As filed with the Securities and Exchange Commission on May 10, 1996
Registration Statement No. 333-____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BANC ONE AUTO GRANTOR TRUST 1996-B
(Issuer with respect to the Certificates)
BANC ONE ABS CORPORATION
(Exact name of registrant as specified in its charter)
United States Not Available
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
100 East Broad Street
Columbus, Ohio 43271-0158
(614) 248-5700
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Steven Alan Bennett, Esq.
BANC ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271-0158
(614) 248-5700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Kim L. Swanson, Esq. Kenneth L. Wagner, Esq. Reed D. Auerbach, Esq.
Squire, Sanders & Dempsey BANC ONE CORPORATION Stroock & Stroock & Lavan
1300 Huntington Center 100 East Broad Street Seven Hanover Square
41 South High Street Columbus, Ohio 43271-0158 New York, New York 10004
Columbus, Ohio 43215
--------------------------------------------------
Approximate date of commencement of proposed sale to public:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. X
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed maximum
Amount to be maximum offering aggregate offering Amount of
Title of each class of securities to be registered registered (1) price per unit (1) price (1) Registration fee
<S> <C> <C> <C> <C>
Class A Asset Backed Certificates.................... $ 500,000 (2) 100% $ 500,000 $172.42
Class B Asset Backed Certificates.................... $ 500,000 (2) 100% $ 500,000 $172.42
TOTAL................................................ $1,000,000 (2) 100% $1,000,000 $344.84
===== ============== ==== ========== =======
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Includes an indeterminate amount of Certificates as may be offered or sold in connection with market making activities
by an affiliate of the Registrant.
</TABLE>
<PAGE>
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
EXPLANATORY NOTE
This Registration Statement contains a Prospectus relating to a public
offering by Banc One Auto Grantor Trust 1996-B of $______________ aggregate
principal balance of Asset Backed Certificates (the "Certificates"). The
Prospectus may be used in connection with offers and sales relating to
market-making transactions in the Certificates by an affiliate of the
Registrant.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED ________, 1996
BANC ONE AUTO GRANTOR TRUST 1996-B
$ Class A % Asset Backed Certificates
$ Class B % Asset Backed Certificates
BANC ONE ABS CORPORATION
Seller
-------------------------
BANK ONE, ARIZONA, N.A.
Servicer
-------------------------
Banc One Auto Grantor Trust 1996-B (the "Trust") will be formed pursuant
to a Pooling and Servicing Agreement dated as of _______, 1996, between Banc
One ABS Corporation, an Ohio corporation, as seller, Bank One, Arizona, N.A., a
national banking association, as servicer, and ____________________, as
trustee, and will issue $ aggregate principal balance of % Class A Asset Backed
Certificates (the "Class A Certificates") and $ aggregate principal balance of
% Class B Asset Backed Certificates (the "Class B Certificates" and, together
with the Class A Certificates, the "Certificates").
The assets of the Trust will include a pool of motor vehicle retail
installment sale contracts (the "Receivables") secured by new or used
automobiles, vans or light duty trucks, certain payments made thereunder on or
after __________, 1996 (the "Cutoff Date"), security interests in the vehicles
financed thereby, and the proceeds thereof. The Trust may also draw on funds on
deposit in the Reserve Fund, to the extent described herein, to meet shortfalls
in amounts due to Certificateholders on any Distribution Date.
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 Class A or Class B
Pass-Through Rate will be distributed to Certificateholders on or about the
fifteenth day of each month, commencing ________, 1996. The rights of the
holders of the Class B Certificates to receive distributions are subordinated
to the rights of holders of the Class A Certificates to the extent described
herein. The outstanding principal balance, if any, of the Certificates will be
due and payable on the __________ Distribution Date (the "Final Scheduled
Distribution Date").
-------------------------
For a discussion of certain factors which should be considered by
prospective purchasers of the Certificates, see "Risk Factors" beginning on
page __.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN BANK ONE, ARIZONA, N.A., BANC ONE ABS
CORPORATION OR ANY OF THEIR AFFILIATES.
NONE OF THE CERTIFICATES OR THE RECEIVABLES ARE INSURED OR GUARANTEED
BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Price to Underwriting Proceeds to
Public Discounts The Seller(1)
Per Class A Certificate................ % % %
Per Class B Certificate................ % % %
Total.................................. $ $ $
- --------------------
(1) Before deducting expenses, estimated to be $_______.
The Certificates are offered by the Underwriters when, as and if issued by
the Trust, delivered and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Certificates in book-entry form will be made through the facilities of The
Depository Trust Company on the Same Day Funds Settlement System and Cedel
Bank, societe anonyme ("Cedel"), and the Euroclear System ("Euroclear") on or
about _________, 1996.
After the initial distribution of the Certificates by the Underwriters,
this Prospectus may be used by Banc One Capital Corporation, an affiliate of
the Seller, in connection with offers and sales relating to market making
transactions in the Certificates. Banc One Capital Corporation may act as
principal or agent in such transactions. Such sales will be made at prices
related to prevailing market prices at the time of sale. Certain information in
this Prospectus will be updated from time to time as described in
"Incorporation of Certain Documents by Reference."
- ---------------------------- --------------------
The date of this Prospectus is __________, 1996
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
REPORTS TO CERTIFICATEHOLDERS
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.
("Cede"), as nominee of The Depository Trust Company ("DTC") and registered
holder of the Certificates. Certificateholders may elect to hold their
securities through any of DTC (in the United States) or Cedel or Euroclear (in
Europe). DTC will forward such reports to Participants, Cedel Participants and
Euroclear Participants. See "The Certificates--Book-Entry Registration" and
"--Statements to Certificateholders." Such reports will not constitute
financial statements prepared in accordance with generally accepted accounting
principles. The Servicer, on behalf 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 (the "Exchange
Act"), and the rules and regulations of the Commission thereunder.
AVAILABLE INFORMATION
The Seller has filed with the Commission a Registration Statement
(together with all amendments and exhibits thereto, referred to herein as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Certificates offered pursuant to this
Prospectus. For further information, reference is made to the Registration
Statement which may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
and at the Commission's regional offices at the Northwestern Atrium Building,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and at Seven
World Trade Center, 13th Floor, New York, New York 10048. Copies of the
Registration Statement may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington. D.C. 20549, at prescribed
rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and other documents filed by the Servicer, on behalf of the
Trust, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Certificates offered hereby shall be deemed incorporated by
reference into this Prospectus and to be a part hereof. After the initial
distribution of the Certificates by the Underwriters and in connection with
market making transactions by Banc One Capital Corporation, this Prospectus
will be distributed together with, and should be read in conjunction with an
accompanying supplement to the Prospectus. Such supplement will contain the
reports described above and generally will include the information contained in
the monthly statements furnished to Certificateholders. See "The
Certificates--Statements to Certificateholders." Any statement contained herein
or in a document 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 in any other subsequently filed document which also is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as modified or superseded, to constitute part of this Prospectus.
The Servicer will provide without charge to each person, including any
beneficial owner of Certificates, to whom a copy of this Prospectus is
delivered, on the written or oral request of any such person, a copy of any or
all the documents incorporated herein by reference (other than exhibits to such
documents). Written requests for such copies should be directed to BANC ONE
CORPORATION, 100 East Broad Street, Columbus, Ohio 43271-0133, Attention:
Structured Finance. Telephone requests for such copies should be directed to
BANC ONE CORPORATION at (614) 248-6347.
SUMMARY OF TERMS
The following summary is qualified in its entirety by
reference to the detailed information appearing elsewhere in
this Prospectus. Certain capitalized terms used in this summary
are defined elsewhere in this Prospectus on the pages indicated
in the Index of Principal Terms.
Issuer..................................... Banc One Auto
Grantor Trust 1996-B (the "Trust" or the "Issuer").
Seller..................................... Banc One ABS
Corporation (the "Seller"), an affiliate of the Servicer
and the Subservicer. See "The Seller."
Servicer................................... Bank One, Arizona,
N.A. (the "Servicer" or the "Bank"). A portion of the
Receivables will be serviced by Valley National Financial
Co. (the "Subservicer" or "Valley National"), a
wholly-owned subsidiary of Bank One, Arizona, N.A. See "The
Servicer and the Subservicer."
Trustee and Collateral Agent............... The _____________, a
______________________, not in its individual capacity, but
solely as trustee for the Trust (the "Trustee") and as
collateral agent with respect to the Reserve Fund (the
"Collateral Agent").
Securities Offered......................... Banc One Auto
Grantor Trust 1996-B will issue two classes of Certificates
(each, a "Class") with one class of senior certificates
(the "Class A Certificates") and one class of subordinated
certificates (the "Class B Certificates" and, together with
the Class A Certificates, the "Certificates") pursuant to a
Pooling and Servicing Agreement dated as of _______, 1996
(the "Agreement") among the Seller, the Servicer and the
Trustee. Each Certificate will represent a fractional
undivided interest in the assets of the Trust. The Class A
Certificates will be issued in an initial aggregate
principal amount of $ (the "Original Class A Principal
Balance") and will evidence in the aggregate an undivided
ownership interest in approximately % of the Trust (the
"Class A Percentage").
The Class B Certificates will be issued in an initial aggregate
principal amount of $ (the "Original Class B Principal
Balance") and will evidence in the aggregate an undivided
ownership interest in approximately % of the Trust (the
"Class B Percentage"). The Class B Certificates will be
subordinated to the Class A Certificates to the extent
described herein. See "Risk Factors--Subordination of the
Class B Certificates" and "The Certificates--Subordination
of the Class B Certificates."
Registration of the Certificates........... The Certificates
will be available for purchase in denominations of $1,000
and integral multiples thereof in book-entry form only. See
"The Certificates--General." Certificateholders will not be
entitled to receive a Definitive Certificate, except in the
event that Definitive Certificates are issued in the
limited circumstances described herein. Persons acquiring
beneficial interests in the Certificates will hold their
interests through DTC in the United States or Cedel or
Euroclear in Europe. See "The Certificates--Definitive
Certificates."
Trust Property............................. The property of the
Trust (the "Trust Property") will include (i) the
Receivables; (ii) all monies received under the Receivables
on and after , 1996 (the "Cutoff Date"); (iii) certain bank
accounts established and maintained by the Trustee; (iv)
security interests in the Financed Vehicles; (v) the rights
to proceeds from certain insurance policies covering the
Financed Vehicles or the retail purchasers of, or other
persons owing payments on, the Financed Vehicles (the
"Obligors"); (vi) the rights of the Trustee for the benefit
of the Certificateholders under the Agreement; (vii) the
rights to certain payments from the Reserve Fund; and
(viii) all proceeds (within the meaning of the UCC) of the
foregoing. The Reserve Fund will be maintained for the
benefit of the Certificateholders, but will not be part of
the Trust.
The Receivables............................ The Receivables
will consist of motor vehicle retail installment sale
contracts secured by new or used automobiles, vans or light
duty trucks, including rights to receive certain payments
made with respect to such Receivables on and after the
Cutoff Date, security interests in the vehicles financed
thereby (the "Financed Vehicles"), and the proceeds
thereof. On the date of the issuance of the Certificates
(the "Closing Date"), the Trustee will purchase from the
Seller pursuant to the Agreement simple interest motor
vehicle retail installment sale contracts (the
"Receivables") having an aggregate principal balance of
$_____________ as of the Cutoff Date. See "The
Certificates--Sale and Assignment of the Receivables."
The Receivables will consist of loans either presently owned by
the Bank or acquired by the Bank pursuant to a loan
purchase and servicing agreement (the "Loan Purchase and
Servicing Agreement") dated as of the Cutoff Date from
Valley National. On or prior to the Closing Date, the Bank
will sell the Receivables to the Seller pursuant to a Loan
Sale Agreement dated as of the Cutoff Date among the Bank
and the Seller (the "Loan Sale Agreement"). The Receivables
have been selected based on the criteria specified in the
Agreement and described herein. As of the Cutoff Date, the
weighted average annual percentage rate (the "APR") 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. As of the
Cutoff Date, no Receivable has a scheduled maturity later
than __________ (the "Final Scheduled Maturity Date").
Approximately ____% of the aggregate principal balance of
the Receivables as of the Cutoff Date represents financing
of new vehicles; the remainder represents financing of used
vehicles. As of the Cutoff Date, approximately ___% and
___% of the aggregate principal balance of the Receivables
have Obligors with billing addresses in the State of
Arizona and ___________, respectively. See "The Receivables
Pool" and "Risk Factors--Regional Economic Conditions."
Class A Pass-Through Rate.................. % per annum,
calculated on the basis of a 360-day year consisting of
twelve 30-day months (the "Class A Pass-Through Rate").
Class B Pass-Through Rate.................. % per annum,
calculated on the basis of a 360-day year consisting of
twelve 30-day months (the "Class B Pass-Through Rate").
Distribution Date.......................... Distributions of
principal and interest will be made on the 15th day of each
month (or, if such 15th day is not a Business Day, the next
succeeding Business Day) (each, a "Distribution Date"),
commencing in ______ 1996. The final scheduled Distribution
Date is the _________ Distribution Date (the "Final
Scheduled Distribution Date"). A "Business Day" is a day
other than a Saturday, a Sunday or a day on which banking
institutions or trust companies in , or Phoenix, Arizona
are authorized by law, regulation, executive order or
governmental decree to be closed.
Interest................................... On each Distribution
Date, the Trustee will distribute, to the extent of funds
available therefor, first (i) pro rata to the holders of
the Class A Certificates (the "Class A Certificateholders")
as of the last day of the immediately preceding calendar
month (each such date, a "Record Date"), interest in an
amount equal to one-twelfth (or, in the case of the first
Distribution Date, a fraction, the numerator of which is
and the denominator of which is 360) of the product of the
Class A Pass-Through Rate and the Class A Principal Balance
after giving effect to distributions of principal made on
the preceding Distribution Date or, in the case of the
first Distribution Date, the Original Class A Principal
Balance (the "Class A Monthly Interest") plus any unpaid
Class A Monthly Interest from any preceding Distribution
Date that remains unpaid and interest on such amount to the
extent permitted by law at the Class A Pass-Through Rate
and then (ii) pro rata to the holders of record of the
Class B Certificates (the "Class B Certificateholders" and,
together with the Class A Certificateholders, the
"Certificateholders") as of the Record Date, interest in an
amount equal to one-twelfth (or, in the case of the first
Distribution Date, a fraction, the numerator of which is
and the denominator of which is 360) of the product of the
Class B Pass-Through Rate and the Class B Principal Balance
after giving effect to all payments of principal made on
the preceding Distribution Date, or, in the case of the
first Distribution Date, the Original Class B Principal
Balance (the "Class B Monthly Interest") plus any unpaid
Class B Monthly Interest from any preceding Distribution
Date that remains unpaid and interest on such amount to the
extent permitted by law at the Class B Pass-Through Rate.
The "Class A Principal Balance" on any date of determination
shall equal the Original Class A Principal Balance reduced
by all distributions actually made to the Class A
Certificateholders and allocable to principal. The "Class B
Principal Balance" on any date of determination shall equal
the Original Class B Principal Balance reduced by all
distributions actually made to the Class B
Certificateholders and allocable to principal.
Principal.................................. On each Distribution
Date, the Trustee will distribute, to the extent of funds
available therefor, first (i) pro rata to Class A
Certificateholders of record as of the related Record Date
an amount equal to the sum of
(x) the Class A Percentage of all payments received by the
Servicer during the preceding Collection Period allocable
to principal on or in respect of the Receivables as
described under "The Certificates--Distributions on
Certificates" ("Principal Collections"), (y) the Class A
Percentage of Realized Losses with respect to Receivables
which became Liquidated Receivables during the related
Collection Period (the sum of (x) and (y), the "Class A
Monthly Principal") and (z) any unpaid Class A Monthly
Principal with respect to any preceding Distribution Date
and then (ii) pro rata to Class B Certificateholders of
record as of the related Record Date an amount equal to the
sum of (x) the Class B Percentage of Principal Collections,
(y) the Class B Percentage of Realized Losses with respect
to Receivables which became Liquidated Receivables during
the related Collection Period (the sum of (x) and (y), the
"Class B Monthly Principal") and (z) any unpaid Class B
Monthly Principal with respect to any preceding
Distribution Date.
A "Collection Period" means, with respect to any Distribution
Date the calendar month immediately preceding the calendar
month in which such Distribution Date occurs.
Subordination of the Class B Certificates.......................
The rights of the Class B Certificateholders to receive
distributions to which they would otherwise be entitled
with respect to the assets of the Trust will be
subordinated to the rights of the Class A
Certificateholders, as more fully described under "Risk
Factors--Subordination of the Class B Certificates" and
"The Certificates--Subordination of the Class B
Certificates." This subordination is intended to enhance
the likelihood of timely receipt by Class A
Certificateholders of the full amount of interest and
principal required to be paid to them, and to afford such
Class A Certificateholders limited protection against
losses in respect of the Receivables.
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
below, current distributions from collections on or in
respect of the Receivables and by the establishment of a
segregated trust account held by the Collateral Agent for
the benefit of the Certificateholders (the "Reserve Fund").
Amounts on deposit in the Reserve Fund will also be
generally available to cover shortfalls in required
distributions to the Class B Certificateholders, in respect
of interest, after payment of interest on the Class A
Certificates and, in respect of principal, after payment of
interest and principal of the Class A Certificates and
interest on the Class B Certificates. The Reserve Fund will
be maintained for the benefit of the Certificateholders,
but will not be part of the Trust.
No interest distribution will be made to the Class B
Certificateholders on any Distribution Date until the full
amount of interest on the Class
A Certificates payable on such Distribution Date has been
distributed to the Class A Certificateholders. No principal
distribution 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 and interest
on the Class B Certificates payable on such Distribution
Date has been distributed to the Class A Certificateholders
and Class B Certificateholders, respectively. Distributions
of interest on the Class B Certificates, to the extent of
collections on or in respect of the Receivables allocable
to interest and certain available amounts on deposit in the
Reserve Fund, will not be subordinated to the payment of
principal on the Class A Certificates.
Reserve Fund............................... The Reserve Fund
will be created with an initial deposit by the Seller of
cash or Eligible Investments having a value of $ , or % of
-------- --- the Pool Balance as of the Cutoff Date (the
"Original Pool Balance"). The amount initially deposited in
the Reserve Fund will be augmented on each Distribution
Date by the deposit in the Reserve Fund of amounts
remaining after distribution of the Servicing Fee and
amounts to be paid to Class A Certificateholders and Class
B Certificateholders. Amounts in the Reserve Fund on any
Distribution Date (after giving effect to all distributions
to be made on such Distribution Date) in excess of the
Specified Reserve Balance for such Distribution Date will
be released to the Seller, on such Distribution Date and
upon such release, the Certificateholders will have no
further rights in, or claims to, such amounts. The
"Specified Reserve Balance" with respect to any
Distribution Date generally will be equal to the greater of
(a) % of --- the sum of the Class A Principal Balance and
the Class B Principal Balance (after giving effect to all
distributions on the Certificates on such Distribution
Date) or (b) % of the sum of the Original Class A ---
Principal Balance and the Original Class B Principal
Balance. Funds will be withdrawn, to the extent available,
from the Reserve Fund 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 and then to Class B
Certificateholders to the extent of shortfalls in the
amounts available to make required distributions of
interest on the Class B Certificates. Thereafter, funds
will be withdrawn from the Reserve Fund for distribution
first 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
then to Class B Certificateholders to the extent of
shortfalls in the amounts available to make required
distributions of principal on the Class B Certificates.
The "Pool Balance" at any time will represent the aggregate
principal balance of the Receivables at the end of the
preceding Collection Period, after giving effect to all
payments received from Obligors and Purchase Amounts to be
remitted by the Servicer, the Seller or the Bank, as the
case may be, all for such Collection Period, and all losses
realized on Receivables liquidated during such Collection
Period.
Servicing Fee.............................. The Servicer will
receive a monthly fee (the "Servicing Fee"), payable on
each Distribution Date, equal to one-twelfth of the product
of ____% (the "Servicing Fee Rate") and the Pool Balance as
of the first day of the related Collection Period. In
addition, the Servicer will be entitled to certain
nonsufficient funds charges and other administrative fees
or similar charges. The Servicer will, and the Trust will
not, be responsible for paying any compensation to the
Subservicer. See "The Certificates--Servicing
Compensation."
Optional Purchase.......................... The Seller may
purchase all the Receivables on any Distribution Date as of
which the Pool Balance is 5% or less of the Original Pool
Balance at a purchase price determined as described under
"The Certificates--Termination."
Prepayment Considerations.................. All the Receivables
are prepayable at any time. The rate of prepayments on the
Receivables may be influenced by a variety of economic,
social and other factors, including changes in interest
rates and the fact that an Obligor generally may not sell
or transfer the Financed Vehicle securing a Receivable
without the consent of the secured party, which generally
results in the repayment of the remaining principal balance
of the Receivable. In addition, under certain
circumstances, the Seller will be obligated to repurchase
(or to cause the Bank to repurchase) or the Servicer will
be obligated to purchase Receivables from the Trust
pursuant to the Agreement as a result of breaches of their
respective representations, warranties or covenants.
Accordingly, under certain circumstances it is likely that
the Certificates will be repaid before the Final Scheduled
Distribution Date. Any reinvestment risk (which will vary
from investor to investor, but which may include the risk
that principal payments will have to be reinvested at a
lower yield) resulting from the rate of prepayments in full
of the Receivables and the distribution of such prepayments
to Certificateholders will be borne entirely by the
Certificateholders.
Tax Status................................. In the opinion of
special tax counsel, the Trust will be classified for
Federal income tax purposes as a grantor trust and not as
an association taxable as a corporation. Certificateholders
must report their respective allocable shares of income
earned on Trust assets (excluding certain amounts retained
by the Seller as described herein) and, subject to certain
limitations applicable to individuals, estates and trusts,
may deduct their respective allocable shares of reasonable
servicing and other fees. See "Federal Income Tax
Consequences." Investors should consult their own tax
advisors regarding state and local tax consequences. See
"State and Local Tax Consequences."
Rating..................................... It is a condition to
the issuance of the Certificates that the Class A
Certificates be rated in the highest investment rating
category by at least two nationally recognized rating
agencies (each, a "Rating Agency") and the Class B
Certificates be rated at least "A" or its equivalent by
each such Rating Agency. The ratings of the Certificates
are based primarily on the quality of the Receivables and
the availability of the Reserve Fund and, in the case of
the Class A Certificates, on the subordination provided by
the Class B Certificates. A security rating is not a
recommendation to buy, sell or hold securities and may be
revised or withdrawn at any time by the assigning Rating
Agency. See "Risk Factors--Ratings of the Certificates;
Possibility of Withdrawal or Downgrading."
ERISA Considerations....................... The Class A
Certificates may be purchased by or on behalf of an
employee benefit plan or other retirement arrangement that
is 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"), as
well as any entity whose source of funds for the purchase
of Class A Certificates includes plan assets by reason of a
plan or account investing in such entity (each, a "Plan"),
subject to the considerations described herein. Because the
Class B Certificates are subordinated to the Class A
Certificates, no Class B Certificate may be purchased by or
on behalf of a Plan other than an "insurance company
general account" as defined in, and which complies with the
provisions of, Prohibited Transaction Exemption 95-60 which
may be deemed to be holding Plan assets. See "ERISA
Considerations."
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective purchasers of the Certificates should read and carefully consider
the risk factors set forth below prior to making an investment in the
Certificates.
Certain Legal Aspects
The Seller will cause financing statements to be filed with the
appropriate governmental authorities to perfect the interest of the Trustee on
behalf of the Certificateholders in its purchase of the Receivables in
accordance with the requirements of the Uniform Commercial Code in effect in
the States of Ohio (the "Ohio UCC") and Arizona (the "Arizona UCC," and
together with the Ohio UCC, the "UCC"), and the Servicer will hold the
Receivables, either directly or through the Subservicer, as custodian for the
Trustee following the sale and assignment of the Receivables to the Trustee on
behalf of the Certificateholders. The Receivables will not be segregated,
stamped or otherwise marked to indicate that they have been sold to the Trustee
on behalf of the Certificateholders. If, through inadvertence or otherwise,
another party purchases (or takes a security interest in) the Receivables for
new value in the ordinary course of business and takes possession of the
Receivables without actual knowledge of the Trust's interest, the purchaser (or
secured party) will acquire an interest in the Receivables superior to the
interest of the Trust.
Valley National will assign its security interests in any Financed
Vehicles along with the sale and assignment of the related Receivables to the
Bank and the Bank will assign its security interests in the Financed Vehicles
along with the sale and assignment of the Receivables to the Seller. The Seller
will assign its security interests in the Financed Vehicles along with the sale
and assignment of the Receivables to the Trust, and the Servicer will hold the
certificates of title or ownership relating to the Financed Vehicles, either
directly or through the Subservicer, as custodian for the Trustee following the
sale and assignment of the Receivables to the Trust. The certificates of title
or ownership will not be endorsed or otherwise amended to identify the Trust as
the new secured party. In Arizona and most other states, in the absence of
fraud or forgery by the vehicle owner or of fraud, forgery, negligence or error
by Valley National, the Bank or the Seller or administrative error by state or
local agencies, the notation of Valley National's or the Bank's lien on the
certificates of title or ownership and/or possession of such certificates with
such notation will be sufficient to protect the Trust against the rights of
subsequent purchasers of a Financed Vehicle or subsequent lenders who take a
security interest in a Financed Vehicle. There exists a risk, however, in not
identifying the Trust or the Trustee as the new secured party on the
certificate of title that the security interest of the Trust or the Trustee may
not be enforceable. In the event the Trust has failed to obtain or maintain a
perfected security interest in a Financed Vehicle, its security interest would
be subordinate to, among others, a bankruptcy trustee of the Obligor, a
subsequent purchaser of the Financed Vehicle or a holder of a perfected
security interest in the Financed Vehicle.
The Seller intends that the transfer of the Receivables by it to the
Trustee on behalf of the Trust under the Agreement constitutes a valid sale and
assignment of such Receivables. Notwithstanding the foregoing, if the Seller
were to become a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy of the Seller or the Seller itself were to take the
position that the sale of the Receivables by the Seller to the Trust should
instead be treated as a pledge of Receivables to secure a borrowing of the
Seller, delays in payments or collections of Receivables could occur or (should
the court rule in favor of any such trustee, debtor or creditor) reductions in
the amounts of such payments could result. If the transfer of Receivables by
the Seller to the Trust is treated as a pledge instead of a sale, a tax or
government lien on the property of the Seller arising before the transfer of
the Receivables to the Trust may have priority over the Trust's interest in
such Receivables.
Regional Economic Conditions
Economic conditions in the states where Obligors reside may affect the
delinquency, loan loss and repossession experience of the Trust with respect to
the Receivables. As of the Cutoff Date, the billing addresses of the Obligors
with respect to approximately ____% and ____% by principal balance of the
Receivables were located in Arizona and _____________, respectively. Arizona and
_____________ have experienced economic downturns from time to time and no
predictions can be made regarding future economic conditions in Arizona,
________ or in any of the other states where the Obligors are located. See "The
Receivables Pool."
Limited Obligations of the Seller and Servicer
Neither the Seller nor the Servicer is obligated to make any payments in
respect of the Certificates or the Receivables. In addition, if Bank One,
Arizona, N.A. were to cease acting as Servicer or if Valley National were to
cease acting as Subservicer, delays in processing payments on the Receivables
and information in respect thereof could occur and result in delays in payments
to the Certificateholders.
In connection with the sale of Receivables by the Seller to the Trustee
for the benefit of the Certificateholders, the Seller makes representations and
warranties with respect to the characteristics of such Receivables. In certain
circumstances, the Seller is required to repurchase (or require the Bank to
repurchase) Receivables with respect to which such representations and
warranties have been breached. If the Servicer fails to cure certain breaches
of the covenants made by it in the Agreement with respect to a Receivable, the
Servicer may be required to purchase the affected Receivable. Because the
Servicer is initially the Bank and the Seller and the Servicer are affiliates,
certain conflicts of interest may arise with respect to such obligations. For
example, the Servicer may discover a breach of one of the representations that
would cause the Seller (or itself) to have to repurchase a Receivable. Since
both the Seller and the Servicer are obligated to give notices of any breaches
of representations to the Trustee, failure by the Servicer to give such notice
could give rise to an Event of Servicing Termination. Neither the Seller nor
the Servicer is otherwise obligated with respect to the Receivables or the
Certificates. See "The Certificates--Sale and Assignment of the Receivables"
and "--Servicing Procedures."
Maturity and Prepayment Assumptions
All the Receivables are prepayable at any time. For this purpose the term
"prepayments" includes prepayments by the Obligors in full or in part, certain
partial prepayments related to liquidations due to default, including rebates
of extended warranty contract costs and insurance premiums, as well as receipts
of proceeds from physical damage, credit life, theft and disability insurance
policies and certain other Receivables purchased or repurchased pursuant to the
terms of the Agreement. The rate of prepayments on the Receivables may be
influenced by a variety of economic, social and other factors. In addition,
under certain circumstances, the Seller is obligated to repurchase (or require
the Bank to repurchase), and the Servicer is obligated to purchase, Receivables
pursuant to the Agreement as a result of certain uncured breaches of
representations and warranties in the case of the Seller (and the Bank) and
certain uncured breaches of covenants in the case of the Servicer made by them
in the Agreement. See "The Certificates--Sale and Assignment of the
Receivables" and "--Servicing Procedures." See also "The
Certificates--Termination" regarding the Seller's option to purchase the
Receivables. Accordingly, under certain circumstances, it is likely that the
Certificates will be repaid before the Final Scheduled Distribution Date. Any
reinvestment risk (which will vary from investor to investor, but which may
include the risk that principal payments will have to be reinvested at a lower
yield) resulting from the rate of prepayments of the Receivables and the
distribution of such prepayments to Certificateholders will be borne entirely
by the related Certificateholders. See "Maturity and Prepayment Assumptions."
Limited Assets
The Trust does not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the right
to receive payments under certain circumstances from the Reserve Fund. The
Certificates represent interests solely in the Trust and neither the Class A
Certificates nor the Class B Certificates will be insured or guaranteed by the
Seller, the Servicer, the Subservicer, the Trustee or any other person or
entity. Consequently, holders of the Certificates must rely for payment upon
payments on the Receivables and, if and to the extent available, amounts on
deposit in the Reserve Fund. Amounts to be deposited in the Reserve Fund are
limited in amount and will be reduced as the Pool Balance declines.
Subordination of the Class B Certificates
Amounts on deposit in the Reserve Fund will be available on any
Distribution Date first to cover shortfalls in distributions of interest on the
Class A Certificates and then to cover shortfalls in distributions of interest
on the Class B Certificates. As a result, shortfalls in distributions of
interest on the Class B Certificates will be covered (to the extent of amounts
available in the Reserve Fund after the payment of interest on the Class A
Certificates) prior to the use of the Reserve Fund to cover shortfalls of
principal on the Class A Certificates. After distributions of interest on both
the Class A Certificates and the Class B Certificates have been made, amounts
on deposit in the Reserve Fund will be available first to cover shortfalls in
distributions of principal on the Class A Certificates and then to cover
shortfalls in distributions of principal on the Class B Certificates. If the
Reserve Fund is exhausted, the Trust will depend solely on current payments on
the Receivables to make distributions on the Certificates.
The Class B Certificateholders will not receive any distributions of
interest with respect to a Collection Period until the full amount of interest
on the Class A Certificates relating to such Collection Period has been
deposited in the Class A Distribution Account. Class B Certificateholders will
not receive any distributions of principal with respect to such Collection
Period until the full amount of interest on and principal of the Class A
Certificates relating to such Collection Period has been deposited in the Class
A Distribution Account. However, distributions of interest on the Class B
Certificates, to the extent of collections on the Receivables allocable to
interest and the amount on deposit in the Reserve Fund available after the
payment of interest on the Class A Certificates has been made, will not be
subordinated to the payment of principal on the Class A Certificates. See "The
Certificates--Distributions on Certificates."
Federal Income Taxation
It is expected that, for Federal income tax purposes, amounts otherwise
payable to the Class B Certificate Owners that are paid to the Class A
Certificate Owners pursuant to the subordination provisions described above
under "--Subordination of the Class B Certificates" will be deemed to have been
received by the Class B Certificate Owners and then paid by them to the Class A
Certificate Owners pursuant to a guaranty. See "Federal Income Tax
Consequences--Class B Certificate Owners--Effect of Subordination."
Ratings of the Certificates; Possibility of Withdrawal or Downgrading
It is a condition to the issuance of the Certificates that the Class A
Certificates be rated in the highest rating category by at least two nationally
recognized rating agencies (each a "Rating Agency"). It is a condition to the
issuance of the Class B Certificates that they be rated at least "A" or its
equivalent by each such Rating Agency. 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 of the Certificates are based primarily on the quality of the
Receivables and the availability of the Reserve Fund and, in the case of the
Class A Certificates, on the subordination provided by the Class B
Certificates. The ratings of the Certificates address the likelihood of the
receipt of distributions due on the Certificates 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 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. There can be no assurance as to
whether any additional rating agency will rate the Certificates or, if one
does, what rating would be assigned to either class of Certificates by such
rating agency.
Limited Liquidity
There is currently no secondary market for the Certificates. The
Underwriters currently intend to make a market in the Certificates, but are
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 the
Certificateholders with liquidity of investment or that it will continue for
the life of the Certificates.
FORMATION OF THE TRUST
The Seller will establish the Trust by selling and assigning the
Receivables and certain other Trust Property to the Trust in exchange for the
Certificates. All references herein to sales, assignments and transfers to the
Trust refer to sales, assignments and transfers to the Trustee on behalf of the
Trust for the benefit of the Certificateholders. Prior to such sale and
assignment, the Trust will have no assets or obligations or any operating
history. Upon formation, the Trust will not engage in any business activities
other than acquiring and holding the Receivables, issuing the Certificates and
distributing payments thereon.
To facilitate servicing and to minimize administrative burden and expense,
it is anticipated that as of the Closing Date, the Servicer will appoint the
Subservicer as custodian of the Receivables being serviced by the Subservicer.
The Servicer will be paid the Servicing Fee out of collections from the
Receivables, prior to distributions to Certificateholders. See "The Portfolio
of Motor Vehicle Loans--Motor Vehicle Lending," "The Certificates--Servicing
Procedures," "--Servicing Compensation" and "--Distributions on Certificates."
The Servicer will, directly or through the Subservicer, hold the
Receivables and the certificates of title relating to the Financed Vehicles as
custodian for the Trustee. However, the Receivables will not be marked or
stamped to indicate that they have been sold to the Trust, and the certificates
of title for the Financed Vehicles will not be endorsed or otherwise amended to
identify the Trustee as the new secured party. Under the foregoing
circumstances and in certain jurisdictions, the Trust's interest in the
Receivables and the Financed Vehicles may be defeated. See "Certain Legal
Aspects of the Receivables."
The Trust will not acquire any contracts or assets other than the Trust
Property, and it is not anticipated that the Trust will have any need for
additional capital resources. Because the Trust will have no operating history
upon its establishment and will not engage in any business activity other than
acquiring and holding the Trust Property, issuing the Certificates and
distributing payments thereon, no historical or pro forma financial statements
or ratios of earnings to fixed charges with respect to the Trust have been
included herein.
THE TRUST PROPERTY
Each Certificate represents a fractional undivided interest in the Trust.
The Trust Property will include the Receivables, which were originated either
by the Bank or Valley National. See "The Portfolio of Motor Vehicle Loans." The
Receivables will continue to be serviced by the Servicer or the Subservicer, as
the case may be, and evidence direct and indirect financing made available by
the Bank and Valley National, respectively, to the Obligors. On the Closing
Date, the Seller will sell the Receivables to the Trustee for the benefit of
the Certificateholders. The Trust Property also includes (i) all monies
received under the Receivables on and after the Cutoff Date, (ii) such amounts
as from time to time may be held in one or more accounts established and
maintained by the Trustee pursuant to the Agreement as described below, (iii)
security interests in the Financed Vehicles, (iv) the Seller's rights (if any)
to receive proceeds from claims on credit life, disability, theft and physical
damage insurance policies covering the Financed Vehicles or the Obligors, (v)
the rights of the Trustee on behalf of the Certificateholders under the
Agreement, (vi) the rights to certain payments from the Reserve Fund and (vii)
all proceeds (within the meaning of the UCC) of the foregoing.
The Reserve Fund will be maintained for the benefit of the
Certificateholders, but will not be part of the Trust.
THE PORTFOLIO OF MOTOR VEHICLE LOANS
General
The Receivables will consist of loans either presently owned by the Bank
or acquired by the Bank from its wholly-owned subsidiary, Valley National
pursuant to the Loan Purchase and Servicing Agreement dated as of the
Cutoff Date. On or prior to the Closing Date, the Bank will sell the
Receivables to the Seller pursuant to the Loan Sale Agreement. As of the Cutoff
Date, approximately ____% of the Receivables by aggregate principal balance of
the Receivables represents Receivables originated by Valley National.
Motor Vehicle Lending
The Bank purchases from motor vehicle dealers (the "Dealers") motor
vehicle retail installment sale contracts which are secured by a new or used
automobile, van or light-duty truck ("Motor Vehicle Loans"). The Bank enters
into agreements (the "Dealer Agreements") primarily with Dealers that are
franchised to sell new motor vehicles and with certain Dealers that sell used
motor vehicles, based upon a limited financial review of the Dealer or, in some
cases, the reputation and prior experience of the Bank with such Dealers and
their key management. The Bank's motor vehicle lending operations are centrally
managed through two regional dealer centers located in Phoenix and Tucson,
Arizona. In addition to purchasing Motor Vehicle Loans from such Dealers, the
Bank also extends loans and lines of credit to certain Dealers for, among other
things, inventories and other commercial purposes. Such loans and lines of
credit are not included in the Receivables purchased by the Trust.
The Dealers require an applicant to complete an application which
generally includes such information as the applicant's income, deposit
accounts, liabilities, credit and employment history and other personal
information. The application is reviewed for completeness and compliance with
the Bank's guidelines. The Bank evaluates applicants by considering, based on
information provided in the application and the credit bureau reports referred
to below, the relation of the applicant's income to expenses, including
expenses relating to such Motor Vehicle Loan.
All applications are analyzed using a combination of empirical and
judgmental systems. Upon receipt of an application, a credit bureau report on
the applicant is ordered along with a credit bureau risk score. The
application, along with the credit bureau report and pertinent information on
the applicant's proposed purchase, is then evaluated judgmentally. Applications
are approved generally on the strength of the applicant's credit and employment
background and ability to repay the new debt. The Bank does, however, also give
favorable consideration to an applicant's down payment and loan-to-value ratio
and, in some instances, will accept weaker credit profiles in cases of
applicant stability, ability to repay, lower loan-to-value ratios and/or
additional rate. The Bank utilizes a "pricing model" which assigns operational
costs and loan losses to new production based on credit quality (credit bureau
risk score) and loan-to-value ratios. Approvals are generally made to requests
which appear reasonable to the underwriter as well as profitable on the pricing
model.
The Bank also utilizes a "dual matrix" based on a custom scorecard and
credit bureau risk score. This dual matrix will also recommend approvals and
declines based on the dual scores.
Under the Bank's normal underwriting standards, the amount advanced under
a Motor Vehicle Loan generally will not exceed (i) in the case of new motor
vehicles, 120% of the Dealer invoice for the motor vehicle which serves as
collateral, plus sales tax, license fee, title fee, service and warranty
contracts, plus any premium for credit life and credit accident and health
insurance obtained in connection with such Motor Vehicle Loan, or (ii) in the
case of used motor vehicles, 120% of the wholesale price reported in the most
recent edition of the Kelly Blue Book guide plus sales tax, license fee, title
fee, service and warranty contracts, plus any premium for credit life and
credit accident and health insurance obtained in connection with such Motor
Vehicle Loan. Maximum advance guidelines are differentiated by credit grade (as
defined by credit bureau risk score) and varying loss and servicing costs are
assigned to the production via the pricing model outlined above. The Bank
reviews each of the Motor Vehicle Loans to ensure compliance with its
established policies and procedures. Cancellation of extended warranty
contracts or insurance may result in partial prepayments of the Motor Vehicle
Loans.
Dealer Agreements
Each Dealer that originates Motor Vehicle Loans and assigns them to the
Bank has made representations and warranties to the Bank with respect to each
Motor Vehicle Loan and the security interest in the motor vehicle relating
thereto, including that (a) the Motor Vehicle Loan and underlying purchase
transaction comply with all applicable laws and regulations, (b) the contract is
a bona fide sale that arose from the sale of the vehicle described therein, the
Obligor's signature thereon is genuine and the Obligor is of full age and has
the capacity to contract, (c) the cash down payment and/or trade-in allowance
were actually received and were in the amounts specified in the documents
delivered to the Bank, (d) all statements of fact in the contract are true to
the best of the Dealer's knowledge, (e) there are no warranties, express or
implied, that exist outside the written contract and (f) the Dealer has no
knowledge of any fact impairing the validity or value of the contract. None of
these representations and warranties relate to the creditworthiness of the
Obligor or the collectability of the Motor Vehicle Loans. Upon breach of any
representation or warranty made by such Dealer with respect to a Motor Vehicle
Loan, the Bank has a right to require the Dealer to repurchase such loan.
Contract Modifications
The Bank follows specific procedures with respect to contract extensions
and modifications. The Bank's extension policy is limited to extraordinary
circumstances and generally permits an extension of one month in any rolling
twelve-month period, not to exceed 7 months during the term of the contract. An
extension within such policy requires approval by a collection supervisor.
Extensions exceeding the Bank's policy require the approval of a collection
manager. The Bank may also change a payment date once during the term of the
contract as an accommodation to the Obligor if the new payment date is within
20 days of the original scheduled payment date. Such change of payment date is
not deemed to be an extension and no extension fee is charged. [The Bank will
not voluntarily make modifications to the Receivables that reduce the original
rates of interest or the amount of the regularly scheduled payments on the
Receivables or that extend the final payments on such Receivables beyond the
Collection Period relating to the Final Scheduled Distribution Date.
Collection and Charge-Off Policies
Using behavior scoring and other variables, Motor Vehicle Loans are
assessed in terms of odds of becoming "bad". Bad is defined as the probability
of the loan going three or more [cycles] delinquent. The higher the odds, the
higher the risk to the Bank. In accordance with current [TRIAD] strategies,
higher risk accounts are collected more aggressively than medium and low risk
accounts. Delinquent loan collection efforts can begin as early as five days
past due or as late as 13 days past due, depending on measured risk level.
Obligors on first payment default loans (highest risk) are called at 5 days by
a late stage, seasoned collector with no system-generated letters. Obligors on
non-first payment default high risk loans are called via autodialer technology
beginning at 10 days past due. Obligors on medium risk loans are called at 12
days. Obligors on low risk loans are sent a reminder letter at 13 days past due
and typically called at 20 days. Collection accounts remain on the autodialer
where efforts are made to contract for payment arrangements or until determined
to be worthy of accelerated collection techniques. If a loan ages past 45 days,
the loan is automatically considered high risk and transferred to a manual
calling environment. Advanced stage delinquent loans are handled with
progressively shorter resolution horizons. Repossession evaluations are
typically conducted at 60 days past due. Once all other collection efforts have
been exhausted, loans are referred for repossession if it is in the best
interest of the Bank to do so. Repossessions are executed by repossession firms
who have met the Bank's eligibility requirements (must have liability
insurance, etc.). Collateral is liquidated at weekly auctions, subject to
minimum bid requirements, no later than 45 days after repossession.
The Bank's general policy is to charge off delinquent consumer loans prior
to becoming 120 days past due. If collateral has been repossessed, the full
principal balance plus accrued interest is charged off. Subsequent repossession
sale proceeds are applied as gross loss reductions if received within 45 days
of charge off, otherwise, credits are applied as recoveries. Deficiency
balances are generally pursued if deemed collectible.
Insurance
Pursuant to the Bank's customary policies, each Motor Vehicle Loan requires
the Obligor to obtain fire, theft and collision insurance or comprehensive and
collision insurance with respect to the Financed Vehicle. While verified at the
funding of each Receivable, insurance coverage on the Financed Vehicles will not
be monitored by or on behalf of the Servicer on an ongoing basis. The Servicer,
on behalf of the Trust, is not obligated, and does not intend, to purchase
required insurance on any Financed Vehicle and charge the Obligor for the cost
of such insurance if the Obligor fails to do so.
Delinquencies and Net Loss of the Bank
Set forth below is certain information concerning the historical
experience of the portfolio owned or serviced by the Bank pertaining to retail
(new or used) automobile, van or light duty truck Receivables originated
indirectly by the Bank through Dealers. There can be no assurance that the
delinquency and net loss experience on the Receivables will be comparable to
that set forth below.
Delinquency Experience
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
For Year Ended [December 31],
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ -----
Number of Number of Number of Number of Number of
Contracts Amount Contracts Amount Contracts Amount Contracts Amount Contracts Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delinquency:
30-59 days..............
60-89 days..............
90 days or more.........
Total Delinquencies as a
Percentage of the
Portfolio...............
</TABLE>
Historical Net Loss Experience
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
For Year Ended [December 31],
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ----------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C>
Principal Amount Outstanding .......... $ $ $ $ $
Average Principal Amount
Outstanding............................ $ $ $ $ $
Number of Loans Outstanding............
Average Number of Loans
Outstanding............................
Net Losses ............................ $ $ $ $ $
Net Losses as a Percent of Principal
Amount Outstanding .................... % % % % %
Net Losses as a Percent of Average
Principal Amount Outstanding .......... % % % % %
</TABLE>
- ----------------------
Delinquencies and net charge-offs are affected by a number of social,
economic and other factors, and there can be no assurance as to the level of
future total delinquencies or the severity of future net charge-offs. As a
result, the delinquency and net charge-off experience of the Receivables may
differ from those shown in the tables.
Delinquencies and Net Loss of Valley National
Set forth below is certain information concerning the historical
experience of the portfolio owned or serviced by the Subservicer pertaining to
retail (new and used) automobile, van and light duty truck Receivables
[originated indirectly by the Subservicer through Dealers]. There can be no
assurance that the delinquency and net loss experience on the Receivables will
be comparable to that set forth below.
<TABLE>
<CAPTION>
For Year Ended [December 31],
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ -----
Number of Number of Number of Number of Number of
Contracts Amount Contracts Amount Contracts Amount Contracts Amount Contracts Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio at Period End.
Delinquency:
30-59 days..............
60-89 days..............
90 days or more.........
Total Delinquencies as a
Percentage of the
Portfolio...............
</TABLE>
Historical Net Loss Experience
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
For Year Ended [December 31],
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ----------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C>
Principal Amount Outstanding .......... $ $ $ $ $
Average Principal Amount
Outstanding............................ $ $ $ $ $
Number of Loans Outstanding............
Average Number of Loans
Outstanding............................
Net Losses ............................ $ $ $ $ $
Net Losses as a Percent of Principal
Amount Outstanding .................... % % % % %
Net Losses as a Percent of Average
Principal Amount Outstanding .......... % % % % %
</TABLE>
- ------------------
Delinquencies and net charge-offs are affected by a number of social,
economic and other factors, and there can be no assurance as to the level of
future total delinquencies or the severity of future net charge-offs. As a
result, the delinquency and net charge-off experience of the Receivables may
differ from those shown in the tables.
THE RECEIVABLES POOL
General
The Receivables were selected by several criteria, including, as of the
Cutoff Date, the following: each Receivable has a scheduled maturity of not
later than the Final Scheduled Maturity Date; each Receivable provides for
level monthly payments which fully amortize the amount financed (except for the
last payment, which may be different from the level payment); each Receivable
is not more than 90 days contractually past due (a scheduled payment has not
been received by the third subsequent calendar month's scheduled payment date)
and is not more than six months paid ahead; each Receivable has a principal
balance between $___ and $_____; and each Receivable is a fixed rate, simple
interest receivable (a "Simple Interest Receivable"). As of the Cutoff Date, no
Obligor on any Receivable was noted in the related records of the Servicer as
being the subject of a bankruptcy proceeding. No selection procedures believed
by the Seller to be adverse to Certificateholders were used in selecting the
Receivables.
The composition, distribution by remaining principal, distribution by APR,
distribution by remaining term and geographic distribution of the Receivables
as of the Cutoff Date are set forth in the following tables.
<TABLE>
<CAPTION>
Composition of the Receivables as of the Cutoff Date
Weighted Average
APR of Aggregate Principal Number of Weighted Average Weighted Average Average Principal
Receivables Balance Receivables Remaining Term Original Term Balance
<S> <C> <C> <C> <C> <C>
% $ months months $
</TABLE>
<TABLE>
<CAPTION>
Distribution by Remaining Principal of the Receivables as of the Cutoff Date
Percentage
Remaining Principal Number of Aggregate Principal of Aggregate
Range of Balance Receivables Balance (1) Principal Balance (2)
- -------------------- ----------- ------------- ---------------------
(Dollars in Thousands)
<S> <C> <C> <C>
$ 250 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............................................... $ %
================== ======== ===============
- ----------------
(1) Dollar amounts may not add to $_______ because of rounding.
(2) Percentages may not add to 100.00% because of rounding.
</TABLE>
Distribution by Annual Percentage Rate of the Receivables as of the Cutoff Date
<TABLE>
<CAPTION>
Percentage
Annual Percentage Number of Aggregate Principal of Aggregate
Rate Range Receivables Balance Principal Balance (1)
- ----------------- ----------- --------- ---------------------
(Dollars in Thousands)
<S> <C> <C> <C>
8.00% to 8.99% ............... $ %
9.00% to 9.99% ...............
10.00% to 10.99% ...............
11.00% to 11.99% ...............
12.00% to 12.99% ...............
13.00% to 13.99% ...............
14.00% to 14.99% ...............
15.00% and above ............... %
-------- -------- ---------%
Total........... ............... -------- -------- ---------%
- -------------------
(1) Percentages may not add to 100.00% because of rounding.
</TABLE>
<TABLE>
<CAPTION>
Distribution by Remaining Term of the Receivables as of the Cutoff Date
Percentage
Number of Aggregate Principal of Aggregate
Range of Remaining Terms Receivables Balance Principal Balance(1)
(Dollars in Thousands)
<S> <C> <C> <C>
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............................................... $ . %
====== ======= ===========
- ----------------
(1) Percentages may not add to 100.00% because of rounding.
</TABLE>
Geographic Distribution of the Receivables as of the Cutoff Date (1)
Number of Aggregate Percentage of Aggregate
State (1) Receivables Principal Balance Principal Balance
- --------- ----------- ----------------- ------------------
(Dollars in Thousands)
Arizona $ %
Other
Total $ %
- ----------------
(1) Based on [billing addresses] of the Obligors.
Approximately _______% of the aggregate principal balance of the
Receivables, constituting ________% of the number of Receivables, as of the
Cutoff Date, represents financing of new vehicles; the remainder represents
financing of used vehicles. As of the Cutoff Date, _______% of the aggregate
principal balance of the Receivables, constituting ______% of the number of
Receivables, were more than 30 days contractually past due. A Receivable is 30
days contractually past due if a scheduled payment has not been received by the
subsequent calendar month's scheduled payment date.
All of the Receivables are Simple Interest Receivables. A Simple Interest
Receivable provides for the amortization of the amount financed under the
receivable over a series of fixed level monthly payments. Each monthly payment
includes an installment of interest which is calculated on the basis of the
outstanding principal balance of the receivable multiplied by the stated APR
and further multiplied by the period elapsed (as a fraction of a calendar year)
since the preceding payment of interest was made. As payments are received
under a Simple Interest Receivable, the amount received is applied first to
interest accrued to the date of payment and the balance is applied to reduce
the unpaid principal balance. Accordingly, if an Obligor pays a fixed monthly
installment before its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be less
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an Obligor pays a fixed monthly
installment after its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be greater
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly less. In either case, the Obligor pays a fixed monthly
installment until the final scheduled payment date, at which time the amount of
the final installment is increased or decreased as necessary to repay the then
outstanding principal balance.
The Bank or Valley National, as the case may be, may accede to an
Obligor's request to pay scheduled payments in advance, in which event the
Obligor will not be required to make another regularly scheduled payment until
the time a scheduled payment not paid in advance is due. The amount of any
payment made in advance will be treated as a principal prepayment and will be
distributed as part of the Principal Collections in the month following the
Collection Period in which the prepayment was made. See "Maturity and
Prepayment Assumptions."
MATURITY AND PREPAYMENT ASSUMPTIONS
All the Receivables are prepayable at any time. For this purpose the term
"prepayments" includes prepayments by Obligors in full or in part, certain
partial prepayments related to liquidations due to default, including rebates
of extended warranty contract costs and insurance premiums, as well as receipts
of proceeds from physical damage, credit life, theft and disability insurance
policies and certain other Receivables, purchased or repurchased pursuant to
the terms of the Agreement. The rate of prepayments on the Receivables may be
influenced by a variety of economic, social and other factors, including
changes in interest rates and the fact that an Obligor generally may not sell
or transfer the Financed Vehicle securing a Receivable without the consent of
the secured party, which generally results in the repayment of the remaining
principal balance of the Receivable. In addition, under certain circumstances,
the Seller is obligated to repurchase (or require the Bank to repurchase), and
the Servicer is obligated to purchase, Receivables pursuant to the Agreement as
a result of certain uncured breaches of representations and warranties in the
case of the Seller (and the Bank) and certain uncured breaches of covenants in
the case of the Servicer. See "The Certificates--Sale and Assignment of the
Receivables" and "--Servicing Procedures." See also "The
Certificates--Termination" regarding the Seller's option to purchase the
Receivables when the aggregate principal balance thereof is 5% or less of the
Original Pool Balance, at a purchase price equal to the sum of the Class A
Principal Balance and the Class B Principal Balance plus accrued and unpaid
interest thereon. Accordingly, under certain circumstances it is likely that
the Certificates will be repaid before the Final Scheduled Distribution Date.
Any reinvestment risk (which will vary from investor to investor, but which may
include the risk that principal payments will have to be reinvested at a lower
yield) resulting from the rate of prepayments in full of the Receivables and
the distribution of such prepayments to Certificateholders will be borne
entirely by the Certificateholders.
If an Obligor pays more than one scheduled payment at a time, the entire
amount of the additional payment will be treated as a principal prepayment and
distributed as part of the Principal Collections in the month following the
month of receipt and the Bank and Valley National do not generally require the
Obligor to make any scheduled payment in respect of such Receivable (a
"Paid-Ahead Receivable") for the number of due dates corresponding to the
number of such additional scheduled payments (the "Paid-Ahead Period").
Although the terms of the retail installment contract require the Obligor to
make its next scheduled payments, the Obligor's Receivable is not considered
delinquent for purposes of the Agreement during the Paid-Ahead Period and,
interest will continue to accrue on the principal balance of the Receivable, as
reduced by the application of the early payment. When the Obligor pays the next
required payment, although such payment may be insufficient to cover the
interest that has accrued since the last payment by the Obligor, the Obligor's
Receivable would be considered to be current. This situation will continue
until the installments are once again sufficient to cover all accrued interest
and to reduce the principal balance of the Receivable. Depending on the
principal balance and the APR of the related Receivable and on the number of
installments that were paid early, there may be extended periods of time during
which Receivables that are current are not amortizing. During such periods, no
distributions in respect of principal will be made to the Certificateholders
with respect to such Receivables.
Paid-Ahead Receivables will affect the weighted average life of the
Certificates. The distribution of the paid-ahead amount on the Distribution
Date following the Collection Period in which such amount was received will
generally shorten the weighted average life of the Certificates. However,
depending on the length of time during which a Paid-Ahead Receivable is not
amortizing as described above, the weighted average life of the Certificates
may be extended.
The Bank's and Valley National's portfolio of motor vehicle installment
sale contracts has historically included contracts which have been paid-ahead
by one or more scheduled monthly payments. There can be no assurance as to the
number of Receivables which may become Paid-Ahead Receivables or the number or
the principal amount of the scheduled payments which may be paid-ahead.
YIELD CONSIDERATIONS
Interest on the Certificates will accrue at the Class A Pass-Through Rate
and the Class B Pass-Through Rate with respect to each Collection Period on the
Class A Principal Balance and the Class B Principal Balance, respectively, as
of the Distribution Date occurring in such Collection Period (after giving
effect to any payments made on such Distribution Date) or, in the case of the
first Distribution Date, on the Original Class A Principal Balance and the
Original Class B Principal Balance, respectively. In the event of a principal
prepayment on a Receivable during a Collection Period, Class A
Certificateholders and Class B Certificateholders will receive their pro rata
share of interest for the full Collection Period with respect to the unpaid
principal balance of such Receivable as of the first day of such Collection
Period to the extent that amounts on deposit in the Collection Account and in
the Reserve Fund are available for such purpose. If the Reserve Fund is
exhausted, the amount of interest distributed to the Class B Certificateholders
and, in certain limited circumstances, the Class A Certificateholders may be
less than that described above. See "The Certificates--Distributions on
Certificates."
Although the Receivables have different APRs, each Receivable's APR
exceeds the sum of (a) the weighted average of the Class A Pass-Through Rate
and the Class B Pass-Through Rate and (b) the Servicing Fee Rate. Therefore,
disproportionate rates of prepayments between Receivables with higher and lower
APRs will generally not affect the yield to Certificateholders. However, higher
rates of prepayments of Receivables with higher APRs will decrease the amount
available to cover delinquencies and defaults on the Receivables and may
decrease the amount available to the Reserve Fund. See "The
Certificates--Distributions on Certificates" and "--Reserve Fund."
POOL FACTORS AND TRADING INFORMATION
The "Class A Pool Factor" and the "Class B Pool Factor" will each be a
seven-digit decimal which the Servicer will compute each month indicating the
remaining Class A Principal Balance and Class B Principal Balance,
respectively, as of the close of business on the Distribution Date, as a
fraction of the respective initial outstanding principal balance of the Class A
Certificates and the Class B Certificates. The Class A Pool Factor and the
Class B Pool Factor will each be 1.0000000 as of the Closing Date, and
thereafter will decline to reflect reductions in the outstanding principal
balance of the Class A Certificates and the Class B Certificates, respectively.
A Class A Certificateholder's portion of the aggregate outstanding
principal balance of the Class A Certificates is the product of (i) the
original denomination of the holder's Class A Certificate and (ii) the Class A
Pool Factor. A Class B Certificateholder's portion of the aggregate outstanding
principal balance of the Class B Certificates is the product of (i) the
original denomination of the holder's Class B Certificate and (ii) the Class B
Pool Factor.
Pursuant to the Agreement, the Trustee will forward Certificateholders a
copy of the Servicer's monthly reports concerning the payments received on the
Receivables, the Pool Balance, the Class A Pool Factor, the Class B Pool Factor
and various other items of information. Certificateholders during each calendar
year will be furnished information for tax reporting purposes not later than
the latest date permitted by law. See "The Certificates--Statements to
Certificateholders."
USE OF PROCEEDS
The Seller will use the net proceeds from the sale of the Certificates to
purchase the Receivables from the Bank and to make the initial Reserve Fund
deposit in the amount of $ .
THE SELLER
The Seller is a wholly-owned subsidiary of BANC ONE CORPORATION ("BANC
ONE"), an Ohio corporation. The Seller was incorporated in the State of Ohio on
May 7, 1996. The principal executive offices of the Seller are located at 100
East Broad Street, Columbus, Ohio 43271-0158 and its telephone number is (614)
248-5700.
The Seller has taken steps in structuring the transactions described
herein that are intended to ensure that the voluntary or involuntary
application for relief by BANC ONE under the United States Bankruptcy Code or
similar applicable state laws ("Insolvency Laws") will not result in
consolidation of the assets and liabilities of the Seller with those of BANC
ONE. These steps include the creation of the Seller as a separate,
limited-purpose subsidiary pursuant to articles of incorporation containing
certain limitations (including restrictions on the nature of the Seller's
business and a restriction on the Seller's ability to commence a voluntary case
or proceeding under any Insolvency Law without the prior unanimous affirmative
vote of all of its directors). However, there can be no assurance that the
activities of the Seller would not result in a court's concluding that the
assets and liabilities of the Seller should be consolidated with those of BANC
ONE in a proceeding under any Insolvency Law. See "Risk Factors -- Certain
Legal Aspects."
In addition, the Trustee, and all Certificateholders will covenant that
they will not at any time institute against the Seller any bankruptcy,
reorganization or other proceeding under any Federal or state bankruptcy or
similar law.
The Seller will warrant to the Trust in the Agreement that the sale of the
Receivables by the Seller to the Trustee on behalf of the Trust is a valid sale
of such Receivables. In addition, the Seller, the Trustee and the Trust will
treat the conveyance by the Seller of the Receivables as a sale of the
Receivables by the Seller to the Trustee on behalf of the Trust and the Seller
will take or cause to be taken all actions that are required to perfect the
Trustee's ownership in such Receivables. If the Seller were to become a debtor
in a bankruptcy case and a creditor or trustee in bankruptcy of the Seller or
the Seller itself were to take the position that the sale of Receivables by the
Seller to the Trust should instead be treated as a pledge of the Receivables to
secure a borrowing of the Seller, then delays in payments of collections of the
Receivables could occur or (should the court rule in favor of any such trustee,
debtor or creditor) reductions in the amount of such payments could result. If
the transfer of the Receivables by the Seller to the Trustee on behalf of the
Trust is treated as a pledge instead of a sale, a tax or government lien on the
property of the Seller arising before the transfer of the Receivables to the
Trustee on behalf of the Trust may have priority over such Trustee's interest
in the Receivables. If the conveyance by the Seller of the Receivables is
treated as a sale, the Receivables would not be part of the Seller's bankruptcy
estate and would not be available to the Seller's creditors.
THE SERVICER AND THE SUBSERVICER
Bank One, Arizona, N.A., a national banking association, is an indirect
wholly owned subsidiary of BANC ONE CORPORATION, a multi-bank holding company
incorporated under the laws of the State of Ohio. The following unaudited
financial information regarding the Bank was calculated on the basis of
regulatory accounting principles and not on the basis of generally accepted
accounting principles, is based on the Bank's Consolidated Report of Condition
as of ____________ (the "Call Report") and is qualified in its entirety by
detailed information included in such Call Report. As of ____________, the Bank
had total assets of approximately $____ billion, total deposits of
approximately $____ billion and total equity capital of approximately $____
billion.
The Servicer will be responsible for servicing the Receivables in
accordance with the terms set forth in the Agreement. The Servicer intends to
perform some of its servicing obligations under the Agreement through a
Subservicing Agreement with Valley National with respect to the Receivables
sold by Valley National to the Bank then sold by the Bank to the Seller and
finally sold by the Seller to the Trust. As of the Cutoff Date, approximately
___% of the Receivables by aggregate principal balance of the Receivables as of
the Cutoff Date will be serviced by Valley National.
The principal executive offices of the Bank are located at
____________________, and its telephone number is ---------------.
The principal executive offices of Valley National are located at
__________________, and its telephone number is _______________.
THE CERTIFICATES
The Certificates will be issued pursuant to the Agreement, substantially
in the form filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. Copies of the Agreement may be obtained by the
Certificateholders upon written request to the Servicer. The following
information summarizes all material provisions of the Certificates and the
Agreement. The summary is subject to, and qualified in its entirety by
reference to, the Agreement.
General
The Certificates will evidence fractional undivided interests in the
assets of the Trust to be created pursuant to the Agreement. The Class A
Certificates will evidence in the aggregate an undivided ownership interest of
% of the Trust and the Class B Certificates will evidence in the aggregate an
undivided ownership interest of % of the Trust.
The Certificates will be offered for purchase in denominations of $1,000
and integral multiples of $1,000 thereof in book-entry form. Each Class of
Certificates will initially be represented by a certificate registered in the
name of Cede, the nominee of DTC. No beneficial owner of a Certificate (a
"Certificate Owner") will be entitled to receive a definitive certificate
representing such person's interest in the Trust except as set forth below
under "--Definitive Certificates." Unless and until Certificates of a Class are
issued in fully-registered certificated form ("Definitive Certificates") under
certain limited circumstances described below, all references to actions by
Certificateholders shall refer to actions taken by DTC upon instructions from
its Direct Participants (as defined herein) and all references to
distributions, notices, reports and statements to Certificateholders shall
refer to distributions, notices, reports and statements to DTC or Cede, as the
case may be, for the benefit of the Certificate Owners in accordance with DTC
procedures. See "--Book-Entry Registration" and "--Definitive Certificates."
Book-Entry Registration
Persons acquiring beneficial ownership interests in the Certificates may
hold their interests through DTC in the United States or Cedel or Euroclear in
Europe. Each Class of Certificates will be registered in the name of Cede as
nominee for DTC. Cedel and Euroclear will hold omnibus positions with respect
to the Certificates on behalf of Cedel Participants and Euroclear Participants,
respectively, through customers' securities accounts in Cedel's and Euroclear's
name on the books of their respective depositories (collectively, the
"Depositories") which in turn will hold such positions in customers' securities
accounts in the Depositories' names on the books of DTC. For additional
information regarding clearance and settlement procedures see Annex I hereto.
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 New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to Section 17A of the Exchange Act. DTC was created
to hold securities for its participating members ("Participants") and to
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of certificates. "Direct
Participants" include securities brokers and dealers, banks, trust companies
and clearing corporations. Indirect access to the DTC system is also available
to others such as banks, brokers, dealers, and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Commission.
Certificate Owners that are not Direct Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, Certificates may do so only through Direct Participants or
Indirect Participants. In addition, Certificate Owners will receive all
distributions of principal and interest from the Trustee through Direct
Participants. Under a book-entry format, Certificate Owners may experience some
delay in their receipt of payments, since such payments will be forwarded by the
Trustee to Cede, as nominee for DTC. DTC will forward such payments to its
Direct Participants, which thereafter will forward them to Indirect Participants
or Certificate Owners. It is anticipated that the only "Certificateholder" will
be Cede, as nominee for DTC. Certificate Owners will not be recognized by the
Trustee as Certificateholders, as such term is used in the Agreement, and
Certificate Owners will only be permitted to exercise the rights of
Certificateholders indirectly through DTC and its Participants.
Transfers between Participants will occur in accordance with DTC Rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Because of time zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date, and any such credits or any transactions in
such securities settled during such processing will be reported to the relevant
Euroclear or Cedel Participants on such business day. Cash received in Cedel or
Euroclear as a result of sales of Certificates by or through a Cedel
Participant or Euroclear Participant to a DTC Participant will be received with
value on the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in DTC.
Cross-market transfers between persons directly holding Certificates or
indirectly through DTC, on the one hand, and directly or indirectly through
Cedel Participants or Euroclear Participants, on the other, will be effected in
DTC in accordance with DTC Rules on behalf of the relevant European
international clearing system by its Depository; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadline (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
Depository to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same day funds settlement applicable to
DTC. Cedel Participants and Euroclear Participants may not deliver instructions
to the Depositories.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Certificates among Direct Participants on whose behalf it acts with respect to
the Certificates and to receive and transmit distributions of principal of, and
interest on, the Certificates. Direct Participants and Indirect Participants
with which Certificate Owners have accounts with respect to the Certificates
similarly are required to make book-entry transfers and receive and transmit
such payments on behalf of their respective Certificate Owners. Accordingly,
although Certificate Owners will not possess Certificates, the Rules provide a
mechanism by which Certificate Owners will receive payments and will be able to
transfer their interests.
Because DTC can only act on behalf of Direct Participants, who in turn act
on behalf of Indirect Participants and certain banks, the ability of a
Certificate Owner to pledge Certificates to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such
Certificates, may be limited due to the lack of a physical certificate for such
Certificates.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes
in accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to its Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for its participants
("Euroclear Participants") and to clear and settle transactions between
Euroclear Participants through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may be settled in any of 32 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euroclear Clearance Systems, S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries. Indirect access to Euroclear is
also available to other firms that clear through, or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of Euroclear, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities
and cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Certificates held through Cedel or Euroclear
will be credited to the cash accounts of Cedel Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depository. Such distributions will be subject to
tax reporting in accordance with relevant United States tax laws and
regulations. Cedel or the Euroclear Operator, as the case may be, will take any
other action permitted to be taken by a beneficial holder of Certificates under
the Agreement on behalf of a Cedel Participant or Euroclear Participant only in
accordance with its relevant rules and procedures and subject to its
Depository's ability to effect such actions on its behalf through DTC.
DTC has advised the Seller that it will take any action permitted to be
taken by a Certificateholder under the Agreement only at the direction of one
or more Direct Participants to whose accounts with DTC the applicable
Certificates are credited. DTC may take conflicting actions with respect to
other undivided interests to the extent that such actions are taken on behalf
of Direct Participants whose holdings include such undivided interests.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of interests in the Certificates among Direct
Participants of DTC, Cedel and Euroclear, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.
NEITHER THE TRUST, THE SELLER, THE SERVICER, THE SUBSERVICER, THE TRUSTEE
NOR ANY OF THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY
PARTICIPANTS, CEDEL PARTICIPANTS OR EUROCLEAR PARTICIPANTS OR THE PERSONS FOR
WHOM THEY ACT AS NOMINEES WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS
MAINTAINED BY DTC, CEDEL, EUROCLEAR OR ANY PARTICIPANT, (2) THE PAYMENT BY DTC,
CEDEL, EUROCLEAR OR ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER
IN RESPECT OF THE PRINCIPAL BALANCE OF, OR INTEREST ON, THE CERTIFICATES, (3)
THE DELIVERY BY ANY PARTICIPANT, CEDEL PARTICIPANT OR EUROCLEAR PARTICIPANT OF
ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE
TERMS OF THE AGREEMENT TO BE GIVEN TO CERTIFICATEHOLDERS OR (4) ANY OTHER
ACTION TAKEN BY DTC OR ITS NOMINEE AS THE CERTIFICATEHOLDER.
Definitive Certificates
The Certificates will be issued in fully registered, certificated form
("Definitive Certificates") to Certificate Owners, rather than to DTC or its
nominee, only if (i) the Seller advises the Trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as depository
with respect to the Certificates and the Servicer is unable to locate a
qualified successor, (ii) the Seller, at its option, elects to terminate the
book-entry system through DTC or (iii) after the occurrence of an Event of
Servicing Termination, holders of Certificates evidencing not less than a
majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single Class,
advise the Trustee and DTC through Direct Participants in writing, and DTC
shall so notify the Trustee, that the continuation of a book-entry system
through DTC (or a successor thereto) is no longer in the Certificate Owners'
best interests.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee is required to notify all Certificate Owners, through
DTC and its Participants, of the availability of Definitive Certificates. Upon
surrender by DTC of the definitive certificates representing the Certificates
and receipt by the Trustee of instructions for re-registration, the Trustee
will reissue the Certificates as Definitive Certificates, and thereafter the
Trustee will recognize the holders of such Definitive Certificates as
Certificateholders under the Agreement ("Holders").
Distributions of principal of, and interest on, the Definitive
Certificates will be made by the Trustee directly to Holders in accordance with
the procedures set forth herein and in the Agreement. Distributions of
principal and interest on each Distribution Date will be made to Holders in
whose names the Definitive Certificates were registered at the close of
business on the applicable Record Date specified for such Certificates. Such
distributions will be made by check mailed to the address of such Holder as it
appears on the register maintained by the Trustee. The final payment on any
Definitive Certificate, however, will be made only upon presentation and
surrender of such Definitive Certificate at the office or agency specified in
the notice of final distribution mailed to Certificateholders.
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee or of a registrar named in a notice delivered to
Holders. No service charge will be imposed for any registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge imposed in connection therewith.
Sale and Assignment of the Receivables
On or prior to the Closing Date, Valley National will sell and assign to
the Bank, without recourse, its entire interest in the Receivables, including
its security interests in the related Financed Vehicles and all Collections
received and to be received with respect thereto for the period on or after the
Cutoff Date and the Bank will sell and assign to the Seller, without recourse,
its entire interest in the Receivables and all Collections received and to be
received with respect thereto for the period on or after the Cutoff Date. On
the Closing Date, the Seller will sell and assign to the Trust, without
recourse, its entire interest in the Receivables, including its security
interests in the related Financed Vehicles, pursuant to the Agreement. Each
Receivable will be identified in a schedule appearing as an exhibit to the
Agreement. The Trustee will, concurrently with such sale and assignment and at
the written direction of the Seller, execute, authenticate and deliver the
Certificates.
In the Agreement, the Seller will represent and warrant to the Trustee (and
will have assigned to the Trust such representations and warranties made by the
Bank in the Loan Sale Agreement), among other things, that (i) the information
provided in a schedule to the Agreement is correct in all material respects and
the computer tape supplied to the Trustee describing certain characteristics of
the Receivables is correct in all material respects as of the Cutoff Date; (ii)
the Obligor on each Receivable is required to maintain physical damage insurance
covering the Financed Vehicle; (iii) at the Cutoff Date the Seller has not
received notice that any right of rescission, setoff, counterclaim or defense
has been asserted or threatened with respect to any Receivable; (iv) at the
Closing Date each of the Receivables is secured by a validly perfected first
priority security interest in the Financed Vehicle in favor of the Bank or
Valley National, as the case may be or appropriate action has been taken to
obtain the same; (v) each Receivable, at the time it was originated, complied
and, at the Closing Date, complies in all material respects with applicable
Federal and state laws, including, without limitation, consumer credit, truth in
lending, equal credit opportunity and disclosure laws; and (vi) the Seller has
not received notice of any liens or claims, including liens for work, labor,
materials or unpaid state or federal taxes relating to any Financed Vehicle
securing the related Receivable that are or may be prior to or equal to the lien
granted by such Receivable. Pursuant to the Agreement, the Seller, the Servicer
or the Trustee must promptly advise the others in writing upon a discovery of a
breach of any of the Seller's representations and warranties with respect to the
Receivables. Unless any such breach shall have been cured within 60 days
following the discovery of such breach by the Trustee or receipt by the Trustee
of written notice from the Seller or the Servicer of such breach, the Seller
will repurchase (or cause the Bank to repurchase) any Receivable from the Trust
in which the interests of the Certificateholders are materially and adversely
affected by such breach as of the first day succeeding the end of such 60 day
period that is the last day of a Collection Period (or, at the Seller's option,
the last day of the first Collection Period following the discovery) at a price
equal to the unpaid principal balance owed by the Obligor plus interest thereon
at the respective APR to the last day of the month of repurchase (the "Purchase
Amount"). The repurchase obligation will constitute the sole remedy available to
the Trustee or the Certificateholders for any such uncured breach.
The Loan Sale Agreement will contain similar representations, warranties
and obligations pursuant to which the Bank will be obligated to take the
actions required of the Seller as described above. The Trustee will have the
ability to enforce such obligations directly against the Bank in the event that
the Seller fails to do so.
To assure uniform quality in servicing the Receivables and to reduce
administrative costs, the Trustee will appoint the Servicer as custodian of the
Receivables.
The Servicer, in its capacity as custodian, will hold the Receivables and
all electronic entries, documents, instruments and writings relating thereto
(each, a "Receivable File"), either directly or through the Subservicer, on
behalf of the Trustee for the benefit of Certificateholders. The Receivables
will not be stamped or otherwise marked to reflect the sale and assignment of
the Receivables to the Trust and will not be segregated from other receivables
held by the Servicer or the Subservicer. The Seller will cause the accounting
records and computer systems used by the Seller as a master record of the
Receivables conveyed by it to the Trust to be marked to reflect the sale and
assignment of the Receivables to the Trust, and will file UCC financing
statements reflecting such sale and assignment, the sale and assignment of
Receivables from Valley National to the Bank and the sale and assignment of the
Receivables from the Bank to the Seller with appropriate governmental
authorities. The Obligors under the Receivables will not be notified of the
sale and assignment of the Receivables to the Trust. See "Formation of the
Trust" and "Certain Legal Aspects of the Receivables."
Accounts
The Trustee will establish one or more segregated accounts (the
"Collection Account"), in the name of the Trustee on behalf of the Trust and
the Certificateholders, into which all payments made on or with respect to the
Receivables will be deposited. The Trustee will also establish a segregated
account (the "Class A Distribution Account"), in the name of the Trustee on
behalf of the Trust and the Class A Certificateholders, and a segregated
account (the "Class B Distribution Account"), in the name of the Trustee on
behalf of the Trust and the Class B Certificateholders, from which all
distributions with respect to the Class A Certificates and the Class B
Certificates, respectively, will be made. The Servicer will establish the
Reserve Fund as a segregated account with , as collateral agent on behalf of
the Certificateholders (the "Collateral Agent"). The Collection Account, the
Class A Distribution Account, the Class B Distribution Account and the Reserve
Fund are collectively referred to as the "Accounts." The Reserve Fund will be
maintained for the benefit of the Certificateholders, but will not be an asset
of the Trust.
The 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 (other than the Seller or any affiliate
of the Seller) 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 in one of its generic
rating categories which signifies investment grade (an "Eligible Trust
Company"). "Eligible Institution" means a depository institution (other than the
Seller or any affiliate of the Seller) 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) which has either (A) a long-term
senior unsecured debt rating acceptable to the Rating Agencies or (B) a
short-term senior unsecured debt rating or certificate of deposit rating
acceptable to the Rating Agencies and (ii) whose deposits are insured by the
FDIC. The Accounts will be established initially with the trust department of
the Trustee or, in the case of the Reserve Fund, with the Collateral Agent. In
the event that the Trustee ceases to be an Eligible Institution, the Trustee or,
in the case of the Reserve Fund, the Collateral Agent shall transfer the
Accounts to an Eligible Institution or Eligible Trust Company. [None of the
Accounts may be maintained in the State of Arizona.]
Funds in the Accounts will be invested as provided in the Agreement in
Eligible Investments at the direction of the Servicer. "Eligible Investments"
are generally limited to investments acceptable to the Rating Agencies as being
consistent with the ratings of the Certificates. Eligible Investments may
include securities or other obligations issued by the Seller or its affiliates
or trusts originated by the Seller or its affiliates. Eligible Investments are
limited to obligations or securities that mature not later than the Business
Day before the date on which the funds invested in such Eligible Investments
are required to be withdrawn from the Accounts. Any earnings (net of losses and
investment expenses) on amounts on deposit in the Accounts (other than the
Reserve Fund) will be paid to the Servicer and will not be available to
Certificateholders.
Servicing Procedures
[The Servicer will make reasonable efforts to collect all payments due
with respect to the Receivables and, in a manner consistent with the Agreement,
will continue such collection procedures as it follows with respect to
automotive retail installment sale contracts it services. Consistent with its
normal procedures, the Servicer may, in its discretion, arrange with the
Obligor on a Receivable to extend or modify the payment schedule, subject to
certain limitations contained in the Agreement. Pursuant to the Agreement, the
Servicer or the Trustee shall inform the other party in writing promptly upon
the discovery of the breach by the Servicer of certain covenants made by it. If
the Servicer fails to cure the breaches with respect to a Receivable within 60
days following the discovery of the breach or the receipt by the Trustee of
notice of such breach, the Servicer is required to purchase for the Purchase
Amount any Receivable in which the interests of the Certificateholders are
materially and adversely affected by the breach as of the first day succeeding
the end of such 60 day period that is the last day of a Collection Period (or,
at the Servicer's option, the last day of the first Collection Period following
the discovery).]
[Certain functions associated with the servicing of the Receivables,
including data processing, payment processing, statement rendering, customer
service, collateral file maintenance and certain administrative functions are
currently performed on behalf of the Bank by Banc One Services Corporation, an
affiliate of the Bank. The Servicer intends to delegate such servicing
functions with respect to the Receivables to Banc One Services Corporation. No
such delegation will relieve the Bank of any of its obligations as Servicer
under the Agreement and the Servicer shall be responsible for such functions as
if it alone were performing such functions with respect to the Receivables.]
Pursuant to the Agreement, the Bank, as Servicer, has the right to
delegate any of its responsibilities and obligations as Servicer to any of its
affiliates and to certain third-party service providers that agree to conduct
such duties in accordance with the Agreement. Pursuant to the Loan Purchase and
Servicing Agreement, the Bank has delegated its responsibilities and
obligations as Servicer to Valley National, with respect to all of the
Receivables that the Bank has acquired from Valley National and conveyed to the
Seller. Notwithstanding any delegation of its responsibilities and obligations
to any other entity, the Servicer will continue to be liable for all of its
obligations under the Agreement.
Payments on Receivables
The Servicer will deposit all payments, other than any nonsufficient funds
charges and other administrative fees and similar charges retained by the
Servicer as part of its compensation, on Receivables (from whatever source) and
all proceeds of Receivables collected during each Collection Period into the
Collection Account within two Business Days of receipt thereof. For purposes of
the Agreement, the Servicer will be deemed to have received any amounts with
respect to the Receivables that are received by the Subservicer, regardless of
whether such amounts are received by the Subservicer. However, in the event
that the Bank satisfies certain requirements for monthly remittances and
neither of the Rating Agencies, after 10 days prior notice, shall have notified
the Seller, the Servicer or the Trustee in writing that monthly deposits by the
Servicer in and of itself will result in a reduction or withdrawal of the
then-current ratings of the Certificates, then so long as the Bank is the
Servicer and provided that (i) there exists no Event of Servicing Termination
(as described below) and (ii) each other condition to making monthly deposits
as may be specified by the Rating Agencies is satisfied, the Servicer will not
be required to deposit such amounts into the Collection Account until on or
before the Business Day preceding the Distribution Date. It is anticipated that
the Bank will satisfy such requirements on the Closing Date. In such event, the
Servicer will also deposit the aggregate Purchase Amount of Receivables
repurchased by the Seller (or the Bank) or purchased by the Servicer into the
Collection Account on or before the Business Day preceding the Distribution
Date. Pending deposit into the Collection Account, Collections may be invested
by the Servicer at its own risk and for its own benefit, and will not be
segregated from funds of the Servicer.
Servicing Compensation
The Servicer will be entitled to receive on each Distribution Date, out of
interest collected on or in respect of the Receivables, the Servicing Fee for
the related Collection Period equal to one-twelfth of the product of _____%
(the "Servicing Fee Rate") and the Pool Balance as of the first day of such
Collection Period. The Servicing Fee will be calculated and paid based upon a
360-day year consisting of twelve 30-day months. The Servicing Fee will be paid
out of Interest Collections from the Receivables, prior to distributions to
Certificateholders.
The Servicer will also collect and retain any nonsufficient funds charges
and other administrative fees or similar charges allowed by applicable law with
respect to the Receivables, and will be entitled to reimbursement from the
Trust for certain expenses. Payments by or on behalf of Obligors will be
allocated to scheduled payments and late fees and other charges in accordance
with the Servicer's normal practices and procedures. In addition, the Servicer
will be entitled to any earnings (net of losses and investment expenses) on
amounts on deposit in the Accounts (other than the Reserve Fund).
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of automotive receivables as an agent for
their beneficial owner, including collecting and posting all payments,
responding to inquiries of Obligors on the Receivables, investigating
delinquencies, sending payment coupons to Obligors, paying costs of disposition
of defaults and policing the collateral. The Servicing Fee also will compensate
the Servicer for administering the Receivables, accounting for Collections and
furnishing monthly and annual statements to the Trustee with respect to
distributions and generating Federal income tax information. The Servicing Fee
also will reimburse the Servicer for certain taxes, accounting fees, outside
auditor fees, data processing costs and other costs incurred in connection with
administering the Receivables. The Servicer will, and the Trust will not, be
responsible for paying any compensation to the Subservicer.
Distributions on Certificates
Deposits to Collection Account. On the later of the eighth Business Day
and the eleventh calendar day of each month in which a Distribution Date occurs
(the "Determination Date"), the Servicer will provide the Trustee with certain
information with respect to the preceding Collection Period, including the
amount of aggregate Collections on the Receivables, the aggregate amount of
Liquidated Receivables and the aggregate Purchase Amount of Receivables to be
repurchased by the Seller or to be purchased by the Servicer.
No later than the Business Day preceding each Distribution Date, the
Servicer will cause Collections to be deposited into the Collection Account.
See "--Payments on Receivables." "Collections" for any Distribution Date will
equal the sum of Interest Collections and Principal Collections for the related
Distribution Date.
"Interest Collections" for any Distribution Date 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 respect
of such Collection Period; (ii) all proceeds (other than any proceeds from any
Dealer reserve) 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 Obligor on
such Liquidated Receivables ("Liquidation Proceeds"), to the extent
attributable to interest due thereon, which became Liquidated Receivables
during such Collection Period in accordance with the Servicer's customary
servicing procedures, to the extent not included in clause (i) above; (iii) the
Purchase Amount of each Receivable that was repurchased by the Seller (or the
Bank) or purchased by the Servicer during such Collection Period, to the extent
attributable to accrued interest thereon; and (iv) all monies collected, from
whatever source (other than any proceeds from any Dealer reserve), in respect
of Liquidated Receivables during any Collection Period following the Collection
Period in which such Receivable was written off, net of the sum of any amounts
expended by the Servicer for the account of the Obligor and any amounts
required by law to be remitted to the Obligor ("Recoveries"), to the extent
received during such Collection Period.
"Principal Collections" for any Distribution Date 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 respect
of such Collection Period; (ii) all Liquidation Proceeds attributable to the
principal amount of Receivables which became Liquidated Receivables during such
Collection Period in accordance with the Servicer's customary servicing
procedures, to the extent not included in clause (i) above; (iii) the Purchase
Amount of each Receivable repurchased by the Seller (or the Bank) or purchased
by the Servicer during such Collection Period to the extent attributable to
principal; and (iv) partial prepayments on Receivables in respect of such
Collection Period relating to refunds of extended warranty contract costs or of
credit life or disability insurance policy premiums, but only if such costs or
premiums were financed by the respective Obligor and only to the extent not
included in clause (i) above.
Interest Collections and Principal Collections on any Distribution Date
shall exclude all payments and proceeds (including Liquidation Proceeds) of any
Receivables the Purchase Amount of which has been included in Collections in a
prior Collection Period.
Deposits to the Distribution Accounts. On each Distribution Date, the
Servicer shall instruct the Trustee to make the following deposits and
distributions, to the extent of Interest Collections (and, in the case of
shortfalls occurring under clause (ii) below in the Class A Interest
Distribution, the Class B Percentage of Principal Collections to the extent of
such shortfalls):
(i) to the Servicer, the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods (to the extent not
retained by the Servicer as described under "-Net Deposits" below);
(ii) to the Class A Distribution Account, after the
application of clause (i), the Class A Interest
Distribution; and
(iii) to the Class B Distribution Account, after the
application of clauses (i) and (ii), the Class B Interest
Distribution.
On each Distribution Date, the Servicer shall instruct the Trustee to make
the following deposits and distributions, to the extent of Principal
Collections and Interest Collections remaining after the application of clauses
(i), (ii) and (iii) above:
(iv) to the Class A Distribution Account, the Class
A Principal Distribution;
(v) to the Class B Distribution Account, after the
application of clause (iv), the Class B Principal
Distribution; and
(vi) to the Reserve Fund, any amounts remaining after the
application of clauses (i) through (v).
To the extent necessary to satisfy the distributions described above, the
Servicer shall instruct the Trustee to withdraw from the Reserve Fund and
deposit in the Class A Distribution Account or the Class B Distribution Account
as described below in the following order of priority on each Distribution
Date:
(i) an amount equal to the excess of the Class A Interest
Distribution over the sum of Interest Collections and the Class B
Percentage of Principal Collections will be deposited into the Class A
Distribution Account;
(ii) an amount equal to the excess of the Class B Interest
Distribution over the portion of Interest Collections remaining after
the distribution of the Class A Interest Distribution will be
deposited into the Class B Distribution Account;
(iii) an amount equal to the excess of the Class A Principal
Distribution over the portion of Principal Collections and Interest
Collections remaining after the distribution of the Class A Interest
Distribution and the Class B Interest Distribution will be deposited
into the Class A Distribution Account; and
(iv) an amount equal to the excess of the Class B Principal
Distribution over the portion of Principal Collections and Interest
Collections remaining after the distribution of the Class A Interest
Distribution, the Class B Interest Distribution and the Class A
Principal Distribution will be deposited into the Class B Distribution
Account.
On each Distribution Date, all amounts on deposit in the Class A
Distribution Account will be distributed to the Class A Certificateholders and
all amounts on deposit in the Class B Distribution Account will be distributed
to the Class B Certificateholders.
"Class A Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class A Monthly Interest for the preceding
Distribution Date and any outstanding Class A Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that
is actually deposited in the Class A Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class A Pass-Through Rate.
"Class A Interest Distribution" means, with respect to any Distribution
Date, the sum of Class A Monthly Interest for such Distribution Date and the
Class A Interest Carryover Shortfall for such Distribution Date.
"Class A Monthly Interest" means, with respect to any Distribution Date,
one-twelfth (or, in the case of the first Distribution Date a fraction, the
numerator of which is equal to and the denominator of which is 360) of the
product of the Class A Pass-Through Rate and the Class A Principal Balance as
of the Distribution Date occurring in the preceding Collection Period (after
giving effect to any payments made on such Distribution Date) or, in the case
of the first Distribution Date, the Original Class A Principal Balance.
"Class A Monthly Principal" means, with respect to any Distribution Date,
the Class A Percentage of Principal Collections for such Distribution Date plus
the Class A Percentage of Realized Losses with respect to Receivables which
became Liquidated Receivables during the related Collection Period.
"Class A Principal Balance" equals the Original Class A Principal Balance,
as reduced by all amounts allocable to principal on the Class A Certificates
previously distributed to Class A Certificateholders.
"Class A Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class A Monthly Principal for the preceding
Distribution Date and any outstanding Class A Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that
is actually deposited in the Class A Distribution Account on such preceding
Distribution Date.
"Class A Principal Distribution" means, with respect to any Distribution
Date, the sum of Class A Monthly Principal for such Distribution Date and the
Class A Principal Carryover Shortfall for such Distribution Date; provided,
however, that the Class A Principal Distribution shall not exceed the Class A
Principal Balance immediately prior to such Distribution Date. In addition, on
the Final Scheduled Distribution Date, the principal required to be deposited
in the Class A Distribution Account will include the lesser of (a) any
principal due and remaining unpaid on each Receivable in the Trust as of the
Final Scheduled Maturity Date or (b) the portion of the amount required to be
deposited under clause (a) above that is necessary (after giving effect to the
other amounts to be deposited in the Class A Distribution Account on such
Distribution Date and allocable to principal) to reduce the Class A Principal
Balance to zero.
"Class B Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class B Monthly Interest for the preceding
Distribution Date and any outstanding Class B Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that
is actually deposited in the Class B Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class B Pass-Through Rate.
"Class B Interest Distribution" means, with respect to any Distribution
Date, the sum of Class B Monthly Interest for such Distribution Date and the
Class B Interest Carryover Shortfall for such Distribution Date.
"Class B Monthly Interest" means, with respect to any Distribution Date,
one-twelfth (or, in the case of the first Distribution Date a fraction, the
numerator of which is equal to and the denominator of which is 360) of the
product of the Class B Pass-Through Rate and the Class B Principal Balance as of
the Distribution Date occurring in the preceding Collection Period (after giving
effect to any payments made on such Distribution Date) or, in the case of the
first Distribution Date, the Original Class B Principal Balance.
"Class B Monthly Principal" means, with respect to any Distribution Date,
the Class B Percentage of Principal Collections for such Distribution Date plus
the Class B Percentage of Realized Losses with respect to Receivables which
became Liquidated Receivables during the related Collection Period.
"Class B Principal Balance" equals the Original Class B Principal Balance,
as reduced by all amounts allocable to principal on the Class B Certificates
previously distributed to Class B Certificateholders.
"Class B Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class B Monthly Principal for the preceding
Distribution Date and any outstanding Class B Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that
is actually deposited in the Class B Distribution Account on such preceding
Distribution Date.
"Class B Principal Distribution" means, with respect to any Distribution
Date, the sum of Class B Monthly Principal for such Distribution Date and the
Class B Principal Carryover Shortfall for such Distribution Date; provided,
however, that the Class B Principal Distribution shall not exceed the Class B
Principal Balance immediately prior to such Distribution Date. In addition, on
the Final Scheduled Distribution Date, the principal required to be distributed
to Class B Certificateholders will include the lesser of (a) any principal due
and remaining unpaid on each Receivable in the Trust as of the Final Scheduled
Maturity Date or (b) the portion of the amount required to be deposited under
clause (a) above that is necessary (after giving effect to the other amounts to
be deposited in the Class B Distribution Account on such Distribution Date and
allocable to principal) to reduce the Class B Principal Balance to zero, and,
in the case of clauses (a) and (b), remaining after any required distribution
of the amount described in clause (a) to the Class A Distribution Account.
"Realized Losses" means, for any period, the excess of the principal
balance of any Liquidated Receivable over Liquidation Proceeds to the extent
allocable to principal.
Subordination of the Class B Certificates
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 below. This subordination is
intended to enhance the likelihood of timely receipt by Class A
Certificateholders of the full amount of interest and principal required to be
paid to them, and to afford such Class A Certificateholders limited protection
against losses in respect of the Receivables.
No interest distribution will be made to the Class B Certificateholders on
any Distribution Date in respect of interest until the full amount of interest
on the Class A Certificates payable on such Distribution Date has been
distributed to the Class A Certificateholders. No principal distribution will
be made to the Class B Certificateholders on any Distribution Date in respect
of principal until the full amount of interest on and principal of the Class A
Certificates and interest on the Class B Certificates payable on such
Distribution Date has been distributed to the Class A Certificateholders and
the Class B Certificateholders, respectively. Distributions of interest on the
Class B Certificates, however, to the extent of collections on or in respect of
the Receivables allocable to interest and certain available amounts on deposit
in the Reserve Fund, will not be subordinated to the payment of principal of
the Class A Certificates.
Reserve Fund
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 current
distributions with respect to the Receivables, to the extent described above
under "--Subordination of the Class B Certificates," prior to any distribution
being made on a Distribution Date to the Class B Certificateholders, and to
receive amounts on deposit in the Reserve Fund. Amounts on deposit in the
Reserve Fund will also be generally available to cover shortfalls in required
distributions to the Class B Certificateholders, in respect of interest, after
payment of interest on the Class A Certificates and, in respect of principal,
after payment of interest on and principal of the Class A Certificates and
interest on the Class B Certificates. The Reserve Fund will not be a part of or
otherwise includible in the Trust and will be a segregated trust account held by
the Collateral Agent for the benefit of the Certificateholders.
The Reserve Fund will be created with an initial deposit by the Seller on
the Closing Date of an amount equal to % of the Original Pool Balance, and will
be augmented on each Distribution Date by deposit therein of Collections
remaining after distribution of the Servicing Fee and amounts to be paid to
Class A Certificateholders and Class B Certificateholders as described above
under "--Distributions on Certificates." Amounts on deposit in the Reserve Fund
will be released to the Seller on each Distribution Date to the extent that the
amount on deposit in the Reserve Fund exceeds the Specified Reserve Balance.
Upon any such release to the Seller of amounts from the Reserve Fund, neither
the Class A Certificateholders nor the Class B Certificateholders will have any
further rights in, or claims to, such amounts.
"Specified Reserve Balance" with respect to any Distribution Date means
the greater of (a) % of the sum of the Class A Principal Balance and Class B
Principal Balance on such Distribution Date (after giving effect to all
distributions with respect to the Certificates to be made on such Distribution
Date) or (b) % of the sum of the Original Class A Principal Balance and
Original Class B Principal Balance. In no circumstances will the Seller be
required to deposit any amounts in the Reserve Fund other than the initial
Reserve Fund deposit to be made on the Closing Date.
Amounts held from time to time in the Reserve Fund will continue to be
held for the benefit of the Certificateholders and may be invested in Eligible
Investments. Any loss on such investment will be charged to the Reserve Fund.
Any investment earnings (net of losses) will be paid to the Seller.
The time necessary for the Reserve Fund to reach and maintain the
Specified Reserve Balance at any time after the date of issuance of the
Certificates will be affected by the delinquency, credit loss and repossession
and prepayment experience of the Receivables and, therefore, cannot be
accurately predicted.
If on any Distribution Date the protection afforded the Class A
Certificates by the Class B Certificates and by the Reserve Fund is exhausted,
the Class A Certificateholders will directly bear the risks associated with
ownership of the Receivables. If on any Distribution Date amounts on deposit in
the Reserve Fund have been depleted, the protection afforded the Class B
Certificates by the Reserve Fund will be exhausted and the Class B
Certificateholders will directly bear the risks associated with ownership of
the Receivables.
None of the Class B Certificateholders, the Trustee, the Servicer, the
Subservicer or the Seller will be required to refund any amounts properly
distributed or paid to them, whether or not there are sufficient funds on any
subsequent Distribution Date to make full distributions to the Class A
Certificateholders.
Net Deposits
As an administrative convenience, unless the Servicer is required to remit
Collections within two Business Days of receipt thereof, the Servicer will be
permitted to make the deposit of Collections and Purchase Amounts for or with
respect to the Collection Period net of distributions to be made to the
Servicer with respect to the Collection Period. The Servicer, however, will
account to the Trustee and the Certificateholders as if all deposits,
distributions and transfers were made individually.
Statements to Certificateholders
On each Distribution Date, the Trustee will include with each distribution
to each Class A Certificateholder and Class B Certificateholder as of the close
of business on the related Record Date (which shall be Cede as the nominee for
DTC unless Definitive Certificates are issued under the limited circumstances
described herein) a statement prepared by the Servicer (the "Distribution Date
Statement"), setting forth with respect to the related Collection Period, among
other things, the following information:
(i) the amount of the distribution allocable to principal of the Class A
Certificates and the Class B Certificates;
(ii) the amount of the distribution allocable to interest on the Class A
Certificates and the Class B Certificates;
(iii) the Pool Balance as of the close of business on the last day of such
Collection Period;
(iv) the amount of the Servicing Fee paid to the Servicer with respect to
such Collection Period and the Class A Percentage and Class B Percentage of the
Servicing Fee paid to the Servicer with respect to such Collection Period;
(v) the amount of any Class A Interest Carryover Shortfall, Class A
Principal Carryover Shortfall, Class B Interest Carryover Shortfall and Class B
Principal Carryover Shortfall on the Distribution Date immediately following
such Collection Period and the change in such amounts from those with respect
to the immediately preceding Distribution Date;
(vi) the Class A Pool Factor and the Class B Pool Factor as of such
Distribution Date, after giving effect to payments allocated to principal
reported under clause (i) above;
(vii) the amount of the aggregate Realized Losses, if any, for such
Collection Period;
(viii) the aggregate principal balance of all Receivables which were more
than 60 days delinquent as of the close of business on the last day of such
Collection Period;
(ix) the amount on deposit in the Reserve Fund on such Distribution Date,
after giving effect to distributions made on such Distribution Date;
(x) the Class A Principal Balance and the Class B Principal Balance as of
such Distribution Date, after giving effect to payments allocated to principal
reported under clause (i) above;
(xi) the amount otherwise distributable to the Class B Certificateholders
that is being distributed to the Class A Certificateholders on such
Distribution Date; and
(xii) the aggregate Purchase Amount of Receivables repurchased by the
Seller or purchased by the Servicer with respect to such Collection Period.
Each amount set forth pursuant to clauses (i), (ii), (iv) and (v) above
shall be expressed in the aggregate and as a dollar amount per $1,000 of
original denomination of a Certificate. Copies of such statements may be
obtained by Certificateholders by a request in writing addressed to the
Trustee. In addition, within the prescribed period of time for tax reporting
purposes after the end of each calendar year during the term of the Agreement,
the Trustee will mail to each person who at any time during such calendar year
shall have been a Certificateholder a statement containing the sum of the
amounts described in clauses (i), (ii), (iv) and (v) above for the purposes of
such Certificateholder's preparation of federal income tax returns. See
"Federal Income Tax Consequences--Information Reporting and Backup
Withholding."
Evidence as to Compliance
[The Agreement will provide that a firm of independent public accountants
will furnish to the Trustee a report expressing a summary of findings based
upon a comparison of the mathematical calculations of certain amounts set forth
in the Distribution Date Statement during the preceding calendar year (or, in
the case of the first such report, the period from the Closing Date to December
31, 1996) with the Servicer's computer reports that were the source of such
amounts and a report with regard to the assertions by the Servicer's management
about the Servicer's compliance with the Agreement during the preceding
calendar year (or, in the case of the first such report, the period from the
Closing Date to December 31, 1996).]
[The Agreement will also provide for delivery to the Trustee concurrently
with the delivery of the reports referred to above of a certificate signed by an
officer of the Servicer stating that the Servicer has fulfilled its obligations
under the Agreement throughout the preceding twelve months ended December 31 (or
in the case of the first such certificate, the period from the Closing Date to
December 31, 1996) or, if there has been a default in the fulfillment of any
such obligation, describing each such default. The Servicer has agreed to give
the Trustee notice of certain Events of Servicing Termination under the
Agreement.]
Copies of such statements and certificates may be obtained by
Certificateholders by a request in writing addressed to the Trustee. See "The
Certificates--The Trustee."
Certain Matters Regarding the Servicer
The Agreement will provide that the Servicer may not resign from its
obligations and duties as Servicer thereunder, except upon a determination that
the Servicer's performance of such duties is no longer permissible under
applicable law or if such resignation is required by regulatory authorities.
Such resignation will become effective on the earlier of the date the Servicer
is required by regulatory authorities to resign or the date on which the
Trustee or a successor servicer has assumed the Servicer's servicing
obligations and duties under the Agreement.
The Agreement will further provide that neither the Servicer nor any of
its directors, officers, employees, and agents shall be under any liability to
the Trust or the Certificateholders for taking any action or for refraining
from taking any action pursuant to the Agreement, or for errors in judgment;
provided, however, that neither the Servicer nor any such person will be
protected against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of its duties
or by reason of reckless disregard of its obligations and duties thereunder. In
addition, the Agreement will provide that the Servicer is under no obligation
to appear in, prosecute or defend any legal action that is incidental to its
servicing responsibilities under the Agreement and that, in its opinion, may
cause it to incur any expense or liability.
Under the circumstances specified in the Agreement, any entity into which
the Servicer may be merged or consolidated, or any entity resulting from any
merger or consolidation to which the Servicer is a party, or any entity
succeeding to the business of the Servicer, which corporation or other entity
in each of the foregoing cases assumes the obligations of the Servicer, will be
the successor to the Servicer under the Agreement.
The Servicer may appoint a subservicer to perform all or any portion of
its obligations under the Agreement; however, the Servicer shall remain
obligated and be liable to the Trust, the Trustee and the Certificateholders
for the servicing and administering of the Receivables as if the Servicer alone
were servicing and administering the Receivables.
Events of Servicing Termination
"Events of Servicing Termination" under the Agreement will consist of (i)
any failure by the Servicer to deliver to the Trustee for deposit in any of the
Accounts any required payment or to direct the Trustee or the Collateral Agent,
as applicable, to make any required distributions therefrom, that shall
continue unremedied for five Business Days after written notice of such failure
is received by the Servicer from the Trustee or the Collateral Agent, as
applicable, or after discovery of such failure by the Servicer; (ii) any
failure by the Servicer duly to observe or perform in any material respect any
other covenant or agreement in the Agreement which failure materially and
adversely affects the rights of Certificateholders and which continues
unremedied for 60 days after the giving of written notice of such failure (1)
to the Servicer by the Trustee or (2) to the Servicer and to the Trustee by
holders of Certificates, evidencing not less than 25% aggregate outstanding
principal balance of the Class A Certificates and Class B Certificates taken
together as a single Class (or such longer period, not in excess of 120 days,
as may be reasonably necessary to remedy such default; provided that such
default is capable of remedy within 120 days and the Servicer delivers an
officer's certificate to the Trustee to such effect and to the effect that the
Servicer has commenced, or will promptly commence, and diligently pursue all
reasonable efforts to remedy such default); and (iii) certain events of
insolvency, receivership, readjustment of debt, marshalling of assets and
liabilities or similar proceedings with respect to the Servicer and certain
actions by the Servicer indicating its insolvency, reorganization pursuant to
bankruptcy, receivership or similar proceedings, or inability to pay its
obligations.
If an Event of Servicing Termination occurs, the Trustee will have no
obligation to notify Certificateholders of such event prior to the end of any
cure period described above.
Rights upon an Event of Servicing Termination
As long as an Event of Servicing Termination remains unremedied, the
Trustee or the holders of Certificates evidencing not less than a majority of
the aggregate outstanding principal balance of the Class A Certificates and the
Class B Certificates taken together as a single Class may terminate
substantially all of the Servicer's rights and obligations under the Agreement,
whereupon the Trustee or a successor Servicer appointed by the Trustee will
succeed to all the responsibilities, duties and liabilities of the Servicer
under the Agreement. Thereafter, the successor Servicer will be entitled to the
compensation otherwise payable to the Servicer. If, however, a conservator or
receiver has been appointed for the Servicer, and no Event of Servicing
Termination other than such appointment has occurred, such conservator or
receiver may have the power to prevent the Trustee or the Certificateholders
from terminating substantially all of the Servicer's rights and obligations
under the Agreement. In the event that the Trustee is unwilling or legally
unable so to act, the Trustee may appoint, or petition a court of competent
jurisdiction for the appointment of a successor with a net worth of at least
$50,000,000 and whose regular business includes the servicing of automobile
receivables. In no event may the servicing compensation to be paid to such
successor be greater than the servicing compensation payable to the Servicer
under the Agreement.
Waiver of Past Defaults
The holders of Certificates evidencing not less than a majority of the
aggregate outstanding principal balance of the Class A Certificates and Class B
Certificates taken together as a single Class, in the case of any default which
does not adversely affect the Trustee may, on behalf of all Certificateholders,
waive any default by the Servicer in the performance of its obligations under
the Agreement and its consequences, except a default in making any required
deposits to or payments from any of the Accounts in accordance with the
Agreement. No such waiver shall impair the Certificateholders' rights with
respect to subsequent defaults.
Amendment
The Agreement may be amended by the Seller, the Servicer and the Trustee,
without the consent of any of the Certificateholders, to cure any ambiguity or
defect, to correct or supplement any provision therein or for the purpose of
adding any provision to or changing in any manner or eliminating any of the
provisions of the Agreement, or of modifying in any manner the rights of
Certificateholders; provided, that such action will not, in the opinion of
counsel reasonably satisfactory to the Trustee, materially and adversely affect
the interest of any Certificateholder.
The Agreement also may be amended by the Seller, the Servicer and the
Trustee, with the consent of the holders of Certificates evidencing not less
than a majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single Class, for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Agreement or of modifying in any
manner the rights of the Certificateholders; provided, however, that no such
amendment may (i) increase or reduce in any manner the amount of, or accelerate
or delay the timing of, collections of payments on Receivables or distributions
that are required to be made on any Certificate, without the consent of all
adversely affected Certificateholders or (ii) reduce the percentage of the
aggregate outstanding principal balance of the Certificates, the holders of
which are required to consent to any such amendment, without the consent of all
Certificateholders affected thereby.
List of Certificateholders
Upon written request of the Servicer, the Trustee will provide to the
Servicer within 15 days after receipt of such request a list of names and
addresses of all Certificateholders of record as of the most recent Record
Date. Upon written request by holders of Certificates of either Class
evidencing not less that 25% of the voting interests thereof, and upon
compliance by such Certificateholders with certain provisions of the Agreement,
the Trustee will afford such Certificateholders access during business hours to
the most current list of Certificateholders for purposes of communicating with
other Certificateholders with respect to their rights under the Agreement.
The Agreement will not provide for holding any annual or other meetings of
Certificateholders.
Termination
The obligations of the Seller, the Servicer and the Trustee under the
Agreement will, except with respect to certain reporting requirements,
terminate upon the earliest of (i) the Distribution Date next succeeding the
Seller's purchase of the Receivables, as described below, (ii) payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and (iii) the Distribution Date next succeeding the month which is
six months after the maturity or other liquidation of the last Receivable and
the disposition of any amounts received upon liquidation of any property
remaining in the Trust (including any Liquidated Receivables) in accordance
with the terms and priorities set forth in the Agreement.
The Seller will be permitted, at its option, in the event that the Pool
Balance as of the first day of a Collection Period has declined to 5% or less
of the Original Pool Balance, to purchase from the Trust, on any Distribution
Date occurring in a subsequent Collection Period, all remaining Receivables in
the Trust at a purchase price equal to the sum of the Class A Principal Balance
and the Class B Principal Balance plus accrued and unpaid interest thereon. The
exercise of this right will effect an early retirement of the Certificates.
The Trustee will give written notice of termination of the Trust to each
Certificateholder of record. The final distribution to any Certificateholder
will be made only upon surrender and cancellation of such Certificateholder's
Certificate (whether a Definitive Certificate or the physical certificate
representing the Certificates) at the office or agency of the Trustee specified
in the notice of termination. Any funds remaining in the Trust, after the
Trustee has taken certain measures to locate a Certificateholder and such
measures have failed, will be distributed to the Seller or as otherwise
provided in the Agreement.
Duties of the Trustee
The Trustee will make no representations as to the validity or sufficiency
of the Agreement, the Certificates (other than the execution and authentication
of the Certificates), the Receivables or any related documents, and will not be
accountable for the use or application by the Seller or the Servicer of any
funds paid to the Seller or the Servicer in respect of the Certificates or the
Receivables, or the investment of any monies by the Servicer before such monies
are deposited into the Collection Account. The Trustee will not independently
verify the Receivables. If no Event of Servicing Termination has occurred and
is continuing, the Trustee will be required to perform only those duties
specifically required of it under the Agreement. Generally, those duties are
limited to the receipt of the various certificates, reports or other
instruments required to be furnished to the Trustee under the Agreement, in
which case it will only be required to examine them to determine whether they
conform to the requirements of the Agreement. The Trustee will not be charged
with knowledge of a failure by the Servicer to perform its duties under the
Agreement which failure constitutes an Event of Servicing Termination unless a
responsible officer of the Trustee obtains actual knowledge of such failure as
specified in the Agreement.
The Trustee will be under no obligation to exercise any of the rights or
powers vested in it by the Agreement or to make any investigation of matters
arising thereunder or to institute, conduct or defend any litigation thereunder
or in relation thereto at the request, order or direction of any of the
Certificateholders, unless such Certificateholders have offered the Trustee
reasonable security or indemnity satisfactory to it against the costs, expenses
and liabilities which may be incurred therein or thereby. No Class A
Certificateholder or Class B Certificateholder will have any right under the
Agreement to institute any proceeding with respect to the Agreement, unless
such holder has given the Trustee written notice of default and unless, with
respect to the Class A Certificates, the holders of Class A Certificates
evidencing not less than a majority of the aggregate outstanding principal
balance of the Class A Certificates or, with respect to the Class B
Certificates, the holders of Class B Certificates evidencing not less than a
majority of the aggregate outstanding principal balance of the Class B
Certificates, have made a written request to the Trustee to institute such
proceeding in its own name as Trustee thereunder and have offered to the
Trustee reasonable indemnity, and the Trustee for 30 days has neglected or
refused to institute any such proceedings.
The Trustee
________________ a _______________, will act as Trustee under the
Agreement. The Trustee, in its individual capacity or otherwise, and any of its
affiliates, may hold Certificates in their own names or as pledgee. In addition,
for the purpose of meeting the legal requirements of certain jurisdictions, the
Servicer and the Trustee, acting jointly (or in some instances, the Trustee,
acting alone), will have the power to appoint co-trustees or separate trustees
of all or any part of the Trust. In the event of such appointment, all rights,
powers, duties and obligations conferred or imposed upon the Trustee by the
Agreement will be conferred or imposed upon the Trustee and such co-trustee or
separate trustee jointly, or, in any jurisdiction where the Trustee is
incompetent or unqualified to perform certain acts, singly upon such co-trustee
or separate trustee who shall exercise and perform such rights, powers, duties
and obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event the Servicer will be
obligated to appoint a successor trustee. The Servicer may also remove the
Trustee if the Trustee ceases to be eligible to serve, becomes legally unable
to act, is adjudged insolvent or is placed in receivership or similar
proceedings. In such circumstances, the Servicer will be obligated to appoint a
successor trustee. However, any such resignation or removal of the Trustee and
appointment of a successor trustee will not become effective until acceptance
of the appointment by the successor trustee.
The Agreement will provide that the Servicer will pay the Trustee's fees.
The Agreement will also provide that the Trustee will be entitled to
indemnification by the Seller for, and will be held harmless against, any loss,
liability or expense incurred by the Trustee not resulting from the Trustee's
own willful misfeasance, bad faith or negligence. Indemnification will be
unavailable to the Trustee to the extent that any such loss, liability or
expense results from a breach of any of the Trustee's representations or
warranties set forth in the Agreement, and for any tax, other than those for
which the Seller or the Servicer is required to indemnify the Trustee.
The Trustee's Corporate Trust Office is located at __________________. The
Seller, the Servicer, the Subservicer and their respective affiliates may have
other banking relationships with the Trustee and its affiliates in the ordinary
course of their business.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Rights in the Receivables
The Receivables are "chattel paper" as defined in the Ohio UCC and the
Arizona UCC. Pursuant to the UCC, for most purposes, a sale of chattel paper is
treated in a manner similar to a transaction creating a security interest in
chattel paper. The Seller will cause appropriate financing statements to be
filed with the appropriate governmental authorities in the States of Ohio and
Arizona to perfect the interest of the Trustee in its purchase of the
Receivables from the Seller, in the Seller's purchase of the Receivables from
the Bank and the Bank's purchase of Receivables from Valley National.
Pursuant to the Agreement, the Servicer will hold the Receivables, either
directly or through the Subservicer, as custodian for the Trustee following the
sale and assignment of the Receivables to the Trust. The Seller will take such
action as is required to perfect the rights of the Trustee in the Receivables.
The Receivables will not be segregated, stamped or otherwise marked to indicate
that they have been sold to the Trust. If, through inadvertence or otherwise,
another party purchases (or takes a security interest in) the Receivables for
new value in the ordinary course of business and takes possession of the
Receivables without actual knowledge of the Trust's interest, the purchaser (or
secured party) will acquire an interest in the Receivables superior to the
interest of the Trust.
Under the Agreement, the Servicer will be obligated from time to time to
take such actions as are necessary to protect and perfect the Trust's interest
in the Receivables and their proceeds.
Security Interests in the Financed Vehicles
Generally, retail motor vehicle loans such as the Receivables evidence
loans to obligors to finance the purchase of such motor vehicles. The loans
also constitute personal property security agreements and include grants of
security interests in the vehicles under the UCC. Perfection of security
interests in motor vehicles is generally governed by the motor vehicle
registration laws of the state in which the vehicle is located. In Arizona and
most other states, a security interest in the vehicle is perfected by notation
of the secured party's lien on the vehicle's certificate of title.
The Bank's and Valley National's practice is to take such action as is
required in order to perfect their security interest in a Financed Vehicle
under the laws of the jurisdiction in which the Financed Vehicle is registered.
If the Bank or Valley National, because of clerical error or otherwise, has
failed to take such action with respect to a Financed Vehicle, it will not have
a perfected security interest in the Financed Vehicle and its security interest
may be subordinate to the interests of, among others, subsequent purchasers of
the Financed Vehicle that give value without notice of the Bank's and Valley
National's security interest and to whom a certificate of ownership is issued
in such purchaser's name, holders of perfected security interests in the
Financed Vehicle, and the trustee in bankruptcy of the Obligor. The Bank's or
Valley National's security interest may also be subordinate to such third
parties in the event of fraud or forgery by the Obligor or administrative error
by state recording officials or in the circumstances noted below. As described
more fully below, the Seller will warrant in the Agreement (and will have
assigned to the Trust such warranty made by the Bank in the Loan Sale
Agreement) that an enforceable first priority perfected security interest with
respect to each Financed Vehicle on the Closing Date has been created in favor
of either the Bank or Valley National and the Seller or the Bank will be
required to repurchase the related Receivable in the event of an uncured breach
of such warranty.
Pursuant to the Loan Purchase and Servicing Agreement, Valley National will
assign its security interest in any Financed Vehicles, along with the sale and
assignment of the related Receivables to the Bank and pursuant to the Loan
Purchase Agreement, the Bank will assign its security interest in the Financed
Vehicles, along with the sale and assignment of the related Receivables to the
Seller. Pursuant to the Agreement, the Seller will assign its security interests
in the Financed Vehicles, along with the sale and assignment of the related
Receivables, to the Trust, and the Servicer will hold the certificates of title
relating to the Financed Vehicles, either directly or through the Subservicer,
as custodian for the Trustee following such sale and assignment. The
certificates of title will not be endorsed or otherwise amended to identify the
Trust or Trustee as the new secured party, however, because of the
administrative burden and expense involved.
In Arizona and most other states, an assignment of a security interest in
a Financed Vehicle along with the applicable Receivable is effective without
amendment of any lien noted on a vehicle's certificate of title or ownership,
and the assignee succeeds thereby to the assignor's rights as secured party. In
Arizona and most other states, in the absence of fraud or forgery by the
vehicle owner or of fraud, forgery, negligence or error by Valley National, the
Bank or the Seller or administrative error by state or local agencies, the
notation of Valley National's or the Bank's lien on the certificates of title
or ownership and/or possession of such certificates with such notation will be
sufficient to protect the Trust against the rights of subsequent purchasers of
a Financed Vehicle or subsequent lenders who take a security interest in a
Financed Vehicle. There exists a risk, however, in not identifying the Trust or
Trustee as the new secured party on the certificate of title that the security
interest of the Trust or the Trustee may not be enforceable. In the event the
Trust has failed to obtain or maintain a perfected security interest in a
Financed Vehicle, its security interest would be subordinate to, among others,
a bankruptcy trustee of the Obligor, a subsequent purchaser of the Financed
Vehicle or a holder of a perfected security interest.
The Seller will warrant in the Agreement as to each Receivable conveyed by
it to the Trust that, on the Closing Date, the Bank or Valley National has a
valid, subsisting and enforceable first priority perfected security interest in
the Financed Vehicle securing the Receivable (subject to administrative delays
and clerical errors on the part of the applicable government agency and to any
statutory or other lien arising by operation of law after the Closing Date
which is prior to such security interest) and such security interest has been
assigned to the Seller and will be assigned by the Seller to the Trustee for
the benefit of the Certificateholders. In the event of an uncured breach of
such warranty, the Seller will be required to repurchase (or cause the Bank to
repurchase) such Receivable for its Purchase Amount. This repurchase obligation
will constitute the sole remedy available to the Trust, the Trustee and the
Certificateholders for such breach. The Seller's warranties with respect to
perfection and enforceability of a security interest in a Financed Vehicle will
not cover statutory or other liens arising after the Closing Date by operation
of law which have priority over such security interest. Accordingly, any such
lien would not by itself give rise to a repurchase obligation on the part of
the Seller (or the Bank).
In the event that an Obligor moves to a state other than the state in which
the Financed Vehicle is registered, under the laws of Arizona and most states, a
perfected security interest in a motor vehicle continues for four months after
such relocation and thereafter, in most instances, until the Obligor
re-registers the motor vehicle in the new state, but in any event not beyond the
surrender of the certificate. A majority of states require surrender of a
certificate of title to re-register a motor vehicle and require that notice of
such surrender be given to each secured party noted on the certificate of title.
In those states that require a secured party take possession of a certificate of
title to perfect a security interest, the secured party would learn of the
re-registration through the request from the Obligor to surrender possession of
the certificate of title. In those states that require a secured party to note
its lien on a certificate of title to perfect a security interest but do not
require possession of the certificate of title, the secured party would learn of
the re-registration through the notice from the applicable state department of
motor vehicles that the certificate of title had been surrendered. The
requirements that a certificate of title be surrendered and that notices of such
surrender be given to each secured party also apply to re-registrations effected
following a sale of a motor vehicle. The Bank or Valley National would therefore
have the opportunity to re-perfect its security interest in a Financed Vehicle
in the state of re-registration following relocation of the Obligor and would be
able to require satisfaction of the related Receivable following a sale of the
Financed Vehicle. In states that do not require a certificate of title for
registration of a motor vehicle, re-registration could defeat perfection. In the
ordinary course of servicing motor vehicle loans, the Servicer takes steps to
effect re-perfection upon receipt of notice of re-registration or information
from the Obligor as to relocation. However, there is a risk that an Obligor
could relocate without notification to the Servicer, then file a false affidavit
with the new state to cause a new certificate of title to be issued without
notation of the Bank's or Valley National's lien.
Under the laws of Arizona and many other states, certain possessory liens
for repairs performed on or storage of a motor vehicle and liens for unpaid
taxes as well as certain rights arising from the use of a motor vehicle in
connection with illegal activities, may take priority over a perfected security
interest in the motor vehicle. The Seller will warrant in the Agreement that,
as of the Closing Date, the Seller has not received notice that any such liens
are pending. In the event of a breach of such warranty which has a material and
adverse effect on the interests of the Trust, the Trustee and the
Certificateholders, the Seller will be required to repurchase (or cause the
Bank to repurchase) the Receivable secured by the Financed Vehicle involved.
This repurchase obligation will constitute the sole remedy available to the
Trust, the Trustee and the Certificateholders for such breach. Any liens for
repairs or taxes arising at any time after the Closing Date during the term of
a Receivable would not give rise to a repurchase obligation on the part of the
Seller (or the Bank).
Repossession
In the event of a default by an Obligor, the holder of a Receivable has
all the remedies of a secured party under the Arizona UCC, except where
specifically limited by other state laws or by contract. The remedies of a
secured party under the Arizona UCC include the right to repossession by means
of self-help, unless such means would constitute a breach of the peace.
Self-help repossession is the method employed by the Bank and Valley National
in most cases, and is accomplished simply by taking possession of the motor
vehicle. Generally, where the obligor objects or raises a defense to
repossession, a court order must be obtained from the appropriate state court
and the motor vehicle must then be repossessed in accordance with that order.
In the event of a default by an obligor, Arizona and many jurisdictions require
that, absent a waiver, the obligor be notified of the default and be given a
time period within which he may cure the default prior to repossession except
such notice need not be given in emergency situations pursuant to an order from
the appropriate state court.
Notice of Sale; Redemption Rights
The Arizona UCC and other state laws require the secured party to provide
an 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 generally has the right to redeem the collateral prior to
actual sale by paying the secured party the unpaid principal balance of the
obligation plus, in most cases, reasonable expenses for repossessing, holding
and preparing the collateral for disposition and arranging for its sale plus,
in some jurisdictions, reasonable attorneys' fees. In some states, the obligor
has the right, prior to actual sale, to reinstatement of the original loan
terms and to return of the collateral by payment of delinquent installments of
the unpaid balance.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of Financed Vehicles generally will be applied first
to the expenses of repossession and resale and then to the satisfaction of the
indebtedness on the related Receivable. 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
Arizona and those states that do not prohibit or limit such judgments. Any such
deficiency judgment would be a personal judgment against the Obligor for the
shortfall, however, a defaulting Obligor may have very little capital or sources
of income available following repossession. Other statutory provisions,
including state and federal bankruptcy laws, may interfere with a lender's
ability to enforce a deficiency judgment or to collect a debt owed or realize
upon collateral. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount or not paid at all.
Occasionally, after resale of a repossessed motor vehicle and payment of
all expenses and indebtedness, there is a surplus of funds. In that case, the
Arizona UCC requires the secured party to remit the surplus to any other holder
of a lien with respect to the motor vehicle or, if no such lienholder exists or
funds remain after paying such other lienholder, to the Obligor.
Consumer Protection Laws
Numerous Federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers involved
in consumer finance. These laws include the Truth In Lending Act, the Equal
Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices
Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B,
Z and AA, and other similar acts and regulations, state adoptions of the
Uniform Consumer Credit Code and other similar laws, including the Arizona
Consumer Fraud Act, Title 6 of the Arizona Revised Statutes and state usury
laws. Also, state laws impose other restrictions on consumer transactions, may
require contract disclosures in addition to those required under Federal law
and may limit the remedies available in the event of default by an Obligor.
These requirements impose specific statutory liabilities upon creditors who
fail to comply with their provisions where applicable. In most cases, this
liability could affect the ability of an assignee, such as the Trust, to
enforce secured loans such as the Receivables.
The FTC's holder-in-due-course rule (the "FTC Rule") has the effect of
subjecting a seller of motor vehicles (and certain related lenders and their
assignees) in a consumer credit transaction and any assignee of the seller to
all claims and defenses which the purchaser could assert against the seller.
Liability under the FTC Rule is limited to the amounts paid by the purchaser
under the contract, and the holder of the contract may also be unable to
collect any balance remaining due thereunder from the purchaser. The FTC Rule
may be duplicated by state statutes or the common law in certain states.
Although none of Valley National, the Bank or the Seller is a seller of motor
vehicles and they are not subject to the jurisdiction of the FTC, the loan
agreements evidencing the Receivables contain provisions which contractually
apply the FTC Rule. Accordingly, Valley National, the Bank, the Seller and the
Trustee as holder of the Receivables, may be subject to claims or defenses, if
any, that the purchaser of a Financed Vehicle may assert against the seller of
such vehicle.
Under the motor vehicle dealer licensing laws of Arizona and most states,
sellers of motor vehicles are required to be licensed to sell such vehicles at
retail sale. In addition, with respect to used motor vehicles, the FTC's Rule
on Sale of Used Vehicles requires that all sellers of used motor vehicles
prepare, complete and display a "Buyer's Guide" which explains the warranty
coverage for such vehicles. Federal Odometer Regulations promulgated under the
Motor Vehicle Information and Cost Savings Act require that all sellers of used
motor 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 properly
provided to the purchaser of a Financed Vehicle, such purchaser may be able to
assert a claim against the seller of such vehicle. Although none of Valley
National, the Bank or the Seller is a seller of motor vehicles and they are not
subject to these laws, a violation thereof may form the basis for a claim or
defense against Valley National, the Bank, the Seller or the Trustee as holder
of the Receivables.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an Obligor from some or
all of the legal consequences of a default.
The Seller will warrant in the Agreement as to each Receivable conveyed by
it to the Trust that such Receivable complied at the time it was originated and
as of the Closing Date in all material respects with all requirements of
applicable law. If, as of the Cutoff Date, an Obligor had a claim against the
Trust for violation of any law and such claim materially and adversely affected
the Trust's interest in a Receivable, such violation would create an obligation
of the Seller to repurchase (or cause the Bank to repurchase) the Receivable
unless the breach were cured. This repurchase obligation will constitute the
sole remedy of the Trust, the Trustee and the Certificateholders against the
Seller in respect of any such uncured breach. See "The Certificates--Sale and
Assignment of the Receivables."
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 lender to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the Bankruptcy Code, a court may prevent a lender
from repossessing a motor vehicle and, as part of the rehabilitation plan,
reduce the amount of the secured indebtedness to the market value of such
vehicle at the time of bankruptcy (as determined by the court), leaving the
party providing financing as a general unsecured creditor for the remainder of
the indebtedness. A bankruptcy court may also reduce the monthly payments due
under a contract or change the rate of interest and time of repayment of the
indebtedness.
The Seller intends that the transfer of the Receivables by it to the
Trustee on behalf of the Trust under the Agreement constitutes a valid sale and
assignment of such Receivables. Notwithstanding the foregoing, if the Seller
were to become a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy of the Seller or the Seller itself were to take the
position that the sale of the Receivables by the Seller to the Trust should
instead be treated as a pledge of Receivables to secure a borrowing of the
Seller, delays in payments or collections of Receivables could occur or (should
the court rule in favor of any such trustee, debtor or creditor) reductions in
the amounts of such payments could result. If the transfer of Receivables by
the Seller to the Trust is treated as a pledge instead of a sale, a tax or
government lien on the property of the Seller arising before the transfer of
the Receivables to the Trust may have priority over the Trust's interest in
such Receivables.
[As an insured depository institution, the Bank and its subsidiaries and
persons owned or controlled by the Bank or its subsidiaries are subject to the
examination, regulation and supervision of the Office of the Comptroller of the
Currency (the "OCC"). The OCC has broad regulatory powers to prevent or remedy
unsafe or unsound practices or other violations of applicable regulations,
agreements or policies. The OCC may issue a cease-and-desist order or require
affirmative action to correct any conditions resulting from any violation or
practice with respect to which such order is issued including requiring such
entity, among other things, to make restitution or provide reimbursement, to
dispose of any loan or asset involved, to rescind agreements or contracts and
to take such other action as the OCC determines to be appropriate. The Bank
believes that the transactions contemplated by the Prospectus do not constitute
unsafe or unsound practices and do not violate any applicable OCC regulations,
agreements or policies.]
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated Federal income tax
consequences of the purchase, ownership and disposition of Certificates. This
summary is based upon laws, regulations, rulings and decisions currently in
effect, all of which are subject to change. The discussion does not deal with
all Federal tax consequences applicable to all categories of investors, some of
which may be subject to special rules. In addition, this summary is generally
limited to investors who will hold the Certificates as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Code. Consequences to individual investors of investment in the
Certificates will vary according to circumstances; accordingly, investors
should consult their own tax advisors to determine the Federal, state, local,
and other tax consequences of the purchase, ownership and disposition of the
Certificates. Prospective investors should note that no rulings have been or
will be sought from the Internal Revenue Service (the "IRS") with respect to
any of the Federal income tax consequences discussed below, and no assurance
can be given that the IRS will not take contrary positions.
Tax Status of the Trust
In the opinion of Squire, Sanders & Dempsey, special tax counsel, the
Trust will be classified as a grantor trust and not as an association taxable
as a corporation for Federal income tax purposes. Accordingly, each Certificate
Owner will be subject to Federal income taxation as if it owned directly its
interest in each asset owned by the Trust and paid directly its share of
reasonable expenses paid by the Trust.
In General. For purposes of Federal income tax, the Bank will be deemed to
have retained a fixed portion of the interest due on each Receivable (the
"Retained Yield") equal to the difference between (x) the APR of such Receivable
and (y)(i) with respect to the Class A Percentage of such Receivable, the sum of
the Class A Pass-Through Rate and the Servicing Fee Rate, and (ii) with respect
to the Class B Percentage of such Receivable, the sum of the Class B
Pass-Through Rate and the Servicing Fee Rate. The Retained Yield will be treated
as "stripped coupons" within the meaning of Section 1286 of the Code. In
addition, if the Class B Pass-Through Rate exceeds the Class A Pass-Through
Rate, a portion of the interest accrued on each Receivable could be treated as a
"stripped coupon" purchased by the Class B Certificate Owners or as an amount
received as consideration for a guaranty. Accordingly, each Class A Certificate
Owner will be treated as owning its pro rata percentage interest in the
principal of, and interest payable on, each Receivable (minus the portion of the
interest payable on such Receivable that is treated as Retained Yield and less
any amount treated as a stripped coupon purchased by the Class B Certificate
Owners or received as consideration for a guaranty), and such interest in each
Receivable will be treated as a "stripped bond" within the meaning of Section
1286 of the Code. Similarly, each Class B Certificate Owner will be treated as
owning its pro rata percentage interest in the principal of each Receivable,
plus a disproportionate share of the interest payable on each Receivable or any
amount treated as consideration for a guaranty.
Class A Certificate Owners
Because Class A Certificates represent stripped bonds, they will be
subject to the original issue discount ("OID") rules of the Code. Accordingly,
the tax treatment of a Class A Certificate Owner will depend upon whether the
amount of OID on a Class A Certificate is less than a statutorily defined de
minimis amount.
In general, under regulations issued under Section 1286 of the Code, the
amount of OID on a Receivable treated as a "stripped bond" will be de minimis
if it is less than 1/4 of one percent of the stated redemption price at
maturity, as defined in Section 1273(a)(2) of the Code, for each full year
remaining after the purchase date until the maturity of the Receivable. The
maturity date is based on the weighted average maturity date (and a reasonable
prepayment assumption may have to be taken into account in determining weighted
average maturity). Under the regulations, it appears that the portion of the
interest on each Receivable payable to the Class A Certificate Owners will be
treated as "qualified stated interest." As a result, the amount of OID on a
Receivable will equal the amount by which the price at which a Certificate
Owner is deemed to have acquired an interest in a Receivable (the "Purchase
Price") is less than the portion of the remaining principal balance of the
Receivable allocable to the interest acquired. Although the matter is not free
from doubt, the Trust intends to take the positions (i) that the amount of OID
on the Receivables will be determined by aggregating all payments on the
Receivables allocable to the Class A Certificate Owners (not including the
Retained Yield), and treating the portion of all payments on the Receivables
allocable to the Class A Certificate Owners as a single obligation on an
aggregate basis, rather than being determined separately with respect to each
Receivable, and (ii) that no separate allocation of consideration must be made
to accrued interest or to amounts held in the Collection Account.
Based on these positions, it is anticipated that the Certificates will not
be issued initially with OID (or that any OID present will be de minimis). The
IRS could require, instead, that the computation be performed on a
Receivable-by-Receivable basis. In the preamble to the regulations under
Section 1286 of the Code, the IRS requests comment on appropriate aggregation
rules. Any such recalculation could adversely affect the timing and character
of a Class A Certificate Owner's income. The IRS might also require that a
portion of the purchase price of a Certificate be allocated to accrued interest
on each Receivable and to amounts held in the Collection Account pending
distribution to Certificate Owners at the time of purchase as though such
accrued interest and collections on the Receivables were separate assets
purchased by the Certificate Owner. Any such allocation would reduce the
Purchase Price and thus increase the discount (or decrease the premium) on the
Receivables.
If the amount of OID is de minimis under the rule set forth above, the
Class A Certificates would not be treated as having OID. Each Class A
Certificate Owner would be required to report on its Federal income tax return
its share of the gross income of the Trust, including interest and certain
other charges accrued on the Receivables and any gain upon collection or
disposition of the Receivables (but not including any portion of the Retained
Yield). Such gross income attributable to interest on the Receivables would
exceed the Class A Certificate Rate by an amount equal to the Class A
Certificate Owner's share of the expenses of the Trust for the period during
which it owns a Class A Certificate. The Class A Certificate Owner would be
entitled to deduct its share of expenses of the Trust to the extent described
below. Any amounts received by a Class A Certificate Owner from the Reserve
Fund or from the subordination of the Class B Certificates will be treated for
Federal income tax purposes as having the same characteristics as the payments
they replace.
A Class A Certificate Owner would report its share of the income of the
Trust under its usual method of accounting. Accordingly, interest would be
includible in a Certificate Owner's gross income when it accrues on the
Receivables, or, in the case of Certificate Owners who are cash basis taxpayers,
when received by the Servicer on behalf of Certificate Owners. Because (i)
interest accrues on the Receivables over differing monthly periods and is paid
in arrears and (ii) interest collected on a Receivable generally is paid to
Certificateholders in the following month, the amount of interest accruing to a
Certificate Owner during any calendar month will not equal the interest
distributed in that month. The actual amount of discount on a Receivable would
be includible in income as principal payments are received on the Receivables.
If the OID on a Receivable is not treated as being de minimis, in addition
to the amounts described above, a Class A Certificate Owner will be required to
include in income any OID as it accrues on a daily basis, regardless of when
cash payments are received, using a method reflecting a constant yield on the
Receivables. It is possible that the IRS could require use of a prepayment
assumption in computing the yield of a Receivable. If a Receivable is deemed to
be acquired by a Certificate Owner at a significant discount, such treatment
could accelerate the accrual of income by a Certificate Owner.
The Servicer intends to account for OID, if any, reportable by holders of
Class A Certificates by reference to the price paid for a Class A Certificate
by an initial purchaser, although the amount of OID will differ for subsequent
purchasers. Such subsequent purchasers should consult their tax advisors
regarding the proper calculation of OID on the interest in Receivables
represented by a Class A Certificate.
In the event that a Receivable is treated as purchased at a premium (i.e.,
its Purchase Price exceeds the portion of the remaining principal balance of
such Receivable allocable to the Certificate Owner), such premium will be
amortizable by the Certificate Owner as an offset to interest income (with a
corresponding reduction in the Certificate Owner's basis) under a constant
yield method over the term of the Receivable if an election under Section 171
of the Code is made with respect to the interests in the Receivables
represented by the Certificates or was previously in effect. Any such election
will also apply to all debt instruments held by the Certificate Owner during
the year in which the election is made and all debt instruments acquired
thereafter.
A Certificate Owner will be entitled to deduct, consistent with its method
of accounting, its pro rata share of reasonable servicing fees and other fees
paid or incurred by the Trust as provided in Section 162 or 212 of the Code. If
a Certificate Owner is an individual, estate or trust, the deduction for such
holder's share of such fees will be allowed only to the extent that all of such
holder's miscellaneous itemized deductions, including such holder's share of
such fees, exceed 2% of such holder's adjusted gross income. In addition, in
the case of Certificate Owners who are individuals, certain otherwise allowable
itemized deductions will be reduced, but not by more than 80%, by an amount
equal to 3% of such Certificate Owner's adjusted gross income in excess of a
statutorily defined threshold.
Class B Certificate Owners
In General. Except as described below, it is believed that the Class B
Certificate Owners will be subject to tax in the same manner as Class A
Certificate Owners. However, no Federal income tax authorities address the
precise method of taxation of an instrument such as the Class B Certificates.
In the absence of applicable authorities, the Servicer intends to report income
to Class B Certificate Owners in the manner described below.
Each Class B Certificate Owner will be treated as owning (i) the Class B
Percentage of the principal on each Receivable plus (ii) a disproportionate
portion of the interest on each Receivable (not including the Retained Yield).
Income will be reported to a Class B Certificate Owner based on the assumption
that all amounts payable to the Class B Certificate Owners are taxable under
the coupon stripping provisions of the Code and treated as a single obligation.
In applying those provisions, the Servicer will take the position that a Class
B Certificate Owner's entire share of the interest on a Receivable will qualify
as "qualified stated interest". Thus, except to the extent modified by the
effects of subordination of the Class B Certificates, as described below,
income will be reported to Class B Certificate Owners in the manner described
above for holders of the Class A Certificates.
Effect of Subordination. If the Class B Certificate Owners receive
distributions of less than their share of the Trust's receipts of principal or
interest (the "Shortfall Amount") because of the subordination of the Class B
Certificates, holders of Class B Certificates would probably be treated for
Federal income tax purposes as if they had (1) received as distributions their
full share of such receipts, (2) paid over to the Class A Certificate Owners an
amount equal to such Shortfall Amount, and (3) retained the right to
reimbursement of such amounts to the extent of future collections otherwise
available for deposit in the Reserve Fund.
Under this analysis, (1) Class B Certificate Owners 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 Class A Certificate Owners, (2) a loss would only be allowed to the Class B
Certificate Owners when their right to receive reimbursement of such Shortfall
Amount became worthless (i.e., when it becomes clear that the amount will not
be available from any source to reimburse such loss), and (3) reimbursement of
such Shortfall Amount prior to such a claim of worthlessness would not be
taxable income to Class B Certificate Owners because such amount was previously
included in income. Those results should not significantly affect the inclusion
of income for Class B Certificate Owners on the accrual method of accounting,
but could accelerate inclusion of income to Class B Certificate Owners 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.
Sales of Certificates
A Certificate Owner that sells a Certificate will recognize gain or loss
equal to the difference between the amount realized on the sale and its
adjusted basis in the Certificate. In general, such adjusted basis will equal
the Certificate Owner's cost for the Certificate, increased by the amount of
any income previously reported with respect to the Certificate, and decreased
by the amount of any losses previously reported with respect to the Certificate
and the amount of any distributions received thereon. Any such gain or loss
generally will be capital gain or loss if the assets underlying the Certificate
were held as capital assets, except that, in the case of a Certificate that was
acquired with more than a de minimis amount of market discount, such gain will
be treated as ordinary interest income to the extent of the portion of such
discount that accrued during the period in which the seller held the
Certificate and that was not previously included in income.
Foreign Certificate Owners
Interest attributable to Receivables which is payable to a foreign
Certificate Owner will generally not be subject to the normal 30% withholding
tax imposed with respect to such payments, provided that such Certificate Owner
is not engaged in a trade or business in the United States and that such
Certificate Owner fulfills certain certification requirements. Under such
certification requirements, the Certificate Owner must certify, under penalties
of perjury, that it is not a "United States person" and it is the beneficial
owner of the Certificates, and must provide its name and address. For this
purpose, "United States person" means a citizen or resident of the United
States, a corporation, partnership, or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, or an
estate or trust the income of which is includible in gross income for United
States Federal income tax purposes, regardless of its source.
Information Reporting and Backup Withholding
The Trustee will furnish or make available, within the prescribed period
of time for tax reporting purposes after the end of each calendar year, to each
Certificate Owner or each person holding a Certificate on behalf of a
Certificate Owner at any time during such year, such information as the Trustee
deems necessary or desirable to assist Certificate Owners in preparing their
federal income tax returns. Payments made on the Certificates and proceeds from
the sale of Certificates will not be subject to a "backup" withholding tax of
31% unless, in general, the Certificate Owner fails to comply with certain
reporting procedures and is not an exempt recipient under applicable provisions
of the Code.
STATE AND LOCAL TAX CONSEQUENCES
The discussion above does not address the tax consequences of purchase,
ownership or disposition of the Certificates under any state or local tax law.
Investors should consult their own tax advisors regarding state and local tax
consequences.
ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing, retirement or other employee
benefit plan subject to Title I of ERISA, should consider the fiduciary
standards under ERISA in the context of the plan's particular circumstances
before authorizing an investment of a portion of such plan's assets in the
Certificates. Accordingly, pursuant to Section 404 of ERISA, such fiduciary
should consider among other factors: (i) whether the investment is for the
exclusive benefit of plan participants and their beneficiaries; (ii) whether
the investment satisfies the applicable diversification requirements; (iii)
whether the investment is in accordance with the documents and instruments
governing the plan; and (iv) whether the investment is prudent, considering the
nature of the investment. Fiduciaries of plans also should consider ERISA's
prohibition on improper delegation of control over, or responsibility for, plan
assets.
In addition, benefit plans subject to ERISA, as well as individual
retirement accounts or certain types of Keogh plans not subject to ERISA but
subject to Section 4975 of the Code and any entity whose source of funds for
the purchase of Certificates includes plan assets by reason of a plan or
account investing in such entity (each, a "Plan"), are prohibited from engaging
in a broad range of transactions involving Plan assets and persons having
certain specified relationships to a Plan ("parties in interest" and
"disqualified persons"). Such transactions are treated as "prohibited
transactions" under Sections 406 and 407 of ERISA and excise taxes are imposed
upon such persons by Section 4975 of the Code.
An investment in Certificates by a Plan might result in the assets of the
Trust being deemed to constitute Plan assets, which in turn might mean that
certain aspects of such investment, including the operation of the Trust, might
be prohibited transactions under ERISA and the Code. Neither ERISA nor the Code
defines the term "plan assets." Under Section 2510.3- 101 of the United States
Department of Labor ("DOL") regulations (the "Regulation"), a Plan's assets may
include an interest in the underlying assets of an entity (such as a trust) for
certain purposes, including the prohibited transaction provisions of ERISA and
the Code, if the Plan acquires an "equity interest" in such entity, unless
certain exceptions apply. The Seller believes that the Certificates will give
Certificateholders an equity interest in the Trust for purposes of the
Regulation and can give no assurance that the Certificates will qualify for any
of the exceptions under the Regulation. As a result, the assets of the Trust
may be considered the assets of any Plan which acquires a Certificate.
The DOL has issued individual exemptions, Prohibited Transaction Exemption
("PTE") _____, Exemption Application No. D-_____, __ Fed. Reg. _____ (____), to
____________________________, and PTE _____, as amended, Exemption Application
No. D-____, __ Fed. Reg. ______ (____), to ____________________ (collectively,
the "Exemption"). The Exemption generally exempts from the application of the
prohibited transaction provisions of Section 406 of ERISA and the excise taxes
imposed on such prohibited transactions pursuant to Section 4975(a) and (b) of
the Code and Section 502(i) of ERISA certain transactions relating to the
initial purchase, holding and subsequent resale by Plans of certificates in
pass-through trusts that consist of certain receivables, loans and other
obligations that meet the conditions and requirements set forth in the
Exemption. The receivables covered by the Exemption include motor vehicle
installment obligations such as the Receivables. The Seller believes that the
Exemption will apply to the acquisition, holding and resale of the Class A
Certificates by a Plan and that all conditions of the Exemption other than
those within the control of the investors have been or will be met.
The Exemption sets forth six general conditions that must be satisfied for
a transaction involving the acquisition of the Class A Certificates by a Plan
to be eligible for the exemptive relief thereunder:
(1) the acquisition of the Class A Certificates by a Plan is on terms
(including the price for the Class A Certificates) that are at least as
favorable to the Plan as they would be in an arm's-length transaction with an
unrelated party;
(2) the rights and interests evidenced by the Class A Certificates
acquired by a Plan are not subordinated to the rights and interest evidenced by
other certificates of the Trust;
(3) the Class A Certificates acquired by the Plan have received a rating
at the time of such acquisition that is in one of the three highest generic
rating categories from any one of four rating entities;
(4) the Trustee is not an affiliate of any other member of the "Restricted
Group", which consists of the Underwriters, the Seller, the Trustee, the
Servicer, each subservicer, each insurer and any Obligor with respect to the
Receivables included in the Trust constituting more than 5% of the aggregate
unamortized principal balance of the assets of the Trust as of the date of
initial issuance of the Class A Certificates, and any affiliate of such
parties.
(5) the sum of all payments made to and retained by the Underwriters in
connection with the offering of the Class A Certificates represents not more
than reasonable compensation for placing the Class A Certificates. The sum of
all payments made to and retained by the Servicer represents not more than the
reasonable compensation for the Servicer's services under the Agreement and
reimbursement of the Servicer's reasonable expenses in connection therewith;
and
(6) the Plan investing in the Class A Certificates must be an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the Commission under
the Securities Act.
Because the rights and interests evidenced by the Class A Certificates
acquired by a Plan are not subordinated to the rights and interests evidenced
by other certificates of the Trust, the second general condition set forth
above is satisfied. It is a condition of the issuance of the Class A
Certificates that they be rated in the highest rating category by a nationally
recognized rating agency and thus the third general condition should be
satisfied. The Seller and the Servicer expect that the fourth general condition
set forth above will be satisfied with respect to the Class A Certificates. A
fiduciary of a Plan contemplating purchasing a Class A certificate must make
its own determination that the first, fifth and sixth general conditions set
forth above will be satisfied with respect to the Class A Certificates.
If the general conditions of the Exemption are satisfied, the Exemption
may provide relief from the restrictions imposed by Sections 406(a) and 407(a)
of ERISA as well as the excise taxes imposed by Section 4975(a) and (b) of the
Code by reason of Section 4975(c)(1)(A) through (D) of the Code, in connection
with the direct or indirect sale, exchange, transfer or holding of the Class A
Certificates by a Plan. However, no exemption is provided from the restrictions
of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or
holding of a Class A Certificate on behalf of an "Excluded Plan" by any person
who has discretionary authority or renders investment advice with respect to
the assets of such Excluded Plan. For purposes of the Class A Certificates an
Excluded Plan is a Plan sponsored by any member of the Restricted Group.
If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide relief from the restrictions imposed by Sections
406(b)(1) and (b)(2) and 407(a) of ERISA and the taxes imposed by Section
4975(a) and (b) of the Code by reason of Section 4975(c)(1)(E) of the Code in
connection with the direct or indirect sale, exchange, transfer or holding of
Class A Certificates in the initial issuance of Class A Certificates between
the Seller or the Underwriters and a Plan other than an Excluded Plan when the
person who has discretionary authority or renders investment advice with
respect to the investment of Plan assets in the Class A Certificates is (a) an
Obligor with respect to 5% or less of the fair market value of the Receivables
or (b) an affiliate of such person.
The Exemption also may provide relief from the restriction imposed by
Sections 406(a) and 407(a) of ERISA and the taxes imposed by Section
4975(c)(1)(A) through (D) of the Code if such restrictions are deemed to
otherwise apply merely because a person is deemed to be a party in interest or
a disqualified person with respect to an investing Plan by virtue of providing
services to a Plan (or by virtue of having certain specified relationships to
such a person) solely as a result of such Plan's ownership of Class A
Certificates.
Before purchasing a Class A Certificate, a fiduciary of a Plan should
itself confirm (a) that the Class A Certificates constitute "certificates" for
purposes of the Exemption and (b) that the specific conditions set forth in
Section II of the Exemption and the other requirements set forth in the
Exemption will be satisfied.
Any Plan fiduciary considering whether to purchase a Class A Certificate
on behalf of a Plan should consult with its counsel regarding the applicability
of the fiduciary responsibility and prohibited transaction provisions of ERISA
and the Code to such investment.
Because the Class B Certificates are subordinate interests, the Exemption
will not be available for Class B Certificates. Accordingly, no Class B
Certificate may be purchased by or otherwise transferred to a Plan other than
an "insurance company general account" as defined in, and which complies with
the provisions of, PTE 95-60 which may be deemed to be holding Plan assets.
Furthermore, each purchaser of Class B Certificates will be deemed to have
represented that it is not acquiring Class B Certificates, directly or
indirectly, for or on behalf of a Plan other than an "insurance company general
account" as defined in, and which complies with the provisions of, PTE 95-60.
If Definitive Certificates are issued, each transferee of a Class B Certificate
will be required to deliver to the Trustee a certificate to such effect. Any
purchaser whose source of funds for the purchase of Class B Certificates
includes such assets of an insurance company general account should itself
confirm that all applicable requirements set forth in PTE 95-60 will be
satisfied, particularly the requirement (set forth in Section IV(c) of PTE
95-60) that neither the insurance company nor an affiliate thereof will be a
party in interest or disqualified person in connection with the purchase and
holding of Class B Certificates or the servicing, management and operation of
the Trust.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement relating to the Certificates (the "Underwriting Agreement"), the
Seller has agreed to sell to each of the Underwriters named below
(collectively, the "Underwriters"), and each of the Underwriters has severally
agreed to purchase, the principal balance of each Class of Certificates set
forth opposite its name below:
Principal Balance Principal Balance
of Class A of Class B
Underwriters Certificates Certificates
- ----------------
----------- ................. $ $
____________________........... $ $
-----------
Total................. $ $
==========
The Seller has been advised by the Underwriters that they propose to offer
the Certificates to the public initially at the public offering prices set
forth on the cover page of this Prospectus, and to certain dealers at such
prices less a concession of 0. % per Class A Certificate and 0. % per Class B
Certificate; that the Underwriters and such dealers may allow a discount of 0.
% per Class A Certificate and 0. % per Class B Certificate on the sale to
certain other dealers; and that after the initial public offering of the
Certificates, the public offering prices and the concessions and discounts to
dealers may be changed by the Underwriters.
The Seller has agreed to indemnify the several Underwriters against
certain liabilities, including civil liabilities under the Securities Act, or
contribute to payments which the Underwriters may be required to make in
respect thereof.
The Trustee or the Collateral Agent, as applicable, may, from time to
time, invest the funds in the Accounts in Eligible Investments acquired from
the Underwriters.
After the initial distribution of the Certificates by the Underwriters,
this Prospectus may be used by Banc One Capital Corporation, an affiliate of
the Seller, the Servicer and the Subservicer, in connection with offers and
sales relating to market making transactions in the Certificates. Banc One
Capital Corporation may act as principal or agent in such transactions. Such
sales will be made at prices related to prevailing market prices at the time of
sale.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the Certificates in Canada is being made only on a
private placement basis exempt from the requirement that the Trust prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of the Certificates are effected. Accordingly, any resale of the
Certificates in Canada must be made in accordance with applicable securities
laws which will vary depending on the relevant jurisdiction, and which may
require resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the Certificates.
Representations of Purchasers
Each purchaser of Certificates in Canada who receives a purchase
confirmation will be deemed to represent to the Seller, the Trust and the
dealer from whom such purchase confirmation is received that (i) such purchaser
is entitled under applicable provincial securities laws to purchase such
Certificates without the benefit of a prospectus qualified under such
securities laws, (ii) where required by law, that such purchaser is purchasing
as principal and not as agent, and (iii) such purchaser has reviewed the text
above under "Resale Restrictions."
Rights of Action and Enforcement
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
The Trust, the Seller, the Servicer and the Trustee and their respective
directors and officers, if any, as well as the experts named herein, may be
located outside of Canada and, as a result, it may not be possible for Ontario
purchasers to effect service of process within Canada upon the Issuer or such
persons. All or a substantial portion of the assets of the Issuer and such
persons may be located outside of Canada and, as a result, it may not be
possible to satisfy a judgment against the Issuer or such persons in Canada or
to enforce a judgment obtained in Canadian courts against such Issuer or
persons outside of Canada.
Notice to British Columbia Residents
A purchaser of the Certificates to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any of the Certificates acquired by such purchaser pursuant to this offering.
Such report must be in the form attached to British Columbia Securities
Commission Blanket Order BOR #88/5. Only one such report must be filed in
respect of the Certificates acquired on the same date and under the same
prospectus exemption.
LEGAL MATTERS
The validity of the Certificates will be passed upon for the Seller by
Squire, Sanders & Dempsey, Columbus, Ohio, and for the Underwriters by Stroock
& Stroock & Lavan, New York, New York. Certain Federal income tax matters will
be passed upon for the Seller by Squire, Sanders & Dempsey.
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION
PROCEDURES
Except in certain limited circumstances, the globally offered Certificates
of Banc One Auto Grantor Trust 1996-B (the "Global Securities") will be
available only in book-entry form. Investors in the Global Securities may hold
such Global Securities through any of DTC, Cedel or Euroclear. The Global
Securities will be tradeable as home market instruments in both the European
and U.S. domestic markets. Initial settlement and all secondary trades will
settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a
delivery-against-payment basis through the respective Depositories of Cedel and
Euroclear (in such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their Participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the name
of Cede as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their Participants through their respective
Depositories, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices specified by the Underwriters. Investor securities
custody accounts will be credited with their holdings against payment in
same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global
securities and no "lock-up" or restricted period. Global Securities will be
credited to the securities custody accounts on the settlement date against
payment in same-day funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to insure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC Seller and Cedel or Euroclear Purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depository, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment
date to and excluding the settlement date, on the basis of the actual number of
days in such accrual period and year assumed to consist of 360 days. For
transactions settling on the 31st of the month, payment will include interest
accrued to and excluding the first day of the following month. Payment will
then be made by the respective Depository of the DTC Participant's account
against delivery of the Global Securities. After settlement has been completed,
the Global Securities will be credited to the respective clearing system and by
the clearing system, in accordance with its usual procedures, to the Cedel
Participant's or Euroclear Participant's account. The securities credit will
appear the next day (European time) and the cash debt will be back-valued to,
and the interest on the Global Securities will accrue from, the value date
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade fails),
the Cedel or Euroclear cash debt will be valued instead as of the actual
settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day
funds settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to preposition
funds and allow that credit line to be drawn upon to finance the settlement.
Under this procedure, Cedel Participants or Euroclear Participants purchasing
Global Securities would incur overdraft charges for one day, assuming they
cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the value
date. Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although this result will depend on each Cedel
Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective European Depository for the benefit of Cedel Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the DTC Participants a cross-market
transaction will settle no differently than a trade between two DTC
Participants.
Trading between Cedel or Euroclear Seller and DTC Purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depository, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases Cedel or Euroclear
will instruct the respective Depository, as appropriate, to deliver the Global
Securities to the DTC Participant's account against payment. Payment will
include interest accrued on the Global Securities from and including the last
interest payment to and excluding the settlement date on the basis of the actual
number of days in such accrual period and a year assumed to consist of 360 days.
For transactions settling on the 31st of the month, payment will include
interest accrued to and excluding the first day of the following month. The
payment will then be reflected in the account of the Cedel Participant or
Euroclear Participant the following day, and receipt of the cash proceeds in the
Cedel Participant's or Euroclear Participant's account would be back-valued to
the value date (which would be the preceding day, when settlement occurred in
New York). Should the Cedel Participant or Euroclear Participant have a line of
credit with its respective clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft incurred over that one-day period. If settlement
is not completed on the intended value date (i.e., the trade fails), receipt of
the cash proceeds in the Cedel Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or
Euroclear Participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global Securities
sufficient time to be reflected in their Cedel or Euroclear account in order to
settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC Participant is at least one
day prior to the value date for the sale to the Cedel Participant or Euroclear
Participant.
Certain U.S. Federal Withholding Taxes and Documentation Requirements
A beneficial owner of Global Securities through Cedel or Euroclear (or
through DTC if the holder has an address outside the U.S.) will be subject to
30% U.S. withholding tax that generally applies to payments of interest
(including original issue discount) on registered debt issued by U.S. Persons,
unless (i) each clearing system, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business in the
chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements
and (ii) such beneficial owners take one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global
Securities that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are beneficial owners of Global
Securities residing in a country that has a tax treaty with the United States
can obtain an exemption or reduced tax rate (depending on the treaty terms) by
filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the
treaty provides for a reduced rate, withholding tax will be imposed at that
rate unless the filer alternatively files Form W-8. Form 1001 may be filed by
the Certificateholder or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The holder of a Global
Securities or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includible in gross income for United States tax
purposes, regardless of its source. This summary of documentation requirements
does not deal with all aspects of U.S. Federal income tax withholding that may
be relevant to foreign holders of the Global Securities. Investors are advised
to consult their own tax advisors for specific tax advice concerning their
holding and disposing of the Global Securities.
INDEX OF PRINCIPAL TERMS
Page
Accounts.......................................................
Agreement......................................................
Arizona UCC ...................................................
APR............................................................
Bank...........................................................
BANC ONE.......................................................
Business Day...................................................
Call Report....................................................
Cede...........................................................
Cedel..........................................................
Cedel Participants ..........................................
Collection Account.............................................
Certificate Owner..............................................
Certificateholders.............................................
Certificates...................................................
Class..........................................................
Class A Certificateholders.....................................
Class A Certificates...........................................
Class A Distribution Account...................................
Class A Interest Carryover Shortfall...........................
Class A Interest Distribution..................................
Class A Monthly Interest.......................................
Class A Monthly Principal......................................
Class A Pass-Through Rate......................................
Class A Percentage.............................................
Class A Pool Factor............................................
Class A Principal Balance......................................
Class A Principal Carryover Shortfall..........................
Class A Principal Distribution.................................
Class B Certificateholders.....................................
Class B Certificates...........................................
Class B Distribution Account...................................
Class B Interest Carryover Shortfall...........................
Class B Interest Distribution..................................
Class B Monthly Interest.......................................
Class B Monthly Principal......................................
Class B Pass-Through Rate......................................
Class B Percentage.............................................
Class B Pool Factor............................................
Class B Principal Balance......................................
Class B Principal Carryover Shortfall..........................
Class B Principal Distribution.................................
Closing Date...................................................
Code...........................................................
Collateral Agent...............................................
Collection Account.............................................
Collection Period..............................................
Collections....................................................
Commission.....................................................
Comptroller....................................................
Cooperative....................................................
Cutoff Date....................................................
Dealer Agreements .............................................
Dealers........................................................
Definitive Certificates........................................
Depositories...................................................
Determination Date.............................................
Direct Participants............................................
Distribution Date..............................................
Distribution Date Statement....................................
DOL............................................................
DTC............................................................
Eligible Deposit Account.......................................
Eligible Institution...........................................
Eligible Investments...........................................
Eligible Trust Company.........................................
ERISA..........................................................
Euroclear......................................................
Euroclear Operator.............................................
Euroclear Participants.........................................
Events of Servicing Termination................................
Exchange Act...................................................
Excluded Plan..................................................
Exemption......................................................
FDIC...........................................................
Final Scheduled Distribution Date..............................
Final Scheduled Maturity Date..................................
Financed Vehicles..............................................
FIRREA.........................................................
FTC Rule.......................................................
Global Securities..............................................
Holders........................................................
Indirect Participants..........................................
Insolvency Laws................................................
Interest Collections...........................................
Issuer.........................................................
IRS............................................................
Liquidated Receivables.........................................
Liquidation Proceeds...........................................
Loan Purchase and Servicing Agreement .........................
Loan Sale Agreement ...........................................
Motor Vehicle Loans ...........................................
Obligors.......................................................
OCC............................................................
Ohio UCC ......................................................
OID............................................................
Original Class A Principal Balance.............................
Original Class B Principal Balance.............................
Original Pool Balance..........................................
Paid-Ahead Period..............................................
Paid-Ahead Receivable..........................................
Participants...................................................
Plan...........................................................
Pool Balance...................................................
Principal Collections..........................................
PTE............................................................
Purchase Amount................................................
Purchase Price.................................................
Rating Agency..................................................
Realized Losses................................................
Receivable File................................................
Receivables....................................................
Record Date....................................................
Recoveries.....................................................
Registration Statement.........................................
Regulation.....................................................
Reserve Fund...................................................
Restricted Group...............................................
Retained Yield.................................................
Rules..........................................................
Securities Act.................................................
Seller.........................................................
Servicer.......................................................
Servicing Fee..................................................
Servicing Fee Rate.............................................
Shortfall Amount...............................................
Simple Interest Receivable.....................................
Specified Reserve Balance......................................
Subservicer....................................................
Terms and Conditions...........................................
Trust..........................................................
Trustee........................................................
Trust Property.................................................
UCC............................................................
Underwriters...................................................
Underwriting Agreement.........................................
U.S. Person....................................................
Valley National................................................
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 in connection with the offer made
by this Prospectus and, if given or made,
such information or representation
must not be relied upon as having been
authorized by the Seller, the Servicer or
the Underwriters. This Prospectus does not
constitute an offer or solicitation
by anyone in any state in which such offer
or solicitation is not authorized 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.
---------------------
TABLE OF CONTENTS $---------------
Page Banc One Auto Grantor Trust
1996-B
Reports to Certificateholders..................
Available Information..........................
Incorporation of Certain Documents by
Reference.................................... $
Summary of Terms............................... Class A %
Risk Factors................................... Asset Backed Certificates
Formation of the Trust.........................
The Trust Property.............................
The Portfolio of Motor Vehicle Loans........... $
The Receivables Pool........................... Class B %
Maturity and Prepayment Assumptions............ Asset Backed Certificates
Yield Considerations...........................
Pool Factors and Trading Information...........
Use of Proceeds................................
The Seller..................................... BANC ONE ABS CORPORATION
The Servicer and the Subservicer...............
The Certificates .............................. Seller
Certain Legal Aspects of the Receivables....... BANK ONE, ARIZONA, N.A.
Federal Income Tax Consequences................
State and Local Tax Consequences............... Servicer
ERISA Considerations...........................
Underwriting...................................
Notice to Canadian Residents................... --------------
Legal Matters..................................
Annex I........................................ PROSPECTUS
Index of Principal Terms....................... ---------,1996
--------------- --------------
Until , 1996 (90 days after the date
of this Prospectus), all dealers effecting
transactions in the Certificates, whether
or not participating in this
distribution, may be required to deliver a
Prospectus. This is in addition to
the obligation of dealers to deliver a
Prospectus when acting as Underwriters
and with respect to their unsold
allotments or subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
SEC Registration Fee................................ $ 344.84
Printing and Engraving.............................. $ *
Trustee's Fees...................................... $ *
Legal Fees and Expenses............................. $ *
Blue Sky Fees and Expenses.......................... $ *
Accountant's Fees and Expenses...................... $ *
Rating Agency Fees.................................. $ *
Miscellaneous Fees and Expenses..................... $ *
---------
Total Expenses................................$ *
- -------------------
* To be completed by amendment
Item 15. Indemnification of Directors and Officers
Section 1701.13(E) of the Ohio General Corporation Law sets forth
provisions which define the extent which a corporation may indemnify directors,
officers and employees. Those provisions have been adopted by the Registrant in
Article VI of Registrant's Code of Regulations, which provides as follows:
The Corporation may indemnify any director or officer, any former director
or officer of the Corporation and any person who is or has served at the
request of the Corporation as a director, officer or trustee of any other
corporation, partnership, joint venture, trust or other enterprise (and his
heirs, executors and administrators) against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him by reason of the fact that he is or was such director, officer
or trustee in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, to the
full extent and according to the procedures and requirements set forth in the
Ohio General Corporation Law as the same may be in effect from time to time.
The indemnification provided for herein shall not be deemed to restrict the
right of the Corporation to (i) indemnify employees, agents and others
permitted by such Law, (ii) purchase and maintain insurance or provide similar
protection on behalf of directors, officers or such other persons against
liabilities asserted against them or expenses incurred by them arising out of
their service to the Corporation as contemplated herein, and (iii) enter into
agreements with such directors, officers, employees, agents or others
indemnifying them against any and all liabilities (or such lesser
indemnification as may be provided in such agreement) asserted against them or
incurred by them arising out of their service to the Corporation as
contemplated herein.
The Registrant's parent, BANC ONE CORPORATION, has entered into
indemnification agreements with certain directors and executive officers of the
Registrant that provide for indemnification unless the indemnitee's conduct is
finally adjudged by a court to be knowingly fraudulent, deliberately dishonest
or willful misconduct.
The Underwriting Agreement filed as Exhibit 1.1 hereto provides for
indemnification by the Underwriters of the Registrant and its directors,
officers and controlling persons for certain liabilities arising under the
Securities Act of 1933 or otherwise.
Item 16. Exhibits
1.1. Form of Underwriting Agreement*
3.1. Articles of Incorporation of Banc One ABS Corporation*
3.2. Code of Regulations of Banc One ABS Corporation*
4.1. Form of Pooling and Servicing Agreement*
4.2. Form of Certificate (included as part of Exhibit 4.1)*
5.1. Opinion of Squire, Sanders & Dempsey with respect to legality*
8.1. Opinion of Squire, Sanders & Dempsey with respect to
federal income tax matters*
10.1 Form of Loan Sale Agreement*
23.1. Consent of Squire, Sanders & Dempsey (contained in Exhibit 5.1)*
24.1. Powers of Attorney (included as part of signature page)
- -------------------------
* To be filed by amendment.
Item 17. Undertakings
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, as amended (the "Securities Act"), the information omitted from the form
of prospectus filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the Securities
Act 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 Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
(4) For purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") 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.
(5) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt delivery to each
purchaser.
(6) 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;
and
(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.
(7) 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.
(8) 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Banc One ABS
Corporation 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 Columbus and State of Ohio on May 9, 1996.
BANC ONE ABS CORPORATION
By: /s/ Steven R. Bluhm
Steven R. Bluhm
President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned does
hereby constitute and appoint Steven R. Bluhm, Jeffrey B. Upperman or Kenneth
L. Wagner, or any of them (with full power to each of them to act alone), his
or her true and lawful attorney-in-fact and agent with full power of
substitution, for him or her and on his or her behalf to sign, execute and file
this Registration Statement and any and all amendments (including, without
limitation, post-effective amendments and any amendments increasing the amount
of securities for which registration is being sought) to this Registration
Statement, with all exhibits and any and all documents to be filed with respect
thereto, with the Securities and Exchange Commission or any regulatory
authority, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he or she might or
could do if personally present, hereby ratifying and confirming all that such
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Steven R. Bluhm President and Director (principal May 9, 1996
Steven R. Bluhm executive, financial and
accounting officer)
/s/ Jeffrey B. Upperman
Jeffrey B. Upperman Vice President and Director May 9, 1996
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit Page
3.1. Articles of Incorporation of Banc One ABS Corporation*
3.2. Code of Regulations of Banc One ABS Corporation*
1.1. Form of Underwriting Agreement*
4.1. Form of Pooling and Servicing Agreement*
4.2. Form of Certificate (included as part of Exhibit 4.1)*
5.1. Opinion of Squire, Sanders & Dempsey with respect to legality*
8.1 Opinion of Squire, Sanders & Dempsey with respect to federal
income tax matters*
10.1 Form of Loan Sale Agreement*
23.1. Consent of Squire, Sanders & Dempsey (contained in Exhibit 5.1)*
24.1. Powers of Attorney (included as part of signature page)
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* To be filed by amendment.
