
and considered executed originals or counterparts, or certified or other
copies identified to our satisfaction as being true copies of such
certificates, instruments, documents and other corporate records of the
Registrant, and matters of fact and law as we deem necessary for the
purposes of the opinion expressed below. Capitalized terms not otherwise
defined herein have the meanings assigned to them in the Registration
Statement.
In our examination we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of the originals of such
documents. As to any facts material to the opinions expressed herein that
were not independently established or verified, we have relied upon
statements and representations of officers and other representatives of the
Registrant and others.
Based on and subject to the foregoing, we are of the opinion that, with
respect to the Notes and/or Certificates of any series, when (i) the
Registration Statement becomes effective pursuant to the provisions of the
Securities Act of 1933, as amended, (ii) the amount, price, interest rate and
other principal terms of such Notes and/or Certificates have been duly
approved by the Board of Directors of the Registrant forming the related
Owner Trust or Grantor Trust, (iii) the applicable Operative Documents
relating to such series have each been duly completed, executed and delivered
by the parties thereto substantially in the form filed as an exhibit to the
Registration Statement reflecting the terms established as described above,
(iv) with respect to each Owner Trust, the related Certificate of Trust has
been duly executed by the Trustee and timely filed with the Secretary of
State of the State of Delaware, (v) with respect to each series that includes
Notes, the related Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended, and (vi) such Notes and/or Certificates
have been duly executed and issued by the related Owner Trust or Grantor
Trust and authenticated by the Trustee or the Indenture Trustee, as
applicable, and sold by the Registrant, all in accordance with the terms and
conditions of the related Operative Documents and in the manner described in
the Registration Statement, such Notes and/or Certificates will have been
duly authorized by all necessary action of the applicable Owner Trust or
Grantor Trust and will have been legally issued, fully paid and
nonassessable.
<PAGE>
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the Prospectus included in the Registration Statement.
Very truly yours,
/s/ Brown & Wood
2
<PAGE>
Exhibit 8.1
May 29, 1996
Re: Financial Asset Securities Corp.
Registration Statement on Form S-3 (No. 333-1548)
-------------------------------------------------
Ladies and Gentlemen:
We have acted as special federal tax counsel to Financial Asset
Securities Corp., a Delaware corporation (the "Registrant"), in connection
with the issuance and sale of its Asset Backed Notes (the "Notes") and Asset
Backed Certificates (the "Certificates" and, together with the Notes, the
"Securities"), to be issued from time to time in one or more series. Each
series of Securities will be issued by a trust to be formed with respect to
such series (each, a "Trust"). The property of each Trust will include motor
vehicle installment loan agreements and motor vehicle retail installment sale
contracts. Each Trust will be formed, and each series of Certificates will
be issued, pursuant to a Trust Agreement to be entered into among the
Registrant, an affiliate of the Registrant, and a trustee to be specified in
the prospectus supplement for such series of Certificates. Each series of
Notes will be issued pursuant to an Indenture between the Registrant and a
separate trustee to be specified in the prospectus supplement for such series
of Notes. We have advised the Registrant with respect to certain federal
income tax consequences of the proposed issuance of the Securities. This
advice is summarized under the headings "Summary of Terms -- Tax
Considerations" and "Certain Material Federal Income Tax Consequences" in the
Prospectus relating to the Securities, all a part of the Registration
Statement on Form S-3 (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"), for the registration of the Securities
under the Act. Such description does not purport to discuss all possible
federal income tax ramifications of the proposed issuance, but with respect
to those tax consequences that are discussed, in our opinion, the description
is accurate in all material respects.
<PAGE>
Furthermore, we hereby confirm that, as specified in the Prospectus, we will
provide an opinion to the Trust specified in the related prospectus
supplement that (i) with respect to a Trust as to which a partnership
election is made or which issues no classes of Certificates, the Trust will
not be classified as an association taxable as a corporation or a publicly
traded partnership taxable as a corporation, (ii) with respect to a Trust as
to which no partnership election is made, and which does not issue one or
more classes of Certificates treated as debt for federal income tax purposes,
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 Internal
Revenue Code of 1986, as amended, (iii) with respect to a Trust which issues
one or more classes of Certificates treated as debt for Federal income tax
purposes, the Trust will not be classified as an association taxable as a
corporation or a publicly traded partnership taxable as a corporation and,
unless otherwise specified in the related prospectus supplement, the
Certificates will be classified as debt for federal income tax purposes, and
(iv) unless otherwise specified in the related prospectus supplement, the
Notes will be classified as debt for federal income tax purposes.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to a reference to this firm (as counsel to the
Registrant) under the headings "Summary of Terms -- Tax Considerations" and
"Legal Matters" in the Prospectus forming a part of the Registration
Statement, without implying or admitting that we are "experts" within the
meaning of the Act or the rules and regulations of the Commission issued
thereunder, with respect to any part of the Registration Statement, including
this exhibit.
Very truly yours,
/s/ Brown & Wood
2
<PAGE>
Exhibit 10.1
Form of Sale and Servicing Agreement
SALE AND SERVICING AGREEMENT
among
FASCO AUTO TRUST 199__-__,
Issuer,
and
FINANCIAL ASSET SECURITIES CORP.
Depositor,
and
______________________,
Servicer
and
_________________________,
Backup Servicer
Dated as of __________, 199_
1
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
Definitions
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions . . . . . . . . . . . . . . 16
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables . . . . . . . . . . . . . . . . 18
ARTICLE III
The Receivables
SECTION 3.01. Representations and Warranties of the Depositor with
Respect to the Receivables . . . . . . . . . . . . . . 18
SECTION 3.02. Repurchase upon Breach . . . . . . . . . . . . . . . . . . 19
SECTION 3.03. Custody of Receivable Files . . . . . . . . . . . . . . . 20
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.01. Duties of Servicer . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.02. Collection and Allocation of Receivable Payments . . . . . 22
SECTION 4.03. Realization upon Receivables . . . . . . . . . . . . . . . 22
SECTION 4.04. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.05. Maintenance of Security Interests in Financed Vehicles . . 23
SECTION 4.06. Covenants of Servicer . . . . . . . . . . . . . . . . . . 23
SECTION 4.07. Purchase of Receivables upon Breach . . . . . . . . . . . 23
SECTION 4.08. Servicing Fee . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.09. Servicer's Certificate . . . . . . . . . . . . . . . . . . 24
SECTION 4.10. Annual Statement as to Compliance; Notice of Default . . . 24
SECTION 4.11. Annual Independent Certified Public Accountants' Report . 25
SECTION 4.12. Servicer Expenses . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.13. Appointment of Subservicer . . . . . . . . . . . . . . . . 26
SECTION 4.14. Oversight of Servicing . . . . . . . . . . . . . . . . . . 26
SECTION 4.15. Duties of Backup Servicer . . . . . . . . . . . . . . . . 27
1
<PAGE>
ARTICLE V
Trust Accounts; Distributions; Reserve Account; Statements to
Certificateholders and Noteholders
SECTION 5.01. Establishment of Trust Accounts . . . . . . . . . . . . . 28
SECTION 5.02. Collections . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.03. Application of Collections . . . . . . . . . . . . . . . . 30
SECTION 5.04. Additional Deposits . . . . . . . . . . . . . . . . . . . 31
SECTION 5.05. Distributions . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.06. Reserve Account . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.07. Statements to Certificateholders and Noteholders . . . . . 33
SECTION 5.08. Transfer of the Notes . . . . . . . . . . . . . . . . . . 34
SECTION 5.09. Dealer Reserve Account . . . . . . . . . . . . . . . . . . 35
ARTICLE VI
The Depositor
SECTION 6.01. Representations of Depositor . . . . . . . . . . . . . . . 35
SECTION 6.02. Corporate Existence . . . . . . . . . . . . . . . . . . . 37
SECTION 6.03. Liability of Depositor; Indemnities . . . . . . . . . . . 38
SECTION 6.04. Merger or Consolidation of, or Assumption of the
Obligations of, Depositor . . . . . . . . . . . . . . 38
SECTION 6.05. Limitation on Liability of Depositor and Others . . . . . 39
SECTION 6.06. Depositor May Own Certificates or Notes . . . . . . . . . 39
SECTION 6.07. Sale of Receivables . . . . . . . . . . . . . . . . . . . 39
ARTICLE VII
The Servicer; Backup Servicer
SECTION 7.01. Representations of Servicer . . . . . . . . . . . . . . . 39
SECTION 7.02. Indemnities of Servicer . . . . . . . . . . . . . . . . . 41
SECTION 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer . . . . . . . . . . . . . . . 42
SECTION 7.04. Limitation on Liability of Servicer and Others . . . . . . 43
SECTION 7.05. ___________ Not To Resign as Servicer . . . . . . . . . . 44
SECTION 7.06. Representations of Backup Servicer . . . . . . . . . . . . 44
SECTION 7.07. Merger or Consolidation of, or Assumption of the
Obligations of, Backup Servicer . . . . . . . . . . . 45
SECTION 7.08. _________________ Not To Resign as Backup Servicer . . . . 45
ARTICLE VIII
Default
SECTION 8.01. Servicer Default . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.02. Appointment of Successor . . . . . . . . . . . . . . . . . 47
SECTION 8.03. Notification to Noteholders and Certificateholders . . . . 48
2
<PAGE>
SECTION 8.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . 48
ARTICLE IX
Termination
SECTION 9.01. Optional Purchase of All Receivables . . . . . . . . . . . 49
ARTICLE X
Miscellaneous
SECTION 10.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.02. Protection of Title to Trust . . . . . . . . . . . . . . . 51
SECTION 10.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.04. Assignment by the Depositor or the Servicer . . . . . . . 54
SECTION 10.05. Limitations on Rights of Others . . . . . . . . . . . . . 54
SECTION 10.06. Severability . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.07. Separate Counterparts . . . . . . . . . . . . . . . . . . 54
SECTION 10.08. Headings . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.10. Assignment by Issuer . . . . . . . . . . . . . . . . . . . 55
SECTION 10.11. Nonpetition Covenants . . . . . . . . . . . . . . . . . . 55
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . . . 55
SCHEDULE A Schedule of Receivables
EXHIBIT A Form of Distribution Date Statement to Noteholders
EXHIBIT B Form of Distribution Date Statement to Certificateholders
EXHIBIT C Form of Servicer's Certificate
EXHIBIT D Form of Receivables Checklist
EXHIBIT E Form of Receivables Assignment
3
<PAGE>
SALE AND SERVICING AGREEMENT dated as of ___________________, among FASCO
AUTO TRUST 199_-_, a Delaware business trust (the "Issuer"), FINANCIAL
ASSET SECURITIES CORP., a Delaware corporation (the "Depositor"),
_____________________, a ______ corporation (the "Servicer") and
_______________________, a __________________banking corporation (the
"Backup Servicer").
WHEREAS _____________________ has generated a portfolio of automobile
retail installment sale contracts, which contracts were conveyed by
_____________________ to _______________ and by _________________ to the
Depositor;
WHEREAS the Issuer wishes to purchase that receivables arising from such
contracts, and the Depositor is willing to sell such receivables to the
Issuer; and
WHEREAS _____________________ is willing to service such receivables and
_________________________ is willing to act as backup servicer with respect
to such receivables;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
--------
SECTION 1.01. Definitions. Whenever used in this Agreement, the
-----------
following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Amount Financed" means, with respect to any Receivable, the amount
________________
advanced under the Receivable toward the purchase price of the Financed
Vehicle and any related costs, exclusive of any amount allocable to the
premium of "dual interest" insurance covering the Financed Vehicle.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate
---------------------- ---
of finance charges stated in the related Contract.
"Backup Servicer" means, __________________________, a _________________
---------------
banking corporation, and its successors or assigns, when acting in its
capacity as Backup Servicer under this Agreement.
"Certificate Balance" equals, as of the Closing Date, the Initial
--------------------
Certificate Balance and, thereafter, will equal the Initial Certificate
Balance reduced by all amounts allocable to principal previously distributed
to Certificateholders.
"Certificate Distribution Account" has the meaning assigned to such term
--------------------------------
in the Trust Agreement.
1
<PAGE>
"Certificate Pool Factor" means, as of the close of business on the last
-----------------------
day of a Collection Period, a seven-digit decimal figure equal to the
Certificate Balance (after giving effect to any reductions therein to
be made on the immediately following Distribution Date) divided by
the Initial Certificate Balance. The Certificate Pool Factor will be
1.0000000 as of the Closing Date; thereafter, the Certificate Pool Factor
will decline to reflect reductions in the Certificate Balance.
"Certificateholders" or "Holders" (when used in the context of the
------------------ -------
Holders of Certificates) has the meaning assigned to such term in the
Trust Agreement.
"Certificateholders' Distributable Amount" means, with respect to any
-----------------------------------------
Distribution Date, the sum of the Certificateholders' Principal
Distributable Amount and the Certificateholders' Interest Distributable
Amount for such date.
"Certificateholders' Interest Carryover Shortfall" means, with respect to
------------------------------------------------
any Distribution Date, (i) the excess of the Certificateholders' Interest
Distributable Amount for the preceding Distribution Date, over the amount
in respect of interest that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, plus
(ii) ___ days of interest on the amount of such excess for such
preceding Distribution Date, to the extent permitted by law,
at the Pass-Through Rate.
"Certificateholders' Interest Distributable Amount" means, with respect
--------------------------------------------------
to any Distribution Date, the sum of the Certificateholders' (Monthly)
(Quarterly) Interest Distributable Amount for such Distribution
Date and the Certificateholders' Interest Carryover Shortfall for such
Distribution Date. Interest with respect to the Certificates shall be
computed on the basis of a 360-day year consisting of twelve 30-day months
for all purposes of this Agreement and the Basic Documents.
"Certificateholders' (Monthly) (Quarterly) Interest Distributable Amount"
-----------------------------------------------------------------------
means, with respect to any Distribution Date, (30) (90) days of interest at
the Pass-Through Rate on the Certificate Balance on the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, on the
Closing Date) after giving effect to all payments of principal to
Certificateholders on such immediately preceding Distribution Date.
"Certificateholders' (Monthly) (Quarterly) Principal Distributable
------------------------------------------------------------------------
Amount" means, with respect to any Distribution Date prior to the
Distribution Date on which the Notes are paid in full, zero; and with respect
to any Distribution Date on or after the Distribution Date on which the Notes
are paid in full, 100% of the Principal Distribution Amount for such
Distribution Date (less, on the Distribution Date on which the Notes are
paid in full, the portion thereof payable as principal of the Notes).
"Certificateholders' Principal Carryover Shortfall" means, as of the
---------------------------------------------------
close of a particular Distribution Date, the excess of the
2
<PAGE>
Certicateholders' (Monthly) (Quarterly) Principal Distributable Amount and
any outstanding Certificateholders' Principal Carryover Shortfall from
the preceding Distribution Date, over the amount in respect of principal
that is actually deposited in the Certificate Distribution Account on such
particular Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with respect
--------------------------------------------------
to any Distribution Date, the sum of the Certificateholders' (Monthly)
(Quarterly) Principal Distributable Amount for such Distribution Date and
the Certificateholders' Principal Carryover Shortfall as of the close of
the preceding Distribution Date; provided, however, that the
Certificateholders' Principal Distributable Amount shall not exceed the
Certificate Balance. In addition, on the Final Scheduled Distribution
Date, the principal required to be included in the Certificateholders'
Principal Distributable Amount will include the lesser of (a) (i) any
Scheduled Payments of principal due and remaining unpaid on each Precomputed
Receivable and (ii) any principal due and remaining unpaid on each Simple
Interest Receivable, in each case, in the Trust as of the Final Scheduled
Distribution Date or (b) the amount that is necessary (after giving effect
to the other amounts to be deposited in the Certificate Distribution Account
on such Distribution Date and allocable to principal) to reduce the
Certificate Balance to zero.
"Certificates" means the Trust Certificates (as defined in the Trust
------------
Agreement).
"Class" means any one of the classes of Notes.
-----
"Class A-1 Final Scheduled Distribution Date" means the
-------------------------------------------------------
____________________ Distribution Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note is
--------------------
registered in the Note Register.
"Class A-2 Final Scheduled Distribution Date" means the
--------------------------------------------------------
____________________ Distribution Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note is
--------------------
registered in the Note Register.
"Closing Date" means ____________________.
---------
"Collection Account" means the account designated as such, established
-------------------
and maintained pursuant to Section 5.01(a)(i).
"Collection Period" means the (three) calendar-month (period) ending on
-----------------
the last day of the month preceding the month of each Distribution Date.
Any amount or balance stated as of the last day of a Collection Period shall
give effect to the following calculations as determined as of the close
of business on such last day:
(1) all applications of collections, (2) all current and previous Payaheads,
(3) all applications of Payahead Balances and
3
<PAGE>
(4) all distributions to be made on the following Distribution Date.
"Computer Tape" means a computer tape generated by the Servicer that
--------------
provides information relating to the Receivables.
"Contract" means a motor vehicle retail installment sale contract.
--------
"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 at the date of the execution of this
Agreement is located at __________________________________________________
____________________________________; or at such other address as the
Indenture Trustee may designate from time to time by notice to the
Noteholders and the Depositor, or the principal corporate trust office of
any successor Indenture Trustee (of which address such successor Indenture
Trustee will notify the Noteholders and the Depositor).
"Custodial Agreement" means the Custodial Agreement dated as of
-------------------
_______________________________________________, among the Issuer,
___________________________________, as Indenture Trustee (and Custodian),
and the Servicer.
"Custodian" means ___________________________, as Custodian under the
---------
Custodial Agreement and any successor Custodian pursuant to the Custodial
Agreement.
"Cutoff Date" means ______________________.
-----------
"Dealer" means the dealer or other entity who sold a Financed Vehicle and
------
originated the related Contract or who acquired a Contract and in either case
assigned the related Receivable to ___________ under an existing agreement
between it and ___________.
"Dealer Reserve Account" means the account designated as such,
-------------------------
established and maintained pursuant to Section 5.01.
"Delinquency Trigger Event" means, as to any Collection Period, that the
-------------------------
Average Three Month Delinquency Ratio as of the last day of such Collection
Period is greater than ___%. "Average Three Month Delinquency Ratio" means,
as of any date, the ratio of the average aggregate Principal Balances of
Receivables that are 60 days or more delinquent for each of the three prior
calendar months prior to such date to the average of the Pool Balances
as of the end of such periods.
"Delivery" when used with respect to Trust Account Property means:
--------
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and
are susceptible of physical delivery,
4
<PAGE>
transfer thereof to the Indenture Trustee or its nominee or custodian by
physical delivery to the Indenture Trustee or its nominee or
custodian endorsed to, or registered in the name of, the Indenture
Trustee or its nominee or custodian or endorsed in blank, and, with
respect to a "certificated security" (as defined in Section 8-102(1)(a)
of the UCC) transfer thereof (i) by delivery of such certificated security
endorsed to, or registered in the name of, the Indenture Trustee or its
nominee or custodian or endorsed in blank to a financial intermediary
(as defined in Section 8-313 of the UCC) and the making by such financial
intermediary of entries on its books and records identifying such
certificated securities as belonging to the Indenture Trustee or its
nominee or custodian and the sending by such financial intermediary of
a confirmation of the purchase of such certificated security by the
Indenture Trustee or its nominee or custodian, or (ii) by delivery
thereof to a "clearing corporation" (as defined in Section 8-102(3) of
the UCC) and the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities account of
the transferor and increasing the appropriate securities account of
a financial intermediary by the amount of such certificated security,
the identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities
by such clearing corporation or a "custodian bank" (as defined in
Section 8-102(4) of the UCC) or the nominee of either subject to the
clearing corporation's exclusive control, the sending of a confirmation
by the financial intermediary of the purchase by the Indenture Trustee or
its nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying
such certificated securities as belonging to the Indenture Trustee or its
nominee or custodian (all of the foregoing, "Physical Property"), and, in
any event, any such Physical Property in registered form shall be in the
name of the Indenture Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become appropriate
to effect the complete transfer of ownership of any such Trust Account
Property (as defined herein) to the Indenture Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or
the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations, the
following procedures, all in accordance with applicable law, including
applicable Federal regulations and Articles 8 and 9 of the UCC: book-
entry registration of such Trust Account Property to an appropriate book-
entry account maintained with a Federal Reserve Bank by a financial
intermediary which is also a "depository" pursuant to applicable Federal
regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation
5
<PAGE>
of such book-entry registration to the Indenture Trustee or its
nominee or custodian of the purchase by the Indenture Trustee or its
nominee or custodian of such book-entry security; the making by such
financial intermediary of entries in its books and records identifying
such book-entry security held through the Federal Reserve System
pursuant to Federal book-entry regulations as belonging to the Indenture
Trustee or its nominee or custodian and indicating that such custodian
holds such Trust Account Property solely as agent for the Indenture
Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete
transfer of ownership of any such Trust Account Property to the
Indenture Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation thereof;
and (c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the sending
of a confirmation by the financial intermediary of the purchase by the
Indenture Trustee or its nominee or custodian of such uncertificated
security, and the making by such financial intermediary of entries on its
books and records identifying such uncertificated certificates as
belonging to the Indenture Trustee or its nominee or custodian.
"Depositor" means Financial Asset Securities Corp., a Delaware
---------
corporation and any successor in interest.
"Distribution Date" means (the _____ day of each calendar month)
------------------
(____________, ____________, ____________ and ____________ of each year) or,
if such day is not a Business Day, the immediately following Business Day,
commencing on __________________.
"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 shall have a credit rating from each Rating Agency in one of
its generic rating categories that signifies investment grade.
"Eligible Institution" means (a) the corporate trust department of the
---------------------
Indenture Trustee or the Owner Trustee or (b) a depository institution
organized under the laws of the United States of America or any one of
the states thereof or the District of
6
<PAGE>
Columbia (or any domestic branch of a foreign bank), which (i) has either
(A) a long-term unsecured debt rating of A or better by each Rating Agency
or, if not rated by each Rating Agency, of A or better by Standard &
Poor's, A1 or better by Moody's and, if rated by one of the Rating Agencies,
A or better by such agency and (ii) whose deposits are insured by the FDIC.
If so qualified, the Indenture Trustee or the Owner Trustee may be
considered an Eligible Institution for the purposes of clause (b) of this
definition.
"Eligible Investments" means book-entry securities, negotiable
----------------------
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
the full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws
of the United States of America or any state thereof (or any domestic
branch of a foreign bank) and subject to supervision and examination by
federal or state banking or depository institution authorities;
provided, however, that at the time of the investment or contractual
commitment to invest therein, the commercial paper or other short-term
unsecured debt obligations thereof (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) shall have a short-term credit
rating from each Rating Agency in the highest investment category granted
thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each Rating
Agency in the highest investment category granted thereby;
(d) investments in money market mutual funds having a rating from
Standard & Poor's and Moody's and, if any Rating Agency rates such fund,
from such agency in the highest investment category granted by each
Rating Agency so rating such fund (including funds for which the
Indenture Trustee or the Owner Trustee or any of their respective
Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of which
are backed by the full faith and credit of the United States of America,
in either case entered into with a depository institution or trust
company (acting as principal) described in clause (b); and
7
<PAGE>
(g) any other investment with respect to which the Issuer or the
Servicer has received written notification from each Rating Agency that
the acquisition of such investment as an Eligible Investment will not
result in a withdrawal or downgrading of the ratings on the Notes or
Certificates.
"Excess Spread" shall have the meaning set forth in Section 5.06(a)(ii).
-------------
"FDIC" means the Federal Deposit Insurance Corporation.
----
"Final Scheduled Distribution Date" means the __________________
-------------------------------------
Distribution Date.
"Final Scheduled Maturity Date" means __________________.
-----------------------------
"Financed Vehicle" means an automobile, light-duty truck or van, together
----------------
with all accessions thereto, securing an Obligor's indebtedness under the
related Receivable.
"Indenture" means the Indenture dated as of __________________, between
---------
the Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under
-----------------
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Initial Certificate Balance" shall have the meaning set forth in the
----------------------------
Trust Agreement.
"Insolvency Event" means, with respect to a specified Person, (a) the
----------------
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property
in an involuntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar
official for such Person or for any substantial part of its property,
or ordering the winding-up or liquidation of such Person's affairs, and
such decree or order shall remain unstayed and in effect for a period of
60 consecutive days; or (b) the commencement by such Person of a voluntary
case under any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to
the entry of an order for relief in an involuntary case under any such law,
or the consent by such Person to the appointment of or taking possession
by a receiver, liquidator, assignee, custodian, trustee, sequestrator, or
similar official for such Person or for any substantial part of its
property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its
debts as such debts become due, or the taking of action by such Person in
furtherance of any of the foregoing.
8
<PAGE>
"Insolvency Proceeds" shall have the meaning set forth in Section 9.01.
-------------------
"Insurance Policies" means any physical damage, credit life, disability,
-------------------
theft, mechanical breakdown, dual interest, or guaranteed auto-protection
insurance policies or coverage relating to the Financed Vehicles or Obligors.
"Investment Earnings" means, with respect to any Payment Determination
--------------------
Date, the investment earnings (net of losses and investment expenses) on
amounts on deposit in the Trust Accounts (other than the Dealer Reserve
Account) to be deposited into the Collection Account and to be deemed
to constitute a portion of the Total Distribution Amount for the
related Distribution Date pursuant to Section 5.01(b).
"Issuer" means FASCO Auto Trust 199_-_.
------
"Lien" means a security interest, lien, charge, pledge, equity, or
----
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to a Receivable by operation of law as a result of any act or
omission by the related Obligor.
"Liquidated Receivable" means any defaulted Receivable as to which the
---------------------
Servicer has determined that all amounts which it expects to recover therefrom
or on account thereof have been recovered or with respect to which the related
Financed Vehicle has been realized upon and disposed of and the proceeds of
such disposition have been received; provided that any Receivable that is
120 days or more past due shall be deemed to be a Liquidated Receivable.
"Liquidation Proceeds" means, with respect to any Liquidated Receivable,
---------------------
the moneys collected in respect thereof, from whatever source, including
Insurance Policy proceeds, net of the sum of any amounts expended by the
Servicer in connection with such liquidation and any amounts required by
law to be remitted to the Obligor on such Liquidated Receivable.
"Loss Trigger Event" means, as to any Collection Period, that the Average
------------------
Six Month Realized Loss Ratio as of the last day of such Collection Period is
greater than ___%. The "Average Six Month Realized Loss Ratio" as of
any date is the ratio, expressed on an annualized basis, of the average
of the aggregate Realized Losses in respect of Liquidated Receivables for
each of the six calendar month periods (or lesser number of calendar
months from the Cutoff Date) prior to such date to the average of the Pool
Balance as of the beginning of such periods.
"Moody's" means Moody's Investors Service, Inc., and any successors in
-------
interest.
"Note Distribution Account" means the account designated as such,
---------------------------
established and maintained pursuant to Section 5.01.
9
<PAGE>
"Note Pool Factor" means, with respect to each Class of Notes as of the
----------------
close of business on the last day of a Collection Period, a seven-digit
decimal figure equal to the Outstanding Amount of such Class of Notes divided
by the original Outstanding Amount of such Class of Notes. The Note Pool
Factor for each Class of Notes will be 1.0000000 as of the Closing Date;
thereafter, the Note Pool Factor will decline to reflect reductions in
the Outstanding Amount of the applicable Class of Notes.
"Noteholders' Distributable Amount" means, with respect to any
-------------------------------------
Distribution Date, the sum of the Noteholders' Principal Distributable
Amount and the Noteholders' Interest Distributable Amount for such
Distribution Date.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
------------------------------------------
Distribution Date, (i) the excess of the Noteholders' Interest Distributable
Amount for the preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Note Distribution Account on
such preceding Distribution Date, plus (ii) (30) (90) days of interest on
the amount of such excess for such preceding Distribution Date, to the
extent permitted by law, at the respective Interest Rates borne by each
Class of the Notes.
"Noteholders' Interest Distributable Amount" means, with respect to any
-------------------------------------------
Distribution Date, the sum of the Noteholders' (Monthly) (Quarterly) Interest
Distributable Amount for such Distribution Date and the Noteholders' Interest
Carryover Shortfall for such Distribution Date. For all purposes of this
Agreement and the Basic Documents, interest with respect to each Class of
Notes shall be computed on the basis of a 360-day year consisting of twelve
30-day months.
"Noteholders' (Monthly) (Quarterly) Interest Distributable Amount" means,
----------------------------------------------------------------
with respect to any Distribution Date, (30) (90) days of interest on the
Class A-1 Notes and the Class A-2 Notes at the Class A-1 Interest Rate
and the Class A-2 Interest Rate, respectively, on the Outstanding Amount of
the Notes of such Class on the immediately preceding Distribution Date
(or, in the case of the first Distribution Date, the Closing Date) after
giving effect to all payments of principal to the Noteholders on such
immediately preceding Distribution Date.
"Noteholders' (Monthly) (Quarterly) Principal Distributable Amount"
-----------------------------------------------------------------------
means, with respect to any Distribution Date, for so long as the Class A-1
Notes or Class A-2 Notes are outstanding, 100% of the Principal Distribution
Amount; provided, however, that on the Distribution Date on which the
Outstanding Amount of the Class A-2 Notes is reduced to zero, the
portion, if any, of the Principal Distribution Amount that is not
applied to the Class A-2 Notes will be applied to the principal of the
Certificates.
"Noteholders' Principal Carryover Shortfall" means, as of the close of
-------------------------------------------
business on a particular Distribution Date, the excess of the Noteholders'
(Monthly) (Quarterly) Principal Distributable
10
<PAGE>
and any outstanding Noteholders' Principal Carryover Shortfall from the
preceding Distribution Date, over the amount in respect of principal that is
actually deposited in the Note Distribution Account on such particular
Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to any
--------------------------------------------
Distribution Date, the sum of the Noteholders' (Monthly) (Quarterly) Principal
Distributable Amount for such Distribution Date and the Noteholders' Principal
Carryover Shortfall as of the close of the preceding Distribution Date;
provided, however, that the Noteholders' Principal Distributable Amount shall
not exceed the Outstanding Amount of the Notes. In addition, (i) on the
Class A-1 Final Scheduled Distribution Date, the Noteholder's Principal
Distributable Amount will not be less than the amount that is necessary
(after giving effect to all other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to principal)
to reduce the Outstanding Amount of the Class A-1 Notes to zero;
and (ii) on the Class A-2 Final Scheduled Distribution Date the
Noteholders' Principal Distributable Amount will not be less than the
amount that is necessary (after giving effect to all other amounts to
be deposited in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the Outstanding Amount of the
Class A-2 Notes to zero.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
-------
related Financed Vehicle and any other Person who owes payments under
the Receivable.
"Officers' Certificate" means a certificate signed by (a) the chairman of
---------------------
the board, the president or any vice president and (b) a treasurer,
assistant treasurer, the controller or any assistant controller, secretary
or assistant secretary of the Seller, the Depositor, the Servicer or
the Backup Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of counsel, who
------------------
may be an employee of or counsel to the Seller, the Depositor, Servicer or
the Backup Servicer, which counsel shall be acceptable to the Indenture
Trustee, the Owner Trustee or each Rating Agency, as applicable.
"Original Pool Balance" means the Pool Balance as of the Cutoff Date.
---------------
"Owner Trust Estate" has the meaning assigned to such term in the Trust
------------------
Agreement.
"Owner Trustee" means the Person acting as Owner Trustee under the Trust
-------------
Agreement, its successors in interest and any successor owner trustee under
the Trust Agreement.
"Pass-Through Rate" means ______% per annum.
------------
11
<PAGE>
"Payahead" on a Receivable that is a Precomputed Receivable means the
--------
amount, as of the close of business on the last day of a Collection Period,
computed in accordance with Section 5.03 with respect to such Receivable.
"Payahead Account" means the account designated as such, established and
----------------
maintained pursuant to Section 5.01.
"Payahead Balance" on a Receivable that is a Precomputed Receivable means
----------------
the sum, as of the close of business on the last day of a Collection Period,
of all Payaheads made by or on behalf of the Obligor with respect to such
Precomputed Receivable, as reduced by applications of previous Payaheads
with respect to such Precomputed Receivable pursuant to Section 5.03.
"Payment Determination Date" means, with respect to any Distribution
---------------------------
Date, the _____ day of the month (or if such day is not a Business Day, the
next succeeding Business Day) in which such Distribution Date occurs.
"Physical Property" has the meaning assigned to such term in the
------------------
definition of "Delivery" above.
"Pool Balance" means, as of the close of business on the last day of a
------------
Collection Period or any other date of determination, the aggregate Principal
Balance of the Receivables as of such day (excluding Purchased Receivables and
Liquidated Receivables).
"Precomputed Receivable" means any Receivable (i) under which the portion
----------------------
of a payment allocable to earned interest (which may be referred to in
the related Contract as an add-on finance charge) and the portion allocable
to the Amount Financed is determined according to the sum of periodic
balances or the sum of monthly balances or any equivalent method or
(ii) that is a monthly actuarial receivable.
"Principal Balance" means (a) with respect to any Precomputed Receivable
-----------------
as of the close of business on the last day of a Collection Period, the Amount
Financed minus the sum of (i) that portion of all Scheduled Payments due
on or prior to such day allocable to principal using the actuarial or
constant yield method, (ii) any payment of the Purchase Amount with respect
to the Precomputed Receivable allocable to principal and (iii) any prepayment
in full applied to reduce the Principal Balance of the Precomputed Receivable
and (b) with respect to any Simple Interest Receivable as of the close of
business on the last day of a Collection Period, the Amount Financed minus
the sum of (i) the portion of all payments made by or on behalf of the
related Obligor on or prior to such day and allocable to principal using the
Simple Interest Method and (ii) any payment of the Purchase Amount with
respect to the Simple Interest Receivable allocable to principal.
"Principal Distribution Amount" means, with respect to any Distribution
-----------------------------
Date, an amount equal to the sum of the following amounts with respect to the
related Collection Period:
(i) with
12
<PAGE>
respect to Precomputed Receivables, the principal component of all monthly
payments scheduled to be received with respect to such Receivables and all
prepayments in full of such Receivables (including amounts with respect
thereto withdrawn from the Payahead Account); (ii) with respect to Simple
Interest Receivables, that portion of all collections on such Receivables
allocable to principal; (iii) the Principal Balance of all Precomputed
Receivables that became Liquidated Receivables during such Collection
Period; (iv) all Liquidation Proceeds attributable to the principal amount
of Simple Interest Receivables that became Liquidated Receivables during
such Collection Period, plus all Realized Losses with respect to such
Liquidated Receivables; and (v) to the extent attributable to principal,
the Purchase Amount of each Receivable that was purchased by ___________
or by the Servicer during the related Collection Period.
"Purchase Amount" means the amount, as of the close of business on the
---------------
last day of a Collection Period, required to prepay a Receivable in full
under the terms thereof, including interest to the end of the month of
purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
--------------------
business on the last day of a Collection Period by the Servicer
pursuant to Section 4.07 or by ___________ pursuant to Section 3.02.
"Rating Agency" means each of ________________________________ and
--------------
_______________________ and their successors in interest.
"Rating Agency Condition" means, with respect to any action, that each
------------------------
Rating Agency shall have been given 10 days' (or such shorter period as shall
be acceptable to such Rating Agency) prior notice thereof and that each
Rating Agency shall have notified the Depositor, the Servicer, the Owner
Trustee and the Indenture Trustee in writing that such action will not
result in a reduction or withdrawal of the then current rating of the Notes
or the Certificates.
"Realized Losses" means, with respect to any Receivable that becomes a
---------------
Liquidated Receivable, the excess of the Principal Balance of such
Liquidated Receivable over that portion of the Liquidation Proceeds
allocable to principal.
"Receivable" means any Contract listed on Schedule A (which Schedule may
----------
be in the form of microfiche).
"Receivable Files" means the documents specified in Section 3.03.
----------------
"Receivables Purchase Agreement" means the Receivables Purchase Agreement
------------------------------
dated as of __________________, among ___________, _______________, as
seller, and the Depositor, as purchaser.
"Recoveries" means, with respect to any Receivable that becomes a
----------
Liquidated Receivable, moneys collected in respect thereof, from whatever
13
<PAGE>
source, during any Collection Period following the Collection Period in
which such Receivable became a Liquidated Receivable, net of the sum of any
amounts expended by the Servicer for the account of the Obligor and any
amounts required by law to be remitted to the Obligor.
"Repossession Trigger Event" means, as to any Collection Period, that the
--------------------------
Average Six Month Repossession Ratio as of the last day of such Collection
Period is greater than _____%. "Average Six Month Repossession Ratio" as
of any date is the ratio (expressed on an annualized basis) of the
average of the aggregate Principal Balances of Receivables with respect to
which the related Financed Vehicle has been repossessed by the Servicer for
each of the six calendar months (or lesser number of calendar months since
the Cutoff Date) prior to such date to the average Pool Balances as of the
beginning of such periods.
"Reserve Account" means the account designated as such, established and
---------------
maintained pursuant to Section 5.01.
"Reserve Account Initial Deposit" means $_______________.
------------------------------
"Scheduled Payment" on a Precomputed Receivable means that portion of the
-----------------
payment required to be made by the Obligor during a calendar month sufficient
to amortize the Principal Balance under the actuarial method over the term
of the Receivable and to provide interest at the APR.
"Seller" means _______________, a ______________ corporation, and any
------
successor in interest.
"Servicer" means ___________, in its capacity as the servicer of the
--------
Receivables, and each successor to ___________ (in the same capacity) pursuant
to Section 7.03 or 8.02.
"Servicer Default" means an event specified in Section 8.01.
----------------
"Servicer's Certificate" means an Officers' Certificate of the Servicer
----------------------
delivered pursuant to Section 4.09, substantially in the form of Exhibit C.
"Servicing Fee" means the fee payable to the Servicer for services
--------------
rendered during a Collection Period, determined pursuant to Section 4.08.
"Servicing Fee Rate" means ______% per annum.
-------------
"Simple Interest Method" means the method of allocating a fixed level
-----------------------
payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the fixed
rate of interest multiplied by the unpaid principal balance multiplied by
the period of time elapsed since the preceding payment of interest was made,
and the remainder of such payment is allocable to principal.
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"Simple Interest Receivable" means any Receivable under which the
--------------------------
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Specified Reserve Account Balance" means, with respect to any
-------------------------------------
Distribution Date, $___________ until the first Distribution Date with
respect to which the Pool Balance on the close of business on the last day of
the Collection Period immediately preceding such date is less than or equal
to $___________ (one-half of the Initial Pool Balance). On such
Distribution Date and thereafter the Specified Reserve Account Balance
shall equal the greater of _____% of the Pool Balance on the close of
business on the last day of the related Collection Period and $___________
until the first Distribution Date with respect to which the Pool Balance on
the close of business on the last day of the preceding Collection Period is
less than or equal to $__________. On such Distribution Date and thereafter
the Specified Reserve Account Balance shall equal 100% of the Pool Balance on
the close of business on the last day of the related Collection Period. In
no event, however, shall the Specified Reserve Account Balance exceed the
aggregate outstanding principal balance of the Notes and the Certificates.
"Standard & Poor's" means Standard & Poor's Rating Services, A Division
-----------------
of the McGraw Hill Companies, Inc. and any successor in interest.
"Total Distribution Amount" means, with respect to a Distribution Date,
-------------------------
the sum of the following amounts with respect to the related Collection
Period: (i) that portion of all collections on the Receivables (including
amounts withdrawn from the Payahead Account but excluding amounts deposited
into the Payahead Account) allocable to principal and interest; (ii) all
Liquidation Proceeds, and all Recoveries in respect of Liquidated
Receivables that were written off in prior Collection Periods; (iii) the
Purchase Amount of each Receivable that was purchased by ___________ or by
the Servicer during the related Collection Period; and (iv) Investment
Earnings.
"Trigger Event" means any Distribution Date on which one or more of a
--------------
Delinquency Trigger Event, a Repossession Trigger Event or a Loss Trigger
Event has occurred with respect to the previously ended Collection Period.
A Trigger Event will be deemed to have terminated as to any Distribution
Date (subject to the reoccurrence of such event) if neither a Delinquency
Trigger Event, a Loss Trigger Event or a Repossession Trigger Event shall
have occurred during the related Collection Period.
"Trust" means the Issuer.
-----
"Trust Account Property" means the Trust Accounts, all amounts and
------------------------
investments held from time to time in any Trust Account (whether in the
form of deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise),
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including the Reserve Account Initial Deposit, and all proceeds of the
foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.01.
--------------
"Trust Agreement" means the Trust Agreement dated as of
-----------------
__________________, between the Depositor and the Owner Trustee.
"Trust Officer" means, in the case of 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 and, with respect to the Owner Trustee, any officer
in the Corporate Trust Administration Department of the Owner Trustee with
direct responsibility for the administration of the Trust Agreement and the
Basic Documents on behalf of the Owner Trustee.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized terms
------------------------------
used and not otherwise defined herein have the meanings assigned to them in
the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate
or other document to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles. To
the extent that the definitions of accounting terms in this Agreement or in
any such certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document
shall control.
(d) The words "hereof", "herein", "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; 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
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terms and to the masculine as well as to the feminine and neuter genders of
such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
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ARTICLE II
Conveyance of Receivables
-------------------------
SECTION 2.01. Conveyance of Receivables. In consideration of the
---------------------------
Issuer's delivery on the Closing Date to or upon the order of the Depositor of
$_______________, the Depositor does hereby sell, transfer, assign, set over
and otherwise convey to the Issuer, without recourse (subject to the
obligations herein), all right, title and interest of the Depositor in and
to (but none of the Depositor's obligations with respect to):
(1) the Receivables and all moneys received thereon on and after
the Cutoff Date plus all Payaheads as of the Cutoff Date;
(2) the security interests in the Financed Vehicles granted by
Obligors pursuant to such Receivables, any other right to realize upon
property securing a Receivable and any other interest of the Depositor in
such Financed Vehicles, including the Depositor's right, title and
interest in or to the lien on the Financed Vehicles in the name of the
Depositor's agent, _______________ or ___________;
(3) any proceeds with respect to the Receivables from claims on
any Insurance Policies relating to Financed Vehicles or Obligors;
(4) proceeds of any recourse (but none of the obligations) to
Dealers on Receivables;
(5) any Financed Vehicle that shall have secured a Receivable and
shall have been acquired by or on behalf of the Seller, the Depositor,
the Servicer, or the Trust;
(6) the Receivables Files;
(7) the Receivables Purchase Agreement, including the right of the
Depositor to cause ___________ to purchase Receivables under certain
circumstances;
(8) the Trust Accounts; and
(9) the proceeds of any and all of the foregoing.
ARTICLE III
The Receivables
---------------
SECTION 3.01. Representations and Warranties of the Depositor with
--------------------------------------------------------
Respect to the Receivables. The Depositor makes the following representations
- --------------------------
and warranties with respect to the Receivables on which the Issuer relies in
acquiring the Receivables and issuing the Notes and Certificates. Such
representations and warranties
18
<PAGE>
speak as of the execution and delivery of this Agreement and as of the Closing
Date, but shall survive the sale, transfer and assignment of the Receivables
to the Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a) Title. It is the intention of the Depositor that the
------
transfer and assignment herein contemplated constitute a sale of the
Receivables from the Depositor to the Issuer and that the beneficial
interest in and title to the Receivables not be part of the debtor's estate
in the event of the filing of a bankruptcy petition by or against the
Depositor under any bankruptcy law. No Receivable has been sold,
transferred, assigned or pledged by the Depositor to any
Person other than the Issuer. Immediately prior to the transfer and
assignment herein contemplated, the Depositor 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 Issuer shall have good and
marketable title to each Receivable, free and clear of all Liens and rights
of others; and the transfer has been perfected under the UCC.
(b) All Filings Made. All filings (including UCC filings)
-------------------
necessary in any jurisdiction to give (i) the Issuer a first perfected
ownership interest in the Receivables and (ii) the Indenture Trustee a first
perfected security interest in the Receivables shall have been made.
SECTION 3.02. Repurchase upon Breach. The Depositor, the Servicer, the
-----------------------
Backup Servicer and the Issuer, as the case may be, shall inform the other
parties to this Agreement, ___________ and the Indenture Trustee promptly,
in writing, upon the discovery of any breach of the Depositor's
representations and warranties made pursuant to Section 3.01 or of
___________ representations and warranties made pursuant to Section
3.02(c) of the Receivables Purchase Agreement. Unless any such breach
shall have been cured by the last day of the Collection Period following the
discovery thereof by ___________ or the receipt by ___________ of written
notice thereof from the Owner Trustee, the Indenture Trustee, the Depositor,
the Servicer or the Backup Servicer, the Depositor, the Issuer or the Owner
Trustee shall enforce the obligation of ___________ under the Receivables
Purchase Agreement to purchase as of such last day any Receivable with
respect to which such a breach had occurred if such breach has a material
and adverse effect on the interests of the Depositor or the Trust in and
to such Receivable. In consideration for the purchased Receivable, _______
shall remit the Purchase Amount in the manner specified in Section 6.02
of the Receivables Purchase Agreement. Subject to the provisions of Section
6.03, the sole remedy of the Issuer, the Owner Trustee, the Indenture
Trustee, the Noteholders or the Certificateholders with respect to a
breach of representations and warranties pursuant to Section 3.01 and the
agreement contained in this Section shall be to require ___________ to
purchase Receivables pursuant to this Section and the Receivables Purchase
Agreement.
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SECTION 3.03. Custody of Receivable Files. (a) In connection with the
---------------------------
sale and transfer of the Receivables pursuant to this Agreement, the Issuer,
simultaneously with the execution and delivery of this Agreement, is
entering into the Custodial Agreement with the Custodian pursuant to which
the Issuer appoints the Custodian, and the Custodian accepts such appointment,
to act as the agent and bailee of the Issuer and the Indenture Trustee,
for all purposes of Article 9 of the UCC, as Custodian of the following
documents or instruments, which are hereby constructively delivered to
the Indenture Trustee, as pledgee of the Issuer, with respect to each
Receivable:
(i) a list of Receivables in the form of Schedule A hereto,
identifying such Receivable together with the Computer Tape identifying
such Receivable and a completed checklist in the form of Exhibit D hereto
(it being expressly understood and agreed that the Custodian and
Indenture Trustee have no duties or responsibilities for checking or
verifying the accuracy or completeness of such checklist);
(ii) the fully executed original Receivable with manual signatures
and Dealer endorsements, together with executed assignments thereof by
___________, the Seller and the Depositor in blank, which assignments
shall be substantially in the form of Exhibit E hereto;
(iii) a written confirmation from the Servicer certifying as to the
Insurance Policies covering the Receivable and stating that they are in
full force and effect;
(iv) (a) the original certificate of title relating to the Financed
Vehicle or (b) a copy of the application for a certificate of title or
(c) a copy of the existing title, lien entry form or receipt of
registration or (d) a copy of the related letter guarantee, in each case
noting the lien of ___________ or the Seller; provided, however, that at
any time during the term hereof the Owner Trustee may request and require
that the Depositor cause the party in whose name the lien is noted to
transfer such lien to the Depositor;
(v) an original or copy of the credit application of the Obligor;
and
(vi) financing statements on Form UCC-1 listing the Owner Trustee as
the secured party with respect to each Receivable and the other items
conveyed pursuant to Section 2.01 and stamped to indicate filing with the
Office of the Secretary of State of the State of Florida and with the
Office of the Secretary of the State of Delaware.
(b) The Servicer or the Custodian, as the case may be, shall provide
to (or in the case of the Custodian shall be required pursuant to the
Custodial Agreement to provide to) the Indenture Trustee, the Issuer, the
Backup Servicer, Noteholders and Certificateholders and their duly authorized
representatives,
20
<PAGE>
attorneys or auditors access to the Receivable Files in such cases where the
Indenture Trustee, the Issuer, a Noteholder or a Certificateholder is
required by applicable statutes or regulations to review the related
accounts, records and computer systems maintained by the Servicer or the
Custodian, as the case may be, such access being afforded without charge but
only upon reasonable request and during normal business hours at offices of
the Servicer or the Custodian, as the case may be, designated by the Servicer
or the Custodian. Nothing in this Section shall derogate from the obligation
of the Servicer or the Custodian to observe any applicable law prohibiting
disclosure of information regarding the Obligors, and the failure of the
Servicer or the Custodian to provide access as provided in this Section as
the result of such obligation shall not constitute a breach of this Section.
ARTICLE IV
Administration and Servicing of Receivables
-------------------------------------------
SECTION 4.01. Duties of Servicer. The Servicer, for the benefit of the
------------------
Issuer (to the extent provided herein), shall manage, service, administer and
make collections on the Receivables (other than Purchased Receivables) with
reasonable care, acting prudently and in accordance with customary and
usual servicing procedures employed by other institutional servicers of
receivables of the type subject to this Agreement and applicable law and,
to the degree not inconsistent with the foregoing, using that degree of
skill and attention that the Servicer exercises with respect to all
comparable automotive receivables that it services for itself or others.
The Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on the Receivables, investigating
delinquencies, sending billing statements to Obligors, reporting tax
information to Obligors, accounting for collections, and furnishing monthly
and annual statements to the Owner Trustee and the Indenture Trustee
with respect to distributions. To the extent consistent with the
standards, policies and procedures otherwise required hereby, the Servicer
shall follow its customary standards, policies and procedures in performing
its duties as Servicer. Without limiting the generality of the foregoing,
the Servicer is authorized and empowered to execute and deliver, on behalf
of itself, the Issuer, the Owner Trustee, the Indenture Trustee, the
Certificateholders and the Noteholders or any of them, any and all instruments
of satisfaction or cancellation, or partial or full release or discharge, and
all other comparable instruments with respect to the Receivables or to the
Financed Vehicles securing the Receivables. If the Servicer shall commence
a legal proceeding to enforce a Receivable, the Issuer (in the case of a
Receivable other than a Purchased Receivable) shall thereupon be deemed to
have automatically assigned, solely for the purpose of collection, such
Receivable to the Servicer. If in any enforcement suit or legal proceeding
it shall be held that the Servicer may not enforce a Receivable on the
ground that it is not a real party in interest or a holder entitled to
enforce such Receivable, the Owner Trustee
21
<PAGE>
shall at the Servicer's expense and direction, take steps to enforce such
Receivable, including bringing suit in the Servicer's name or the name of the
Owner Trustee, the Indenture Trustee, the Certificateholders or the
Noteholders. The Owner Trustee shall (and the Custodian pursuant to the
Custodial Agreement shall be required), upon the written request of the
Servicer, furnish the Servicer with any powers of attorney and other
documents reasonably necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.
SECTION 4.02. Collection and Allocation of Receivable Payments. The
--------------------------------------------------
Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Receivables as and when the same shall
become due and shall follow such collection procedures as it follows with
respect to all comparable automotive receivables that it services for itself
or others. The Servicer may grant extensions, rebates or adjustments on
a Receivable or arrange with the Obligor to extend or modify the payment
schedule, which actions shall not, for the purposes of this Agreement, modify
the original due dates or amounts of the Scheduled Payments on a Precomputed
Receivable or the original due dates or amounts of the originally scheduled
payments of interest on Simple Interest Receivables; provided, however,
that if the Servicer extends the date for final payment by the Obligor of
any Receivable beyond the Final Scheduled Maturity Date, it shall promptly
purchase such Receivable from the Issuer in accordance with the terms of
Section 4.07. The Servicer may in its discretion waive any late payment
charge or any other fees that may be collected in the ordinary course
of servicing a Receivable. The Servicer shall not agree to any alteration
of the interest rate on any Receivable or of the amount of any Scheduled
Payment on Precomputed Receivables or the originally scheduled payments on
Simple Interest Receivables.
SECTION 4.03. Realization upon Receivables. On behalf of the Issuer,
----------------------------
the Servicer shall use its best efforts, consistent with its customary
servicing procedures, to repossess or otherwise convert the ownership of
and liquidate the Financed Vehicle securing any Receivable as to which
the Servicer shall have determined eventual payment in full is unlikely.
The Servicer shall follow such customary and usual practices and procedures
as it shall deem necessary or advisable in its servicing of automotive
receivables, which may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private
sale. The foregoing shall be subject to the provision that, in any case in
which the Financed Vehicle shall have suffered damage, the Servicer shall
not expend funds in connection with the repair or the repossession of such
Financed Vehicle unless it shall determine in its discretion that such
repair and/or repossession will increase the Liquidation Proceeds by an
amount greater than the amount of such expenses. (The Servicer may not sell
any Financed Vehicles to ______________________________ for less than 100%
of such Financed Vehicles' wholesale value, determined from the "Black Book".)
22
<PAGE>
SECTION 4.04. Insurance. The Servicer shall, in accordance with its
---------
customary servicing procedures, require that each Obligor shall have obtained
physical damage and theft insurance covering the Financed Vehicle as of
the execution of the Receivable. The Servicer shall notify each insurer
providing a "guaranteed auto protection" insurance policy with respect to the
Receivables to include the Indenture Trustee as an additional insured and
its payee on each such policy. Upon receipt of notification that the
insurance required pursuant to the terms of any Receivable is not in place,
the Servicer shall obtain "dual interest" insurance chargeable to the
Obligor in accordance with its customary servicing procedures.
SECTION 4.05. Maintenance of Security Interests in Financed Vehicles.
--------------------------------------------------------
The Servicer shall, in accordance with its customary servicing procedures,
take such steps as are necessary to maintain perfection of the security
interest created by each Receivable in the related Financed Vehicle.
The Servicer is hereby authorized to take such steps as are necessary
to re-perfect such security interest on behalf of the Issuer and the
Indenture Trustee in the event of the relocation of a Financed Vehicle or
for any other reason.
SECTION 4.06. Covenants of Servicer. The Servicer shall not release the
---------------------
Financed Vehicle securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full
by the Obligor thereunder or repossession, nor shall the Servicer impair the
rights of the Issuer, the Indenture Trustee, the Certificateholders or
the Noteholders in such Receivable, nor shall the Servicer (except
in the case of an extension permitted pursuant to Section 4.02) increase
the number of scheduled payments due under a Receivable.
Neither ___________ nor any Affiliate thereof shall incur liabilities of
any kind to ________________________ Bank (the "Bank"), if the total amount
of such liabilities outstanding at any time exceeds $10,000 except for
liabilities with respect to which the Bank has expressly agreed to
irrevocably and unconditionally waive all right of set-off or other claims
that it may have under contract, applicable law or otherwise with respect to
any funds or monies the Bank may hold from time to time pursuant to the Lock-
box Agreement dated __________________, between ___________ and the Bank, or
any other agreement related to the holding of any proceeds of the Receivables
or the other property conveyed pursuant to Section 2.01.
SECTION 4.07. Purchase of Receivables upon Breach. The Servicer or the
------------------------------------
Owner Trustee shall inform the other party and the Indenture Trustee and
the Depositor promptly, in writing, upon the discovery of any breach pursuant
to Section 4.02, 4.05 or 4.06. Unless the breach shall have been cured
by the last day of the Collection Period following such discovery, the
Servicer shall purchase as of such last day any Receivable with respect to
which such breach had occurred if such breach has a material and adverse
effect on the interests of the Depositor or the Trust in and to
23
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such Receivable. If the Servicer takes any action during any Collection
Period pursuant to Section 4.02 that impairs the rights of the Issuer, the
Indenture Trustee, the Certificateholders or the Noteholders in any Receivable
or as otherwise provided in Section 4.02, the Servicer shall purchase
such Receivable as of the last day of such Collection Period. In
consideration of the purchase of any such Receivable pursuant to either of
the two preceding sentences, the Servicer shall remit the Purchase
Amount in the manner specified in Section 5.04. Subject to Section 7.02,
the sole remedy of the Issuer, the Owner Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders with respect to a breach pursuant to
Section 4.02, 4.05 or 4.06 shall be to require the Servicer to purchase
Receivables pursuant to this Section. The Owner Trustee shall have no duty
to conduct any affirmative investigation as to the occurrence of any
condition requiring the repurchase of any Receivable pursuant to this Section.
SECTION 4.08. Servicing Fee. The Servicing Fee for a Distribution Date
-------------
shall equal the product of (a) (one-twelfth) (one-fourth), (b) the Servicing
Fee Rate and (c) the Pool Balance as of the first day of the preceding
Collection Period. The Servicer shall also be entitled to all late fees,
prepayment charges (including, in the case of a Receivable that provides
for payments according to the "Rule of 78s" and that is prepaid in
full, the difference between the Principal Balance of such Receivable
(plus accrued interest to the date of prepayment) and the principal
balance of such Receivable computed according to the "Rule of 78s"),
and other administrative fees or similar charges allowed by
applicable law with respect to the Receivables, collected (from
whatever source) on the Receivables, plus any reimbursement pursuant
to the last paragraph of Section 7.02.
SECTION 4.09. Servicer's Certificate. Not later than 11:00 a.m. (New
----------------------
York time) on the _____ day of each month, or if such _____ day is not
a Business Day, the next succeeding Business Day, the Servicer shall deliver
to the Owner Trustee, each Paying Agent, the Indenture Trustee, the Backup
Servicer (in electronic media form acceptable to the Backup Servicer) and the
Depositor, with a copy to the Rating Agencies, a Servicer's Certificate
substantially in the form attached hereto as Exhibit C setting forth
the applicable information for each of the items set forth therein.
Receivables to be purchased by the Servicer or by ___________ shall
be identified by the Servicer by account number with respect to such
Receivable (as specified in Schedule A).
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.
-------------------------------------------------------
(a) The Servicer shall deliver to the Owner Trustee and the Indenture Trustee,
on or before ____________ of each year beginning __________________, an
Officers' Certificate, dated as of __________________, stating that (i) a
review of the activities of the Servicer during the preceding 12-month
period (or such shorter period as shall have elapsed since the Closing Date)
and of its performance under this Agreement has been made under such officers'
supervision and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations
24
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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 officers and the nature and status thereof. The Indenture Trustee shall
send a copy of such certificate and the report referred to in Section 4.11 to
each Rating Agency. A copy of such certificate and the report referred to in
Section 4.11 may be obtained by any Certificateholder or Noteholder by a
request in writing to the Owner Trustee addressed to the Corporate Trust
Office. Upon the telephone request of the Owner Trustee, the Indenture
Trustee will promptly furnish the Owner Trustee with a list of Noteholders as
of the date specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee, the Backup Servicer and each Rating Agency, promptly after having
obtained knowledge thereof, but in no event later than five (5) Business Days
thereafter, written notice in an Officers' Certificate of any event which
with the giving of notice or lapse of time, or both, would become a Servicer
Default under Section 8.01.
SECTION 4.11. Annual Independent Certified Public Accountants' Report.
--------------------------------------------------------
The Servicer shall cause a firm of independent certified public accountants,
which may also render other services to the Servicer, the Depositor or their
Affiliates, to deliver to the Owner Trustee and the Indenture Trustee on or
before (February 28) of each year beginning (February 28, 199_), a report
addressed to the Board of Directors of the Servicer, to the effect that
such firm has examined the financial statements of the Servicer for the
preceding twelve months for, in the case of the first such report, during
such longer period that shall have elapsed since the Closing Date) and
issued its report thereon and that such examination (a) was made in
accordance with generally accepted auditing standards and accordingly
included such tests of the accounting records and such other auditing
procedures as such firm considered necessary in the circumstances;
(b) included tests relating to automotive loans serviced for others
in accordance with the requirements of the Uniform Single Audit
Program for Mortgage Bankers (the "Program"), to the extent the procedures in
such Program are applicable to the servicing obligations set forth in this
Agreement; and (c) except as described in the report, disclosed no exceptions
or errors in the records relating to automobile, light-duty truck and van
loans serviced for others that, in the firm's opinion, paragraph four of such
Program requires such firm to report.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
SECTION 4.12. Servicer Expenses. The Servicer shall be required to pay
-----------------
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed
on the Servicer and expenses
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incurred in connection with distributions and reports to Certificateholders
and Noteholders.
SECTION 4.13. Appointment of Subservicer. The Servicer may at any time
--------------------------
appoint a subservicer to perform all or any portion of its obligations
as Servicer hereunder; provided, however, that the Rating Agency Condition
shall have been satisfied in connection therewith; and provided, further,
that the Servicer shall remain obligated and be liable to the Issuer,
the Owner Trustee, the Indenture Trustee, the Certificateholders and
the Noteholders for the servicing and administering of the Receivables
in accordance with the provisions hereof without diminution of such
obligation and liability by virtue of the appointment of such subservicer
and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Receivables. The fees
and expenses of the subservicer shall be as agreed between the Servicer
and its subservicer from time to time, and none of the Issuer, the Owner
Trustee, the Indenture Trustee, the Certificateholders or the Noteholders
shall have any responsibility therefor.
SECTION 4.14. Oversight of Servicing.
----------------------
(a) Commencing on the date of execution of this Agreement and
continuing until the earlier of (i) the termination of the Trust created by
the Trust Agreement and (ii) the appointment of the Backup Servicer as
Servicer under this Agreement, the Servicer shall, on the last day of each
calendar month, deliver to the Backup Servicer in the Computer Tape format
acceptable to the Back-up Servicer, such information as is necessary to
permit the Backup Servicer to service the Receivables in accordance with the
provisions of this Agreement. The Backup Servicer shall accept and store,
but shall not be required to examine, such information. Upon notice that the
Servicer has resigned or upon the removal of the Servicer under this
Agreement, the Backup Servicer shall assume all responsibilities of the
Servicer (or of Indenture Trustee or any other Person then acting as
successor to such Servicer in accordance with Sections 8.01 and 8.02) under
this Agreement within thirty days of such notice or removal. The Backup
Servicer shall service the Receivables in accordance with provisions of this
Agreement.
(b) On the date that each Servicer's Certificate is delivered by the
Servicer to the Owner Trustee and Indenture Trustee, the Servicer shall also
deliver a Computer Tape containing detailed information with respect to the
Receivables for the related Collection Period. The Backup Servicer shall
determine that (i) the Servicer's Certificate appears on its face to be
complete and (ii) that amounts credited to and withdrawn from the Trust
Accounts and the balance of such Trust Accounts are the same as the amount
set forth in such Servicer's Certificate. To the extent verifiable using the
information contained in the Servicer's Certificate, the Backup Servicer
shall calculate and check that the
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calculations made by the Servicer in the Servicer's Certificate are
mathematically accurate.
(c) In the event of any discrepancies or exceptions noted by the
Backup Servicer in the Servicer's Certificate, the Backup Servicer shall,
within three Business Days of its receipt of the Servicer's Certificate,
notify the Servicer of such discrepancies or exceptions. The Servicer shall
consult with the Backup Servicer and use its best efforts to ensure that such
Servicer's Certificate is corrected, and that subsequent Servicer's
Certificates are accurate. If such discrepancies or exceptions cannot be
reconciled within 30 days, the Backup Servicer's interpretation shall prevail
for all subsequent Distribution Dates.
(d) The Backup Servicer will not be responsible for delays
attributable to the Servicer's failure to deliver information, defects in the
information supplied by Servicer or other circumstances beyond the control of
the Backup Servicer.
SECTION 4.15. Duties of Backup Servicer.
-------------------------
(a) The Backup Servicer shall 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 Backup
Servicer.
(b) In the absence of bad faith or negligence on its part, the Backup
Servicer 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 Backup Servicer and conforming to the requirements of this
Agreement.
(c) The Backup Servicer shall not be required 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
the repayment of such funds or adequate written indemnity against such risk
or liability is not reasonably assured to it in writing prior to the
expenditure or risk of such funds or incurrence of financial liability.
(d) The Servicer shall indemnify, defend and hold harmless the Backup
Servicer, its agents, officers, directors or employees from and against any
claim, action, loss, damage, penalty, fine, cost, expense, or other
liability, including court costs and reasonable attorney's fees and expenses,
incurred as a result of its acts or omissions or its breach of its own
representations made in this Agreement or the Backup Servicer's performance
of its duties under this Agreement. The right of indemnification provided
hereby shall survive the termination of this Agreement. The Servicer shall
not be liable to the Backup Servicer, under this Section 4.15 or otherwise,
for the improper acts, negligence or bad faith of the Backup Servicer.
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ARTICLE V
Trust Accounts; Distributions; Reserve Account; Statements to
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Certificateholders and Noteholders
----------------------------------
SECTION 5.01. Establishment of Trust Accounts. (a) (i) The Servicer,
--------------------------------
for the benefit of the Noteholders and the Certificateholders, shall establish
and maintain in the name of the Indenture Trustee an Eligible Deposit Account
(the "Collection Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Noteholders and the
Certificateholders.
(ii) The Servicer, for the benefit of the Noteholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible
Deposit Account (the "Note Distribution Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Noteholders.
(iii) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the
Indenture Trustee an Eligible Deposit Account (the "Reserve Account"),
bearing a designation clearly indicating that the funds deposited therein
are held for the benefit of the Noteholders and the Certificateholders.
(iv) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the
Indenture Trustee an Eligible Deposit Account (the "Payahead Account"),
bearing a designation clearly indicating that the funds deposited therein
are held for the benefit of the Noteholders and the Certificateholders.
(v) The Servicer, for the benefit of the Noteholders, the
Certificateholders and ___________, shall establish and maintain in the
name of the Indenture Trustee an Eligible Deposit Account (the "Dealer
Reserve Account") bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Noteholders, the
Certificateholders, the Depositor and ___________.
(b) With respect to the Collection Account, the Note Distribution
Account, the Reserve Account, the Payahead Account and the Dealer Reserve
Amount (collectively the "Trust Accounts") funds on deposit in such Trust
Accounts (other than the Note Distribution Account) shall be invested by the
Indenture Trustee in Eligible Investments. All such Eligible Investments of
the Trust Fund shall be held by the Indenture Trustee for the benefit of the
beneficiaries of such accounts; provided, that on each Payment Determination
Date all interest and other investment income (net of losses and investment
expenses) on funds on deposit in the Trust Accounts (other than the Dealer
Reserve Account) shall be deposited
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into the Collection Account and shall be deemed to constitute a portion of
the Total Distribution Amount for the related Distribution Date. Investment
income (net of losses and investment expenses) on the Dealer Reserve Account
will be payable on each Distribution Date to the Depositor. Other than as
permitted by each Rating Agency, funds on deposit in the Trust Accounts
shall be invested in Eligible Investments that will mature not later than the
Business Day immediately preceding the next Distribution Date. Funds
deposited in a Trust Account on a day which immediately precedes a
Distribution Date are not required to be invested overnight.
(c) (i) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts
and in all proceeds thereof (including all income thereon) and all such
funds, investments, proceeds and income shall be part of the Trust
Estate. The Trust Accounts shall be under the sole dominion and control
of the Indenture Trustee for the benefit of the Noteholders and the
Certificateholders (and in the case of the Dealer Reserve Account,
___________), as the case may be. If, at any time, any of the Trust
Accounts ceases to be an Eligible Deposit Account, the Indenture Trustee
(or the Servicer on its behalf) shall within 10 Business Days (or such
longer period, not to exceed 30 calendar days, as to which each Rating
Agency may consent) establish a new Trust Account as an Eligible Deposit
Account and shall transfer any cash and/or any investments to such new
Trust Account.
(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Deposit Accounts,
subject to the last sentence of Section 5.01(c)(i); and each such
Eligible Deposit Account shall be subject to the exclusive custody
and control of the Indenture Trustee, and the Indenture Trustee shall
have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance
with paragraph (a) of the definition of "Delivery" and shall be held,
pending maturity or disposition, solely by the Indenture Trustee or a
financial intermediary (as such term is defined in Section 8-313(4)
of the UCC) acting solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to federal book-
entry regulations shall be delivered in accordance with paragraph (b)
of the definition of "Delivery" and shall be maintained by the
Indenture
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Trustee, pending maturity or disposition, through continued
book-entry registration of such Trust Account Property as described
in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article VIII of the UCC and that is not governed by
clause (C) above shall be delivered to the Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued registration of the Indenture
Trustee's (or its nominee's) ownership of such security.
(iii) The Servicer shall have the power, revocable by the Indenture
Trustee or by the Owner Trustee with the consent of the Indenture
Trustee, to instruct the Indenture Trustee to make withdrawals and
payments from the Trust Accounts for the purpose of permitting the
Servicer or the Owner Trustee to carry out its respective duties
hereunder or permitting the Indenture Trustee to carry out its duties
under the Indenture.
(d) The Servicer shall on or prior to each Distribution Date (and
prior to deposits to the Note Distribution Account or the Certificate
Distribution Account) transfer from the Collection Account to the Payahead
Account an amount equal to the increase in the Payahead Balance as described
in Section 5.03 received by the Servicer during the related Collection Period
or, if the Payahead Balance decreased during such Collection Period, shall
transfer an amount equal to the amount of such decrease from the Payahead
Account to the Collection Account.
SECTION 5.02. Collections. The Servicer shall remit within two Business
-----------
Days of receipt thereof to the Collection Account all payments by or on behalf
of the Obligors with respect to the Receivables (other than Purchased
Receivables) and all Liquidation Proceeds and Recoveries, both as collected
during the Collection Period.
SECTION 5.03. Application of Collections. All collections for the
---------------------------
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied first, in the
case of Precomputed Receivables, to the Scheduled Payment and, in the
case of Simple Interest Receivables, to interest and principal in
accordance with the Simple Interest Method. With respect to Precomputed
Receivables, any remaining excess shall be added to the Payahead Balance,
and shall be applied to prepay the Precomputed Receivable (in reduction
of the Payahead Balance as evidenced by a transfer of the net amount of
such reduction from the Payahead Account to the Collection Account), but
only
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if the sum of such excess and the previous Payahead Balance shall be
sufficient to prepay the Receivable in full. Otherwise, any such
remaining excess payments shall constitute a Payahead (as shall the
accumulated amount of such excess on the Receivables as of the Cut-off
Date) and shall increase the Payahead Balance.
SECTION 5.04. Additional Deposits. The Servicer and the Depositor shall
-------------------
deposit or cause to be deposited in the Collection Account the aggregate
Purchase Amount with respect to Purchased Receivables, and the Servicer
shall deposit therein all amounts to be paid under Section 9.01. The
Servicer will deposit the aggregate Purchase Amount with respect to
Purchased Receivables in the Collection Account when such obligations are
due.
SECTION 5.05. Distributions. (a) On each Payment Determination Date,
-------------
the Servicer shall calculate all amounts required to be deposited in the Note
Distribution Account and the Certificate Distribution Account.
(b) On each Distribution Date, the Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Payment Determination Date pursuant to
Section 4.09) to make the following deposits and distributions for receipt by
the Servicer or deposit in the applicable account by 1:00 p.m. (New York
time), to the extent of the Total Distribution Amount, in the following order
of priority:
(i) to the Servicer, from the Interest Distribution Amount, the
Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods;
(ii) to the Note Distribution Account, from the Total Distribution
Amount remaining after the application of clause (i), the Noteholders'
Interest Distributable Amount;
(iii) to the Note Distribution Account, from the Total Distribution
Amount remaining after the application of clauses (i) and (ii), the
Noteholders' Principal Distributable Amount;
(iv) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
through (iii), the Certificateholders' Interest Distributable Amount;
(v) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
through (iv), the Certificateholders' Principal Distributable Amount;
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(vi) to the Reserve Account, the Total Distribution Amount
remaining after application of clauses (i) through (v), as and to the
extent provided in Section 5.06;
(vii) to the Depositor, any remaining amount.
Notwithstanding that the Notes have been paid in full, the Indenture Trustee
shall continue to maintain the Collection Account hereunder until the
Certificate Balance is reduced to zero.
SECTION 5.06. Reserve Account. (a) (i) On the Closing Date, the Owner
---------------
Trustee will deposit, on behalf of the Depositor, the Reserve Account Initial
Deposit into the Reserve Account from the net proceeds of the sale of the
Notes and the Certificates.
(ii) If on a Distribution Date (i) the amount on deposit in the
Reserve Account, after any withdrawals therefrom on or prior to such
Distribution Date, is less than the Specified Reserve Account Balance,
there shall be deposited into the Reserve Account on such Distribution
Date pursuant Section 5.05(b)(vi) the portion of the Total Distribution
Amount on such Distribution Date remaining after payment of the Servicing
Fee, the Noteholders' Distributable Amount and the Certificateholders'
Distributable Amount (such amount, the "Excess Spread") until the amount
on deposit in the Reserve Account equals the Specified Reserve Account
Balance for such Distribution Date and (ii) a Trigger Event has occurred
and not terminated, there shall be deposited into the Reserve Account on
such Distribution Date pursuant to Section 5.05(vi) all of the Excess
Spread, if any, for such Distribution Date.
(b) Unless a Trigger Event has occurred and has not terminated, if
the amount on deposit in the Reserve Account on any Distribution Date (after
giving effect to all deposits thereto or withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve Account Balance for
such Distribution Date, the Servicer shall instruct the Indenture Trustee to
distribute the amount of such excess to the Depositor. During the pendency
of a Trigger Event no amounts will be released to the Depositor from the
Reserve Account (other than pursuant to clause (e) of this Section 5.06, if
applicable).
(c) In the event that the Noteholders' Distributable Amount for a
Distribution Date exceeds the sum of the amounts deposited into the Note
Distribution Account pursuant to Section 5.05(b)(ii) and (iii) on such
Distribution Date, the Servicer shall instruct the Indenture Trustee to
withdraw from the Reserve Account on such Distribution Date an amount equal
to such excess, to the extent of funds available therein, and deposit such
amount into the Note Distribution Account on such Distribution Date.
(d) In the event that the Certificateholders' Distributable Amount
for a Distribution Date exceeds the sum of the amounts
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deposited into the Certificate Distribution Account pursuant to Section
5.05(b)(iv) and (v) on such Distribution Date, the Servicer shall instruct
the Indenture Trustee to withdraw from the Reserve Account on such
Distribution Date an amount equal to such excess, to the extent of
funds available therein after giving effect to paragraph (c) above,
and deposit such amount into the Certificate Distribution Account on
such Distribution Date.
(e) Following the payment in full of the aggregate Outstanding Amount
of the Notes and the Certificate Balance and of all other amounts owing or to
be distributed hereunder or under the Indenture or the Trust Agreement to
Noteholders and Certificateholders and the termination of the Trust, any
amount remaining on deposit in the Reserve Account shall be distributed to
the Depositor.
(f) Upon any distribution to the depositor of amounts from the
Reserve Fund in accordance with the terms hereof, neither the Noteholders nor
the Certificateholders will have any rights in, or claims to, such amounts.
SECTION 5.07. Statements to Certificateholders and Noteholders. (a) On
------------------------------------------------
or prior to each Distribution Date, the Servicer shall provide to the
Indenture Trustee (with a copy to each Rating Agency and each Paying Agent)
for the Indenture Trustee to forward to each Noteholder of record as of the
most recent Record Date and to the Owner Trustee (with a copy to each Paying
Agent) for the Owner Trustee to forward to each Certificateholder of record
as of the most recent Record Date a statement substantially in the form of
Exhibits A and B, respectively, setting forth at least the following
information as to the Notes and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal
allocable to each Class of Notes and to the Certificates;
(ii) the amount of such distribution allocable to interest
allocable to each Class of Notes and to the Certificates;
(iii) the Pool Balance as of the close of business on the last day
of the preceding Collection Period;
(iv) the Outstanding Amount of each Class of Notes, the Note Pool
Factor for each such Class, the Certificate Balance and the Certificate
Pool Factor as of the close of business on the last day of the preceding
Collection Period, after giving effect to payments allocated to principal
reported under clause (i) above;
(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period;
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(vi) the amount of aggregate Realized Losses, if any, with respect
to the related Collection Period;
(vii) the aggregate Principal Balance of Receivables that are 30 to
59 days, 60 to 89 days and 90 days or more delinquent;
(viii) the Average Three Delinquency Ratio, the Average Six Month
Repossession Ratio and the Average Six Month Realized Loss Ratio as of
the last day of the related Collection Period.
(ix) the Noteholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover Shortfall, the Certificateholders'
Interest Carryover Shortfall and the Certificateholders' Principal
Carryover Shortfall, if any, in each case as applicable to each Class of
Securities, after giving effect to payments on such Distribution Date,
and the changes in such amounts from the preceding statement;
(x) the aggregate Purchase Amounts for Receivables, if any, that
were purchased by ___________ or the Servicer during the related
Collection Period;
(xi) the balance, if any, of the Reserve Account after giving
effect to deposits and withdrawals to be made on such Distribution Date,
and the change in such balance from the preceding Statement; and
(xii) the aggregate Payahead Balance.
Each amount set forth under clauses (i), (ii), (v) and (ix) above shall
be expressed as a dollar amount per $1,000 of original principal balance of a
Certificate or Note, as applicable.
(b) On or prior to the ____ day of each (month) (quarter) that is
not a month in which a Distribution Date occurs and on or prior to each
Distribution Date, the Indenture Trustee shall forward to each Noteholder
of record and the Owner Trustee shall forward to each Certificateholder
of record the Servicer's Certificate provided to it pursuant to Section
4.09 (except that on any Distribution Date information otherwise provided
to such holder pursuant to clause (a) of this Section 5.08 need not have
been included in such certificate).
SECTION 5.08. Transfer of the Notes. In the event any Holder of the
----------------------
Notes shall wish to transfer such Note, the Depositor shall provide to such
Holder and any prospective transferee designated by such Holder information
regarding the Notes and the Receivables and such other information as shall
be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for transfer of any such Note without registration thereof under
the Securities Act of 1933, as amended, pursuant to the exemption from
registration provided by Rule 144A.
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SECTION 5.09. Dealer Reserve Account. (a) On the Closing Date, the
-----------------------
Owner Trustee will deposit, on behalf of the Depositor, an amount equal to
$_______________ into the Dealer Reserve Account.
(b) On each Distribution Date, the Servicer shall be entitled to
withdraw from the Dealer Reserve Account for payment to ___________, an
amount equal to the amount payable or paid by ___________ to Dealers during
the related Collection Period in respect of dealer reserves on the
Receivables and amounts to which ___________ may be entitled from such dealer
reserves under _________ agreements with such Dealers. After payment in
full, or the provision for such payment, of all amounts payable to Dealers in
respect of dealer reserves on the Receivables, any funds remaining on deposit
in the Dealer Reserve Account will be paid to the Depositor. Amounts on
deposit in the Dealer Reserve Account will not be available to make payments
on the Securities or for any other purpose other than that set forth above in
this clause (b).
ARTICLE VI
The Depositor
---------
SECTION 6.01. Representations of Depositor. The Depositor makes the
-----------------------------
following representations on which the Issuer relies in acquiring the
Receivables and issuing the Notes and the Certificates. The representations
speak as of the execution and delivery of this Agreement and as of the
Closing Date and shall survive the sale of the Receivables to the Issuer and
the pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Depositor is duly
---------------------------------
organized and validly existing as a corporation in good standing under the
laws of the State of Delaware, with the corporate power and authority to own
its properties and to conduct its business as such properties are
currently owned and such business is presently conducted, and had at all
relevant times, and has, the corporate power, authority and legal right to
acquire and own the Receivables.
(b) Due Qualification. The Depositor is duly qualified to do
------------------
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property or the conduct of its business shall
require such qualifications.
(c) Power and Authority. The Depositor has the corporate power
-------------------
and authority to execute and deliver this Agreement and to carry out its
terms; the Depositor has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Issuer, and the
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Depositor shall have duly authorized such sale and assignment to the
Issuer by all necessary corporate action; and the execution, delivery
and performance of this Agreement has been duly authorized by the
Depositor by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal, valid
------------------
and binding obligation of the Depositor enforceable in accordance with its
terms.
(e) No Violation. The consummation of the transactions
--------------
contemplated by this Agreement and the fulfillment of the terms hereof do not
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or bylaws of the Depositor, or any indenture,
agreement or other instrument to which the Depositor is a party or by which
it is bound; or 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); or violate
any law or, to the best of the Depositor's knowledge, any order, rule
or regulation applicable to the Depositor of any court or of any federal
or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its properties.
(f) No Proceedings. There are no proceedings or investigations
---------------
pending, or to the Depositor's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Depositor or its properties: (i) asserting the
invalidity of this Agreement, the Receivables Purchase Agreement, the
Indenture or any of the other Basic Documents, the Notes or the
Certificates, (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated
by this Agreement, the Receivables Purchase Agreement, the Indenture or
any of the other Basic Documents, (iii) seeking any determination or ruling
that might materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or enforceability of,
this Agreement, the Receivables Purchase Agreement, the Indenture, any of
the other Basic Documents, the Notes or the Certificates or (iv) which might
adversely affect the federal or state income tax attributes of the Notes or
the Certificates.
(g) Principal Place of Business. The principal place of business
---------------------------
and chief executive office of the Depositor are located at the place set forth
in Section 10.03(a) and such location has not changed since the date the
Depositor was incorporated.
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(h) Use of Names. The legal name of Depositor is the name used by
------------
it in this Agreement and Depositor has not changed its name since the date
of its incorporation and does not have trade names, fictitious names,
assumed names or "doing business" names.
(i) Solvency. Depositor is solvent and will not become insolvent
--------
after giving effect to the transactions contemplated in this Agreement;
Depositor is paying its debts, if any, as they become due; Depositor,
after giving effect to the transactions contemplated in this Agreement,
will have adequate capital to conduct its business.
SECTION 6.02. Corporate Existence. (a) During the term of this
--------------------
Agreement, the Depositor will keep in full force and effect its existence,
rights and franchises as a corporation under the laws of the jurisdiction
of its incorporation and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement,
the Basic Documents and each other instrument or agreement necessary
or appropriate to the proper administration of this Agreement and the
transactions contemplated hereby.
(b) During the term of this Agreement, the Depositor shall observe
the applicable legal requirements for the recognition of the Depositor as a
legal entity separate and apart from its Affiliates, including the following:
(i) the Depositor shall maintain corporate records and books of
account separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement, the Depositor
shall not commingle its assets and funds with those of its Affiliates;
(iii) the Depositor shall hold such appropriate meetings of its
board of directors as are necessary to authorize all the Depositor's
corporate actions required by law to be authorized by the board of
directors, shall keep minutes of such meetings and of meetings of its
stockholder(s) and observe all other customary corporate formalities (and
any successor Depositor not a corporation shall observe similar
procedures in accordance with its governing documents and applicable
law);
(iv) the Depositor shall at all times hold itself out to the public
under the Depositor's own name as a legal entity separate and distinct
from its Affiliates;
(v) all transactions and dealings between the Depositor and its
Affiliates will be conducted on an arm's-length basis;
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(vi) except as provided for by the Basic Documents, the Depositor
shall not utilize ___________ as its agent and shall not agree to act as
the agent of any other Person; and
(vii) the Depositor shall at all times have at least one director
that is an "Independent Director" as such term is defined in the
certificate of incorporation.
SECTION 6.03. Liability of Depositor; Indemnities. (a) The Depositor
-----------------------------------
shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Depositor under this Agreement.
(b) The Depositor shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders and
the Noteholders and any of the officers, directors, employees and agents of
the Issuer, the Owner Trustee and the Indenture Trustee from and against any
loss, liability or expense incurred by reason of (i) the Depositor's willful
misfeasance, bad faith or negligence in the performance of its duties under
this Agreement or by reason of reckless disregard of its obligations and
duties under this Agreement and (ii) the Depositor's or the Issuer's
violation of federal or state securities laws in connection with the offering
and sale of the Notes and the Certificates.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee and the termination of
this Agreement and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Depositor shall have made any indemnity
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others,
such Person shall promptly repay such amounts to the Depositor, without
interest.
SECTION 6.04. Merger or Consolidation of, or Assumption of the
-------------------------------------------------------
Obligations of, Depositor. Any Person (a) into which the Depositor
- -------------------------
may be merged or consolidated, (b) which may result from any merger or
consolidation to which the Depositor shall be a party or (c) which may succeed
to the properties and assets of the Depositor substantially as a whole, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Depositor under this Agreement, shall be the
successor to the Depositor hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement;
provided, however, that (i) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 3.01
shall have been breached and no Servicer Default, and no event that, after
notice or lapse of time, or both, would become a Servicer Default
shall have occurred and be continuing,
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(ii) the Depositor shall have delivered to the Owner Trustee and the
Indenture Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if
any, provided for in this Agreement relating to such transaction have been
complied with, (iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction and (iv) the Depositor shall have delivered
to the Owner Trustee and the Indenture Trustee an Opinion of Counsel stating
that, in the opinion of such counsel, either (A) all financing statements and
continuation statements and amendments thereto have been executed and filed
that are necessary fully to preserve and protect the interest of the Owner
Trustee and Indenture Trustee, respectively, in the Receivables and reciting
the details of such filings, or (B) no such action shall be necessary to
preserve and protect such interests. Notwithstanding anything herein to the
contrary, the execution of the foregoing agreement of assumption and
compliance with clauses (i), (ii), (iii) and (iv) above shall be conditions
to the consummation of the transactions referred to in clauses (a), (b) or
(c) above.
SECTION 6.05. Limitation on Liability of Depositor and Others. The
--------------------------------------------------
Depositor and any director, officer, employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any
kind, prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor shall not be
under any obligation to appear in, prosecute or defend any legal action
that shall not be incidental to its obligations under this Agreement and
that in its opinion may involve it in any expense or liability.
SECTION 6.06. Depositor May Own Certificates or Notes. The Depositor
----------------------------------------
and any Affiliate thereof may in its individual or any other capacity
become the owner or pledgee of Certificates or Notes with the same
rights as it would have if it were not the Depositor or an Affiliate
thereof, except as expressly provided herein or in any Basic Document.
SECTION 6.07. Sale of Receivables. Depositor shall take no actions
--------------------
inconsistent with the Trust's ownership of the Receivables. Depositor shall
promptly respond to any third- party inquiries regarding the Receivables
by indicating that ownership thereof has been transferred to the Trust.
ARTICLE VII
The Servicer; Backup Servicer
-----------------------------
SECTION 7.01. Representations of Servicer. The Servicer makes the
----------------------------
following representations on which the Issuer relies in acquiring the
Receivables and issuing the Notes and the Certificates. The representations
speak as of the execution and delivery of this Agreement and as of the
Closing Date and shall
39
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survive the sale of the Receivables to the Issuer and the pledge thereof
to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is duly
----------------------------------
organized and validly existing as a corporation in good standing under the
laws of the state of its incorporation, with the corporate power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted, and
had at all relevant times, and has, the corporate power, authority and legal
right to acquire, own, sell and service the Receivables.
(b) Due Qualification. The Servicer is duly qualified to do
------------------
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership
or lease of property or the conduct of its business (including the servicing
of the Receivables as required by this Agreement) shall require such
qualifications.
(c) Power and Authority. The Servicer has the corporate power and
-------------------
authority to execute and deliver this Agreement and to carry out its
terms; and the execution, delivery and performance of this Agreement have
been duly authorized by the Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal, valid
------------------
and binding obligation of the Servicer enforceable in accordance with its
terms.
(e) No Violation. The consummation of the transactions
--------------
contemplated by this Agreement and the fulfillment of the terms hereof shall
not conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or bylaws of the Servicer, or any indenture,
agreement or other instrument to which the Servicer is a party or by which
it is bound; or result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement
or other instrument (other than this Agreement); or violate any law or
any order, rule or regulation applicable to the Servicer of any court or
of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Servicer
or its properties.
(f) No Proceedings. There are no proceedings or investigations
---------------
pending or, to the Servicer's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties:
(i) asserting the invalidity of this Agreement, the Receivables Purchase
Agreement, the Indenture, any of the other Basic
40
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Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any of
the transactions contemplated by this Agreement, the Receivables Purchase
Agreement, the Indenture or any of the other Basic Documents,
(iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations under,
or the validity or enforceability of, this Agreement, the Receivables
Purchase Agreement, the Indenture, any of the other Basic Documents, the
Notes or the Certificates or (iv) relating to the Servicer and which
might adversely affect the federal or state income tax attributes of
the Notes or the Certificates.
(g) No Insolvent Obligors. As of the Cutoff Date, no Obligor on a
---------------------
Receivable is shown on the Receivable Files as the subject of a bankruptcy
proceeding.
SECTION 7.02. Indemnities of Servicer. The Servicer shall be liable in
-----------------------
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement:
(a) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Backup Servicer,
the Noteholders, the Certificateholders, and the Depositor, their
respective officers, directors, employees and agents from and against any
and all costs, expenses, losses, damages, claims and liabilities, arising
out of or resulting from the use, ownership or operation by the Servicer
or any Affiliate thereof of a Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Backup Servicer and
the Depositor and their respective officers, directors, employees and
agents from and against any taxes that may at any time be asserted
against any such Person with respect to the transactions contemplated
herein and in the Basic Documents, including any sales, gross receipts,
general corporation, tangible personal property, privilege or license
taxes (but, in the case of the Issuer, not including any taxes asserted
with respect to, and as of the date of, the sale of the Receivables to
the Issuer or the issuance and original sale of the Certificates and the
Notes, or asserted with respect to ownership of the Receivables, or
federal or other income taxes arising out of distributions on or
transfers of the Certificates or the Notes) and costs and expenses in
defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Backup Servicer,
the Depositor, the Certificateholders and the Noteholders and their
respective officers, directors, employees and agents from and against any
and all costs,
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expenses, losses, claims, damages and liabilities to the extent that
such cost, expense, loss, claim, damage or liability arose out of, or
was imposed upon any such Person through, the negligence, willful
misfeasance or bad faith of the Servicer in the performance of its
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
(d) The Servicer shall indemnify, defend and hold harmless the
Owner Trustee and the Indenture Trustee and their respective officers,
directors, employees and agents from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties
herein and in the Trust Agreement contained, in the case of the Owner
Trustee, and in the Indenture contained, in the case of the Indenture
Trustee, except to the extent that such cost, expense, loss, claim,
damage or liability: (i) in the case of the Owner Trustee, shall be due
to the willful misfeasance, bad faith or negligence (except for errors in
judgment) of the Owner Trustee or, in the case of the Indenture Trustee,
shall be due to the willful misfeasance, bad faith or negligence (except
for errors in judgment) of the Indenture Trustee; or (ii) in the case of
the Owner Trustee, shall arise from the breach by the Owner Trustee of
any of its representations or warranties set forth in Section 7.03 of the
Trust Agreement.
(e) The Servicer shall pay any and all taxes levied or assessed
upon all or any part of the Owner Trust Estate.
For purposes of this Section, in the event of the termination of the
rights and obligations of ___________ (or any successor thereto pursuant to
Section 7.03) as Servicer pursuant to Section 8.01, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer (other than the
Indenture Trustee) pursuant to Section 8.02.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of
this Agreement and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Servicer shall have made any indemnity
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter collects any of such amounts from others, such
Person shall promptly repay such amounts to the Servicer, without interest.
SECTION 7.03. Merger or Consolidation of, or Assumption of the
-------------------------------------------------------
Obligations of, Servicer. Any Person
- ------------------------
(a) into which the Servicer may be merged or consolidated, (b) which may
result from any merger or con solidation to which the Servicer shall be a
party, (c) which may succeed to the properties and assets of the Servicer
42
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substantially as a whole or (d) with respect to the Servicer's
obligations hereunder, which is a corporation 50% or more of the
voting stock of which is owned, directly or indirectly, by ___________,
which Person executed an agreement of assumption to perform every obligation
of the Servicer hereunder, shall be the successor to the Servicer under this
Agreement without further act on the part of any of the parties to this
Agreement; provided, however, that (i) immediately after giving effect to
such transaction, no Servicer Default and no event which, after notice or
lapse of time, or both, would become a Servicer Default shall have
occurred and be continuing, (ii) the Servicer shall have delivered to the
Owner Trustee and the Indenture Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section and that all
conditions precedent provided for in this Agreement relating to such
transaction have been complied with, (iii) the Rating Agency Condition shall
have been satisfied with respect to such transaction, (iv) immediately
after giving effect to such transaction, the successor to the Servicer
shall become the Administrator under the Administration Agreement in
accordance with Section 8 of such Agreement and (v) the Servicer shall have
delivered to the Owner Trustee and the Indenture Trustee an Opinion of
Counsel stating that, in the opinion of such counsel, either (A) all
financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary fully to preserve and protect
the interest of the Owner Trustee and the Indenture Trustee,
respectively, in the Receivables and reciting the details of such filings or
(B) no such action shall be necessary to preserve and protect such interests.
Notwithstanding anything herein to the contrary, the execution of the
foregoing agreement of assumption and compliance with clauses (i), (ii),
(iii), (iv) and (v) above shall be conditions to the consummation of the
transactions referred to in clause (a), (b) or (c) above.
SECTION 7.04. Limitation on Liability of Servicer and Others. Neither
-----------------------------------------------
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be under any liability to the Issuer, the Noteholders or the
Certificateholders, except as provided under this Agreement, for any
action taken or for refraining from the taking of any action pursuant
to this Agreement or for errors in judgment; provided, however, that
this provision shall not protect the Servicer or any such person
against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties
under this Agreement. The Servicer and any director, officer,
employee or agent of the Servicer may rely in good faith on any document of
any kind prima facie properly executed and submitted by any person respecting
any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal
43
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action that shall not be incidental to its duties to service the Receivables
in accordance with this Agreement and that in its opinion may involve
it in any expense or liability; provided, however, that the Servicer may
undertake any reasonable action that it may deem necessary or desirable in
respect of this Agreement and the Basic Documents and the rights and duties
of the parties to this Agreement and the Basic Documents and the interests of
the Certificateholders under the Trust Agreement and the Noteholders under the
Indenture.
SECTION 7.05. ___________ Not To Resign as Servicer. Subject to the
provisions of Section 7.03, ___________ shall not resign from the obligations
and duties hereby imposed on it as Servicer under this Agreement except upon
a determination that the performance of its duties under this Agreement shall
no longer be permissible under applicable law. Notice of any such
determination permitting the resignation of ___________ shall be communicated
to the Owner Trustee and the Indenture Trustee at the earliest practicable
time (and, if such communication is not in writing, shall be confirmed in
writing at the earliest practicable time) and any such determination shall be
evidenced by an Opinion of Counsel to such effect delivered to the Owner
Trustee and the Indenture Trustee concurrently with or promptly after such
notice. No such resignation shall become effective until the Indenture
Trustee or a successor Servicer shall (i) have assumed the responsibilities
and obligations of ___________ in accordance with Section 8.02 and (ii) have
become the Administrator under the Administration Agreement in accordance
with Section 8 of such Agreement.
SECTION 7.06. Representations of Backup Servicer. The Backup Servicer
----------------------------------
makes the following representations on which the Issuer relies in acquiring
the Receivables and issuing the Notes and the Certificates. The
representations speak as of the execution and delivery of this Agreement and
as of the Closing Date and shall survive the sale of the Receivables to the
Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Backup Servicer is duly
-------------------------------
organized and validly existing as a __________ (banking corporation) in good
standing under the laws of the state of its incorporation, with the corporate
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted,
and had at all relevant times, and has, the corporate power, authority and
legal right to acquire, own, sell and service the Receivables.
(b) Due Qualification. The Backup Servicer is duly qualified to
------------------
do business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business (including
44
<PAGE>
the servicing of the Receivables as required by this Agreement)
shall require such qualifications.
(c) Power and Authority. The Backup Servicer has the corporate
--------------------
power and authority to execute and deliver this Agreement and to carry out its
terms; and the execution, delivery and performance of this Agreement have
been duly authorized by the Backup Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal, valid
------------------
and binding obligation of the Backup Servicer enforceable in accordance with
its terms.
SECTION 7.07. Merger or Consolidation of, or Assumption of the
-------------------------------------------------------
Obligations of, Backup Servicer.
- -------------------------------
Any Person (a) into which the Backup Servicer may be merged or consolidated,
(b) which may result from any merger or consolidation to which the Backup
Servicer shall be a party, (c) which may succeed to the properties and assets
of the Backup Servicer substantially as a whole or (d) with respect to the
Backup Servicer's obligations hereunder, shall be the successor to the Backup
Servicer under this Agreement without further act on the part of any of the
parties to this Agreement.
SECTION 7.08. Resignation as Backup Servicer. Subject to the provisions
------------------------------
of Section 7.07, the Backup Servicer may resign upon 30 days' written notice
to the Indenture Trustee and the Owner Trustee; provided, however, that no
such resignation shall become effective unless and until a successor
reasonably acceptable to the Indenture Trustee and the Owner Trustee shall
have assumed the responsibilities and obligations of the Backup Servicer and
the Rating Agency Condition shall have been satisfied in connection therewith;
provided, further, that if the Backup Servicer shall have resigned after its
determination that the performance of its duties under this Agreement
shall no longer be permissible under applicable law as evidenced by an
Opinion of Counsel to such effect delivered to the Owner Trustee and
the Indenture Trustee, then, in the event a successor Backup Servicer
is not appointed within 30 days after such a resignation, the Backup
Servicer may petition a court for its removal.
ARTICLE VIII
Default
-------
SECTION 8.01. Servicer Default. If any one of the following events (a
----------------
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver or cause to be
delivered to the Owner Trustee or the Indenture Trustee, as applicable,
for deposit in any of the Trust Accounts or the Certificate Distribution
Account any required payment or
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to direct the Owner Trustee or the Indenture Trustee, as applicable,
to make any required distributions therefrom, which failure continues
unremedied for a period of five Business Days after discovery of such
failure by an officer of the Servicer, or after the date on which
written notice of such failure shall have been given (A) to the
Servicer by the Owner Trustee or the Indenture Trustee, as applicable,
or (B) to the Servicer, and to the Owner Trustee and the Indenture
Trustee, as applicable, by the Holders of Notes, evidencing not less
than 25% of the Outstanding Amount of the Notes or, if the Notes have
been paid in full, by Holders of Certificates evidencing not less than
25% of the outstanding Certificate Balance; or
(b) failure by the Servicer duly to observe or to perform in any
material respect any other covenants or agreements of the Servicer set
forth in this Agreement or any other Basic Document, which failure shall
(i) materially and adversely affect the rights of Certificateholders or
Noteholders and (ii) continue unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to
be remedied, shall have been given (A) to the Servicer by the Owner
Trustee or the Indenture Trustee or (B) to the Servicer, and to the Owner
Trustee and the Indenture Trustee by the Holders of Notes or
Certificates, as applicable, evidencing not less than 25% of the
Outstanding Amount of the Notes or 25% of the outstanding Certificate
Balance; or
(c) the occurrence of an Insolvency Event with respect to the
Servicer;
then, and in each and every case, so long as the Servicer Default shall not
have been remedied, either the Indenture Trustee or the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, by
notice then given in writing to the Servicer (and to the Indenture Trustee
and the Owner Trustee if given by the Noteholders) may terminate all the
rights and obligations (other than the obligations set forth in Section 7.02
hereof) of the Servicer under this Agreement. On or after the receipt by the
Servicer of such written notice, all authority and power of the Servicer
under this Agreement, whether with respect to the Notes, the Certificates or
the Receivables or otherwise, shall, without further action, pass to and be
vested in the Indenture Trustee or such successor Servicer as may be
appointed under Section 8.02; and, without limitation, the Indenture Trustee
and the Owner Trustee are hereby authorized and empowered to execute and
deliver, for the benefit of the predecessor Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer, the
Indenture Trustee and the Owner Trustee in effecting the termination of the
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responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer for administration by it of
all cash amounts that shall at the time be held by the predecessor Servicer
for deposit, or shall thereafter be received by it with respect to any
Receivable. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Receivable Files to the
successor Servicer and amending this Agreement to reflect such succession as
Servicer pursuant to this Section shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses.
Upon receipt of notice of the occurrence of a Servicer Default, the Owner
Trustee shall give notice thereof to each Rating Agency.
SECTION 8.02. Appointment of Successor. (a) Upon the Servicer's receipt
------------------------
of notice of termination pursuant to Section 8.01 or the Servicer's
resignation in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of resignation,
until the later of (i) the date 45 days from the delivery to the Owner
Trustee, the Indenture Trustee and the Backup Servicer of written notice
of such resignation (or written confirmation of such notice) in accordance
with the terms of this Agreement and (ii) the date upon which the predecessor
Servicer shall become unable to act as Servicer, as specified in the
notice of resignation and accompanying Opinion of Counsel. In the event
of the Servicer's termination hereunder, the Indenture Trustee shall appoint
a successor Servicer, and the successor Servicer shall accept its
appointment (including its appointment as Administrator under the
Administration Agreement as set forth in Section 8.02(b)) by a written
assumption in form acceptable to the Owner Trustee and the Indenture Trustee.
If the Indenture Trustee appoints the Backup Servicer as successor Servicer
in accordance with Sections 7.03 or 8.01 (after confirmation from each Rating
Agency that such appointment will not result in the withdrawal or downgrade
of the then current ratings of the Class A-1 Notes, the Class A-2 Notes and
the Certificates), the Backup Servicer shall be the successor in all respects
to the Servicer in its capacity as Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof; provided, however, that the
Backup Servicer shall not be liable for any acts or omissions of the Servicer
occurring prior to such succession or for any breach by the Servicer of any of
its representations and warranties contained herein or in any related
document or agreement. Notwithstanding the above, if the Backup Servicer is'
legally unable or unwilling to act as Servicer, the Indenture Trustee will
appoint a successor Servicer to act as Servicer. As compensation for acting
as Sucessor Servicer, the Backup Servicer shall be entitled to
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<PAGE>
receive the Servicing Fee. In the event that a successor Servicer has not
been appointed at the time when the predecessor Servicer has ceased to
act as Servicer in accordance with this Section, the Indenture Trustee
without further action shall automatically be appointed the successor
Servicer and the Indenture Trustee shall be entitled to the Servicing
Fee. Notwithstanding the above, the Indenture Trustee shall, if it shall be
legally unable so to act, appoint or petition a court of competent
jurisdiction to appoint any established institution, having a net worth
of not less than $50,000,000 and whose regular business shall include
the servicing of automotive receivables, as the successor to the Servicer
under this Agreement.
(b) Upon appointment, the successor Servicer (including the Indenture
Trustee acting as successor Servicer) shall (i) be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer and shall be entitled to the Servicing Fee
and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement and (ii) become the Administrator under the
Administration Agreement in accordance with Section 8 of such Agreement.
(c) The Servicer may not resign unless it is prohibited from serving
as such by law.
SECTION 8.03. Notification to Noteholders and Certificateholders. Upon
---------------------------------------------------
any termination of, or appointment of a successor to the Servicer pursuant to
this Article VIII, the Owner Trustee shall give prompt written notice thereof
to Certificateholders, and the Indenture Trustee shall give prompt written
notice thereof to Noteholders and each Rating Agency.
SECTION 8.04. Waiver of Past Defaults. The Holders of Notes evidencing
-----------------------
not less than a majority of the Outstanding Amount of the Notes or the
Holders of Certificates evidencing not less than a majority of the outstanding
Certificate Balance (in the case of any default which does not adversely
affect the Indenture Trustee or the Noteholders) may, on behalf of all
Noteholders and Certificateholders, waive in writing any default by the
Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or
payments from any of the Trust Accounts in accordance with this Agreement or
in respect of a covenant or the Servicer or provision herein that cannot be
waived without the consent of each Securityholder (which event the related
waiver will require the approval of the Holders of all Securities). Upon
any such waiver of a past default, such default shall cease to exist, and any
Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereto.
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ARTICLE IX
Termination
-----------
SECTION 9.01. Optional Purchase of All Receivables. (a) As of the last
------------------------------------
day of any Collection Period immediately preceding a Distribution Date as
of which the then outstanding Pool Balance is 10% or less of the Original
Pool Balance, the Servicer shall have the option to purchase the Owner Trust
Estate, other than the Trust Accounts and the Certificate Distribution
Account. To exercise such option, the Servicer shall deposit pursuant to
Section 5.04 in the Collection Account an amount equal to the aggregate
Purchase Amount for the Receivables (including defaulted Receivables), plus
the appraised value of any such other property held by the Trust other than
the Trust Accounts and the Certificate Distribution Account, such value to be
determined by an appraiser mutually agreed upon by the Servicer, the Owner
Trustee and the Indenture Trustee, and shall succeed to all interests in and
to the Trust. Notwithstanding the foregoing, the Servicer shall not be
permitted to exercise such option unless the amount to be deposited in
the Collection Account pursuant to the preceding sentence is greater than or
equal to the sum of the Outstanding Amount of the Notes and the Certificate
Balance and all accrued but unpaid interest (including any overdue interest)
thereon to and including the last day of the Collection Period immediately
preceding the redemption date.
(b) Upon any sale of the assets of the Trust pursuant to Section 9.02
of the Trust Agreement, the Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "Insolvency Proceeds") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a
Distribution Date, on the Distribution Date immediately following such
deposit), the Servicer shall instruct the Indenture Trustee to make the
following deposits (after the application on such Distribution Date of the
Total Distribution Amount and funds on deposit in the Reserve Account
pursuant to Sections 5.05 and 5.06) from the Insolvency Proceeds and any
funds remaining on deposit in the Reserve Account (including the proceeds of
any sale of investments therein as described in the following sentence):
(i) to the Note Distribution Account, any portion of the
Noteholders' Interest Distributable Amount not otherwise deposited into
the Note Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the Outstanding Amount of
the Notes (after giving effect to the reduction in the Outstanding Amount
of the Notes to result from the deposits
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made in the Note Distribution Account on such Distribution Date and on
prior Distribution Dates);
(iii) to the Certificate Distribution Account, any portion of the
Certificateholders' Interest Distributable Amount not otherwise deposited
into the Certificate Distribution Account on such Distribution Date; and
(iv) to the Certificate Distribution Account, the Certificate
Balance (after giving effect to the reduction in the Certificate Balance
to result from the deposits made in the Certificate Distribution Account
on such Distribution Date under prior Distribution Dates).
Any investments on deposit in the Reserve Account or Note Distribution
Account which will not mature on or before such Distribution Date shall be
sold by the Indenture Trustee at such time as will result in the Indenture
Trustee receiving the proceeds from such sale not later than the Payment
Determination Date preceding such Distribution Date. Any Insolvency Proceeds
remaining after the deposits described above shall be paid to the Depositor.
(c) As described in Article 9 of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee
and the Indenture Trustee as soon as practicable after the Servicer has
received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder
and the Owner Trustee will succeed to the rights of, and assume the
obligations of, the Indenture Trustee pursuant to this Agreement.
ARTICLE X
Miscellaneous
-------------
SECTION 10.01. Amendment. This Agreement may be amended by the
---------
Depositor, the Servicer and the Issuer, with the consent of the Indenture
Trustee, but without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions in this
Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided, however, that such action shall not,
as evidenced by an Opinion of Counsel delivered to the Owner Trustee
and the Indenture Trustee, adversely affect in any material respect
the interests of any Noteholder or Certificateholder.
50
<PAGE>
This Agreement may also be amended from time to time by the Depositor, the
Servicer and the Issuer, with the consent of the Indenture Trustee, the
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and the consent of the Holders (as defined in
the Trust Agreement) of outstanding Certificates evidencing not less than a
majority of the outstanding Certificate Balance, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that no such
amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders or (b) reduce the aforesaid percentage
of the Outstanding Amount of the Notes and the Certificate Balance, the
Holders of which are required to consent to any such amendment, without the
consent of the Holders of all the outstanding Notes and the Holders (as
defined in the Trust Agreement) of all the outstanding Certificates.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment
or consent to each Certificateholder, the Indenture Trustee and each Rating
Agency.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee shall be entitled to receive and rely upon
an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel referred
to in Section 10.02(i)(1). The Owner Trustee and the Indenture Trustee may,
but shall not be obligated to, enter into any such amendment which affects
the Owner Trustee's or the Indenture Trustee's, as applicable, own rights,
duties or immunities under this Agreement or otherwise. No amendment to this
Agreement will have any effect on the rights and obligations of the Backup
Servicer hereunder unless the Backup Servicer shall consent thereto in
writing.
SECTION 10.02. Protection of Title to Trust. (a) The Depositor shall
-----------------------------
execute and file such financing statements and cause to be executed and
filed such continuation statements, all in such manner and in such places
as may be required by law fully to preserve, maintain and protect the interest
of the Issuer and of the Indenture Trustee in the Receivables and in the
proceeds thereof. The Depositor shall deliver (or cause to be delivered)
to the Owner Trustee and the Indenture Trustee file-stamped copies of,
51
<PAGE>
on filing receipts for, any document filed as provided above, as
soon as available following such filing.
(b) Neither the Depositor nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section
9-402(7) of the UCC, unless it shall have given the Owner Trustee and
the Indenture Trustee at least five days' prior written notice thereof and
shall have promptly filed appropriate amendments to all previously filed
financing statements or continuation statements.
(c) Each of the Depositor and the Servicer shall have an obligation
to give the Owner Trustee and the Indenture Trustee at least 60 days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment or new financing statement. The Servicer shall at all times
maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to)
each Receivable and the amounts from time to time deposited in the Collection
Account and the Payahead Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that refer
to a Receivable shall indicate clearly the interest of the Issuer and the
Indenture Trustee in such Receivable and that such Receivable is owned by the
Issuer and has been pledged to the Indenture Trustee. Indication of the
Issuer's and the Indenture Trustee's interest in a Receivable shall be
deleted from or modified on the Servicer's computer systems when, and only
when, the related Receivable shall have been paid in full or repurchased.
(f) If at any time the Depositor or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or printouts (including any restored
from backup archives) that, if they shall refer in any manner whatsoever to
any
52
<PAGE>
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee, the Backup
Servicer and their agents at any time during normal business hours to
inspect, audit and make copies of and abstracts from the Servicer's records
regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee or
to the Indenture Trustee, within five Business Days, a list of all
Receivables (by contract number and name of Obligor) then held as part of the
Trust, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of this Agreement
and of each amendment hereto, an Opinion of Counsel stating that, in the
opinion of such counsel, either (A) all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Owner Trustee and the
Indenture Trustee in the Receivables, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details
are given, or (B) no such action shall be necessary to preserve and
protect such interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Closing Date, an Opinion of Counsel, dated as of a date during
such 90-day period, stating that, in the opinion of such counsel, either
(A) all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Owner Trustee and the Indenture Trustee in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) no such
action shall be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall specify
any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
SECTION 10.03. Notices. All demands, notices, communications and
-------
instructions upon or to the Depositor, the Servicer, the Owner Trustee, the
Indenture Trustee or each Rating Agency under this Agreement shall be in
writing, personally delivered or mailed by
53
<PAGE>
Certified mail, return receipt requested, and shall be deemed to have been
duly given upon receipt (a) in the case of the Depositor, to _______________,
(b) in the case of the Servicer, to _____________________, (c) in the case
of the Issuer or the Owner Trustee, at the Corporate Trust Office (as defined
in the Trust Agreement), (d) in the case of the Indenture Trustee or Backup
Servicer, at the Corporate Trust Office, (e) in the case of the Rating
Agencies, to Fitch Investors Service, Inc., One State Street Plaza, New York,
New York 10004 and Duff & Phelps Credit Rating Co., 55 E. Monroe Street,
Chicago, Illinois 60603, Telephone: 312-263-2610, Fax: 312-263-2852,
Attention: Asset-Backed Research and Monitoring; or, as to each of the
foregoing, at such other address as shall be designated by written notice
to the other parties.
SECTION 10.04. Assignment by the Depositor or the Servicer.
----------------------------------------------------
Notwithstanding anything to the contrary contained herein, except as
provided in the remainder of this Section, as provided in Sections 6.04
and 7.03 herein and as provided in the provisions of this Agreement concerning
the resignation of the Servicer, this Agreement may not be assigned by the
Depositor or the Servicer.
SECTION 10.05. Limitations on Rights of Others. The provisions of this
--------------------------------
Agreement are solely for the benefit of the Depositor, the Servicer, the
Issuer, the Owner Trustee, the Certificateholders, the Indenture Trustee
and the Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under or in respect of
this Agreement or any covenants, conditions or provisions contained herein.
SECTION 10.06. Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 10.07. Separate Counterparts. This Agreement may be executed by
---------------------
the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.08. Headings. The headings of the various Articles and
--------
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 10.09. Governing Law. This Agreement shall be construed in
--------------
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the
54
<PAGE>
Obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.
SECTION 10.10. Assignment by Issuer. The Depositor and the Servicer
---------------------
hereby acknowledge and consent to any mortgage, pledge, assignment and grant
of a security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of all right, title and
interest of the Issuer in, to and under the Receivables and the assignment
of any or all of the Issuer's rights and obligations hereunder to the Indenture
Trustee.
SECTION 10.11. Nonpetition Covenants. (a) Notwithstanding any prior
---------------------
termination of this Agreement, the Servicer, the Backup Servicer and the
Depositor shall not, prior to the date which is one year and one day
after the termination of this Agreement with respect to the Issuer or the
Depositor, acquiesce, petition or otherwise invoke or cause the Issuer or
the Depositor to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Issuer
or the Depositor under any federal or state bankruptcy, insolvency or
similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Issuer or the
Depositor or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of the Issuer or the Depositor.
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture
--------------------------------------------------------
Trustee. (a) Notwithstanding anything contained herein to the
- --------
contrary, this Agreement has been countersigned by _________________________
not in its individual capacity but solely in its capacity as Owner Trustee
of the Issuer and in no event shall ___________________ in its individual
capacity or, except as expressly provided in the Trust Agreement, as
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer.
For all purposes of this Agreement, in the performance of its duties or
obligations hereunder or in the performance of any duties or obligations of
the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles VI, VII and VIII of the
Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by ___________________, not in its individual
capacity but solely as Indenture Trustee and in no event shall
_____________________ have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any
of the certificates, notices or agreements delivered pursuant hereto, as to
all of which recourse shall be had solely to the assets of the Issuer.
55
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
FASCO AUTO TRUST 199_-_
By: _______________________, not in its individual
capacity but solely as Owner Trustee on behalf of
the Trust
By: _________________________
Name:
Title:
Financial Asset Securities Corp., Depositor
By: _________________________
Name:
Title:
_____________________, Servicer
By: __________________________
Name:
Title:
_______________________, Backup
Servicer
By: ________________________
Name:
Title:
Acknowledged and accepted as of the day and year
first above written:
__________________________,
not in its individual capacity
but solely as Indenture Trustee
By: _____________________________________________
Name:
Title:
56
<PAGE>
SCHEDULE A
Schedule of Receivables
-----------------
1
<PAGE>
EXHIBIT A
_____________________
FASCO Auto Trust 199_-_ Distribution Date Statement to Noteholders
Principal Distribution Amount
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Interest Distribution Amount
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Pool Balance
Note Balance
Class A-1 Notes
Class A-2 Notes
Note Pool Factor
Class A-1 Notes
Class A-2 Notes
Certificate Balance
Servicing Fee
Servicing Fee Per $1,000 original principal amount
Realized Losses
Noteholders' Interest Carryover Shortfall per $1,000 original principal
amount
Noteholders' Principal Carryover Shortfall per $1,000 original principal
amount
Purchase Amounts
Reserve Account Balance
Payahead Balance
Average Three Month Delinquency Ratio
Average Six Month Realized Loss Ratio
Average Six Month Repossession Ratio
1
<PAGE>
Delinquency Trigger Event (YES) (NO)
Repossession Trigger Event (YES) (NO)
Loss Trigger Event (YES) (NO)
Delinquent Receivables
30 days
60 days
90 days
2
<PAGE>
EXHIBIT B
_____________________
FASCO Auto Trust 199_-_ Distribution Date Statement to Certificateholders
Principal Distribution Amount
Principal Per $1,000 Initial Certificate Balance
Interest Distribution Amount
Interest Per $1,000 Initial Certificate Balance
Pool Balance
Note Balance:
Class A-1 Notes:
Class A-2 Notes:
Note Pool Factor:
Class A-1 Notes:
Class A-2 Notes:
Certificate Balance
Certificate Pool Factor
Servicing Fee
Servicing Fee Per $1,000 Initial Certificate Balance
Realized Losses
Noteholders' Interest Carryover Shortfall per $1,000 original Note principal
amount
Noteholders' Principal Carryover Shortfall per $1,000 original Note principal
amount
Certificateholders' Interest Carryover Shortfall per $1,000 Initial
Certificate Balance
Certificateholders' Principal Carryover Shortfall per $1,000 Initial
Certificate Balance
Purchase Amounts
Reserve Account Balance
Payahead Balance
Average Three Month Delinquency Ratio
Average Six Month Realized Loss Ratio
B-1
<PAGE>
e Six Month Repossession Ratio
Delinquency Trigger Event (YES) (NO)
Repossession Trigger Event (YES) (NO)
Loss Trigger Event (YES) (NO)
Delinquent Receivables
30 days
60 days
90 days
B-2
<PAGE>
EXHIBIT C
Form of Servicer's Certificate
----------------------
_____________________
FASCO Auto Trust 199_-_ Monthly Servicer's Certificate/1)/
(___________, 199__)
Dates Covered: From & Incl. _____ To & Incl.
I. Collections
Principal Payments Received $
Interest Payments Received $
Liquidation Proceeds $
Recoveries on Previously Liquidated Receivables $
Aggregate Purchase Amount for Purchased Receivables $
Amount Attributable to Interest $
Amount Attributable to Principal $
Investment Earnings $
Total Collections $
II. Distributions//
Total Required Principal Reduction of the Securities $
Principal Distribution Amount
Class A-1 Notes ($_________ per $1,000 original principal amount)
Class A-2 Notes ($_________ per $1,000 original principal amount)
Certificates ($_________ per $1,000 original principal amount)
Interest Distribution Amount
Class A-1 Notes ($_________ per $1,000 original principal amount)
Class A-2 Notes ($_________ per $1,000 original principal amount)
Certificates ($_________ per $1,000 original principal amount)
Total Distributable Amount
Class A-1 Notes ($_________ per $1,000 original principal amount)
Class A-2 Notes ($_________ per $1,000 original principal amount)
Certificates ($_________ per $1,000 original principal amount)
Additional Required Distributions
Servicing Fee $
Deposit to the Reserve Account $
Reserve Account
Withdrawals for this Distribution Date $
Cumulative Withdrawals $
III. Payahead Account Information
Beginning Period Balance $
Amounts Deposited into Payahead Account $
Amounts Withdrawn from Payahead Account $
Ending Balance $
___________________
/1)/ Items that are marked with an * will be delivered quarterly.
<PAGE>
IV. Pool Balance and Portfolio Information
Beginning of Period End of Period
Pool Balance $ $
Note Balances//
Class A-1 Notes $ $
Class A-2 Notes
Note Pool Factor//
Class A-1 Notes
Class A-2 Notes
Certificate Balance// $ $
Certificate Pool Factor//
Remaining Number of Receivables
Weighted Average A/R
Weighted Average Remaining Term
V. Reconciliation of the Reserve Account
Beginning Balance $
Withdrawals from Reserve Account $
Amounts Available for Deposit
to Reserve Account $
Specified Reserve Account Balance $
Amounts Deposited to Reserve Account $
Ending Balance $
VI. Loss and Delinquency Report Activity
Realized Losses for Collection Period $
Liquidated Receivables
Aggregate Principal Balance $
Liquidation Proceeds $
Recoveries on Previously
Liquidated Receivables $
Cumulative Realized Losses $
Delinquency
30-59 days
Principal Amount $
Number of Receivables
60-89 days
Principal Amount $
Number of Receivables
90 days or more
Principal Amount $
Number of Receivables
C-2
<PAGE>
Total Amount
Principal Amount $
Number of Receivables
VII. Original Deal Parameter Inputs
Aggregate Principal Balance of the
Receivables as of the Cutoff Date $
Weighted Average APR of the Receivables
as of the Cutoff Date %
Weighted Average Remaining Term of the
Receivables as of the Cutoff Date months
Number of Receivables
Initial Reserve Account Balance $
C-3
<PAGE>
EXHIBIT D
---------
_____________________
CREDIT FILE CONTENTS
LOAN AND LEASE
(RIGHT SIDE OF FILE)
RISK
NAME:______________________ CODE:_______________________ A C C O U N T
#:______________________
<TABLE>
<CAPTION>
(X) (X)
UNDER EXCEPTIONS INT DOCUMENTATION AUDIT COMMENTS
<S> <C> <C> <C> <C> <C>
Application
Credit Report
Explanation
Derogatory Credit
Credit Decision Notification
Investigation Work
A) Home Address Verified
B) Employment Verified
1040's/W-2/Paystubs
Current Telephone Bill in
Applicant's Name and Address
Reference Sheet (5 included)
Other Stips - Specify
Insurance Confirmation
by ___________ Insurance Dept.
Loan/Lease Worksheet
Copy of Funding Check
Collections/Other
Correspondence
Approved Dealer
(GE Approval)
</TABLE>
________________________________________ ______________________________
Signature - Funder Date
________________________________________ ______________________________
Signature - Auditor Date
D-1
<PAGE>
_____________________
CREDIT FILE CONTENTS
LOAN AND LEASE
(LEFT SIDE OF FILE)
NAME:______________________ CODE:_______________________ A C C O U N T
#:______________________
<TABLE>
<CAPTION>
(X) (X)
UNDER EXCEPTIONS INT DOCUMENTATION AUDIT COMMENTS
<S> <C> <C> <C> <C> <C>
Contract:
A) Trade-In/Down Payment
B) Interest Rate
C) Term
D) Monthly Payment
E) Add's Approved
F) Dealer Advance Per Approval
Original Assignment
Copy of Application for
Certificate of Title
Certificate of Origin (MSO)(New)
Copy of Title (Used)
Lien Guarantee/
Lien Registration
Bill of Sale /
Buyer's Order Signed
Manufacturers Invoice (New)
Copy Black Book /
NADA Valuation
Odometer Statement (Used)
Photocopy of Driver's License
Add's Documentation
Notice to Cosigner
Signed Disclosure Form for
A & H Insurance (if applicable)
Customer Phone Interview
Correspondence
</TABLE>
________________________________________ ______________________________
Signature - Funder Date
________________________________________ ______________________________
Signature - Auditor Date
D-2
<PAGE>
EXHIBIT E
---------
Form of Assignment
Reference is made to the Sale and Servicing Agreement dated as of
________________ (the "Sale and Servicing Agreement") among FASCO Auto Trust
199_-_, Financial Asset Securities Corp. ("___________"),
_____________________ and ______________________. All capitalized terms used
herein without definition shall have the respective meanings specified in the
Sale and Servicing Agreement.
(___________) hereby assigns to ____________, for which the Custodian is
acting as custodian and bailee under the terms of the Custodial Agreement all
right, title and interest of (___________) in and to (but none of
(___________)'s obligations with respect to):
(1) the Receivables and all moneys received thereon on and after the
Cutoff Date plus all Payaheads as of the Cutoff Date;
(2) the security interests in the Financed Vehicles granted by
Obligors pursuant to such Receivables, any other right to realize upon
property securing a Receivable and any other interest of (___________) in
such Financed Vehicles including (___________)'s right, title and interest in
the lien on the Financed Vehicles in the name of the Depositor's agent,
________________, ___________ or ________;
(3) any proceeds with respect to the Receivables from claims on any
Insurance Policies relating to Financed Vehicles or Obligors;
(4) proceeds of any recourse (but none of the obligations) to Dealers
on Receivables;
(5) any Financed Vehicle that shall have secured a Receivable and
shall have been acquired by or on behalf of the Seller, the Depositor, the
Servicer, or the Trust;
(6) the Receivables Files; and
(7) the proceeds of any and all of the foregoing.
(___________) (Financial Asset Securities Corp.)
By:__________________________
Name:
Title:
E-1
<PAGE>
Exhibit 10.2
Form of Administration Agreement
This ADMINISTRATION AGREEMENT dated as of ________________, 199_,
among FASCO AUTO TRUST 199_-_, a Delaware business trust (the "Issuer"),
FINANCIAL ASSET SECURITIES CORP., a Delaware corporation, as
administrator (the "Administrator"), and ______________________, a
___________ banking corporation, not in its individual capacity but
solely as Indenture Trustee (the "Indenture Trustee"),
W I T N E S S E T H :
WHEREAS, the Issuer is issuing the Class A-1 ______% Asset Backed Notes
and the Class A-2 ______% Asset Backed Notes (collectively, the "Notes")
pursuant to the Indenture dated as of __________, 199_ (as amended and
supplemented from time to time, the "Indenture"), between the Issuer and the
Indenture Trustee (capitalized terms used and not otherwise defined herein
shall have the meanings assigned to such terms in the Indenture);
WHEREAS, the Issuer has entered into certain agreements in connection
with the issuance of the Notes and of certain beneficial ownership interests
in the Issuer, including (i) a Sale and Servicing Agreement dated as of
________________, 199_ (as amended and supplemented from time to time, the
"Sale and Servicing Agreement"), among the Issuer, _____________________, as
servicer, __________________________, as back-up servicer, and Financial
Asset Securities Corp., as depositor (the "Depositor"), and (ii) the
Indenture (the Sale and Servicing Agreement and the Indenture being referred
to hereinafter collectively as the "Related Agreements");
WHEREAS, pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (a) the
Notes and the collateral therefor pledged pursuant to the Indenture (the
"Collateral") and (b) the beneficial ownership interests in the Issuer (the
registered holders of such interests being referred to herein as the
"Owners");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner
Trustee referred to in the preceding clause and to provide such additional
services consistent with the terms of this Agreement and the Related
Agreements as the Issuer and the Owner Trustee may from time to time request;
and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and
the Owner Trustee on the terms set forth herein;
1
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:
1.Duties of the Administrator. (a) Duties with Respect to the
---------------------------
Indenture. (i) The Administrator agrees to perform all its duties as
Administrator . In addition, the Administrator shall consult with the Owner
Trustee regarding the duties of the Issuer or the Owner Trustee under the
Indenture. The Administrator shall monitor the performance of the Issuer and
shall advise the Owner Trustee when action is necessary to comply with the
Issuer's or the Owner Trustee's duties under the Indenture. The
Administrator shall prepare for execution by the Issuer, or shall cause the
preparation by other appropriate persons of, all such documents, reports,
filings, instruments, certificates and opinions that it shall be the duty of
the Issuer or the Owner Trustee to prepare, file or deliver pursuant to the
Indenture. In furtherance of the foregoing, the Administrator shall take all
appropriate action that is the duty of the Issuer or the Owner Trustee to
take pursuant to the Indenture including, without limitation, such of the
foregoing as are required with respect to the following matters under the
Indenture (references are to sections of the Indenture):
(A) the duty to cause the Note Register to be kept and to give the
Indenture Trustee notice of any appointment of a new Note Registrar and the
location, or change in location, of the Note Register (Section 2.05);
(B) the notification of Noteholders of the final principal payment on
their Notes (Section 2.08(b));
(C) the fixing or causing to be fixed of any special record date and
the notification of the Noteholders with respect to special payment dates, if
any (Section 2.08(c));
(D) the preparation of or obtaining of the documents and instruments
required for authentication of the Notes and delivery of the same to the
Indenture Trustee (Section 2.02);
(E) the maintenance of an office in the Borough of Manhattan, City of
New York, for registration of transfer or exchange of Notes (Section 3.02);
(F) the duty to cause newly appointed Paying Agents, if any, to deliver
to the Indenture Trustee the instrument specified in the Indenture regarding
funds held in trust (Section 3.03);
(G) the direction to the Indenture Trustee to deposit moneys with
Paying Agents, if any, other than the Indenture Trustee (Section 3.03);
(H) the obtaining and preservation of the Issuer's qualification to do
business in each jurisdiction in which such
2
<PAGE>
qualification is or shall be necessary to protect the validity and
enforceability of the Indenture, the Notes, the Collateral and each other
instrument and agreement included in the Trust Estate (Section 3.04);
(I) the preparation of all supplements and amendments to the Indenture
and all financing statements, continuation statements, instruments of further
assurance and other instruments and the taking of such other action as is
necessary or advisable to protect the Trust Estate (Section 3.05);
(J) the delivery of the Opinion of Counsel on the Closing Date and the
annual delivery of Opinions of Counsel as to the Trust Estate, and the annual
delivery of the Officer's Certificate and certain other statements as to
compliance with the Indenture (Sections 3.06 and 3.09);
(K) the identification to the Indenture Trustee in an Officer's
Certificate of a Person with whom the Issuer has contracted to perform its
duties under the Indenture (Section 3.07(b));
(L) the notification of the Indenture Trustee and the Rating Agencies
of a Servicer Default under the Sale and Servicing Agreement and, if such
Servicer Default arises from the failure of the Servicer to perform any of
its duties under the Sale and Servicing Agreement with respect to the
Receivables, the taking of all reasonable steps available to remedy such
failure (Section 3.07(d));
(M) the duty to cause the Servicer to comply with Sections 4.09, 4.10,
4.11 and Article IX of the Sale and Servicing Agreement (Section 3.14);
(N) the preparation and obtaining of documents and instruments required
for the release of the Issuer from its obligations under the Indenture
(Section 3.11(b));
(O) the delivery of written notice to the Indenture Trustee and the
Rating Agencies of each Event of Default under the Indenture and each default
by the Servicer or the Depositor under the Sale and Servicing Agreement
(Section 3.19);
(P) the monitoring of the Issuer's obligations as to the satisfaction
and discharge of the Indenture and the preparation of an Officer's
Certificate and the obtaining of the Opinion of Counsel and the Independent
Certificate relating thereto (Section 4.01);
(Q) the compliance with any written directive of the Indenture Trustee
with respect to the sale of the Trust Estate in a commercially reasonable
manner if an Event of Default shall have occurred and be continuing
(Section 5.04);
3
<PAGE>
(R) the preparation and delivery of notice to Noteholders of the
removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee (Section 6.08);
(S) the preparation of any written instruments required to confirm more
fully the authority of any co-trustee or separate trustee and any written
instruments necessary in connection with the resignation or removal of any
co-trustee or separate trustee (Sections 6.08 and 6.10);
(T) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee is not
the Note Registrar (Section 7.01);
(U) the opening of one or more accounts in the Issuer's name, the
preparation and delivery of Issuer Orders, Officer's Certificates and
Opinions of Counsel and all other actions necessary with respect to
investment and reinvestment of funds in the Trust Accounts (Sections 8.02 and
8.03);
(V) the preparation of an Issuer Request and Officer's Certificate and
the obtaining of an Opinion of Counsel and Independent Certificates, if
necessary, for the release of the Trust Estate (Sections 8.04 and 8.05);
(W) the preparation of Issuer Orders and the obtaining of Opinions of
Counsel with respect to the execution of supplemental indentures and the
mailing to the Noteholders of notices with respect to such supplemental
indentures (Sections 9.01, 9.02 and 9.03);
(X) the execution and delivery of new Notes conforming to any
supplemental indenture (Section 9.05);
(Y) the duty to notify Noteholders of redemption of the Notes or to
cause the Indenture Trustee to provide such notification (Section 10.02);
(Z) the preparation and delivery of all Officer's Certificates and
Opinions of Counsel with respect to any requests by the Issuer to the
Indenture Trustee to take any action under the Indenture (Section 11.01);
(AA) the notification of the Rating Agencies, upon the failure of the
Indenture Trustee to give such notification, of the information required
pursuant to Section 11.04 of the Indenture (Section 11.04);
(BB) the preparation and delivery to Noteholders and the Indenture
Trustee of any agreements with respect to alternate payment and notice
provisions (Section 11.06);
(CC) the recording of the Indenture, if applicable (Section 11.15); and
4
<PAGE>
(DD) the delivery to each Noteholder of such information as may be
required to enable such holder to prepare its federal and state tax returns
(Section 6.06).
(ii) The Administrator will:
(A) pay the Indenture Trustee (and any separate trustee or co-trustee
appointed pursuant to Section 6.10 of the Indenture (a "Separate Trustee"))
from time to time reasonable compensation for all services rendered by the
Indenture Trustee or Separate Trustee, as the case may be, under the
Indenture (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(B) except as otherwise expressly provided in the Indenture, reimburse
the Indenture Trustee or any Separate Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Indenture Trustee or Separate Trustee, as the case may be, in accordance with
any provision of the Indenture (including the reasonable compensation,
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;
(C) indemnify the Indenture Trustee and its officers, directors, agents
and employees and any Separate Trustee and their respective agents for, and
hold them harmless against, any losses, liability or expense (including
attorney's fees and expenses) incurred by it in connection with the
administration of the trust created by the Indenture and the performance of
its duties under the Indenture; provided, that, the Administrator need not
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee's own willful
misconduct, negligence or bad faith; and
(D) pay the Owner Trustee (and any Indemnified Party, as defined in
Section 8.02 of the Trust Agreement) any amounts owed to it under Section
8.01 or 8.02 of the Trust Agreement.
(b) Additional Duties. (i) In addition to the duties of the
-----------------
Administrator set forth above, the Administrator shall perform such calcula-
tions and shall prepare or shall cause the preparation by other appropriate
persons of, and shall execute on behalf of the Issuer or the Owner Trustee,
all such documents, reports, filings, instruments, certificates and opinions
that it shall be the duty of the Issuer or the Owner Trustee to prepare, file
or deliver pursuant to the Related Agreements or Section 5.05(a), (b), (c) or
(d) of the Trust Agreement, and at the request of the Owner Trustee shall
take all appropriate action that it is the duty of the Issuer or the Owner
Trustee to take pursuant to the Related Agreements. In furtherance thereof,
the Owner Trustee shall, on behalf of itself and of the Issuer, execute and
deliver to the Administrator and to each successor Administrator appointed
pursuant to the terms hereof, one or more
5
<PAGE>
powers of attorney substantially in the form of Exhibit A hereto, appointing
the Administrator the attorney-in-fact of the Owner Trustee and the Issuer
for the purpose of executing on behalf of the Owner Trustee and the Issuer
all such documents, reports, filings, instruments, certificates and opinions.
Subject to Section 5 of this Agreement, and in accordance with the directions
of the Owner Trustee, the Administrator shall administer, perform or
supervise the performance of such other activities in connection with the
Collateral (including the Related Agreements) as are not covered by any of
the foregoing provisions and as are expressly requested by the Owner Trustee
and are reasonably within the capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding tax
is imposed on the Trust's payments (or allocations of income) to an Owner as
contemplated in Section 5.02(c) of the Trust Agreement. Any such notice
shall specify the amount of any withholding tax required to be withheld by
the Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Owner Trustee set forth in Section 5.05(a),
(b), (c) and (d), the penultimate sentence of Section 5.05 and Section
5.06(a) of the Trust Agreement with respect to, among other things,
accounting and reports to Owners; provided, however, that the Owner Trustee
shall retain responsibility for the distribution of the Schedule K-1s
necessary to enable each Owner to prepare its federal and state income tax
returns.
(iv) The Administrator shall satisfy its obligations with respect to
clauses (ii) and (iii) above by retaining, at the expense of the Trust
payable by the Administrator, a firm of independent public accountants (the
"Accountants") acceptable to the Owner Trustee, which shall perform the
obligations of the Administrator thereunder. In connection with paragraph
(ii) above, the Accountants will provide prior to December 31, 199_, a letter
in form and substance satisfactory to the Owner Trustee as to whether any tax
withholding is then required and, if required, the procedures to be followed
with respect thereto to comply with the requirements of the Code. The
Accountants shall be required to update the letter in each instance that any
additional tax withholding is subsequently required or any previously
required tax withholding shall no longer be required.
(v) The Administrator shall perform the duties of the Administrator
specified in Section 10.02 of the Trust Agreement required to be performed in
connection with the resignation or removal of the Owner Trustee, and any
other duties expressly required to be performed by the Administrator under
the Trust Agreement.
6
<PAGE>
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions or otherwise deal with any of its affiliates; provided,
however, that the terms of any such transactions or dealings shall be in
accordance with any directions received from the Issuer and shall be, in the
Administrator's opinion, no less favorable to the Issuer than would be
available from unaffiliated parties.
(c) Non-Ministerial Matters. (i) With respect to matters that in
-----------------------
the reasonable judgment of the Administrator are non-ministerial, the
Administrator shall not take any action unless within a reasonable time
before the taking of such action, the Administrator shall have notified the
Owner Trustee of the proposed action and the Owner Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of
the preceding sentence, "non-ministerial matters" shall include, without
limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the Issuer
(other than in connection with the collection of the Receivables);
(C) the amendment, change or modification of the Related Agreements;
(D) the appointment of successor Note Registrars, successor Paying
Agents and successor Indenture Trustees pursuant to the Indenture or the
appointment of successor Administrators or Successor Servicers, or the
consent to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement, the
Administrator shall not be obligated to, and shall not, (x) make any payments
to the Noteholders under the Related Agreements, (y) sell the Trust Estate
pursuant to Section 5.04 of the Indenture or (z) take any other action that
the Issuer directs the Administrator not to take on its behalf.
2. Records. The Administrator shall maintain appropriate books of
-------
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer at any
time during normal business hours.
3. Compensation. As compensation for the performance of the
------------
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator
7
<PAGE>
shall be entitled to $_________ per annum which shall be solely an obligation
of the Servicer.
4. Additional Information To Be Furnished to the Issuer. The
----------------------------------------------------
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
5. Independence of the Administrator. For all purposes of this
---------------------------------
Agreement, the Administrator shall be an independent contractor and shall not
be subject to the supervision of the Issuer or the Owner Trustee with respect
to the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Administrator
shall have no authority to act for or represent the Issuer or the Owner
Trustee in any way and shall not otherwise be deemed an agent of the Issuer
or the Owner Trustee.
6. No Joint Venture. Nothing contained in this Agreement
----------------
(i) shall constitute the Administrator and either of the Issuer or the Owner
Trustee as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to
confer on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
7. Other Activities of Administrator. Nothing herein shall prevent
---------------------------------
the Administrator or its Affiliates from engaging in other businesses or, in
its sole discretion, from acting in a similar capacity as an administrator
for any other person or entity even though such person or entity may engage
in business activities similar to those of the Issuer, the Owner Trustee or
the Indenture Trustee.
8. Term of Agreement; Resignation and Removal of Administrator.
-----------------------------------------------------------
(a) This Agreement shall continue in force until the dissolution of the
Issuer, upon which event this Agreement shall automatically terminate.
(b) Subject to Section 8(e), the Administrator may resign its duties
hereunder by providing the Issuer with at least 60 days' prior written
notice.
(c) Subject to Section 8(e), the Issuer may remove the Administrator
without cause by providing the Administrator with at least 60 days' prior
written notice.
(d) Subject to Section 8(e), at the sole option of the Issuer, the
Administrator may be removed immediately upon written notice of termination
from the Issuer to the Administrator if any of the following events shall
occur:
(i) the Administrator shall default in the performance of any of its
duties under this Agreement and, after notice of such
8
<PAGE>
default, shall not cure such default within ten days (or, if such default
cannot be cured in such time, shall not give within ten days such assurance
of cure as shall be reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter a decree or
order for relief, and such decree or order shall not have been vacated within
60 days, in respect of the Administrator in any involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect or appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for the Administrator or any substantial
part of its property or order the winding-up or liquidation of its affairs;
or
(iii) the Administrator shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary
case under any such law, shall consent to the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator or similar official
for the Administrator or any substantial part of its property, shall consent
to the taking of possession by any such official of any substantial part of
its property, shall make any general assignment for the benefit of creditors
or shall fail generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in
clauses (ii) or (iii) of this Section shall occur, it shall give written
notice thereof to the Issuer and the Indenture Trustee within seven days
after the happening of such event.
(e) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall have
been appointed by the Issuer and (ii) such successor Administrator shall have
agreed in writing to be bound by the terms of this Agreement in the same
manner as the Administrator is bound hereunder.
(f) The appointment of any successor Administrator shall be effective
only after satisfaction of the Rating Agency Condition with respect to the
proposed appointment.
(g) Subject to Section 8(e) and 8(f), the Administrator acknowledges
that upon the appointment of a Successor Servicer pursuant to the Sale and
Servicing Agreement, the Administrator shall immediately resign and such
Successor Servicer shall automatically become the Administrator under this
Agreement.
9. Action upon Termination, Resignation or Removal. Promptly upon
-----------------------------------------------
the effective date of termination of this Agreement pursuant to Section 8(a)
or the resignation or removal of the Administrator pursuant to Section 8(b)
or (c), respectively, the Administrator shall be entitled to be paid all fees
and reimbursable expenses accruing to it to the date of such
9
<PAGE>
termination, resignation or removal. The Administrator shall forthwith upon
such termination pursuant to Section 8(a) deliver to the Issuer all property
and documents of or relating to the Collateral then in the custody of the
Administrator. In the event of the resignation or removal of the
Administrator pursuant to Section 8(b) or (c), respectively, the
Administrator shall cooperate with the Issuer and take all reasonable steps
requested to assist the Issuer in making an orderly transfer of the duties of
the Administrator.
10. Notices. Any notice, report or other communication given
-------
hereunder shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to:
FASCO Auto Trust 199_-_
In care of ____________________
(address)
(b) if to the Administrator, to:
Financial Asset Securities Corp.
(address)
(c) if to the Indenture Trustee, to:
___________________________
(address)
or to such other address as any party shall have provided to the other
parties in writing. Any notice required to be in writing hereunder shall be
deemed given if such notice is mailed by certified mail, postage prepaid, or
hand-delivered to the address of such party as provided above.
11. Amendments. This Agreement may be amended from time to time by
----------
a written amendment duly executed and delivered by the Issuer, the
Administrator and the Indenture Trustee, with the written consent of the
Owner Trustee, without the consent of the Noteholders and the
Certificateholders, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or Certificateholders;
provided that such amendment will not, in the Opinion of Counsel satisfactory
to the Indenture Trustee and each Rating Agency, materially and adversely
affect the interest of any Noteholder or Certificateholder. This Agreement
may also be amended by the Issuer, the Administrator and the Indenture
Trustee with the
10
<PAGE>
written consent of the Owner Trustee and the holders of Notes evidencing at
least a majority of the Outstanding Amount of the Notes and the holders of
Certificates evidencing at least a majority of the Certificate Balance for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of Noteholders or the Certificateholders; provided,
however, that no such amendment may (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 Certificateholders or (ii) reduce the aforesaid percentage
of the holders of Notes and Certificates which are required to consent to any
such amendment, without the consent of the holders of all the outstanding
Notes and Certificates. Notwithstanding the foregoing, the Administrator may
not amend this Agreement without the permission of the Depositor, which
permission shall not be unreasonably withheld.
12. Successors and Assigns. This Agreement may not be assigned by
----------------------
the Administrator unless such assignment is previously consented to in
writing by the Issuer and the Owner Trustee and subject to the satisfaction
of the Rating Agency Condition in respect thereof. An assignment with such
consent and satisfaction, if accepted by the assignee, shall bind the
assignee hereunder in the same manner as the Administrator is bound
hereunder. Notwithstanding the foregoing, this Agreement may be assigned by
the Administrator without the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor (by merger,
consolidation or purchase of assets) to the Administrator; provided that such
successor organization executes and delivers to the Issuer, the Owner Trustee
and the Indenture Trustee an agreement in which such corporation or other
organization agrees to be bound hereunder by the terms of said assignment in
the same manner as the Administrator is bound hereunder. Subject to the
foregoing, this Agreement shall bind any successors or assigns of the parties
hereto.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
14. Headings. The section headings hereof have been inserted for
--------
convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
15. Counterparts. This Agreement may be executed in counterparts,
------------
each of which when so executed shall be an original, but all of which
together shall constitute but one and the same agreement.
11
<PAGE>
16. Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
17. Not Applicable to Financial Asset Securities Corp. in Other
-----------------------------------------------------------
Capacities. Nothing in this Agreement shall affect any obligation
- ----------
Financial Asset Securities Corp. may have in any other capacity.
18. Limitation of Liability of Owner Trustee and Indenture Trustee.
--------------------------------------------------------------
(a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by Wilmington Trust Company in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or
any beneficial owner of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder, as to all of which recourse shall be had solely to the
assets of the Issuer. For all purposes of this Agreement, in the performance
of any duties or obligations of the Issuer hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by __________________________ not in its
individual capacity but solely as Indenture Trustee and in no event shall
__________________________ have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the
assets of the Issuer.
19. Third-Party Beneficiary. The Owner Trustee is a third-party
-----------------------
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
* * * * * * * * * * * * * * * * * * * * * *
12
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
FASCO AUTO TRUST 199_-_
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:
FINANCIAL ASSET SECURITIES CORP.,
as Administrator
By:
--------------------------------------
Name:
Title:
13
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
STATE OF NEW YORK }
}
COUNTY OF NEW YORK }
KNOW ALL MEN BY THESE PRESENTS, that ___________________, a
__________________ banking corporation, not in its individual capacity but
solely as owner trustee (the "Owner Trustee") for FASCO Auto Trust 199_-_
(the "Trust"), does hereby make, constitute and appoint Financial Asset
Securities Corp., as administrator under the Administration Agreement dated
as of ________________, 199_ (the "Administration Agreement"), among the
Trust, Financial Asset Securities Corp. and __________________________, as
Indenture Trustee, as the same may be amended from time to time, and its
agents and attorneys, as Attorneys-in-Fact to execute on behalf of the Owner
Trustee or the Trust all such documents, reports, filings, instruments,
certificates and opinions as it should be the duty of the Owner Trustee or
the Trust to prepare, file or deliver pursuant to the Related Agreements, or
pursuant to Section 5.05(a), (b), (c) or (d) of the Trust Agreement,
including, without limitation, to appear for and represent the Owner Trustee
and the Trust in connection with the preparation, filing and audit of
federal, state and local tax returns pertaining to the Trust, and with full
power to perform any and all acts associated with such returns and audits
that the Owner Trustee could perform, including without limitation, the right
to distribute and receive confidential information, defend and assert
positions in response to audits, initiate and defend litigation, and to
execute waivers of restrictions on assessments of deficiencies, consents to
the extension of any statutory or regulatory time limit, and settlements.
All powers of attorney for this purpose heretofore filed or executed by
the Owner Trustee are hereby revoked.
Capitalized terms that are used and not otherwise defined herein shall
have the meanings ascribed thereto in the Administration Agreement.
EXECUTED this ___ of __________, 199_.
__________________________,
not in its individual capacity but solely
as Owner Trustee
--------------------------------
Name:
Title:
1
<PAGE>
STATE OF ___________}
}
COUNTY OF _________ }
Before me, the undersigned authority, on this day personally appeared
_______________________, known to me to be the person whose name is
subscribed to the foregoing instrument, and acknowledged to me that he/she
signed the same for the purposes and considerations therein expressed.
Sworn to before me this ___
day of _______, 199_.
- -------------------------------------------------------------
Notary Public - State of ____________
2
<PAGE>
Exhibit 10.3
Form of Custodial Agreement
CUSTODIAL AGREEMENT
CUSTODIAL AGREEMENT dated as of , between FASCO
------------------------
Auto Trust 199 - , a Delaware business trust (the "Issuer"), ___________
--- ---
___________________, a ______________ banking corporation, as
indenture trustee (in such capacity, the "Indenture Trustee") under the
Indenture dated as of ____________________ (the "Indenture"), between the
Issuer and the Indenture Trustee, _________________________, as custodian
(in such capacity, the "Custodian") and _________________, a ______________
corporation, as servicer (the "Servicer) under the Sale and Servicing
Agreement dated as of ___________________ (the "Sale and Servicing
Agreement"), among the Issuer, _________________________, a _____________
corporation, as depositor (the "Depositor"), the Servicer and _____________,
as backup servicer (in such capacity, the "Backup Servicer"). Capitalized
terms used and not otherwise defined herein shall have the meanings
assigned to such terms in the Sale and Servicing Agreement.
WHEREAS, pursuant to the Sale and Servicing Agreement, the Depositor has
sold, transferred and assigned to the Issuer without recourse all of the
Depositor's right, title and interest in and to the Receivables, and the
Servicer has agreed to service the Receivables;
WHEREAS, pursuant to the Indenture, the Issuer has pledged all of its
right, title and interest in and to the Receivables to the Indenture Trustee,
as trustee for the benefit of holders of the Notes issued pursuant thereto;
WHEREAS, the Custodian is a banking
----------------------------
corporation whose business includes serving as custodian for financial
instruments;
WHEREAS, the Indenture Trustee desires the Custodian to take possession
of the Receivables, as the custodian for, and bailee of, the Indenture
Trustee until the Notes have been paid in full and the Custodian is willing
to do so;
WHEREAS, the Issuer desires the Custodian to take possession of the
Receivables, as the custodian for, and bailee of, the Issuer after the Notes
have been paid in full, and the Custodian is willing to do so;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Appointment as Custodian; Acknowledgment of Receipt. (a) Subject
---------------------------------------------------
to the terms and conditions hereof, the Custodian is hereby appointed by the
Issuer, and the Custodian hereby accepts such appointment, to act as
custodian and bailee of the Issuer, for purposes of Article 9 of the UCC, to
maintain custody of the Receivable Files until delivery to the Custodian by
the Depositor of an executed copy of a cross-receipt indicating that the
Depositor has received payment in full for the Notes.
(b) Subject to the terms and conditions hereof, upon the receipt of
such cross-receipt the Custodian is hereby appointed by the Indenture
Trustee, and the Custodian hereby accepts such appointment, to act as
custodian and bailee of the Indenture Trustee, for purposes of Article 9 of
the UCC, to maintain custody of the Receivable Files until the Issuer shall
have delivered to the Custodian the officer's certificate and opinion of
counsel under the Indenture to the effect that conditions for the discharge
of the Indenture have been satisfied.
1
<PAGE>
(c) Subject to the terms and conditions hereof, upon delivery to the
Custodian by the Issuer of the officer's certificate and opinion of counsel
under the Indenture to the effect that conditions for the discharge the
Indenture have been satisfied by the Issuer, the Custodian is hereby
appointed by the Issuer, and the Custodian hereby accepted such appointment,
to act as custodian and bailee of the Issuer, for the purposes of Article 9
of the UCC, to maintain custody of the Receivable Files.
2. Maintenance at Offices. The Custodian agrees that the Receivable
----------------------
Files shall at all times be maintained separately at the Corporate Trust
Office of the Custodian, which on the date hereof is located at ____________
_______________________________________, Attention: _______________________,
unless otherwise agreed upon by the Indenture Trustee and the Issuer.
3. Duties of Custodian. The Custodian shall have and perform the
-------------------
following powers and duties:
(a) Certification of the Custodian. The Custodian hereby
------------------------------
certifies that (i) it has received each of the items listed on Exhibit A with
respect to each Receivable identified on the Schedule of Receivables attached
to the Indenture and the Sale and Servicing Agreement, (ii) the documents
referred to in the preceding clause (i) have been reviewed by it and appear
regular on their face and (iii) the signature block on each Receivable in the
Receivable File for each Receivable contains a manual signature. The
Custodian further certifies that as to each Receivable, the Custodian holds
the Receivable without written notice (a) of any adverse claims, liens or
encumbrances, (ii) that the Receivable was overdue or has been dishonored,
(c) of evidence on the face of the Receivable or other document relating
thereto in the Custodian's possession of any security interest therein, or
(d) of any defense against or claim to the Receivable by any party.
(b) Safekeeping. The Custodian, either directly or by acting
-----------
through an agent or nominee (which agent shall not be the Depositor, the
Issuer or any affiliate of the Depositor or the Issuer) shall hold the
Receivable Files for the exclusive use and benefit of the Indenture Trustee
(until the Notes have been paid in full) and for the exclusive benefit of the
Issuer (after the Notes have been paid in full) and shall make disposition
thereof only in accordance with this Agreement, the Indenture and the Sale
and Servicing Agreement. The Custodian shall segregate and maintain
continuous custody of all Receivable Files in secure and fire-proof
facilities in accordance with customary standards for such custody. Any
documents other than Receivable Files related to the transactions
contemplated by the Indenture and the Sale and Servicing Agreement shall be
delivered to the Indenture Trustee (until the Notes have been paid in full)
and thereafter to the Issuer.
(c) Access to Records. The Custodian shall permit the Indenture
-----------------
Trustee, the Issuer, the Servicer, the Backup Servicer, the Noteholders, the
Certificateholders or their duly authorized representatives, attorneys or
auditors to inspect the Receivable Files and the books and records maintained
by the Custodian pursuant hereto at such times during normal business hours
as the Indenture Trustee, the Issuer, the Servicer, the Backup Servicer, the
Indenture Trustee, or such Certificateholders or Noteholders may reasonably
request. Nothing in this Section shall derogate from the obligation of the
Custodian to observe any applicable law prohibiting disclosure of information
regarding Obligors, and the failure of the Custodian to provide access as
provided in this Section as the result of such obligation shall not
constitute a breach of this Section.
(d) Release of Documents. The Custodian is hereby authorized,
--------------------
upon receipt of a written request of the Servicer in the form attached as
Exhibit B hereto ("Request for Release"), to release to the Servicer the
Receivable Files or certain documents therein specified in the Request for
Release. All documents released to the Servicer shall be held by the
Servicer in trust for the Indenture Trustee (until the Notes are paid in
full) and thereafter in trust for the Issuer. Unless a Receivable File is
released because the related Receivable is paid in full,
2
<PAGE>
purchased by the Depositor or the Servicer, or liquidated, the Servicer
shall return any documents so released promptly after its need for
possession of such documents no longer exists.
Upon the purchase by the Depositor or the Servicer of any
Receivable pursuant to the Sale and Servicing Agreement or the payment
in full of any Receivable, which shall be evidenced by the delivery to
the Custodian of a Request for Release, the Custodian shall release the
related Receivable File to the person specified in such Request for
Release.
4. Indemnification. The Servicer agrees to indemnify the Custodian
---------------
and any of its officers, directors, agents or employees against, and to hold
it harmless from, any claims, losses, liabilities, and any related
out-of-pocket expenses (including without limitation reasonable attorney's
fees and expenses) that it may incur in connection with this Agreement, other
than any liabilities and expenses arising out of the Custodian's negligence
or bad faith. The indemnification provided in this Section 4 shall survive
the termination of this Agreement and the termination of the Custodian as
Custodian under this Agreement.
5. Adverse Interest. By its acceptance of each Receivable File, the
----------------
Custodian covenants and warrants to the Issuer and the Indenture Trustee that
(a) to the best of its knowledge, as of the date of acceptance of such
Receivable File, the Custodian (in such capacity) holds no adverse interest,
by way of security or otherwise, in the related Receivable and (b) the
Custodian (in such capacity) hereby waives and releases any interest in such
Receivable that it has or may thereafter acquire prior to the time of release
of such Receivable from the terms of this Agreement.
6. Limitation of Liability. The Custodian shall not be liable for any
-----------------------
action or non-action by it in reliance on advice of counsel believed by it in
good faith to be competent to give such advice. The Custodian may
conclusively rely upon, and shall be protected in acting upon, any written
notice, order, certificate, request, direction, or other document believed by
it to be genuine and to have been signed or presented by the proper party or
parties.
7. Concerning the Custodian. (a) Limitation of Liability;
------------------------ ------------------------
Indemnification. In no event shall the Custodian or any of its officers,
- ---------------
directors, agents, or employees be liable to the Issuer, the Indenture
Trustee or any third party for special, indirect or consequential damages, or
lost profits or loss of business arising under or in connection with this
Agreement. The Custodian may, with respect to questions of law, apply for and
obtain the advice and opinion of counsel, and shall be fully protected with
respect to anything done or omitted by it in good faith in conformity with
such reasonable advice or opinion. The Servicer agrees to indemnify the
Custodian and to hold it harmless against any and all losses (including
claims by the Servicer) that are sustained by the Custodian as a result of
the Custodian's action or inaction in connection with this Agreement, except
those losses arising out of the Custodian's negligence, bad faith or willful
misconduct. Such indemnity shall survive the termination of this Agreement
and the termination of the Custodian as Custodian under this Agreement.
(b) No Guaranty by Custodian. It is expressly agreed and acknowledged
------------------------
that the Custodian is not guaranteeing performance of or assuming any
liability for the obligations of the other parties hereto nor is it assuming
any credit risk associated with transactions hereunder; further, it is
expressly agreed that the Custodian is not undertaking to make credit
available to any party hereto to enable it to complete the transactions
hereunder.
(c) Force Majeure. The Custodian shall not be responsible or liable
-------------
for any failure or delay in the performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances
beyond its reasonable control, including without limitation, acts of God,
earthquakes, fires, floods, wars, civil or military disturbances, sabotage,
epidemics, riots, loss or malfunctions of utilities, computer (hardware or
software) or communications service, labor disputes,
3
<PAGE>
acts of civil or military authority, or governmental, judicial or regulatory
actions; provided, however, that the Custodian shall use its best efforts to
resume performance as soon as possible.
(d) No Additional Duties. The Custodian (in such capacity) shall have
--------------------
no duties or responsibilities except such duties and responsibilities as are
specifically set forth in this Agreement, and no covenant or obligation shall
be implied in this Agreement against the Custodian.
(e) Custodian Not Responsible for Losses on Receivables. The Custodian
---------------------------------------------------
shall not be responsible for any losses incurred by the Indenture Trustee or
the Issuer in respect of the Receivables other than any losses arising out of
the Custodian's negligence, bad faith or wilful misconduct.
(f) Custodian Not Required to Risk Its Own Funds. The Custodian shall
--------------------------------------------
not be required to expend its own funds in the performance of its duties
hereunder if it shall have reasonable grounds to believe that repayment of
such funds is not reasonably assured.
8. Charges and Expenses. The Servicer agrees to pay all fees of the
--------------------
Custodian in connection with the performance of its duties hereunder in
accordance with written agreements to be entered into from time to time
between the Custodian and the Servicer, including without limitation, fees
and expenses of counsel incurred by the Custodian in the performance of its
duties hereunder; provided, however, that the Custodian shall in no event
acquire any lien upon any Receivable deposited under this Agreement or any
claim against the Issuer by reason of the failure of the Servicer to pay any
of such charges or expenses.
9. Insurance of Custodian. At its own expense, the Custodian shall
----------------------
maintain at all times during the existence of this Agreement and keep in full
force and effect such insurance, with standard coverage and subject to
deductibles, as is customary for insurance typically maintained by banks
acting in a custodial capacity.
10. Periodic Statements. Upon the written request of the Indenture
-------------------
Trustee or the Issuer at any other time, the Custodian shall deliver to the
Indenture Trustee and the Issuer a list of all of the Receivable Files which
the Custodian holds pursuant to this Agreement.
11. Resignation or Removal of Custodian. The Custodian may at any time
-----------------------------------
resign and be discharged from the obligations hereby created by giving
written notice thereof to Indenture Trustee and the Issuer. Upon receiving
such notice of resignation, the Indenture Trustee (until the Notes are paid
in full) and thereafter the Issuer shall promptly appoint a successor
Custodian, by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Custodian and one copy to the successor
Custodian. If no successor Custodian shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Custodian may petition any court of competent
jurisdiction for the appointment of a successor Custodian.
If at any time the Custodian shall be legally unable to act, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Custodian or of its
property shall be appointed, or any public officer shall take charge or
control of the Custodian or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Indenture Trustee
(until the Notes are paid in full) and thereafter the Issuer may remove the
Custodian. If it shall remove the Custodian under the authority of the
immediately preceding sentence, the Indenture Trustee (until the Notes are
paid in full) and thereafter the Issuer shall promptly appoint a successor
Custodian by written instrument, in duplicate, one copy of which instrument
shall be delivered to the Custodian so removed and one copy to the successor
Custodian.
Any resignation or removal of the Custodian and appointment of a
successor Custodian pursuant to any of the provisions of this Section 11
shall not become effective until acceptance of appointment by the successor
Custodian pursuant to Section 12.
4
<PAGE>
12. Successor Custodian. Any successor Custodian appointed pursuant
-------------------
to Section 11 shall execute, acknowledge, and deliver to the Indenture
Trustee and the Issuer and to its predecessor Custodian an instrument
accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Custodian shall become effective
and such successor Custodian, without any further act, deed, or conveyance,
shall become fully vested with all the rights, powers, duties and obligations
of its predecessor under this Agreement, with like effect as if originally
named as Custodian. The predecessor Custodian shall, upon payment of all
amounts due and payable to it, deliver to the successor Custodian all
documents and statements held by it under this Agreement; and the predecessor
Custodian and the other parties hereto shall execute and deliver such
instruments and do such other things as may reasonably be required for fully
and certainly vesting and confirming in the successor Custodian all such
rights, powers, duties, and obligations.
13. Representations and Warranties. The Custodian represents and
------------------------------
warrants that:
(a) The Custodian is duly organized, validly existing and in good
standing under the laws of the State of New York;
(b) The Custodian has the corporate power and authority to enter into
and perform its obligations under this Agreement and has duly authorized,
executed and delivered this Agreement;
(c) The execution and delivery of this Agreement will not conflict with
or result in a breach of any of the provisions of the Custodian's charter or
bylaws; and
(d) Except in accordance with the Indenture and the Sale and Servicing
Agreement, the Custodian will not release or remove any security interest
arising under financing statements and continuation statements filed pursuant
to such agreements in the Receivables, and related assets subject to such
agreements.
14. Amendment. This Agreement may be amended from time to time by
---------
written agreement signed by the parties hereto.
15. Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of the State of New York without reference to
its conflict of law provisions.
16. Notices. Notices and other writings delivered or mailed, postage
-------
prepaid, to the Custodian at
----------------------------------------------
, telephone: , facsimile: _____________,
- --------------- ---------------------
Attention: ___________________________; and to the Issuer at
FASCO Auto Trust 199___-___, in care of _________________________,
as Owner Trustee, _______________________, telephone: ____________,
facsimile: _________________, Attention: _______________________;
to the Indenture Trustee at _______________________, telephone: _________,
facsimile: _________________, Attention: _______________________;
and to the Servicer at ____________________________, telephone: ________,
facsimile: _______________, Attention: _____________________, or
to such other address as the Custodian, the Issuer, the
Indenture Trustee or the Servicer may hereafter specify in writing, shall
be conclusively presumed deemed to have been duly given hereunder to such
party upon receipt.
17. Binding Effect. This Custodial Agreement shall be binding upon and
--------------
shall inure to the benefit of the parties hereto and their respective
successors and assigns.
5
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Custodial
Agreement to be executed in its name and on its behalf by a duly authorized
officer as of the date first above written.
FASCO AUTO TRUST 199 - , Issuer
--- ---
By: _________________, not in its individual
capacity, but solely as Owner Trustee
By:
-----------------------------------
Name:
Title:
___________________________, as Custodian
By:
----------------------------------------
Name:
Title:
___________________________, as Indenture
Trustee
By:
----------------------------------------
Name:
Title:
_____________________________, as Servicer
By:
----------------------------------------
Name:
Title:
6
<PAGE>
EXHIBIT A
ITEMS IN RECEIVABLE FILE
1. the Schedule of Receivables;
2. the fully executed original Receivable with manual signatures and Dealer
endorsements, together with executed assignments thereof by the Seller
in blank;
3. a written confirmation from the Servicer certifying as to the Insurance
Policies covering the Receivable and stating that they are in full force
and effect;
4. the original certificate of title relating to the Financed Vehicle or
(a) a copy of the application for a certificate of title and (b) a copy
of the existing title, lien entry form or receipt of registration or (c)
a copy of the related letter guarantee, in each case noting the lien of
the Seller; and
5. an original or copy of the credit application of the Obligor.
B-1
<PAGE>
EXHIBIT B
REQUEST FOR RELEASE AND RECEIPT OF DOCUMENTS
To: , as Custodian
----------------------------------------
------------------------------------------
------------------------------------------
Attention:
--------------------------
Re: Custodial Agreement dated (the
-----------------------------
"Agreement"), among FASCO Auto Trust 199 - ,
--- ---
______________, as Indenture Trustee, ____________, as Custodian,
and _______________________, as Servicer
Ladies and Gentlemen:
In connection with the administration of the Receivables held by you as
the Custodian for (the Indenture Trustee) (the Issuer), we request the
release, and acknowledge receipt, of the (Receivable File/specify documents)
for the Receivable described below, for the reason indicated.
Obligor's Name, Address & Zip Code:
Contract Number:
Reason for Requesting Documents (check one or more)
________ 1. Receivable Paid in Full
________ 2. Receivable Repurchased
________ 3. Receivable Liquidated
________ 4. Receivable in Repossession
________ 5. Other (explain)
If item 1, 2 or 3 above is checked, and if all or part of the Receivable File
was previously released to us, please release to us our previous receipt on
file with you, as well as any additional documents in your possession
relating to the above specified Receivable.
1
<PAGE>
If item 4 or 5 above is checked, upon our return of the above document(s) to
you as the Custodian, please acknowledge your receipt by signing in the space
indicated below, and returning this form.
--------------------------------------------
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Date:
-----------------------------------
Documents returned to the Custodian:
, as Custodian
- ---------------------------------
By:
-------------------------------
Name:
-----------------------------
Title:
---------------------------------
Date:
----------------------------------
B-2
<PAGE>
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
---------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
----
PURSUANT TO SECTION 305(b)(2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A NATIONAL BANKING ASSOCIATION 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
SIXTH STREET AND MARQUETTE AVENUE
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip code)
---------------------------------
FINANCIAL ASSET SECURITIES CORP.
(Exact name of obligor as specified in its charter)
DELAWARE APPLIED FOR
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
600 STEAMBOAT ROAD
GREENWICH, CONNECTICUT 06830
(Address of principal executive offices) (Zip code)
---------------------------------
$500,000,000 ASSET BACKED SECURITIES
(Title of the indenture securities)
<PAGE>
Item 1. General Information. Furnish the following information as to the
-------------------
trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor. If the obligor is an affiliate of the
-------------------------
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-15 of this Form T-1 because the obligor
is not in default as provided under Item 13.
Item 16. List of Exhibits. List below all exhibits filed as a part of
----------------
this Statement of Eligibility. Norwest Bank incorporates by reference into
this Form T-1 the exhibits attached hereto.
Exhibit 1. a. A copy of Articles of Association of the trustee
now in effect.*
Exhibit 2. a. A copy of the certificate of authority of the
trustee to commence business issued June 28, 1872,
by the Comptroller of the Currency to The
Northwestern National Bank of Minneapolis.*
b. A copy of the certificate of the Comptroller of the
Currency dated January 2, 1934, approving the
consolidation of the Northwestern National Bank of
Minneapolis and the Minnesota Loan and Trust
Company of Minneapolis.*
c. A copy of the certificate of the Acting Comptroller
of the currency dated January 12, 1943, as to change
of corporate title of Northwestern National Bank and
Trust Company of Minneapolis to Northwestern National
Bank of Minneapolis.*
d. A copy of the certificate of the Comptroller of the
Currency dated May 1, 1983, authorizing Norwest Bank
Minneapolis, National Association, to act as
fiduciary.*
<PAGE>
Exhibit 3. A copy of the authorization of the trustee to exercise
corporate trust powers issued January 2, 1934, by the Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section 32(b) of
the Act.
Exhibit 7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or examining
authority.**
Exhibit 8. A copy of the certificate dated May 10, 1983 of name
change from Northwestern National Bank Minneapolis to Norwest Bank
Minneapolis, National Association.*
Exhibit 9. A copy of the certificate dated January 11, 1988, of
name changes from Norwest Bank Minneapolis, National Association to Norwest
Bank Minnesota, National Association.*
* Incorporated by reference to the exhibit of the same number filed
with the registration statement number 33-66086.
** Incorporated by reference to the exhibit of the same number filed
with the registration statement number 333-1126.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 17th day of May, 1996.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/Raymond S. Haverstock
---------------------------------------
Raymond S. Haverstock
Vice President
<PAGE>
EXHIBIT 6
May 17, 1996
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321 (b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal or State authorities authorized to make such
examination may be furnished by such authorities to the Securities and
Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
Raymond S. Haverstock
Vice President
<PAGE>
Exhibit 99.1
Form of Transfer Agreement
TRANSFER AGREEMENT dated as of ________________, between FINANCIAL ASSET
SECURITIES CORP., a Delaware corporation, as depositor (the "Depositor"), and
, a banking corporation, as trustee of
- -------------------- ---------------
FASCO Auto Trust 199__-__ (the "Trustee").
RECITALS
WHEREAS FASCO Auto Trust 199 - (the "Trust") has been formed and
--- ---
has issued the ____% Asset Backed Certificates, Class A and the _____% Asset
Backed Certificates, Class B (collectively, the "Certificates") pursuant to a
Pooling and Servicing Agreement dated as of _________________ (the
"Pooling and Servicing Agreement"), among Financial Asset Securities Corp.,
as depositor, _________________________, as trustee, __________________,
as servicer, and _______________________, as backup servicer, and
the Trustee has delivered the Certificates to the Depositor pursuant to such
Pooling and Servicing Agreement;
WHEREAS the Depositor has applied certain of the proceeds of the sale of
the Certificates to pay for its purchase of certain motor vehicle retail
installment sale contracts (the "Initial Receivables") from ______________
_________, but will retain the remainder of the proceeds pending their
application to the purchase from _________________________ of additional
motor vehicle retail installment sale contracts (the "Subsequent
Receivables");
WHEREAS the Depositor will, pursuant to the Pooling and Servicing
Agreement and concurrently with the execution and delivery hereof, deposit,
transfer, assign and set over the Initial Receivables to the Trust in partial
consideration of the Certificates and agree to acquire, transfer, assign and
set over the Subsequent Receivables to the Trust during the Funding Period;
and
WHEREAS the Depositor has agreed to secure the payment and performance
of its obligations relating to the acquisition and conveyance to the Trust of
the Subsequent Receivables by entering into the Security Agreement with the
Trustee;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Depositor and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms. Capitalized terms used in this Agreement
and not specifically defined herein shall have the respective meanings
assigned to such terms in the Pooling and Servicing Agreement. Whenever used
in this Agreement, the following words and phrases shall have the meanings
set forth below:
("Carrying Charges" means the amount that the Depositor is obligated to
pay to the Trust pursuant to Section 3.01.)
"Collateral Agent" shall have the meaning set forth in the Security
Agreement dated as of _____________________, between the Depositor, the
Trustee and ________________________, as collateral agent.
"Liquidated Damages" means the amount that is payable as liquidated
damages to the Trust hereunder in the event the Depositor fails to transfer
Subsequent Receivables having an aggregate
1
<PAGE>
Principal Balance equal to the Pre-Funded Amount to the Trust during the
Funding Period in accordance with Section 2.02 below.
ARTICLE II
AGREEMENT TO TRANSFER SUBSEQUENT RECEIVABLES
Section 2.01. Transfer of Subsequent Receivables. The Depositor
hereby undertakes and agrees to acquire from ____________________________
by purchase for cash pursuant to one or more Subsequent Purchase Agreements
and to transfer to the Trust pursuant to one or more Subsequent Transfer
Agreements, during the Funding Period, Subsequent Receivables in an aggregate
Principal Balance, as of their respective Subsequent Cutoff Dates, of
$______________, which amount is equal to the Pre-Funded Amount
deposited to the Pre-Funding Account on the Closing Date. The Depositor
shall effect the purchases of Subsequent Receivables from _______________
using funds on deposit in the Pre-Funding Account in accordance
with the terms of the Security Agreement.
Section 2.02. Remedy for Breach. If the Depositor fails to perform
the obligation described in Section 2.01 in its entirety by the end of the
Funding Period, the Trustee shall take remedial action upon the expiration of
the Funding Period by giving written notice of non-performance to the
Depositor, accompanied by written demand upon the Depositor for payment of
liquidated damages ("Liquidated Damages") hereunder in respect of such non-
performance. The Liquidated Damages shall be in an amount equal to (the
amount then on deposit in the Pre-Funding Account) and shall be payable
immediately upon demand. The Trustee shall deposit all amounts received in
respect of Liquidated Damages into the Collection Account and shall
distribute such Liquidated Damages, pro rata, to the Certificateholders as a
prepayment of principal on the Distribution Date occurring on or (if the
Funding Period does not end on a Distribution Date) immediately following the
termination of the Funding Period.
(ARTICLE III
CARRYING CHARGES
Section 3.01. Payment of Carrying Charges. The Depositor hereby
agrees to pay to the Trustee for the benefit of the Trust, from, and only to
the extent of, funds on deposit in the Interest Reserve Account, an amount
with respect to each Distribution Date occurring during the Funding Period
equal to the amount (referred to herein as the "Carrying Charge"), if any, by
which (i) the product of (A) the weighted average of the Class A Pass-Through
Rate and the Class B Pass-Through Rate and (B) the Pre-Funded Amount as of
the first day of the related Collection Period exceeds (ii) the amount of
Investment Income received with respect to the Pre-Funded Amount during such
Collection Period.
The Trustee shall demand payment of any Carrying Charge required to be
paid by the Depositor with respect to a Distribution Date by making demand on
the Depositor pursuant to Section ______ of the Pooling and Servicing
Agreement and Section 3.03 of the Security Agreement. No such Carrying
Charges shall be payable on or after the second Distribution Date following
the termination of the Funding Period.
Section 3.02. Demand on Collateral Agent. The Depositor agrees that
the Trustee, as collateral agent under the Security Agreement, may effect
payment of any Carrying Charges on any Distribution Date by making demand
directly on the Collateral Agent instead of the Depositor, and hereby
consents to the payment of such Carrying Charges from amounts on deposit in
the Interest Reserve Account by the Collateral Agent directly to the
Trustee.)
2
<PAGE>
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. Amendments; Waivers. No amendment, modification or
waiver of or supplement to this Agreement or any provision of this Agreement
shall in any event be effective unless the same shall have been made or
consented to in writing by each of the parties hereto and each Rating Agency
shall have confirmed in writing that such amendment will not cause a
reduction or withdrawal of a rating of the Certificates.
Section 4.02. Severability. In the event that any provision of this
Agreement or the application thereof to any party hereto or to any
circumstance or in any jurisdiction governing this Agreement shall, to any
extent, be invalid or unenforceable under any applicable statute, regulation
or rule of law, then such provision shall be deemed inoperative to the extent
that it is invalid or unenforceable, and the remainder of this Agreement, and
the application of any such invalid or unenforceable provisions to the
parties and in jurisdictions or circumstances other than those to whom or in
which it is held invalid or unenforceable, shall not be affected thereby nor
shall the same affect the validity or enforceability of any other provision
of this Agreement.
Section 4.03. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, each of the parties hereto agrees that it
shall not, prior to the date that is one year and one day after the
Distribution Date first occurring following the final disbursement of funds
under the Security Agreement, acquiesce, petition or otherwise invoke or
cause the Depositor to invoke the process of the United States of America,
any State or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory, or administrative functions of
or pertaining to government for the purpose of commencing or sustaining a
case by or against the Depositor or the Trust under a federal or state
bankruptcy, insolvency or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator, or other similar official of the
Depositor or the Trust or all or any part of its property or assets, or
ordering the winding up or liquidation of the affairs of the Depositor or the
Trust. The parties agree that damages will be an inadequate remedy for
breach of this covenant and that this covenant may be specifically enforced.
Section 4.04. Notices. All notices, demands, certificates, requests
and communications hereunder ("notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt
to be effective the date of delivery indicated on the return receipt, or (b)
one business day after delivery to an overnight courier or (c) on the date
personally delivered to the party to which sent or (d) on the date
transmitted by legible telecopier transmission with a confirmation of
receipt, in all cases addressed to the recipient as follows:
(i) If to the Depositor:
Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, CT 06830
Attention: _______________________
Telecopier no.: _____________________
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(ii) If to the Trustee:
-------------------------------------
-------------------------------------
-------------------------------------
Attention:
---------------------
Telecopier no.:
----------------
(iii) If to the Rating Agencies:
-------------------------------------
-------------------------------------
-------------------------------------
Attention:
---------------------
Telecopier no.:
----------------
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 4.05. Governing Law. This Agreement shall be governed by and
construed in accordance with, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with, the laws of the
State of New York.
Section 4.06. Limitation of Trustee Responsibility. It is expressly
understood and agreed by the parties hereto that (a) ____________________
is executing this Agreement not in its individual capacity but solely
in its capacity as Trustee of FASCO Auto Trust 199 ___-___ pursuant to the
Pooling and Servicing Agreement and (b) in no case whatsoever shall _______
_________________ be personally liable on, or for any loss in respect of,
any of the statements, representations, warranties, covenants, agreements, or
obligations of the Trust (if any) hereunder, all such liability, if any,
being expressly waived by the parties hereto, except and to the extent such
loss is caused by the negligence, bad faith or willful misconduct of the
Trustee.
Section 4.07. Counterparts. This Agreement may be executed in two or
more counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute but one and
the same instrument.
Section 4.08. Headings. The headings of sections and paragraphs and
the Table of Contents contained in this Agreement are provided for
convenience only. They form no part of this Agreement and shall not affect
its construction or interpretation.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth on the first page hereof.
FINANCIAL ASSET SECURITIES CORP., as Depositor
By:
-----------------------------------------
Name:
Title:
________________________, as Trustee
By:
-----------------------------------------
Name:
Title:
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Exhibit 99.2
Form of Security Agreement
THIS SECURITY AGREEMENT dated as of _______________ (this "Agreement"),
is by and between FINANCIAL ASSET SECURITIES CORP., a Delaware corporation,
as depositor (the "Depositor"), and ____________________, a _____________
banking corporation, in its capacities as trustee under the Pooling and
Servicing Agreement referred to below (the "Trustee") and as Collateral Agent
(as defined below).
RECITALS
1. FASCO Auto Trust 199__-__ (the "Trust") is being formed
contemporaneously herewith pursuant to a Pooling and Servicing Agreement
dated as of _________________ (the "Pooling and Servicing Agreement"), by and
among the Depositor, _______________________, as Trustee, __________________,
as Servicer, and ________________________, as Back-up Servicer.
2. Pursuant to the Pooling and Servicing Agreement, the Depositor is
transferring to the Trust all of its right, title and interest in and to the
Initial Receivables and certain other assets in exchange for the
Certificates.
3. Upon the sale of the Certificates, the Depositor will apply part of
the proceeds thereof to the purchase from _________________ of the Initial
Receivables (in an aggregate principal amount, as of the Initial Cutoff Date,
of $_______________________________), which Initial Receivables will be
conveyed to the Trust as of the Closing Date, but will retain the remainder
of the proceeds of such sale (in the amount of $___________________________),
which will be used to purchase Subsequent Receivables from __________________
during the Funding Period.
AGREEMENTS
In consideration of the premises herein set forth, and for other good
and valuable consideration, the adequacy, receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. Capitalized terms used and not otherwise
-----------
defined in this Agreement (including in the recitals above) shall have the
respective meanings assigned to such terms in the Pooling and Servicing
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
"Account" means the Pre-Funding Account (or the Interest Reserve Account
and, when used in the plural, refers to both the Pre-Funding Account and the
Interest Reserve Account).
"Authorized Officer" means (i) with respect to the Trustee or the
Collateral Agent, any Vice President or Trust Officer thereof, (ii) with
respect to the Servicer, the President or any Vice President thereof and
(iii) with respect to the Depositor, the President or any Vice President
thereof.
"Collateral" has the meaning specified in Section 2.01(a) hereof.
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"Collateral Agent" means, initially, _________________________, in its
capacity as collateral agent on behalf of the Trustee with respect to the
Pre-Funding Account (and the Interest Reserve Account), including its
successors in interest, until a successor Person shall have become the
Collateral Agent pursuant to Section 4.05 hereof; and thereafter "Collateral
Agent" shall mean such successor Person.
"Default" means, at any time during the Funding Period, any failure by
the Depositor to make payment or render performance when due hereunder.
("Interest Reserve Account" means the account designated as such,
established and maintained pursuant to Section 3.01.)
"Pre-Funding Account" means the account designated as such, established
and maintained pursuant to Section 3.01.
"Secured Obligations" means ((i)) the transfer and assignment to the
Trustee, for the benefit of the Certificateholders, of Subsequent Receivables
having an aggregate Principal Balance, as of their respective Subsequent
Cutoff Dates, of $___________ (and (ii) the payment to the Trustee, for
distribution to the Certificateholders, of any shortfall that may occur in
the Class A Interest Distributable Amount or the Class B Interest
Distributable Amount during the Funding Period due to the fact that the Pre-
Funded Amount is deposited in the Pre-Funding Account rather than being
invested in Receivables on the Closing Date).
"Secured Party" means the Trustee for the benefit of the
Certificateholders.
"Security Interests" means the security interests and Liens in the
Collateral granted pursuant to Section 2.01.
Section 1.02. Rules of Interpretation. (a) All terms defined in this
-----------------------
Agreement shall have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto or thereto unless otherwise
defined therein.
(b) The words "hereof", "herein", "hereunder" and words of similar
import when used herein shall refer to this Agreement as a whole and not to
any particular provision hereof; Article, Section, Schedule and Exhibit
references contained herein are references to Articles, Sections, Schedules
and Exhibits herein; and the term "including" shall mean "including without
limitation".
(c) 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 the feminine and neuter genders of such terms.
(d) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means
such agreement, instrument or statute as from time to time amended, modified
or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II.
THE COLLATERAL
Section 2.01. Grant of Security Interest by the Depositor. (a) In
-------------------------------------------
order to secure the performance of the Secured Obligations, the Depositor
hereby pledges, assigns, grants, transfers, and conveys to the Collateral
Agent, on behalf of and for the benefit of the Secured Party, a lien on
and
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security interest in (which lien and security interest is intended to be
prior to all other Liens) all of its right, title and interest in and to
the following (all being collectively referred to herein as the
"Collateral"):
(i) the Pre-Funding Account established pursuant to Section 3.01
hereof, including the Pre-Funded Amount deposited thereto on the Closing
Date (which initially will equal $_____________), and all additional
monies, checks, securities, investments, and other items or documents at
any time held in or evidencing the Pre-Funding Account;
((ii) the Interest Reserve Account established pursuant to
Section 3.01 hereof, including the initial deposit thereto by the
Depositor of $__________, and all additional monies, checks, securities,
investments, and other items or documents at any time held in or
evidencing the Interest Reserve Account;)
(iii) all of the Depositor's right, title and interest in and
to investments made with proceeds of the property described in clause(s)
(i) (and (ii)) above; and
(iv) all distributions, revenues, products, substitutions,
benefits, profits, and proceeds, in whatever form, of any of the
foregoing.
(b) In order to effectuate the provisions and purposes of this
Agreement, including for the purpose of perfecting the security interests
granted hereunder, the Depositor represents and warrants that it has, prior
to the execution of this Agreement, executed and filed an appropriate Uniform
Commercial Code financing statement in the State of ____________ sufficient
to assure that the Collateral Agent, as agent for the Secured Party, has a
first priority perfected security interest in all Collateral that can be
perfected by the filing of a financing statement.
Section 2.02. Priority. The Depositor intends the security interests
--------
in favor of the Secured Party to be prior to all other Liens in respect of
the Collateral, and the Depositor shall take all actions necessary to obtain
and maintain, in favor of the Collateral Agent, for the benefit of the
Secured Party, a first lien on and a first priority, perfected security
interest in the Collateral. Subject to the provisions hereof, the Secured
Party shall have all of the rights, remedies and recourse with respect to the
Collateral afforded a secured party under the Uniform Commercial Code and all
other applicable laws in addition to, and not in limitation of, the other
rights, remedies and recourse granted to the Secured Party by this Agreement
or any other law relating to the creation and perfection of liens on, and
security interests in, the Collateral.
Section 2.03. Depositor Remains Liable. The Security Interests are
------------------------
granted as security only and shall not (i) transfer or in any way affect or
modify, or relieve the Depositor from, any obligation to perform or satisfy
every term, covenant, condition or agreement to be performed or satisfied by
the Depositor under or in connection with this Agreement, the Pooling and
Servicing Agreement or the Transfer Agreement or (ii) impose any obligation
on the Secured Party or the Collateral Agent to perform or observe any such
term, covenant, condition or agreement, or impose any liability on the
Secured Party or the Collateral Agent for any act or omission on its part
relative thereto or for any breach of any representation or warranty on its
part contained therein or made in connection therewith, except, in each case,
to the extent provided herein or in the Pooling and Servicing Agreement or
the Transfer Agreement.
Section 2.04. Maintenance of Collateral. The Collateral Agent agrees
-------------------------
to maintain the Collateral received by it (or evidence thereof, in the case
of book-entry securities in the name of the Collateral Agent) and all records
and documents relating thereto at the office of the Collateral Agent
specified in Section 7.06. The Collateral Agent shall keep all Collateral
and related documentation in its possession separate and apart from all other
property that it holds in its possession and from its own general assets and
shall maintain accurate records pertaining to the Eligible Investments and
the
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<PAGE>
Accounts included in the Collateral in such a manner as shall enable the
Depositor and the Secured Party to verify the accuracy of such record-
keeping. The Collateral Agent's books and records shall at all times
show that the Collateral is held by the Collateral Agent as agent of
the Secured Party and is not the property of the Collateral Agent.
The Collateral Agent promptly shall report to the Secured Party and the
Depositor any failure on its part to hold the Collateral as provided
in this Section 2.04(a) and promptly shall take appropriate action
to remedy any such failure.
Section 2.05. Termination and Release of Rights. Upon the occurrence
---------------------------------
of (i) the termination of the Funding Period, (ii) the application in full of
the Pre-Funded Amount (A) to the purchase of Subsequent Receivables, which
shall have been transferred and assigned by the Depositor to the Trust, and
(B) the distribution of any remaining portion of the Pre-Funded Amount as a
prepayment of principal to the Certificateholders pursuant to the terms of
the Pooling and Servicing Agreement (and (iii) the payment to the Trustee,
for distribution to the Certificateholders, of any shortfall occurring in the
Class A Interest Distributable Amount or the Class B Interest Distributable
Amount as a result of the deposit of the Pre-Funded Amount to the Pre-Funding
Account), the rights, remedies, powers, duties, authority, and obligations
conferred upon the Secured Party pursuant to this Agreement in respect of the
Collateral shall terminate and be of no further force and effect, and all
rights, remedies, powers, duties, authority, and obligations of the Secured
Party with respect to such Collateral shall be automatically released. The
Collateral Agent in such event agrees to execute and deliver, at the expense
of the Depositor, such instruments as the Depositor may reasonably request to
effectuate such release, and any such instruments so executed and delivered
shall be fully binding on the Secured Party.
Section 2.06. Non-Recourse Obligations of Depositor. Notwithstanding
-------------------------------------
anything herein or in the Pooling and Servicing Agreement or the Transfer
Agreement to the contrary, the parties hereto agree that the obligations of
the Depositor hereunder (without limiting the obligation to apply
distributions from the Accounts hereunder in accordance with Section 3.03)
shall be recourse only to the extent of the Collateral available hereunder.
Nothing contained herein shall be deemed to limit the rights of the
Certificateholders under the Pooling and Servicing Agreement or the Transfer
Agreement.
ARTICLE III.
THE ACCOUNTS
Section 3.01. Establishment of Accounts; Initial Deposits into
------------------------------------------------
Accounts. (a) On or prior to the Closing Date, the Collateral Agent shall
- --------
establish, in its name and at its office or at another depository institution
or trust company, (an) (separate) Eligible Deposit Account(s), designated
(respectively) as the "Pre-Funding Account -- FASCO Auto Trust 199__-__ --
________________________, as Collateral Agent for the Trustee and Holders of
the _____% Asset Backed Certificates, Class A and the ___% Asset Backed
Certificates, Class B" (such account being the "Pre-Funding Account") (and
the "Interest Reserve Account -- FASCO Auto Trust 199__-__ --
___________________________, as Collateral Agent for the Trustee and Holders
of the _____% Asset Backed Certificates, Class A and the ___% Asset Backed
Certificates, Class B" (such account being the "Interest Reserve Account")).
All Accounts established under this Agreement shall be maintained at the same
depository institution (which depository institution may be changed from time
to time in accordance with this Agreement).
(b) No withdrawals may be made of funds in any Account except as
provided in Section 3.03 of this Agreement. Except as specifically provided
in this Agreement, funds in any Account shall not be commingled with funds in
any other account or accounts established with respect to the Certificates,
any other series of securities or with any other moneys. All moneys
deposited from time to time in such Account and all investments made with
such moneys shall be held by the Collateral Agent as part of the Collateral
hereunder.
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(c) On the Closing Date, the Collateral Agent shall deposit the initial
Pre-Funded Amount received from the Depositor into the Pre-Funding Account
(and shall deposit the amounts received from the Depositor for deposit to the
Interest Reserve Account into the Interest Reserve Account).
(d) Each Account shall be separate from the Trust and amounts on
deposit therein shall not constitute a part of the assets of the Trust. The
Accounts shall be maintained by the Collateral Agent at all times separate
and apart from any other account of the Depositor, the Servicer or the Trust.
All income or loss on investments of funds in an Account shall be reported by
the Depositor as taxable income or loss of the Depositor.
Section 3.02. Investments. (a) Funds that may at any time be held in
-----------
the Account shall be invested and reinvested by the Collateral Agent, at the
written direction (which may include, subject to the provisions hereof,
general standing instructions) of the Depositor or its designee received by
the Collateral Agent by 1:00 P.M. New York City time on the business day
prior to the date on which such investment shall be made, in one or more
Eligible Investments. If no written direction with respect to any portion of
such Account is received by the Collateral Agent, the Collateral Agent shall
invest such funds overnight in Eligible Investments selected by the
Collateral Agent, and the Collateral Agent shall not be liable for any loss
or absence of income resulting from such investment.
(b) Each investment made pursuant to this Section 3.02 on any date
shall mature not later than the business day immediately preceding a
Subsequent Transfer Date or, if later, the end of the Funding Period;
provided that any investment of funds held in the Account in any investment
as to which the Collateral Agent in its individual capacity is the obligor
(including any repurchase agreement on which the Collateral Agent in its
commercial capacity is liable as principal) may mature upon the succeeding
Subsequent Transfer Date or end of the Funding Period, as the case may be,
rather than on the business day immediately preceding such dates.
(c) Subject to the other provisions hereof, the Collateral Agent shall
have sole control over each Eligible Investment and the income thereon, and
any certificate or other instrument evidencing any such investment shall be
delivered directly to the Collateral Agent or its agent, together with each
document of transfer, if any, necessary to transfer title to such investment
to the Collateral Agent.
(d) If amounts on deposit in the Account are at any time invested in
an Eligible Investment payable on demand, the Collateral Agent shall,
consistent with any notice required to be given thereunder, demand that
payment thereon be made on the last day such Eligible Investment is permitted
to mature under the provisions hereof.
(e) Subject to Section 4.03, the Collateral Agent shall not be liable
by reason of any insufficiency in any Account resulting from any loss on an
Eligible Investment included therein except for losses attributable to the
Collateral Agent's failure to make payments on Eligible Investments as to
which the Collateral Agent, in its commercial capacity, is obligated.
Section 3.03. Distributions from Accounts. ((a)) All investment
---------------------------
earnings realized in respect of amounts in the Pre-Funding Account shall be
deposited when and as received in the (Collection Account) (Interest Reserve
Account), such that the Pre-Funded Amount shall never exceed the amount
initially deposited into the Pre-Funding Account on the Closing Date.
Following receipt, at any time during the Funding Period, from the Depositor
of an Addition Notice and a written demand for a disbursement of funds from
the Pre-Funding Account (which written demand must be delivered not later
than one business day prior to the requested date of funding), the Collateral
Agent shall disburse the amount demanded from the Pre-Funding Account to
___________________ upon the order of the Depositor for the purpose of
purchasing Subsequent Receivables from ___________________. Any Pre-Funded
Amount remaining on deposit in the Pre-Funding Account on the date on
which the Funding Period ends shall be transferred immediately by the
Collateral Agent to the Trustee for deposit into the
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Collection Account, provided that a timely written demand for funding
as described in the preceding sentence has not been received requesting
funding on such date.
((b) The Collateral Agent shall disburse amounts on deposit in the
Interest Reserve Account to the Trustee immediately upon receipt of the
Trustee's written demand therefor pursuant to Section ____ of the Pooling and
Servicing Agreement, in the amount specified in such demand. In the event
that (i) the Funding Period has terminated, (ii) the Pre-Funded Amount has
been disbursed, (iii) a Distribution Date has elapsed following the
occurrence of both (i) and (ii), and (iv) all amounts referred to in clause
(ii) have been applied in accordance with the Pooling and Servicing
Agreement, then any amounts remaining in the Interest Reserve Account shall
be distributed to the Depositor free and clear of the Lien and security
interest established hereunder.)
Section 3.04. General Provisions Regarding Accounts. (a) Promptly
-------------------------------------
upon the establishment (initially or upon any relocation) of an Account
hereunder, the Collateral Agent shall advise the Depositor in writing of the
name and address of the depository institution or trust company where such
Account has been established (if not ______________________ or any successor
Collateral Agent in its commercial banking capacity), the name of the officer
of the depository institution who is responsible for overseeing such Account,
the account number and the individuals whose names appear on the signature
cards for such Account. The Collateral Agent shall cause each such
depository institution or trust company to execute a written agreement
waiving, and the Collateral Agent by its execution of this Agreement hereby
waives (except to the extent expressly provided herein), in each case to the
extent permitted under applicable law, (i) any banker's or other statutory or
similar Lien and (ii) any right of set-off or other similar right under
applicable law with respect to such Account and any other Account and
agreeing, and the Collateral Agent by its execution of this Agreement hereby
agrees, to notify the Depositor and the Secured Party of any charge or claim
against or with respect to such Account. The Collateral Agent shall give the
Depositor and the Secured Party at least ten business days' prior written
notice of any change in the location of an Account or in any related account
information.
(b) Upon the written request of the Depositor, the Collateral Agent
shall cause the depository institution at which the Accounts are located to
forward to the Depositor, at the Depositor's expense, copies of all monthly
account statements for the Accounts.
(c) If at any time an Account ceases to be an Eligible Deposit Account,
the Collateral Agent shall establish within ______ business days of such
determination, in accordance with Section 3.01, a successor Account thereto,
which shall be an Eligible Deposit Account, at another depository institution
acceptable to the Secured Party.
Section 3.05. Reports by the Collateral Agent. The Collateral Agent
-------------------------------
shall report to the Depositor, the Trustee and the Servicer on a monthly
basis no later than each Distribution Date with respect to the amount on
deposit in each Account and the identity of the investments included therein
as of the last day of the related Collection Period, and shall provide
accountings of deposits into and withdrawals from the Accounts and of the
investments held therein, upon the request of the Servicer, the Depositor or
the Trustee.
ARTICLE IV.
COLLATERAL AGENT
Section 4.01. Appointment and Powers. Subject to the terms and
----------------------
conditions hereof, the Depositor hereby appoints __________________________
as the Collateral Agent with respect to the Collateral, and _________________
hereby accepts such appointment and agrees to act as Collateral Agent with
respect to the Collateral for the Secured Party, to maintain custody and
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possession of the Collateral (except as otherwise provided hereunder) and
to perform the other duties of the Collateral Agent in accordance with the
provisions of this Agreement. The Secured Party hereby authorizes the
Collateral Agent to take such action on its behalf, and to exercise such
rights, remedies, powers and privileges hereunder, as the Secured Party may
direct and as are specifically authorized to be exercised by the Collateral
Agent by the terms hereof, together with such actions, rights, remedies,
powers, and privileges as are reasonably incidental thereto. The
Collateral Agent shall act upon and in compliance with the written
instructions of the Secured Party delivered pursuant to this Agreement
promptly following receipt of such written instructions; provided that the
Collateral Agent shall not act in accordance with any instructions (i) that
are not authorized by, or are in violation of the provisions of, this
Agreement, (ii) that are in violation of any applicable law, rule or
regulation or (iii) for which the Collateral Agent has not received
reasonable indemnity. Receipt of such instructions shall not be a condition
to the exercise by the Collateral Agent of its express duties hereunder,
except where this Agreement provides that the Collateral Agent is permitted
to act only following and in accordance with such instructions.
Section 4.02. Performance of Duties. The Collateral Agent shall have
---------------------
no duties or responsibilities except those expressly set forth in this
Agreement and the other Basic Documents or, subject to Section 4.01 above, as
directed by the Secured Party in accordance with this Agreement.
Section 4.03. Limitation on Liability. Neither the Collateral Agent
-----------------------
nor any of its directors, officers or employees shall be liable for any
action taken or omitted to be taken by it or them hereunder, or in connection
herewith, except that the Collateral Agent shall be liable for its
negligence, bad faith or willful misconduct; nor shall the Collateral Agent
be responsible for the validity, effectiveness, value, sufficiency, or
enforceability against the Depositor of this Agreement or any of the
Collateral (or any part thereof). Notwithstanding any term or provision of
this Agreement, the Collateral Agent shall incur no liability to the
Depositor or the Secured Party for any action taken or omitted by the
Collateral Agent in connection with the Collateral, except for the negligence
or willful misconduct of the Collateral Agent, and, further, shall incur no
liability to the Secured Party except for negligence or willful misconduct in
carrying out its duties to the Secured Party. Subject to Section 4.04, the
Collateral Agent shall be protected and shall incur no liability to any party
in relying upon the accuracy, acting in reliance upon the contents and
assuming the genuineness of any notice, demand, certificate, signature,
instrument, or other document reasonably believed by the Collateral Agent to
be genuine and to have been duly executed by the appropriate signatory, and
(absent actual knowledge to the contrary) the Collateral Agent shall not be
required to make any independent investigation with respect thereto. The
Collateral Agent shall at all times be free independently to establish to its
reasonable satisfaction, but shall have no duty to independently verify, the
existence or nonexistence of facts that are a condition to the exercise or
enforcement of any right or remedy hereunder or under any of the Basic
Documents. The Collateral Agent may consult with counsel and shall not be
liable for any action taken or omitted to be taken by it hereunder in good
faith and in accordance with the written advice of such counsel. The
Collateral Agent shall not be under any obligation to exercise any of the
remedial rights or powers vested in it by this Agreement or to follow any
direction from the Secured Party unless it shall have received reasonable
security or indemnity satisfactory to the Collateral Agent against the costs,
expenses and liabilities that might be incurred by it.
Section 4.04. Reliance upon Documents. In the absence of bad faith or
-----------------------
negligence on its part, the Collateral Agent shall be entitled to rely on any
communication, instrument, paper or other document reasonably believed by it
to be genuine and correct and to have been signed or sent by the proper
Person or Persons and shall have no liability in acting or omitting to act,
where such action or omission to act is in reasonable reliance upon any
statement or opinion contained in any such document or instrument.
Section 4.05. Successor Collateral Agent. (a) Merger. Any Person
--------------------------
into which the Collateral Agent may be converted or merged, or with which it
may be consolidated, or to which it may sell or transfer its trust business
and assets as a whole or substantially as a whole, or any Person resulting
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from any such conversion, merger, consolidation, sale or transfer to which
the Collateral Agent is a party, shall (provided it is otherwise qualified to
serve as the Collateral Agent hereunder) be and become the successor
Collateral Agent hereunder and be vested with all of the title to and
interest in the Collateral and all of the trusts, powers, discretions,
immunities, privileges, and other matters as was its predecessor, without the
execution or filing of any instrument or any further act, deed or conveyance
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding, except to the extent, if any, that any such action is
necessary to perfect, or continue the perfection of, the security interest of
the Secured Party in the Collateral.
(b) Resignation. The Collateral Agent and any successor Collateral
Agent may resign only (i) upon a determination that by reason of a change in
legal requirements the performance of its duties under this Agreement would
cause it to be in violation of such legal requirements in a manner that would
result in a material adverse effect on the Collateral Agent or (ii) with the
prior written consent of the Depositor. The Collateral Agent shall give not
less than 60 days' prior written notice of any such permitted resignation by
registered or certified mail to the Secured Party and the Depositor;
provided, that such resignation shall take effect only upon the date that is
the latest of (i) the effective date of the appointment of a successor
Collateral Agent and the acceptance in writing by such successor Collateral
Agent of such appointment and of its obligation to perform its duties
hereunder in accordance with the provisions hereof, (ii) delivery of the
Collateral to such successor to be held in accordance with the procedures
specified in Article II hereof and (iii) receipt by the Depositor of an
Opinion of Counsel to the effect described in Section 5.02. Notwithstanding
the preceding sentence, if by the contemplated date of resignation specified
in the written notice of resignation delivered as described above, no
successor Collateral Agent or temporary successor Collateral Agent has been
appointed Collateral Agent or become the Collateral Agent pursuant to
subsection (d) hereof, the resigning Collateral Agent may petition a court of
competent jurisdiction in New York, New York for the appointment of a
successor.
(c) Removal. The Collateral Agent may be removed by the Depositor at
any time, with or without cause, by an instrument or concurrent instruments
in writing delivered to the Collateral Agent and the Secured Party. A
temporary successor may be removed at any time to allow a successor
Collateral Agent to be appointed pursuant to subsection (d) below. Any
removal pursuant to the provisions of this subsection (c) shall take effect
only upon the date that is the latest of (i) the effective date of the
appointment of a successor Collateral Agent and the acceptance in writing by
such successor Collateral Agent of such appointment and of its obligation to
perform its duties hereunder in accordance with the provisions hereof, (ii)
delivery of the Collateral to such successor to be held in accordance with
the procedures specified in Article II hereof and (iii) receipt by the
Depositor of an Opinion of Counsel to the effect described in Section 5.02.
(d) Acceptance by Successor. Every temporary or permanent successor
Collateral Agent appointed hereunder shall execute, acknowledge and deliver
to its predecessor and to the Secured Party and the Depositor an instrument
in writing accepting such appointment hereunder, and the relevant predecessor
shall execute, acknowledge and deliver such other documents and instruments
as will effectuate the delivery of all Collateral to the successor Collateral
Agent to be held in accordance with the procedures specified in Article II
hereof, whereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, properties,
rights, powers, duties, and obligations of its predecessor. Such predecessor
shall, nevertheless, on the written request of the Secured Party or the
Depositor, execute and deliver an instrument transferring to such successor
all the estates, properties, rights and powers of such predecessor hereunder.
In the event that any instrument in writing from the Depositor or the Secured
Party is reasonably required by a successor Collateral Agent to more fully
and certainly vest in such successor the estates, properties, rights, powers,
duties, and obligations vested or intended to be vested hereunder in the
Collateral Agent, any and all such written instruments shall, at the
request of the temporary or permanent successor Collateral Agent, be
forthwith executed, acknowledged and delivered by the Depositor or the
Secured Party, as applicable. The instrument or instruments removing any
Collateral Agent and
8
<PAGE>
appointing a successor hereunder, together with all other instruments
provided for herein, shall be maintained with the records relating to the
Collateral and, to the extent required by applicable law, filed or recorded
by the successor Collateral Agent in each place where such filing or
recording is necessary to effect the transfer of the Collateral to the
successor Collateral Agent or to perfect or continue the perfection of the
security interests granted hereunder.
Section 4.06. Indemnification. The Depositor shall indemnify the
---------------
Collateral Agent, its directors, officers, employees and agents for, and hold
the Collateral Agent, its directors, officers, employees and agents harmless
against, any loss, liability or expense (including the costs and expenses of
defending against any claim or liability) arising out of or in connection
with the Collateral Agent's acting as Collateral Agent hereunder, except such
loss, liability or expense as shall result from the negligence, bad faith or
willful misconduct of the Collateral Agent or its directors, officers,
employees or agents. The obligation of the Depositor under this Section
shall survive the termination of this Agreement and the resignation or
removal of the Collateral Agent. The Collateral Agent covenants and agrees
that the obligations of the Depositor hereunder and under Section 4.07 shall
be limited to the extent provided in Section 2.06, and further covenants not
to take any action to enforce its rights to indemnification hereunder with
respect to the Depositor and to payment under Section 4.07 except in
accordance with the provisions of Section 7.05, or otherwise to assert any
Lien or take any other action in respect of the Collateral or the assets of
the Trust.
Section 4.07. Compensation and Reimbursement. The Depositor agrees for
------------------------------
the benefit of the Secured Party and as part of the Secured Obligations (a)
to pay to the Collateral Agent, from time to time, reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a collateral
trustee); and (b) to reimburse the Collateral Agent upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Collateral Agent in accordance with any provision of, or in carrying out its
duties and obligations under, this Agreement (including the reasonable
compensation and fees and the expenses and disbursements of its agents, any
independent certified public accountants and independent counsel), except any
expense, disbursement or advance as may be attributable to negligence, bad
faith or willful misconduct on the part of the Collateral Agent.
Section 4.08. Representations and Warranties of the Collateral Agent.
------------------------------------------------------
The Collateral Agent represents and warrants to the Depositor and to the
Secured Party as follows:
(a) Due Organization. The Collateral Agent is a ____________
banking corporation, duly organized, validly existing and in good
standing under the laws of the State of _____________, and is duly
authorized and licensed under applicable law to conduct its business as
presently conducted.
(b) Corporate Power. The Collateral Agent has all requisite
right, power and authority to execute and deliver this Agreement and to
perform all of its duties as Collateral Agent hereunder.
(c) Due Authorization. The execution and delivery by the
Collateral Agent of this Agreement and the other Basic Documents to
which it is a party and the performance by the Collateral Agent of its
duties hereunder and thereunder have been duly authorized by all
necessary corporate proceedings, and no further approvals or filings,
including any governmental approvals, are required for the valid
execution and delivery by the Collateral Agent, or the performance by
the Collateral Agent, of this Agreement and the other Basic Documents.
(d) Valid and Binding Agreement. The Collateral Agent has duly
executed and delivered this Agreement and each other Basic Document to
which it is a party, and each of this Agreement and each such other
Basic Document constitutes the legal, valid and binding
9
<PAGE>
obligation of the Collateral Agent, enforceable against the
Collateral Agent in accordance with its terms, except as (i) such
enforceability may be limited by bankruptcy, insolvency,
reorganization and similar laws relating to or affecting the
enforcement of creditors' rights generally and (ii) the availability
of equitable remedies may be limited by equitable principles of
general applicability.
Section 4.09. Waiver of Setoffs. The Collateral Agent hereby expressly
-----------------
waives any and all rights of setoff that the Collateral Agent may otherwise
at any time have under applicable law with respect to the Accounts and agrees
that amounts in the Accounts shall at all times be held and applied solely in
accordance with the provisions hereof.
ARTICLE V.
COVENANTS OF THE DEPOSITOR
Section 5.01. Preservation of Collateral. Subject to the rights,
--------------------------
powers and authorities granted to the Collateral Agent in this Agreement, the
Depositor shall take such action as is necessary and proper with respect to
the Collateral in order to preserve and maintain such Collateral and to cause
(subject to the rights of the Secured Party) the Collateral Agent to perform
its obligations with respect to such Collateral as provided herein. The
Depositor will do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, such instruments of transfer or take
such other steps or actions as may be necessary to perfect the Security
Interest granted hereunder in the Collateral, to ensure that such Security
Interest ranks prior to all other Liens and to preserve the priority of the
Security Interest and the validity and enforceability thereof. Upon any
delivery or substitution of Collateral, the Depositor shall be obligated to
execute such documents and perform such actions as are necessary to create in
the Collateral Agent for the benefit of the Secured Party a valid first Lien
on, and valid and perfected, first priority security interest in, the
Collateral so delivered and to deliver such Collateral to the Collateral
Agent free and clear of any other Lien, together with satisfactory assurances
thereof, and to pay any reasonable costs incurred by the Secured Party or the
Collateral Agent (including its agents) or otherwise in connection with such
delivery.
Section 5.02. Opinions as to Collateral. Not less than 10 days prior
-------------------------
to each date on which the Depositor proposes to take any action contemplated
by Section 5.06, the Depositor shall, at its own cost and expense, furnish to
the Secured Party and the Collateral Agent an Opinion of Counsel stating
that, in the opinion of such counsel, either (a) such action has been taken
with respect to the execution and filing of any financing statements and
continuation statements and other actions as are necessary to perfect,
maintain and protect the lien and security interest of the Collateral Agent
(and the priority thereof), on behalf of the Secured Party, with respect to
the Collateral against all creditors of and purchasers from the Depositor and
reciting the details of such action, or (b) no such action is necessary to
maintain such perfected lien and security interest. Such Opinion of Counsel
shall further describe each execution and filing of any financing statements
and continuation statements and such other actions as will, in the opinion of
such counsel, be required to perfect, maintain and protect the lien and
security interest of the Collateral Agent, on behalf of the Secured Party,
with respect to the Collateral against all creditors of and purchasers from
the Depositor for a period specified in such Opinion that shall end earlier
than eighteen months from the date of such Opinion.
Section 5.03. Notices. In the event that the Depositor acquires
-------
knowledge of the occurrence and continuance of any event of default or like
event, howsoever described or called, under any of the Basic Documents, the
Depositor shall immediately give notice thereof to the Collateral Agent and
the Secured Party.
Section 5.04. Waiver of Stay or Extension Laws. The Depositor
--------------------------------
covenants, to the fullest extent permitted by applicable law, that it will
not at any time insist upon, plead or in any manner
10
<PAGE>
whatsoever claim or take the benefit or advantage of any appraisement,
valuation, stay, extension or redemption law wherever enacted, now or at
any time hereafter in force, in order to prevent or hinder the
enforcement of this Agreement; and the Depositor, to the fullest extent
permitted by applicable law, for itself and all who may claim under it,
hereby waives the benefit of all such laws and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Collateral Agent, but will suffer and permit the execution of every
such power as though no such law had been enacted.
Section 5.05. Noninterference, etc. The Depositor shall not (i) waive
---------------------
or alter any of its rights under the Collateral (or any agreement or
instrument relating thereto) without the prior written consent of the Secured
Party; or (ii) fail to pay any tax, assessment, charge or fee levied or
assessed against the Collateral or to defend any action, if such failure to
pay or defend might adversely affect the priority or enforceability of the
Depositor's right, title or interest in and to the Collateral or the
Collateral Agent's lien on, and security interest in, the Collateral for the
benefit of the Secured Party; or (iii) take any action, or fail to take any
action, if such action or failure to take action will interfere with the
enforcement of any rights under the Basic Documents.
Section 5.06. Depositor Changes. (a) Change in Name, Structure, etc.
-----------------
The Depositor shall not change its name, identity or corporate structure
unless it shall have given the Secured Party and the Collateral Agent at
least 10 days' prior written notice thereof, shall have effected any
necessary or appropriate assignments or amendments thereto and filings of
financing statements or amendments thereto, and shall have delivered to the
Collateral Agent and the Secured Party an Opinion of Counsel of the type
described in Section 5.02.
(b) Relocation of the Depositor. The Depositor shall not change the
location of its principal executive office unless it gives the Secured Party
and the Collateral Agent at least 10 days' prior written notice of such
relocation. If the Depositor relocates its principal executive office or
principal place of business from ____________, the Depositor shall give prior
notice thereof to the Collateral Agent and shall effect whatever appropriate
recordations and filings are necessary and shall provide an Opinion of
Counsel to the Collateral Agent to the effect that, upon the recording of any
necessary assignments or amendments to previously recorded assignments and
the filing of any necessary amendments to the previously filed financing or
continuation statements or upon the filing of one or more specified new
financing statements and the taking of such other actions as may be specified
in such opinion, the security interests in the Collateral shall remain, after
such relocation, valid and perfected.
ARTICLE VI.
REMEDIES UPON DEFAULT
Section 6.01. Remedies upon a Default. If an event of default or
-----------------------
similar event has occurred and is continuing, the Collateral Agent shall, at
the direction of the Secured Party, take whatever action at law or in equity
as may appear necessary or desirable in the judgment of the Secured Party to
collect and satisfy all outstanding Secured Obligations, including
foreclosure upon the Collateral and all other rights available to secured
parties under applicable law, or to enforce performance and observance of any
obligation, agreement or covenant under any of the Basic Documents.
Section 6.02. Restoration of Rights and Remedies. If the Collateral
----------------------------------
Agent 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 Collateral Agent, then and in
every such case, the Depositor, the Collateral Agent and the Secured Party
shall, subject to any determination in such proceeding, be restored
severally and respectively to their former positions
11
<PAGE>
hereunder, and thereafter all rights and remedies of the Secured Party
shall continue as though no such proceeding had been instituted.
Section 6.03. No Remedy Exclusive. No right or remedy herein conferred
-------------------
upon or reserved to the Collateral Agent or the Secured Party is intended to
be exclusive of any other right or remedy, and every right or 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, in
equity or otherwise (but, in each case, shall be subject to the provisions of
this Agreement limiting such remedies), and each and every right, power and
remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Collateral Agent, and the exercise of or the beginning of
the exercise of any right or power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other
right, power or remedy.
ARTICLE VII.
MISCELLANEOUS
Section 7.01. Further Assurances. Each party hereto shall take such
------------------
action and deliver such instruments to any other party hereto, in addition to
the actions and instruments specifically provided for herein, as may be
reasonably requested or required to effectuate the purpose or provisions of
this Agreement or to confirm or perfect any transaction described or
contemplated herein.
Section 7.02. Waiver. Any waiver by any party of any provision of this
------
Agreement or of any right, remedy or option hereunder shall only prevent and
stop such party from thereafter enforcing such provision, right, remedy or
option if such waiver is given in writing and only as to the specific
instance and for the specific purpose for which such waiver was given. The
failure or refusal of any party hereto to insist in any one or more instances
or in a course of dealing upon the strict performance of any of the terms or
provisions of this Agreement by any party hereto or the partial exercise of
any right, remedy or option hereunder shall not be construed as a waiver or
relinquishment of the right to require the performance of any such term or
provision, but the same shall continue in full force and effect.
Section 7.03. Amendments; Waivers. No amendment, modification, waiver
-------------------
or supplement to this Agreement or any provision of this Agreement shall in
any event be effective unless the same shall have been made or consented to
in writing by each of the parties hereto and each Rating Agency shall have
confirmed in writing that such amendment will not cause a reduction or
withdrawal of a rating of the Certificates.
Section 7.04. Severability. In the event that any provision of this
------------
Agreement or the application thereof to any party hereto or to any
circumstance or in any jurisdiction governing this Agreement shall, to any
extent, be invalid or unenforceable under any applicable statute, regulation
or rule of law, then such provision shall be deemed inoperative to the extent
that it is invalid or unenforceable, and the remainder of this Agreement, and
the application of any such invalid or unenforceable provision to the parties
or in jurisdictions or circumstances other than those to whom or in which it
is held invalid or unenforceable, shall not be affected thereby nor shall the
same affect the validity or enforceability of any other provision of this
Agreement. The parties hereto further agree that the holding by any court of
competent jurisdiction that any remedy pursued by the Collateral Agent or the
Secured Party hereunder is unavailable or unenforceable shall not affect in
any way the ability of the Collateral Agent or the Secured Party to pursue
any other remedy available to it (subject, however, to the provisions of this
Agreement limiting such remedies).
12
<PAGE>
Section 7.05. Nonpetition Covenant. Notwithstanding any prior
--------------------
termination of this Agreement, each of the parties hereto agrees that it
shall not, prior to one year and one day after the date on which the
Certificate Balance has been reduced to zero, acquiesce, petition or
otherwise invoke or cause the Depositor to invoke the process of the United
States of America, any State or other political subdivision thereof or any
entity exercising executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to government for the purpose of
commencing or sustaining a case by or against the Depositor or the Trust
under a federal or state bankruptcy, insolvency or similar law, or appointing
a receiver, liquidator, assignee, trustee, custodian, sequestrator, or other
similar official of the Depositor or the Trust or all or any part of its
property or assets, or ordering the winding up or liquidation of the affairs
of the Depositor or the Trust. The parties agree that damages would be an
inadequate remedy for breach of this covenant and that this covenant may be
specifically enforced.
Section 7.06. Notices. All notices, demands, certificates, requests,
-------
and communications hereunder ("notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, by registered or
certified mail, return receipt requested, postage prepaid, with such receipt
to be effective the date of delivery indicated on the return receipt, or (b)
one business day after delivery to an overnight courier or (c) on the date
personally delivered to an Authorized Officer of the party to which sent or
(d) on the date transmitted by legible telecopier transmission with a
confirmation of receipt, in all cases addressed to the recipient as follows:
(i) If to the Depositor:
Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, CT 06830
Attention: ________________________
Telecopier No.: ___________________
(ii) If to the Trustee:
__________________________________
__________________________________
__________________________________
Attention:________________________
Telecopier No.: ___________________
(iii) If to the Collateral Agent:
__________________________________
__________________________________
__________________________________
Attention:________________________
Telecopier No.: __________________
(iv) If to the Rating Agencies:
__________________________________
__________________________________
__________________________________
Telecopier No.: ___________________
13
<PAGE>
A copy of each notice given hereunder to any party hereto shall also be given
to (without duplication) the Depositor, the Trustee and the Collateral Agent.
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 7.07. Term of this Agreement. This Agreement shall take effect
----------------------
on the Closing Date and shall continue in effect until the Distribution
immediately following the termination of the Funding Period. On such date,
this Agreement shall terminate, all obligations of the parties hereunder
shall cease and terminate, and the Collateral, if any, held hereunder and not
to be used or applied in discharge of any obligations of the Depositor in
respect of the Secured Obligations or otherwise under this Agreement shall be
released to and in favor of the Depositor; provided that the provisions of
Sections 4.06, 4.07 and 7.05 shall survive any termination of this Agreement
and the release of any Collateral upon such termination.
Section 7.08. Assignments; Third-Party Rights. This Agreement shall
-------------------------------
be a continuing obligation of the parties hereto and shall (i) be binding
upon the parties and their respective successors and assigns and (ii) inure
to the benefit of the Secured Party and be enforceable by the Collateral
Agent and by their respective successors, transferees and assigns. The
Depositor may not assign this Agreement or delegate any of its duties
hereunder without the prior written consent of the Secured Party.
Section 7.09. Trial by Jury Waived. Each of the parties hereto waives,
--------------------
to the fullest extent permitted by law, any right it may have to a trial by
jury in respect of any litigation arising directly or indirectly out of,
under or in connection with this Agreement, any of the other Basic Documents
or any of the transactions contemplated hereunder or thereunder. Each of the
parties hereto (a) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce the foregoing waiver
and (b) acknowledges that it has been induced to enter into this Agreement
and the other Basic Documents to which it is a party, by among other things,
this waiver.
Section 7.10. Governing Law. This Agreement shall be governed by and
-------------
construed, and the obligations, rights and remedies of the parties hereunder
shall be determined, in accordance with, the laws of the State of New York.
Section 7.11. Consents to Jurisdiction. Each of the parties hereto
------------------------
irrevocably submits to the jurisdiction of the United States District Court
for the Southern District of New York, any court in the state of New York
located in the City of New York, and any appellate court from any thereof, in
any action, suit or proceeding brought against it and related to or in
connection with this Agreement, the other Basic Documents or the
transactions contemplated hereunder or thereunder or for recognition or
enforcement of any judgment, and each of the parties hereto irrevocably
and unconditionally agrees that all claims in respect of any such suit or
action or proceeding may be heard or determined in such New York State
court or, to the extent permitted by law, in such federal court. Each of
the parties hereto agrees that a final judgment in any such action, suit
or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law. To the extent permitted by applicable law, each of the parties
hereby waives and agrees not to assert by way of motion, as a defense or
otherwise, in any such suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of such courts, that the
suit, action or proceeding is brought in an inconvenient forum, that
the venue of the suit, action or proceeding is improper or that this
Agreement or any of the other Basic Documents or the subject matter
hereof or thereof may not be litigated in or by such courts.
Section 7.12. Counterparts. This Agreement may be executed in two or
------------
more counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
14
<PAGE>
Section 7.13. Headings. The headings of sections and paragraphs and
--------
the Table of Contents contained in this Agreement are provided for
convenience only. They form no part of this Agreement and shall not affect
its construction or interpretation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth on the first page hereof.
FINANCIAL ASSET SECURITIES CORP.,
as Depositor
By:_________________________________________
Name:
Title:
_____________________________,
as Trustee
By:_________________________________________
Name:
Title:
_____________________________,
as Collateral Agent
By:_________________________________________
Name:
Title:
15
<PAGE>
Exhibit 99.3
Form of Receivables Purchase Agreement
RECEIVABLES PURCHASE AGREEMENT dated as of ,
---------------------
between , a corporation, as
------------------------------- ----------------
seller (the "Seller"), and FINANCIAL ASSET SECURITIES CORP. a Delaware
corporation, as purchaser (the "Purchaser").
WHEREAS in the regular course of its business, the Seller has purchased
certain motor vehicle retail installment sale contracts secured by new and
used automobiles, light-duty trucks and vans from motor vehicle dealers; and
WHEREAS the Purchaser wishes to purchase such contracts, certain
additional contracts and rights related thereto from the Seller and to convey
all right, title and interest in and to such contracts and rights to FASCO
Auto Trust 199 - (the "Trust");
--- ---
WHEREAS the Seller and the Purchaser wish to set forth the terms
pursuant to which the Seller will sell the contracts and related rights to
the Purchaser;
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 dated as of ,
--------------------------
among Financial Asset Securities Corp., as depositor,
---------------------
, as trustee, , as servicer, and
- ---- --------------------------
, as backup servicer. 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 Purchase Agreement, as the same
---------
may be amended and supplemented from time to time.
"Assignment" shall mean the document of assignment substantially in the
----------
form of Exhibit A.
"Closing Date" shall mean .
------------ -------------------------------
"Cutoff Date" shall mean the Initial Cutoff Date or any Subsequent
-----------
Cutoff Date.
"Initial Cutoff Date" shall mean .
------------------- ------------------------------
"Initial Receivables" shall mean the Receivables listed on Schedule I
-------------------
hereto on the Closing Date.
"Pooling and Servicing Agreement" shall mean the Pooling and Servicing
-------------------------------
Agreement dated as of ________________________, among Financial Asset
Securities Corp., as depositor, ___________________________, as trustee,
____________________________, as servicer, and ______________________, as
backup servicer, as the same may be amended or supplemented from time to
time.
"Prospectus Supplement" means the prospectus supplement dated __________
---------------------
to the Prospectus dated __________ relating to the Certificates.
1
<PAGE>
"Purchaser" shall mean Financial Asset Securities Corp., a Delaware
---------
corporation, its successors and assigns.
"Receivable" shall mean any Contract listed on Schedule I hereto (which
----------
Schedule may be in the form of microfiche), as such Schedule shall be
supplemented on each Subsequent Transfer Date to reflect the transfer of
Subsequent Receivables to the Purchaser pursuant to Section 2.02.
"Repurchase Event" shall have the meaning specified in Section 6.02.
----------------
"Schedule of Receivables" shall mean the list of Receivables annexed
-----------------------
hereto as Schedule I, as supplemented on each Subsequent Transfer Date to
reflect the transfer by the Seller to the Purchaser of the Subsequent
Receivables.
"Seller" shall mean , a
------ ---------------------------------
corporation, its successors and assigns.
"Subsequent Receivables" shall mean the Receivables sold by the Seller
----------------------
to the Purchaser after the Closing Date, which shall be listed on Schedule I
to the related Subsequent Purchase Agreement.
"Subsequent Receivables Purchase Price" shall have the meaning assigned
-------------------------------------
to such term in the applicable Subsequent Purchase Agreement.
"Subsequent Purchase Agreement" shall have the meaning specified in
-----------------------------
Section 2.02(b)(i).
"Transfer Agreement" means the Transfer Agreement dated as of
------------------
______________, between the Seller and the Trust.
"Trust" means FASCO Auto Trust 199 - , created pursuant to the
----- --- ---
Pooling and Servicing Agreement.
ARTICLE II
Conveyance of Receivables
-------------------------
SECTION 2.01. Conveyance of Receivables. In consideration of the
-------------------------
Purchaser's delivery to or upon the order of the Seller of $_______________,
the Seller does hereby sell, transfer, assign, set over, and otherwise
convey to the Purchaser, without recourse (subject to the obligations of the
Seller herein), all right, title and interest of the Seller in and to (but
none of the obligations of the Seller with respect to):
(a) the Initial Receivables, and all moneys received thereon on and
after the Initial Cutoff Date plus all related Payaheads as of the Initial
Cutoff Date;
(b) the security interests in the Financed Vehicles granted by Obligors
pursuant to the Initial Receivables, any other right to realize upon property
securing any Initial Receivable and any other interest of the Seller in such
Financed Vehicles;
(c) any proceeds with respect to the Initial Receivables from claims on
any Insurance Policies relating to the related Financed Vehicles or Obligors;
(d) proceeds of any recourse (but none of the obligations) to Dealers
on Initial Receivables;
(e) any Financed Vehicle that shall have secured an Initial Receivable
and shall have been acquired by or on behalf of the Seller, the Purchaser or,
upon the conveyance of the Initial Receivables
2
<PAGE>
by the Purchaser to the Trust contemplated by the Pooling and Servicing
Agreement, the Servicer or the Trust;
(f) the related Receivable Files; and
(g) the proceeds of any and all of the foregoing.
SECTION 2.02. Conveyance of Subsequent Receivables. (a) Subject to
------------------------------------
the conditions set forth in paragraph (b) below, in consideration of the
Purchaser's delivery on each Subsequent Transfer Date to or upon the order of
the Seller of the Subsequent Receivables Purchase Price set forth in the
applicable Subsequent Purchase Agreement, the Seller does hereby sell,
transfer, assign, set over, and otherwise convey to the Purchaser (subject to
the obligations of the Seller herein), all right, title and interest of the
Seller in and to (but none of the obligations of the Seller with respect to):
(i) the Subsequent Receivables and all moneys received thereon on
and after the applicable Subsequent Cutoff Date plus all related
Payaheads as of the applicable Subsequent Cutoff Date;
(ii) the security interests in the related Financed Vehicles
granted by Obligors pursuant to the Subsequent Receivables, any other
right to realize upon property securing any Subsequent Receivable and
any other interest of the Seller in such Financed Vehicles;
(iii) any proceeds with respect to the Subsequent Receivables
from claims on any Insurance Policies relating to the related Financed
Vehicles or Obligors;
(iv) proceeds of any recourse (but none of the obligations) to
Dealers on Subsequent Receivables;
(v) any Financed Vehicle that shall have secured a Subsequent
Receivable and shall have been acquired by or on behalf of the Seller,
the Purchaser or, upon the conveyance of the Subsequent Receivables to
the Trust contemplated by the Pooling and Servicing Agreement, the
Servicer or the Trust;
(vi) the related Receivable Files; and
(vii) the proceeds of any and all of the foregoing.
(b) The Seller shall transfer to the Purchaser, and the Purchaser shall
acquire, the Subsequent Receivables and the other property and rights related
thereto described in paragraph (a) above only upon the satisfaction of each
of the following conditions on or prior to the related Subsequent Transfer
Date:
(i) the Seller shall have delivered to the Purchaser a duly
executed written assignment substantially in the form of Exhibit B (the
"Subsequent Purchase Agreement"), which shall include a supplement to
Schedule I listing the Subsequent Receivables being conveyed to the
Purchaser on such Subsequent Transfer Date;
(ii) the Funding Period shall not have terminated;
(iii) (A) the weighted average APR of the Receivables in the
Trust, including the Subsequent Receivables to be conveyed to the
Purchaser, and by the Purchaser to the Trust, on such Subsequent Date
(based on the characteristics of the Initial Receivables on the Initial
Cutoff Date and the Subsequent Receivables on their respective
Subsequent Cutoff Dates) shall not be less than %, unless an
------
additional deposit acceptable to the Rating Agencies is made to the Reserve
Account pursuant to the Pooling and Servicing Agreement, (B) the weighted
3
<PAGE>
average remaining term of the Subsequent Receivables to be conveyed to
the Purchaser, and by the Purchaser to the Trust, on such Subsequent
Transfer Date shall not be greater than months and (C) the Seller
-----
shall have delivered to the Purchaser a letter of a firm of
independent certified public accountants confirming the
foregoing and covering substantially the same matters with respect
to the Subsequent Receivables as are set forth in Exhibit C hereto; and
(iv) no selection procedures believed by the Seller to be adverse
to the interests of the Certificateholders shall have been utilized in
selecting the Subsequent Receivables.
(c) The Seller covenants to transfer to the Purchaser pursuant to this
Section 2.02 Subsequent Receivables having an aggregate Principal Balance of
$_______________.
SECTION 2.03. The Closing. The sale and purchase of the Receivables
-----------
shall take place at a closing (the "Closing") at the offices of Brown & Wood,
One World Trade Center, New York, New York 10048 on the Closing Date,
simultaneously with the closing under the Pooling and Servicing Agreement.
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Representations and Warranties of the Purchaser. The
-----------------------------------------------
Purchaser hereby represents and warrants to the Seller as of the Closing Date
and each Subsequent Transfer Date:
(a) Organization and Good Standing. The Purchaser has been duly
------------------------------
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with the power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and
has, the power, authority and legal right to acquire and own the Receivables.
(b) Due Qualification. The Purchaser is duly qualified to do business
-----------------
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or lease
of its property or the conduct of its business shall require such
qualifications.
(c) Power and Authority. The Purchaser has the power and authority to
-------------------
execute and deliver this Agreement and to carry out its terms, and the
execution, delivery and performance of this Agreement has been duly
authorized by the Purchaser by all necessary corporate action.
(d) No Violation. The consummation of the transactions contemplated
------------
by this Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or bylaws of the Purchaser, or any indenture,
agreement or other instrument to which the Purchaser is a party or by which
it is bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement or
other instrument (other than the Pooling and Servicing Agreement); or violate
any law or, to the best of the Purchaser's knowledge, any order, rule or
regulation applicable to the Purchaser of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Purchaser or its properties.
(e) No Proceedings. There are no proceedings or investigations pending
--------------
or, to the Purchaser's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Purchaser or its properties: (i) asserting
4
<PAGE>
the invalidity of this Agreement, (ii) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Purchaser of its obligations under, or the validity or
enforceability of, this Agreement.
SECTION 3.02. Representations and Warranties of the Seller. (a) The
--------------------------------------------
Seller hereby represents and warrants to the Purchaser as of the Closing Date
and each Subsequent Transfer Date:
(i) Organization and Good Standing. The Seller has been duly
------------------------------
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with the power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and
has, the power, authority and legal right to acquire, own and sell the
Receivables.
(ii) Due Qualification. The Seller is duly qualified to do
-----------------
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership
or lease of its property or the conduct of its business shall require such
qualifications.
(iii) Power and Authority. The Seller has the power and authority
-------------------
to execute and deliver this Agreement and to carry out its terms; the Seller
has full power and authority to sell and assign the property sold and
assigned to the Purchaser hereby and has duly authorized such sale and
assignment to the Purchaser by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Seller by all necessary corporate action.
(iv) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the fulfillment of the terms hereof shall
not conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or bylaws of the Seller, or any indenture,
agreement or other instrument to which the Seller is a party or by which it
is bound, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than this Agreement); or violate any law or, to the best of
the Seller's knowledge, any order, rule or regulation applicable to the
Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties.
(v) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the Seller's best knowledge, threatened before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Seller 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 Seller of its obligations under, or the validity or
enforceability of, this Agreement.
(vi) Principal Place of Business. The principal place of
---------------------------
business and chief executive office of the Seller are located at the place
set forth in Section 6.08(a) and such location has not changed since the date
the Seller was incorporated.
(vii) Use of Names. The legal name of the Seller is the name used
------------
by it in this Agreement and the Seller has not changed its name since
_________________________ and does not have trade names, fictitious names,
assumed names or "doing business" names.
(viii) Solvency. The Seller is solvent and will not become
--------
insolvent after giving effect to the transactions contemplated in this
Agreement; the Seller is paying its debts, if any,
5
<PAGE>
as they become due; the Seller, after giving effect to the transactions
contemplated in this Agreement, will have adequate capital to conduct
its business.
(b) The Seller makes the following representations and warranties to
the Purchaser in respect of the Receivables. The Seller agrees that the
Purchaser's rights with respect to such representations and warranties shall
be conveyed by the Purchaser to the Trust under the Pooling and Servicing
Agreement. The Seller further agrees that the Trust may enforce any and all
remedies for the breach of any such representations and warranties directly
against the Seller. The Seller acknowledges and agrees that the Purchaser
shall rely on such representations and warranties in accepting the
Receivables. Such representations and warranties speak as of the execution
and delivery of this Agreement, in the case of the Initial Receivables, and
as of the applicable Subsequent Transfer Dates, in the case of the Subsequent
Receivables, but shall survive the sale, transfer and assignment of the
Initial Receivables and the Subsequent Receivables to the Purchaser and the
subsequent sale, assignment and transfer of the Initial Receivables and the
Subsequent Receivables to the Trust pursuant to the Pooling and Servicing
Agreement and Transfer Agreement.
(i) Characteristics of Receivables. Each Receivable (A) was
------------------------------
originated in the United States of America by a Dealer for the retail sale of
a Financed Vehicle in the ordinary course of such Dealer's business, was
fully and properly executed by the parties thereto, was purchased by the
Seller from such Dealer under an existing dealer agreement, and was validly
assigned by such Dealer to the Seller in accordance with the terms of such
dealer agreement, (B) has created a valid, subsisting and enforceable first
priority security interest in favor of the Seller in the Financed Vehicle,
which security interest is assignable by the Seller to the Purchaser and by
the Purchaser to the Trust, (C) contains customary and enforceable provisions
such that the rights and remedies of the holder thereof are adequate for
realization against the collateral of the benefits of the security,
(D) provides for level monthly payments (provided that the payment in the
first or last month in the life of the Receivable may be different from the
level payments) that fully amortize the Amount Financed by maturity and yield
interest at the Annual Percentage Rate, and (E) provides, in the event that
such Contract is prepaid, for a prepayment that fully pays the Principal
Balance of the Receivable and includes a full month's interest in the month
of prepayment at the Annual Percentage Rate.
(ii) Schedule of Receivables. The information set forth in
-----------------------
Schedule I to this Agreement and Schedule I to each Subsequent Purchase
Agreement is true and correct in all material respects as of the opening of
business on the applicable Cutoff Date, and no selection procedures believed
to be adverse to the Certificateholders were or will be utilized in selecting
the Initial Receivables or the Subsequent Receivable. The computer tape
regarding the Initial Receivables made available to the Purchaser is true and
correct in all respects.
(iii) Compliance with Law. Each Receivable and the sale of the
-------------------
related Financed Vehicle complied at the time it was originated or made, and
at the execution of this Agreement and each Subsequent Purchase Agreement
complies, in all material respects with all requirements of applicable
federal, state and local laws and regulations thereunder, including usury
laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Fair Credit Reporting 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, and 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.
(iv) Binding Obligation. Each Receivable represents the genuine,
------------------
legal, valid and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms.
6
<PAGE>
(v) No Government Obligor. None of the Receivables is 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.
(vi) Security Interest in Financed Vehicle. Immediately prior
-------------------------------------
to the sale, assignment and transfer thereof to the Purchaser, each
Receivable shall be secured by a validly perfected first security interest in
the Financed Vehicle in favor of the Seller as secured party or all necessary
and appropriate actions have been commenced that will result in the
perfection of a validly perfected first security interest in the Financed
Vehicle in favor of the Seller as secured party.
(vii) 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.
(viii) No Waiver. No provision of a Receivable has been waived
---------
except by a writing constituting an amendment to the applicable Contract.
(ix) No Amendments. No Receivable has been amended such that the
-------------
amount of the Obligor's scheduled payments has been increased.
(x) No Defenses. No right of rescission, setoff, counterclaim
-----------
or defense has been asserted or threatened with respect to any Receivable.
(xi) No Liens. To the best of the Seller's knowledge, no liens
--------
or claims have been filed for work, labor or materials relating to a Financed
Vehicle that are liens prior to, or equal or coordinate with, the security
interest in the Financed Vehicle created by any Receivable.
(xii) No Default. No Receivable has a payment that is more than
----------
___ days overdue as of the applicable Cutoff Date, and no default, breach,
violation or event permitting acceleration under the terms of any Receivable
has occurred; no Receivable has a first full payment that is ___ or more days
overdue as of the applicable Cutoff Date; 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 Seller has not waived any of its rights regarding the occurrence of
any of the foregoing.
(xiii) Insurance. The Seller, in accordance with its customary
---------
procedures, has determined that each Obligor has obtained physical damage
insurance covering the Financed Vehicle and under the terms of the Receivable
the Obligor is required to maintain such insurance.
(xiv) Title. It is the intention of the parties hereto that the
-----
transfer and assignment herein contemplated constitute a sale of the
Receivables from the Seller to the Purchaser, and that the beneficial
interest in and title to the Receivables not be part of the debtor's estate
in the event of the filing of a bankruptcy petition by or against the Seller
under any bankruptcy law. No Receivable has been sold, transferred, assigned
or pledged by the Seller to any Person other than to the Purchaser or
pursuant to the Pooling and Servicing Agreement and Transfer Agreement.
Immediately prior to the transfers and assignments herein contemplated, the
Seller had good and marketable title to each Receivable free and clear of all
Liens and, immediately upon the transfer thereof, the Purchaser shall have
good and marketable title to each Receivable, free and clear of all Liens;
and the transfer has been perfected under the UCC.
(xv) Lawful Assignment. No Receivable was originated in, or is
-----------------
subject to the laws of, any jurisdiction under which the sale, transfer and
assignment of such Receivable or any
7
<PAGE>
Receivable under this Agreement or the Pooling and Servicing Agreement
is unlawful, void or voidable.
(xvi) All Filings Made. All filings (including UCC filings)
----------------
necessary in any jurisdiction to give the Purchaser a first perfected
ownership interest in the Receivables have been made.
(xvii) One Original. There is only one executed original of each
------------
Receivable.
(xviii) Maturity of Receivables. Each Receivable has or will have
-----------------------
an original maturity of not more than ____ months; the weighted average
remaining term of the Initial Receivables as of the Initial Cutoff Date is
______ months.
(xix) Scheduled Payments. (A) Each Receivable has a first
------------------
Scheduled Payment due, in the case of Precomputed Receivables, or a scheduled
due date, in the case of Simple Interest Receivables, not later than _____
days following the applicable Cutoff Date and (B) no Receivable has a final
scheduled payment date later than the Final Scheduled Maturity Date.
(xx) Location of Receivable Files. The Receivable Files are kept
----------------------------
at one or more of the locations listed in Schedule II hereto.
(xxi) Outstanding Principal Balance. The Amount Financed pursuant
-----------------------------
to each Receivable is at least $1,000.
(xxii) Financing. Approximately ______% of the aggregate principal
---------
balance of the Initial Receivables, constituting ______% of the number of
Initial Receivables as of the Initial Cutoff Date, represent financing of
used vehicles; the remainder of the Receivables represent financing of new
vehicles; approximately ______% of the aggregate principal balance of the
Initial Receivables as of the Initial Cutoff Date represent Precomputed
Receivables; and the remainder of the Receivables represent Simple Interest
Receivables. The aggregate Principal Balance of the Initial Receivables as
of the Initial Cutoff Date is $___________________.
(xxiii) No Bankruptcies. As of the applicable Cutoff Date, no
---------------
Obligor on any Receivable was or will be noted in the related Receivable File
as having filed for bankruptcy.
(xxiv) No Repossessions. No Financed Vehicle securing any
----------------
Receivable is in repossession status.
(xxv) Chattel Paper. Each Receivable constitutes "chattel paper"
-------------
as defined in the UCC.
(xxvi) Underwriting Guidelines. Each Receivable was originated by
-----------------------
the Dealer and purchased by the Seller in accordance with the underwriting
guidelines set forth in Exhibit ____.
(xxvii) Servicing. As of the applicable Cutoff Date each Receivable
---------
was being serviced by the Servicer and no other person had a right to service
such Receivable.
(xxviii) Full Amount Advanced. The full principal amount of each
--------------------
Receivable has been advanced to the related Obligor, and there is no
requirement for future advances thereunder. The Obligor with respect to each
Receivable does not have any option thereunder to borrow from any person
additional funds secured by the Financed Vehicle.
(xxix) Obligation to Dealers or Others. The Purchaser and its
-------------------------------
assignees will assume no obligations to Dealers or other originators or prior
holders of the Receivables (including, but not limited to obligations under
dealer reserves) as a result of its purchase of the Receivables.
8
<PAGE>
(xxx) Collection Practices. The Collection practices utilized by
--------------------
any person servicing a Receivable in seeking payment under the documentation
evidencing such Receivable have been in all respects legal, proper and
customary in the automobile loan servicing business.
(xxxii) Prospectus Supplement. The Prospectus Supplement dated
---------------------
to the Prospectus dated _____________________ relating to the
Certificates does not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the
statements therein not misleading.
(xxxiii) Subsequent Transfer. The representations and warranties of
-------------------
the Depositor in Section 3.01 of the Pooling and Servicing Agreement are true
and correct.
ARTICLE IV
Conditions
----------
SECTION 4.01. Conditions to Obligation of the Purchaser. The
-----------------------------------------
obligation of the Purchaser to purchase the Receivables is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and
-----------------------------------
warranties of the Seller hereunder shall be true and correct on the Closing
Date and each Subsequent Transfer Date with the same effect as if then made,
and the Seller shall have performed all obligations to be performed by it
hereunder on or prior to the Closing Date or the applicable Subsequent
Transfer Date, as the case may be.
(b) Computer Files Marked. The Seller shall, at its own expense, on
---------------------
or prior to the Closing Date or Subsequent Transfer Date, as applicable,
indicate in its computer files that the Receivables have been sold to the
Purchaser pursuant to this Agreement and will deliver to the Purchaser the
Schedule of Receivables, certified by the Chairman, the President, a Vice
President or the Treasurer to be true, correct and complete.
(c) Documents To Be Delivered by the Seller at the Closing.
------------------------------------------------------
(i) The Assignment. At the Closing and on each Subsequent
--------------
Transfer Date, the Seller will execute and deliver an Assignment
substantially in the form of Exhibit A hereto.
(ii) Evidence of UCC Filing. On or prior to the Closing Date, the
----------------------
Seller shall record and file, at its own expense, a UCC-1 financing statement
in each jurisdiction in which required by applicable law, executed by the
Seller, as seller or debtor, and naming the Purchaser as purchaser or secured
party, describing the Receivables and the other assets of the Trust, meeting
the requirements of the laws of each such jurisdiction and in such manner as
is necessary to perfect the sale, transfer, assignment and conveyance of the
Receivables to the Purchaser. The Seller shall deliver a file-stamped copy
or other evidence satisfactory to the Purchaser of such filing to the
Purchaser on or prior to the Closing Date.
(iii) Other Documents. Such other documents as the Purchaser
---------------
may reasonably request.
(d) Other Transactions. The transactions contemplated by the Pooling
------------------
and Servicing Agreement to be consummated on the Closing Date shall be
consummated on such date.
SECTION 4.02. Conditions to Obligation of the Seller. The obligation
--------------------------------------
of the Seller to sell the Receivables to the Purchaser is subject to the
satisfaction of the following conditions:
9
<PAGE>
(a) Representations and Warranties True. The representations and
-----------------------------------
warranties of the Purchaser hereunder shall be true and correct on the
Closing Date and on each Subsequent Transfer Date with the same effect as if
then made, and the Seller shall have performed all obligations to be
performed by it hereunder on or prior to the Closing Date or Subsequent
Transfer Date, as applicable.
(b) Receivables Purchase Price. On the Closing Date and on each
--------------------------
Subsequent Transfer Date, the Purchaser shall have delivered to the Seller
the purchase price specified in Section 2.01 or 2.02, as applicable.
ARTICLE V
Covenants of the Seller
-----------------------
The Seller agrees with the Purchaser as follows:
SECTION 5.01. Protection of Right, Title and Interest. (a) Filings.
--------------------------------------- -------
The Seller shall cause all financing statements and continuation statements
and any other necessary documents covering the right, title and interest of
the Seller and the Purchaser, respectively, in and to the Receivables and the
other assets of the Trust 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 Purchaser hereunder in and to the Receivables and the other
assets of the Trust. The Seller shall deliver to the Purchaser file stamped
copies of, or filing receipts for, any document recorded, registered or filed
as provided above, as soon as available following such recordation,
registration or filing. The Purchaser shall cooperate fully with the Seller
in connection with the obligations set forth above and will execute any and
all documents reasonably required to fulfill the intent of this paragraph.
(b) Name Change. Within 15 days after the Seller makes any change in
-----------
its name, identity or corporate structure that 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 Seller shall give the Purchaser notice of such change and,
no later than 5 days after the effective date thereof, shall file such
financing statements or amendments as may be necessary to continue the
perfection of the Purchaser's interest in the Receivables and other assets of
the Trust.
(c) Relocation. The Seller shall have an obligation to give the
----------
Purchaser at least 60 days' prior written notice of any relocation of its
principal executive office if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall promptly file any such amendment or new financing
statement. The Seller shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the
United States of America.
(d) Notice. If at any time the Seller shall propose to sell, grant a
------
security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, the
Seller shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup
archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Purchaser. Should any third party inquire of the Seller as to
the Receivables, the Seller will promptly indicate to such party that the
Receivables have been sold to the Purchaser pursuant to this Agreement.
SECTION 5.02. Other Liens or Interests. Except for the conveyances
------------------------
hereunder and under the Pooling and Servicing Agreement and Transfer
Agreement, the Seller will not sell, pledge, assign or transfer to any Person,
or grant, create, incur, assume or suffer to exist any Lien on, or any
interest
10
<PAGE>
in, to or under the Receivables, and the Seller shall defend the right, title
and interest of the Purchaser in, to and under the Receivables against all
claims of third parties claiming through or under the Seller; provided,
however, that the Seller's obligations under this Section shall
terminate upon the termination of the Trust pursuant to the Pooling and
Servicing Agreement.
SECTION 5.03. Costs and Expenses. The Seller agrees to pay all
------------------
reasonable costs and disbursements in connection with the perfection, as
against all third parties, of the Seller's or any of its assignees right,
title and interest in and to the Receivables.
SECTION 5.04. Indemnification. The Seller shall indemnify the
---------------
Purchaser for any liability resulting from the failure of a Receivable to be
originated in compliance with all requirements of law and for any breach of
any of its representations and warranties contained herein and for any
failure by the Seller to comply with its obligations under Sections 5.01 and
5.02 hereof. These indemnity obligations shall be in addition to any
obligation that the Seller may otherwise have.
ARTICLE VI
Miscellaneous Provisions
------------------------
SECTION 6.01. Obligations of Seller. The obligations of the Seller
---------------------
under this Agreement shall not be affected by reason of any invalidity,
illegality or irregularity of any Receivable.
SECTION 6.02. Repurchase Events. The Seller hereby covenants and
-----------------
agrees with the Purchaser for the benefit of the Purchaser, the Trustee, the
Certificateholders and their respective assignees that the occurrence of a
breach of any of the Seller's representations and warranties contained in
Section 3.02(b), unless such breach shall have been cured by the last day of
the Collection Period following the Seller's discovery or receipt of notice
thereof, shall constitute an event obligating the Seller to purchase as of
such last day any Receivable with respect to which such breach occurred if
such breach has a material and adverse effect on the interests of the
Purchaser or the Trust in and to such Receivable (each, a "Repurchase
Event"), at the Purchase Amount from the Purchaser or, upon the assignment
contemplated by the Pooling and Servicing Agreement, from the Trust. The
repurchase obligation of the Seller shall constitute the sole remedy (other
than that provided by Section 5.04) of the Purchaser, the Trust, the Trustee
or the Certificateholders against the Seller with respect to any Repurchase
Event.
SECTION 6.03. Purchaser Assignment of Repurchased Receivables. With
-----------------------------------------------
respect to all Receivables repurchased by the Seller pursuant to this
Agreement, the Purchaser shall assign, without recourse, representation or
warranty, to the Seller all the Purchaser's right, title and interest in and
to such Receivables and all security and documents relating thereto.
SECTION 6.04. The Trust. The Seller acknowledges and agrees that
---------
(a) the Purchaser will, pursuant to the Pooling and Servicing Agreement and
the Transfer Agreement, sell the Initial Receivables and the Subsequent
Receivables to the Trust and assign its rights under this Agreement to the
Trust and (b) the representations and warranties contained in this Agreement
and the rights of the Purchaser under this Agreement, including under Section
6.02, are intended to benefit the Trust and the Certificateholders. The
Seller hereby consents to all such sales and assignments and agrees that the
Trustee may exercise the rights of the Purchaser and enforce the obligations
of the Seller hereunder directly and without the consent of the Purchaser.
SECTION 6.05. Amendment. This Agreement may be amended from time to
---------
time, with prior written notice to each Rating Agency, by a written amendment
duly executed and delivered by the Seller and the Purchaser, to cure any
ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein, or to add any other provision
with respect to matters or questions arising under this Agreement that are
not inconsistent with the provisions of this
11
<PAGE>
Agreement or the Pooling and Servicing Agreement; provided that such
amendment shall not, in the Opinion of Counsel satisfactory to the
Trustee, materially and adversely affect the interest of any
Certificateholder in the Trust or the Receivables. This Agreement may
also be amended by the Seller and the Purchaser, with prior written notice to
each Rating Agency and the consent of holders of Certificates representing at
least a majority of the Certificate Balance for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the
Certificateholders in the Trust or Receivables; provided, however, that no
such amendment may (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
Certificateholders or (ii) reduce the aforesaid percentage of the
Certificates that is required to consent to any such amendment, without the
consent of the holders of all the outstanding Certificates.
SECTION 6.06. Accountants' Letters. (a) _________________________
--------------------
will review the characteristics of the Initial Receivables and will compare
those characteristics to the information with respect to the Initial
Receivables contained in the Prospectus Supplement; (b) the Seller will
cooperate with the Purchaser and _________________________ in making
available all information and taking all steps reasonably necessary to permit
such accountants to complete the review set forth in clause (a) above and to
deliver the letters required of them under the Prospectus Supplement;
(c) ________________________ will deliver to the Purchaser a letter, dated
the date of the Prospectus Supplement, in the form previously agreed to by
the Seller and the Purchaser, with respect to the financial and statistical
information contained in the Prospectus Supplement and with respect to such
other information as may be agreed in the form of letter.
SECTION 6.07. Waivers. No failure or delay on the part of the
-------
Purchaser, or any assignee of the Purchaser, in exercising any power, right
or remedy under this Agreement 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 6.08. Notices. All demands, notices and communications under
-------
this Agreement shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, or by recognized overnight courier
or by facsimile confirmed by delivery or mail as described above, and shall
be deemed to have been duly given upon receipt (a) in the case of the Seller,
to ________________________________________; (b) in the
case of the Purchaser, to Financial Asset Securities Corp., ________________
_________________________; (c) in the case of the Rating Agencies, to
___________________________________; or as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties.
SECTION 6.09. Costs and Expenses. The Seller shall pay all expenses
------------------
incident to the performance of its obligations under this Agreement and all
reasonable out-of-pocket costs and expenses of the Purchaser, excluding fees
and expenses of counsel, in connection with the perfection as against third
parties of the Purchaser's right, title and interest in and to the
Receivables and the enforcement of any obligation of the Seller hereunder.
SECTION 6.10. Representations of the Seller and the Purchaser. The
-----------------------------------------------
respective agreements, representations, warranties and other statements by
the Seller and the Purchaser set forth in or made pursuant to this Agreement
shall remain in full force and effect and will survive the sales and
assignments referred to in Section 6.04.
SECTION 6.11. Confidential Information. The Purchaser 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 Purchaser's rights
hereunder, under the Receivables, under the Pooling and Servicing Agreement
or any other Basic Document or as required by any of the foregoing or by law.
12
<PAGE>
SECTION 6.12. 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 6.13. GOVERNING LAW. THIS AGREEMENT AND THE ASSIGNMENT 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 OR THEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 6.14. 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.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers duly authorized as of the date and year
first above written.
_________________________, as Seller
By: ______________________________
Name:
Title:
FINANCIAL ASSET SECURITIES CORP.,
as Purchaser
By: ______________________________
Name:
Title:
14
<PAGE>
SCHEDULE I
Schedule of Receivables
-----------------------
(To Be Delivered at Closing)
1
<PAGE>
SCHEDULE II
Location of Receivable Files
----------------------------
1
<PAGE>
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Receivables Purchase
Agreement dated as of ____________________________, between ________________,
a ____________ corporation, as seller (the "Seller"), and
FINANCIAL ASSET SECURITIES CORP., a Delaware corporation, as purchaser (the
"Purchaser"), the Seller does hereby sell, assign, transfer and
otherwise convey unto the Purchaser, without recourse (subject to the
obligations of the Seller in the Receivables Purchase Agreement), all right,
title and interest of the Seller in and to (but none of the obligations of
the Seller with respect to) (i) the (Initial) (Subsequent) Receivables and
all moneys received thereon on and after the applicable Cutoff Date plus all
Payaheads as of the applicable Cutoff Date; (ii) the security interests in
the Financed Vehicles granted by the Obligors pursuant to the Receivables,
any other right to realize upon property securing a Receivable and any other
interest of the Seller in such Financed Vehicles; (iii) any proceeds with
respect to Receivables from claims on any Insurance Policies relating to the
Financed Vehicles or Obligors; (iv) the proceeds of any recourse (but none of
the obligations) to Dealers on Receivables; (v) any Financed Vehicle that
shall have secured a Receivable and shall have been acquired by or on behalf
of the Purchaser, or, upon the assignment contemplated by the Pooling and
Servicing Agreement, the Servicer or the Trust; (vi) the Receivable Files;
and (vii) the proceeds of any and all of the foregoing. The foregoing sale
does not constitute and is not intended to result in any assumption by the
Purchaser of any obligation of the undersigned to the Obligors, insurers,
Dealers or any other person in connection with the Receivables, Receivable
Files, 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 Purchase Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Receivables Purchase Agreement dated as of
__________, between __________, as Seller, and Financial Asset Securities
Corp., as Purchaser.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of ______________________________.
--------------------------------------------
By: ___________________________________
Name:
Title:
A-1
<PAGE>
EXHIBIT B
Form of Subsequent Purchase Agreement
TRANSFER No. ____ OF SUBSEQUENT RECEIVABLES dated as of __________________,
between FINANCIAL ASSET SECURITIES CORP., as purchaser (the
"Purchaser"), and _________________________, as seller (the "Seller"),
pursuant to the Receivables Purchase Agreement referred to below.
Recitals
WHEREAS the Seller and the Purchaser are parties to a Receivables
Purchase Agreement dated as of ___________________ (as amended or
supplemented from time to time, the "Receivables Purchase Agreement");
WHEREAS pursuant to the Receivables Purchase Agreement, the Seller
wishes to convey the Subsequent Receivables to the Purchaser; and
WHEREAS, the Purchaser is willing to accept such conveyance subject to
the terms and conditions hereof;
NOW, THEREFORE, the Seller and the Purchaser hereby agree as follows:
1. Defined Terms. Capitalized terms used herein shall have the
-------------
meanings ascribed to them in the Receivables Purchase Agreement unless
otherwise defined herein.
"Subsequent Cutoff Date" shall mean, with respect to the Subsequent
----------------------
Receivables conveyed hereby, _________________________.
"Subsequent Transfer Date" shall mean, with respect to the Subsequent
------------------------
Receivables conveyed hereby, ____________________.
2. Schedule of Receivables. Annexed hereto is a supplement to
-----------------------
Schedule I to the Receivables Purchase Agreement listing the Receivables that
constitute the Subsequent Receivables to be conveyed pursuant to this
Agreement on the Subsequent Transfer Date.
3. Conveyance of Subsequent Receivables. In consideration of the
------------------------------------
Purchaser's delivery to or upon the order of the Seller of $____________, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to
the Purchaser, without recourse (except as provided in the Receivables
Purchase Agreement), all right, title and interest of the Seller in and to
(but none of the obligations of the Seller with respect to):
(a) the Subsequent Receivables and all moneys received thereon on
or after the Subsequent Cutoff Date plus all related Payaheads as of the
Subsequent Cutoff Date;
(b) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Subsequent Receivables, any other right to
realize upon property securing any Subsequent Receivable and any other
interest of the Seller in such Financed Vehicles;
(c) any proceeds with respect to the Subsequent Receivables from
claims on any Insurance Policies relating to the Financed Vehicles or
Obligors;
(d) proceeds of any recourse (but none of the obligations) to
Dealers on Subsequent Receivables;
B-1
<PAGE>
(e) any Financed Vehicle that shall have secured a Subsequent
Receivable and shall have been acquired by or on behalf of the Seller,
the Purchaser or, upon the conveyance of the Subsequent Receivables to
the Trust contemplated in the Pooling and Servicing Agreement, the
Servicer or the Trust;
(f) the related Receivable Files; and
(g) the proceeds of any and all of the foregoing.
4. Representations and Warranties of the Seller. The Seller hereby
--------------------------------------------
represents and warrants to the Purchaser as of the date of this Agreement and
as of the Subsequent Transfer Date that:
(a) Legal, Valid and Binding Obligation. This Agreement
-----------------------------------
constitutes a legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or equity).
(b) Organization and Good Standing. The Seller has been duly
------------------------------
organized and is validly existing as a corporation in good standing under the
laws of the State of ____________, with the power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and
has, the power, authority and legal right to acquire, own, sell, transfer and
assign the Receivables.
(c) Due Qualification. The Seller is duly qualified to do
-----------------
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership
or lease of its property or the conduct of its business shall require such
qualifications.
(d) Power and Authority. The Seller has the power and authority
-------------------
to execute and deliver this Agreement and to carry out its terms; the Seller
has full power and authority to sell and assign the property sold and
assigned to the Purchaser hereby and has duly authorized such sale and
assignment to the Purchaser by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Seller by all necessary corporate action.
(e) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the fulfillment of the terms hereof shall
not conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or bylaws of the Seller, or any indenture,
agreement or other instrument to which the Seller is a party or by which it
is bound, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than this Agreement), or violate any law or, to the best of
the Seller's knowledge, any order, rule or regulation applicable to the
Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the Seller's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Seller or its properties (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or (iii) seeking any
determination or ruling that
B-2
<PAGE>
might materially and adversely affect the performance by the Seller
of its obligations under, or the validity or enforceability of, this
Agreement.
(g) Insolvency. As of the Subsequent Cutoff Date and the
----------
Subsequent Transfer Date, neither the Seller nor the Purchaser is insolvent
nor will either of them have been made insolvent after giving effect to the
conveyance set forth in Section 3 of this Agreement, nor is either of them
aware of any pending insolvency.
(h) Principal Balance. The aggregate Principal Balance of the
-----------------
Subsequent Receivables listed on the supplement to Schedules I annexed hereto
and conveyed to the Purchaser pursuant this Agreement as of the Subsequent
Cutoff Date is $__________.
5. Conditions Precedent. The obligation of the Purchaser to acquire
--------------------
the Receivables hereunder is subject to the satisfaction, on or prior to the
Subsequent Transfer Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the representations
------------------------------
and warranties made by the Seller in Section 4 of this Agreement and in the
Receivables Purchase Agreement shall be true and correct as of the date of
this Agreement and as of the Subsequent Transfer Date.
(b) Purchase Agreement Conditions. Each of the conditions set
-----------------------------
forth in Sections 2.02(b) and 4.01 of the Receivables Purchase Agreement
applicable to the conveyance of Subsequent Receivables shall have been
satisfied.
(c) Collections. The Seller shall have delivered to the Purchaser
-----------
for deposit to the Collection Account all collections in respect of
Subsequent Receivables required to be deposited by the Purchaser to the
Collection Account pursuant to Section __________ of the Pooling and Servicing
Agreement.
(d) Delivery of Assignment. The Seller shall have delivered an
----------------------
Assignment substantially in the form of Exhibit A to the Receivables Purchase
Agreement.
(e) Additional Information. The Seller shall have delivered to
----------------------
the Purchaser such information as was reasonably requested by the Purchaser
to satisfy itself as to (i) the accuracy of the representations and
warranties set forth in Section 4 of this Agreement and the Receivables
Purchase Agreement and (ii) the satisfaction of the conditions set forth in
this Section 5.
6. Ratification of Agreement. As supplemented by this Agreement, the
-------------------------
Receivables Purchase Agreement is in all respects ratified and confirmed and
the Receivables Purchase Agreement as so supplemented by this Agreement shall
be read, taken and construed as one and the same instrument.
7. Counterparts. This Agreement may be executed in two or more
------------
counterparts (and by different parties in separate counterparts), each of
which shall be an original but all of which together shall constitute one and
the same instrument
8. Governing Law. This Subsequent Purchase Agreement shall be
-------------
construed in accordance with the laws of the State of New York, without
reference to its conflict of law provisions, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
B-3
<PAGE>
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be duly executed and delivered by their respective duly
authorized officers as of the day and the year first above written.
FINANCIAL ASSET SECURITIES CORP.,
as Purchaser
By: ___________________________________
Name:
Title:
______________________________________,
as Seller
By: ___________________________________
Name:
Title:
B-4
<PAGE>
Exhibit C
Form of Accountants' Letter
1
