<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 8, 1996
REGISTRATION NO. 333-1548
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AUTO RECEIVABLES 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)
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DELAWARE 06-1442101
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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)
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CHARLES A. FORBES, JR.
FINANCIAL ASSET SECURITIES CORP.
600 STEAMBOAT ROAD
GREENWICH, CONNECTICUT 06830
(203) 622-5673
(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.
FINANCIAL ASSET SECURITIES CORP.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER 600 STEAMBOAT ROAD
NEW YORK, NEW YORK 10048 GREENWICH, CONNECTICUT 06830
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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
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(2)
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<S> <C> <C> <C> <C>
Asset Backed
Securities............ $500,000,000 100% $500,000,000 $172,414
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) This Registration Fee was paid upon the filing of Amendment No. 1.
---------------
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.
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<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 Auto Receivables Trusts created from time to time by Financial
Asset Securities Corp. and (ii) two forms of Prospectus Supplement relating to
the offering by Auto Receivables 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
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1996)
AUTO RECEIVABLES TRUST 199 -
$ % ASSET BACKED NOTES, CLASS A-1
$ % ASSET BACKED NOTES, CLASS A-2
$ % ASSET BACKED CERTIFICATES
FINANCIAL ASSET SECURITIES CORP.
Depositor
[ ], SERVICER
-----------
Auto Receivables 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)
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THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF, OR INTER-
ESTS IN, FINANCIAL ASSET SECURITIES CORP., GREENWICH CAPITAL MARKETS, INC.
OR ANY OF THEIR RESPECTIVE AFFILIATES. NONE OF THE NOTES, THE CERTIFI-
CATES OR THE RECEIVABLES ARE INSURED OR GUARANTEED FINANCIAL ASSET SECU-
RITIES CORP., GREENWICH CAPITAL MARKETS, INC. OR ANY OF THEIR RESPEC-
TIVE AFFILIATES.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PRO-
SPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" ON PAGE S-8 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 11
OF THE ACCOMPANYING PROSPECTUS.
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<TABLE>
<CAPTION>
PRICE TO THE UNDERWRITING PROCEEDS TO THE
PUBLIC(1) DISCOUNT DEPOSITOR(1)(2)
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<S> <C> <C> <C>
Per Class A-1 Note................... % % %
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Per Class A-2 Note................... % % %
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Per Certificate...................... % % %
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Total................................ $ $ $
</TABLE>
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(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 .
LOGO
The date of this Prospectus Supplement is , 199 .
<PAGE>
(Continued from previous 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..............
Auto Receivables 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 orporation (the
"Company"), and the Owner Trustee.
Depositor........... Financial Asset Securities Corp., a Delaware corporation
(the "Depositor").
Originator and , a corporation (in its capacity as originator
Servicer............ 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 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
S-3
<PAGE>
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 Payments of interest and principal on the Notes will be
Dates............... 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.
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
S-4
<PAGE>
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 The Class A-2 Notes may be redeemed in whole, but not in
Redemption.......... 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.
Terms of the Certificates
A. Distribution Distributions with respect to the Certificates will be
Dates............... 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 % per annum (the "Pass-Through Rate").
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'
S-5
<PAGE>
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 If the Servicer exercises its option to purchase the
Prepayment.......... 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 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.
S-6
<PAGE>
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 LLP, 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 "Material Federal Income Tax
Consequences" in the Prospectus for additional
information concerning the application of federal income
tax laws to the Trust and the Securities.
ERISA Subject to the considerations discussed under "ERISA
Considerations...... 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 It is a condition to the issuance of the Notes and
Securities.......... 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-7
<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 amount of interest on and principal of the Notes distributable on such
Distribution Date has been deposited in the Note Distribution
S-8
<PAGE>
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.
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
S-9
<PAGE>
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:
<TABLE>
<S> <C>
Class A-1 Notes....................................................... $
Class A-2 Notes.......................................................
Certificates..........................................................
----
Total............................................................... $
====
</TABLE>
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
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.
S-10
<PAGE>
The composition and distribution of the Receivables Pool as of the Cutoff
Date are as set forth in the following tables.
COMPOSITION OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
WEIGHTED AGGREGATE NUMBER OF WEIGHTED AVERAGE WEIGHTED AVERAGE AVERAGE
AVERAGE APR PRINCIPAL BALANCE RECEIVABLES REMAINING TERM ORIGINAL TERM PRINCIPAL BALANCE
----------- ----------------- ----------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
% $ months months $
</TABLE>
DISTRIBUTION BY APR OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<TABLE>
<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%.....
--- ---- ------
$ 100.00%
=== ==== ======
</TABLE>
- --------
(1)Percentages may not add to 100.00% because of rounding.
DISTRIBUTION BY REMAINING PRINCIPAL BALANCE OF THE RECEIVABLES POOL AS OF THE
CUTOFF DATE
<TABLE>
<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.
S-11
<PAGE>
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE AGGREGATE
RANGE OF 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.
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<TABLE>
<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]
DESCRIPTION OF BUSINESS
UNDERWRITING STANDARDS
SERVICING STANDARDS
CREDIT LOSS EXPERIENCE
DELINQUENCY EXPERIENCE
S-12
<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
S-13
<PAGE>
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.
S-14
<PAGE>
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 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
S-15
<PAGE>
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.
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.
S-16
<PAGE>
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 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;
S-17
<PAGE>
(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.
"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.
S-18
<PAGE>
"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 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.
S-19
<PAGE>
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
(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-20
<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.
LEGAL MATTERS
Certain legal matters relating to the Securities will be passed upon for the
Trust and the Depositor by Brown & Wood LLP, New York, New York. Certain
federal income tax and other matters will be passed upon for the Trust by
Brown & Wood LLP and certain state income and business tax matters will be
passed upon for the Trust by .
S-21
<PAGE>
INDEX OF TERMS
<TABLE>
<S> <C>
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
</TABLE>
S-22
<PAGE>
<TABLE>
<S> <C>
Purchase Agreement......................................................... S-3
Rating Agencies............................................................ S-10
Realized Losses............................................................ S-18
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
</TABLE>
S-23
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 SUPPLEMENT AND THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH
OFFER OR SOLICITATION IS UNAUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
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.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Reports to Securityholders................................................. S-2
Summary of Terms........................................................... S-3
Risk Factors............................................................... S-8
The Trust.................................................................. S-9
The Receivables Pool....................................................... S-10
The Depositor.............................................................. S-12
The Originator............................................................. S-12
Weighted Average Life of the Securities.................................... S-13
Description of the Notes................................................... S-13
Description of the Certificates............................................ S-15
Description of the Transfer and Servicing Agreements....................... S-15
ERISA Considerations....................................................... S-21
Underwriting............................................................... S-21
Legal Matters.............................................................. S-21
Index of Terms............................................................. S-22
PROSPECTUS
Available Information...................................................... 2
Reports to Securityholders................................................. 2
Incorporation of Certain Documents by Reference............................ 2
Summary of Terms........................................................... 3
Risk Factors............................................................... 11
The Trusts................................................................. 15
The Receivables Pools...................................................... 17
Weighted Average Life of the Securities.................................... 18
Pool Factors and Trading Information....................................... 19
Use of Proceeds............................................................ 19
The Depositor.............................................................. 20
The Originators............................................................ 20
Description of the Notes................................................... 20
Description of the Certificates............................................ 25
Certain Information Regarding the Securities............................... 26
Description of the Transfer and Servicing Agreements....................... 32
Certain Legal Aspects of the Receivables................................... 43
Material Federal Income Tax Consequences................................... 46
ERISA Considerations....................................................... 62
Plan of Distribution....................................................... 63
Legal Matters.............................................................. 64
Index of Principal Terms................................................... 65
</TABLE>
---------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AUTO RECEIVABLES TRUST
199 -
$ %
ASSET BACKED NOTES, CLASS A-1
$ %
ASSET BACKED NOTES, CLASS A-1
$
ASSET BACKED CERTIFICATES
FINANCIAL ASSET
SECURITIES CORP.,
DEPOSITOR
[ ]
SERVICER
---------------
PROSPECTUS SUPPLEMENT
---------------
LOGO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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)
AUTO RECEIVABLES TRUST 199 -
$ % ASSET BACKED CERTIFICATES, CLASS A
$ % ASSET BACKED CERTIFICATES, CLASS B
FINANCIAL ASSET SECURITIES CORP.
Depositor
[ ]
Servicer
-----------
Auto Receivables 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").
(Continued on following page)
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" ON PAGE S-12 OF THIS PROSPECTUS SUPPLEMENT AND ON PAGE 11 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 SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PRO-
SPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
<TABLE>
<CAPTION>
PRICE TO
THE UNDERWRITING PROCEEDS TO THE
PUBLIC(1) DISCOUNT SELLERS(1)(2)
--------- ------------ ---------------
<S> <C> <C> <C>
Per Class A Certificate.................. % % %
Per Class B Certificate.................. % % %
Total.................................. $ $ $
</TABLE>
- -----
(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 .
LOGO
The date of this Prospectus Supplement is , 199 .
<PAGE>
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.
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.
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<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..............
Auto Receivables 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 , a corporation (in its capacity as
Servicer........... 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.
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
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<PAGE>
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 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
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<PAGE>
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
warranty, nor will it have any other obligation with
respect to the Receivables or the Certificates.
Terms of the
Certificates
A. Distribution Distributions of interest and principal on the
Dates............ 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 Interest will accrue on the Class A Certificates at the
Rates............ 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.
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<PAGE>
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 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
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<PAGE>
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 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
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<PAGE>
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.
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 If the Servicer exercises its option to purchase the
Prepayment......... 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
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<PAGE>
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 The Certificates will be prepaid, in part, pro rata on
Repurchase......... the basis of their initial principal amounts, 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 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 During the period (the "Funding Period") from and
Account............ 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
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<PAGE>
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 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 LLP, 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 "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 "Material Federal Income Tax
Consequences--Trusts Treated as Grantor Trusts".
ERISA During the Funding Period, not more than 24.9% of the
Considerations..... 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 It is a condition to the issuance of the Certificates
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 based
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<PAGE>
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.
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<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 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".
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<PAGE>
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 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
S-13
<PAGE>
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.
S-14
<PAGE>
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
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<PAGE>
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 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
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<PAGE>
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.
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.
COMPOSITION OF THE INITIAL RECEIVABLES AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
WEIGHTED AGGREGATE NUMBER OF WEIGHTED AVERAGE WEIGHTED AVERAGE AVERAGE
AVERAGE APR PRINCIPAL BALANCE RECEIVABLES REMAINING TERM ORIGINAL TERM PRINCIPAL BALANCE
- ----------- ----------------- ----------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
% $ months months $
</TABLE>
DISTRIBUTION OF INITIAL RECEIVABLES BY APR AS OF THE INITIAL CUTOFF DATE
<TABLE>
<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-17
<PAGE>
DISTRIBUTION BY REMAINING PRINCIPAL BALANCE OF THE INITIAL RECEIVABLES AS OF
THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
RANGE OF REMAINING NUMBER OF AGGREGATE AGGREGATE
PRINCIPAL BALANCES 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.
DISTRIBUTION BY REMAINING TERM OF THE INITIAL RECEIVABLES AS OF THE INITIAL
CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE AGGREGATE
RANGE OF 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.
GEOGRAPHIC DISTRIBUTION OF THE INITIAL RECEIVABLES AS OF THE INITIAL CUTOFF
DATE
<TABLE>
<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.
S-18
<PAGE>
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.
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.
S-19
<PAGE>
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 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
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<PAGE>
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.
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,
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<PAGE>
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 subordination 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.
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.
S-22
<PAGE>
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 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.
S-23
<PAGE>
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
<TABLE>
<S> <C>
Greenwich Capital Markets, Inc........................................... $
-----
Total.................................................................. $
=====
</TABLE>
CLASS B CERTIFICATES
<TABLE>
<S> <C>
Greenwich Capital Markets, Inc. .......................................... $
----
Total................................................................... $
====
</TABLE>
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 LLP, New York, New York.
S-24
<PAGE>
INDEX OF TERMS
<TABLE>
<S> <C>
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
</TABLE>
S-25
<PAGE>
<TABLE>
<S> <C>
Pool Balance................................................................ 9
Pooling and Servicing Agreement............................................. 3
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
</TABLE>
S-26
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN CONNECTION
WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS UNAUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SO-
LICITATION 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 SUP-
PLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUM-
STANCES, 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.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Reports to Certificateholders.............................................. S-2
Summary of Terms........................................................... S-3
Risk Factors............................................................... S-12
The Originator............................................................. S-15
The Trust.................................................................. S-16
The Receivables Pool....................................................... S-16
The Depositor.............................................................. S-19
Weighted Average Life of the Certificates.................................. S-19
Description of the Certificates............................................ S-19
ERISA Considerations....................................................... S-23
Underwriting............................................................... S-24
Legal Matters.............................................................. S-24
Index of Terms............................................................. S-25
PROSPECTUS
Available Information...................................................... 2
Reports to Securityholders................................................. 2
Incorporation of Certain Documents by Reference............................ 2
Summary of Terms........................................................... 3
Risk Factors............................................................... 11
The Trusts................................................................. 15
The Receivables Pools...................................................... 17
Weighted Average Life of the Securities.................................... 18
Pool Factors and Trading Information....................................... 19
Use of Proceeds............................................................ 19
The Depositor.............................................................. 20
The Originators............................................................ 20
Description of the Notes................................................... 20
Description of the Certificates............................................ 25
Certain Information Regarding the Securities............................... 26
Description of the Transfer and Servicing Agreements....................... 32
Certain Legal Aspects of the Receivables................................... 43
Material Federal Income Tax Consequences................................... 46
ERISA Considerations....................................................... 62
Plan of Distribution....................................................... 63
Legal Matters.............................................................. 64
Index of Principal Terms................................................... 65
</TABLE>
---------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS EFFECT-
ING 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 OBLI-
GATION OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AUTO RECEIVABLES TRUST
199 -
$
% ASSET BACKED
CERTIFICATES, CLASS A
$
% ASSET BACKED
CERTIFICATES, CLASS B
FINANCIAL ASSET
SECURITIES CORP.,
DEPOSITOR
[ ]
SERVICER
---------------
PROSPECTUS SUPPLEMENT
---------------
LOGO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
AUTO RECEIVABLES 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"). 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 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 11 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 REP-
RESENTATION 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
M A R K E T S, INC. LOGO]
-------------------
August 8, 1996.
<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 "Material
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 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.
2
<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 servic-
ing 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 Origina-
tors (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 Supple-
ment (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 cor-
poration and an indirect limited purpose finance
subsidiary of The Long-Term Credit Bank of Japan,
Limited and an affiliate of Greenwich Capital Mar-
kets, Inc. See "The Depositor".
Master Servicer........... The entity named as Master Servicer in the related
Prospectus Supplement (the "Master Servicer"). Each
Prospectus Supplement will specify whether the Mas-
ter 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, di-
rectly or indirectly, from one or more institutions
(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) origi-
nated by the related Originator, (ii) originated by
various dealers ("Dealers") and assigned to the
Originator or (iii) acquired by the related Origi-
nator from other originators or owners of receiv-
ables.
Trustee................... With respect to each Owner Trust and each Grantor
Trust, the trustee specified in the related Pro-
spectus 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 "Inden-
ture Trustee").
3
<PAGE>
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 is-
sued pursuant to an indenture (each, an "Inden-
ture") between the related Owner Trust and the In-
denture Trustee specified in the related Prospectus
Supplement. Each class of Certificates will be is-
sued 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 Cer-
tificates 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 Pro-
spectus Supplement. Each class of Notes may have a
different Interest Rate, which may be a fixed,
variable or adjustable Interest Rate or any combi-
nation 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, al-
locations 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 Re-
ceivables Pool. If specified in the related Pro-
spectus Supplement, one or more classes of Notes
("Strip Notes") may be entitled to (i) principal
payments with disproportionate, nominal or no in-
terest payments or (ii) interest payments with dis-
proportionate, nominal or no principal payments.
See "Description of the Notes--Distributions of
Principal and Interest".
Unless otherwise specified in the related Prospec-
tus Supplement, Notes will be available for pur-
chase in denominations of $1,000 and integral mul-
tiples thereof and will be available in book-entry
form only. Noteholders will be able to receive De-
finitive Notes only in the limited circumstances
described herein or in the related Prospectus Sup-
plement. See "Certain Information Regarding the Se-
curities--Definitive Securities".
If the Master Servicer exercises its option to pur-
chase the Receivables of a Trust (or if not and, if
and to the extent provided in the related Prospec-
tus 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 Ac-
count or Collateral
4
<PAGE>
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 ad-
ditional Receivables in the manner and to the ex-
tent specified in the related Prospectus Supple-
ment.
The Certificates.......... Each class of Certificates will have a stated cer-
tificate balance (the "Certificate Balance") and
will accrue interest on such Certificate Balance 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 fore-
going. The related Prospectus Supplement will spec-
ify the Pass-Through Rate, or the method for deter-
mining 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, alloca-
tions 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 spec-
ified events or on the basis of collections from
designated portions of the related Receivables
Pool. If specified in the related Prospectus Sup-
plement, one or more classes of Certificates
("Strip Certificates") may be entitled to (i) prin-
cipal distributions with disproportionate, nominal
or no interest distributions or (ii) interest dis-
tributions with disproportionate, nominal or no
principal distributions. See "Description of the
Certificates--Distributions of Principal and Inter-
est". If a Series of Securities issued by an Owner
Trust includes one or more classes of Notes, dis-
tributions 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 Prospec-
tus 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 Defini-
tive Certificates only in the limited circumstances
described herein or in the related Prospectus Sup-
plement. See "Certain Information Regarding the Se-
curities--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 re-
ceived), 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
5
<PAGE>
of a Trust will include a Pre-Funding Account or
Collateral Reinvestment Account that will be used
to purchase additional Receivables after the Clos-
ing 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 vehi-
cle installment sale contracts or motor vehicle in-
stallment loans secured by new and used automo-
biles, vans and light duty trucks (the "Receiv-
ables"), including the right to receive payments
received or due on or with respect to such Receiv-
ables 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 poli-
cies. On the date of issuance of a Series of Secu-
rities specified in the related Prospectus Supple-
ment (the "Closing Date"), the Depositor will con-
vey Receivables having the aggregate principal bal-
ance 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 Servic-
ing Agreement") among the Depositor, the Master
Servicer, such Trust and, if so specified in the
related Prospectus Supplement, one or more Origina-
tors 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 Ac-
count, any Collateral Reinvestment Account and any
other account identified in the applicable Prospec-
tus 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 ini-
tially 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 Re-
ceivables") to the related Trust, subject only to
the availability thereof, having an aggregate prin-
cipal balance approximately equal to the amount de-
posited to the Pre-Funding Account on the Closing
Date (the "Pre-Funded Amount"), and the Trust will
be obligated to purchase such Subsequent Receiv-
ables (subject to the satisfaction of certain con-
ditions set forth in such Sale and Servicing Agree-
ment 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 Subse-
quent Receivables conveyed to a Trust will have
been acquired by the Depositor, directly or indi-
rectly, from the same Originator or Originators
from which the Depositor
6
<PAGE>
acquired the Receivables conveyed to such Trust on
the related Closing Date (the "Initial Receiv-
ables") and will meet all of the credit and other
criteria set forth herein and in the related Pro-
spectus 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 Prospec-
tus Supplement, in lieu of a Funding Period, during
the period (the "Revolving Period") from the Clos-
ing Date until the first to occur of (i) such event
or events as are described in the related Prospec-
tus Supplement (each, an "Early Amortization
Event") or (ii) the last day of the Collection Pe-
riod 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 may, if so specified in the related Prospectus
Supplement, include an amount specified in the re-
lated Prospectus Supplement (which will be depos-
ited out of the net proceeds of the sale of the re-
lated 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 collec-
tions 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 Subse-
quent Receivables transferred to such Trust during
the related Funding Period or Revolving Period, if
any.
Amounts on deposit in any Pre-Funding Account dur-
ing 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 re-
lated 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 re-
lated Prospectus Supplement. Any funds remaining in
a Pre-Funding Account at the end of the related
Funding Period or in a Collateral Reinvestment Ac-
count at the end of the related Revolving Period
will be distributed as a prepayment or early dis-
tribution of principal to holders of one or more
classes of the Notes and/or Certificates of the re-
lated 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
7
<PAGE>
"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
Enhancement..............
If and to the extent specified in the related Pro-
spectus Supplement, credit enhancement with respect
to a Trust or any class or classes of Securities
may include any one or more of the following: sub-
ordination of one or more other classes of Securi-
ties of the same Series, reserve funds, spread ac-
counts, surety bonds, insurance policies, letters
of credit, credit or liquidity facilities, cash
collateral accounts, over-collateralization, guar-
anteed investment contracts, swaps or other inter-
est rate protection agreements, repurchase obliga-
tions, other agreements with respect to third party
payments or other support, cash deposits, or other
arrangements. To the extent specified in the re-
lated Prospectus Supplement, a form of credit en-
hancement with respect to a Trust or a class or
classes of Securities may be subject to certain
limitations and exclusions from coverage thereun-
der.
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 re-
lated Indenture Trustee as collateral for such
Notes pursuant to the Indenture. The Master
Servicer will agree with each Trust to be responsi-
ble 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 sched-
uled 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 Ad-
vance from subsequent payments on or with respect
to such Receivable or from other Precomputed Re-
ceivables. If so provided in the related Prospectus
Supplement, with respect to Simple Interest Receiv-
ables, the Master Servicer will advance any inter-
est shortfall (a "Simple Interest Advance"). As
used herein, "Advance" means any Precomputed Ad-
vance or Simple Interest Advance. The Master
Servicer will be entitled to reimbursement of Ad-
vances 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 Prospec-
tus 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
8
<PAGE>
Receivables Pool, plus certain late fees, prepay-
ment charges and other administrative fees or simi-
lar charges. Fees payable to any Subservicer as
compensation for performing certain servicing func-
tions with respect to all or a portion of the Re-
ceivables in a Receivables Pool will be the respon-
sibility 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 re-
lated 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 or Special 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 associa-
tion 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 "Notehold-
er"), 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 Cer-
tificate 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 purposes. Al-
ternative characterizations of such Trust and any
such Certificates are possible, but would not re-
sult in materially adverse tax consequences to
Certificateholders.
If a Prospectus Supplement specifies that the re-
lated Trust will be a Grantor Trust, upon the issu-
ance of the related Series of Certificates Federal
Tax Counsel or Special 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 re-
lated Trust will issue one or more classes of Cer-
tificates treated as debt, upon the issuance of the
related Series of Securities (a) Federal Tax Coun-
sel or Special Federal Tax Counsel to such Trust
will deliver an opinion to the effect that for fed-
eral income tax purposes: (i) unless provided oth-
erwise in the Prospectus Supplement, any Certifi-
cates of such Series will be characterized as debt
and (ii) such Trust will not be characterized as an
association or a publicly traded partnership tax-
able as a corporation and (b) local tax counsel to
such Trust will deliver an opinion to the effect
that the same characterizations apply for applica-
ble state income and business tax purposes. In re-
spect of any such Series, each Certificateholder,
by the acceptance of a Certificate of such Series,
will agree to treat such Certificate as indebted-
ness. Alternative characterizations of such Trust
and such Certificates are possible, but would not
result in materially adverse tax consequences to
Certificateholders.
9
<PAGE>
See "Material 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 Depart-
ment of Labor requirements are eligible for pur-
chase by employee benefit plans.
Unless otherwise specified in the related Prospec-
tus Supplement, the Certificates of any Series that
are subordinated to any other Security of that Se-
ries may not be acquired by any employee benefit
plan subject to the Employee Retirement Income Se-
curity Act of 1974, as amended, or by any individ-
ual 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 organ-
ization. A rating is not a recommendation to pur-
chase, hold or sell Securities inasmuch as such
rating does not comment as to market price or suit-
ability for a particular investor. Ratings of Secu-
rities 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
agency if in its judgment circumstances in the fu-
ture so warrant. For more detailed information re-
garding the ratings assigned to any class of a par-
ticular Series of Securities, see "Summary of
Terms--Rating of the Securities" and "Risk Fac-
tors--Ratings of the Securities" in the related
Prospectus Supplement.
10
<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. Any such
prepayment of principal could have the effect of shortening the weighted
average life of the Securities of the related Series. In addition, holders of
the related Securities will bear the risk that they may be unable to reinvest
any such principal prepayment at yields at least equal to the yield on such
Securities.
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;
11
<PAGE>
(iii) as of the respective Cutoff Dates for 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".
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.
12
<PAGE>
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 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
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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 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
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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. Unless otherwise 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".
Delinquent Receivables. If so specified in the related Prospectus
Supplement, a Trust may include Receivables which are delinquent as of the
Cutoff Date for such Trust, provided that no more than 10% by principal
balance of the Receivables in a Trust may be more than 30 days delinquent as
of such Cutoff Date. A Receivable is "delinquent" if payment on such
Receivable is contractually past due and the period of delinquency of a
Receivable is the number of calendar days such Receivable is contractually
past due. Investors should consider the risk that inclusion of delinquent
Receivables in a Trust may affect the rate of prepayment or losses on such
Receivables.
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 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.
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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.
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.
"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
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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.
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
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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 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
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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.
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.
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
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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.
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. Unless otherwise provided
in the related Prospectus Supplement, "Events of Default" in respect of a
Series of Notes under the related Indenture will consist of: (i) a
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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
due if such obligations had not been declared due and payable, and such
Indenture Trustee obtains the consent of the holders of 66 2/3% 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
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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 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
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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.
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.
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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". 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,
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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 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
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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 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
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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.
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.
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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 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
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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.
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.
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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. 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.
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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.
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 "Material
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.
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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.
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.
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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 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
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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 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
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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".
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,
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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.
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
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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.
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
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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
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 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
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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.
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
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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 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
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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 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.
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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 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
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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 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
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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".
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.
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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.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of material federal income tax
consequences of the purchase, ownership and disposition of the Notes and the
Certificates and is based on the advice of Brown & Wood LLP, special federal
tax counsel for the Depositor ("Federal Tax Counsel"). 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 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 ("Special Federal Tax Counsel") relating
to the federal income tax consequences to investors in Securities of the
related Series and to the effect that the federal income tax matters discussed
below are accurate in all material respects. An opinion of Federal Tax Counsel
or Special 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 or Special 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
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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.
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 or Special 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, etc. The discussion below assumes that all payments on the Notes are
denominated in U.S. dollars, and that the Notes are not 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
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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 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
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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.
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.
The following discussion assumes that all payments on the Certificates are
denominated in U.S. dollars, none of the Certificates are 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
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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
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
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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) 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
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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 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
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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 or Special
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 or Special 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
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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.
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
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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 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
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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.
Subordinated Certificates. In the event the Trust issues two classes of
Grantor Trust Certificates, one class being a subordinate class and the other
being a senior class (referred to herein as the "Subordinate Certificates" and
"Senior Certificates", respectively) the Trust will be deemed to have acquired
the following assets: (i) the principal portion of each Receivable plus a
portion of the interest due on each Receivable (the "Trust Stripped Bond"),
and (ii) a portion of the interest due on each Receivable equal to the
difference between the pass-through rate on the Subordinate Certificates and
the pass-through rate on the Senior Certificates, if any, which difference is
then multiplied by the Subordinate Class Percentage (the "Trust Stripped
Coupon"). The "Subordinate Class Percentage" equals the initial aggregate
principal amount of the Subordinate Certificates divided by the sum of the
initial aggregate principal amount of the Subordinate Certificates and the
Senior Certificates. The "Senior Class Percentage" equals the initial
aggregate principal amount of the Senior Certificates divided by the sum of
the initial aggregate principal amount of the Subordinate Certificates and the
Senior Certificates.
The Senior Certificateholders in the aggregate will own the Senior Class
Percentage of the Trust Stripped Bond and accordingly each Senior
Certificateholder will be treated as owning its pro rata share of such asset.
The Senior Certificateholders will not own any portion of the Trust Stripped
Coupon. The Subordinate Certificateholders in the aggregate own both the
Subordinate Class Percentage of the Trust Stripped Bond plus 100% of the Trust
Stripped Coupon, if any, and accordingly each Subordinate Certificateholder
will be treated
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as owning its pro rata share in both such assets. The Trust Stripped Bond will
be treated as a "stripped bond" and the Trust Stripped Coupon will be treated
as "stripped coupons" within the meaning of Section 1286 of the Code. Because
the purchase price paid by each Subordinate Certificateholder will be
allocated between that Certificateholder's interest in the Trust Stripped Bond
and the Trust Stripped Coupon based on the relative fair market values of each
asset on the date such Subordinate Certificate is purchased, the Trust
Stripped Bond may be issued with original issue discount.
Trust Stripped Bond. Except to the extent modified below, the income of the
Trust Stripped Bond represented by a Certificate will be reported in the same
manner as described generally above for holders of Certificates. The interest
income on the Subordinate Certificates at the Senior Certificate pass-through
rate and the portion of the Servicing Fee that does not constitute excess
servicing will be treated as qualified stated interest.
Trust Stripped Coupon. The Trust Stripped Coupon will be treated as a debt
instrument with original issued discount equal to the excess of the total
amount payable with respect to such Trust Stripped Coupon (based on the
prepayment assumption used in pricing the Certificates) over the portion of
the purchase price allocated thereto. The sum of the daily portions of
original issue discount on the Trust Stripped Coupon for each day during a
year in which the Subordinate Certificateholder holds the Trust Stripped
Coupon will be included in the Subordinate Certificateholder's income.
Effect of Subordination. If the Subordinate Certificateholders receive
distribution of less than their share of the Trust's receipts of principal or
interest (the "Shortfall Amount") because of the subordination of the
Subordinate Certificates, holders of Subordinate Certificates would probably
be treated for federal income tax purposes as if they had (i) received as
distributions their full share of such receipts, (ii) paid over to the Senior
Certificateholders an amount equal to such Shortfall Amount and (iii) retained
the right to reimbursement of such amounts to the extent such amounts are
otherwise available as a result of collections on the Receivables or amounts
available from a Reserve Account or other form of credit enhancement, if any.
Under this analysis, (a) Subordinate Certificateholders would be required to
accrue as current income any interest or OID income of the Trust that was a
component of the Shortfall Amount, even though such amount was in fact paid to
the Senior Certificateholders, (b) a loss would only be allowed to the
Subordinate Certificateholders when their right to receive reimbursement of
such Shortfall Amount became worthless (i.e., when it becomes clear that
amount will not be available from any source to reimburse such loss) and (c)
reimbursement of such Shortfall Amount prior to such a claim of worthlessness
would not be taxable income to Subordinate Certificateholders because such
amount was previously included in income. Those results should not
significantly affect the inclusion of income for Subordinate
Certificateholders on the accrual method of accounting, but could accelerate
inclusion of income to Subordinate Certificateholders on the cash method of
accounting by, in effect, placing them on the accrual method. Moreover, the
character and timing of loss deductions is unclear. Subordinate
Certificateholders are strongly urged to consult their own tax advisors
regarding the appropriate timing, amount and character of any losses sustained
with respect to the Subordinate Certificates including any loss resulting from
the failure to recover previously accrued interest or discount income.
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).
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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.
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 or Special 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
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<PAGE>
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
or Special 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, etc. The discussion below assumes that all payments on the Certificates
are denominated in U.S. dollars, and that the Certificates are not 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 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
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<PAGE>
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.
* * *
THE FEDERAL TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A NOTEHOLDER'S
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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.
61
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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.
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);
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(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.
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.
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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 LLP, 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.
<TABLE>
<S> <C>
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
CD Rate Security........................................................... 28
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
Company.................................................................... 4
Composite Quotations....................................................... 26
Contracts.................................................................. 18
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
</TABLE>
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<TABLE>
<S> <C>
FASIT..................................................................... 56
Federal Funds Rate........................................................ 28
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
foreign person............................................................ 62
FTC Rule.................................................................. 46
Funding Period............................................................ 7
GCM....................................................................... 60
Grantor Trust............................................................. 4
Grantor Trust Certificateholders.......................................... 54
Grantor Trust Certificates................................................ 54
H.15(5-19)................................................................ 26
Indenture................................................................. 4
Indenture Trustee......................................................... 4
Index Maturity............................................................ 26
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 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....................................................... 7
Precomputed Advance....................................................... 8
Precomputed Receivables................................................... 17
Prospectus Supplement..................................................... 1
</TABLE>
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<TABLE>
<S> <C>
Purchase Agreement......................................................... 33
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........................................................ 56
Series..................................................................... 1
Servicer Default........................................................... 41
Servicing Fee.............................................................. 39
Servicing Fee Rate......................................................... 39
Shortfall Amount........................................................... 57
Short-Term Note............................................................ 48
Simple Interest Advance.................................................... 8
Simple Interest Receivables................................................ 17
Special Federal Tax Counsel................................................ 46
Spread..................................................................... 26
Spread Multiplier.......................................................... 26
Strip Certificates......................................................... 6
Strip Notes................................................................ 5
Subordinate Certificates................................................... 56
Subsequent Receivables..................................................... 7
Subsequent Transfer Date................................................... 11
Subservicer................................................................ 4
Transfer and Servicing Agreements.......................................... 33
Treasury bills............................................................. 31
Treasury Rate.............................................................. 29
Treasury Rate Determination Date........................................... 30
Treasury Rate Security..................................................... 28
Trust...................................................................... 1
Trust Accounts............................................................. 36
Trust Agreement............................................................ 4
Trust Stripped Bond........................................................ 56
Trust Stripped Coupon...................................................... 56
Trustee.................................................................... 4
UCC........................................................................ 31
</TABLE>
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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:
<TABLE>
<S> <C>
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
==========
</TABLE>
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.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
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 LLP with respect to legality*
8.1 Opinion of Brown & Wood LLP 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 LLP (included in Exhibits 5.1 and 8.1)*
23.2 Consent of Coopers & Lybrand L.L.P.**
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*
</TABLE>
- --------
* Previously filed in Amendment No. 1 to Registration Statement on Form S-3
(Reg. No. 333-1548, filed with the Commission by the Registrant on May 29,
1996).
** Previously filed in Amendment No. 3 to Registration Statement on Form S-3
(Reg. No. 333-1548, filed with the Commission by the Registrant on June 20,
1996).
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<PAGE>
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.
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.
II-2
<PAGE>
(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 7TH DAY OF AUGUST, 1996.
Financial Asset Securities Corp.
/s/ Konrad R. Kruger
By: _________________________________
NAME: KONRAD R. KRUGER
TITLE: PRESIDENT
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Directors and Officers
of Financial Asset Securities Corp., a Delaware corporation, hereby constitute
and appoint Stephen M. Peet, Charles A. Forbes, Jr., and John C. Anderson,
each with full power of substitution and resubstitution, their true and lawful
attorneys and agents to sign the name of the undersigned Directors and
Officers in the capacities 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 each of the undersigned hereby ratify and confirm 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
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:
SIGNATURE TITLE DATE
Konrad R. Kruger* President & Director
- ------------------------------------- (Principal August 7, 1996
KONRAD R. KRUGER Executive Officer
and Principal
Financial Officer)
Kevin C. Piccoli* Controller
- ------------------------------------- (Principal August 7, 1996
KEVIN C. PICCOLI Financial Officer)
/s/ Stephen M. Peet* Director
- ------------------------------------- August 7, 1996
STEPHEN M. PEET
Kensaku Higashi* Director
- ------------------------------------- August 7, 1996
KENSAKU HIGASHI
David R. Jones* Director
- ------------------------------------- August 7, 1996
DAVID R. JONES
/s/ Stephen M. Peet
*By__________________________________
STEPHEN M. PEET
ATTORNEY-IN-FACT
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
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)*
Form of Pooling and Servicing Agreement (including form of
4.2 Certificates)*
4.3 Form of Indenture (including form of Notes)*
5.1 Opinion of Brown & Wood LLP with respect to legality*
Opinion of Brown & Wood LLP with respect to certain tax
8.1 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 LLP (included in Exhibits 5.1 and 8.1)*
23.2 Consent of Coopers & Lybrand L.L.P.**
24.1 Power of Attorney (included on Page II-4)*
Statement of Eligibility and Qualification of Indenture
25.1 Trustee*
99.1 Form of Transfer Agreement*
99.2 Form of Security Agreement*
99.3 Form of Receivables Purchase Agreement*
</TABLE>
- --------
* Previously filed in Amendment No. 1 to Registration Statement on Form S-3
(Reg. No. 333-1548, filed with the Commission by the Registrant on May 29,
1996).
**Previously filed in Amendment No. 3 to Registration Statement on Form S-3
(Reg. No. 333-1548, filed with the Commission by the Registrant on June 20,
1996).
