<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 1996
REGISTRATION STATEMENT NO. 333-3457
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
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)
<TABLE>
<S> <C> <C>
OHIO NOT AVAILABLE
(State or other jurisdiction (IRS Employer
of incorporation or Identification
organization) Number)
</TABLE>
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:
<TABLE>
<S> <C> <C>
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
</TABLE>
--------------------------
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 MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED (1) PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Class A Asset Backed Certificates...... $293,459,000.00(2) 100% $293,459,000.00 $101,193
Class B Asset Backed Certificates...... $12,227,731.53(2) 100% $12,227,731.53 $4,217
TOTAL.................................. $305,686,731.53(2) 100% $305,686,731.53 $105,410(3)
</TABLE>
(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.
(3) A fee of $344.84 has previously been paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This Registration Statement contains a Prospectus relating to a public
offering by Banc One Auto Grantor Trust 1996-B of $305,686,731.53 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.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 18, 1996
$305,686,731.53
BANC ONE AUTO GRANTOR TRUST 1996-B
$293,459,000.00 CLASS A % ASSET BACKED CERTIFICATES
$12,227,731.53 CLASS B % ASSET BACKED CERTIFICATES
BANC ONE ABS CORPORATION
SELLER
---------------------
BANK ONE, ARIZONA, NA
SERVICER
---------------------
Banc One Auto Grantor Trust 1996-B (the "Trust") will be formed pursuant to
a Pooling and Servicing Agreement dated as of June 1, 1996, between Banc One ABS
Corporation, an Ohio corporation, as seller, Bank One, Arizona, NA, a national
banking association, as servicer, and Bankers Trust Company, as trustee, and
will issue $293,459,000.00 aggregate principal balance of % Class A Asset
Backed Certificates (the "Class A Certificates") and $12,227,731.53 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 June 1, 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 96% of the Trust. The Class B Certificates
will evidence in the aggregate an undivided ownership interest in approximately
4% 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 July 15, 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 February 2003 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 10.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN BANK ONE, ARIZONA, NA, 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.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNTS THE SELLER(1)
---------- --------------- -------------
<S> <C> <C> <C>
Per Class A Certificate...................................... % % %
Per Class B Certificate...................................... % % %
Total........................................................ $ $ $
</TABLE>
- --------------------------
(1) Before deducting expenses, estimated to be $533,000.
--------------------------
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
June , 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."
BANC ONE CAPITAL CORPORATION SALOMON BROTHERS INC
The date of this Prospectus is June , 1996
<PAGE>
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.
2
<PAGE>
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.
<TABLE>
<S> <C>
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, NA (the "Servicer" or the "Bank"). A
portion of the Receivables will be serviced by Valley
National Financial Services Company (the "Subservicer"
or "Valley National"), a wholly-owned subsidiary of Bank
One, Arizona, NA See "The Servicer and the Subservicer."
Trustee and Collateral Agent...... Bankers Trust Company, a New York banking corporation,
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 June 1, 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 $293,459,000.00 (the "Original Class
A Principal Balance") and will evidence in the aggregate
an undivided ownership interest in approximately 96% of
the Trust (the "Class A Percentage").
The Class B Certificates will be issued in an initial
aggregate principal amount of $12,227,731.53 (the
"Original Class B Principal Balance") and will evidence
in the aggregate an undivided ownership interest in
approximately 4% 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 The Certificates will be available for purchase in
Certificates..................... 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."
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
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 June 1, 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 $305,686,731.53
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 12.15%, the weighted
average remaining maturity of the Receivables was
approximately 45.97 months and the weighted average
original maturity of the Receivables was approximately
60.12 months. As of the Cutoff Date, no Receivable has a
scheduled maturity later than June 2002 (the "Final
Scheduled Maturity Date"). Approximately 45.02% 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 34.46%, 12.15% and 10.89%
of the aggregate principal balance of the Receivables
have Obligors with billing addresses in the State of
Arizona, Nevada and Georgia, 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").
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
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 July 1996. The
final scheduled Distribution Date is the February 2003
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 New York, New York 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.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
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.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
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 $4,585,300.97, or 1.50% 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) 3.25% 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) 1.00% 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
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
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 1.00% (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
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<TABLE>
<S> <C>
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."
</TABLE>
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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 or other documents evidencing the notation of
Valley National's or the Bank's lien on 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 34.46%, 12.15% and 10.89% by principal balance of
the Receivables were located in Arizona, Nevada and Georgia, respectively.
Arizona, Nevada and Georgia
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have experienced economic downturns from time to time and no predictions can be
made regarding future economic conditions in Arizona, Nevada, Georgia 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 the Bank were to
cease acting as Servicer, if Valley National were to cease acting as Subservicer
or during the period that the collection activities of the Bank and Valley
National are consolidated with certain of their affiliates, delays in processing
payments on the Receivables and information in respect thereof could occur and
result in delays in payments to the Certificateholders. See "The Portfolio of
Motor Vehicle Loans--Collection and Charge-Off Policies."
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.
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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
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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 or ownership or other documents evidencing the
notation of Valley National's or the Bank's lien on the certificates of title or
ownership 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 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
MOTOR VEHICLE LENDING
The Receivables will consist of loans either presently owned by the Bank or
acquired by the Bank from its wholly-owned subsidiary, Valley National (together
the "Originators") 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
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Receivables to the Seller pursuant to the Loan Sale Agreement. As of the Cutoff
Date, approximately 64.94% of the Receivables by aggregate principal balance of
the Receivables represents Receivables originated by Valley National.
The Originators purchase 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 Originators
enter 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 Originators 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. Valley National's motor vehicle lending operations are locally
managed through 17 sites in 12 states. In addition to purchasing Motor Vehicle
Loans from such Dealers, the Originators also extend 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.
Each Motor Vehicle Loan was purchased by the Originators after a review by
the Originators in accordance with their established underwriting procedures
described below. These procedures are intended to assess the ability of an
applicant for a proposed Motor Vehicle Loan to repay a proposed Motor Vehicle
Loan and the adequacy of the motor vehicle as collateral.
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 each Originator's
guidelines.
The Originators analyze all applications using a combination of empirical
and judgmental systems. Upon receipt of an application, a credit bureau report
on the applicant is ordered. The application, along with the credit bureau data
and pertinent information on the applicant's proposed purchase is then
judgmentally evaluated. Applications are generally approved on the strength of
the applicant's credit and employment background and ability to repay the new
debt. The Originators also give favorable consideration to an applicant's down
payment, 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. Each proposed loan is also evaluated utilizing a
"pricing model" which assigns operating costs and loan losses to new production
based on credit quality and loan-to-value ratios. Loan approvals are generally
made to requests which appear reasonable to the underwriter as well as
profitable on the pricing model.
Under the Originators' normal underwriting standards, the amount advanced
under a Motor Vehicle Loan generally will not exceed (i) in the case of new
motor vehicles, 125% of the Dealer's cost, 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, 125% of the wholesale price
reported in the most recent edition of the Kelly Blue Book, NADA or Blackbook
guide (varies by local market), 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. The
Originators' guidelines are intended to provide a basis for the lending
decision, but are not meant to supercede the credit judgment of the lending
officer. As a result, certain Motor Vehicle Loans may not comply with all of the
Originators' guidelines. The Originators review each of the Motor Vehicle Loans
to ensure compliance with its established policies and procedures.
DEALER AGREEMENTS
Each Dealer that originates Motor Vehicle Loans and assigns them to either
of the Originators has made representations and warranties to such Originator
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
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allowance were actually received and were in the amounts specified in the
documents delivered to such Originator, (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 and an Originator, such Originator has a right
to require the Dealer to repurchase such loan.
CONTRACT MODIFICATIONS
The Originators follow specific procedures with respect to contract
extensions and modifications. Extensions may be granted to a current or
delinquent customer to cure a short term cash flow problem. Extensions are
granted on an individual basis and are reported and monitored closely.
Generally, the extension policy includes: (i) at least six monthly payments must
be made before an account is eligible for extension, (ii) one extension is
allowed for every 12 month period, (iii) extensions will not be granted if the
loan is deemed to be uncollectible, and (iv) extensions will not be granted if
an account is more than 90 days past due unless approval by the Credit Unit
Manager is obtained. Approval by a collection supervisor must be obtained before
an extension is granted.
The Originators 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 Originators will not make modifications to the Receivables that (i)
reduce the original rates of interest on the Receivables, (ii) reduce the amount
of the regularly scheduled payments on the Receivables or (iii) extend the final
payment dates on such Receivables beyond the Collection Period relating to the
Final Scheduled Distribution Date.
INSURANCE
Pursuant to the Originators' 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.
COLLECTION AND CHARGE-OFF POLICIES
The Bank's collection activities are currently centralized in Phoenix and
Tucson, Arizona. Valley National's collection activities are currently locally
managed through 17 sites in 12 states. As part of its ongoing consolidation and
standardization efforts, BANC ONE CORPORATION intends to consolidate the Bank's
and Valley National's collection activities with respect to the Receivables into
a single collection center in Phoenix, Arizona. It is currently estimated that
this consolidation effort will be completed by the third quarter of 1997.
Certain of the collection procedures discussed below may be modified in
connection with the consolidation and standardization efforts of BANC ONE
CORPORATION.
The Originators consider Motor Vehicle Loans to be past due when payments
are not received by the due date. Using behavior scoring and other variables,
the Bank assesses Motor Vehicle Loans in terms of odds of becoming "bad." Bad is
defined as the probability of the loan going three or more payments (60 days)
delinquent. High risk loans are collected more aggressively than medium and low
risk loans. Depending on risk level, delinquent loan collection efforts can
begin as early as five days past due or as late as 13 days past due. Obligors on
first payment default loans (highest risk) are called at 5 days by a late stage
seasoned collector. Obligors on high risk non-first payment default loans are
called via autodialer technology beginning at 10 days past due. Obligors on
medium risk loans are called at 12 days past due. Obligors on low risk loans are
sent a reminder letter at 13 days past due and typically called at 20 days past
due. Collection accounts remain on the autodialer where efforts are made to
contract for payment arrangements or until
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determined to be worthy of accelerated collection techniques. If a loan ages
past 45 days, it is automatically considered high risk and transferred to a
manual calling environment. Repossession evaluations are typically conducted at
60 days past due.
Valley National's collection efforts generally begin on the tenth day of
delinquency via telephone. Collection personnel within each office, with the
assistance of the collection and/or branch manager, prioritize accounts on the
basis of perceived risk after the tenth day of delinquency. Repossession
procedures generally begin by the 45th day of delinquency.
Repossessions are carried out by contractors who have met the Originators'
eligibility requirements. Collateral is liquidated at weekly auctions, subject
to minimum bid requirements, no later than 45 days after repossession.
The Originators' policy is to charge off Motor Vehicle Loans at the time of
repossession or at the point the loan becomes 120 days delinquent, whichever
comes first. 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. Prior to the first quarter of 1996, each of the
Originator's procedure was to charge off less than 100% of the principal balance
plus accrued interest of Motor Vehicle Loans at the time of repossession. The
net losses for each of the Originators for the three months ended March 31, 1996
in the tables below reflect such change.
DELINQUENCY AND NET LOSS EXPERIENCE 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
<TABLE>
<CAPTION>
AT MARCH 31,
-------------------------------------------------
1996 1995
----------------------- -----------------------
NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Portfolio at Period End....... 50,010 $472,358,212 49,816 $433,521,970
Delinquency:
30-59 days.................. 476 $ 4,109,434 411 $ 3,230,137
60-89 days.................. 81 $ 650,581 39 $ 300,287
90 days or more............. 34 $ 318,138 14 $ 85,719
Total Delinquencies as a
Percentage of the
Portfolio.................... 1.18 % 1.08% 0.93 % 0.83%
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------------------------------
1995 1994 1993
----------------------- ----------------------- -----------------------
NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- ------------ --------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Portfolio at Period End....... 47,845 $432,159,919 51,935 $459,919,212 56,840 $514,433,322
Delinquency:
30-59 days.................. 579 $ 4,685,050 561 $ 4,136,178 559 $ 3,600,321
60-89 days.................. 96 $ 723,220 115 $ 920,306 88 $ 502,998
90 days or more............. 21 $ 138,255 13 $ 98,657 17 $ 100,920
Total Delinquencies as a
Percentage of the
Portfolio.................... 1.45 % 1.28% 1.33 % 1.12% 1.17 % 0.82%
</TABLE>
HISTORICAL NET LOSS EXPERIENCE
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED MARCH 31, FOR YEAR ENDED DECEMBER 31,
---------------------------------------- ----------------------------------------------
1996 (1) 1995 (1) 1995 1994 1993
------------------- ------------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Principal Amount Outstanding.......... $ 472,358,212 $ 433,521,970 $432,159,919 $459,919,212 $514,433,322
Average Principal Amount
Outstanding.......................... $ 449,852,213 $ 446,638,416 $424,055,377 $495,350,326 $468,400,193
Number of Loans Outstanding........... 50,010 49,816 47,845 51,935 56,840
Average Number of Loans Outstanding... 49,314 50,652 48,570 54,884 55,488
Net Losses............................ $ 677,763 $ 629,339 $ 1,728,951 $ 733,306 $ 820,765
Net Losses as a Percent of Principal
Amount Outstanding................... 0.57% 0.58% 0.40% 0.16% 0.16%
Net Losses as a Percent of Average
Principal Amount Outstanding......... 0.60% 0.56% 0.41% 0.15% 0.18%
</TABLE>
- ----------------------------------------
(1) Percentages are computed on an annualized basis.
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.
16
<PAGE>
DELINQUENCY AND NET LOSS EXPERIENCE OF VALLEY NATIONAL
Set forth below is certain information concerning the historical experience
of the portfolio owned or serviced by Valley National pertaining to retail (new
and used) automobile, van and light duty truck Receivables originated indirectly
by the Valley National 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
<TABLE>
<CAPTION>
AT MARCH 31,
-------------------------------------------------
1996 1995
----------------------- -----------------------
NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Portfolio at Period End....... 57,615 $481,980,813 75,028 $680,700,832
Delinquency:
30-59 days.................. 338 $ 2,999,444 321 $ 2,910,280
60-89 days.................. 53 $ 482,534 41 $ 403,771
90 days or more............. 31 $ 270,541 14 $ 146,535
Total Delinquencies as a
Percentage of the
Portfolio.................... 0.73 % 0.78% 0.50 % 0.51%
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------------------------------
1995 1994 1993
----------------------- ----------------------- -----------------------
NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- ------------ --------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Portfolio at Period End....... 60,118 $499,872,817 79,093 $738,210,863 81,030 $767,066,037
Delinquency:
30-59 days.................. 503 $ 4,375,988 364 $ 3,367,531 486 $ 3,997,134
60-89 days.................. 73 $ 691,106 43 $ 404,326 29 $ 255,539
90 days or more............. 44 $ 437,131 14 $ 102,886 6 $ 29,018
Total Delinquencies as a
Percentage of the
Portfolio.................... 1.03 % 1.10% 0.53 % 0.52% 0.64 % 0.56%
</TABLE>
HISTORICAL NET LOSS EXPERIENCE
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED MARCH
31, FOR YEAR ENDED DECEMBER 31,
------------------------------ ----------------------------------------------
1996 (1)(2) 1995 (1) 1995 1994 1993
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Principal Amount Outstanding.......... $481,980,813 $680,700,832 $499,872,817 $738,210,863 $767,066,037
Average Principal Amount
Outstanding.......................... $485,613,955 $711,966,618 $612,606,526 $788,399,898 $698,730,738
Number of Loans Outstanding........... 57,615 75,028 60,118 79,093 81,030
Average Number of Loans Outstanding... 58,319 76,584 68,830 82,753 77,566
Net Losses............................ $ 164,853 $ 698,566 $ 3,834,679 $ 1,731,872 $ 1,672,978
Net Losses as a Percent of Principal
Amount Outstanding................... 0.14% 0.41% 0.77% 0.23% 0.22%
Net Losses as a Percent of Average
Principal Amount Outstanding......... 0.14% 0.39% 0.63% 0.22% 0.24%
</TABLE>
- ----------------------------------------
(1) Percentages are computed on an annualized basis.
(2) Net loss numbers reflect an atypically high level of recoveries.
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 $250 and $50,000; and each Receivable is a fixed rate, simple interest
receivable (a "Simple Interest Receivable") having an APR of no less than 9%, in
the case of Receivables originated by Valley National and 11%, in the case of
Receivables originated by the Bank. 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.
COMPOSITION OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
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>
12.15% $ 305,686,731.53 31,595 45.97 months 60.12 months $ 9,675.16
</TABLE>
17
<PAGE>
DISTRIBUTION BY REMAINING PRINCIPAL OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
REMAINING PRINCIPAL NUMBER OF AGGREGATE PRINCIPAL
RANGE OF BALANCE RECEIVABLES BALANCE (1)
- ------------------------------------------------------------------------------------------ ----------- -------------------
<S> <C> <C>
$ 250 to $ 2,499......................................................................... 1,077 $ 2,115,568
$ 2,500 to $ 4,999........................................................................ 5,608 21,460,032
$ 5,000 to $ 7,499........................................................................ 6,235 38,949,385
$ 7,500 to $ 9,999........................................................................ 5,632 49,071,066
$10,000 to $12,499........................................................................ 4,691 52,564,253
$12,500 to $14,999........................................................................ 3,304 45,124,007
$15,000 to $17,499........................................................................ 2,178 35,213,426
$17,500 to $19,999........................................................................ 1,291 24,036,749
$20,000 to $22,499........................................................................ 766 16,192,066
$22,500 to $24,999........................................................................ 421 9,944,592
$25,000 to $27,499........................................................................ 205 5,351,939
$27,500 to $29,999........................................................................ 119 3,408,897
$30,000 to $39,999........................................................................ 65 2,121,325
$40,000 to $49,999........................................................................ 3 133,425
----------- -------------------
Total..................................................................................... 31,595 $ 305,686,732
----------- -------------------
----------- -------------------
<CAPTION>
PERCENTAGE OF
REMAINING PRINCIPAL AGGREGATE PRINCIPAL
RANGE OF BALANCE BALANCE (2)
- ------------------------------------------------------------------------------------------ ---------------------
<S> <C>
$ 250 to $ 2,499......................................................................... 0.69%
$ 2,500 to $ 4,999........................................................................ 7.02
$ 5,000 to $ 7,499........................................................................ 12.74
$ 7,500 to $ 9,999........................................................................ 16.05
$10,000 to $12,499........................................................................ 17.20
$12,500 to $14,999........................................................................ 14.76
$15,000 to $17,499........................................................................ 11.52
$17,500 to $19,999........................................................................ 7.86
$20,000 to $22,499........................................................................ 5.30
$22,500 to $24,999........................................................................ 3.25
$25,000 to $27,499........................................................................ 1.75
$27,500 to $29,999........................................................................ 1.12
$30,000 to $39,999........................................................................ 0.69
$40,000 to $49,999........................................................................ 0.04
------
Total..................................................................................... 100.00%
------
------
</TABLE>
- --------------------------
(1) Dollar amounts may not add to $305,686,732 because of rounding.
(2) Percentages may not add to 100.00% because of rounding.
DISTRIBUTION BY ANNUAL PERCENTAGE RATE OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
ANNUAL PERCENTAGE NUMBER OF AGGREGATE PRINCIPAL
RATE RANGE RECEIVABLES BALANCE (1)
- ------------------------------------------------------------------------------------------ ----------- -------------------
<S> <C> <C>
9.00% to 9.99%.......................................................................... 6,456 $ 62,159,280
10.00% to 10.99%.......................................................................... 4,173 40,862,152
11.00% to 11.99%.......................................................................... 6,443 69,242,320
12.00% to 12.99%.......................................................................... 5,255 51,620,688
13.00% to 13.99%.......................................................................... 2,726 26,480,454
14.00% to 14.99%.......................................................................... 1,989 17,673,233
15.00% and above.......................................................................... 4,553 37,648,604
----------- -------------------
Total..................................................................................... 31,595 $ 305,686,732
----------- -------------------
----------- -------------------
<CAPTION>
PERCENTAGE OF
ANNUAL PERCENTAGE AGGREGATE PRINCIPAL
RATE RANGE BALANCE
- ------------------------------------------------------------------------------------------ ---------------------
<S> <C>
9.00% to 9.99%.......................................................................... 20.33%
10.00% to 10.99%.......................................................................... 13.37
11.00% to 11.99%.......................................................................... 22.65
12.00% to 12.99%.......................................................................... 16.89
13.00% to 13.99%.......................................................................... 8.66
14.00% to 14.99%.......................................................................... 5.78
15.00% and above.......................................................................... 12.32
------
Total..................................................................................... 100.00%
------
------
</TABLE>
- --------------------------
(1) Dollar amounts may not add to $305,686,732 because of rounding.
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE PRINCIPAL
RANGE OF REMAINING TERMS RECEIVABLES BALANCE
- -------------------------------------------------------------------------------------------- ----------- -------------------
<S> <C> <C>
12 to 17 months............................................................................. 3,710 $ 13,512,987
18 to 23 months............................................................................. 3,253 16,181,933
24 to 29 months............................................................................. 3,434 22,171,388
30 to 35 months............................................................................. 3,617 28,404,990
36 to 41 months............................................................................. 3,875 36,642,396
42 to 47 months............................................................................. 3,524 38,428,800
48 to 53 months............................................................................. 2,933 36,572,468
54 to 59 months............................................................................. 3,578 50,738,146
60 to 65 months............................................................................. 1,828 29,464,301
66 to 71 months............................................................................. 1,613 29,191,449
72 months................................................................................... 230 4,377,874
----------- -------------------
Total....................................................................................... 31,595 $ 305,686,732
----------- -------------------
----------- -------------------
<CAPTION>
PERCENTAGE OF
AGGREGATE PRINCIPAL
RANGE OF REMAINING TERMS BALANCE (1)
- -------------------------------------------------------------------------------------------- -------------------
<S> <C>
12 to 17 months............................................................................. 4.42%
18 to 23 months............................................................................. 5.29
24 to 29 months............................................................................. 7.25
30 to 35 months............................................................................. 9.29
36 to 41 months............................................................................. 11.99
42 to 47 months............................................................................. 12.57
48 to 53 months............................................................................. 11.96
54 to 59 months............................................................................. 16.60
60 to 65 months............................................................................. 9.64
66 to 71 months............................................................................. 9.55
72 months................................................................................... 1.43
------
Total....................................................................................... 100.00%
------
------
</TABLE>
- --------------------------
(1) Percentages may not add to 100.00% because of rounding.
18
<PAGE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES AS OF THE CUTOFF DATE (1)
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE PRINCIPAL
STATE (1) RECEIVABLES BALANCE
- ------------------------------------------------------------------------------------------ ----------- -------------------
<S> <C> <C>
Arizona................................................................................... 10,612 $ 105,333,837
California................................................................................ 506 5,554,738
Colorado.................................................................................. 765 6,304,885
Florida................................................................................... 1,589 14,636,674
Georgia................................................................................... 3,541 33,304,423
Nevada.................................................................................... 3,318 37,139,371
New Mexico................................................................................ 3,089 30,214,021
North Carolina............................................................................ 1,033 8,397,304
Oklahoma.................................................................................. 2,261 24,453,130
South Carolina............................................................................ 919 8,962,327
Tennessee................................................................................. 912 9,999,926
Texas..................................................................................... 1,825 10,989,802
Other..................................................................................... 1,225 10,396,294
----------- -------------------
Total..................................................................................... 31,595 $ 305,686,732
----------- -------------------
----------- -------------------
<CAPTION>
PERCENTAGE OF
AGGREGATE PRINCIPAL
STATE (1) BALANCE
- ------------------------------------------------------------------------------------------ ---------------------
<S> <C>
Arizona................................................................................... 34.46%
California................................................................................ 1.82
Colorado.................................................................................. 2.06
Florida................................................................................... 4.79
Georgia................................................................................... 10.89
Nevada.................................................................................... 12.15
New Mexico................................................................................ 9.88
North Carolina............................................................................ 2.75
Oklahoma.................................................................................. 8.00
South Carolina............................................................................ 2.93
Tennessee................................................................................. 3.27
Texas..................................................................................... 3.60
Other..................................................................................... 3.40
------
Total..................................................................................... 100.00%
------
------
</TABLE>
- ------------------------
(1) Based on billing addresses of the Obligors.
Approximately 45.02% of the aggregate principal balance of the Receivables,
constituting 37.02% 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, 0.65% of the aggregate principal balance of the
Receivables, constituting 0.68% 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."
19
<PAGE>
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.
20
<PAGE>
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 $4,585,300.97.
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.
21
<PAGE>
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, NA, 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 March 31, 1996 (the "Call Report") and is qualified in its entirety by
detailed information included in such Call Report. As of March 31, 1996, the
Bank had total assets of approximately $13.8 billion, total deposits of
approximately $10.9 billion and total equity capital of approximately $.9
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 the Loan Purchase and
Servicing 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 64.94% 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 201 North Central
Avenue, Phoenix, AZ 85004, and its telephone number is (602) 221-2900.
The principal executive offices of Valley National are located at 1600 East
Northern Avenue, Phoenix, AZ 85020, and its telephone number is (602) 221-2900.
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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 96% of the
Trust and the Class B Certificates will evidence in the aggregate an undivided
ownership interest of 4% 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
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"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.
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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
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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 sold by it to the
Bank pursuant to the Loan Purchase and Servicing Agreement, 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
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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 Bankers Trust Company, as collateral agent on behalf of the
Certificateholders (the "Collateral Agent"). The Collection Account, the Class A
Distribution Account, the
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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.
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 Bank or its affiliates or
trusts originated by the Bank 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).
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. 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 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.
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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 Servicer 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, as Servicer, 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 1.00% (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.
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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
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(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.
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"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.
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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 1.50% 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) 3.25% 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), except that, if on any Distribution Date (x) the average of the
Charge-off Rates for the three preceding Collection Periods exceeds 1.75% or (y)
the average of the Delinquency Percentages for the three preceding Collection
Periods exceeds 1.75%, then the Specified Reserve Balance shall be an amount
equal to the greater of 8.00% of the sum of the Class A Principal Balance and
the 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) and the amount specified in clause (b) below or (b) 1.00% 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.
The "Charge-off Rate" with respect to a Collection Period will equal the
Aggregate Net Losses with respect to the Receivables expressed, on an annualized
basis, as a percentage of the average of (x) the Pool Balance on the last day of
the immediately preceding Collection Period and (y) the Pool Balance on the last
day in such Collection Period. The "Aggregate Net Losses" with respect to a
Collection Period will equal the
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aggregate principal balance of all Receivables newly designated during such
Collection Period as Liquidated Receivables minus Liquidation Proceeds collected
during such Collection Period with respect to all Liquidated Receivables and any
Recoveries collected during such Collection Period. The "Delinquency Percentage"
with respect to a Collection Period will equal the ratio of (a) the outstanding
principal balance of the Receivables 60 days or more delinquent (which amount
shall include Receivables in respect of Financed Vehicles that have been
repossessed but not yet sold or otherwise liquidated) as of the last day of such
Collection Period, determined in accordance with the Servicer's normal
practices, divided by (b) the outstanding principal balance of all Receivables
on the last day of such Collection Period.
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;
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(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 one or more reports expressing a summary of findings
regarding 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
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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.
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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.
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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
Bankers Trust Company, a New York banking corporation, 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.
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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 4 Albany Street, New
York, New York 10006. 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
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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
or ownership or other documents evidencing the notation of Valley National's or
the Bank's lien on the certificate of title or ownership 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
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re-registration through notification 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
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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
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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.
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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 one quarter 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
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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.
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
The DOL has issued individual exemptions, Prohibited Transaction Exemption
("PTE") 95-89, Exemption Application No. D-10046, 60 Fed. Reg. 49011 (1995), to
Banc One Capital Corporation, and PTE 89-89, as amended, Exemption Application
No. D-6446, 54 Fed. Reg. 42,589 (1989), to Salomon Brothers Inc (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
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<PAGE>
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.
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<PAGE>
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:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
BALANCE BALANCE
OF CLASS A OF CLASS B
UNDERWRITERS CERTIFICATES CERTIFICATES
- --------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Banc One Capital Corporation............................. $ 146,729,500 $ 6,113,865.77
Salomon Brothers Inc..................................... $ 146,729,500 $ 6,113,865.76
---------------- ----------------
Total.............................................. $ 293,459,000 $ 12,227,731.53
---------------- ----------------
---------------- ----------------
</TABLE>
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
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<PAGE>
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.
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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
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<PAGE>
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:
53
<PAGE>
(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.
54
<PAGE>
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Accounts................................................................................................... 28
Aggregate Net Losses....................................................................................... 33
Agreement.................................................................................................. 3
Arizona UCC................................................................................................ 10
APR........................................................................................................ 4
Bank....................................................................................................... 3
BANC ONE................................................................................................... 21
Business Day............................................................................................... 5
Call Report................................................................................................ 22
Cede....................................................................................................... 2
Cedel...................................................................................................... 1
Cedel Participants......................................................................................... 24
Closing Date............................................................................................... 10
Collection Account......................................................................................... 27
Collection Period.......................................................................................... 6
Certificate Owner.......................................................................................... 23
Certificateholders......................................................................................... 5
Certificates............................................................................................... 1
Charge-off Rate............................................................................................ 33
Class...................................................................................................... 3
Class A Certificateholders................................................................................. 5
Class A Certificates....................................................................................... 1
Class A Distribution Account............................................................................... 27
Class A Interest Carryover Shortfall....................................................................... 31
Class A Interest Distribution.............................................................................. 31
Class A Monthly Interest................................................................................... 5
Class A Monthly Principal.................................................................................. 6
Class A Pass-Through Rate.................................................................................. 4
Class A Percentage......................................................................................... 3
Class A Pool Factor........................................................................................ 21
Class A Principal Balance.................................................................................. 5
Class A Principal Carryover Shortfall...................................................................... 31
Class A Principal Distribution............................................................................. 32
Class B Certificateholders................................................................................. 5
Class B Certificates....................................................................................... 1
Class B Distribution Account............................................................................... 27
Class B Interest Carryover Shortfall....................................................................... 32
Class B Interest Distribution.............................................................................. 31
Class B Monthly Interest................................................................................... 5
Class B Monthly Principal.................................................................................. 6
Class B Pass-Through Rate.................................................................................. 5
Class B Percentage......................................................................................... 3
Class B Pool Factor........................................................................................ 21
Class B Principal Balance.................................................................................. 32
Class B Principal Carryover Shortfall...................................................................... 32
Class B Principal Distribution............................................................................. 32
Closing Date............................................................................................... 4
Code....................................................................................................... 9
Collateral Agent........................................................................................... 3
Collection Account......................................................................................... 27
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
Collection Period.......................................................................................... 6
<S> <C>
Collections................................................................................................ 30
Commission................................................................................................. 2
Cooperative................................................................................................ 25
Cutoff Date................................................................................................ 1
Dealer Agreements.......................................................................................... 14
Dealers.................................................................................................... 14
Definitive Certificates.................................................................................... 23
Delinquency Percentage..................................................................................... 34
Depositories............................................................................................... 23
Determination Date......................................................................................... 29
Direct Participants........................................................................................ 23
Distribution Date.......................................................................................... 5
Distribution Date Statement................................................................................ 34
DOL........................................................................................................ 47
DTC........................................................................................................ 2
Eligible Deposit Account................................................................................... 28
Eligible Institution....................................................................................... 28
Eligible Investments....................................................................................... 28
Eligible Trust Company..................................................................................... 28
ERISA...................................................................................................... 9
Euroclear.................................................................................................. 1
Euroclear Operator......................................................................................... 25
Euroclear Participants..................................................................................... 25
Events of Servicing Termination............................................................................ 36
Exchange Act............................................................................................... 2
Excluded Plan.............................................................................................. 48
Exemption.................................................................................................. 48
Final Scheduled Distribution Date.......................................................................... 1
Final Scheduled Maturity Date.............................................................................. 4
Financed Vehicles.......................................................................................... 4
FTC Rule................................................................................................... 42
Global Securities.......................................................................................... 52
Holders.................................................................................................... 26
Indirect Participants...................................................................................... 23
Insolvency Laws............................................................................................ 22
Interest Collections....................................................................................... 30
Issuer..................................................................................................... 3
IRS........................................................................................................ 43
Liquidated Receivables..................................................................................... 30
Liquidation Proceeds....................................................................................... 30
Loan Purchase and Servicing Agreement...................................................................... 4
Loan Sale Agreement........................................................................................ 4
Motor Vehicle Loans........................................................................................ 14
Obligors................................................................................................... 4
OCC........................................................................................................ 43
Ohio UCC................................................................................................... 10
OID........................................................................................................ 44
Original Class A Principal Balance......................................................................... 3
Original Class B Principal Balance......................................................................... 3
Original Pool Balance...................................................................................... 7
Originators................................................................................................ 13
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
Paid-Ahead Period.......................................................................................... 20
<S> <C>
Paid-Ahead Receivable...................................................................................... 20
Participants............................................................................................... 23
Plan....................................................................................................... 9
Pool Balance............................................................................................... 7
Principal Collections...................................................................................... 6
PTE........................................................................................................ 48
Purchase Amount............................................................................................ 27
Purchase Price............................................................................................. 44
Rating Agency.............................................................................................. 8
Realized Losses............................................................................................ 32
Receivable File............................................................................................ 27
Receivables................................................................................................ 1
Record Date................................................................................................ 5
Recoveries................................................................................................. 30
Registration Statement..................................................................................... 2
Regulation................................................................................................. 47
Reserve Fund............................................................................................... 6
Restricted Group........................................................................................... 48
Retained Yield............................................................................................. 44
Rules...................................................................................................... 24
Securities Act............................................................................................. 2
Seller..................................................................................................... 3
Servicer................................................................................................... 3
Servicing Fee.............................................................................................. 8
Servicing Fee Rate......................................................................................... 8
Shortfall Amount........................................................................................... 46
Simple Interest Receivable................................................................................. 17
Specified Reserve Balance.................................................................................. 7
Subservicer................................................................................................ 3
Terms and Conditions....................................................................................... 25
Trust...................................................................................................... 3
Trustee.................................................................................................... 3
Trust Property............................................................................................. 4
UCC........................................................................................................ 10
Underwriters............................................................................................... 50
Underwriting Agreement..................................................................................... 50
U.S. Person................................................................................................ 54
Valley National............................................................................................ 3
</TABLE>
57
<PAGE>
- --------------------------------------------
--------------------------------------------
- --------------------------------------------
--------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS 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
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Reports to Certificateholders.................... 2
Available Information............................ 2
Incorporation of Certain Documents by
Reference....................................... 2
Summary of Terms................................. 3
Risk Factors..................................... 10
Formation of the Trust........................... 12
The Trust Property............................... 13
The Portfolio of Motor Vehicle Loans............. 13
The Receivables Pool............................. 17
Maturity and Prepayment Assumptions.............. 20
Yield Considerations............................. 21
Pool Factors and Trading Information............. 21
Use of Proceeds.................................. 21
The Seller....................................... 21
The Servicer and the Subservicer................. 22
The Certificates................................. 23
Certain Legal Aspects of the Receivables......... 39
Federal Income Tax Consequences.................. 43
State and Local Tax Consequences................. 47
ERISA Considerations............................. 47
Underwriting..................................... 50
Notice to Canadian Residents..................... 50
Legal Matters.................................... 51
Annex I.......................................... 52
Index of Principal Terms......................... 55
</TABLE>
------------------------
UNTIL SEPTEMBER , 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.
$305,686,731.53
BANC ONE AUTO GRANTOR TRUST
1996-B
$293,459,000.00
CLASS A %
ASSET BACKED CERTIFICATES
$12,227,731.53
CLASS B %
ASSET BACKED CERTIFICATES
BANC ONE ABS CORPORATION
SELLER
BANK ONE, ARIZONA, NA
SERVICER
---------------------
PROSPECTUS
JUNE , 1996
---------------------
BANC ONE CAPITAL CORPORATION
SALOMON BROTHERS INC
- --------------------------------------------
--------------------------------------------
- --------------------------------------------
--------------------------------------------
<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.
<TABLE>
<S> <C>
SEC Registration Fee...................................................... $ 105,410
Printing and Engraving.................................................... $ 45,000
Trustee's Fees............................................................ $ 4,000
Legal Fees and Expenses................................................... $ 100,000
Blue Sky Fees and Expenses................................................ $ 30,000
Accountant's Fees and Expenses............................................ $ 50,000
Rating Agency Fees........................................................ $ 193,542
Miscellaneous Fees and Expenses........................................... $ 5,048
---------
Total Expenses........................................................ $ 533,000
---------
---------
</TABLE>
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.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
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
Opinion of Squire, Sanders & Dempsey with respect to federal income tax
8.1 matters
10.1 Form of Loan Sale Agreement
Consent of Squire, Sanders & Dempsey (contained in Exhibit 5.1 and Exhibit
23.1 8.1)
24.1 Powers of Attorney (included as part of signature page)*
</TABLE>
- ------------------------
*Previously filed.
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-2
<PAGE>
(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.
II-3
<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
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Columbus and State of
Ohio on June 17, 1996.
BANC ONE ABS CORPORATION
By: /s/ STEVEN R. BLUHM
-----------------------------------
Steven R. Bluhm
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ----------------------------------- ------------------------- ----------------
President and Director
/s/ STEVEN R. BLUHM (principal executive,
- ----------------------------------- financial and accounting June 17, 1996
Steven R. Bluhm officer)
/s/ JEFFREY B. UPPERMAN
- ----------------------------------- Vice President and June 17, 1996
Jeffrey B. Upperman Director
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT PAGE
- ----------- ------------------------------------------------------------------------------------------------- ---------
<C> <S> <C>
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 and Exhibit 8.1)
24.1 Powers of Attorney (included as part of signature page)*
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
EXHIBIT 1.1
BANC ONE AUTO GRANTOR TRUST 1996-B
$______________ CLASS A ____% ASSET BACKED CERTIFICATES
$_____________ CLASS B ____% ASSET BACKED CERTIFICATES
BANK ONE, ARIZONA, NA
(SELLER)
FORM OF UNDERWRITING AGREEMENT
June __, 1996
BANC ONE CAPITAL CORPORATION
90 North High Street
Columbus, OH 43215
SALOMON BROTHERS INC
7 World Trade Center
32nd Floor
New York, NY 10048
Ladies and Gentlemen:
1. INTRODUCTORY. Banc One ABS Corporation, an Ohio Corporation (the
"Seller"), proposes to cause BANC ONE AUTO GRANTOR TRUST 1996-B (the "Trust") to
issue $______________ principal amount of its Class A ____% Asset Backed
Certificates (the "Class A Certificates") and $_____________ principal amount of
its Class B % Asset Backed Certificates (the "Class B Certificates" and,
together with the Class A Certificates, the "Certificates") and the Seller
proposes to sell the Certificates to the several underwriters named in Schedule
I attached hereto (the "Underwriters"). The assets of the Trust include, among
other things, a pool of retail receivables generated from time to time pursuant
to motor vehicle retail installment sale contracts (the "Receivables") secured
by new or used automobiles, vans or light-duty trucks financed thereby (the
"Financed Vehicles"), and certain monies received thereunder on or after June 1,
1996 (the "Cutoff Date"), and the other property and the proceeds thereof to be
conveyed to the Trustee pursuant to the Pooling and Servicing Agreement to be
dated as of June 1, 1996 (the "Pooling and Servicing Agreement") among the
Seller, as seller and Bank One, Arizona, NA, a national banking association, as
servicer (the "Bank" or the "Servicer") and Bankers Trust Company, a New York
banking corporation, as
<PAGE>
trustee (the "Trustee"). Pursuant to the Pooling and Servicing Agreement, the
Seller will sell the Receivables to the Trustee, acting on behalf of Trust and
the Servicer will service the Receivables on behalf of the Trust. In addition,
pursuant to the Pooling and Servicing Agreement, the Servicer will agree to
perform certain administrative tasks. The Certificates will be issued pursuant
to the Pooling and Servicing Agreement.
Certain of the Receivables were originated by Valley National
Financial Services Company ("Valley National" or the "Subservicer"), a wholly-
owned subsidiary of the Bank will be sold to the Bank pursuant to the terms of
the Loan Purchase and Servicing Agreement (the "Loan Purchase and Servicing
Agreement") dated as of June 1, 1996 between the Bank and Valley National. The
Bank will sell the Receivables to the Seller pursuant to the terms of the Loan
Sale Agreement dated as of June 1, 1996 (the "Loan Sale Agreement") between the
Bank and the Seller.
Capitalized terms used and not otherwise defined herein shall have the
meanings given them in the Pooling and Servicing Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. (a) The Seller
represents and warrants to and agrees with the Underwriters that:
(i) A registration statement (No. 333-3457), including a form of
prospectus, on Form S-3 relating to the Certificates has been filed with
the Securities and Exchange Commission (the "Commission") and either (A)
has been declared effective under the Securities Act of 1933, as amended
(the "Act"), and is not proposed to be amended or (B) is proposed to be
amended by amendment or post-effective amendment. If the Seller does not
propose to amend such registration statement and if any post-effective
amendment to such registration statement has been filed with the Commission
prior to the execution and delivery of the Underwriting Agreement, the most
recent such amendment has been declared effective by the Commission. For
purposes of the Underwriting Agreement, "Effective Time" means (x) if the
Seller has advised the Underwriters that it does not propose to amend such
registration statement, the date and time as of which such registration
statement, or the most recent post-effective amendment thereto (if any)
filed prior to the execution and delivery of the Underwriting Agreement,
was declared effective by the Commission, or (y) if the Seller has advised
the Underwriters that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which
such registration statement, as amended by such amendment or post-effective
-2-
<PAGE>
amendment, as the case may be, is declared effective by the Commission.
"Effective Date" means the date of the Effective Time. Such registration
statement, as amended at the Effective Time, including all information (if
any) deemed to be a part of such registration statement as of the Effective
Time pursuant to Rule 430A(b) under the Act, and including the exhibits
thereto and any material incorporated by reference therein, is hereinafter
referred to as the "Registration Statement," and the form of prospectus
relating to the Certificates, as first filed with the Commission pursuant
to and in accordance with Rule 424(b) ("Rule 424(b)") under the Act or, if
no such filing is required, as included in the Registration Statement at
the Effective Date, is hereinafter referred to as the "Prospectus."
(ii) If the Effective Time is prior to the execution and delivery of
the Underwriting Agreement: (A) on the Effective Date, the Registration
Statement conformed in all material respects to the requirements of the Act
and the rules and regulations of the Commission under the Act (the "Rules
and Regulations"), (B) on the date of the Underwriting Agreement, the
Registration Statement conforms, and at the time of filing of the
Prospectus pursuant to Rule 424(b), the Registration Statement and the
Prospectus will conform, in all material respects to the requirements of
the Act and the Rules and Regulations, (C) on the Effective Date, the
Registration Statement did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading and (D) on
the Effective Date, the Prospectus, if not filed pursuant to Rule 424(b),
did not, and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date the Prospectus will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
are made, not misleading. If the Effective Time is subsequent to the
execution and delivery of the Underwriting Agreement: (1) on the Effective
Date, the Registration Statement and the Prospectus will conform in all
material respects to the requirements of the Act and the Rules and
Regulations, (2) on the Effective Date, the Registration Statement will not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading and (3) on the Effective Date, at the
time of filing of the Prospectus pursuant to Rule 424(b) and at the Closing
Date, the Prospectus will not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to
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<PAGE>
make the statements therein, in the light of the circumstances under which
they were made, not misleading. The two preceding sentences do not apply
to statements in or omissions from the Registration Statement or Prospectus
based upon written information furnished to the Seller by any Underwriter
through the Underwriters specifically for use therein and the Seller
acknowledges that the only such information is the Underwriters'
Information as defined in Section 2(b) hereof.
(iii) The Underwriting Agreement has been duly authorized, executed and
delivered by the Seller. The execution, delivery and performance of the
Underwriting Agreement and the issuance and sale of the Certificates and
compliance with the terms and provisions hereof will not result in a breach
or violation of any of the terms and provisions of, or constitute a default
under, any agreement or instrument to which the Seller is a party or by
which the Seller is bound or to which any of the properties of the Seller
is subject which could reasonably be expected to have a material adverse
effect on the transactions contemplated herein. The Seller has full
corporate power and authority to (i) authorize the Trustee to execute and
deliver the Certificates to the Seller and (ii) sell the Certificates to
the Underwriters, all as contemplated by the Underwriting Agreement.
(iv) Other than as contemplated by the Underwriting Agreement or as
disclosed in the Prospectus, there is no broker, finder or other party that
is entitled to receive from the Seller any brokerage or finder's fee or
other fee or commission as a result of any of the transactions contemplated
by the Underwriting Agreement.
(v) All legal or governmental proceedings, contracts or documents of
a character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement have
been so described or filed as required.
(vi) As of the Closing Date (as defined below), the representations
and warranties of (i) the Seller and the Bank under the Pooling and
Servicing Agreement will be true and correct in all material respects and
each such representation and warranty is so incorporated herein by this
reference; (ii) the Bank under the Loan Sale Agreement, (iii) Valley
National under the Loan Purchase and Servicing Agreement and (iv) the
Seller herein shall be true and correct in all material respects.
(vii) The Seller's assignment and delivery of the Receivables to the
Trustee, on behalf of the Trust, on the
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Closing Date will vest in the Trustee, on behalf of the Trust, all the
Seller's right, title and interest therein, or will result in a first
priority perfected security interest therein, in either case subject to no
prior Lien.
(viii) The Certificates, when duly and validly executed and
authenticated by the Trustee, in accordance with the Pooling and Servicing
Agreement, and delivered and paid for pursuant hereto will be validly
issued and outstanding and entitled to the benefits of the Pooling and
Servicing Agreement.
(ix) Neither the transfer from the Seller to the Trustee, acting on
behalf of the Trust, of the Receivables and other Trust Property conveyed
by it to the Trust pursuant to the Pooling and Servicing Agreement, nor the
assignment of the security interest of the Seller in the Financed Vehicles
or the other Trust Property to the Trustee, acting on behalf of the Trust,
pursuant to the Pooling and Servicing Agreement, nor the issuance, sale and
delivery of the Certificates, nor the fulfillment of the terms of the
Certificates, will conflict with, or result in a breach, violation or
acceleration of, or constitute a default under, any term or provision of
the organizational documents of the Seller or any material indenture or
other material agreement or instrument to which the Seller is a party or by
which it or its properties is bound or result in a violation of or
contravene the terms of any statute, order or regulation applicable to the
Seller of any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over the Seller or will result in
the creation of any Lien upon any material property or assets of the
Seller.
(x) The Seller has caused the Servicer to deliver to the Underwriters
or to counsel for the Underwriters complete and correct copies of publicly
available portions of the Consolidated Report of Condition of the Servicer
for the period ended March 31, 1996, as submitted to the Governors of the
Federal Reserve System; except as set forth in or contemplated in the
Registration Statement and the Prospectus, there has been no material
adverse change in the financial condition or results of operations of the
Servicer since March 31, 1996.
(xi) Any taxes, fees and other governmental charges in connection with
the execution, delivery and performance by the Seller of the Underwriting
Agreement, the Pooling and Servicing Agreement and the Certificates shall
have been paid or will be paid by or on behalf of the Seller at or prior to
the Closing Date to the extent then due.
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<PAGE>
(b) The Seller hereby agrees with the Underwriters that, for all
purposes of the Underwriting Agreement, the only information furnished to the
Seller by the Underwriters specifically for use in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, are the statements with respect to stabilization on the
second page of, and the statements under the caption "Underwriting" in, the
preliminary prospectus and the Prospectus (collectively, the "Underwriters'
Information").
3. PURCHASE, SALE AND DELIVERY OF THE CERTIFICATES. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Seller agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Seller, the principal amount of the Class A Certificates set forth
opposite the name of such Underwriter in Schedule I hereto at a purchase price
of __________% of the principal amount thereof and the principal amount of the
Class B Certificates set forth opposite the name of such Underwriter in Schedule
I hereto at a purchase price of __________% of the principal amount thereof.
The Seller will deliver the Certificates to the Underwriters, for the account of
the Underwriters, against payment of the purchase price to or upon the order of
the Seller by wire transfer or check in Federal (same day) Funds, at the office
of Stroock & Stroock & Lavan, Seven Hanover Square, New York, New York 10004, at
10:00 a.m., New York time on June , 1996, or at such other time not later than
seven full business days thereafter as the Underwriters and the Seller
determine, such time being herein referred to as the "Closing Date." The
Certificates to be so delivered will be initially represented by one or more
Class A Certificates and one or more Class B Certificates registered in the name
of Cede & Co., the nominee of The Depository Trust Company ("DTC"). The
interests of beneficial owners of the Certificates will be represented by book
entries on the records of DTC and participating members thereof. Definitive
Certificates will be available only under the limited circumstances specified in
the Pooling and Servicing Agreement.
4. OFFERING. It is understood that, after the Registration Statement becomes
effective, the Underwriters propose to offer the Certificates for sale to the
public (which may include selected dealers), on the terms set forth in the
Prospectus.
5. COVENANTS OF THE SELLER. The Seller covenants and agrees with
the several Underwriters that:
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<PAGE>
(a) If the Effective Time is prior to the execution and delivery of
the Underwriting Agreement, the Seller will file the Prospectus, properly
completed, with the Commission pursuant to and in accordance with subparagraph
(1) (or, if applicable and if consented to by the Underwriters, subparagraph
(4)) of Rule 424(b) not later than the earlier of (i) the second business day
following the execution and delivery of the Underwriting Agreement and (ii) the
fifth business day after the Effective Date. The Seller will advise the
Underwriters promptly of any such filing pursuant to Rule 424(b).
(b) The Seller will advise the Underwriters promptly of any proposal
to amend or supplement the registration statement as filed or the related
prospectus or the Registration Statement or the Prospectus and will not effect
such amendment or supplementation without the consent of the Underwriters, which
consent shall not be unreasonably withheld or delayed; the Seller will also
advise the Underwriters promptly of any request by the Commission for any
amendment of or supplement to the Registration Statement or the Prospectus or
for any additional information; and the Seller will also advise the Underwriters
promptly of the effectiveness of the Registration Statement (if the Effective
Time is subsequent to the execution of the Underwriting Agreement) and of any
amendment or supplement to the Registration Statement or the Prospectus and of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the institution or threat of any proceeding for
that purpose and the Seller will use its reasonable best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible the lifting of
any issued stop order.
(c) If, at any time when a prospectus relating to the Certificates is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or supplement
the Prospectus to comply with the Act, the Seller promptly will prepare and file
with the Commission an amendment or supplement which will correct such statement
or omission, or an amendment or supplement which will effect such compliance.
Neither the consent of the Underwriters to, nor the delivery by the Underwriters
of, any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.
(d) The Seller will timely prepare and file all periodic reports, on
behalf of the Trust, with the Commission referred to in its No-Action Letter to
the Commission dated
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<PAGE>
August 11, 1995 until no longer required to do so as permitted by Section 15(d)
of the Exchange Act.
(e) The Seller will furnish to each of the Underwriters copies of the
Registration Statement (two of which will be signed and will include all
exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as the Underwriters reasonably request.
(f) The Seller will take all actions which are reasonably necessary
to arrange for the qualification of the Certificates for sale under the laws of
such jurisdictions as the Underwriters designate and will continue such
qualifications in effect so long as required for the distribution; PROVIDED,
HOWEVER, that in no event shall the Seller be obligated to qualify as a foreign
corporation or to execute a general or unlimited consent to service of process
in any such jurisdiction.
(g) For a period from the date of the Underwriting Agreement until
the retirement of the Certificates, or until such time as the Underwriters shall
cease to maintain a secondary market in the Certificates, whichever occurs
first, the Seller will deliver to the Underwriters the annual statements of
compliance and the annual independent certified public accountants' reports
furnished to the Trustee pursuant to the Pooling and Servicing Agreement, as
soon as such statements and reports are furnished to the Trustee.
(h) So long as any of the Certificates are outstanding, the Seller
will furnish to the Underwriters (i) as soon as practicable after the end of the
fiscal year all documents required to be distributed to Certificateholders or
filed with the Commission on behalf of the Trust pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any order of the
Commission thereunder and (ii) from time to time, any other information
concerning the Seller as the Underwriters may reasonably request only insofar as
such information reasonably relates to the Registration Statement or the
transactions contemplated by the Pooling and Servicing Agreement.
(i) On or before the Closing Date, the Seller shall mark its
accounting and computer records relating to the Receivables and shall cause the
Bank and Valley National to mark its respective computer records relating to the
Receivables to show the absolute ownership by the Trustee on behalf of the Trust
of the Receivables, and from and after the Closing Date none of the Seller, the
Bank or Valley National shall take any action inconsistent with the ownership by
the Trustee on behalf
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<PAGE>
of the Trust of such Receivables, other than as permitted by the Pooling and
Servicing Agreement.
(j) To the extent, if any, that any of the ratings provided with
respect to the Certificates by the rating agency or agencies that initially rate
any of the Certificates are conditional upon the furnishing of documents or the
taking of any other actions by the Seller on or prior to the Closing Date, the
Seller shall furnish such documents and take any such other actions. A copy of
any such document shall be provided to the Underwriters at the time it is
delivered to the rating agencies.
(k) For the period beginning on the date of the Underwriting
Agreement and ending on the Closing Date, neither the Seller nor any Affiliate
or trust originated, directly or indirectly, by the Seller or any Affiliate (or
any trust, partnership or other entity sponsored by the Seller or any Affiliate
or in which the Seller or any Affiliate is a partner or a stockholder) will,
without the prior written consent of the Underwriters, offer to issue or issue
notes collateralized by, or certificates (other than the Certificates)
evidencing an ownership interest in, motor vehicle installment sale contracts,
PROVIDED, HOWEVER, that except as otherwise provided by the Pooling and
Servicing Agreement, this shall not be construed to prevent (i) the sale of
Receivables by any Affiliate of the Seller to any person or (ii) any sales or
grants of participations in and to Receivables by one or more Affiliates of the
Seller to one or more other Affiliates of the Seller.
(l) The Seller will apply the net proceeds of the sale of the
Certificates that it receives in the manner set forth in the Prospectus under
the caption "Use of Proceeds."
(m) The Seller will pay all expenses incident to the performance of
its obligations under the Underwriting Agreement, including (i) the printing and
filing of the documents (including the Registration Statement and Prospectus),
(ii) the preparation, issuance and delivery of the Certificates to the
Underwriters, (iii) the fees and disbursements of the Seller's counsel and
accountants, (iv) the qualification of the Certificates under securities laws in
accordance with the provisions of Section 6(f), including filing fees and the
fees and disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of any blue sky or legal investment
survey, if any is requested, (v) the printing and delivery to the Underwriters
of copies of the Registration Statement as originally filed and of each
amendment thereto, (vi) the printing and delivery to the Underwriters of copies
of any blue sky or legal investment survey prepared in connection with the
Certificates, (vii) any fees charged by rating agencies for the rating of the
Certificates, (viii) the fees and expenses, if any, incurred with respect to any
filing
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<PAGE>
with the National Association of Securities Dealers, Inc. and (ix) the fees and
expenses of Squire Sanders & Dempsey, Arizona.
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Certificates
will be subject to the accuracy, as of the date hereof and as of the Closing
Date, of the representations and warranties on the part of the Seller herein, to
the accuracy of the written statements of officers of the Seller made pursuant
to the provisions of this Section, to the performance by the Seller of its
obligations hereunder and to the following additional conditions precedent:
(a) If the Effective Time is not prior to the execution and delivery
of the Underwriting Agreement, the Effective Time shall have occurred not later
than 6:00 p.m. New York City time on the date of the Underwriting Agreement or
such later time or date as shall have been consented to by the Underwriters.
(b) If the Effective Time is prior to the execution and delivery of
the Underwriting Agreement, the Prospectus and any supplements thereto shall
have been filed with the Commission in accordance with the Rules and Regulations
and Section 5(a) hereof. Prior to the Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the knowledge of
the Seller or the Underwriters, shall be contemplated by the Commission.
(c) The Underwriters shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time is prior to the execution and
delivery of the Underwriting Agreement, shall be on or prior to the date of the
Underwriting Agreement or, if the Effective Time is subsequent to the execution
and delivery of the Underwriting Agreement, shall be prior to the filing of the
amendment or post-effective amendment to the Registration Statement to be filed
shortly prior to the Effective Time), of Deloitte & Touche L.L.P. with respect
to certain agreed-upon procedures, confirming that such accountants are
independent public accountants within the meaning of the Act and the Rules and
Regulations, and substantially in the form of the draft to which the
Underwriters have previously agreed and otherwise in form and substance
reasonably satisfactory to the Underwriters and counsel for the Underwriters.
(d) Subsequent to the execution and delivery of the Underwriting
Agreement, there shall not have occurred (i) any change, or any development
involving a prospective change materially and adversely affecting (A) the Trust
Property taken as a whole or (B) the business or properties of the Seller, the
Bank, Valley National or BANC ONE CORPORATION which, in the
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<PAGE>
reasonable judgment of the Underwriters in the case of either (A) or (B) makes
it impractical or inadvisable to market the Certificates on the terms and in the
manner contemplated in the Prospectus; (ii) any downgrading in the rating of any
debt securities of BANC ONE CORPORATION or any of its Affiliates by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any such debt
securities (other than an announcement with positive implications of a possible
upgrading, and no implication of a possible downgrading, of such rating); (iii)
any suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such exchange;
(iv) any suspension of trading of any securities of BANC ONE CORPORATION on any
exchange or in the over-the-counter market; (v) any banking moratorium declared
by Federal or New York authorities; or (vi) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress, or any other substantial national or international calamity or
emergency if, in the judgment of a majority in interest of the Underwriters
(including the Underwriters), the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the sale of and payment for the Certificates.
(e) The Underwriters shall have received an opinion of Squire,
Sanders & Dempsey, special counsel to the Seller, the Bank and Valley National
or from such other counsel reasonably satisfactory to the Underwriters and
counsel for the Underwriters, dated the Closing Date, satisfactory in form and
substance to the Underwriters and counsel for the Underwriters, to the effect
that:
(i) The Seller has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Ohio, with the
corporate power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
currently conducted, and to enter into and perform its obligations under
the Underwriting Agreement and the Pooling and Servicing Agreement.
(ii) The Seller has duly authorized, executed and delivered the
written order to the Trustee to execute and deliver the Certificates. When
the Certificates have been duly executed, delivered and authenticated in
accordance with the Pooling and Servicing Agreement and delivered and paid
for pursuant to the Underwriting Agreement, the Certificates will be
validly issued, outstanding and entitled to the benefits of the Pooling and
Servicing
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<PAGE>
Agreement, subject as to enforceability to the effects of applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
and similar laws now or hereafter in effect relating to creditors' rights
generally and subject to general principles of equity (whether in a
proceeding at law or in equity).
(iii) The Seller has duly authorized, executed and delivered the
Underwriting Agreement, the Loan Sale Agreement and the Pooling and
Servicing Agreement, and each of the Loan Sale Agreement and the Pooling
and Servicing Agreement is the legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms,
subject as to enforceability to the effects of applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and similar
laws now or hereafter in effect relating to creditors' rights generally and
subject to general principles of equity (whether applied in a proceeding at
law or in equity)
(iv) Neither the transfer of the Trust Property by the Seller to the
Trustee on behalf of the Trust, nor the execution and delivery by the
Seller of the Underwriting Agreement, the Loan Sale Agreement or the
Pooling and Servicing Agreement, nor the consummation by the Seller of the
transactions contemplated by the Underwriting Agreement, the Loan Sale
Agreement or the Pooling and Servicing Agreement nor the performance by the
Seller of its obligations thereunder will (i) violate the articles of
incorporation or the code of regulations, each as amended, of the Seller or
(ii) violate or contravene the terms of applicable provisions of statutory
law or regulation.
(v) To such counsel's knowledge, there are no actions, proceedings or
investigations pending against the Seller or threatened against the Seller
before any court, administrative agency or tribunal (i) asserting the
invalidity of the Trust, the Underwriting Agreement, the Loan Sale
Agreement or the Pooling and Servicing Agreement, (ii) seeking to prevent
the consummation of any of the transactions contemplated by the
Underwriting Agreement, the Loan Sale Agreement or the Pooling and
Servicing Agreement or the execution and delivery thereof or (iii) that
could reasonably be expected to materially and adversely affect the
enforceability of the Underwriting Agreement, the Loan Sale Agreement or
the Pooling and Servicing Agreement against the Seller or the ability of
the Seller to perform its obligations thereunder.
(vi) No consent, license, approval, authorization or order of, or
filing with, any court or governmental agency or body is required of the
Seller for the consummation by
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<PAGE>
the Seller of the transactions contemplated in the Underwriting Agreement,
the Loan Sale Agreement or the Pooling and Servicing Agreement, except such
consents, licenses, approvals, authorizations or orders as have been
obtained or such filings as have been made and except where the failure to
obtain the same would not have a material adverse effect upon the rights of
the Certificateholders.
(vii) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened against the Seller that are required to
be disclosed in the Registration Statement, other than those disclosed
therein.
(viii) The Seller is not, and will not as a result of the offer and sale
of the Certificates as contemplated in the Prospectus and the Underwriting
Agreement become, an "investment company" as defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act"), or a
company "controlled by" an "investment company" within the meaning of the
Investment Company Act.
(ix) All actions required, if any, to be taken and all filings
required to be made by the Seller or the Trust under the Act and the
Exchange Act prior to the sale of the Certificates have been duly taken or
made.
(x) The Pooling and Servicing Agreement need not be qualified under
the Trust Indenture Act and the Trust is not required to register under the
Investment Company Act.
(xi) Such counsel has been advised by the Commission's staff that the
Registration Statement has become effective under the Act; any required
filing of the Prospectus pursuant to Rule 424(b) promulgated under the Act
has been made in the manner and within the time period required under such
rule; and to such counsel's knowledge no stop order suspending the
effectiveness of the Registration Statement or any part thereof has been
issued and no proceedings for that purpose are pending or threatened by the
Commission.
(xii) The statements in the Prospectus under the headings "Summary of
Terms -- Tax Status," "Federal Income Tax Consequences," "Summary of
Terms--ERISA Considerations," and "ERISA Considerations," to the extent
that they constitute statements of matters of law or legal conclusions with
respect thereto, have been reviewed by such counsel and accurately describe
the material consequences to holders of the Certificates under the Code and
ERISA.
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<PAGE>
(xiii) The Trust will not be classified as an association taxable as a
corporation for federal income tax purposes and, instead, under subpart E,
part I of subchapter J of the Internal Revenue Code of 1986, as amended,
the Trust will be treated as a grantor trust and, except with respect to
amounts received with respect to the Receivables which are payable by the
Trust to the Seller or to the Collateral Agent for deposit in the Reserve
Fund and certain amounts payable by the Trust to the Servicer, each
Certificateholder will be treated as the owner of an undivided pro rata
interest in the income and corpus attributable to the Trust.
(xiv) To such counsel's knowledge, there are no contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments to which the
Seller is a party that are required to be filed as exhibits to the
Registration Statement other than those described or referred to therein or
filed or incorporated by reference as exhibits thereto.
(xv) Such counsel shall state that they have participated in the
preparation of the Registration Statement and no facts have come to their
attention which may cause them to believe that the Registration Statement,
as of the Effective Time, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading or that
the Prospectus, as of its date or the Closing Date, contains any untrue
statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that
such counsel need not express any view with respect to the financial,
statistical or computational material included in the Registration
Statement or the Prospectus.
(xvi) Each of the Loan Purchase and Servicing Agreement, the Loan Sale
Agreement, the Pooling and Servicing Agreement and the Bank Agreement meets
each of the requirements of Section 13(e) of the Federal Deposit Insurance
Act, as amended (the "FDIA"), and neither Section 11(d)(9) nor Section
11(n)(4)(I) of the FDIA would prevent the Pooling and Servicing Agreement
from forming the basis of a claim against the FDIC as conservator or
receiver or in its corporate capacity, or against any bridge bank chartered
pursuant to Section 11(n) of the FDIA. For purposes of this paragraph
(xiv), such counsel may assume that from the time of its execution each of
the Loan Purchase and Servicing Agreement, the Loan Sale Agreement, the
Pooling and Servicing Agreement and the Bank Agreement
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has been and will be an official record (as such term is used in Sections
11(n)(4)(I)(iv) and 13(e)(4) of the FDIA) of the Bank.
(xvii) The Bank has been duly organized and is validly existing as a
national banking association in good standing under the laws of the United
States of America, with corporate power and authority to own its
properties, to conduct its business as now conducted and as proposed to be
conducted by it and to enter into and perform its obligations under the
agreement in the form attached hereto as Exhibit A (the "Bank Agreement")
the Pooling and Servicing Agreement, the Loan Purchase and Servicing
Agreement and the Loan Sale Agreement (collectively, the "Bank Documents").
(xviii) The Bank has duly authorized, executed and
delivered each of the Bank Documents, and each of the Bank Documents is the
legal, valid and binding obligations of the Bank, enforceable against the
Bank in accordance with the respective terms thereof, subject as to
enforceability, to the effects of applicable insolvency, receivership,
conservatorship and other similar laws affecting the rights of creditors'
generally or the rights of creditors of institutions the deposits in which
are insured by the FDIC and subject to general principles of equity
(whether applied in a proceeding at law or in equity).
(xix) Neither the execution and delivery by the Bank of any Bank
Document nor the consummation by the Bank of the transactions contemplated
therein nor the fulfillment of the terms thereof by the Bank will conflict
with, result in a breach, violation or acceleration of, or constitute a
default under, any term or provision of the articles of association or
by-laws of the Bank or result in a violation of or contravene the terms of
any statute, order or regulation applicable to the Bank of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it.
(xx) To such counsel's knowledge, there are no actions, proceedings or
investigations pending or threatened against the Bank before or by any
governmental authority that could reasonably be expected to materially and
adversely affect the performance by the Bank of its obligations under, or
the validity or enforceability of, any Bank Document.
(xxi) Valley National has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Arizona
with corporate power and authority to own its properties, to conduct it
business as
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now conducted and as proposed to be conducted by it and to enter into and
perform its obligations under the Loan Purchase and Servicing Agreement.
(xxii) Valley National has duly authorized, executed and delivered the
Loan Purchase and Servicing Agreement and the Loan Purchase and Servicing
Agreement is the legal, valid and binding obligation of Valley National,
enforceable against Valley National in accordance with its terms, subject
as to enforceability, to the effects of applicable bankruptcy, insolvency,
receivership, moratorium, fraudulent conveyance, reorganization,
conservatorship and other similar laws affecting the rights of creditors'
generally or the rights of creditors of institutions the deposits and
subject to general principles of equity (whether applied in a proceeding at
law or in equity).
(xxiii) Neither the execution and delivery by Valley National of the Loan
Purchase and Servicing Agreement nor the consummation by Valley National of
the transactions contemplated therein nor the fulfillment of the terms
thereof by Valley National will conflict with, result in a breach,
violation or acceleration of, or constitute a default under, any term or
provision of the [articles of association or by-laws] of Valley National,
or result in a violation of or contravene the terms of any statute, order
or regulation applicable to Valley National of any court, regulatory body,
administrative agency or governmental body having jurisdiction over Valley
National.
(xxiv) To such counsel's knowledge, there are no actions, proceedings or
investigations pending or threatened against Valley National before or by
any governmental authority that could reasonably be expected to materially
and adversely affect the performance by Valley National of its obligations
under, or the validity or enforceability of the Loan Purchase and Servicing
Agreement.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriters. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the States of Ohio, Arizona and New York.
(f) The Underwriters shall have received the opinion of Squire,
Sanders & Dempsey, special counsel to the Seller, dated the Closing Date,
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters, regarding the
-16-
<PAGE>
creation, attachment and perfection of a first priority security interest in the
Receivables, the Financed Vehicles located in the State of Arizona and the
property held in the Reserve Fund in favor of the Trustee on behalf of the
Certificateholders. Such opinion may contain such assumptions, qualifications
and limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriters. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the States of Ohio, Arizona and New York.
(g) The Underwriters shall have received the opinion of in-house
counsel to the Bank, or such other counsel acceptable to the Underwriters and
counsel for the Underwriters, dated the Closing Date, satisfactory in form and
substance to the Underwriters and counsel for the Underwriters to the effect
that:
(i) Neither the execution and delivery by the Bank of any Bank
Documents nor the consummation by the Bank of the transactions contemplated
therein nor the fulfillment of the terms thereof by the Bank will (a)
violate the articles of association or by-laws of the Bank, (b) result in a
breach, violation or acceleration of, or constitute a default under, any
term or provision of any material indenture or other material agreement or
instrument of which such counsel has knowledge after due inquiry to which
the Bank is a party or by which it is bound or (c) result in a violation of
or contravene the terms of any Federal or Arizona statute or, to such
counsel's knowledge, any order or regulation applicable to the Bank of any
Federal or Arizona court, regulatory body, administrative agency or
governmental body having jurisdiction over the Bank.
(ii) Such counsel has been advised of the Bank's standard operating
procedures relating to the Bank's acquisition of a perfected first priority
security interest in the vehicles financed by the Bank pursuant to the
retail automobile, van or light duty truck installment sale contracts in
the ordinary course of the Bank's business. Assuming that the Bank's
standard procedures are followed with respect to the perfection of security
interests in the Financed Vehicles (such counsel having no reason to
believe that the Bank has not or will not continue to follow its standard
procedures in connection with the perfection of security interests in the
Financed Vehicles), the Bank has acquired or will acquire a perfected first
priority security interest in the Financed Vehicles.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of
-17-
<PAGE>
this type and are reasonably acceptable to counsel to the Underwriters. In
rendering such opinion, such counsel may state that they express no opinion as
to the laws of any jurisdiction other than the federal law of the United States
of America and the laws of the State of Arizona.
(h) The Underwriters shall have received the opinion of in-house
counsel to Valley National, or such other counsel acceptable to the Underwriters
and counsel for the Underwriters, dated the Closing Date, satisfactory in form
and substance to the Underwriters and counsel for the Underwriters to the effect
that:
(i) Neither the execution and delivery by Valley National of the Loan
Purchase and Servicing Agreement nor the consummation by Valley National of
the transactions contemplated therein nor the fulfillment of the terms
thereof by Valley national will (a) violate the [articles of association or
by-laws] of Valley National, (b) result in a breach, violation or
acceleration of, or constitute a default under, any term or provision of
any material indenture or other material agreement or instrument of which
such counsel has knowledge after due inquiry to which Valley National is a
party or by which it is bound or (c) result in a violation of or contravene
the terms of any Federal or Arizona statute or, to such counsel's
knowledge, any order or regulation applicable to Valley National of any
Federal or Arizona court, regulatory body, administrative agency or
governmental body having jurisdiction over Valley National.
(ii) Such counsel has been advised of Valley National's standard
operating procedures relating to Valley National's acquisition of a
perfected first priority security interest in the vehicles financed by
Valley National pursuant to the retail automobile, van or light duty truck
installment sale contracts in the ordinary course of Valley National's
business. Assuming that Valley National's standard procedures are followed
with respect to the perfection of security interests in the Financed
Vehicles (such counsel having no reason to believe that Valley National has
not or will not continue to follow its standard procedures in connection
with the perfection of security interests in the Financed Vehicles securing
the Receivables sold by Valley National to the Bank pursuant to the Loan
Purchase and Servicing Agreement), Valley National has acquired or will
acquire a perfected first priority security interest in the Financed
Vehicles securing the Receivables sold by Valley National to the Bank
pursuant to the Loan Purchase and Servicing Agreement.
-18-
<PAGE>
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriters. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of Arizona.
(i) The Underwriters shall have received an opinion addressed to it
of Stroock & Stroock & Lavan, in its capacity as counsel to the Underwriters,
dated the Closing Date, with respect to the validity of the Certificates and
such other related matters as the Underwriters shall reasonably require and the
Seller shall have furnished or caused to be furnished to such counsel such
documents as they may reasonably request for the purpose of enabling them to
pass upon such matters.
(j) The Underwriters shall have received an opinion of counsel to the
Trustee, dated the Closing Date and satisfactory in form and substance to the
Underwriters and counsel for the Underwriters, to the effect that:
(i) The Trustee is a banking corporation validly existing and in good
standing under the laws of the State of New York.
(ii) The Trustee has the requisite power and authority to execute,
deliver and perform its obligations under the Pooling and Servicing
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of the Pooling and Servicing Agreement.
(iii) The Pooling and Servicing Agreement has been duly executed and
delivered by the Trustee and constitutes a legal, valid and binding
obligation of the Trustee, enforceable against the Trustee in accordance
with its respective terms, except that such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, liquidation, or other
similar laws applicable to banking corporations affecting the enforcement
of creditors' rights generally, and by general principles of equity,
including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(iv) The Certificates have been duly authenticated by the Trustee in
accordance with the terms of the Pooling and Servicing Agreement.
(k) The Underwriters shall have received copies of each opinion of
counsel delivered to either rating agency,
-19-
<PAGE>
together with a letter addressed to the Underwriters, dated the Closing Date, to
the effect that each Underwriter may rely on each such opinion to the same
extent as though such opinion was addressed to each as of its date.
(l) The Underwriters shall have received certificates dated the
Closing Date of each of the Seller, the Bank and Valley National, executed by
any two of the Chairman of the Board, the President, any Executive Vice
President, Senior Vice President or Vice President, the Treasurer, any Assistant
Treasurer, the Secretary, the principal financial officer or the principal
accounting officer of each of the Seller, the Bank and Valley National, in which
such officer of the Seller, the Bank or Valley National, as the case may be,
shall state that, to the best of its knowledge after reasonable investigation,
(i) the representations and warranties of the Seller contained in the
Underwriting Agreement and the Pooling and Servicing Agreement, the Bank in each
of the Bank Documents or Valley National in the Loan Purchase and Servicing
Agreement, as applicable, are true and correct in all material respects, (ii)
that Seller, the Bank, or Valley National, as the case may be, has complied with
all agreements and satisfied all conditions on its respective part to be
performed or satisfied under such agreements at or prior to the Closing Date,
(iii) in the case of the certificate from the Seller only, that no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are contemplated by the
Commission, and (iv) since March 31, 1996, except as may be disclosed in the
Prospectus or in such certificate, no material adverse change, or any
development involving a prospective material adverse change, in or affecting
particularly the business or properties of the Bank or Valley National, as
applicable, has occurred.
(m) The Underwriters shall have received evidence satisfactory to it
that, on or before the Closing Date, UCC-1 financing statements have been or are
being filed in the appropriate filing offices reflecting the transfer of the
interest in the Receivables and the proceeds thereof from Valley National to the
Bank, from the Bank to the Seller and from the Seller to the Trustee on behalf
of the Trust.
(n) The Class A Certificates shall be rated "AAA" or its equivalent,
and the Class B Certificates shall be rated at least "A" or its equivalent, in
each case by Moody's and S&P and neither corporation shall have placed either
the Class A Certificates or the Class B Certificates under surveillance or
review with possible negative implications.
(o) The issuance of the Certificates shall not have resulted in a
reduction or withdrawal by any Rating Agency of
-20-
<PAGE>
the current rating of any outstanding securities issued or originated by the
Seller.
(p) The Underwriters shall have received, upon execution hereof, the
duly executed agreement of the Bank in the form attached as Exhibit A.
The Seller will provide or cause to be provided to the Underwriters
such conformed copies of such of the foregoing opinions, certificates, letters
and documents as the Underwriters shall reasonably request.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Seller will indemnify
and hold each Underwriter harmless against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus or any amendment or supplement
thereto or any related preliminary prospectus, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
PROVIDED, HOWEVER, that the Seller will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon the Underwriters'
Information; PROVIDED, FURTHER, that the Seller shall not be liable to any
Underwriter to the extent that any such loss, claim, damage or liability of such
Underwriter arises as a result of a misstatement or omission or alleged
misstatement or omission in any related preliminary prospectus that was
corrected in the Prospectus (and copies of which Prospectus were furnished to
the Underwriters) and such Underwriter, if required by law, failed to give or
send to the purchaser, at or prior to the written confirmation of sale, a copy
of the Prospectus.
(b) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Seller against any losses, claims, damages or liabilities
to which the Seller may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus or
any amendment or
-21-
<PAGE>
supplement thereto or any related preliminary prospectus, or arise out of or are
based upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Seller by such Underwriter through the Underwriters specifically for use
therein, and will reimburse the Seller for any legal or other expenses
reasonably incurred by the Seller in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by the indemnified party of the counsel appointed
by the indemnifying party, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability from any
claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnifying party as a result of the losses,
-22-
<PAGE>
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Seller on the one hand and the Underwriters on the other from the offering
of the Certificates or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Seller on the one hand and the Underwriters on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Seller on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Seller bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Seller or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Certificates
underwritten by it were offered to the public exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) The obligations of the Seller under this Section shall be in
addition to any liability which the Seller may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Seller, to each officer of the Seller
who has signed the Registration Statement and to each person, if any, who
controls the Seller within the meaning of the Act.
-23-
<PAGE>
8. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Seller or its officers and of the Underwriters set forth in or made pursuant to
the Underwriting Agreement or contained in certificates of officers of the
Seller submitted pursuant hereto shall remain operative and in full force and
effect, regardless of any investigation or statement as to the results thereof,
made by or on behalf of any Underwriter, the Seller or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Certificates. If for any reason the
purchase of the Certificates by the Underwriters is not consummated, the Seller
shall remain responsible for the expenses to be paid or reimbursed by the Seller
pursuant to Section 5(m) and the respective obligations of the Seller and the
Underwriters pursuant to Section 7 shall remain in effect. If for any reason
the purchase of the Certificates by the Underwriters is not consummated (other
than because of a failure to satisfy the conditions set forth in items (iii),
(v) and (vi) of Section 6(d)), the Seller will reimburse the Underwriters for
all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Certificates.
9. FAILURE TO PURCHASE THE CERTIFICATES. If any Underwriter or
Underwriters default in its obligations to purchase its portion of Class A
and/or Class B Certificates hereunder, and the aggregate principal amount that
such defaulting Underwriter or Underwriters agreed but failed to purchase does
not exceed 10% of the total principal amount of the Certificates, the
Underwriters may make arrangements satisfactory to the Seller for the purchase
of such Certificates by other persons, including any of the Underwriters, but if
no such arrangements are made by the Closing Date, the nondefaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Certificates that such defaulting
Underwriters agreed but failed to purchase. If any Underwriter or Underwriters
so default and the aggregate principal amount of the Certificates with respect
to such default or defaults exceeds 10% of the total principal amount of the
Certificates, and arrangements satisfactory to the Underwriters are not made by
the Seller for the purchase of such Certificates by other persons within 48
hours after such default, the Underwriting Agreement will terminate without
liability on the part of any nondefaulting Underwriter or the Seller, except as
provided in Section 8. As used in the Underwriting Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter or Underwriters
from liability for its default.
-24-
<PAGE>
10. NOTICES. Any written request, demand, authorization, direction,
notice, consent or waiver shall be personally delivered or mailed certified
mail, return receipt requested (or in the form of telex or facsimile notice,
followed by written notice as aforesaid) and shall be deemed to have been duly
given upon receipt, if sent to the Underwriters, when delivered to Banc One
Capital Corporation, 90 North High Street, Columbus, Ohio 43215, Attention:
Asset Backed Securities Department (fax # (614) 221-2441) and Salomon Brothers
Inc, 7 World Trade Center, New York, New York 10048, Attention: Asset Backed
Securities Department (fax # (212) 783-3848), and if sent to the Seller, when
delivered to Banc One ABS Corporation, 100 East Broad Street, Columbus, Ohio
43271, Attention: Jeffrey B. Upperman (fax # (614) 248-5099).
11. SUCCESSORS. The Underwriting Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7, and no
other person will have any right or obligations hereunder.
12. COUNTERPARTS. The Underwriting Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. APPLICABLE LAW. The Underwriting Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to the choice of law provisions thereof.
-25-
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Seller and the
Underwriters in accordance with its terms.
Very truly yours,
BANC ONE ABS CORPORATION
By:
--------------------------------
Name:
Title:
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first written above.
BANC ONE CAPITAL CORPORATION
By:
---------------------------
Name:
Title:
SALOMON BROTHERS INC
By:
---------------------------
Name:
Title:
-26-
<PAGE>
SCHEDULE I
INITIAL PRINCIPAL
UNDERWRITER CLASS AMOUNT OF CERTIFICATES
- ----------- ----- ----------------------
Banc One Capital
Corporation A $
Salomon Brothers Inc A $
Banc One Capital
Corporation B $
Salomon Brothers Inc B $
<PAGE>
EXHIBIT A
June __, 1996
BANC ONE CAPITAL CORPORATION
90 North High Street
Columbus, OH 43215
SALOMON BROTHERS INC
7 World Trade Center
32nd Floor
New York, NY 10048
Re: Underwriting Agreement dated June __, 1996 (the
"Underwriting Agreement") among Banc One ABS Corporation
(the "Company"), Banc One Capital Corporation and Salomon
Brothers Inc (TOGETHER, THE "UNDERWRITERS")
---------------------------------------------------------
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement, the Company has undertaken
certain financial obligations to the Underwriters. Any financial obligations of
the Company (including all fees to be paid) under the Underwriting Agreement,
whether or not specifically enumerated in this paragraph, are hereinafter
referred to as the "Joint and Several Obligations"; PROVIDED, HOWEVER, that
"Joint and Several Obligations" shall mean only the financial obligations of the
Company under the Underwriting Agreement (including without limitation the
payment of money damages for a breach of any of the Company's representations,
warranties or obligations, whether financial or otherwise).
As a condition of its execution of the Underwriting Agreement, the
Underwriters have required the undersigned to acknowledge its joint-and-several
liability with the Company for the payment of the Joint and Several Obligations
under the Underwriting Agreement.
Now, therefore, the Underwriters and Bank One, Arizona, NA, do hereby
agree that:
(i) Bank One, Arizona, NA hereby agrees to be absolutely and
unconditionally jointly and severally liable with the Company to
the Underwriters for the payment of the Joint and Several
Obligations.
A-1
<PAGE>
(ii) Bank One, Arizona, NA may honor its obligations hereunder either
by direct payment of any Joint and Several Obligations or by
causing any Joint and Several Obligations to be paid to the
Underwriters by the Company or another affiliate of Bank One,
Arizona, NA
(iii) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York without regard to the
choice of law provisions thereof.
(iv) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same
Agreement.
(v) This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in
Section 7 of the Underwriting Agreement, and no other person will
have any right or obligations hereunder.
(vi) Any written request, demand, authorization, direction, notice,
consent or waiver shall be personally delivered or mailed
certified mail, return receipt requested (or in the form of telex
or facsimile notice, followed by written notice as aforesaid) and
shall be deemed to have been duly given upon receipt, if sent to
the Underwriters, when delivered to Banc One Capital Corporation,
90 North High Street, Columbus, Ohio 43215, Attention: Asset
Backed Securities Department (fax # (614) 221-2441) and Salomon
Brothers Inc, 7 World Trade Center, New York, New York 10048,
Attention: Asset Backed Securities Department (fax # (212) 783-
3848); and if sent to the Seller, when delivered to 100 East
Broad Street, Columbus, Ohio 43271, Attention: Jeffrey B.
Upperman (fax # (614) 248-5099).
A-2
<PAGE>
Capitalized terms used herein and not defined herein shall have their
respective meanings as set forth in the Underwriting Agreement.
Very truly yours,
BANK ONE, ARIZONA, NA
By:
----------------------------------------
Name:
Title:
Acknowledged and Agreed:
BANC ONE CAPITAL CORPORATION
By:
-------------------------------
Name:
Title:
SALOMON BROTHERS INC
By:
-------------------------------
Name:
Title:
A-3
<PAGE>
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
BANC ONE ABS CORPORATION
------------------------
FIRST. The name of said corporation (hereinafter called the "Corporation")
- ------ shall be BANC ONE ABS CORPORATION.
SECOND. The place in Ohio where its principal office is to be located is
- ------- Columbus, Franklin County, Ohio.
THIRD. The nature of the business or purposes to be conducted or promoted by
- ----- the Corporation is to engage in any of the following acts or
activities:
(a) to authorize, issue, sell, deliver, purchase and invest in (and
enter into agreements in connection with), and/or to engage in
the establishment of one or more trusts (each, a "Trust") which
will issue and sell bonds, notes, debt or equity securities,
obligations, and other securities and instruments (in one or more
series, each of which series may consist of one or more classes)
("Securities"), which Securities will be collateralized or
otherwise secured or backed by, or otherwise represent interests
in, among other things, one or more pools of Receivables (as
defined in Article Third (b) below) or other collateral (the
Receivables and other collateral pledged as security for or
otherwise supporting the Securities and the proceeds thereof are
collectively referred to herein as the "Collateral"); in each
case the Securities of a series which are distributed through one
or more public offerings (with the exception of the Subordinated
Securities (as defined in Article Third (c) below), which may or
may not be rated) shall, when issued, be rated in one of the four
highest rating categories by any one or more nationally
recognized rating agencies;
(b) in connection with the issuance and sale of the Securities or
otherwise, to purchase or otherwise acquire, own, hold, transfer,
convey, pledge, assign, sell (or otherwise dispose of), service,
finance, refinance or otherwise deal in or with the Receivables
(and any assets to which such Receivables relate) and related
Collateral and to enter into contractual arrangements,
transactions and agreements with respect to the Receivables and
with the providers or obligors respecting such Collateral,
including agreements with originators of Receivables, sellers or
servicers of Receivables or dealers in any assets to which the
Receivables relate; for purposes of these Articles of
Incorporation, the term "Receivables" means the right to payment
hereunder, and other rights of a holder with respect to, various
promissory notes, leases, loan agreements, installment sales
contracts, drafts (including bank and commercial drafts),
<PAGE>
trade documents, certificates of participation, accounts
receivable, accounts, account balances, certificates of
beneficial ownership, bankers' acceptances and other agreements
and instruments evidencing indebtedness or payment obligations,
any or all of which may be secured or unsecured, that arise in
connection with one or more of the following: (i) the sale or
lease of automobiles, trucks or other motor vehicles, equipment,
merchandise and other personal property and financings or re-
financings secured thereby, (ii) credit card purchases or cash
advances, (iii) the sale, licensing or other commercial provision
of services, rights, intellectual properties and other
intangibles, (iv) trade financing, with or without whole or
partial guarantees of payment by the Export-Import Bank of the
United States or any comparable domestic, foreign or
international authority, (v) loans secured by first or junior
mortgages on real estate, (vi) loans to employee stock ownership
plans and (vii) any and all other commercial transactions and
commercial, sovereign, student and consumer loans and
indebtedness;
(c) to arrange or otherwise provide for support for any series of
Securities to be issued by the Corporation or any Trust by
various forms of credit enhancement including collections and/or
distributions on the Receivables which are to be remitted to
certain accounts to be established under the indenture or
participation, pooling or other similar agreements relating to
such series, cash deposits, insurance policies, guaranteed
investment contracts, investment agreements, guaranteed rate
agreements, interest rate cap or swap agreements, currency
exchange agreements, tax protection agreements, maturity
liquidity facilities, letters of credit, minimum payment
agreements, guarantees and other forms of credit enhancement
including arrangements whereby for a given series, payments on
one or more classes of Securities ("Subordinated Securities") are
subordinated to, and constitute additional security for, payments
due on one or more other classes of Securities in such series;
(d) to invest certain proceeds from Receivables and related
Collateral as determined by the Corporation's Board of Directors;
and
(e) to engage in any lawful act or activity and to exercise any
powers permitted to corporations organized under the General
Corporation Law of Ohio that are incidental to and necessary or
convenient for the accomplishment of the above mentioned business
and purposes.
FOURTH The number of shares which the Corporation is authorized to have
- ------ outstanding is five hundred (500) shares of common stock, all of which
shall be without par value.
FIFTH. The amount of stated capital with which the Corporation shall begin
- ----- business is Five
-2-
<PAGE>
Hundred Dollars ($500.00).
SIXTH. (a) The affairs of the Corporation shall be managed by a board of
- ----- directors consisting of three members. At all times on and after
the date of issuance of Securities by any Trust, there shall be
at least one director of the Corporation (the "Outside Director")
who is not a director, officer or employee of, or direct or
indirect beneficial owner of 10% or more of the voting securities
of, or member of the immediate family of any such director,
officer, employee or beneficial owner of the Corporation's
parent, BANC ONE CORPORATION ("BANC ONE"), or any corporate
affiliate of BANC ONE. Notwithstanding the foregoing, the
Outside Director may be a director of one other corporation that
is an affiliate of BANC ONE, provided such corporation is formed
with purposes limited to those similar to the purposes of the
Corporation. For the purposes of the foregoing, the "affiliate"
of an entity is an entity controlling, controlled by or under
common control with such entity. Should any Outside Director
resign, die, become disabled or incapacitated, or be prevented
from acting, the affairs of the Corporation shall and may be
managed by the remaining directors, who shall promptly replace
the aforementioned Outside Director with a person meeting the
requirements set forth above. When voting on matters subject to
the vote of the Corporation's Board of Directors, including those
matters specified in this Article Sixth and in Article Seventh
hereof, notwithstanding that the Corporation is not then
insolvent, the Outside Director shall take into account the
interests of the creditors of the Corporation as well as the
interests of the Corporation.
(b) The Corporation shall maintain a principal office through which
its business shall be conducted, which office may be separately
denoted space at the offices of BANC ONE.
(c) The Corporation shall maintain corporate records and books of
account and shall not commingle its corporate records and books
of account with the corporate records and books of account of
BANC ONE.
(d) The Board of Directors of the Corporation shall hold appropriate
meetings to authorize all of its corporate actions. Regular
meetings of the Board of Directors shall be held not less
frequently than three times per annum.
(e) The funds and other assets of the Corporation shall not be
commingled with those of any other corporation.
(f) The Corporation shall pay its own expenses and shall not hold
itself out as being liable for the debts of any other party.
(g) The Corporation shall not form, or cause to be formed, any
subsidiaries.
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<PAGE>
(h) The Corporation shall act solely in its corporate name and
through its duly authorized officers or agents in the conduct of
its business, and shall conduct its business so as not to mislead
others as to the identity of the entity with which they are
concerned.
(i) Meetings of the shareholders of the Corporation shall be held not
less frequently than one time per annum.
(j) The Corporation shall operate in such a manner that it would not
be substantively consolidated in the trust estate of any other
entity.
SEVENTH. Notwithstanding any other provision of these Articles of Incorporation
- -------- and any provision of law that otherwise so empowers the Corporation,
the Corporation shall not do any of the following:
(a) dissolve or liquidate, in whole or in part;
(b) merge or consolidate with any other corporation other than a
corporation wholly owned, directly or indirectly, by any entity
owning 100% of the stock of the Corporation and having articles
of incorporation containing provisions identical to the
provisions of Articles Third and Sixth and this Article Seventh;
(c) without the approval of the Outside Director, institute
proceedings to be adjudicated a bankrupt or insolvent, or consent
to the institution of bankruptcy or insolvency proceedings
against it, or file a petition or answer or consent seeking
reorganization or relief under the Federal Bankruptcy laws, or
consent to the filing of any such petition or to the appointment
of a receiver, liquidator, assignee, trustee, conservator,
sequestrator (or other similar official) of the Corporation or of
any substantial part of the Corporation's property, or make an
assignment for the benefit of creditors, or admit in writing its
inability to pay its debts generally as they become due, or take
corporate action in furtherance of any such action; or
(d) amend these Articles of Incorporation to alter in any manner or
delete Article Third or this Article Seventh or, without the
consent of Moody's Investors Service, Inc. and Standard & Poor's,
a Division of The McGraw-Hill Companies, or their respective
successors, Article Sixth.
EIGHTH. These Amended and Restated Articles of Incorporation take the place of
- ------ and supersede the existing Articles of Incorporation as heretofore
amended.
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<PAGE>
CODE OF REGULATIONS
OF
BANC ONE ABS CORPORATION
(HEREIN CALLED THE "CORPORATION)
ARTICLE I
SHAREHOLDERS
SECTION 1.01. ANNUAL MEETING. The annual meeting of shareholders for the
election of Directors and the transaction of such other business as may properly
come before it shall be held on the fourth Tuesday of January of each year. The
annual meeting shall be at such hour and place as shall be fixed by resolution
of the Board of Directors and stated in the written notice of the meeting. If
the annual meeting for election of Directors is not held on the date designated
therefor, the Directors shall cause the meeting to be held as soon thereafter as
convenient.
SECTION 1.02. SPECIAL MEETINGS. Special meetings of the shareholders for any
purpose(s), may be called at any time by the Chairman, the President, the Board
of Directors or any two members thereof. Special meetings of shareholders shall
be held on such date and at such hour and place as shall be fixed by the
person(s) calling the meeting and stated in the notice of the meeting. No
business may be transacted at any such meeting except that referred to in such
notice or in a supplemental notice given in compliance with this Code of
Regulations.
SECTION 1.03. NOTICE OF MEETING. Whenever shareholders are required or
permitted to take any action at a meeting, a written notice stating the place,
date, hour and purpose(s) of the shareholders' meeting shall be given to the
shareholders. Said notice shall be given by or under the direction of the
Secretary of the Corporation or such other Officer of the Corporation as is
designated by the Board of Directors. Such written notice of any meeting shall
be given, personally or by mail, postage prepaid, not less than ten nor more
than fifty days before the date of the meeting, to each shareholder entitled to
vote at such meeting. If mailed, such notice shall be addressed to the
shareholder at his address as it appears on the records of the Corporation. Any
shareholder may waive any notice required to be given by law, the Articles of
Incorporation, or this Code of Regulations.
When a meeting is adjourned to another time or place, it shall not be necessary
to give any notice of the adjourned meeting if the time and place to which the
meeting is adjourned are announced at the meeting at which the adjournment is
taken. Any business may be transacted at the adjourned meeting which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment the Board of Directors fixes a new
record date for the adjourned meeting, a notice of the adjourned meeting shall
be given to each shareholder of record entitled to vote at the meeting.
<PAGE>
SECTION 1.04. QUORUM. Except as otherwise required by law, the Articles of
Incorporation or this Code of Regulations, the holders of record of a majority
of the issued and outstanding shares of the Corporation entitled to vote shall
constitute a quorum at a meeting of shareholders for the transaction of any
business. When a quorum is once present to organize a meeting, it is not broken
by the subsequent withdrawal of any shareholders. The shareholders present may
adjourn the meeting despite the absence of a quorum. At any such adjourned
meeting at which the requisite amount of voting stock shall be represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed.
SECTION 1.05. RECORD DATE. In order that the Corporation may determine the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date
which shall not be more than sixty nor less than ten days before the date of
such meeting nor more than sixty days prior to any other action.
SECTION 1.06. PROXIES. Each shareholder entitled to vote at a shareholders'
meeting, or to express consent or dissent to corporate action in writing without
a meeting, may authorize another person or persons, including a partnership or
corporation, to act for him by proxy. Each such proxy shall be dated and if not
dated by the shareholder, shall be dated as of the date of receipt thereof. No
such proxy shall be valid after the final adjournment of any meeting for which
it shall have been given. Every proxy shall be revocable at the pleasure of the
shareholder executing it in accordance with the provisions of the General
Corporation Law of Ohio.
SECTION 1.07. SELECTION AND DUTIES OF JUDGES. The Board of Directors, in
advance of any shareholders' meeting, may appoint one or more judges to act at
the meeting or any adjournment thereof. If judges are not so appointed, the
person presiding at a shareholders' meeting may and on the request of any
shareholder entitled to vote thereat, or his proxy, shall appoint one or more
judges. In case any person appointed fails to appear or to act, the vacancy may
be filled by appointment made by the Board in advance of the meeting or at the
meeting by the person presiding thereat. If there are three or more judges, the
decision, act or certificate of a majority of them shall be effective in all
respects as the decision, act or certificate of all.
The judge(s) shall determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a quorum,
the authenticity, validity and effect of proxies, receive votes, ballots,
consents, waivers or releases; hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
consents, waivers and releases; determine and announce the result and do such
acts as are proper to conduct the election or vote with fairness to all
shareholders. On the request of the person presiding at the meeting or any
shareholder entitled to vote thereat, the judge(s) shall make a report in
writing of any challenge, question or matter determined and execute a
certificate of any fact found. Any
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<PAGE>
report or certificate made shall be prima facie evidence of the facts stated
therein and of the vote as certified by the judge(s). Unless appointed as above
provided in this section, the judge(s) shall be dispensed with at all meetings
of shareholders.
SECTION 1.08. VOTE OF SHAREHOLDERS. Every shareholder of record, as of the
record date fixed by the Board of Directors, shall, with respect to each matter
submitted to vote at a shareholders' meeting, be entitled to one vote for every
share of capital stock standing in his name on the record of shareholders.
Directors shall be elected by a plurality of the votes cast by the holders of
the outstanding shares of the Corporation which are represented at the meeting
and entitled to vote in the election. Whenever any corporate action, other than
the election of Directors, is to be taken by vote of the shareholders, such
corporate action shall, except as otherwise required by law, the Articles of
Incorporation or this Code of Regulations, be authorized by the affirmative
votes of the holders of record of a majority of the votes cast at a meeting of
shareholders by the holders of shares entitled to vote thereon.
SECTION 1.09. PRESIDING OFFICER. Meetings of the shareholders shall be
presided over by the Chairman of the Board, if any, or if not present or there
is no one filling that office by the President of the Corporation, or such other
member of the Board as is designated by the Board. The Chairman, if any, and
the President of the Corporation shall be members of the Board of Directors.
The Secretary or such other officer or director as is designated by the Board of
the Corporation shall record all the proceedings of the meetings of the
shareholders and he shall act as Secretary of all meetings of the shareholders.
In the absence of the Secretary or such other officer or director so designated,
the presiding officer shall appoint another officer or a shareholder of the
Corporation to act as Secretary of the meeting.
ARTICLE II
DIRECTORS
SECTION 2.01. MANAGEMENT OF CORPORATION. The business of the Corporation shall
be managed by its Board of Directors, each member of which shall have the
qualifications prescribed by law, and shall have such further qualifications
relating to age, business affiliation and employment by the Corporation as are
from time to time adopted by the Board of Directors.
SECTION 2.02. NUMBER AND ELECTION. Unless otherwise fixed by the Articles of
Incorporation, the number of members of the Board of Directors shall be
determined from time to time by the vote of the holders of a majority of the
shares entitled to vote thereon at any annual meeting or special meeting called
for the purpose of electing directors and, when so fixed, such number shall
continue to be the authorized number of members of the Board of Directors until
changed by the shareholders by vote as aforesaid. If the annual meeting for
election of Directors is not held on the date designated therefor, the Directors
shall cause the meeting to be held as soon thereafter as convenient.
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<PAGE>
SECTION 2.03. TERM OF OFFICE. Directors shall hold office until the annual
meeting next following their election and until their respective successors are
elected and qualified or until their earlier resignation or removal from office.
SECTION 2.04. VACANCIES. Vacancies and newly-created directorships resulting
from any increase in the authorized number of Directors may be filled by a
majority of the members of the Board of Directors then in office, although such
majority is less than a quorum, or by a sole remaining Director.
SECTION 2.05. QUORUM. A majority of the total authorized number of Directors
shall constitute a quorum for the transaction of business at a meeting of the
Directors. The act of a majority of the Directors present at a meeting at which
a quorum is present shall be the act of the Board except as otherwise provided
by law, the Articles of Incorporation or this Code of Regulations. A majority
of the Directors present, whether or not a quorum is present, may adjourn a
meeting of the Directors to another time and place. Notice of any adjournment
need not be given if such time and place are announced at the meeting.
SECTION 2.06. ANNUAL MEETING. Immediately following the adjournment of the
annual meeting of shareholders, the newly-elected Board of Directors, if a
quorum thereof be present, shall meet for the purpose of organization, the
election of officers and the transaction of any other business. Notice of such
meeting need not be given. If for any reason such organizational meeting is not
held at such time, a special meeting for such purpose shall be held at such
other time and place as is determined by the Board and notice thereof shall not
be necessary.
SECTION 2.07. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held, without notice, on such date and at such hour and place as shall
from time to time be fixed by the Board and no notice thereof shall be
necessary. When the date fixed is a legal holiday, the regular meeting shall be
held on the next succeeding business day or on such other day as the Board
specifically designates at the next preceding Board meeting.
SECTION 2.08. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called at any time by the Chairman, the President or by a majority of the
Board of Directors. Special meetings shall be held on such date and at such
hour and place as shall be fixed by the person(s) calling the meeting and stated
in the notice or waiver of notice of the meeting. Unless waived, notice of each
special meeting of the Directors, stating the date, hour and place of the
meeting, shall be given to each Director, by personal communication either over
the telephone or otherwise, not later than the second day prior to the meeting,
or by mailed letter deposited in the United States mail with postage thereon
prepaid not later than the seventh day prior to the meeting. Notices of special
meetings of the Board of Directors and waivers thereof need not state the
purpose or purposes of the meeting. Any business within the powers of the Board
of Directors may be transacted at any meeting, whether or not stated in the
notice.
-4-
SECTION 2.09. WAIVER OF NOTICE. Any Director may waive any notice required to
be given by law or this Code of Regulations.
SECTION 2.10. COMPENSATION. Directors shall receive such compensation and
expense reimbursement for attendance at each meeting of the Board of Directors
or of any committee thereof and/or such salary as may be determined from time to
time by the Board of Directors. Nothing herein contained shall be construed to
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
SECTION 2.11. COMMITTEES. The Board of Directors, by resolution adopted by a
majority of the Board, may designate from among its members an Executive
Committee and other committees, both standing and special, each consisting of
two or more Directors. Each such committee, to the extent provided in the
Board's resolution creating the committee, and consistent with such limitations
as are contained in the Articles of Incorporation and the General Corporation
Law of Ohio, shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the Corporation.
ARTICLE III
OFFICERS
SECTION 3.01. ELECTION. The officers of the Corporation shall include a
Chairman, a President, a Secretary, a Treasurer and such number of Vice
Presidents (which may include one or more Executive Vice Presidents and/or
Senior Vice Presidents), Assistant Vice Presidents, Assistant Secretaries,
Assistant Treasurers and other officers as are, in the judgment of the Board,
required to transact the business of the Corporation. All officers of the
Corporation may be elected and the compensation of all such officers may be
fixed by the Board provided, however, that the President may appoint the
Secretary, the Treasurer, and Vice Presidents of the Corporation and fix their
salaries subject to approval of the Board. Any two or more offices may be held
by the same person. Any officer may, but no officers except the President must
be chosen from among the Board of Directors. The officers of the Corporation
shall have the authority, perform the duties and exercise the powers in the
management of the Corporation usually incident to the offices held by them
respectively, and/or such other authority, duties and powers as may be assigned
to them from time to time by the President.
SECTION 3.02. TERM. The officers of the Corporation shall be elected or
appointed to hold office until the meeting of the Board of Directors following
the next annual or special meeting at which officers are elected or for such
shorter periods as may be designated by the Board of Directors. Any officer may
be removed at any time, with or without cause, by the Board of Directors. A
vacancy in any office, however created, may be filled by the Board of Directors
at any regular or special meeting.
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<PAGE>
SECTION 3.03. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the Chairman, the President or by such other
officer or agent of the Corporation so authorized by the President or the Board
of Directors. Any such person may, in the name of and on behalf of the
Corporation, take all such action as he may deem advisable to vote in person or
by proxy at any meeting of security holders of any corporation in which this
Corporation may own securities and at any such meeting shall possess and may
exercise any and all rights and powers incident to the ownership of such
securities and which, as the owner thereof, the Corporation might have exercised
and possessed if present. The Board of Directors may, by resolution, from time
to time, confer like powers upon any other person or persons.
ARTICLE IV
CAPITAL STOCK
SECTION 4.01. STOCK CERTIFICATES. The shares of stock of the Corporation shall
be represented by certificates signed by the Chairman or the President and the
Secretary, an Assistant Secretary or such other officer of the Corporation
appointed by the Board of Directors for that purpose, to be known as an
authorized officer. Such certificates may be sealed with the seal of the
Corporation or a facsimile thereof. The signatures of the officers of the
Corporation upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent or by a registrar other than the Corporation
itself or its employee. In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer at the date of issue. Each
certificate shall set forth additional material as is requested by law.
SECTION 4.02. TRANSFERS. The shares of stock of the Corporation shall be
transferable in the manner prescribed by the laws of the State of Ohio.
Transfers of stock shall be made on the share transfer books of the Corporation
only by the person named in the certificate or by attorney lawfully constituted
in writing and upon the surrender of the certificate therefor, which shall be
canceled when the new certificate shall be issued.
SECTION 4.03. REGISTERED HOLDERS. The Corporation shall be entitled to treat
and shall be protected in treating persons in whose names shares or any
warrants, rights or options stand on the records of shareholders, warrant
holders, right holders or option holders, as the case may be, as the owners
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to, or interest in, any such share, warrant, right or option on the
part of any other person, whether or not the Corporation shall have notice
hereof.
SECTION 4.04. NEW CERTIFICATES. The Corporation may issue a new certificate of
stock in the place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the Corporation may require the owner of the
lost, stolen or destroyed certificate,
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<PAGE>
or his legal representative, to give the Corporation a bond sufficient to
indemnify the Corporation and any transfer agent and/or registrar against any
claim that may be made against it or them on account of the alleged loss, theft
or destruction of any such certificate or the issuance of such new certificate.
A new certificate may be issued without requiring any bond when it is proper to
do so.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. OFFICES. The principal office of the Corporation shall be in the
City of Columbus, State of Ohio. The Corporation may have offices within and/or
without the State of Ohio.
SECTION 5.02. SEAL. The corporate seal shall be circular in form. The name of
the Corporation and the year 1996 shall be engraved around the margin. The word
"Seal" shall be engraved across the center. The Chairman, President, Secretary,
Treasurer and such other officers so designated by the President shall have
authority to affix the corporate seal to any document requiring such seal and to
attest the same.
SECTION 5.03. EXECUTION OF INSTRUMENTS. Agreements, indentures, mortgages,
deeds, conveyances, transfers, certificates, declarations, receipts, discharges,
releases, satisfactions, settlements, petitions, schedules, accounts,
affidavits, bonds, undertakings, proxies and other instruments or documents may
be signed, executed, acknowledged, verified, delivered or accepted on behalf of
the Corporation by the Chairman, President, Secretary, Treasurer, and such other
officers as may be specifically authorized by the President or the Board of
Directors. Employees of the Corporation may execute instruments and documents
including but not limited to checks, notes and bills of exchange, on behalf of
the Corporation to the extent specifically authorized by the President or the
Board of Directors.
SECTION 5.04. FISCAL YEAR. The fiscal year of the Corporation shall begin the
first day of January in each year, and shall end on the thirty-first day of
December of such year.
SECTION 5.05. BOOKS AND RECORDS. The Corporation shall keep correct and
complete books and records of accounts and of its transactions. It shall also
keep minutes of the proceedings of its incorporators, shareholders, directors
and committees of the Directors. The Corporation shall keep its share transfer
books and other books and records in accordance with the requirements of law and
prudent retention schedules.
SECTION 5.06. AMENDMENT. This Code of Regulations may be added to, amended or
repealed at any annual meeting of shareholders or at any special meeting called
for that purpose by the affirmative votes of the holders of record of a majority
of the shares entitled to vote on such proposal in person or by proxy, or
without a meeting by the two-thirds of the voting power on such proposal. If
the Regulations are amended or new regulations are adopted by such written
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<PAGE>
consent, the Corporation shall mail a copy of the amendment or the new
regulations to each shareholder entitled to vote thereon who did not participate
in the adoption thereof.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 6.01. INDEMNIFICATION. 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 another 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 as 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
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 agreements) asserted against them or
incurred by them arising out of their service to the Corporation as contemplated
herein.
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<PAGE>
- -----------------------------------------------------------------------------
FORM OF POOLING AND SERVICING
AGREEMENT
between
BANC ONE ABS CORPORATION,
as Seller
BANK ONE, ARIZONA, NA,
as Servicer
and
BANKERS TRUST COMPANY,
as Trustee,
On behalf of the Certificateholders,
and as Collateral Agent
Dated as of June 1, 1996
Banc One Auto Grantor Trust 1996-B
$______________ Class A ____% Asset Backed Certificates
$_____________ Class B ____% Asset Backed Certificates
- -----------------------------------------------------------------------------
<PAGE>
ARTICLE I
Definitions
SECTION 1.1. Definitions.. . . . . . . . . . . . . . . . 1
SECTION 1.2. Usage of Terms. . . . . . . . . . . . . . . 19
SECTION 1.3. Calculations. . . . . . . . . . . . . . . . 20
SECTION 1.4. References. . . . . . . . . . . . . . . . . 20
SECTION 1.5. References to the Trust. . . . . . . . . . 20
SECTION 1.6. Action by or Consent of
Certificateholders.. . . . . . . . . . . . 20
ARTICLE II
The Trust Property
SECTION 2.1. Conveyance of Trust Property. . . . . . . . 20
SECTION 2.2. Representations and Warranties as to Each
Receivable.. . . . . . . . . . . . . . . . 20
SECTION 2.3. Repurchase upon Breach. . . . . . . . . . . 24
SECTION 2.4. Custody of Receivable Files.. . . . . . . . 25
SECTION 2.5. Duties of Servicer as Custodian.. . . . . . 25
SECTION 2.6. Instructions; Authority To Act. . . . . . . 26
SECTION 2.7. Custodian's Indemnification.. . . . . . . . 26
SECTION 2.8. Effective Period and Termination. . . . . . 27
ARTICLE III
Administration and Servicing of the Trust Property
SECTION 3.1. Duties of Servicer. . . . . . . . . . . . . 28
SECTION 3.2. Collection and Allocation of Receivable
Payments . . . . . . . . . . . . . . . . . 28
SECTION 3.3. Realization upon Receivables. . . . . . . . 29
SECTION 3.4. Physical Damage Insurance.. . . . . . . . . 29
SECTION 3.5. Maintenance of Security Interests in
Financed Vehicles. . . . . . . . . . . . . 30
SECTION 3.6. Covenants of Servicer. . . . . . . . . . . 30
SECTION 3.7. Purchase of Receivables upon Breach.. . . . 30
SECTION 3.8. Servicing Fee.. . . . . . . . . . . . . . . 31
SECTION 3.9. Servicer's Certificate. . . . . . . . . . . 31
SECTION 3.10. Annual Statement as to Compliance; Notice
of Default . . . . . . . . . . . . . . . . 31
SECTION 3.11. Annual Independent Certified Public
Accountants' Report. . . . . . . . . . . . 32
SECTION 3.12. Access to Certain Documentation and
Information Regarding Receivables. . . . . 32
SECTION 3.13. Servicer Expenses . . . . . . . . . . . . . 32
SECTION 3.14. Appointment of Subservicers . . . . . . . . 33
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<PAGE>
ARTICLE IV
Distributions; Reserve Fund;
Statements to Certificateholders
SECTION 4.1. Establishment of Accounts.. . . . . . . . . 33
SECTION 4.2. Collections. . . . . . . . . . . . . . . . 36
SECTION 4.3. Additional Deposits.. . . . . . . . . . . . 36
SECTION 4.4. Net Deposits. . . . . . . . . . . . . . . . 37
SECTION 4.5. Distributions. . . . . . . . . . . . . . . 37
SECTION 4.6. Reserve Fund. . . . . . . . . . . . . . . . 39
SECTION 4.7. Statements to Certificateholders. . . . . . 40
ARTICLE V
[Intentionally Omitted]
ARTICLE VI
The Certificates
SECTION 6.1. The Certificates. . . . . . . . . . . . . . 42
SECTION 6.2. Authentication and Delivery of
Certificates . . . . . . . . . . . . . . . 43
SECTION 6.3. Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . . . .43
SECTION 6.4. Reserved. . . . . . . . . . . . . . . . . . 44
SECTION 6.5. Reserved. . . . . . . . . . . . . . . . . . 44
SECTION 6.6. Mutilated, Destroyed, Lost or Stolen
Certificates . . . . . . . . . . . . . . . 44
SECTION 6.7. Persons Deemed Owners . . . . . . . . . . . 45
SECTION 6.8. Access to List of Certificateholders'
Names and Addresses. . . . . . . . . . . . 45
SECTION 6.9. Maintenance of Office or Agency.. . . . . . 45
SECTION 6.10. Book-Entry Certificates. . . . . . . . . . 46
SECTION 6.11. Notices to Clearing Agency. . . . . . . . . 47
SECTION 6.12. Definitive Certificates.. . . . . . . . . . 47
ARTICLE VII
The Seller
SECTION 7.1. Representations of Seller. . . . . . . . . 48
SECTION 7.2. Special Purpose Entity. . . . . . . . . . . 50
SECTION 7.3. Liability of Seller; Indemnities. . . . . . 50
SECTION 7.4. Merger or Consolidation of, or Assumption
of the Obligations of, Seller. . . . . . . 52
SECTION 7.5. Limitation on Liability of Seller and
Others . . . . . . . . . . . . . . . . . . 52
SECTION 7.6. Seller May Own Certificates.. . . . . . . . 53
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ARTICLE VIII
The Servicer
SECTION 8.1. Representations of Servicer.. . . . . . . . 53
SECTION 8.2. Indemnities of Servicer.. . . . . . . . . . 55
SECTION 8.3. Merger or Consolidation of, or Assumption
of the Obligations of, Servicer. . . . . . 56
SECTION 8.4. Limitation on Liability of Servicer and
Others . . . . . . . . . . . . . . . . . . 56
SECTION 8.5. Bank One, Arizona, NA Not To Resign as
Servicer . . . . . . . . . . . . . . . . . 57
SECTION 8.6. Existence. . . . . . . . . . . . . . . . . 57
SECTION 8.7. Tax Accounting. . . . . . . . . . . . . . . 57
ARTICLE IX
Servicing Termination
SECTION 9.1. Events of Servicing Termination.. . . . . . 58
SECTION 9.2. Appointment of Successor. . . . . . . . . . 60
SECTION 9.3. Payment of Servicing Fee. . . . . . . . . . 60
SECTION 9.4. Notification to Certificateholders. . . . . 61
SECTION 9.5. Waiver of Past Events of Servicing
Termination. . . . . . . . . . . . . . . . 61
ARTICLE X
The Trustee
SECTION 10.1. Acceptance by Trustee. . . . . . . . . . . 61
SECTION 10.2. Duties of Trustee. . . . . . . . . . . . . 61
SECTION 10.3. Trustee's Certificate. . . . . . . . . . . 63
SECTION 10.4. Trustee's Assignment of Purchased
Receivables . . . . . . . . . . . . . . . 63
SECTION 10.5. Certain Matters Affecting the Trustee. . . 64
SECTION 10.6. Trustee Not Liable for Certificates or
Receivables . . . . . . . . . . . . . . . 65
SECTION 10.7. Trustee May Own Certificates.. . . . . . . 67
SECTION 10.8. Trustee's Fees and Expenses. . . . . . . . 67
SECTION 10.9. Eligibility Requirements for Trustee. . . 67
SECTION 10.10. Resignation or Removal of Trustee. . . . . 68
SECTION 10.11. Successor Trustee. . . . . . . . . . . . . 68
SECTION 10.12. Merger or Consolidation of Trustee . . . . 69
SECTION 10.13. Appointment of Co-Trustee or Separate
Trustee . . . . . . . . . . . . . . . . . 69
SECTION 10.14. Representations and Warranties of
Trustee . . . . . . . . . . . . . . . . . 71
SECTION 10.15. Reports by Trustee.. . . . . . . . . . . . 72
SECTION 10.16. Tax Accounting . . . . . . . . . . . . . . 72
SECTION 10.17. Trustee May Enforce Claims Without
Possession of Certificates. . . . . . . . 72
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ARTICLE XI
Termination
SECTION 11.1. Termination of the Trust.. . . . . . . . . 72
SECTION 11.2. Optional Purchase of All Receivables.. . . 74
ARTICLE XII
Miscellaneous Provisions
SECTION 12.1. Amendment. . . . . . . . . . . . . . . . . 74
SECTION 12.2. Protection of Title to Trust . . . . . . . 75
SECTION 12.3. Limitation on Rights of
Certificateholders. . . . . . . . . . . . 77
SECTION 12.4. Governing Law. . . . . . . . . . . . . . . 78
SECTION 12.5. Notices. . . . . . . . . . . . . . . . . . 78
SECTION 12.6. Severability of Provisions.. . . . . . . . 78
SECTION 12.7. Assignment.. . . . . . . . . . . . . . . . 79
SECTION 12.8. Certificates Nonassessable and Fully
Paid . . . . . . . . . . . . . . . . . . 79
SECTION 12.9. Intention of Parties.. . . . . . . . . . . 79
SECTION 12.10. Counterparts.. . . . . . . . . . . . . . . 79
SECTION 12.11. Collateral Agent Protection. . . . . . . . 80
SECTION 12.12. Limitation of Liability of Trustee and
Collateral Agent . . . . . . . . . . . . 80
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SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location of Receivable
EXHIBITS
Exhibit A - Form of Class A Certificate
Exhibit B - Form of Class B Certificate
Exhibit C - Form of Servicer's Certificate
Exhibit D - Form of Monthly Statement to Certificateholders
Exhibit E - Form of Benefit Plan Affidavit
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POOLING AND SERVICING AGREEMENT dated as of
June 1, 1996 (the "Agreement"), among Banc One ABS
Corporation, an Ohio corporation (the "Seller"),
Bank One, Arizona, NA, a national banking
association (the "Servicer"), and Bankers Trust
Company, a New York banking corporation, as
trustee hereunder (the "Trustee") and as
collateral agent with respect to the Reserve Fund
(the "Collateral Agent").
In consideration of the premises and of the mutual
agreements herein contained, and other good and valuable
consideration, the receipt of which is acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Whenever used in this
Agreement, the following words and phrases, unless the context
otherwise requires, whenever capitalized shall have the following
meanings:
"ACCOUNTS" has the meaning specified in Section
4.1(a)(ii).
"ACCOUNT PROPERTY" means all amounts and investments
held from time to time in any Account or the Reserve Fund, as the
case may be (whether in the form of deposit accounts, Physical
Property, book-entry securities, uncertificated securities or
otherwise), and all proceeds of the foregoing.
"AFFILIATE" means, with respect to any Person, any
other Person directly or indirectly controlling, controlled by,
or under direct or indirect common control with such specified
Person. For purposes of this definition, "control" when used
with respect to any specified Person means the power to direct
the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGREEMENT" means, this Pooling and Servicing
Agreement, as the same may be amended and supplemented from time
to time.
"AMOUNT FINANCED" means, with respect to any
Receivable, the amount advanced under such Receivable toward the
purchase price of the related Financed Vehicle and any related
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costs and shown as such in the Contract evidencing such
Receivable.
"APR" or "ANNUAL PERCENTAGE RATE" of a Receivable means
the annual rate of finance charges stated in the related Contract
expressed as a percentage.
"AUTHORIZED OFFICER" means (i) with respect to the
Trustee, any officer within the Corporate Trust Office of the
Trustee, including any vice president, assistant vice president,
second vice president, secretary, assistant secretary or any
other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject and (ii)
with respect to the Servicer, any officer of the Servicer who is
authorized to act for the Servicer in matters relating to the
Trust and who is identified on the list of Authorized Officers
delivered by the Servicer to the Trustee on the Closing Date (as
such list may be modified or supplemented from time to time
thereafter).
"BANK" means Bank One, Arizona, NA
"BANK RECEIVABLES" means the motor vehicle retail
installment sales contracts identified in Schedule A to the Loan
Sale Agreement that are not Valley National Receivables.
"BOOK-ENTRY CERTIFICATES" mean beneficial interests in
the definitive Certificates described in Section 6.10, the
ownership of which shall be evidenced, and transfers of which
shall be made, through book entries by a Clearing Agency as
described in Section 6.10.
"BUSINESS DAY" means a day other than a Saturday, a
Sunday or a day on which banking institutions or trust companies
in New York, New York or Phoenix, Arizona or the city in which
the Corporate Trust Office is located are authorized by law,
regulation, executive order or governmental decree to be closed.
"CERTIFICATE" means any Class A Certificate or Class B
Certificate.
"CERTIFICATE OWNER" means, with respect to a Book-Entry
Certificate, the Person who is the owner of such Book-Entry
Certificate, as reflected on the books of the Clearing Agency, or
on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant, in
accordance with the rules, regulations and procedures of such
Clearing Agency).
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"CERTIFICATE REGISTER" means the register maintained by
the Trustee for the registration of Certificates and of transfers
and exchanges of Certificates as provided in Section 6.3.
"CERTIFICATEHOLDER" or "HOLDER" means the Person in
whose name a Certificate shall be registered in the Certificate
Register, except that, solely for the purpose of giving any
consent, request or waiver pursuant to this Agreement, the
interest evidenced by any Certificate registered in the name of
the Seller, the Servicer or any Person actually known to an
Authorized Officer of the Trustee to be an Affiliate of the
Seller or the Servicer, shall not be taken into account in
determining whether the requisite percentage necessary to effect
any such consent, request or waiver shall have been obtained.
"CLASS A CERTIFICATE" means a certificate executed by
the Trustee on behalf of the Trust and authenticated by the
Trustee, substantially in the form of Exhibit A hereto.
"CLASS A CERTIFICATEHOLDER" or "CLASS A HOLDER" means
the Person in whose name a Class A Certificate shall be
registered in the Certificate Register, EXCEPT THAT, solely for
the purpose of giving any consent, request or waiver pursuant to
this Agreement, the interest evidenced by any Class A Certificate
registered in the name of the Seller, the Servicer or any Person
actually known to an Authorized Officer of the Trustee to be an
Affiliate of the Seller or the Servicer, shall not be taken into
account in determining whether the requisite percentage necessary
to effect any such consent, request or waiver shall have been
obtained.
"CLASS A DISTRIBUTION ACCOUNT" means the account
established and maintained as such pursuant to Section 4.1.
"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 ___ and
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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 PASS-THROUGH RATE" means ____% per annum,
calculated on the basis of a 360-day year consisting of twelve
30-day months.
"CLASS A PERCENTAGE" means ____%.
"CLASS A POOL FACTOR" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the
Class A Principal Balance (after giving effect to any
distributions made on such Distribution Date) divided by the
Original Class A Principal Balance.
"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 (including the Final Scheduled 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
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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 CERTIFICATE" means a certificate executed by
the Trustee on behalf of the Trust and authenticated by the
Trustee, substantially in the form of Exhibit B hereto.
"CLASS B CERTIFICATEHOLDER" or "CLASS B HOLDER" means
the Person in whose name a Class B Certificate shall be
registered in the Certificate Register, EXCEPT THAT, solely for
the purpose of giving any consent, request or waiver pursuant to
this Agreement, the interest evidenced by any Class B Certificate
registered in the name of the Seller, the Servicer or any Person
actually known to an Authorized Officer of the Trustee to be an
Affiliate of the Seller or the Servicer, shall not be taken into
account in determining whether the requisite percentage necessary
to effect any such consent, request or waiver shall have been
obtained.
"CLASS B DISTRIBUTION ACCOUNT" means the account
established and maintained as such pursuant to Section 4.1.
"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 ___ 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
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became Liquidated Receivables during the related Collection
Period.
"CLASS B PASS-THROUGH RATE" means ____% per annum,
calculated on the basis of a 360-day year consisting of twelve
30-day months.
"CLASS B PERCENTAGE" means ___%.
"CLASS B POOL FACTOR" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the
Class B Principal Balance (after giving effect to any
distributions made on such Distribution Date) divided by the
Original Class B Principal Balance.
"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 (including the Final Scheduled 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 Certificate- holders 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.
"CLEARING AGENCY" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The initial Clearing Agency
shall be DTC.
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"CLEARING AGENCY PARTICIPANT" means a broker, dealer,
bank, other financial institution or other Person for whom from
time to time a Clearing Agency effects book-entry transfers and
pledges of securities deposited with the Clearing Agency.
"CLOSING DATE" means June __, 1996.
"CODE" means the Internal Revenue Code of 1986, as
amended.
"COLLATERAL AGENT" means Bankers Trust Company, a New
York banking corporation, in its capacity as collateral agent
with respect to the Reserve Fund for the Certificateholders.
"COLLECTION ACCOUNT" means the account or accounts
established and maintained as such pursuant to Section 4.1.
"COLLECTION PERIOD" means, with respect to any
Distribution Date, the calendar month immediately preceding the
calendar month in which such Distribution Date occurs.
"COLLECTIONS" mean, for a Distribution Date, the sum of
the Interest Collections and Principal Collections for such
Distribution Date.
"COMPUTER TAPE" means the computer tape furnished to
the Trustee describing certain characteristics of the Receivables
as of the Cutoff Date.
"CONTRACT" means a motor vehicle retail installment
sale contract.
"CORPORATE TRUST OFFICE" means the principal office of
the Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of
execution of this Agreement is located at 4 Albany Street, New
York, New York 10006, or at such other address as the Trustee may
designate from time to time by notice to the Certificateholders,
the Seller and the Servicer, or the principal corporate trust
office of any successor Trustee (the address of which the
successor Trustee will notify the Certificateholders, the Seller
and the Servicer).
"CUTOFF DATE" means June 1, 1996.
"CUTOFF DATE PRINCIPAL BALANCE" means, with respect to
a Receivable, the Amount Financed minus the sum of (i) that
portion of all payments (including prepayments) made by or on
behalf of the related Obligor prior to the Cutoff Date and
allocable to principal using the Simple Interest Method, (ii) any
portion of extended warranty contract costs or of physical
damage, theft, credit life or disability insurance premiums
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included in the Amount Financed that was refunded prior to the
Cutoff Date and (iii) any prepayment in full or any partial
prepayments applied to reduce the principal balance of the
Receivable, but only to the extent not included in clause (i).
"DEALER" means a dealer who sold a Financed Vehicle and
who originated and assigned the Receivable for such Financed
Vehicle to the Seller under a Dealer Agreement.
"DEALER AGREEMENT" means any agreement between the
Seller and a Dealer relating to the acquisition of Receivables by
the Seller from a Dealer.
"DEFINITIVE CERTIFICATES" shall have the meaning
specified in Section 6.10.
"DELIVERY" when used with respect to Account Property
means:
(a) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other
obligations that constitute "instruments" within the meaning
of Section 9-105(1)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Trustee or
Collateral Agent (all references to the Collateral Agent in
this definition relate to the Reserve Fund), as applicable,
or their respective nominee, agent or custodian by physical
delivery to the Trustee or Collateral Agent, as applicable,
or its nominee, agent or custodian endorsed to, or
registered in the name of, the Trustee or Collateral Agent,
as applicable, or their respective nominee, agent or
custodian or endorsed in blank, and, with respect to a
certificated security (as defined in Section 8-102 of the
UCC) transfer thereof (i) by delivery of such certificated
security endorsed to, or registered in the name of, the
Trustee or Collateral Agent, as applicable, or their
respective nominee, agent or custodian or endorsed in blank
to a financial intermediary (as defined in Section 8-313 of
the UCC) and the making by such financial intermediary of
entries on its books and records identifying such
certificated securities as belonging to the Trustee or
Collateral Agent, as applicable, or their respective
nominee, agent or custodian and the sending by such
financial intermediary of a confirmation of the purchase of
such certificated security by the Trustee or Collateral
Agent, as applicable, or their respective nominee, agent or
custodian, or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102(3) of the UCC) and
the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities
account of the transferor and increasing the appropriate
securities account of a financial intermediary by the amount
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of such certificated security, the identification by the
clearing corporation of the certificated securities for the
sole and exclusive account of the financial intermediary,
the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in
Section 8-102(4) of the UCC) or the nominee of either
subject to the clearing corporation's exclusive control, the
sending of a confirmation by the financial intermediary of
the purchase by the Trustee or Collateral Agent, as
applicable, or their respective nominee, agent or custodian
of such securities and the making by such financial
intermediary of entries on its books and records identifying
such certificated securities as belonging to the Trustee or
Collateral Agent, as applicable, or their respective
nominee, agent or custodian (all of the foregoing, "Physical
Property"), and, in any event, any such Physical Property in
registered form shall be in the name of the Trustee or
Collateral Agent, as applicable, or their respective
nominee, agent or custodian; and such additional or
alternative procedures as may hereafter become appropriate
to effect the complete transfer of ownership of any such
Account Property to the Trustee or Collateral Agent, as
applicable, or their respective nominee, agent or custodian,
consistent with changes in applicable law or regulations or
the interpretation thereof;
(b) with respect to any securities issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by
the Federal National Mortgage Association that is a
book-entry security held through the Federal Reserve System
pursuant to Federal book-entry regulations, the following
procedures, all in accordance with applicable law, including
applicable Federal regulations and Articles 8 and 9 of the
UCC: book-entry registration of such Account Property to an
appropriate book-entry account maintained with a Federal
Reserve Bank by a financial intermediary which is also a
"depository" pursuant to applicable Federal regulations and
issuance by such financial intermediary of a deposit advice
or other written confirmation of such book-entry
registration to the Trustee or Collateral Agent, as
applicable, or its nominee, agent or custodian of the
purchase by the Trustee or Collateral Agent, as applicable,
or its nominee, agent or custodian of such book-entry
securities; the making by such financial intermediary of
entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to
Federal book-entry regulations as belonging to the Trustee
or Collateral Agent, as applicable, or its nominee, agent or
custodian and indicating that such custodian holds such
Account Property solely as agent for the Trustee or
Collateral Agent, as applicable, or its nominee, agent or
custodian; and such additional or alternative procedures as
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may hereafter become appropriate to effect complete transfer
of ownership of any such Account Property to the Trustee or
Collateral Agent, as applicable, or its nominee, agent or
custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Account Property that
is an uncertificated security under Article 8 of the UCC and
that is not governed by clause (b) above, registration on
the books and records of the issuer thereof in the name of
the financial intermediary, the sending of a confirmation by
the financial intermediary of the purchase by the Trustee or
Collateral Agent, as applicable, or its nominee, agent or
custodian of such uncertificated security and the making by
such financial intermediary of entries on its books and
records identifying such uncertificated certificates as
belonging to the Trustee or Collateral Agent, as applicable,
or its nominee, agent or custodian.
"DEPOSITORY AGREEMENT" means the agreement among the
Seller, the Trustee and DTC, dated June , 1996.
"DETERMINATION DATE" with respect to any Distribution
Date, means the later of the eighth Business Day and the eleventh
calendar day of the calendar month in which such Distribution
Date occurs.
"DISTRIBUTION DATE" means, with respect to each
Collection Period, the 15th day of the following month (or, if
such 15th day is not a Business Day, the next following Business
Day), commencing July 15, 1996.
"DISTRIBUTION DATE STATEMENT" means, the statement
described in Section 4.7
"DTC" means The Depository Trust Company.
"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 shall have a credit rating from each
Rating Agency in one of its generic rating categories which
signifies investment grade.
"ELIGIBLE INSTITUTION" means any depository institution
(other than the Seller or any affiliate of the Seller) organized
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under the laws of the United States of America or any one of the
States thereof or the District of Columbia (or any domestic
branch of a foreign bank), which (i) has (A) either a long-term
senior unsecured debt rating of AAA or a short-term senior
unsecured debt or certificate of deposit rating of A-1+ or better
by Standard & Poor's and (B)(1) a long-term senior unsecured debt
rating of A-1 or better and (2) a short-term senior unsecured
debt rating of P-1 or better by Moody's, or any other long-term,
short-term or certificate of deposit rating acceptable to the
Rating Agencies and (ii) whose deposits are insured by the FDIC.
If so qualified, the Trustee and Collateral Agent may be
considered an Eligible Institution.
"ELIGIBLE INVESTMENTS" mean book-entry securities,
negotiable instruments or securities represented by instruments
in bearer or registered form which evidence:
(a) direct obligations of, and obligations fully
guaranteed as to timely payment by, the United States of
America;
(b) demand deposits, time deposits or certificates of
deposit of any depository institution (including the Seller
or any Affiliate of the Seller) or trust company
incorporated under the laws of the United States of America
or any State thereof or the District of Columbia (or any
domestic branch of a foreign bank) and subject to
supervision and examination by Federal or State banking or
depository institution authorities (including depository
receipts issued by any such institution or trust company as
custodian with respect to any obligation referred to in
clause (a) above or portion of such obligation for the
benefit of the holders of such depository receipts);
PROVIDED, HOWEVER, that at the time of the investment or
contractual commitment to invest therein (which shall be
deemed to be made again each time funds are reinvested
following each Distribution Date), the commercial paper or
other short-term senior unsecured debt obligations (other
than such obligations the rating of which is based on the
credit of a Person other than such depository institution or
trust company) of such depository institution or trust
company shall have a credit rating from S&P of A-1+ and from
Moody's of P-1;
(c) commercial paper (including commercial paper of
the Seller or any Affiliate of the Seller) having, at the
time of the investment or contractual commitment to invest
therein, a rating from S&P of A-1+ and from Moody's of P-1;
(d) investments in money market funds (including funds
for which the Seller or the Trustee or any of their
respective Affiliates is investment manager or advisor)
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having a rating from S&P of AAA-m or AAAm-G and from Moody's
of Aaa;
(e) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b)
above;
(f) repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed
by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed
by the full faith and credit of the United States of
America, in either case entered into with a depository
institution or trust company (acting as principal) referred
to in clause (b) above; and
(g) any other investment which would not cause either
Rating Agency to downgrade or withdraw its then current
rating of either the Class A Certificates or the Class B
Certificates, as directed in writing by either Rating Agency
to the Trustee.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA ENTITY" means (i) an employee benefit plan,
retirement arrangement, individual retirement account or Keogh
subject to either Title I of ERISA or Section 4975 of the Code,
or (ii) an entity whose source of funds to be used for the
purchase of a Class B Certificate includes the assets of any such
plan, arrangement or account.
"EVENT OF SERVICING TERMINATION" means an event
specified in Section 9.1.
"FDIC" means the Federal Deposit Insurance Corporation.
"FINAL SCHEDULED DISTRIBUTION DATE" means the _______
____ Distribution Date.
"FINAL SCHEDULED MATURITY DATE" means February 2002.
"FINANCED VEHICLE" means a new or used automobile, van
or light duty truck, together with all accessions thereto,
securing an Obligor's indebtedness under the respective
Receivable.
"INDEPENDENT COUNSEL" means, when used with respect to
any specified Person, that the Person (a) is in fact independent
of the Servicer, the Trust, the Seller and any Affiliate of any
of the foregoing Persons and (b) is not an officer or employee of
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the Servicer, the Trust, the Seller or any Affiliate of any of
the foregoing Persons.
"INSOLVENCY EVENT" means, with respect to a specified
Person, (a) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of such Person or
any substantial part of its property in an involuntary case under
any applicable Federal or State bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver
(including any receiver appointed under the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, as
amended), liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part
of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or
(b) the commencement by such Person of a voluntary case under any
applicable Federal or State bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such
Person to the entry of an order for relief in an involuntary case
under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official
for such Person or for any substantial part of its property, or
the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to
pay its debts as such debts become due, or the taking of action
by such Person in furtherance of any of the foregoing.
"INSURANCE" has the meaning specified in Section 3.4.
"INTEREST COLLECTIONS" for a Distribution Date shall be
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) Liquidation Proceeds attributable to interest on the
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 that became a
Purchased Receivable during such Collection Period to the extent
attributable to accrued interest on such Receivable; and (iv)
Recoveries received during such Collection Period. Interest
Collections for any Distribution Date shall exclude all payments
and proceeds (including Liquidation Proceeds) of any Receivable,
the Purchase Amount of which has been included in Collections in
a prior Collection Period.
"LIEN" means a security interest, lien, charge, pledge,
or encumbrance of any kind, other than tax liens, mechanics'
liens and any liens that may attach to a Financed Vehicle or
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Receivable by operation of law as a result of any act or omission
by the related Obligor.
"LIQUIDATED RECEIVABLE" means any defaulted Receivable
liquidated by the Servicer through the sale of a Financed Vehicle
or otherwise or which the Servicer has, after using all
reasonable efforts to realize upon such Receivable, charged-off.
"LIQUIDATION PROCEEDS" means, with respect to any
Liquidated Receivable, the moneys collected in respect thereof,
from whatever source (other than any proceeds from any Dealer
reserve) on a Liquidated Receivable during the Collection Period
in which such Receivable became a Liquidated Receivable, net of
the sum of any amounts expended by the Servicer in connection
with such liquidation and any amounts required by law to be
remitted to the Obligor on such Liquidated Receivable.
"LOAN PURCHASE AND SERVICING AGREEMENT" means the
agreement by and between the Bank and Valley National, as such
agreement may be amended from time to time, pursuant to which the
Bank shall purchase the Valley National Receivables from Valley
National.
"LOAN SALE AGREEMENT" means the agreement by and
between the Seller and the Bank, as such agreement may be amended
from time to time, pursuant to which the Seller shall purchase
the Receivables from the Bank.
"MOODY'S" means Moody's Investors Service, Inc., or its
successors in interest.
"OBLIGOR" on a Receivable means the purchaser or the
co-purchasers of the Financed Vehicle and any other Person who is
obligated for the indebtedness arising from such Receivable.
"OFFICERS' CERTIFICATE" means a certificate signed by
the chairman of the board, the president, the vice chairman of
the board, any executive vice president, any senior vice
president or any vice president.
"OPINION OF COUNSEL" means one or more written opinions
of counsel who may, except as otherwise expressly provided in
this Agreement, be employees of or counsel to the Seller or the
Servicer and who shall be reasonably satisfactory to the Trustee,
and which opinion or opinions shall be addressed to the Trustee
as Trustee, and shall be in form and substance satisfactory to
the Trustee; provided, however, that any opinion regarding the
status of the Trust as a grantor trust for federal income tax
purposes shall be delivered by Independent Counsel.
"ORIGINAL CLASS A PRINCIPAL BALANCE" means
$______________.
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"ORIGINAL CLASS B PRINCIPAL BALANCE" means
$_____________.
"ORIGINAL POOL BALANCE" means the aggregate Cutoff Date
Principal Balance of the Receivables, which is $305,686,731.53.
"ORIGINAL PRINCIPAL BALANCE" means the sum of the
Original Class A Principal Balance and the Original Class B
Principal Balance.
"PERSON" means any individual, corporation, estate,
partnership, joint venture, association, joint stock company,
trust (including any beneficiary thereof), unincorporated
organization or government or any agency or political subdivision
thereof.
"PHYSICAL PROPERTY" has the meaning assigned to such
term in the definition of "Delivery" above.
"PLAN" has the meaning specified in Section 6.3.
"POOL BALANCE" as of the close of business on the last
day of a Collection Period means the aggregate Principal Balance
of the Receivables (excluding Purchased Receivables and
Liquidated Receivables).
"PRINCIPAL BALANCE" of a Receivable, as of the close of
business on the last day of a Collection Period, means the Amount
Financed minus the sum of (i) that portion of all payments made
by or on behalf of the related Obligor on or prior to such day
and allocable to principal using the Simple Interest Method, (ii)
any refunded portion of extended warranty contract costs or of
physical damage, theft, credit life or disability insurance
premiums included in the Amount Financed, (iii) any payment of
the Purchase Amount with respect to the Receivable allocable to
principal and (iv) any prepayment in full or any partial
prepayments applied to reduce the principal balance of the
Receivable, but only to the extent not included in clause (i).
"PRINCIPAL COLLECTIONS" for a Distribution Date shall
be 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, only to the extent not
included in clause (i) above; (iii) the Purchase Amount of each
Receivable repurchased by the Seller 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
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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. Principal Collections on any Distribution Date
shall exclude all payments and proceeds (including Liquidation
Proceeds) of any Receivable, the Purchase Amount of which has
been included in Collections in a prior Collection Period.
"PURCHASE AMOUNT" means the amount, as of the close of
business on the last day of a Collection Period, required to
prepay in full a Receivable under the terms thereof including
interest at the APR to the end of the month of purchase.
"PURCHASED RECEIVABLE" means, on any date of
determination, a Receivable as to which payment of the Purchase
Amount has been made by the Seller or the Servicer pursuant to
this Agreement or by the Bank pursuant to the Loan Sale
Agreement.
"RATING AGENCY" means either S&P or Moody's. If no
such organization or successor is any longer in existence,
"Rating Agency" shall be a nationally recognized statistical
rating organization or other comparable Person designated by the
Seller, notice of which designation shall be given to the
Trustee, the Collateral Agent and the Servicer.
"RATING AGENCY CONDITION" means, with respect to any
action, that each Rating Agency shall have been given 10 days'
prior notice thereof (or such shorter period as shall be
acceptable to the Rating Agencies) and that neither of the Rating
Agencies shall have notified the Seller, the Servicer or the
Trustee in writing prior to the expiration of such 10-day period
that such action will, in and of itself, result in a reduction or
withdrawal of the then current rating of either class of
Certificates. With respect to Section 4.2, the Rating Agency
Condition shall be deemed to be satisfied on the Closing Date
after receipt of a letter from each Rating Agency dated such date
stating that the Class A Certificates are rated in the highest
investment rating category and the Class B Certificates are rated
at least "A" or its equivalent.
"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.
"RECEIVABLE" means any Contract listed on Schedule A
(which Schedule may be in the form of microfiche), but excluding
Liquidated Receivables and Purchased Receivables.
"RECEIVABLE FILE" means, with respect to a Receivable,
the documents, specified in Section 2.4.
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"RECORD DATE" means, in respect of each Collection
Period and the related Distribution Date, the last day of the
calendar month immediately preceding such Distribution Date.
"RECOVERIES" with respect to any Collection Period,
means all monies received by the Servicer with respect to any
Liquidated Receivable during any Collection Period following the
Collection Period in which such Receivable became a Liquidated
Receivable, net of the sum of (i) any expenses incurred by the
Servicer in connection with the collection of such Receivable and
the disposition of the Financed Vehicle (to the extent not
previously reimbursed) and (ii) any payments required by law to
be remitted to the Obligor, but, in any event, not less than
zero.
"RELATED FINANCED VEHICLE" means (i) with respect to
Valley National, a new or used automobile, van or light duty
truck, together with all accessions thereto securing the
obligor's indebtedness under a Valley National Receivable and
(ii) with respect to the Bank, a new or used automobile, van or
light duty truck, together with all accessions thereto securing
the obligor's indebtedness under a Bank Receivable.
"RELATED RECEIVABLE" means (i) with respect to Valley
National, a Valley National Receivable and (ii) with respect to
the Bank, a Bank Receivable.
"RELATED RECEIVABLE FILES" has the meaning specified in
Section 2.5(a).
"RESERVE FUND" means the fund established and
maintained as such pursuant to Section 4.1(b).
"RESERVE FUND DEPOSIT" means, with respect to the
Closing Date, $____________.
"S&P" or "STANDARD & POOR'S" means Standard & Poor's
Ratings Services, a Division of The McGraw-Hill Companies, Inc.,
or its successors in interest.
"SCHEDULE OF RECEIVABLES" means each list attached
hereto as Schedule A identifying the Receivables conveyed by the
Seller, which list may be in the form of microfiche, or computer
readable tape or diskette.
"SELLER" means Banc One ABS Corporation, as the seller
of the Receivables, and each successor to Banc One ABS
Corporation, (in the same capacity) pursuant to Section 7.4.
"SERVICER" means Bank One, Arizona, NA, the servicer of
the Receivables, and each successor to Bank One, Arizona, NA (in
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the same capacity) pursuant to Section 8.3, and each successor
Servicer appointed and acting pursuant to Section 9.2.
"SERVICER'S CERTIFICATE" has the meaning specified in
Section 3.9.
"SERVICING FEE" means, with respect to any Distribution
Date, the fee payable to the Servicer for services rendered
during such Collection Period, determined pursuant to Section
3.8.
"SERVICING FEE RATE" shall be ___% per annum,
calculated on the basis of a 360-day year consisting of twelve
30-day months.
"SIMPLE INTEREST METHOD" means the method of allocating
a fixed level payment to principal and interest, pursuant to
which the portion of such payment that is allocated to interest
is equal to the product of the APR multiplied by the unpaid
principal balance multiplied by the period of time elapsed since
the preceding payment of interest was made and the remainder of
such payment is allocable to principal.
"SPECIFIED RESERVE BALANCE" means, with respect to any
Distribution Date, the greater of (a) ____% of the sum of the
Class A Principal Balance and the 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 the Original Class B Principal Balance. In no
circumstances will the Seller be required to deposit any amounts
in the Reserve Fund other than the Reserve Fund Deposit.
"STAMP" has the meaning specified in Section 6.3.
"STATE" means any state in the United States of
America.
"SUBSERVICER" means Valley National Financial Services
Company, the subservicer of the Valley National Receivables
pursuant to the Loan Purchase and Servicing Agreement, and each
successor to Valley National.
"TRANSFER DATE" means, with respect to any Distribution
Date, the Business Day preceding such Distribution Date.
"TRUST" means the Banc One Auto Grantor Trust 1996-B
created by this Agreement.
"TRUSTEE" means Bankers Trust Company, a New York
banking corporation, as Trustee under this Agreement, or any
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successor, and any successor Trustee appointed and acting
pursuant to Sections 10.10 and 10.11.
"TRUST PROPERTY" means the (i) Receivables; (ii) all
monies received under the Receivables on and after the Cutoff
Date; (iii) such amounts as from time to time may be held in the
Collection Account, the Class A Distribution Account and the
Class B Distribution Account (including the Account Property
related thereto); (iv) security interests in the Financed
Vehicles; (v) the Seller's rights, if any, to receive proceeds
from claims on physical damage, credit life, theft and disability
insurance policies covering the Financed Vehicles or the
Obligors; (vi) the rights of the Trustee for the benefit of the
Certificateholders under this Agreement; (vii) the rights to
receive payments under the circumstances specified herein from
the Reserve Fund; (viii) all of the Seller's right, title and
interest in its rights and benefits, but none of its obligations
or burdens, under the Loan Sale Agreement, including the delivery
requirements, representations and warranties and the cure and
repurchase obligations of the Bank under the Loan Sale Agreement;
and (ix)all proceeds (within the meaning of Section 9-306 of the
UCC) of the foregoing.
"UCC" means the Uniform Commercial Code as in effect in
the relevant jurisdiction.
"VALLEY NATIONAL" means Valley National Financial
Services Company, an Arizona corporation and a wholly-owned
subsidiary of the Bank.
"VALLEY NATIONAL RECEIVABLE" means a motor vehicle
retail installment sale contract identified on Schedule A to the
Loan Purchase and Servicing Agreement.
SECTION 1.2. USAGE OF TERMS.
(a) All terms defined in this Agreement shall
have the defined meanings when used in any instrument governed
hereby and in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b) As used in this Agreement, in any instrument
governed hereby and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such instrument, certificate
or other document, and accounting terms partly defined in this
Agreement or in any such instrument, certificate or other
document to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting
principles as in effect on the date of this Agreement or any such
instrument, certificate or other document, as applicable. To the
extent that the definitions of accounting terms in this Agreement
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or in any such instrument, certificate or other document are
inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this
Agreement or in any such instrument, certificate or other
document shall control.
(c) The words "hereof," "herein," "hereunder" and
words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision
of this Agreement; Article, Section, Schedule and Exhibit
references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(d) The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and
neuter genders of such terms.
SECTION 1.3. CALCULATIONS. Except as otherwise
specifically provided herein, all calculations of the amount of
interest accrued on the Certificates during any Collection Period
and all calculations of the amount of the Servicing Fee payable
with respect to a Collection Period shall be made on the basis of
a 360-day year consisting of twelve 30-day months.
SECTION 1.4. REFERENCES. All references to the first
day of a Collection Period shall refer to the opening of business
on such day. All references to the last day of a Collection
Period shall refer to the close of business on such day.
SECTION 1.5. REFERENCES TO THE TRUST. Whenever any
provision of this Agreement refers to actions to be taken by the
Trust, matters to be consented to by the Trust, or deliveries or
notices to the Trust, such provision shall be deemed to refer to
actions to be taken by the Trustee, matters to be consented to by
the Trustee, or deliveries or notices to the Trustee.
SECTION 1.6. ACTION BY OR CONSENT OF
CERTIFICATEHOLDERS. Whenever any provision of this Agreement
refers to action to be taken or consented to by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately
preceding the date on which such action is to be taken, or
consented to by Certificateholders.
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ARTICLE II
THE TRUST PROPERTY
SECTION 2.1. CONVEYANCE OF TRUST PROPERTY. In
consideration of the Trustee's delivery to, or upon the written
order of, the Seller of authenticated Certificates, in authorized
denominations, in an aggregate amount equal to the Original
Principal Balance, the Seller does hereby sell, transfer, assign
and convey to the Trustee, upon the terms and conditions hereof,
the Trust Property to the Trustee, without recourse.
SECTION 2.2. REPRESENTATIONS AND WARRANTIES AS TO EACH
RECEIVABLE. The Seller makes the following representations and
warranties as to each Receivable conveyed by the Seller to the
Trustee hereunder on which the Trustee shall rely in accepting
the Trust Property in trust and authenticating the Certificates.
Unless otherwise indicated, such representations and warranties
are being made as of the execution and delivery of the Agreement,
but shall survive the sale, transfer and assignment of the
Receivables and the other Trust Property to the Trustee.
(a) TITLE. It is the intention of the Seller that
the transfer and assignment herein contemplated constitute a sale
of the Receivables from the Seller to the Trustee and that the
beneficial interest in and title to such Receivables not be part
of the debtor's estate in the event of the filing of a petition
for bankruptcy or insolvency by or against the Seller. No
Receivable has been sold, transferred, assigned or pledged by the
Seller to any Person other than the Trustee. Immediately prior
to the transfer and assignment herein contemplated, the Seller
had good and marketable title to each Receivable, free and clear
of all Liens and, immediately upon the transfer thereof, the
Trustee shall have good and marketable title to each such
Receivable, free and clear of all Liens; and the transfer of the
Receivables to the Trustee has been perfected under the UCC.
(b) ALL FILINGS MADE. All filings (including UCC
filings) necessary in any jurisdiction to give the Trustee a
first priority perfected ownership interest in the Receivables,
and to give the Trustee a first priority perfected security
interest therein, shall have been made.
(c) CHARACTERISTICS OF RECEIVABLES. (i) Each
Valley National Receivable (A) has been originated either by a
Dealer in the regular course of such Dealer's business and
purchased from such Dealer by Valley National in the ordinary
course of Valley National's business or originated or acquired by
Valley National in the ordinary course of Valley National's
business, and each Obligor was approved in accordance with Valley
National's standard underwriting procedures in effect at the time
such Receivable was originated, acquired or purchased and (B) has
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created or shall create a valid, subsisting and enforceable first
priority security interest in favor of Valley National in the
Related Financed Vehicle, which security interest is assignable
by Valley National to the Bank, by the Bank to the Seller and by
the Seller to the Trustee; (ii) each Bank Receivable (A) has been
originated either by a Dealer in the regular course of such
Dealer's business and purchased from such Dealer by the Bank in
the ordinary course of the Bank's business or originated or
acquired by the Bank in the ordinary course of the Bank's
business, and each Obligor was approved in accordance with the
Bank's standard Underwriting procedures in effect at the time
such Bank Receivable was originated, acquired or purchased and
(B) has created or shall create a valid, subsisting and
enforceable security interest in favor of the Bank in the Related
Financed Vehicle, which security interest is assignable by the
Bank to the Seller and by the Seller to the Trustee; and
(iii) each Receivable (A) contains customary and enforceable
provisions under the laws of the State governing such Receivables
such that the rights and remedies of the holder thereof are
adequate for realization against the collateral of the benefits
of the security; and (B) provides for equal monthly payments at a
fixed rate of interest calculated based on the Simple Interest
Method that fully amortizes the Amount Financed by maturity and
yields interest at the Annual Percentage Rate assuming payments
are made on the due date thereof.
(d) SCHEDULE OF RECEIVABLES. The information set
forth in Schedule A to this Agreement is true and correct in all
material respects as of the opening of business on the Cutoff
Date and no selection procedures adverse to the
Certificateholders were utilized in selecting the Receivables.
The Computer Tape regarding the Receivables is true and correct
in all material respects as of the Cutoff Date.
(e) COMPLIANCE WITH LAW. Each Receivable
complied at the time it was originated or made and at the Closing
Date complies in all material respects with all requirements of
applicable Federal, State and local laws and regulations
thereunder, including usury laws, the Federal Truth-in-Lending
Act, the Equal Credit Opportunity Act, the Fair Credit Billing
Act, the Fair Credit Reporting Act, the Federal Trade Commission
Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B, Z and AA, State adaptations of the Uniform
Consumer Code, the Arizona Consumer Fraud Act, Title 6 of the
Arizona Revised Statute and other consumer credit laws and equal
credit opportunity and disclosure laws.
(f) BINDING OBLIGATION. As of the Cutoff Date,
each Receivable represents the legal, valid and binding payment
obligation in writing of the Obligor thereunder, enforceable by
the holder thereof in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy,
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insolvency, moratorium, fraudulent conveyance, reorganization and
similar laws now or hereafter in effect related to or affecting
creditors' rights generally and subject to general principles of
equity (whether applied in a proceeding at law or in equity).
(g) NO GOVERNMENT OBLIGOR. As of the Cutoff
Date, none of the Receivables is due from the United States of
America or any State or from any agency, department or
instrumentality of the United States of America or any State.
(h) SECURITY INTEREST IN FINANCED VEHICLE.
Immediately prior to the sale, assignment and transfer thereof,
each Receivable shall be secured by a validly perfected first
priority security interest in the Related Financed Vehicle in
favor of the Bank, in the case of a Bank Receivable, or Valley
National, in the case of a Valley National Receivable, as secured
party or all necessary and appropriate actions have been
commenced that would result in the valid perfection of a first
security interest in the Related Financed Vehicle in favor of the
Bank, in the case of a Bank Receivable, or Valley National, in
the case of a Valley National Receivable, as secured party.
(i) RECEIVABLES IN FORCE. As of the Cutoff Date,
no Receivable has been satisfied, subordinated or rescinded, nor
has any Financed Vehicle been released from the Lien granted by
the related Receivable in whole or in part unless another vehicle
has been substituted as collateral securing the Receivable
without any other modification to such Receivable.
(j) NO WAIVER. As of the Cutoff Date, no
provision of a Receivable has been waived except as reflected in
the Receivable File relating to such Receivable.
(k) NO DEFENSES. As of the Cutoff Date, none of
the Seller, the Bank or Valley National has received notice that
any right of rescission, setoff, counterclaim or defense has been
asserted or threatened with respect to any Receivable.
(l) NO LIENS. None of the Seller, the Bank or
Valley National has 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.
(m) NO DEFAULT. No Receivable has a payment that
is more than 90 days overdue as of the Cutoff Date and, except as
permitted in this paragraph, no default, breach, violation or
event (in any such case) permitting acceleration under the terms
of any Receivable has occurred; and no continuing condition that
with notice or the lapse of time would constitute a default,
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breach, violation or event (in any such case) permitting
acceleration under the terms of any Receivable has arisen as of
the Cutoff Date; and the Seller has not waived and shall not
waive any of the foregoing.
(n) MATURITY OF RECEIVABLES. The weighted
average original maturity of the Receivables is 60.12 months as
of the Cutoff Date; the weighted average remaining term of the
Receivables is 45.97 months as of the Cutoff Date; and the latest
scheduled maturity of any Receivable shall be no later than the
Final Scheduled Maturity Date.
(o) NO BANKRUPTCIES. No Obligor on any
Receivable was noted in the related Receivable File as having
filed for bankruptcy in a proceeding which remained undischarged
as of the Cutoff Date.
(p) NO REPOSSESSIONS. As of the Cutoff Date, no
Financed Vehicle securing any Receivable is in repossession
status.
(q) CHATTEL PAPER. Each Receivable constitutes
"chattel paper" as defined in the UCC.
(r) APR. The weighted average APR of the
Receivables as of the Cutoff Date is approximately 12.15%.
(s) PAID AHEAD. As of the Cutoff Date, no
Receivable is more than six months paid ahead.
(t) PRINCIPAL BALANCE. The average principal
balance of the Receivables as of the Cutoff Date is $9,675.16.
The aggregate Cutoff Date Principal Balance of the Receivables is
$305,686,731.53. As of the Cutoff Date, each Receivable has a
principal balance between $282 and $45,682.
(u) FINANCING. Approximately 45.02% of the
aggregate Cutoff Date Principal Balance of the Receivables,
constituting approximately 37.02% of the number of Receivables as
of the Cutoff Date, represents financing of new vehicles; the
remainder of the Receivables represents financing of used
vehicles.
(v) INSURANCE. The Bank or Valley National, as
the case may be, in accordance with their respective customary
procedures, has determined that the Obligor, at the time the
Related Receivable was originated, obtained, applied for or made
arrangements to obtain physical damage insurance covering the
Related Financed Vehicle and under the terms of the Related
Receivable the Obligor is required to maintain such insurance.
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(w) LAWFUL ASSIGNMENT. No Receivable has been
originated in, or as of the Cutoff Date is subject to the laws
of, any jurisdiction under which the sale, transfer and
assignment of such Receivable or this Agreement, the Loan
Purchase and Servicing Agreement or the Loan Sale Agreement is
unlawful, void or voidable.
(x) NO INSURANCE PREMIUMS. As of the Cutoff
Date, no portion of the Amount Financed of any Receivable
included amounts attributable to the payment of any physical
damage or theft insurance premium.
(y) ONE ORIGINAL. There is only one original
executed copy of each Receivable.
(z) LOCATION OF RECEIVABLE FILES. The Receivable
Files are kept at one or more of the locations listed in Schedule
B.
(aa) COMPUTER RECORDS. As of the Closing Date,
the accounting and computer records of Valley National, relating
to the Valley National Receivables and the Bank and the Seller
relating to the Receivables, have been marked to show the
absolute ownership by the Trustee of the Receivables.
SECTION 2.3. REPURCHASE UPON BREACH. (a) The Seller,
the Servicer or the Trustee, as the case may be, shall inform the
other parties to this Agreement promptly, in writing, upon the
discovery of any breach of the Seller's representations and
warranties made pursuant to Section 2.2. Unless any such breach
shall have been cured within 60 days following the discovery
thereof by the Trustee or receipt by the Trustee of written
notice from the Seller or the Servicer of such breach, the Seller
shall be obligated to repurchase any Receivable in which the
interests of the Certificateholders are materially and adversely
affected by any 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). In consideration of
and simultaneously with the repurchase of the Receivable, the
Seller shall remit to the Collection Account the Purchase Amount
in the manner specified in Section 4.3 and the Trustee shall
execute such assignments and other documents reasonably requested
by the Seller in order to effect such repurchase.
(b) Pursuant to Sections 2.1, the Seller has conveyed
to the Trustee all of the Seller's right, title and interest in
its rights and benefits, but none of its obligations or burdens,
under the Loan Sale Agreement, including the delivery
requirements, representations and warranties and the cure or
repurchase obligations of the Bank under the Loan Sale Agreement.
The Seller hereby represents and warrants to the Trustee that
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such assignment is valid, enforceable and effective to permit the
Trustee to enforce such obligations of the Bank under the Loan
Sale Agreement.
(c) The sole remedy of the Trust, the Trustee or the
Certificateholders with respect to a breach of representations
and warranties pursuant to Section 2.2 and the agreement
contained in this Section shall be to require the Seller (or the
Bank) to repurchase Receivables pursuant to this Section, subject
to the conditions contained herein. The Trustee shall not have
any duty to conduct any affirmative investigation as to the
occurrence of any conditions requiring the repurchase of any
Receivable pursuant to this Section.
SECTION 2.4. CUSTODY OF RECEIVABLE FILES. To assure
uniform quality in servicing the Receivables and to reduce
administrative costs, the Trustee hereby revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, to
act as the agent of the Trustee as custodian of the following
documents or instruments (the "Receivable File") with respect to
each Receivable:
(i) the original executed copy of the Receivable;
(ii) a record of the information supplied by the
Obligor in the original credit application;
(iii) the original certificate of title or such
documents that the Servicer shall keep on file, in
accordance with its customary procedures, evidencing the
security interest of the Seller in the Financed Vehicle (it
being understood that the original certificates of title
generally are not delivered to the Seller for 90 days but
that promptly upon delivery they shall be delivered to the
Servicer as custodian hereunder); and
(iv) any and all other documents that the Servicer
shall keep on file, in accordance with its customary
procedures, relating to a Receivable, an Obligor or a
Financed Vehicle.
SECTION 2.5. DUTIES OF SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer shall hold, subject to the
following sentence, the Receivable Files on behalf of the Trustee
for the benefit of all present and future Certificateholders and
maintain such accurate and complete accounts, records and
computer systems pertaining to each Receivable File as shall
enable the Servicer and the Trustee to comply with this
Agreement. To assure uniform quality in servicing the
Receivables and to reduce administrative costs, the Trustee
acknowledges that, the Servicer may appoint Valley National to
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act as a subcustodian of the Receivable Files of the Valley
National Receivables being serviced by Valley National (the
"Related Receivable Files") pursuant to the terms of the Loan
Purchase and Servicing Agreement. Any such appointment shall not
relieve the Servicer from its obligations as custodian of all the
Receivable Files hereunder. In performing its duties as
custodian the Servicer shall act with reasonable care, using that
degree of skill and attention that the Servicer exercises with
respect to the receivable files relating to all comparable
automotive receivables that the Servicer services for itself or
others, except that the Servicer shall not be obligated, and does
not intend, to (i) pay any premium for force-placed insurance
concerning any Financed Vehicle or (ii) monitor any Obligor's
maintenance of Insurance. The Servicer shall conduct, or cause
to be conducted, periodic audits of the Receivable Files and of
the related accounts, records and computer systems, in such a
manner as shall enable the Trustee to verify the accuracy of the
Servicer's record-keeping in the event the Trustee is required to
do so pursuant to the terms of this Agreement. The Servicer
shall promptly report to the Trustee any failure to hold the
Receivable Files and maintain the accounts, records and computer
systems as herein provided and promptly take appropriate action
to remedy any such failure.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The
Servicer shall maintain each Receivable File at one of the
offices specified in Schedule B to this Agreement or at such
other office of it or any permitted subservicer as shall be
specified to the Trustee by written notice not later than 90 days
after any change in location. Upon reasonable prior notice, the
Servicer shall make available to the Trustee or its duly
authorized representatives, attorneys or auditors a list of
locations of the Receivable Files and the related records and
computer systems and permit access to such Receivable Files at
such times during normal business hours as the Trustee shall
require.
(c) RELEASE OF DOCUMENTS. Upon written
instruction from the Trustee, the Servicer shall release or shall
cause to be released any Receivable File to the Trustee, the
Trustee's agent or the Trustee's designee, as the case may be, at
such place or places as the Trustee may designate, as soon as
practicable and upon the release and delivery of any such
document in accordance with the instructions of the Trustee, the
Servicer shall be released from any further liability and
responsibilities under this Section 2.5 with respect to such
documents unless and until such time as such document may be
returned to the Servicer.
SECTION 2.6. INSTRUCTIONS; AUTHORITY TO ACT. The
Servicer shall be deemed to have received proper instructions
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with respect to the Receivable Files upon its receipt of written
instructions signed by an Authorized Officer of the Trustee.
SECTION 2.7. CUSTODIAN'S INDEMNIFICATION. The
Servicer as custodian shall indemnify and hold harmless the
Trustee and its officers, directors, employees and agents for any
and all liabilities, obligations, losses, compensatory damages,
payments, costs or expenses (including reasonable attorneys' fees
and expenses) that may be imposed on, incurred by or asserted
against the Trustee or any of its officers, directors, employees
and agents as the result of any improper act or omission in any
way relating to the maintenance and custody by the Servicer, as
custodian of the Receivable Files where the final determination
that any such improper act or omission by the Servicer, which
resulted in such liability, obligation, loss, damage, payment,
cost or expense is established by a court of law, by an
arbitrator or by way of settlement agreed to by the Servicer;
PROVIDED HOWEVER, that the Servicer shall not be liable for any
portion of any such amount resulting from the willful
misfeasance, bad faith or negligence of the Trustee. This
provision shall not be considered to limit the Servicer's or any
other party's rights, obligations, liabilities, claims or
defenses which arise as a matter of law or pursuant to any other
provision of this Agreement.
SECTION 2.8. EFFECTIVE PERIOD AND TERMINATION. (a) The
Servicer's appointment as custodian shall become effective as of
the Cutoff Date and shall continue in full force and effect until
terminated pursuant to this Section. If Bank One, Arizona, NA
shall resign as Servicer in accordance with the provisions of
this Agreement or if all of the rights and obligations of any
Servicer shall have been terminated under Section 9.1, the
appointment of such Servicer as custodian shall be terminated by
the Trustee or by 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, in the same manner as the Trustee or
such Holders may terminate the rights and obligations of the
Servicer under Section 9.1. The Trustee may terminate the
Servicer's appointment as custodian, with cause, at any time upon
written notification to the Servicer, and without cause upon 30
days' prior written notification to the Servicer and the Rating
Agencies. As soon as practicable after any termination of such
appointment, the Servicer shall deliver, or cause to be
delivered, at its expense the Receivable Files to the Trustee or
the Trustee's agent at such place or places as the Trustee may
reasonably designate in writing. If the Servicer shall be
terminated as custodian hereunder for any reason but shall
continue to serve as Servicer, the Trustee shall, or shall cause
its agent to, make the Receivable Files available to the Servicer
(or, if designated by the Servicer, a permitted subservicer)
during normal business hours upon reasonable notice so as to
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permit the Servicer to perform its obligations as Servicer
hereunder.
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST PROPERTY
SECTION 3.1. DUTIES OF SERVICER. The Servicer, on
behalf of the Trustee (to the extent provided herein), shall
manage, service, administer and make collections on the
Receivables (other than Purchased Receivables) with reasonable
care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable automotive receivables
that it services for itself or others, except that the Servicer
shall not be obligated, and does not intend, to (i) pay any
premium for force-placed insurance concerning any Financed
Vehicle or (ii) monitor any Obligor's maintenance of Insurance.
The Servicer's duties shall include collection and posting of all
payments, responding to inquiries of Obligors on such
Receivables, investigating delinquencies, sending payment coupons
to Obligors, reporting tax information to Obligors, accounting
for collections and furnishing monthly and annual statements to
the Trustee with respect to distributions. Subject to the
provisions of Section 3.2, the Servicer shall follow its
customary standards, policies and procedures in performing its
duties as Servicer. Without limiting the generality of the
foregoing, the Servicer is authorized and empowered to execute
and deliver, on behalf of itself, the Trust, the Trustee and the
Certificateholders or any of them, any and all instruments of
satisfaction or cancellation, or partial or full release or
discharge, and all other comparable instruments, with respect to
such Receivables or to the Financed Vehicles securing such
Receivables. If the Servicer shall commence a legal proceeding
to enforce a Receivable, the Trustee (in the case of a Receivable
other than a Purchased Receivable) shall thereupon be deemed to
have automatically assigned, solely for the purpose of
collection, such Receivable to the Servicer. If in any
enforcement suit or legal proceeding it shall be held that the
Servicer may not enforce a Receivable on the ground that it shall
not be a real party in interest or a holder entitled to enforce
such Receivable the Trustee shall, at the Servicer's expense and
direction, take steps to enforce such Receivable, including
bringing suit in its name or the name of the Trustee or the
Certificateholders. The Trustee shall upon the written request
of the Servicer execute any powers of attorney and other
documents reasonably necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties
hereunder.
SECTION 3.2. COLLECTION AND ALLOCATION OF RECEIVABLE
PAYMENTS. (a) The Servicer shall make reasonable efforts to
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collect all payments called for under the terms and provisions of
the Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to
all comparable automotive receivables that it services for itself
or others. The Servicer shall allocate collections between
principal and interest in accordance with the customary servicing
procedures it follows with respect to all comparable automotive
receivables that it services for itself or others.
(b) The Servicer may not grant extensions or
modify the original due dates of a Receivable; PROVIDED, HOWEVER,
that the Servicer may grant one extension with respect to a
Receivable of one month in any rolling twelve month period and
may change the original due date once during the term of a
Receivable to a new due date within 20 days of the original
scheduled due date of such Receivable, provided that the Servicer
may not extend the date for final payment by the Obligor of any
Receivable beyond _______________. The Servicer may in its
discretion waive any late payment charge or any other fees that
may be collected in the ordinary course of servicing a
Receivable. The Servicer shall not voluntarily agree to any
reduction of (i) the original interest rate, (ii) the amount of
the original regular scheduled payment or (iii) the Principal
Balance, of any Receivable. The Servicer shall not advance any
funds to any Person as a result of actions taken by it pursuant
to this Section 3.2(b).
SECTION 3.3. REALIZATION UPON RECEIVABLES. On behalf
of the Trust, the Servicer shall use its best efforts, consistent
with its customary servicing procedures, to repossess or
otherwise convert the ownership of the Financed Vehicle securing
any Receivable as to which the Servicer shall have determined
eventual payment in full is unlikely. From time to time, as
appropriate for servicing or foreclosing upon any Receivable, the
Trustee shall, upon written request of the Servicer, execute such
documents as shall be necessary to prosecute any such
proceedings. The Servicer shall follow such customary and usual
practices and procedures as it shall deem necessary or advisable
in its servicing of automotive receivables, which may include
reasonable efforts to realize proceeds from Receivables
repurchased by a Dealer, pursuant to a Dealer Agreement, as a
result of a breach of a representation or warranty in the related
Dealer Agreement or a default by an Obligor resulting in the
repossession of the Financed Vehicle under such Dealer Agreement.
The foregoing shall be subject to the provision that, in any case
in which the Financed Vehicle shall have suffered damage, the
Servicer shall not expend funds in connection with the repair or
the repossession of such Financed Vehicle unless it shall
determine in its reasonable discretion that such repair and/or
repossession will increase the Liquidation Proceeds by an amount
greater than the amount of such expenses.
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SECTION 3.4. PHYSICAL DAMAGE INSURANCE. The Servicer
shall (or shall cause the Subservicer to), in accordance with its
customary servicing procedures, require that each Obligor shall
have obtained and shall maintain fire, theft and collision
insurance or comprehensive and collision insurance covering the
Financed Vehicle ("Insurance") as of the execution of the
Receivable. The Servicer shall enforce the rights under the
Receivables to require the Obligors to maintain Insurance, in
accordance with the Servicer's customary practices and procedures
with respect to comparable new or used motor vehicle receivables
that it services for itself or others, except that the Servicer
shall not be obligated, and does not intend, to (i) pay any
premium for force-placed insurance concerning any Financed
Vehicle or (ii) monitor any Obligor's maintenance of Insurance.
SECTION 3.5. MAINTENANCE OF SECURITY INTERESTS IN
FINANCED VEHICLES. The Servicer shall, in accordance with its
customary servicing procedures, take such steps as are necessary
to maintain perfection of the security interest created by each
Receivable in the related Financed Vehicle in favor of the Bank,
in the case of the Bank Receivables, or Valley National, in the
case of the Valley National Receivables. The Servicer is hereby
authorized to take such steps as are necessary to re-perfect such
security interest on behalf of the Trustee in the event of the
relocation of a Financed Vehicle or for any other reason.
SECTION 3.6. COVENANTS OF SERVICER. The Servicer
shall not release the Financed Vehicle secur any Receivable
from the security interest granted by such Receivable in whole or
in part except in the event of payment in full by the Obligor
thereunder or repossession or except as may be required by an
insurer in order to receive proceeds from insurance covering such
Financed Vehicle, nor shall the Servicer impair the rights of the
Trustee or the Certificateholders in such Receivables (it being
understood that no action of the Servicer taken in compliance
with the terms of this Agreement shall be deemed to impair such
rights), nor shall the Servicer increase the number of scheduled
payments due under a Receivable.
SECTION 3.7. PURCHASE OF RECEIVABLES UPON BREACH. The
Servicer or the Trustee shall inform the other party and the
Seller promptly, in writing, upon the discovery of any breach
pursuant to Section 3.2(b), 3.5 or 3.6. Unless the breach shall
have been cured within 60 days following such discovery thereof
by the Trustee or the receipt by the Trustee of notice of such
breach, the Servicer shall be obligated to purchase any
Receivable 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 Servicer's option, the last
day of the first Collection Period following the discovery). In
consideration of the purchase of any such Receivable pursuant to
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the preceding sentence, the Servicer shall remit the Purchase
Amount in the manner specified in Section 4.3. The sole remedy
of the Trustee or the Certificateholders with respect to a breach
pursuant to Section 3.2(b), 3.5 or 3.6 shall be to require the
Servicer to purchase Receivables pursuant to this Section. The
Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the
purchase of any Receivable pursuant to this Section.
SECTION 3.8. SERVICING FEE. The servicing fee payable
to the Servicer for each Distribution Date shall equal the
product of (i) one-twelfth, (ii) the Servicing Fee Rate and (iii)
the Pool Balance as of the first day of the related Collection
Period (the "Servicing Fee"). As additional servicing
compensation, the Servicer shall also be entitled to retain
certain non-sufficient funds charges and other administrative
fees or similar charges allowed by applicable law with respect to
the Receivables as well as investment earnings (net of losses) on
the Accounts. Any fee of the Subservicer shall be the sole
responsibility of the Servicer.
SECTION 3.9. SERVICER'S CERTIFICATE. On each
Determination Date, the Servicer shall deliver to the Trustee and
the Seller, with a copy to the Rating Agencies, a Servicer's
Certificate (the "Servicer's Certificate") containing all
information necessary to make the distributions pursuant to
Sections 4.5 and 4.6 for the Collection Period preceding the date
of such Servicer's Certificate. Receivables to be purchased by
the Servicer or to be repurchased by the Seller shall be
identified by the Servicer by account number with respect to such
Receivable (as specified in Schedule A).
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE;
NOTICE OF DEFAULT. (a) The Servicer shall deliver to the
Trustee, on or before April 30 of each year beginning April 30,
1997, an Officers' Certificate, dated as of December 31 of the
preceding year, stating that (i) a review of the activities of
the Servicer during the preceding 12-month period (or, in the
case of the first such report, during the period from the Closing
Date to December 31, 1996) and of its performance under this
Agreement has been made under such officers' supervision and (ii)
to the best of such officers' knowledge, based on such review,
the Servicer has fulfilled all its obligations under this
Agreement throughout such year or, if there has been a default in
the fulfillment of any such obligation, specifying each such
default known to such officers and the nature and status thereof.
The Trustee shall send a copy of such certificate and the report
referred to in Section 3.11 to the Rating Agencies. A copy of
such certificate and the report referred to in Section 3.11 may
be obtained by any Certificateholder by a request in writing to
the Trustee addressed to the Corporate Trust Office.
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(b) The Servicer shall deliver to the Trustee and
the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five (5) Business Days
thereafter, written notice in an Officers' Certificate of any
event which with the giving of notice or lapse of time, or both,
would become an Event of Servicing Termination under Section
9.1(a) or (b).
SECTION 3.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS' REPORT. The Servicer shall cause a firm of
independent certified public accountants, which may also render
other services to the Servicer or the Seller, to deliver to the
Seller and the Trustee on or before April 30 of each year
beginning April 30, 1997: [(a) 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) and (b) a report addressed to the Servicer,
the Seller, the Trustee and each Rating Agency to the effect that
(i) such accountants have examined the assertions by the
Servicer's management about the Servicer's compliance with this
Agreement during the preceding calendar year (or, in the case of
the first such report, during the period from the Closing Date to
December 31, 1996) and (ii) in such accountants' opinion, such
assertions are fairly stated in all material respects, except for
such exceptions as such firm shall believe to be immaterial and
such other exceptions as shall be set forth in such report.]
Such report will also indicate that the firm is
independent of the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public
Accountants.
SECTION 3.12. ACCESS TO CERTAIN DOCUMENTATION AND
INFORMATION REGARDING RECEIVABLES. The Servicer shall provide to
the Certificateholders access to the Receivable Files in such
cases where the Certificateholders shall be required by
applicable statutes or regulations to review such documentation
as demonstrated by evidence satisfactory to the Servicer in its
reasonable judgment. Access shall be afforded without charge,
but only upon reasonable request and during normal business hours
at the offices of the Servicer or the Subservicer, as the case
may be, where the Receivable Files are held. Nothing in this
Section shall affect the obligation of the Servicer or the
Subservicer, as the case may be, to observe any applicable law
prohibiting disclosure of information regarding the Obligors and
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the failure of either of them to provide access to information as
a result of such obligation shall not constitute a breach of this
Section.
SECTION 3.13. SERVICER EXPENSES. The Servicer shall
be required to pay all expenses incurred by it in connection with
its activities hereunder, including fees and disbursements of the
Trustee or its agent and independent accountants, taxes imposed
on the Servicer and expenses incurred in connection with
distributions and reports to Certificateholders.
SECTION 3.14. APPOINTMENT OF SUBSERVICERS. (a) The
Servicer may at any time appoint a subservicer to perform all or
any portion of its obligations as Servicer and/or custodian
hereunder; PROVIDED, HOWEVER, that if such subservicer is a
Person other than Valley National, the Rating Agency Condition
shall have been satisfied in connection therewith; PROVIDED
FURTHER that the Servicer shall remain obligated and be liable to
the Trust, the Trustee and the Certificateholders for the
servicing and administering of the Receivables in accordance with
the provisions hereof without diminution of such obligation and
liability by virtue of the appointment of such subservicer and to
the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Receivables.
For purposes of this Agreement, the Servicer shall be deemed to
have received all amounts received in respect of the Receivables
by any subservicer at the time of receipt of such amounts by such
subservicer. The fees and expenses of the subservicer shall be as
agreed between the Servicer and its subservicer from time to time
and none of the Trust, the Trustee or the Certificateholders
shall have any responsibility therefor.
(b) In connection with the foregoing, the Servicer
shall initially appoint Valley National as a subservicer of the
Valley National Receivables and as subcustodian of the
Receivables Files relating to such Valley National Receivables
pursuant to the Loan Purchase and Servicing Agreement. Following
the occurrence of any Event of Servicing Termination, the Trustee
or any other successor Servicer hereunder shall have the right to
either assume the rights and the obligations of the Bank under
the Loan Purchase and Servicing Agreement or terminate the Loan
Purchase and Servicing Agreement. Any costs associated with the
termination of such Loan Purchase and Servicing Agreement shall
be for the account of the Servicer. In the event the Servicer is
terminated as custodian but not as Servicer, the Trustee may
elect, with the consent of the Servicer, not to terminate Valley
National as subcustodian of the Related Receivable Files and, in
such event, the Servicer shall continue to be responsible for the
fees and expenses of the Valley National.
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ARTICLE IV
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO CERTIFICATEHOLDERS
SECTION 4.1. ESTABLISHMENT OF ACCOUNTS. (a) (i) The
Trustee shall establish and maintain in the name of the Trustee
one or more Eligible Deposit Accounts (the "Collection Account"),
bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholders. The
Trustee shall establish and maintain in the name of the Trustee
an Eligible Deposit Account (the "Class A Distribution Account"),
bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Class A
Certificateholders. The Trustee shall establish and maintain in
the name of the Trustee an Eligible Deposit Account (the "Class B
Distribution Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Class B Certificateholders. The Collection Account, the Class A
Distribution Account and the Class B Distribution Account shall
not be held in the State of Arizona.
(ii) Funds on deposit in the Collection Account, the
Class A Distribution Account and the Class B Distribution Account
(collectively, the "Accounts") shall be invested by the Trustee
in Eligible Investments selected in writing by the Servicer;
PROVIDED, HOWEVER, it is understood and agreed that the Trustee
shall not be liable for any loss arising from such investment in
Eligible Investments. All such Eligible Investments shall be
held by the Trustee for the benefit of the beneficiaries of the
applicable Account; PROVIDED, that on each Distribution Date all
interest and other investment income (net of losses and
investment expenses) on funds on deposit therein shall be
withdrawn from the Accounts at the written direction of the
Servicer and shall be paid to the Servicer. Funds on deposit in
the Accounts shall be invested in Eligible Investments that will
mature so that such funds will be available at the close of
business on the Transfer Date preceding the following
Distribution Date. Funds deposited in an Account on a Transfer
Date which immediately precedes a Distribution Date or upon the
maturity of any Eligible Investments are not required to be (but
may be) invested overnight. Neither the Servicer nor the Trustee
shall be liable for any investment losses.
(iii) The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the
Accounts and in all proceeds thereof (including all income
thereon) and all such funds, investments, proceeds and income
shall be part of the Trust Property. Except as expressly
provided herein, the Accounts shall be under the sole dominion
and control of the Trustee. If, at any time, any of the Accounts
ceases to be an Eligible Deposit Account, the Trustee shall
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within 10 Business Days (or such longer period, as to which each
Rating Agency may consent) establish a new Account as an Eligible
Deposit Account and shall transfer any cash and/or any
investments to such new Account. In connection with the
foregoing, the Servicer agrees that, in the event that any of the
Accounts are not accounts with the Trustee, the Servicer shall
notify the Trustee in writing promptly upon any of such Accounts
ceasing to be an Eligible Deposit Account.
(iv) The Servicer shall have the power, revocable by
the Trustee, to instruct the Trustee to make withdrawals and
payments from the Accounts for the purpose of permitting the
Servicer to carry out its duties hereunder or permitting the
Trustee to carry out its duties.
(b) (i) The Servicer, for the benefit of the Trust
and the Certificateholders, shall establish and maintain in the
name of Bankers Trust Company. as Collateral Agent an Eligible
Deposit Account (the "Reserve Fund"). The Reserve Fund shall not
be property of the Trust. [The Reserve Fund shall not be held in
the State of Arizona.]
(ii) Funds on deposit in the Reserve Fund shall be
invested by the Collateral Agent in Eligible Investments selected
in writing by the Servicer; PROVIDED, HOWEVER, it is understood
and agreed that the Collateral Agent shall not be liable for any
loss arising from such investment in Eligible Investments. All
such Eligible Investments shall be held by the Collateral Agent
for the benefit of the beneficiaries of the Reserve Fund;
PROVIDED, that on each Distribution Date all interest and other
investment income (net of losses and investment expenses) on
funds on deposit therein shall be withdrawn from the Reserve Fund
at the written direction of the Servicer and shall be paid to the
Servicer for distribution to the Seller. Funds on deposit in the
Reserve Fund shall be invested in Eligible Investments that will
mature so that such funds will be available at the close of
business on the Transfer Date preceding the following
Distribution Date. Funds deposited in the Reserve Fund on a
Transfer Date which immediately precedes a Distribution Date or
upon the maturity of any Eligible Investments are not required to
be (but may be) invested overnight. Neither the Servicer nor the
Trustee shall be liable for any investment losses. The Seller
will treat these funds, Eligible Investments and other assets in
the Reserve Fund as its own for Federal, State and local income
tax and franchise tax purposes and will report on its tax returns
all income, gain and loss from the Reserve Fund.
(iii) The Reserve Fund shall be under the sole dominion
and control of the Collateral Agent. If, at any time, the
Reserve Fund ceases to be an Eligible Deposit Account, the
Servicer shall within 10 Business Days (or such longer period, as
to which each Rating Agency may consent) establish a new Reserve
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Fund as an Eligible Deposit Account and shall transfer any cash
and/or any investments to such new Reserve Fund. In connection
with the foregoing, the Servicer agrees that, in the event that
the Reserve Fund is not an account with the Trustee, the Servicer
shall notify the Trustee in writing promptly upon the Reserve
Fund ceasing to be an Eligible Deposit Account.
(iv) With respect to the Account Property in respect of
the Reserve Fund, the Collateral Agent agrees that:
(A) any Account Property that is held in deposit
accounts shall be held solely in an Eligible Deposit Account
subject to the penultimate sentence of Section 4.1(b)(iii);
and, except as otherwise provided herein, each such Eligible
Deposit Account shall be subject to the exclusive custody
and control of the Collateral Agent, and the Collateral
Agent shall have sole signature authority with respect
thereto;
(B) any Account Property that constitutes Physical
Property shall be delivered to the Collateral Agent in
accordance with paragraph (a) of the definition of
"Delivery" and shall be held, pending maturity or
disposition, solely by the Collateral Agent or a financial
intermediary (as such term is defined in Section 8-313(4) of
the UCC) acting solely for the Collateral Agent;
(C) any Account Property that is a book-entry security
held through the Federal Reserve System pursuant to Federal
book-entry regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery" and shall be
maintained by the Collateral Agent, pending maturity or
disposition, through continued book-entry registration of
such Account Property as described in such paragraph; and
(D) any Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not
governed by clause (C) above shall be delivered to the
Collateral Agent in accordance with paragraph (c) of the
definition of "Delivery" and shall be maintained by the
Collateral Agent, pending maturity or disposition, through
continued registration of the Collateral Agent's (or its
nominee's) ownership of such security.
(v) The Servicer shall have the power, revocable by
the Trustee, to instruct the Collateral Agent to make withdrawals
and payments from the Reserve Fund for the purpose of permitting
the Servicer to carry out its duties hereunder or permitting the
Collateral Agent to carry out its duties.
SECTION 4.2. COLLECTIONS. (a) The Servicer shall
remit within two Business Days of receipt thereof to the
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Collection Account all payments by or on behalf of the Obligors
with respect to the Receivables (other than certain nonsufficient
funds charges and other administrative fees or similar charges
that may be retained by the Servicer as part of its servicing
compensation in accordance with Section 3.8), and all Liquidation
Proceeds and Recoveries, both as collected during the Collection
Period. Notwithstanding the foregoing, for so long as (i) no
Event of Servicing Termination shall have occurred and be
continuing and (ii) the Rating Agency Condition shall have been
satisfied (and any conditions or limitations imposed by the
Rating Agencies in connection therewith are complied with), the
Servicer shall remit such collections to the Collection Account
on the related Transfer Date. For purposes of this Article IV
the phrase "payments by or on behalf of Obligors" shall mean
payments made with respect to the Receivables by Persons other
than the Servicer or the Seller.
(b) All collections for the Collection Period
shall be applied by the Servicer as follows: with respect to
each Receivable (other than a Purchased Receivable), payments by
or on behalf of the Obligor shall be applied to interest and
principal in accordance with the Simple Interest Method, as
applied by the Servicer. Any excess shall be applied to prepay
the Receivable.
(c) All Liquidation Proceeds shall be applied to
the related Receivable in accordance with the Servicer's
customary servicing procedures.
SECTION 4.3. ADDITIONAL DEPOSITS. The Servicer and
the Seller shall deposit or cause to be deposited in the
Collection Account the aggregate Purchase Amount with respect to
Purchased Receivables and the Seller shall deposit therein all
amounts to be paid under Section 11.2. The Servicer will deposit
the aggregate Purchase Amount with respect to Purchased
Receivables within two Business Days after such obligations
become due, unless the Servicer shall not be required to make
deposits within two Business Days of receipt pursuant to Section
4.2(a) (in which case such deposit will be made by the related
Transfer Date). All such other deposits shall be made on the
Transfer Date following the end of the related Collection Period.
SECTION 4.4. 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 on the Receivables
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.
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SECTION 4.5. DISTRIBUTIONS. (a) On each
Determination Date, the Servicer shall calculate all amounts
required to determine the amounts to be deposited in the Class A
Distribution Account and the Class B Distribution Account.
(b) Subject to the last paragraph of this Section
4.5(b), on each Distribution Date, the Servicer shall instruct
the Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant
to Section 3.9) to make the following deposits and distributions
for receipt by the Servicer or deposit in the applicable Account
by 12:00 P.M. (New York City time):
(i) to the extent of Interest Collections for such
Distribution Date (and, in the case of shortfalls occurring under
clause (B) below in the Class A Interest Distribution, the Class
B Percentage of Principal Collections for such Distribution Date
to the extent of such shortfalls):
(A) to the Servicer, the Servicing Fee for such
Distribution Date and all unpaid Servicing Fees from prior
Collection Periods (to the extent such amounts have not been
retained pursuant to Section 4.4);
(B) to the Class A Distribution Account, after the
application of clause (A), the Class A Interest Distribution
for such Distribution Date; and
(C) to the Class B Distribution Account, after the
application of clauses (A) and (B), the Class B Interest
Distribution for such Distribution Date; and
(ii) to the extent of the portion of Principal
Collections and Interest Collections for such Distribution Date
remaining after the application of clauses (i)(A), (B) and (C)
above:
(A) to the Class A Distribution Account, the Class A
Principal Distribution for such Distribution Date;
(B) to the Class B Distribution Account, after the
application of clause (A), the Class B Principal
Distribution for such Distribution Date; and
(C) to the Reserve Fund, any amounts remaining after
the application of clauses (i)(A) through (C) and (ii) (A)
and (B).
In the event that the Collection Account is maintained with an
institution other than the Trustee, the Servicer shall instruct
and cause such institution to make all deposits and distributions
pursuant to this Section 4.5(b) on the related Transfer Date.
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The Trustee shall be entitled to conclusively rely on the
Servicer's instructions and any Servicer's Certificate without
investigation.
(c) On each Distribution Date, all amounts on deposit
in the Class A Distribution Account, after application of Section
4.6 below, will be distributed to the Class A Certificateholders
by the Trustee and all amounts on deposit in the Class B
Distribution Account, after application of Section 4.6 below,
will be distributed to the Class B Certificateholders by the
Trustee. Payments under this Section 4.5(c) shall be made to the
Certificateholders either by wire transfer, in immediately
available funds, to the account of such Holder at a bank or other
entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions at least seven
Business Days prior to such Distribution Date and such Holder's
Certificates in the aggregate evidence a denomination of not less
than $1,000,000 or by check mailed by the Trustee to each
Holder's respective address of record (or, in the case of
Certificates registered in the name of a Clearing Agency, or its
nominee, by wire transfer of immediately available funds). To the
extent that the Trustee is required to wire funds to the
Certificateholders or the Servicer from the Class A Distribution
Account or the Class B Distribution Account, as applicable, it
shall request the institution maintaining the Class A
Distribution Account or the Class B Distribution Account, as
applicable, to make a wire transfer of the amount to be
distributed and the institution maintaining the Class A
Distribution Account or the Class B Distribution Account, as
applicable, shall promptly deliver to the Trustee a confirmation
of such wire transfer. To the extent that the Trustee is
required to make payments to Certificateholders by check
hereunder, it shall request the institution maintaining the Class
A Distribution Account or the Class B Distribution Account, as
applicable, to provide it with a supply of checks to make such
payments. The institution shall, if a request is made by the
Trustee for a wire transfer in accordance with this Section
4.5(c), wire such funds, in accordance with such instructions by
12:00 P.M. (New York City time) on such Distribution Date, and it
will otherwise act in compliance with the provisions of this
paragraph and the other provisions of this Agreement applicable
to it as the institution maintaining the Class A Distribution
Account or the Class B Distribution Account, as applicable. The
Servicer shall take all necessary action (including requiring an
agreement to such effect) to ensure that any institution
maintaining the Class A Distribution Account or the Class B
Distribution Account, as applicable, agrees to comply, and
complies, with the provisions of this paragraph and the other
provisions of this Agreement applicable to it as the institution
maintaining the Class A Distribution Account or the Class B
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Distribution Account, as applicable. Initially the institution
shall be the Trustee.
SECTION 4.6. RESERVE FUND. (a) On the Closing Date,
the Reserve Fund Deposit shall be deposited into the Reserve Fund
[from the net proceeds from the sale of the Certificates.] The
Seller hereby grants to the Collateral Agent a security interest
in and to the Reserve Fund and any and all property credited
thereto from time to time, including but not limited to Eligible
Investments, to secure payment of the Certificates according to
their terms. Amounts held from time to time in the Reserve Fund
will continue to be held by the Collateral Agent for the benefit
of Class A Certificateholders and the Class B Certificateholders
but the Reserve Fund shall not be an asset of the Trust. By
acceptance of their Certificates, Certificateholders shall be
deemed to have appointed Bankers Trust Company as Collateral
Agent. Bankers Trust Company hereby accepts such appointment as
Collateral Agent.
(b) On each Distribution Date, the Servicer shall
instruct the Collateral Agent (based on the information contained
in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 3.9) to withdraw from the
Reserve Fund on such Distribution Date, to the extent of funds
available therein, the amounts specified below, in the order of
priority specified below, and deposit such amounts in the Class A
Distribution Account or the Class B Distribution Account, as
specified below, on such Distribution Date:
(i) an amount equal to the excess, if any, of the
Class A Interest Distribution for such Distribution Date
over the sum of Interest Collections for such Distribution
Date and the Class B Percentage of Principal Collections for
such Distribution Date will be deposited into the Class A
Distribution Account;
(ii) an amount equal to the excess, if any, of the
Class B Interest Distribution for such Distribution Date
over the portion of Interest Collections for such
Distribution Date remaining after the distribution of the
Class A Interest Distribution for such Distribution Date
will be deposited into the Class B Distribution Account;
(iii) an amount equal to the excess, if any, of the
Class A Principal Distribution for such Distribution Date
over the portion of Principal Collections and Interest
Collections for such Distribution Date remaining after the
distribution of the Class A Interest Distribution and the
Class B Interest Distribution for such Distribution Date
will be deposited into the Class A Distribution Account; and
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(iv) an amount equal to the excess, if any, of the
Class B Principal Distribution for such Distribution Date
over the portion of Principal Collections and Interest
Collections for such Distribution Date remaining after the
distribution of the Class A Interest Distribution, the Class
B Interest Distribution and the Class A Principal
Distribution for such Distribution Date will be deposited
into the Class B Distribution Account.
The Collateral Agent shall be entitled to conclusively rely on
the Servicer's instruction and the Servicer's Certificate without
investigation.
(c) If the amount on deposit in the Reserve Fund on
any Distribution Date (after giving effect to all other deposits
thereto and withdrawals therefrom to be made on such Distribution
Date) is greater than the Specified Reserve Balance for such
Distribution Date, the Servicer shall instruct the Collateral
Agent in writing to distribute the amount of the excess to the
Seller on such Distribution Date. On the date on which the Trust
terminates, any funds remaining in the Reserve Fund (after all
other distributions to be made from the Reserve Fund pursuant to
this Section 4.6 have been made) shall be distributed to the
Seller. Amounts properly distributed to the Servicer for
distribution to the Seller pursuant to Section 4.1(b)(ii) or this
Section 4.6(c) shall not be available under any circumstances to
the Trust, the Trustee or the Certificateholders and the Seller
shall in no event thereafter be required to refund any such
distributed amounts.
SECTION 4.7. STATEMENTS TO CERTIFICATEHOLDERS. (a)
On each Determination Date, the Servicer shall provide to the
Trustee (with a copy to the Rating Agencies) for the Trustee to
forward to each Certificateholder of record a statement (each a
"Distribution Date Statement") setting forth with respect to the
related Collection Period at least the following information as
to the Certificates to the extent applicable:
(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;
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(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 Certificate Owners by a
request in writing addressed to the Trustee.
(b) Within a reasonable period of time after the end
of each calendar year, but not later than the latest date
permitted by law, the Trustee shall 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 such
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calendar year or, in the event such Person shall have been a
Certificateholder during a portion of such calendar year, for the
applicable portion of such year, for the purposes of such
Certificateholder's preparation of Federal income tax returns.
In addition, the Servicer shall furnish to the Trustee for
distribution to such Person at such time any other information
necessary under applicable law for the preparation of such income
tax returns.
(c) The Servicer, at its own expense, shall cause a
firm of nationally recognized accountants to prepare any State
tax returns required to be filed by the Trust, and the Trustee
shall execute and file such returns if requested to do so by the
Servicer. The Trustee, upon request, will promptly furnish the
Servicer with all such information known to the Trustee as may be
reasonably required in connection with the preparation of any
state tax returns of the Trust.
ARTICLE V
[Intentionally Omitted]
ARTICLE VI
THE CERTIFICATES
SECTION 6.1. THE CERTIFICATES. The Certificates shall
be issued as Class A Certificates and Class B Certificates,
substantially in the form of Exhibits A and B hereto,
respectively. The Certificates shall be issued in minimum
denominations of $1,000 and integral multiples of $1,000 in
excess thereof; PROVIDED, HOWEVER, that one Class A Certificate
and one Class B Certificate may be issued in a denomination that
represents any remaining portion of the Original Class A
Principal Balance and the Original Class B Principal Balance, as
the case may be. The Certificates shall be executed by the
Trustee on behalf of the Trust by manual or facsimile signature
of an Authorized Officer of the Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at
the time when such signatures shall have been affixed, authorized
to sign on behalf of the Trustee, shall be valid and binding
obligations of the Trust, notwithstanding that such individuals
shall have ceased to be so authorized prior to the authentication
and delivery of such Certificates or did not hold such offices at
the date of such Certificates.
SECTION 6.2. AUTHENTICATION AND DELIVERY OF
CERTIFICATES. The Trustee shall cause to be authenticated and
delivered to or upon the written order of the Seller, in exchange
for the Receivables and other Trust Property, simultaneously with
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the sale, assignment and transfer to the Trustee of the
Receivables, and the constructive delivery to the Trustee of the
Receivables Files and the other components of the Trust existing
as of the Closing Date, Certificates duly authenticated by the
Trustee in authorized denominations equalling in the aggregate
the sum of the Original Class A Principal Balance and the
Original Class B Principal Balance, and evidencing the entire
ownership of the Trust. No Certificate shall entitle the Holder
thereof to any benefit under this Agreement, or shall be valid
for any purpose, unless there shall appear on such Certificate a
certificate of authentication, substantially in the form set
forth in the form of Certificates attached hereto as Exhibit A
and Exhibit B respectively, executed by the Trustee by manual
signature. Such authentication shall constitute conclusive
evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Certificates
issued on the Closing Date shall be dated the Closing Date. Any
Certificates issued thereafter shall be dated the date of their
authentication.
SECTION 6.3. REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES. The Trustee shall maintain, or cause to be
maintained, at the office or agency to be maintained by it in
accordance with Section 6.9, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. Upon
surrender for registration of transfer of any Class A Certificate
or Class B Certificate at such office or agency, the Trustee
shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Class A
Certificates or Class B Certificates, as the case may be, in
authorized denominations of a like aggregate amount. At the
option of a Certificateholder, Class A Certificates or Class B
Certificates may be exchanged for other Class A Certificates or
Class B Certificates, as the case may be, of authorized
denominations of a like aggregate amount at the office or agency
maintained by the Trustee in accordance with Section 6.9. Every
Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of
transfer duly executed by the Holder and in a form satisfactory
to the Trustee. No service charge shall be made for any
registration of transfer or exchange of Certificates, but the
Trustee may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates. All Certificates
surrendered for registration of transfer or exchange shall be
canceled and disposed of in a commercially reasonable manner
approved by the Trustee.
A Class B Certificate may not be directly or indirectly
sold or transferred to, or purchased or acquired by, or on behalf
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of (1) any employee benefit plan, retirement arrangement,
individual retirement account or keogh plan which is subject to
either Title I of ERISA, or Section 4975 of the Code (each, a
"Plan"), or (2) any entity whose source of funds to be used for
the purchase of such Class B Certificate includes the assets of
any such Plan, other than an "Insurance Company General Account"
as defined in, and which complies with the provisions of,
Prohibited Transaction Exemption 95-60 issued by the United
States Department of Labor. Every transferee of a Class B
Certificate represented by a Book-Entry Certificate shall be
deemed to have represented and warranted to the Seller and the
Trustee that it is not an entity described in either clause (1)
or (2) above. Each transferee of a Definitive Certificate shall
deliver a Benefit Plan Affidavit to the Seller and the Trustee in
the form of Exhibit E. Neither the Servicer nor the Trustee will
incur any liability for any transfers made in accordance with
this Section 6.3.
Every Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a
written instrument of transfer in form satisfactory to the
Trustee duly executed by the Certificateholder or his attorney
duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the
Trustee, which requirements include membership or participation
in the Securities Transfer Agent's Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by
the Trustee in addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act.
SECTION 6.4. RESERVED.
SECTION 6.5. RESERVED.
SECTION 6.6. MUTILATED, DESTROYED, LOST OR STOLEN
CERTIFICATES. If (a) any mutilated Class A Certificate or Class
B Certificate shall be surrendered to the Trustee, or if the
Trustee shall receive evidence to its satisfaction of the
destruction, loss or theft of any Class A Certificate or Class B
Certificate and (b) there shall be delivered to the Trustee such
security or indemnity as may be required to save the Trustee
harmless, then in the absence of notice that such Class A
Certificate or Class B Certificate shall have been acquired by a
bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Class A Certificate or Class B
Certificate, a new Class A Certificate or Class B Certificate of
like tenor and denomination. In connection with the issuance of
any new Certificate under this Section 6.6, the Trustee may
require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
Any replacement Certificate issued pursuant to this Section 6.6
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shall constitute conclusive evidence of ownership in the Trust,
as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
SECTION 6.7. PERSONS DEEMED OWNERS. Prior to due
presentation of a Certificate for registration of transfer, the
Trustee may treat the Person in whose name any Certificate shall
be registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.5 and for all other
purposes, and the Trustee shall not be bound by any notice to the
contrary.
SECTION 6.8. ACCESS TO LIST OF CERTIFICATEHOLDERS'
NAMES AND ADDRESSES. The Trustee shall furnish or cause to be
furnished to the Servicer, within 15 days after receipt by the
Trustee of a request therefor from the Servicer in writing, in
such form as the Servicer may reasonably require, a list of the
names and addresses of the Certificateholders as of the most
recent Record Date. If Definitive Certificates have been issued,
the Trustee, upon written request by holders of Class A
Certificates or Class B Certificates evidencing not less than 25%
of the aggregate outstanding principal balance of either the
Class A Certificates or the Class B Certificates, as the case may
be, will, within fifteen days after the receipt of such request,
afford such Class A Certificateholders or Class B
Certificateholders access during normal business hours to the
most current list of Certificateholders for purposes of
communicating with other Certificateholders with respect to their
rights under the Agreement. Each Certificateholder, by receiving
and holding a Certificate, shall be deemed to have agreed that
none of the Seller, the Servicer or the Trustee is accountable by
reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
SECTION 6.9. MAINTENANCE OF OFFICE OR AGENCY. The
Trustee shall maintain, or cause to be maintained, at its
expense, in the Borough of Manhattan, The City of New York, an
office or agency where Certificates may be surrendered for
registration of transfer or exchange and where notices and
demands to or upon the Trustee in respect of the Certificates and
this Agreement may be served. The Trustee initially designates
4 Albany Street, New York, New York 10006 or by mail to the
Corporate Trust Office as its office for such purposes. The
Trustee shall give prompt written notice to the Servicer and to
Certificateholders of any change in the location of any such
office or agency.
SECTION 6.10. BOOK-ENTRY CERTIFICATES. Upon original
issuance, the Class A Certificates and the Class B Certificates
shall be issued in the form of one or more typewritten
Certificates representing the Book-Entry Certificates, to be
delivered to DTC or its custodian, by, or on behalf of, the
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Seller. Such Certificates shall initially be registered on the
Certificate Register in the name of Cede & Co., the nominee of
DTC, and no Certificate Owner will receive a definitive
certificate representing such Certificate Owner's interest in the
Class A Certificates or the Class B Certificates, as the case may
be, except as provided in Section 6.12. Unless and until
definitive, fully-registered Certificates ("Definitive
Certificates") have been issued to Class A Certificateholders or
Class B Certificateholders, as the case may be, pursuant to
Section 6.12:
(i) the provisions of this Section 6.10 shall be in
full force and effect;
(ii) the Seller, the Servicer and the Trustee may deal
with the Clearing Agency for all purposes (including the
making of distributions on the Certificates and the taking
of actions by the Certificateholders) as the authorized
representative of the Certificate Owners;
(iii) to the extent that the provisions of this Section
6.10 conflict with any other provisions of this Agreement,
the provisions of this Section 6.10 shall control;
(iv) the rights of Certificate Owners shall be
exercised only through the Clearing Agency and shall be
limited to those established by law, the rules, regulations
and procedures of the Clearing Agency and agreements between
such Certificate Owners and the Clearing Agency and all
references in this Agreement to actions by
Certificateholders shall refer to actions taken by the
Clearing Agency upon instructions from the Clearing Agency
Participants, and all references in this Agreement to
distributions, notices, reports and statements to
Certificateholders shall refer to distributions, notices,
reports and statements to the Clearing Agency or its
nominee, as registered holder of the Certificates, as the
case may be, for distribution to Certificate Owners in
accordance with the rules, regulations and procedures of the
Clearing Agency;
(v) pursuant to the Depository Agreement, DTC will
make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of
principal and interest on the Certificates to the Clearing
Agency Participants, for distribution by such Clearing
Agency Participants to the Certificate Owners or their
nominees; and
(vi) Certificate Owners may own beneficial interest in
Certificates representing original denominations of $1,000
and integral multiples of $1,000 in excess thereof except
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for any residual amount of Original Class A Principal
Balance or Original Class B Principal Balance.
For purposes of any provision of this Agreement
requiring or permitting actions with the consent of, or at the
direction of, Holders of Certificates evidencing specified
percentages of the aggregate outstanding principal balance of
such Certificates, such direction or consent may be given by
Certificate Owners having interests in the requisite percentage,
acting through the Clearing Agency.
SECTION 6.11. NOTICES TO CLEARING AGENCY. Whenever
notice or other communication to the Certificateholders is
required under this Agreement unless and until Definitive
Certificates shall have been issued to Certificate Owners
pursuant to Section 6.12, the Trustee shall give all such notices
and communications specified herein to be given to
Certificateholders to the Clearing Agency.
SECTION 6.12. DEFINITIVE CERTIFICATES. If (i) (A) the
Seller advises the Trustee in writing that the Clearing Agency is
no longer willing or able properly to discharge its
responsibilities under the Depository Agreement and (B) the
Trustee or the Servicer is unable to locate a qualified
successor, (ii) the Seller, at its option, advises the Trustee in
writing that it elects to terminate the book-entry system through
the Clearing Agency or (iii) after the occurrence of an Event of
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 the
Clearing Agency through the Clearing Agency Participants in
writing, and the Clearing Agency shall so notify the Trustee,
that the continuation of a book-entry system through the Clearing
Agency is no longer in their best interests, the Trustee shall
notify the Clearing Agency which shall be responsible to notify
the Certificate Owners of the occurrence of any such event and of
the availability of Definitive Certificates to Certificate
Owners, requesting the same. Upon surrender to the Trustee by
the Clearing Agency of the Certificates registered in the name of
the nominee of the Clearing Agency, accompanied by
re-registration instructions from the Clearing Agency for
registration, the Trustee shall execute, on behalf of the Trust,
authenticate and deliver Definitive Certificates in accordance
with such instructions. The Servicer shall arrange for, and will
bear all costs of, the printing and issuance of such Definitive
Certificates. Neither the Seller, the Servicer nor the Trustee
shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
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Definitive Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably
acceptable to the Trustee, as evidenced by its execution thereof.
Neither the Trust, the Seller, the Servicer nor the Trustee will
have any responsibility or obligation to any Clearing Agency
Participants or the Persons for whom they act as nominees with
respect to (1) the accuracy of any records maintained by DTC or
any Clearing Agency Participants, (2) the payment by DTC or any
Clearing Agency 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 Clearing Agency Participant
of any notice to any Certificate Owner which is required or
permitted hereunder to be given to Certificateholders or (4) any
other action taken by DTC or its nominee as the
Certificateholder.
ARTICLE VII
THE SELLER
SECTION 7.1. REPRESENTATIONS OF SELLER. The Seller
makes the following representations on which the Trustee is
deemed to have relied in accepting the Receivables and other
Trust Property in trust and in executing and authenticating the
Certificates. The representations are being made as of the
execution and delivery of this Agreement and shall survive the
sale and assignment of the Receivables and other Trust Property
to the Trustee.
(a) ORGANIZATION AND GOOD STANDING. The Seller is
duly organized and validly existing as a corporation in the
State of Ohio with the corporate power and authority to own
its properties and to conduct its business as such
properties are currently owned and such business is
presently conducted, and had at all relevant times, and has,
the power, authority and legal right to acquire and own the
Receivables.
(b) POWER AND AUTHORITY OF THE SELLER. The Seller has
the corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; the
Seller has full corporate power and authority to sell and
assign the property to be sold and assigned to and deposited
with the Trustee and the Seller has duly authorized such
sale and assignment to the Trustee by all necessary
corporate action; and the execution, delivery and
performance of this Agreement been duly authorized by the
Seller by all necessary corporate action.
(c) BINDING OBLIGATION. This Agreement constitutes a
legal, valid and binding obligation of the Seller,
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enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter
in effect relating to creditors' rights generally and
subject to general principles of equity (whether applied in
a proceeding at law or in equity).
(d) NO VIOLATION. The consummation of the
transactions contemplated by this Agreement and the
fulfillment of the terms hereof do not result in any breach
of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time or both) a default under,
the articles of incorporation or code of regulations of the
Seller, or any indenture, agreement or other instrument to
which the Seller is a party or by which it shall be bound;
nor result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than
pursuant to this Agreement); nor violate any law or, to the
best of its knowledge, any order, rule or regulation
applicable to the Seller of any court or of any Federal or
State regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the
Seller or its properties.
(e) NO PROCEEDINGS. There are no proceedings or
investigations pending against the Seller or, to its best
knowledge, threatened against the Seller, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its
properties: (i) asserting the invalidity of this Agreement
or the Certificates, (ii) seeking to prevent the issuance of
the Certificates or the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking
any determination or ruling that could reasonably be
expected to have a material and adverse effect on the
performance by the Seller of its obligations under, or the
validity or enforceability of this Agreement or the
Certificates or (iv) seeking to affect adversely the Federal
or State income tax or ERISA attributes of the Trust or the
Certificates.
(f) ALL CONSENTS. All authorizations, consents,
orders or approvals of or registrations or declarations with
any court, regulatory body, administrative agency or other
government instrumentality required to be obtained, effected
or given by the Seller in connection with the execution and
delivery by the Seller of this Agreement and the performance
by the Seller of the transactions contemplated by this
Agreement have been duly obtained, effected or given and are
in full force and effect, except where failure to obtain the
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same would not have a material adverse effect upon the
rights of the Trust or the Certificateholders.
SECTION 7.2. SPECIAL PURPOSE ENTITY. The Seller has
been formed as a special purpose entity whose business shall be
limited to those activities specified in its articles of
incorporation. The Seller agrees that it shall not, under any
circumstances, seek the protection of federal bankruptcy laws or
any similar state or local laws providing for the relief of
debtors.
SECTION 7.3. LIABILITY OF SELLER; INDEMNITIES. The
Seller shall be liable in accordance herewith only to the extent
of the obligations specifically undertaken by the Seller under
this Agreement.
(a) The Seller shall indemnify, defend and hold
harmless the Trust and the Trustee and the Trustee's
officers, directors, employees and agents from and against
any taxes that may at any time be asserted against any such
Person with respect to the transactions contemplated in this
Agreement (except any income taxes arising out of fees paid
to the Trustee and except any taxes to which the Trustee may
otherwise be subject to not related to this Agreement),
including any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes (but,
in the case of the Trust, not including any taxes asserted
with respect to, and as of the date of, the issuance and
original sale of the Certificates or asserted with respect
to ownership of the Receivables or Federal or other income
taxes arising out of distributions on the Certificates) and
costs and expenses in defending against the same or in
connection with any application relating to the Certificates
under any State securities laws.
(b) The Seller shall indemnify, defend and hold
harmless the Trust, the Trustee and the Certificateholders
and the officers, directors, employees and agents of the
Trustee from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent
arising out of, or imposed upon such Person through (i) the
Seller's willful misfeasance, bad faith or negligence in the
performance of its duties under this Agreement, or by reason
of reckless disregard of its obligations and duties under
this Agreement and (ii) the Seller's or the Trust's
violation of Federal or State securities laws in connection
with the offering and sale of the Certificates or in
connection with any application relating to the Certificates
under any State securities laws.
(c) The Seller shall be liable as primary obligor
for, and shall indemnify, defend and hold harmless the
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Trustee and its officers, directors, employees and agents
from and against any and all costs, expenses, losses,
claims, damages and liabilities (including reasonable
attorneys' fees and expenses) arising out of, or incurred in
connection with, this Agreement, the Trust Property, the
acceptance or performance of the trusts and duties set forth
herein or the action or the inaction of the Trustee
hereunder (including the Trustee's execution of any Arizona
tax return pursuant to Section 4.7(c)) except to the extent
that such cost, expense, loss, claim, damage or liability:
(i) shall be due to the willful misfeasance, bad faith or
negligence of the Trustee or (ii) shall arise from any
breach by the Trustee of its covenants, representations or
warranties under this Agreement. Such liability shall
survive the termination of the Trust.
(d) The Seller shall pay any and all taxes levied or
assessed upon all or any part of the Trust Property (other
than those taxes expressly excluded from the Seller's
responsibilities pursuant to the parentheticals in paragraph
(a) above).
Indemnification under this Section shall survive the
resignation or removal of the Trustee and the termination of this
Agreement and shall include reasonable fees and expenses of
counsel and other expenses of litigation. If the Seller shall
have made any indemnity payments pursuant to this Section and the
Person to or on behalf of whom such payments are made thereafter
shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
SECTION 7.4. MERGER OR CONSOLIDATION OF, OR ASSUMPTION
OF THE OBLIGATIONS OF, SELLER. Any Person (a) into which the
Seller may be merged or consolidated, (b) which may result from
any merger or consolidation to which the Seller shall be a party
or (c) which may succeed to the properties and assets of the
Seller substantially as a whole, shall be the successor to the
Seller without the execution or filing of any document or any
further act by any of the parties to this Agreement; PROVIDED,
HOWEVER, that the Seller hereby covenants that it will not
consummate any of the foregoing transactions except upon
satisfaction of the following: (i) the surviving Seller if other
than Banc One ABS Corporation, either (a) executes an agreement
of assumption to perform every obligation of the Seller under
this Agreement or (b) delivers to the Trustee an Opinion of
Counsel stating that the surviving Seller is obligated to perform
every obligation of the Seller under this Agreement without the
execution of an agreement of assumption or any other action not
previously taken by the surviving Seller, (ii) immediately after
giving effect to such transaction, no representation or warranty
made pursuant to Section 2.2 or 7.1 shall have been breached,
(iii) the Seller shall have delivered to the Trustee an Officers'
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Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of
assumption, if any, comply with this Section and that all
conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and that
the Rating Agency Condition shall have been satisfied with
respect to such transaction, (iv) such transaction will not
result in a material adverse Federal or State tax consequence to
the Trust or the Certificateholders and (v) unless Banc One ABS
Corporation is the surviving entity, the Seller shall have
delivered to the Trustee an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements
and continuation statements and amendments thereto have been
executed and filed that are necessary fully to preserve and
protect the interest of the Trustee in the Receivables and
reciting the details of such filings, or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to
preserve and protect such interests.
SECTION 7.5. LIMITATION ON LIABILITY OF SELLER AND
OTHERS. The Seller and any director or officer or employee or
agent of the Seller may rely in good faith on the advice of
counsel or on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters
arising under this Agreement (provided that such reliance shall
not limit in any way the Seller's obligations under Section 2.2).
The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental
to its obligations under this Agreement, and that in its opinion
may involve it in any expense or liability except this shall not
relieve the Seller from its obligations to indemnify pursuant to
Section 7.3.
SECTION 7.6. SELLER MAY OWN CERTIFICATES. The Seller
and any Affiliate thereof may in its individual or any other
capacity become the owner or pledgee of Certificates with the
same rights as it would have if it were not the Seller or an
Affiliate thereof, except as expressly provided herein.
ARTICLE VIII
THE SERVICER
SECTION 8.1. REPRESENTATIONS OF SERVICER. The
Servicer makes the following representations on which the Trustee
is deemed to have relied in accepting the Receivables and other
Trust Property in trust and in authenticating the Certificates.
The representations are being made as of the execution and
delivery of this Agreement and shall survive the sale and
assignment of the Receivables and other Trust Property to the
Trustee.
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(a) ORGANIZATION AND GOOD STANDING. The Servicer
is duly organized and validly existing as a national banking
association with the corporate power and authority to own its
properties and to conduct its business as such properties are
currently owned and such business is presently conducted, and had
at all relevant times, and has, the power, authority and legal
right to service the Receivables.
(b) DUE QUALIFICATION. The Servicer is duly
qualified to do business and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the
servicing of the Receivables as required by this Agreement) shall
require such qualifications.
(c) POWER AND AUTHORITY OF THE SERVICER. The
Servicer has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder,
and the execution, delivery and performance of this Agreement
have been duly authorized by the Servicer by all necessary
corporate action. All authorizations, consents, orders or
approvals of or registrations or declarations with any court,
regulatory body, administrative agency or other government
instrumentality required to be obtained, effected or given by the
Servicer in connection with the execution and delivery by the
Servicer of this Agreement and the performance by the Servicer of
the transactions contemplated by this Agreement have been duly
obtained, effected or given and are in full force and effect,
except where failure to obtain the same would not have a material
adverse effect upon the rights of the Trust or the
Certificateholders.
(d) BINDING OBLIGATION. This Agreement
constitutes a legal, valid and binding obligation of the
Servicer, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in
effect relating to creditors' rights generally or the rights of
creditors of banks the deposit accounts of which are insured by
the FDIC, and subject to general principles of equity (whether
applied in a proceeding of law or in equity).
(e) NO VIOLATION. The consummation of the
transactions contemplated by this Agreement and the fulfillment
of the terms hereof do not result in any breach of any of the
terms and provisions of, nor constitute (with or without notice
or lapse of time or both) a default under the articles of
association or by-laws of the Servicer, or any material
indenture, agreement or other instrument to which the Servicer is
a party or by which it shall be bound; nor result in the creation
or imposition of any Lien upon any of its properties pursuant to
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the terms of any such indenture, agreement or other instrument
(other than pursuant to this Agreement); nor violate any law or,
to the best of its knowledge, any order, rule or regulation
applicable to the Servicer of any court or of any federal or
State regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the
Servicer or its properties.
(f) NO PROCEEDINGS. There are no proceedings or
investigations pending against the Servicer, or, to its best
knowledge, threatened against the Servicer, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its
properties: (i) asserting the invalidity of this Agreement or
the Certificates, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions
contemplated by this Agreement, (iii) seeking any determination
or ruling that could reasonably be expected to have a material
and adverse effect on the performance by the Servicer of its
obligations under, or the validity or enforceability of this
Agreement or the Certificates or (iv) seeking to affect adversely
the Federal or State income tax or ERISA attributes of the Trust
or the Certificates.
(g) NO AMENDMENT OR WAIVER. No provision of any
Receivable has been waived, altered or modified in any respect,
except pursuant to a document, instrument or writing included in
the relevant Receivable File, and no such amendment, waiver,
alteration or modification causes such Receivable not to conform
to the other warranties contained in this Section or those of the
Seller contained in Section 2.2.
(h) LOCATION OF RECEIVABLE FILES. The Receivable
Files are kept in the offices of the Servicer, specified in
Schedule B, or at such other office specified in accordance with
Section 2.4.
SECTION 8.2. INDEMNITIES OF SERVICER. The Servicer
shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Servicer under this
Agreement.
The Servicer shall indemnify, defend and hold harmless
the Trust, the Trustee, the Seller and the Certificateholders and
any of the officers, directors, employees and agents of the
Trustee or the Seller from any and all costs, expenses, losses,
claims, damages and liabilities (including reasonable attorneys'
fees and expenses) to the extent arising out of, or imposed upon
any such Person through, the negligence, willful misfeasance or
bad faith of the Servicer in the performance of its obligations
and duties under this Agreement, the performance of the
obligations and duties of Valley National under the Loan Purchase
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and Servicing Agreement or in the performance of the obligations
and duties of any other subservicer under any other subservicing
agreement or by reason of the reckless disregard of its
obligations and duties under this Agreement or by reason of the
reckless disregard of the obligations of Valley National under
the Loan Purchase and Servicing Agreement or any other
subservicer under any other subservicing agreement, where the
final other determination that any such cost, expense, loss,
claim, damage or liability arose out of, or was imposed upon any
such Person through, any such negligence, willful misfeasance,
bad faith or recklessness on the part of the Servicer, Valley
National or any other subservicer, is established by a court of
law, by an arbitrator or by way of settlement agreed to by the
Servicer. Notwithstanding the foregoing, if the Servicer is
rendered unable, in whole or in part, by virtue of an act of God,
act of war, fires, earthquake or other natural disasters, to
satisfy its obligations under this Agreement, the Loan Purchase
and Servicing Agreement or any subservicing agreement, the
Servicer shall not be deemed to have breached any such obligation
upon the sending of written notice of such event to the other
parties hereto, for so long as the Servicer remains unable to
perform such obligation as a result of such event. This
provision shall not be construed to limit the Servicer's, Valley
National's, any subservicer's or any other party's rights,
obligations, liabilities, claims or defenses which arise as a
matter of law or pursuant to any other provision of this
Agreement, the Loan Purchase and Servicing Agreement or any
subservicing agreement.
The Servicer shall indemnify, defend and hold harmless
the Trust, the Trustee, the Seller, the Certificateholders or any
of the officers, directors, employees and agents of the Trustee
or the Seller from any and all costs, expenses, losses, claims,
damages and liabilities (including reasonable attorneys' fees and
expenses) to the extent arising out of or imposed upon any such
Person as a result of any compensation payable to any
subcustodian or subservicer (including any fees payable in
connection with the release of any Receivable File from the
custody of such subservicer or in connection with the termination
of the servicing activities of such subservicer with respect to
any Receivable) whether pursuant to the terms of any subservicing
agreement or otherwise.
SECTION 8.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION
OF THE OBLIGATIONS OF, SERVICER. Any Person (a) into which the
Servicer may be merged or consolidated, (b) which may result from
any merger or consolidation to which the Servicer shall be a
party or (c) which may succeed to the properties and assets of
the Servicer, substantially as a whole, shall be the successor to
the Servicer without the execution or filing of any document or
any further act by any of the parties to this Agreement;
PROVIDED, HOWEVER, that the Servicer hereby covenants that it
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will not consummate any of the foregoing transactions except upon
satisfaction of the following: (i) the surviving Servicer if
other than Bank One, Arizona, NA, either (a) executes an
agreement of assumption to perform every obligation of the
Servicer under this Agreement or (b) delivers to the Trustee an
Opinion of Counsel stating that the surviving Servicer is
obligated to perform every obligation of the Servicer under this
Agreement without the execution of an agreement of assumption or
other action not previously taken by the surviving Servicer,
(ii) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 8.1 shall
have been breached and no Event of Servicing Termination, and no
event that, after notice or lapse of time, or both, would become
an Event of Servicing Termination shall have occurred and be
continuing, (iii) the Servicer shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such
agreement of assumption, if any, comply with this Section and
that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with,
and that the Rating Agency Condition shall have been satisfied
with respect to such transaction, and (iv) such transaction will
not result in a material adverse Federal or State tax consequence
to the Trust or the Certificateholders.
SECTION 8.4. LIMITATION ON LIABILITY OF SERVICER AND
OTHERS. Neither the Servicer nor any of its directors, officers,
employees or agents shall be under any liability to the Trust or
the Certificateholders, except as provided under this Agreement,
for any action taken or for refraining from the taking of any
action in good faith by the Servicer or any subservicer pursuant
to this Agreement or for errors in judgment; PROVIDED, HOWEVER,
that this provision shall not protect the Servicer or any such
person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer,
Valley National or any other subservicer and any of their
respective directors, officers, employees or agents may rely in
good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters
arising under this Agreement.
Except as otherwise provided in this Agreement the
Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that shall be incidental to
its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may involve it in any expense
or liability; PROVIDED, HOWEVER, that the Servicer, may (but
shall not be required to) undertake any reasonable action that it
may deem necessary or desirable in respect of this Agreement to
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protect the interests of the Certificateholders under this
Agreement.
SECTION 8.5. BANK ONE, ARIZONA, NA NOT TO RESIGN AS
SERVICER. Subject to the provisions of Section 8.3, Bank One,
Arizona, NA, hereby agrees not to resign from the obligations and
duties hereby imposed on it as Servicer under this Agreement
except upon determination that the performance of its duties
hereunder shall no longer be permissible under applicable law or
if such resignation is required by regulatory authorities.
Notice of any such determination permitting the resignation of
Bank One, Arizona, NA, as Servicer shall be communicated to the
Trustee at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at
the earliest practicable time) and any such determination shall
be evidenced by an Opinion of Counsel to such effect delivered to
the Trustee concurrently with or promptly after such notice. No
such resignation shall become effective until the earlier of the
Trustee or a successor Servicer having assumed the
responsibilities and obligations of the resigning Servicer in
accordance with Section 9.2 or the date upon which any regulatory
authority requires such resignation.
SECTION 8.6. EXISTENCE. Subject to the provisions of
Sections 7.4 and 8.3, during the term of this Agreement, Bank
One, Arizona, NA, will keep in full force and effect its
existence, rights and franchises as a national banking
association under the laws of the United States and will obtain
and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary
to protect the validity and enforceability of this Agreement and
each other instrument or agreement necessary or appropriate to
the proper administration of this Agreement and the transactions
contemplated hereby.
SECTION 8.7. TAX ACCOUNTING. The Servicer shall
prepare any Federal tax returns of the Trust in accordance with
the Code and any regulations (including, to the extent applicable
by their terms, proposed regulations) thereunder. To the extent
not inconsistent with any such regulations, such returns shall be
prepared in a manner consistent with the following rules:
(a) The Class A Certificateholders shall be treated as
owning the Class A Percentage of Interest Collections (but
limited to the Class A Certificate Rate plus the Servicing Fee
Rate) and Principal Collections and the Class B
Certificateholders shall be treated as owning the Class B
Percentage of Interest Collections (but limited to the Class B
Certificate Rate plus the Servicing Fee Rate) and Principal
Collections. The Seller shall be treated as having retained the
stripped coupons on the Class A Percentage and the Class B
Percentage of each Receivable equal to the difference between the
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APR of such Receivable and the portion owned by the Class A and
Class B Certificateholders, respectively, pursuant to this
paragraph.
(b) To the extent that as a result of the
subordination provisions of this Agreement, actual cash
distributions to the Class B Certificateholders are less than the
amount set forth in subsection (a), the Class B
Certificateholders shall be deemed to have (i) received the
amount set forth in subsection (a), (ii) paid such difference to
the Class A Certificateholders pursuant to a guaranty of the
Class A Certificates, and (iii) become subrogated to the rights
of the Class A Certificateholders to recovery of the amounts so
paid.
ARTICLE IX
SERVICING TERMINATION
SECTION 9.1. EVENTS OF SERVICING TERMINATION. If any
one of the following events ("Events of Servicing Termination")
shall occur and be continuing:
(a) any failure by the Servicer to deliver to the
Trustee for deposit in any of the Accounts or the Reserve
Fund 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 a
period of 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 an Authorized Officer of the Servicer; or
(b) any failure by the Servicer duly to observe or to
perform in any material respect any other covenants or
agreements of the Servicer set forth in this Agreement,
which failure shall (i) materially and adversely affect the
rights of either the Class A Certificateholders or the Class
B Certificateholders and (ii) continue unremedied for a
period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have
been given (A) to the Servicer by the Trustee or (B) to the
Servicer and to the Trustee by Holders of Certificates
evidencing not less than 25% of the aggregate outstanding
principal balance of the Class A Certificates and Class B
Certificates taken together as a single class (or for 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 Officers' Certificate to the Trustee to
such effect and to the effect that the Servicer has
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commenced or will promptly commence, and will diligently
pursue, all reasonable efforts to remedy such default); or
(c) an Insolvency Event occurs with respect to the
Servicer or any successor;
then, and in each and every case, so long as the Event of
Servicing Termination shall not have been remedied within any
applicable cure period, either 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, by notice
then given in writing to the Servicer and the Trustee may
terminate all the rights and obligations (other than the
obligations set forth in Section 8.2) of the Servicer under this
Agreement. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Certificates or the
Receivables or otherwise, shall, without further action, pass to
and be vested in the Trustee or such successor Servicer as may be
appointed under Section 9.2; and, without limitation, the Trustee
is hereby authorized and empowered to execute and deliver, on
behalf of the predecessor Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do
or accomplish all other acts or things necessary or appropriate
to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and
related documents, or otherwise. The predecessor Servicer shall
cooperate with the successor Servicer and the Trustee in
effecting the termination of the responsibilities and rights of
the predecessor Servicer under this Agreement, including the
transfer to the successor Servicer for administration by it of
all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or shall thereafter be received
by it with respect to a Receivable. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with
transferring the Receivable Files to the successor Servicer and
amending this Agreement to reflect such succession as Servicer
pursuant to this Section shall be paid by the predecessor
Servicer upon presentation of reasonable documentation of such
costs and expenses. Upon receipt of notice of the occurrence of
an Event of Servicing Termination, the Trustee shall give notice
thereof to the Rating Agencies.
SECTION 9.2. APPOINTMENT OF SUCCESSOR. (a) Upon the
Servicer's receipt of notice of termination, pursuant to Section
9.1 or the Servicer's resignation in accordance with the terms of
this Agreement, the predecessor Servicer shall continue to
perform its functions as Servicer under this Agreement, in the
case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice
of termination, until receipt of such notice and, in the case of
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resignation, until the earlier of (x) the date 45 days from the
delivery to the Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms
of this Agreement and (y) the date upon which the predecessor
Servicer shall become unable to act as Servicer, as specified in
the notice of resignation and accompanying Opinion of Counsel.
In the event of the Servicer's termination hereunder, the Trustee
shall appoint a successor Servicer, and the successor Servicer
shall accept its appointment by a written assumption in form
acceptable to the Trustee. In the event that a successor
Servicer has not been appointed at the time when the predecessor
Servicer has ceased to act as Servicer in accordance with this
Section, the Trustee without further action shall automatically
be appointed the successor Servicer and the Trustee shall be
entitled to the Servicing Fee. Notwithstanding the above, the
Trustee shall, if it shall be unwilling or unable so to act,
appoint or petition a court of competent jurisdiction to appoint,
any established institution, having a net worth of not less than
$50,000,000 and whose regular business shall include the
servicing of automotive receivables, as the successor to the
Servicer under this Agreement.
(b) Upon appointment, the successor Servicer
(including the Trustee acting as successor servicer) shall be the
successor in all respects to the predecessor Servicer and shall
be subject to all the responsibilities, duties and liabilities of
the Servicer arising thereafter and shall be entitled to the
Servicing Fee and all the rights granted to the Servicer by the
terms and provisions of this Agreement. No successor Servicer
shall be liable for any acts or omissions of any predecessor
Servicer.
(c) The Servicer may not resign unless it is
prohibited from serving as such by law or by requirement of any
regulatory authority.
SECTION 9.3. PAYMENT OF SERVICING FEE. If the
Servicer shall change, the predecessor Servicer shall be entitled
to receive any accrued and unpaid Servicing Fees through the date
of the successor Servicer's acceptance hereunder in accordance
with Section 3.8.
SECTION 9.4. NOTIFICATION TO CERTIFICATEHOLDERS. Upon
any termination of, or appointment of a successor to, the
Servicer pursuant to this Article IX, the Trustee shall give
prompt written notice thereof to Certificateholders and the
Rating Agencies.
SECTION 9.5. WAIVER OF PAST EVENTS OF SERVICING
TERMINATION. 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
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together as a single class, may, on behalf of all
Certificateholders, waive in writing any default by the Servicer
in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to
or payments from any of the Accounts or the Reserve Fund in
accordance with this Agreement. Upon any such waiver of a past
default, such default shall cease to exist, and any Events of
Servicing Termination arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair
any right consequent thereto.
ARTICLE X
THE TRUSTEE
SECTION 10.1. ACCEPTANCE BY TRUSTEE. The Trustee, by
its execution of this Agreement, accepts all consideration
conveyed by the Seller pursuant to Section 2.1 and the Trust
created hereunder and declares that it shall hold such
consideration in trust upon the terms hereof set forth for the
benefit of the Certificateholders.
SECTION 10.2. DUTIES OF TRUSTEE. (a) The Trustee,
both prior to and after the curing of an Event of Servicing
Termination, undertakes to perform only such duties as are
specifically set forth in this Agreement and no implied covenants
or obligations shall be read into this Agreement against the
Trustee. If an Event of Servicing Termination shall have
occurred and shall not have been cured (the appointment of a
successor Servicer (including the Trustee) to constitute a cure
for the purposes of this Article), the Trustee shall exercise
such of the rights and powers vested in it by this Agreement, and
shall use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in
the conduct of his own affairs; PROVIDED, HOWEVER, that if the
Trustee assumes the duties of the Servicer pursuant to Section
9.2, the Trustee in performing such duties shall use the degree
of skill and attention required by Section 3.1.
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or
other instruments furnished to the Trustee that are required
specifically to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they conform
to the requirements of this Agreement.
(c) No provision of this Agreement shall be construed
to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, its own bad faith or
its own willful misconduct; PROVIDED, HOWEVER, that:
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(i) Prior to the occurrence of an Event of Servicing
Termination, and after the curing of all such Events of
Servicing Termination that may have occurred, the duties and
obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not
be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement,
no implied covenants or obligations shall be read into this
Agreement against the Trustee, the permissible right of the
Trustee (solely in its capacity as such) to do things
enumerated in this Agreement shall not be construed as a
duty and, in the absence of bad faith on the part of the
Trustee, or manifest error, the Trustee (solely in its
capacity as such) may conclusively rely on the truth of the
statements and the correctness of the opinions expressed
upon any certificates or opinions furnished to the Trustee
and conforming to the requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of
judgment made in good faith by an officer of the Trustee,
unless it shall be proved that the Trustee shall have been
negligent in ascertaining the pertinent facts; and
(iii) The Trustee shall not be liable with respect to
any action taken, suffered, or omitted to be taken in good
faith in accordance with the direction 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, as set forth in Section 9.1, relating to the
time, method and place of conducting any proceeding or any
remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Agreement.
(d) The Trustee (solely in its capacity as such) shall
not be required to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that
the repayment of such funds or adequate indemnity reasonably
satisfactory to it against such risk or liability shall not be
reasonably assured to it, and none of the provisions contained in
this Agreement shall in any event require the Trustee to perform,
or be responsible for the manner of performance of, any of the
obligations of the Servicer under this Agreement except during
such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the
Servicer in accordance with the terms of this Agreement.
(e) Except for actions expressly authorized by this
Agreement, the Trustee shall take no action reasonably likely to
impair the security interests created or existing under any
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Receivable or Financed Vehicle or to impair the value of any
Receivable or Financed Vehicle.
(f) The Trustee shall have no power to vary the corpus
of the Trust including (i) accepting any substitute obligation
for a Receivable initially assigned to the Trustee under this
Agreement, (ii) adding any other investment, obligation or
security except for investments of moneys in the Accounts as
permitted in this Agreement, or (iii) withdrawing any Receivable,
except for a withdrawal permitted under this Agreement.
SECTION 10.3. TRUSTEE'S CERTIFICATE. As soon as
practicable after each Transfer Date on which Receivables shall
be assigned to the Seller pursuant to Section 2.3 or 11.2, as
applicable, or to the Servicer pursuant to Section 3.7, the
Trustee shall execute a certificate, prepared by the Servicer,
including its date and the date of the Agreement, and accompanied
by a copy of the Servicer's Certificate for the related
Collection Period. The Trustee's certificate shall operate, as
of such Transfer Date, as an assignment pursuant to Section 10.4.
SECTION 10.4. TRUSTEE'S ASSIGNMENT OF PURCHASED
RECEIVABLES. With respect to all Receivables repurchased by the
Seller or the Bank pursuant to Section 2.3 or 11.2, or purchased
by the Servicer pursuant to Section 3.7, the Trustee shall
assign, without recourse, representation or warranty, to the
Seller, the Bank or to the Servicer, as the case may be, all the
Trustee's right, title and interest in and to such Receivables,
and all security and documents and all other Trust Property
conveyed pursuant to Section 2.1 with respect to such
Receivables. Such assignment shall be a sale and assignment
outright, and not for security. If, in any enforcement suit or
legal proceeding, it is held that the Seller, the Bank or the
Servicer, as the case may be, may not enforce any such Receivable
on the ground that it shall not be a real party in interest or a
holder entitled to enforce the Receivable, the Trustee shall, at
the expense of the Seller or the Servicer, as the case may be,
take such steps as the Seller or the Servicer, as the case may
be, deems necessary to enforce the Receivable, including bringing
suit in the Trustee's name or the names of the
Certificateholders.
SECTION 10.5. CERTAIN MATTERS AFFECTING THE TRUSTEE.
Except as otherwise provided in Section 10.2:
(i) The Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate of auditors or accountants or any other
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, appraisal, bond, note or
other paper or document believed by it to be genuine and to
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have been signed or presented by the proper party or
parties.
(ii) The Trustee may consult with counsel and any
Opinion of Counsel or any advice of such counsel shall be
full and complete authorization and protection in respect of
any action taken or suffered or omitted by it under this
Agreement in good faith and in accordance with such Opinion
of Counsel or any advice of such counsel.
(iii) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Agreement, or to institute, conduct or defend any litigation
under this Agreement or in relation to this Agreement, at
the request, order or direction of any of the
Certificateholders pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered
to the Trustee reasonable security or indemnity satisfactory
to it against the costs, expenses, and liabilities that may
be incurred therein or thereby.
(iv) The Trustee shall not be liable for any action
taken, suffered or omitted by it in good faith and believed
by it to be authorized or within the discretion, rights or
powers conferred upon it by this Agreement; PROVIDED,
HOWEVER, that the Trustee's conduct does not constitute
willful misfeasance, negligence or bad faith.
(v) Prior to the occurrence of an Event of Servicing
Termination and after the curing of all Events of Servicing
Termination that may have occurred, the Trustee shall not be
bound to make any investigation into the facts of any
matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent,
direction, order, approval, bond, note or other paper or
document, unless requested in writing so to do by 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; PROVIDED, HOWEVER, that if the payment
within a reasonable time to the Trustee of the costs,
expenses, or liabilities likely to be incurred by it in the
making of an investigation requested by the
Certificateholders is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded
to it by the terms of this Agreement, the Trustee may
require reasonable indemnity satisfactory to it against such
cost, expense, or liability as a condition to so proceeding.
The reasonable expense of every such examination shall be
paid by the Servicer, or, if paid by the Trustee, shall be
reimbursed by the Servicer upon demand. Nothing in this
clause (v) shall affect the obligation of the Servicer to
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observe any applicable law prohibiting disclosure of
information regarding the Obligors; PROVIDED, FURTHER, that
the Trustee shall be entitled to make such further inquiry
or investigation into such facts or matter as it may
reasonably see fit, and if the Trustee shall determine to
make such further inquiry or investigation it shall be
entitled to examine the books and records of the Servicer or
the Seller, personally or by agent or attorney, at the sole
cost and expense of the Servicer or Seller, as the case may
be.
(vi) The Trustee may execute any of the trusts or
powers hereunder or perform any duties under this Agreement
either directly or by or through agents, attorneys, nominees
or a custodian, and shall not be liable for the acts of such
agents, attorneys, nominees or custodians provided that they
have been appointed with due care.
(vii) The Trustee shall not be required to make any
initial or periodic examination of any documents or records
related to the Receivables or Financed Vehicles for the
purpose of establishing the presence or absence of defects,
the compliance by the Seller with their representations and
warranties or for any other purpose.
SECTION 10.6. TRUSTEE NOT LIABLE FOR CERTIFICATES OR
RECEIVABLES. The Trustee assumes no responsibility for the
correctness of the recitals contained herein and in the
Certificates (other than the Trustee's execution of, and the
certificate of authentication on, the Certificates). Except as
expressly provided herein, the Trustee makes no representations
as to the validity or sufficiency of this Agreement or of the
Certificates (other than the Trustee's execution of, and the
certificate of authentication on, the Certificates), or of any
Receivable or related document, or for the validity of the
execution by the Seller and the Servicer of this Agreement or of
any supplements hereto or instruments of further assurance, or
for the sufficiency of the Trust Property hereunder, and the
Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any covenants, conditions or
agreements on the part of the Seller or the Servicer under this
Agreement except as herein set forth; but the Trustee may require
the Seller or the Servicer to provide full information and advice
as to the performance of the aforesaid covenants, conditions and
agreements. The Trustee (solely in its capacity as such) shall
have no obligation to perform any of the duties of the Seller or
the Servicer, except as explicitly set forth in this Agreement.
The Trustee shall have no liability in connection with compliance
of the Servicer or the Seller with statutory or regulatory
requirements related to the Receivables. The Trustee shall not
make or be deemed to have made any representations or warranties
with respect to the Receivables or the validity or sufficiency of
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any assignment of the Receivables to the Trust or the Trustee.
The Trustee (solely in its capacity as such) shall at no time
have any responsibility or liability for, or with respect to, the
legality, validity or enforceability of any security interest in
any Financed Vehicle or (prior to the time, if any, that the
Servicer is terminated as custodian hereunder) any Receivable, or
the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, the efficacy of
the Trust or its ability to generate funds sufficient to provide
for the payments to be distributed to Certificateholders under
this Agreement, the existence, condition, location and ownership
of any Financed Vehicle, the existence and contents of any
Receivable or any computer or other record thereof, the validity
of the assignment of any Receivable to the Trust or of any
intervening assignment, the completeness of any Receivable, the
performance or enforcement of any Receivable, the compliance by
the Seller with any warranty or representation made under this
Agreement or in any related document and the accuracy of any such
warranty or representation, prior to the Trustee's receipt of
notice or other discovery of any noncompliance therewith or any
breach thereof, any investment of monies by the Servicer or any
loss resulting therefrom (it being understood that the Trustee
shall remain responsible for any Trust Property that it may
hold), the acts or omissions of the Seller, the Servicer, or any
Obligor, any action of the Servicer taken in the name of the
Trustee, or any action by the Trustee taken at the instruction of
the Servicer (PROVIDED that such instruction is not in express
violation of the terms and provisions of this Agreement);
PROVIDED, HOWEVER, that the foregoing shall not relieve the
Trustee of its obligation to perform its duties under this
Agreement. Except with respect to a claim based on the failure
of the Trustee to perform its duties under this Agreement
(whether in its capacity as Trustee or as successor Servicer) or
based on the Trustee's willful misfeasance, negligence or bad
faith, or based on the Trustee's breach of a representation and
warranty contained in Section 10.14, no recourse shall be had to
the Trustee (whether in its individual capacity or as Trustee)
for any claim based on any provision of this Agreement, the
Certificates or any Receivable or assignment thereof against the
Trustee in its individual capacity; the Trustee shall not have
any personal obligation, liability, or duty whatsoever to any
Certificateholder or any other Person with respect to any such
claim. The Trustee shall not be accountable for the use or
application by the Seller of the proceeds of such Certificates,
or for the use or application of any funds paid to the Servicer
in respect of the Receivables prior to the time such amounts are
deposited in the Collection Account (whether or not the
Collection Account is maintained with the Trustee). The Trustee
shall have no liability for any losses from the investment or
reinvestment in Eligible Investments made in accordance with
Section 4.1.
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SECTION 10.7. TRUSTEE MAY OWN CERTIFICATES. The
Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would
have if it were not Trustee.
SECTION 10.8. TRUSTEE'S FEES AND EXPENSES. The
Servicer agrees to pay to the Trustee, and the Trustee shall be
entitled to, reasonable compensation as is agreed upon in writing
between the Trustee and the Servicer (which shall not be limited
by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in
the execution of the trusts created by this Agreement and in the
exercise and performance of any of the powers and duties under
this Agreement as Trustee, and the Servicer shall pay or
reimburse the Trustee upon its request for all reasonable
expenses (including, without limitation, expenses incurred in
connection with notices or other communications to
Certificateholders), disbursements and advances (including the
reasonable compensation and the reasonable expenses and
disbursements of its counsel and of all persons not regularly in
its employ) incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including the reasonable
fees and expenses of its agents, any co-trustee and counsel) or
in defense of any action brought against it in connection with
this Agreement except any such expense, disbursement, or advance
as may arise from its negligence, willful misfeasance or bad
faith. The Servicer's covenant to pay the expenses,
disbursements and advances provided for in the preceding sentence
and the Servicer's indemnity pursuant to Section 8.2 shall
survive the termination of this Agreement.
SECTION 10.9. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The trustee shall be organized and doing business under the
banking laws of such State or of the United States, shall be
authorized under such laws to exercise corporate trust powers,
shall have a combined capital and surplus of at least
$50,000,000, shall have a credit rating of at least Baa3 from
Moody's and shall be subject to supervision or examination by
Federal or State banking authorities. If such corporation shall
publish reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section 10.9, the
consolidated net worth of such corporation shall be deemed to be
its consolidated capital and surplus as set forth in its most
recent consolidated report of condition so published. In case at
any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 10.9, the Trustee shall
resign immediately in the manner and with the effect specified in
Section 10.10.
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SECTION 10.10. RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Trustee may at any time resign and be discharged from
the trusts hereby created by giving 30 days' prior written notice
thereof to the Servicer. Upon receiving such notice of
resignation, the Servicer shall promptly appoint a successor
Trustee, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall
have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be
eligible in accordance with the provisions of Section 10.9 and
shall fail to resign after written request therefor by the
Servicer, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged bankrupt or insolvent, or a
receiver, conservator or liquidator of the Trustee or of its
property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation,
then the Servicer may remove the Trustee. If the Trustee is
removed under the authority of the immediately preceding
sentence, the Servicer shall promptly appoint a successor trustee
by written instrument, in duplicate, one copy of which instrument
shall be delivered to the Trustee so removed, the successor
Trustee, the Certificateholders at their respective addresses of
record and the Rating Agencies.
(c) Any resignation or removal of the Trustee and
appointment of a successor Trustee pursuant to any of the
provisions of this Section 10.10 shall not become effective until
acceptance of appointment by the successor Trustee pursuant to
Section 10.11.
(d) The respective obligations of the Seller and the
Servicer described in this Agreement shall survive the removal or
resignation of the Trustee as provided in this Agreement.
SECTION 10.11. SUCCESSOR TRUSTEE. (a) Any successor
Trustee appointed pursuant to Section 10.10 shall execute,
acknowledge, and deliver to the Servicer and to its predecessor
Trustee an instrument accepting such appointment under this
Agreement, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall
become fully vested with all rights, powers, duties and
obligations of its predecessor under this Agreement, with like
effect as if originally named as Trustee. The predecessor
Trustee shall deliver to the successor Trustee all documents and
statements held by it under this Agreement, and the Servicer and
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the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties and
obligations.
(b) No successor Trustee shall accept appointment as
provided in this Section 10.11 unless at the time of such
acceptance such successor Trustee shall be eligible pursuant to
Section 10.9.
(c) Upon acceptance of appointment by a successor
Trustee pursuant to this Section 10.11, the Servicer shall mail
notice of such acceptance by the successor Trustee under this
Agreement to all Certificateholders at their respective addresses
of record and to the Rating Agencies. If the Servicer shall fail
to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor Trustee shall
cause such notice to be mailed at the expense of the Servicer.
SECTION 10.12. MERGER OR CONSOLIDATION OF TRUSTEE. Any
corporation or banking association which is eligible to be a
successor Trustee under Section 10.9 (i) into which the Trustee
may be merged or consolidated, (ii) that may result from any
merger, conversion, or consolidation to which the Trustee shall
be a party, or (iii) that may succeed by purchase and assumption
to the business of the Trustee, where the Trustee is not the
surviving entity, which corporation or banking association
executes an agreement of assumption to perform every obligation
of the Trustee under this Agreement, shall be the successor of
the Trustee hereunder, without the execution or filing of any
instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding. The
Trustee shall promptly notify the Servicer and the Rating
Agencies of any such merger, conversion, consolidation or
purchase and assumption where the Trustee is not the surviving
entity.
SECTION 10.13. APPOINTMENT OF CO-TRUSTEE OR SEPARATE
TRUSTEE. (a) Notwithstanding any other provisions of this
Agreement, at any time, for the purpose of meeting any legal
requirements of any jurisdiction in which any part of the Trust
Property or any Financed Vehicle may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee, jointly
with the Trustee, or separate trustee or separate trustees, of
all or any part of the Trust, and to vest in such Person, in such
capacity and for the benefit of the Certificateholders, such
title to the Trust, or any part thereof, and, subject to the
other provisions of this Section 10.13, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee
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may consider necessary or desirable. If the Servicer shall not
have joined in such appointment within 15 days after the receipt
by it of a request so to do, or in case an Event of Servicing
Termination shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee
pursuant to Section 10.9 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 10.11. Notwithstanding the
appointment of a co-trustee or separate trustee hereunder, the
Trustee shall not be relieved of any of its obligations under
this Agreement.
(b) Each separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the
following provisions and conditions:
(i) All rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred
upon and exercised or performed by the Trustee and such
separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee, is not authorized
to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed
(whether as Trustee under this Agreement or as successor to
the Servicer under this Agreement), the Trustee shall be
incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations
(including the holding of title to the Trust Property or any
portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee.
(ii) No trustee under this Agreement shall be liable
by reason of any act or omission of any other trustee under
this Agreement.
(iii) The Servicer and the Trustee acting jointly may
at any time accept the resignation of or remove any separate
trustee or co-trustee.
(c) Any notice, request or other writing given to the
Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to
each of them. Every instrument appointing any separate trustee
or co-trustee shall refer to this Agreement and in particular to
the provisions of this Article. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be
vested with the estates or property specified in its instrument
of appointment, either jointly with the Trustee or separately, as
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may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of,
or affording protection to, the Trustee. Each such instrument
shall be filed with the Trustee and a copy thereof given to the
Servicer.
(d) Any separate trustee or co-trustee may, at any
time, appoint the Trustee its agent or attorney-in-fact with full
power and authority, to the extent not prohibited by law, to do
any lawful act under or in respect of this Agreement on its
behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted
by law, without the appointment of a new or successor trustee.
The Trustee shall promptly notify the Servicer and the Rating
Agencies of any appointment made pursuant to this Section 10.13.
SECTION 10.14. REPRESENTATIONS AND WARRANTIES OF
TRUSTEE. The Trustee makes the following representations and
warranties on which the Seller, the Servicer, and
Certificateholders may rely:
(i) ORGANIZATION AND GOOD STANDING. The Trustee is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of New York;
(ii) POWER AND AUTHORITY. The Trustee has full power,
authority and legal right to execute, deliver, and perform
this Agreement and has taken all necessary action to
authorize the execution, delivery, and performance by it of
this Agreement; and
(iii) ENFORCEABILITY. This Agreement has been duly
executed and delivered by the Trustee and this Agreement
constitutes a legal, valid and binding obligation of the
Trustee enforceable against the Trustee in accordance with
its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general
and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or
in equity).
SECTION 10.15. REPORTS BY TRUSTEE. The Trustee shall
provide to any Certificateholder or Certificate Owner who so
requests in writing (addressed to the Corporate Trust Office) a
copy of any Servicer's Certificate, the annual statement
described in Section 3.10, and the annual accountant's
examination described in Section 3.11. The Trustee may require
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any Certificateholder or Certificate Owner requesting such report
to pay a reasonable sum to cover the cost of the Trustee's
complying with such request.
SECTION 10.16. TAX ACCOUNTING. The Servicer shall
prepare any Federal tax returns of the Trust in accordance with
the Code and any regulations (including, to the extent applicable
by their terms, proposed regulations) thereunder. In no event
shall the Trustee in its individual capacity be liable for any
liabilities, costs or expenses of the Trust, the
Certificateholders, the Seller or the Servicer arising under any
tax law or regulation, including, without limitation, Federal,
State or local income or excise taxes or any tax imposed on or
measured by income (or any interest or penalty with respect
thereto or arising from any failure to comply therewith).
Notwithstanding the foregoing, in no event shall the Trustee be
liable hereunder for any liabilities, costs or expenses incurred
from any information furnished to it by the Servicer or failure
to furnish information by the Servicer in a timely manner.
SECTION 10.17. TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF CERTIFICATES. All rights of action and claims
under this Agreement or the Certificates may be prosecuted and
enforced by the Trustee without the possession of any of the
Certificates or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall
be brought in its own name as Trustee. Any recovery of judgment
shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of
the Certificateholders in respect of which such judgment has been
obtained.
ARTICLE XI
TERMINATION
SECTION 11.1. TERMINATION OF THE TRUST. (a) The
Trust, and the respective obligations and responsibilities of the
Seller, the Servicer and the Trustee hereunder shall terminate
(except as otherwise expressly provided herein) upon the earliest
of: (i) the Distribution Date next succeeding the purchase by
the Seller at its option, pursuant to Section 11.2, of the
Receivables remaining in the Trust, (ii) the payment to
Certificateholders of all amounts required to be paid to them
pursuant to this Agreement or (iii) the Distribution Date next
succeeding the month which is [ten] months after the maturity or
the liquidation of the last Receivable held in the Trust and the
disposition of any amounts received upon liquidation of any
property remaining in the Trust; PROVIDED, HOWEVER, in no event
shall the Trust created hereby continue beyond the expiration of
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21 years from the death of the last survivor of the descendants
of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James's, living on the date of this Agreement.
The Servicer shall promptly notify the Trustee of any prospective
termination pursuant to this Section 11.1.
(b) Notice of any termination, specifying the
Distribution Date upon which the Certificateholders may surrender
the Certificates to the Trustee for payment of the final
distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders and the Rating Agencies
mailed not earlier than the 15th day and not later than the 25th
day of the month next preceding the specified Distribution Date
stating the amount of any such final payment and that the Record
Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and
surrender of the Certificates at the office of the Trustee
therein specified. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to
Certificateholders amounts distributable on such Distribution
Date pursuant to Section 4.5. Amounts remaining after
distribution, or providing for distribution, to the
Certificateholders shall be distributed to the Seller.
(c) In the event that all of the Certificateholders
shall not surrender their Certificates for cancellation within
six months after the date specified in the above-mentioned
written notice, the Trustee shall give a second written notice to
the remaining Certificateholders to surrender their Certificates
for cancellation and receive the final distribution with respect
thereto. The Trustee shall after giving such notice deliver or
cause to be delivered to the Servicer the Certificate Register.
If within one year after the second notice all the Certificates
shall not have been surrendered for cancellation, the Servicer
may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof
shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any such funds held pending such
distribution shall be held uninvested. Any funds remaining in
the Trust after exhaustion of such remedies shall be distributed
by the Trustee to the Seller.
SECTION 11.2. OPTIONAL PURCHASE OF ALL RECEIVABLES.
In the event that the Pool Balance is 5% or less of the Original
Pool Balance as of the first day of any Collection Period, the
Seller shall have the option to purchase the corpus of the Trust
on any Distribution Date occurring in a subsequent Collection
Period. To exercise such option, the Seller shall deposit
pursuant to Section 4.3 the sum of the Class A Principal Balance
and the Class B Principal Balance plus accrued and unpaid
interest thereon into the Collection Account for the Distribution
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Date occurring in the month in which such repurchase is to be
effected. The payment shall be made in the manner specified in
Section 4.3, and shall be distributed pursuant to Section 4.5.
Upon such payment the Seller shall succeed to and own all
interests in and to the Trust and the Trust Property.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. AMENDMENT. (a) This 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 in this
Agreement or for the purpose of adding any provision to or
changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the
Certificateholders; PROVIDED, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Trustee,
materially and adversely affect the interests of any
Certificateholder; PROVIDED FURTHER, that any amendment within
the scope of Section 12.1(b)(i) or (ii) shall be deemed to
materially and adversely affect the interests of the
Certificateholders.
(b) This Agreement may also be amended from time to
time 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
this Agreement, or of modifying in any manner the rights of the
Certificateholders; PROVIDED, HOWEVER, that no such amendment
shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, or change the allocation or
priority 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. Promptly after the execution of any such
amendment or consent, the Trustee shall furnish written
notification of the substance of such amendment or consent to
each Certificateholder.
(c) It shall not be necessary for the consent of
Certificateholders pursuant to Section 12.1(b) to approve the
particular form of any proposed amendment or consent, but it
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shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Trustee
may prescribe.
(d) Notice of any amendment of this Agreement shall be
sent by the Servicer to the Rating Agencies, at such address as
the Rating Agencies may from time to time specify in writing.
(e) The Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's own
rights, duties or immunities under this Agreement or otherwise.
(f) In connection with any amendment pursuant to this
Section 12.1 the Trustee shall be entitled to receive an Opinion
of Counsel to the effect that such amendment is authorized or
permitted by the Agreement.
SECTION 12.2. PROTECTION OF TITLE TO TRUST. (a) The
Servicer shall cause to be executed and filed such financing
statements and cause to be executed and filed such continuation
statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the
interest of the Certificateholders and the Trustee under this
Agreement in the Trust Property and in the proceeds thereof. The
Servicer shall deliver (or cause to be delivered) to the Trustee
file-stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such
filing. In the event that the Servicer fails to perform its
obligations under this subsection, the Trustee may (but shall not
be obligated to) do so, at the expense of the Servicer.
(b) Neither the Seller nor the Servicer shall (nor
shall the Bank permit Valley National to) change its name,
identity or corporate structure in any manner that would, could
or might make any financing statement or continuation statement
filed by the Servicer in accordance with paragraph (a) above
seriously misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given the Trustee at least five
days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing
statements or continuation statements.
(c) Each of the Seller and the Servicer shall have an
obligation to give the Trustee at least 60 days' prior written
notice of any relocation of its principal executive office if, as
a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing
statement and shall promptly file any such amendment. The
Servicer shall at all times maintain each office from which it
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shall service Receivables, and its principal executive office,
within the United States of America.
(d) The Servicer shall maintain accounts and records
as to each Receivable accurately and in sufficient detail to
permit (i) the reader thereof to know at any time the status of
such Receivable, including payments and Recoveries made and
payments owing (and the nature of each) and (ii) reconciliation
between payments or Recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the
Collection Account in respect of such Receivable.
(e) The Servicer shall (and, with respect to the
Valley National Receivables, shall cause Valley National to)
maintain its computer systems so that, from and after the time of
sale under this Agreement of the Receivables to the Trustee, the
Servicer's and Subservicer's respective master computer records
(including any backup archives) that refer to a Receivable shall
indicate clearly that such Receivable is owned by the Trust.
Indication of the Trust's ownership of a Receivable shall be
deleted from or modified on the Seller's and the Servicer's
computer systems when, and only when, the Receivable shall be
paid or shall become a Purchased Receivable.
(f) If at any time the Seller or the Servicer shall
propose to sell, grant a security interest in or otherwise
transfer any interest in automobile receivables to any
prospective purchaser, lender or other transferee, the Servicer,
shall give or cause to be given to such prospective purchaser,
lender or other transferee computer tapes, records or printouts
(including any restored from backup archives) that, if they shall
refer in any manner whatsoever to any Receivable, shall indicate
clearly that such Receivable has been sold and is owned by the
Trust.
(g) The Servicer shall permit the Trustee and its
agents at any time during normal business hours to inspect, audit
and make copies of and abstracts from the Servicer's or any
subservicer's records regarding any Receivable.
(h) Upon request at any time the Trustee shall have
reasonable grounds to believe that such request is necessary in
connection with the performance of its duties under this
Agreement, the Servicer shall furnish to the Trustee, within five
Business Days, a list of all Receivables (by contract number and
name of Obligor) then held as part of the Trust, together with a
reconciliation of such list to the Schedule of Receivables and to
each of the Servicer's Certificates furnished before such request
indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee promptly
after the execution and delivery of this Agreement and of each
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amendment thereto, an Opinion of Counsel either (A) stating that,
in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the
Trustee in the Receivables, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such
details are given, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and
protect such interest.
(j) The Seller shall, to the extent required by
applicable law, cause the Certificates to be registered with the
Commission pursuant to Section 12(b) or Section 12(g) of the
Exchange Act within the time periods specified in such sections.
SECTION 12.3. LIMITATION ON RIGHTS OF
CERTIFICATEHOLDERS. (a) The death or incapacity of any
Certificateholder shall not operate to terminate this Agreement
or the Trust, or entitle the Certificateholder's legal
representatives or heirs to claim an accounting or to take any
action or commence any proceeding in any court for a partition or
winding up of the Trust, or otherwise affect the rights,
obligations and liabilities of the parties to this Agreement or
any of them.
(b) No Certificateholder shall have any right to vote
(except as expressly provided herein) or in any manner otherwise
control the operation and management of the Trust, or the
obligations of the parties to this Agreement, nor shall anything
set forth in this Agreement, or contained in the terms of the
Certificates, be construed so as to constitute the Holders as
partners or members of an association; nor shall any
Certificateholder be under any liability to any third party by
reason of any action taken pursuant to any provision of this
Agreement.
(c) No Certificateholder shall have any right by
virtue or by availing itself of any provisions of this Agreement
to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written
notice of default and of the continuance thereof, as hereinbefore
provided, and unless the Holders of the 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 shall have made written request
upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee under the Agreement and shall have
offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be
incurred therein or thereby, and the Trustee, for 30 days after
its receipt of such notice, request, and offer of indemnity,
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shall have neglected or refused to institute any such action,
suit or proceeding; no one or more Holders of Certificates shall
have any right in any manner whatever by virtue or by availing
itself or themselves of any provisions of this Agreement to
affect, disturb or prejudice the rights of the Holders of any
other of the Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder or to
enforce any right, under this Agreement, except in the manner
provided in this Agreement and for the equal, ratable, and common
benefit of all Class A Certificateholders or Class B
Certificateholders, as the case may be. For the protection and
enforcement of the provisions of this Section 12.3, each
Certificateholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.
SECTION 12.4. GOVERNING LAW. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER
THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 12.5. NOTICES. All demands, notices and
communications upon or to the Seller, the Servicer, the Trustee
or the Rating Agencies under this Agreement shall be in writing,
personally delivered, sent by overnight courier or mailed by
certified mail, return receipt requested, (or in the form of
telex or facsimile notice, followed by written notice delivered
as aforesaid) and shall be deemed to have been duly given upon
receipt (a) in the case of the Seller to Banc One ABS
Corporation, 100 East Broad Street, Columbus, Ohio 43271-0158,
(b) in the case of the Servicer, to Bank One, Arizona, NA, 241 N.
Central Avenue, Phoenix, Arizona 85001, Attention:
_______________________, facsimile ____________ (c) in the case
of the Trustee, at the Corporate Trust Office, facsimile
____________ (d) in the case of Moody's, to Moody's Investors
Service, Inc., to 99 Church Street, New York, New York 10004,
Attention of Asset Backed Securities Group, facsimile 212-553-0573
and (e) in the case of Standard & Poor's, to Standard &
Poor's Corporation, 26 Broadway (15th Floor), New York, New York
10004, Attention of Asset Backed Surveillance Department,
facsimile 212-208-0098; or, as to each of the foregoing, at such
other address as shall be designated by written notice to the
other parties.
SECTION 12.6. SEVERABILITY OF PROVISIONS. If any one
or more of the covenants, provisions or terms of this Agreement
shall be for any reason whatsoever held invalid, then such
covenants, provisions or terms shall be deemed severable from the
remaining covenants, provisions or terms of this Agreement, and
shall in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Certificates or the
rights of the Holders thereof.
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SECTION 12.7. ASSIGNMENT. Notwithstanding anything to
the contrary contained herein, except as provided in Sections
7.4, 8.3 and 8.5, this Agreement may not be assigned by the
Seller or the Servicer. This Agreement may not be assigned by
the Trustee except as provided by Sections 10.10 through 10.13
hereof.
SECTION 12.8. CERTIFICATES NONASSESSABLE AND FULLY
PAID. The interests represented by the Certificates shall be
nonassessable for any losses or expenses of the Trust or for any
reason whatsoever, and, upon authentication thereof by the
Trustee pursuant to Section 6.1, each Certificate shall be deemed
fully paid.
SECTION 12.9. INTENTION OF PARTIES. (a) The
execution and delivery of this Agreement shall constitute an
acknowledgment by the Seller and the Trustee, on behalf of the
Certificateholders, that it is intended that the assignment and
transfer herein contemplated constitute a sale and assignment
outright, and not for security, of the Receivables and the other
Trust Property, conveying good title thereto free and clear of
any liens, from the Seller to the Trustee, and that the
Receivables and the other Trust Property shall not be a part of
the estate of the Seller in the event of the insolvency,
receivership, conservatorship or the occurrence of another
similar event, of, or with respect to, the Seller. In the event
that such conveyance is determined to be made as security for a
loan made by the Trustee or the Certificateholders to the Seller,
the parties intend that the Seller shall have granted to the
Trustee a security interest in all of the Seller's right, title
and interest in and to the Trust Property conveyed to the Trustee
pursuant to Section 2.1 in order to secure the obligations under
the Certificates, and that this Agreement shall constitute a
security agreement under applicable law.
(b) The execution and delivery of this Agreement shall
constitute an acknowledgment by the Seller and the Trustee on
behalf of the Certificateholders that they intend that the Trust
be classified (for Federal tax purposes) as a grantor trust under
Subpart E, Part I of Subchapter J of the Code of which the
Certificateholders are owners, rather than as an association
taxable as a corporation. The powers granted and obligations
undertaken in this Agreement shall be construed so as to further
such intent.
SECTION 12.10. COUNTERPARTS. This Agreement may be
executed by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be an original, but
all such counterparts shall together constitute but one and the
same instrument.
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SECTION 12.11. COLLATERAL AGENT PROTECTION.
Notwithstanding anything contained herein to the contrary, the
Collateral Agent shall have the same rights and protection
afforded to the Trustee hereunder.
SECTION 12.12. LIMITATION OF LIABILITY OF TRUSTEE AND
COLLATERAL AGENT. Notwithstanding anything contained herein to
the contrary (i) this Agreement has been accepted by Bankers
Trust Company not in its individual capacity but solely as
Trustee and as Collateral Agent with respect to the Reserve Fund
and in no event shall Bankers Trust Company have any liability
for the representations, warranties, covenants, agreements or
other obligations of the Seller hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as
to all of which recourse shall be had solely to the assets of the
Seller and (ii) under no circumstances shall Bankers Trust
Company be liable for the payment of any indebtedness or expenses
of the Trust; PROVIDED, HOWEVER, nothing contained herein shall
relieve Bankers Trust Company of its obligations contained herein
in its capacity as successor Servicer, as Trustee and as
Collateral Agent.
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IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above
written.
BANC ONE ABS CORPORATION
as Seller
By:____________________________
Name:
Title:
BANK ONE, ARIZONA, NA
as Servicer
By:____________________________
Name:
Title:
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Trustee
By:_______________________________
Name:
Title:
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Collateral Agent
By:_______________________________
Name:
Title:
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SCHEDULE A
SCHEDULE OF RECEIVABLES
(delivered to the Trustee at Closing)
<PAGE>
SCHEDULE B
LOCATION OF RECEIVABLES
<PAGE>
EXHIBIT A
FORM OF CLASS A CERTIFICATE
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS
CERTIFICATE WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE
AT ANY TIME MAY BE LESS THAN THE AMOUNT BALANCE ON THE FACE HEREOF.
NUMBER A- $_______________ (of
CUSIP NO. __________ $______________ issued)
BANC ONE AUTO GRANTOR TRUST 1996-B
CLASS A ____% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of motor vehicle
retail installment sale contracts secured by new or used
automobiles, vans or light duty trucks.
(This Certificate does not represent an interest in or obligation
of Banc One ABS Corporation, Bank One, Arizona NA, the Trustee or
any of their respective affiliates, except to the extent described
below.)
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<PAGE>
THIS CERTIFIES THAT _________________ is the registered owner
of a $____________________ nonassessable, fully-paid, fractional
undivided interest in Banc One Auto Grantor Trust 1996-B (the
"Trust") formed pursuant to the Pooling and Servicing Agreement
(the "Agreement") dated as of June 1, 1996 among Banc One ABS
Corporation, as seller (the "Seller") Bank One, Arizona, NA, as
servicer (the "Servicer") and Bankers Trust Company, a New York
banking corporation, as Trustee and Collateral Agent, a summary of
certain of the pertinent provisions of which is set forth below.
To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates,
designated as the Class A ____% Asset Backed Certificates (herein
called the "Class A Certificates"), issued under the Agreement.
Also issued under the Agreement are Certificates designated as the
Class B ____% Asset Backed Certificates (the "Class B
Certificates"). The Class A Certificates and the Class B
Certificates are hereinafter collectively called the
"Certificates." The aggregate beneficial ownership interests in
the Trust evidenced by all Class A Certificates is ____%. This
Class A Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement to which Agreement
reference is hereby made for a statement of the respective rights
and obligations thereunder of the Seller, the Servicer, the Trustee
and Holders of the Class A Certificates.
The property of the Trust includes a pool of simple interest
motor vehicle retail installment sale contracts for new or used
automobiles, vans or light duty trucks (collectively, the
"Receivables"), all monies received under the Receivables on or
after the related Cutoff Date, security interests in the vehicles
financed thereby, certain bank accounts, the rights to proceeds
from certain insurance proceeds, the rights of the Trust under the
Agreement, the right to receive certain payments from funds
deposited in the Reserve Fund and all proceeds of the foregoing.
Under the Agreement, there will be distributed on the 15th day
of each month or, if such 15th day is not a Business Day, the next
Business Day (each, a "Distribution Date"), commencing on July 15,
1996, to the Person in whose name this Certificate is registered at
the close of business on the last day of the calendar month
preceding such Distribution Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the amount to
be distributed to Certificateholders on such Distribution Date.
It is the intent of the Seller, the Trustee and the
Certificateholders that the Trust be classified (for Federal tax
purposes) as a grantor trust under Subpart E, Part I of Subchapter
J of the Code of which the Class A Certificateholders are owners,
rather than as an association taxable as a corporation. The
Seller, the Servicer, the Trustee and the Certificateholders, by
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<PAGE>
acceptance of a Class A Certificate, agree to treat, and to take no
action inconsistent with the treatment of, the Certificates for
such tax purposes as interests in a grantor trust.
Distributions on this Certificate will be made as provided in
the Agreement by the Trustee by check mailed to the
Certificateholder of record in the Certificate Register without the
presentation or surrender of this Certificate or the making of any
notation hereon, except that with respect to Certificates
registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Except as
otherwise provided in the Agreement and notwithstanding the above,
the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office
or agency maintained for that purpose by the Trustee in the Borough
of Manhattan, the City of New York.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Trustee, by manual
signature, this Certificate shall not entitle the Holder hereof to
any benefit under the Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-3
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Certificate to be
duly executed.
Date:
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: ______________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the
within-mentioned Agreement.
Date:
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: ______________________________
Authorized Signatory
A-4
<PAGE>
(REVERSE OF CLASS A CERTIFICATE)
The Class A Certificates do not represent an obligation of, or
an interest in, any of the Seller, the Servicer, the Trustee or any
affiliates of any of them, and no recourse may be had against such
parties or their assets except as expressly set forth or
contemplated herein or in the Agreement. In addition, this
Certificate is limited in right of payment to certain collections
and recoveries with respect to the Receivables (and certain other
amounts), all as more specifically set forth herein and in the
Agreement. A copy of the Agreement may be examined by any
Certificateholder upon written request during normal business hours
at the principal office of the Seller and at such other places, if
any, designated by the Seller.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights
and obligations of the Seller, the Servicer and the Trustee and the
rights of the Certificateholders at any time 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. Any such
consent by the Holder of this Certificate shall be conclusive and
binding on such Holder and on all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof, whether or not notation
of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register upon surrender of this
Certificate for registration of transfer at the offices or agencies
maintained by the Trustee in the Borough of Manhattan, The City of
New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and duly executed by the Holder hereof
or such Holder's attorney duly authorized in writing, and thereupon
one or more new Class A Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued
to the designated transferee.
Except as provided in the Agreement, the Class A Certificates
are issuable only as registered certificates without coupons in
minimum denominations of $1,000 and integral multiples thereof;
PROVIDED, HOWEVER, that one Class A Certificate may be issued in a
denomination that represents any remaining portion of the Original
Class A Principal Balance. As provided in the Agreement and
subject to certain limitations therein set forth, Class A
Certificates are exchangeable for new Class A Certificates of
A-5
<PAGE>
authorized denominations evidencing the same aggregate
denomination, as requested by the Holder surrendering the same. No
service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof
for all purposes, and none of the Trustee or any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them
pursuant to the Agreement and the disposition of all property held
by the Trust. The Seller of the Receivables may at its option
purchase the corpus of the Trust at a price specified in the
Agreement, and such purchase of the Receivables and other property
of the Trust will effect early retirement of the Certificates;
however, such right of purchase is exercisable only on a
Distribution Date during a Collection Period subsequent to a
Collection Period in which the Pool Balance is 5% or less of the
Original Pool Balance as of the first day of such Collection
Period.
A-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including
postal zip code, of assignee)
________________________________________________________________________________
the within Class A Certificate, and all rights
thereunder, hereby irrevocably constituting and appointing
____________________________ to transfer said Class A Certificate
on the books of the Trustee, with full power of substitution in the
premises.
Dated:
___________________________________________*/
Medallion:
____________________________*/
_______________________
*/ NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears upon the face of the
within Class A Certificate in every particular, without alteration,
enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the
requirements of the Trustee, which requirements include membership
or participation in STAMP or such other "signature guarantee
program" as may be determined by the Trustee in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A-7
<PAGE>
EXHIBIT B
FORM OF CLASS B CERTIFICATE
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]
THIS CERTIFICATE MAY NOT BE DIRECTLY OR INDIRECTLY SOLD OR
TRANSFERRED TO, OR PURCHASED OR ACQUIRED BY, OR ON BEHALF OF
(1) ANY EMPLOYEE BENEFIT PLAN, RETIREMENT ARRANGEMENT, INDIVIDUAL
RETIREMENT ACCOUNT OR KEOGH PLAN WHICH IS SUBJECT TO EITHER TITLE
I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (EACH, A "PLAN"), OR (2) ANY ENTITY WHOSE SOURCE OF FUNDS
TO BE USED FOR THE PURCHASE OF THIS CLASS B CERTIFICATE INCLUDES
THE ASSETS OF ANY SUCH PLAN, OTHER THAN AN "INSURANCE COMPANY
GENERAL ACCOUNT" AS DEFINED IN, AND WHICH COMPLIES WITH THE
PROVISIONS OF, PROHIBITED TRANSACTION EXEMPTION 95-60.
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS
CERTIFICATE WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE
AT ANY TIME MAY BE LESS THAN THE AMOUNT BALANCE ON THE FACE HEREOF.
NUMBER B- $_______________ (of
CUSIP NO. __________ $_____________ issued)
BANC ONE AUTO GRANTOR TRUST 1996-B
CLASS B ____% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of motor vehicle
retail installment sale contracts secured by new or used
automobiles, vans or light duty trucks.
(This Certificate does not represent an interest in or obligation
of Banc One ABS Corporation, Bank One, Arizona NA, the Trustee or
any of their respective affiliates, except to the extent described
below.)
B-1
<PAGE>
THIS CERTIFIES THAT _________________ is the registered owner
of a $____________________ nonassessable, fully-paid, fractional
undivided interest in Banc One Auto Grantor Trust 1996-B (the
"Trust") formed pursuant to the Pooling and Servicing Agreement
(the "Agreement") dated as of June 1, 1996 among Banc One ABS
Corporation, as seller (the "Seller"), Bank One, Arizona, NA, as
servicer (the "Servicer") and Bankers Trust Company, a New York
banking corporation, as Trustee and Collateral Agent, a summary of
certain of the pertinent provisions of which is set forth below.
To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates,
designated as the Class B ____% Asset Backed Certificates (herein
called the "Class B Certificates"), issued under the Agreement.
Also issued under the Agreement are Certificates designated as the
Class A ____% Asset Backed Certificates (the "Class A
Certificates"). The Class A Certificates and the Class B
Certificates are hereinafter collectively called the
"Certificates." The aggregate beneficial ownership interests in
the Trust evidenced by all Class B Certificates is ___%. This
Class B Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement to which Agreement
reference is hereby made for a statement of the respective rights
and obligations thereunder of the Seller, the Servicer, the Trustee
and Holders of the Class B Certificates.
The property of the Trust includes a pool of simple interest
motor vehicle retail installment sale contracts for new or used
automobiles, vans or light duty trucks (collectively, the
"Receivables"), all monies received under the Receivables on or
after the Cutoff Date, security interests in the vehicles financed
thereby, certain bank accounts, the rights to proceeds from certain
insurance proceeds, the rights of the Trust under the Agreement,
the right to receive certain payments from funds deposited in the
Reserve Fund and all proceeds of the foregoing.
Under the Agreement, there will be distributed on the 15th day
of each month or, if such 15th day is not a Business Day, the next
Business Day (each, a "Distribution Date"), commencing on July 15,
1996, to the Person in whose name this Certificate is registered at
the close of business on the last day of the calendar month
preceding such Distribution Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the amount to
be distributed to Certificateholders on such Distribution Date.
It is the intent of the Seller, the Trustee and the
Certificateholders that the Trust be classified (for Federal tax
purposes) as a grantor trust under Subpart E, Part I of Subchapter
J of the Code of which the Class B Certificateholders are owners,
rather than as an association taxable as a corporation. The
Seller, the Servicer, the Trustee and the Certificateholders, by
B-2
<PAGE>
acceptance of a Class B Certificate, agree to treat, and to take no
action inconsistent with the treatment of, the Certificates for
such tax purposes as interests in a grantor trust.
Distributions on this Certificate will be made as provided in
the Agreement by the Trustee by check mailed to the
Certificateholder of record in the Certificate Register without the
presentation or surrender of this Certificate or the making of any
notation hereon, except that with respect to Certificates
registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Except as
otherwise provided in the Agreement and notwithstanding the above,
the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office
or agency maintained for that purpose by the Trustee in the Borough
of Manhattan, the City of New York.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Trustee, by manual
signature, this Certificate shall not entitle the Holder hereof to
any benefit under the Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
B-3
<PAGE>
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Certificate to be
duly executed.
Date:
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: ______________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Agreement.
Date:
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: ______________________________
Authorized Signatory
B-4
<PAGE>
(REVERSE OF CLASS B CERTIFICATE)
The Class B Certificates do not represent an obligation of, or
an interest in, any of the Seller, the Servicer, the Trustee or any
affiliates of any of them, and no recourse may be had against such
parties or their assets except as expressly set forth or
contemplated herein or in the Agreement. In addition, this
Certificate is limited in right of payment to certain collections
and recoveries with respect to the Receivables (and certain other
amounts), all as more specifically set forth herein and in the
Agreement. A copy of the Agreement may be examined by any
Certificateholder upon written request during normal business hours
at the principal office of the Seller and at such other places, if
any, designated by the Seller.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights
and obligations of the Seller, the Servicer and the Trustee and the
rights of the Certificateholders at any time 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. Any such
consent by the Holder of this Certificate shall be conclusive and
binding on such Holder and on all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof, whether or not notation
of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register upon surrender of this
Certificate for registration of transfer at the offices or agencies
maintained by the Trustee in the Borough of Manhattan, The City of
New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and duly executed by the Holder hereof
or such Holder's attorney duly authorized in writing, and thereupon
one or more new Class B Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued
to the designated transferee.
Except as provided in the Agreement, the Class B Certificates
are issuable only as registered certificates without coupons in
minimum denominations of $1,000 and integral multiples thereof;
PROVIDED, HOWEVER, that one Class B Certificate may be issued in a
denomination that represents any remaining portion of the Original
Class B Principal Balance. As provided in the Agreement and
subject to certain limitations therein set forth, Class B
Certificates are exchangeable for new Class B Certificates of
B-5
<PAGE>
authorized denominations evidencing the same aggregate
denomination, as requested by the Holder surrendering the same. No
service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof
for all purposes, and none of the Trustee or any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them
pursuant to the Agreement and the disposition of all property held
by the Trust. The Seller of the Receivables may at its option
purchase the corpus of the Trust at a price specified in the
Agreement, and such purchase of the Receivables and other property
of the Trust will effect early retirement of the Certificates;
however, such right of purchase is exercisable only on a
Distribution Date during a Collection Period subsequent to a
Collection Period in which the Pool Balance is 5% or less of the
Original Pool Balance as of the first day of such Collection
Period.
[By accepting and holding this Class B Certificate, the Holder
hereof shall be deemed to have represented and warranted that it is
it is not acquiring Class B Certificates, directly or indirectly,
for or on behalf of an ERISA Entity other than an "insurance
company general account" as defined in, and which complies with the
provisions of, Prohibited Transaction Exemption 95-60.]
[The transferee hereof of this Class B Definitive Certificate
will represent that it is not either (1) an employee benefit plan,
retirement arrangement, individual retirement account or keogh plan
which is subject to either Title I of ERISA, or Section 4975 of the
Code, or (2) any entity whose source of funds to be used for the
purchase of the Class B Certificate includes the assets of any such
Plan, other than an "Insurance Company General Account" as defined
in, and which complies with the provisions of, Prohibited
Transaction Exemption 95-60 issued by the United States Department
of Labor.]
B-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including
postal zip code, of assignee)
________________________________________________________________________________
the within Class B Certificate, and all rights
thereunder, hereby irrevocably constituting and appointing
____________________________ to transfer said Class B Certificate
on the books of the Trustee, with full power of substitution in the
premises.
Dated:
___________________________________________*/
Medallion:
____________________________*/
_______________________
*/ NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears upon the face of the
within Class B Certificate in every particular, without alteration,
enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the
requirements of the Trustee, which requirements include membership
or participation in STAMP or such other "signature guarantee
program" as may be determined by the Trustee in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
B-7
<PAGE>
EXHIBIT E
FORM OF BENEFIT PLAN AFFIDAVIT
Bankers Trust Company
4 Albany Street
New York, New York 10006
Bank One, Arizona, NA
201 N. Central Avenue
Phoenix, Arizona 85001
STATE OF ___________)
ss:
COUNTY OF __________)
Under penalties of perjury, I, the undersigned, declare
that, to the best of my knowledge and belief, the following
representations are true, correct, and complete.
1. That I am a duly authorized officer of _____________
(the "PURCHASER"), whose taxpayer identification number is
_________, and on behalf of which I have the authority to make this
affidavit.
2. That the Purchaser is acquiring a Class B
Certificate (the "CERTIFICATE") representing an interest in the
Trust.
3. That the Purchaser is not either (1) an employee
benefit plan, retirement arrangement, individual retirement account
or keogh plan which is subject to either Title I of ERISA, or
Section 4975 of the Code, or (2) any entity whose source of funds
to be used for the purchase of the Class B Certificate includes the
assets of any such Plan, other than an "Insurance Company General
Account" as defined in, and which complies with the provisions of,
Prohibited Transaction Exemption 95-60 issued by the United States
Department of Labor.
Capitalized terms used in and not otherwise defined
herein shall have the meaning assigned to them in the Pooling and
Servicing Agreement dated as of June 1, 1996 among Banc One ABS
Corporation, as seller, Bank One, Arizona, NA, as servicer and
Bankers Trust Company, as trustee.
E-1
<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this
instrument to be duly executed on its behalf, by its duly
authorized officer this ____ day of ___________, 19__.
___________________________________
By:________________________________
Its:_______________________________
Personally appeared before me ____________, known or
proved to me to be the same person who executed the foregoing
instrument and to be a ________________ of the Purchaser, and
acknowledged to me that he or she executed the same as his or her
free act and deed and as the free act and deed of the Purchaser.
Subscribed and sworn before me
this ____ day of ____________, 19__
_________________________________________
Notary Public
My commission expires the ____ day
of ___________________, 19__.
E-2
<PAGE>
EXHIBIT 5.1
June 17, 1996
Banc One ABS Corporation
Subject: Banc One Auto Grantor Trust 1996-B
Ladies and Gentlemen:
We have acted as counsel to Banc One ABS Corporation, an Ohio corporation
(the "Seller"), in connection with the negotiation, execution and delivery of
(a) the Pooling and Servicing Agreement dated as of June 1, 1996 (the "Pooling
and Servicing Agreement") by and among the Seller, Bank One, Arizona, NA, as
servicer, and Bankers Trust Company, as trustee (the "Trustee"), (b) the
Underwriting Agreement described in the Registration Statement and (c) the
Registration Statement dated May 10, 1996 (Registration No. 333-3457), as
amended (the "Registration Statement").
Pursuant to the Pooling and Servicing Agreement, the Seller is selling all
of its right, title and interest in a pool of retail receivables generated from
time to time pursuant to motor vehicle retail installment sale contracts (the
"Receivables") to the Trustee for the benefit of the holders of the
Certificates. Pursuant to the Underwriting Agreement, the Class A Certificates
and Class B Certificates (collectively, the "Certificates") described in the
Registration Statement are being sold in a public offering registered under the
Securities Act of 1933, as amended (the "1933 Act").
We are familiar with the corporate proceedings taken by the Seller in
connection with the foregoing agreement and the transactions contemplated
thereby. In addition, we have examined such corporate records, certificates of
corporate officers and governmental officials and other documents and such
questions of law as we have considered necessary or appropriate for the purpose
of this opinion.
On the basis of such examination and subject to the foregoing we are of the
opinion that assuming the due execution of the Pooling and Servicing Agreement
in substantially the form
<PAGE>
Banc One ABS Corporation
June 17, 1996
Page 2
presented to us, upon the issuance, authentication and delivery of the
Certificates in accordance with the provisions of the Pooling and Servicing
Agreement against payment therefor, the Certificates will be legally issued,
fully paid and non-assessable and entitled to the benefits of the Pooling and
Servicing Agreement, subject, as to enforceability to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other laws
affecting creditors' rights generally from time to time in effect and to general
principles of equity.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name and the reference to our firm
whenever it appears in such Registration Statement, including the Prospectus
constituting a part thereof, as originally filed or as subsequently amended.
Respectfully submitted,
SQUIRE, SANDERS & DEMPSEY
<PAGE>
EXHIBIT 8.1
June 17, 1996
Banc One ABS Corporation
RE: BANC ONE AUTO GRANTOR TRUST 1996-B
----------------------------------
Ladies and Gentlemen:
We have acted as special federal income tax counsel for Banc One ABS
Corporation, an Ohio corporation (the "Seller"), in connection with the
preparation and filing of a Registration Statement on Form S-3 (Registration No.
333-3457) (the "Registration Statement"), originally filed with the Securities
and Exchange Commission (the "Commission") on May 10, 1996, as amended by
Amendment No. 1 to the Registration Statement to be filed with the Commission
("Amendment No. 1"). The Registration Statement relates to the offering of
Class A Asset Backed Certificates and Class B Asset Backed Certificates (the
"Certificates"). The Certificates will be issued pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") by and among the
Seller, Bank One, Arizona, NA, as seller and Bankers Trust Company, as trustee.
In that connection, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary or appropriate for the
purposes of this opinion, including (a) a prospectus included in Amendment No. 1
relating to the Certificates (the "Prospectus"), (b) the form of the Pooling and
Servicing Agreement filed as an exhibit to Amendment No. 1 and, (c) the form of
the Certificates (included as exhibits to the Pooling and Servicing Agreement).
Based upon the foregoing, we hereby confirm that the statements in the
Prospectus under the heading "FEDERAL INCOME TAX CONSEQUENCES," to the extent
they constitute matters of law or legal conclusions with respect thereto, are
correct.
<PAGE>
Banc One ABS Corporation
June 17, 1996
Page 2
We hereby consent to the use of our name in the Prospectus under the
headings "FEDERAL INCOME TAX CONSEQUENCES" and "LEGAL MATTERS" and to the filing
of this opinion as an exhibit to the Registration Statement.
Respectfully submitted,
SQUIRE, SANDERS & DEMPSEY
<PAGE>
EXHIBIT 10-1
LOAN SALE AGREEMENT dated as of June 1, 1996 (this
"Agreement") between BANK ONE, ARIZONA, NA, a national
banking association, as seller (the "Seller") and BANC ONE
ABS CORPORATION, an Ohio corporation, as purchaser (the
"Purchaser").
WHEREAS, the Purchaser desires to purchase, and the Seller is willing to
sell, the receivables evidencing the motor vehicle installment sales contracts
identified on Schedule A to this Agreement and the Assignment (as hereinafter
defined) (the "Receivables"); and
WHEREAS, following such purchase the Purchaser intends to sell, transfer,
assign, set over and otherwise convey the Receivables to Bankers Trust Company,
as trustee (the "Trustee") on behalf of Banc One Auto Grantor Trust 1996-B (the
"Trust") pursuant to that certain Pooling and Servicing Agreement dated as of
June 1, 1996 among the Purchaser, as seller, the Seller as servicer, and the
Trustee, as trustee (the "Pooling and Servicing Agreement");
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Capitalized terms used but not defined herein are defined in the Pooling
and Servicing Agreement, which also contains rules as to usage and construction
that shall be applicable herein. In addition, the following terms have the
following meanings:
"Agreement" is defined in the Preamble to this Agreement.
"Assignment" is defined in Section 2.1(a).
"Governmental Authority" means the United States of America, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and having jurisdiction over the applicable Person.
"Purchased Receivable" means any Receivable repurchased by the Seller
pursuant to Section 2.5.
"Purchaser" is defined in the Preamble to this Agreement.
"Receivables" is defined in the first WHEREAS clause of this Agreement.
"Receivable File" means the documents specified in Section 2.6.
<PAGE>
"Requirements of Law" with respect to any Person shall mean the certificate
of incorporation or articles of association and bylaws or other organizational
or governing documents of such Person, and any law, treaty, rule or regulation,
or determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, State or local (including usury laws, the Federal Truth in
Lending Act and Regulation Z and Regulation B of the Board of Governors of the
Federal Reserve System).
"Sale Amount" is defined in Section 2.2.
"Secured Obligations" is defined in Section 2.1(d).
"Seller" is defined in the Preamble to this Agreement.
"Trust" is defined in the second WHEREAS clause of this Agreement.
"Trustee" is defined in the second WHEREAS clause of this Agreement.
"UCC" means the Uniform Commercial Code in effect in the State of Arizona.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1 CONVEYANCE OF RECEIVABLES.
(a) Upon the terms and subject to the conditions set forth herein and in
consideration of the Purchaser's delivery to or upon the order of the Seller of
the Sale Amount described in Section 2.2, the Seller does hereby, as evidenced
by a duly executed written assignment in the form of Exhibit A (the
"Assignment"), sell, transfer, assign, set over and otherwise convey to the
Purchaser, without recourse (subject to the obligations herein) all its right,
title and interest in, to and under: (i) the Receivables existing on the Cutoff
Date and listed on Schedule A to this Agreement and the Assignment and all
monies due or to become due with respect thereto and the related computer file
or microfiche list, and all proceeds (including "proceeds" as defined in the
UCC, and Recoveries); (ii) all right, title and interest of the Seller in the
security interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Seller in the Financed Vehicles; (iii)
the interest of the Seller in any proceeds with respect to the Receivables from
claims on any physical damage, theft, credit life or disability insurance
policies covering Financed Vehicles or Obligors; (iv) the interest of the Seller
in any proceeds from any Receivable repurchased by a Dealer, pursuant to a
Dealer Agreement, as a result of a breach of representation or warranty in the
related Dealer Agreement or a default by an Obligor resulting in the
repossession of the Financed Vehicle under such Dealer Agreement; and (v) the
proceeds of any and all of the foregoing. The foregoing does not constitute and
is not intended to result in the creation or assumption by the Purchaser of any
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obligation of the Seller or any other Person in connection with the Receivables
or under any agreement or instrument relating thereto, including any obligation
to Obligors or insurers.
(b) In connection with the foregoing sale, the Seller agrees to record and
file, from time to time, at its own expense, one or more financing statements
with respect to the Receivables and the other property described in Section
2.1(a) sold by the Seller hereunder meeting the requirements of applicable state
law in such manner and in such jurisdictions as are necessary to perfect and
protect the interests of the Purchaser created hereby under the UCC against all
creditors of and purchasers from the Seller, and to deliver a file-stamped copy
of such financing statements or other evidence of such filings to the Purchaser
promptly after the same has been filed.
(c) In connection with the sale and conveyance hereunder, the Seller
agrees, at its own expense, on or prior to the execution of this Agreement, to
indicate or cause to be indicated clearly and unambiguously in its accounting
and master data processing records that such Receivables and the other property
described in Section 2.1(a) have been sold to the Purchaser pursuant to this
Agreement as of the Cutoff Date.
(d) It is the express intent of the Seller and the Purchaser that the
conveyance of the Receivables by the Seller to the Purchaser pursuant to this
Agreement be construed as a sale of such Receivables by the Seller to the
Purchaser. It is, further, not the intention of the Seller and the Purchaser
that such conveyance be deemed a grant of a security interest in the Receivables
by the Seller to the Purchaser to secure a debt or other obligation of the
Seller. However, in the event that, notwithstanding the intent of the parties,
a court of competent jurisdiction determines that the Receivables continue to be
property of the Seller, then (i) this Agreement also shall be deemed to be and
hereby is a security agreement within the meaning of the UCC; and (ii) the
conveyance by the Seller provided for in this Agreement shall be deemed to be
and the Seller hereby grants to the Purchaser a security interest in and to all
of the Seller's right, title and interest in (x) all Receivables outstanding on
the Cutoff Date and all rights (but not the obligations) relating to such
Receivables, (y) all monies due or to become due with respect thereto and (z)
all proceeds of the foregoing, to secure the rights of the Purchaser to recover
all Collections and other property or payments received from time to time in
respect of the Receivables purported to be conveyed hereunder (the "Secured
Obligations"). The Seller and the Purchaser shall, to the extent consistent
with this Agreement, take such actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in the Receivables,
such security interest would be deemed to be a perfected security interest of
first priority in favor of the Purchaser under applicable law and will be
maintained as such throughout the term of this Agreement. The Seller and the
Purchaser may rely upon an Opinion of Counsel addressed to them as to what is
required to provide the Purchaser with such security interest.
SECTION 2.2 CONSIDERATION FOR CONVEYANCE OF RECEIVABLES. In
consideration of the Seller's conveyance to the Purchaser of the Receivables,
the Purchaser shall deliver to the Seller on or prior to the Closing Date the
sale amount ("Sale Amount") for such Receivables as determined pursuant to
Exhibit B hereto, which is hereby incorporated herein.
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SECTION 2.3 REPRESENTATIONS AND WARRANTIES OF THE SELLER RELATING TO THE
SELLER. The Seller hereby represents and warrants to the Purchaser as of the
Closing Date that:
(a) ORGANIZATION AND GOOD STANDING. The Seller is a national banking
association validly existing under the laws of the United States and has, in all
material respects, full power and authority to own its properties and conduct
its consumer revolving lending business as such properties are presently owned
and such business is presently conducted, and to execute, deliver and perform
its obligations under this Agreement.
(b) DUE QUALIFICATION. The Seller is duly qualified to do business and is
in good standing as a foreign corporation (or is exempt from such requirements),
and has obtained all necessary licenses and approvals, in each jurisdiction in
which failure to so qualify or to obtain such licenses and approvals would
render any agreement relating to any Receivable unenforceable by the Seller or
the Purchaser, the Trustee or any Certificateholder or would have a material
adverse effect on the interests of the Purchaser, the Trustee or any
Certificateholder; PROVIDED, HOWEVER, that no representation or warranty is made
with respect to any qualifications, licenses or approvals which the Trustee or
the Purchaser has or may be required at any time to obtain, if any.
(c) DUE AUTHORIZATION. The execution and delivery by the Seller of this
Agreement have been duly authorized by all necessary corporate action on the
part of the Seller.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and
binding obligation of the Seller, enforceable against the Seller in accordance
with its terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, receivership, liquidation and other similar laws
affecting enforcement of the rights of creditors generally and to equitable
limitations on the availability of specific remedies.
(e) NO CONFLICT. The execution and delivery by the Seller of this
Agreement, the performance by the Seller of the transactions contemplated by
this Agreement and the fulfillment by the Seller of the terms hereof applicable
to it will not violate the organizational documents of the Seller or result in
any breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time or both) a material default under, any material
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which the Seller is a party or by which it or any of its properties are bound.
(f) NO VIOLATION. The execution and delivery by the Seller of this
Agreement, the performance by the Seller of the transactions contemplated by
this Agreement and the fulfillment by the Seller of the terms hereof applicable
to it will not violate in any material respect any Requirements of Law
applicable to the Seller.
(g) NO PROCEEDINGS. There are no proceedings or investigations pending
or, to the best knowledge of the Seller, threatened against the Seller, before
any Governmental Authority (i) asserting the invalidity of this Agreement, (ii)
seeking to prevent the consummation by the Seller of any of the transactions
contemplated by this Agreement, (iii) seeking any determination or ruling that,
in the reasonable judgment of the Seller, would materially and adversely affect
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the performance of its obligations under this Agreement or (iv) seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Agreement.
(h) ALL CONSENTS REQUIRED. All authorizations, consents, orders or other
actions of any Person or of any Governmental Authority required to be obtained
by the Seller in connection with the execution and delivery by the Seller of
this Agreement, the performance by the Seller of the transactions contemplated
by this Agreement and the fulfillment by the Seller of the terms hereof, have
been obtained.
(i) INSOLVENCY. No Insolvency Event with respect to the Seller has
occurred and the transfer of the Receivables by the Seller to the Purchaser has
not been made in contemplation of the occurrence thereof.
The representations and warranties set forth in this Section 2.3 shall
survive the transfer and assignment of the Receivables to the Purchaser and the
subsequent transfers and assignments of the Receivables to the Trustee, on
behalf of the Trust. Upon discovery by a responsible officer of the Seller of a
breach of any of the representations and warranties set forth in this
Section 2.3, the Seller shall give prompt written notice to the Purchaser within
three Business Days following such discovery. The Seller agrees to cooperate
with the Purchaser in attempting to cure any such breach.
SECTION 2.4 REPRESENTATIONS AND WARRANTIES OF THE SELLER RELATING TO THE
RECEIVABLES. The Seller makes the following representations and warranties as
to the Receivables on which the Purchaser is deemed to have relied in acquiring
the Receivables. Unless otherwise indicated, such representations and
warranties speak as of the execution and delivery of the Agreement, but shall
survive the sale, transfer and assignment of the Receivables to the Purchaser
and any subsequent assignment or assignments by the Purchaser to the Trustee, on
behalf of the Trust.
(a) TITLE. It is the intention of the Seller that the transfer and
assignment herein contemplated constitute a sale of the Receivables from the
Seller to the Purchaser and that the beneficial interest in and title to such
Receivables not be part of the debtor's estate in the event of the filing of a
petition for receivership by or against the Seller. No Receivable has been
sold, transferred, assigned or pledged by the Seller to any Person other than
the Purchaser. Immediately prior to the transfer and assignment herein
contemplated, the Seller had good and marketable title to each Receivable, free
and clear of all Liens and, immediately upon the transfer thereof, the Purchaser
shall have good and marketable title to each such Receivable, free and clear of
all Liens; and the transfer of the Receivables to the Purchaser has been
perfected under the UCC.
(b) ALL FILINGS MADE. All filings (including UCC filings) necessary in
any jurisdiction to give the Purchaser a perfected ownership interest in the
Receivables, and to give the Purchaser a first priority perfected security
interest in the Receivables, shall have been made.
(c) CHARACTERISTICS OF RECEIVABLES. Each Receivable (i) has been
originated either by a Dealer in the regular course of such Dealer's business
and purchased from such Dealer by
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the Seller in the ordinary course of the Seller's business or originated by the
Seller in the ordinary course of the Seller's business, and each Obligor was
approved in accordance with the Seller's standard underwriting procedures in
effect at the time such Receivable was originated, acquired or purchased, (ii)
has created or shall create a valid, subsisting and enforceable first priority
security interest in favor of the Seller in the Related Financed Vehicle, which
security interest is assignable by the Seller to the Purchaser, (iii) contains
customary and enforceable provisions under the laws of the State governing such
Receivables such that the rights and remedies of the holder thereof are adequate
for realization against the collateral of the benefits of the security, and
(iv) provides for equal monthly payments at a fixed rate of interest that fully
amortizes the Amount Financed by maturity and yields interest at the Annual
Percentage Rate assuming payments are made on the due date thereof.
(d) SCHEDULE OF RECEIVABLES. The information set forth in Schedule A to
this Agreement and the Assignment is true and correct in all material respects
as of the opening of business on the Cutoff Date and no selection procedures
adverse to the Certificateholders were utilized in selecting the Receivables.
The Computer Tape regarding the Receivables is true and correct in all material
respects as of the Cutoff Date.
(e) COMPLIANCE WITH LAW. Each Receivable complied at the time it was
originated or made and at the Closing Date complies in all material respects
with all requirements of applicable Federal, State and local laws and
regulations thereunder, including usury laws, the Federal Truth-in-Lending Act,
the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act,
the Federal Reserve Board's Regulations B, Z and AA, State adaptations of the
Uniform Consumer Code, the Arizona Consumer Fraud Act, Title 6 of the Arizona
Revised Statutes and other applicable consumer credit laws and equal credit
opportunity and disclosure laws.
(f) BINDING OBLIGATION. As of the Cutoff Date, each Receivable represents
the legal, valid and binding payment obligation in writing of the Obligor
thereunder, enforceable by the holder thereof in accordance with its terms
except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization and similar laws
now or hereafter in effect related to or affecting creditors' rights generally
and subject to general principles of equity (whether applied in a proceeding at
law or in equity).
(g) NO GOVERNMENT OBLIGOR. As of the Cutoff Date, none of the Receivables
is due from the United States of America or any State or from any agency,
department or instrumentality of the United States of America or any State.
(h) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to the sale,
assignment and transfer thereof, each Receivable shall be secured by a validly
perfected first priority security interest in the Related Financed Vehicle in
favor of the Seller as secured party or all necessary and appropriate actions
have been commenced that would result in the valid perfection of a first
security interest in the Related Financed Vehicle in favor of the Seller as
secured party.
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(i) RECEIVABLES IN FORCE. As of the Cutoff Date, no Receivable has been
satisfied, subordinated or rescinded, nor has any Financed Vehicle been released
from the Lien granted by the related Receivable in whole or in part unless
another vehicle has been substituted as collateral securing the Receivable
without any other modification to such Receivable.
(j) NO WAIVER. As of the Cutoff Date, no provision of a Receivable has
been waived except as reflected in the Receivable File relating to such
Receivable.
(k) NO DEFENSES. As of 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.
(l) NO LIENS. The Seller shall not have 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.
(m) NO DEFAULT. No Receivable will have a payment that is more than [90]
days overdue as of the Cutoff Date and, except as permitted in this paragraph,
no default, breach, violation or event (in any such case) permitting
acceleration under the terms of any Receivable has occurred; and no continuing
condition that with notice or the lapse of time would constitute a default,
breach, violation or event (in any such case) permitting acceleration under the
terms of any Receivable has arisen as of the Cutoff Date; and the Seller has not
waived and shall not waive any of the foregoing.
(n) MATURITY OF RECEIVABLES. The weighted average original maturity of
the Receivables is _______ months as of the Cutoff Date; the weighted average
remaining term of the Receivables is _______ months as of the Cutoff Date; and
the latest scheduled maturity of any Receivable shall be no later than the Final
Scheduled Maturity Date.
(o) NO BANKRUPTCIES. No Obligor on any Receivable was noted in the
related Receivable File as having filed for bankruptcy in a proceeding which
remained undischarged as of the Cutoff Date.
(p) NO REPOSSESSIONS. As of the Cutoff Date, no Financed Vehicle securing
any Receivable is in repossession status.
(q) CHATTEL PAPER. Each Receivable constitutes "chattel paper" as defined
in the UCC.
(r) APR. The weighted average APR of the Receivables as of the Cutoff
Date is approximately _____%.
(s) PAID AHEAD. As of the Cutoff Date, no Receivable is more than six
months paid ahead.
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(t) PRINCIPAL BALANCE. The average principal balance of the Receivable as
of the Cutoff Date is $_________. The aggregate Cutoff Date Principal Balance
of the Receivables is $___________. As of the Cutoff Date, each Receivable has
a principal balance between $__________ and $___________.
(u) FINANCING. Approximately ____% of the Aggregate Cutoff Date Principal
Balance of the Receivables, constituting approximately ____% of the number of
Receivables as of the Cutoff Date, represents financing of new vehicles; the
remainder of the Receivables represents financing of used vehicles.
(v) INSURANCE. The Seller, in accordance with its customary procedures,
has determined that the Obligor, at the time the Related Receivable was
originated, obtained, applied for or made arrangements to obtain physical damage
insurance covering the Related Financed Vehicle and under the terms of the
Related Receivable the Obligor is required to maintain such insurance.
(w) LAWFUL ASSIGNMENT. No Receivable has been originated in, or as of the
Cutoff Date is subject to the laws of, any jurisdiction under which the sale,
transfer and assignment of such Receivable or this Agreement is unlawful, void
or voidable.
(x) NO INSURANCE PREMIUMS. As of the Cutoff Date, no portion of the
Amount Financed of any Receivable included amounts attributable to the payment
of any physical damage or theft insurance premium.
(y) ONE ORIGINAL. There is only one original executed copy of each
Receivable.
(z) LOCATION OF RECEIVABLE FILES. The Receivable Files are kept at one or
more of the locations listed in Schedule B.
(aa) COMPUTER RECORDS. As of the Closing Date, the accounting and computer
records of the Seller relating to the Receivables have been marked to show the
transfer of the Receivables to the Purchaser.
SECTION 2.5 REPURCHASE UPON BREACH. The Seller shall inform the
Purchaser upon the discovery of any breach of the Seller's representations and
warranties made pursuant to Section 2.4. Unless any such breach shall have been
cured within 60 days following the discovery thereof by the Purchaser or receipt
by the Purchaser of written notice from the Seller of such breach, the Seller
shall be obligated to repurchase any Receivable in which the interests of the
Purchaser or the Certificateholders are materially and adversely affected by any
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). In consideration of and
simultaneously with the repurchase of the Receivable, the Seller shall remit to
the Purchaser the Purchase Amount in the manner specified in Section 4.3 of the
Pooling and Servicing Agreement and the Purchaser shall execute such assignments
and other documents reasonably requested by the Seller in order to effect such
repurchase. The sole remedy of the Purchaser with respect to a breach of
representations and warranties pursuant
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to Section 2.4 and the agreement contained in this Section shall be to require
the Seller to repurchase Receivables pursuant to this Section, subject to the
conditions contained herein.
SECTION 2.6 CUSTODY OF RECEIVABLE FILES. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Purchaser
hereby revocably appoints the Seller, and the Seller hereby accepts such
appointment, to act as the agent of the Purchaser as custodian of the following
documents or instruments which are hereby constructively delivered to the
Purchaser with respect to each Receivable:
(a) the original executed copy of the Receivable;
(b) a record of the information supplied by the Obligor in the original
credit application;
(c) the original certificate of title or such documents that the Seller
shall keep on file, in accordance with its customary procedures, evidencing the
security interest of the Seller in the Financed Vehicle (it being understood
that the original certificates of title or other documents evidencing the
Seller's security interest in the Financed Vehicle generally are not delivered
to the Seller for [90 days] but that promptly upon delivery they shall be
delivered to the Seller as custodian hereunder); and
(d) any and all other documents that the Seller shall keep on file, in
accordance with its customary procedures, relating to a Receivable, an Obligor
or a Financed Vehicle.
SECTION 2.7 DUTIES OF SELLER TO SERVE AS CUSTODIAN.
(a) SAFEKEEPING. The Seller shall hold the Receivable Files on behalf of
the Purchaser and maintain such accurate and complete accounts, records and
computer systems pertaining to each Receivable File as shall enable the Seller
to comply with this Agreement. In performing its duties as custodian the Seller
shall act with reasonable care, using that degree of skill and attention that
the Seller exercises with respect to all comparable automotive receivables that
the Seller services for itself or others, except that the Seller shall not be
obligated, and does not intend, to (i) pay any premium for force-placed
insurance concerning any Financed Vehicle or (ii) monitor any Obligor's
maintenance of insurance. The Seller shall conduct, or cause to be conducted,
periodic audits of the Receivable Files held by it under this Agreement and of
the related accounts, records and computer systems, in such a manner as shall
enable the Purchaser to verify the accuracy of the Seller's record keeping. The
Seller shall promptly report to the Purchaser any failure on its part to hold
the Receivable Files and maintain its accounts, records and computer systems as
herein provided and promptly take appropriate action to remedy any such failure.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Seller shall maintain each
Receivable File at one of its offices specified in Schedule B or at such other
office as shall be specified to the Purchaser by written notice not later than
90 days after any change in location. Upon reasonable prior notice, the Seller
shall make available to the Purchaser or its respective duly authorized
representatives, attorneys or auditors a list of locations of the Receivable
Files
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and records and computer systems maintained by the Seller at such times during
normal business hours as the Purchaser shall instruct.
(c) RELEASE OF DOCUMENTS. Upon written instruction from the Purchaser,
the Seller shall release any Receivable File to the Purchaser or its designee,
as the case may be, at such place or places as the Purchaser may designate, as
soon as practicable and upon the release and delivery of any such document in
accordance with the instructions of the Purchaser, the Seller shall be released
from any further liability and responsibilities under this Section 2.7 with
respect to such documents unless and until such time as such document may be
returned to the Seller.
SECTION 2.8 INSTRUCTIONS; AUTHORITY TO ACT. The Seller shall be deemed
to have received proper instructions with respect to the Receivable Files upon
its receipt of written instructions signed by an authorized officer of the
Purchaser.
SECTION 2.9 CUSTODIAN'S INDEMNIFICATION. The Seller as custodian shall
indemnify and hold harmless the Purchaser, any assignee of the Purchaser and
each of their officers, directors, employees and agents for any and all
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses (including reasonable attorneys' fees and expenses) that may be imposed
on, incurred by or asserted against the Purchaser, any assignee of the Purchaser
or any of their respective officers, directors, employees and agents as the
result of any improper act or omission in any way relating to the maintenance
and custody by the Seller as custodian of the Receivable Files where the final
determination that any such improper act or omission by the Seller which
resulted in such liability, obligation, loss, damage, payment, cost or expense
is established by a court of law, by an arbitrator or by way of settlement
agreed to by the Seller; PROVIDED, HOWEVER, that the Seller shall not be liable
to the Purchaser or any such assignee for any portion of any such amount
resulting from the willful misfeasance, bad faith or negligence of the Purchaser
or any assignee of the Purchaser, including the Trustee. This provision shall
not be considered to limit the Seller's or any other party's rights,
obligations, liabilities, claims or defenses which arise as a matter of law or
pursuant to any other provision of this Agreement.
SECTION 2.10 EFFECTIVE PERIOD AND TERMINATION. The Seller's appointment
as custodian shall become effective as of the Cutoff Date and shall continue in
full force and effect until terminated by the Purchaser pursuant to this Section
2.10. As soon as practicable after any termination of such appointment, the
Seller shall deliver the Receivable Files with respect to which the Seller's
appointment as custodian has been terminated to the Purchaser or to the
Purchaser's agent at such place or places as the Purchaser may reasonably
designate in writing. If the Seller shall be terminated as custodian hereunder
for any reason but shall continue to serve as Servicer under the Pooling and
Servicing Agreement, the Purchaser shall, or shall cause its agent to, make the
Receivable Files with respect to which the Seller's appointment as custodian has
been terminated available to the Servicer during normal business hours upon
reasonable notice so as to permit the Servicer to perform its obligations as
Servicer under the Pooling and Servicing Agreement.
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ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.1 DUTIES OF SERVICER. The Servicer shall service the
Receivables pursuant to the terms, conditions and provisions of the Pooling and
Servicing Agreement.
ARTICLE IV
OTHER MATTERS RELATING TO THE SELLER
SECTION 4.1 LIABILITY OF THE SELLER. The Seller shall be liable in all
respects for the obligations, covenants, representations and warranties of the
Seller arising under or related to this Agreement. The Seller shall be liable
only to the extent of the obligations specifically undertaken by it pursuant to
this Agreement.
SECTION 4.2 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, THE SELLER.
(a) The Seller shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person unless the corporation formed by such consolidation or
into which the Seller is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Seller substantially as an entirety
shall be, if the Seller is not the surviving entity, a corporation, banking
corporation or banking association organized and existing under the laws of the
United States or any State and such corporation, banking corporation or banking
association shall expressly assume, by an agreement supplemental hereto,
executed and delivered to the Purchaser, in form reasonably satisfactory to the
Purchaser, the performance of every covenant and obligation of the Seller
hereunder.
(b) The obligations of the Seller hereunder shall not be assignable nor
shall any Person succeed to the obligations of the Seller hereunder except in
each case in accordance with the provisions of the foregoing paragraph.
SECTION 4.3 LIMITATIONS ON LIABILITY OF THE SELLER. Subject to Section
4.1, neither the Seller nor any of the directors, officers, employees or agents
of the Seller shall be under any liability to the Purchaser, the Trust, the
Trustee, the Certificateholder or any other Person for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement; PROVIDED, HOWEVER, that this provision shall not protect the Seller
or any such Person against any liability which would otherwise be imposed by
reason of wilful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of reckless disregard of obligations and duties
hereunder. The Seller and any director, officer, employee or agent of the
Seller may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person (other than the Seller) respecting any
matters arising hereunder.
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ARTICLE V
MISCELLANEOUS
SECTION 5.1 AMENDMENT. This Agreement may only be amended by the
parties hereto in writing.
SECTION 5.2 NOTICES. All demands, notices and communications upon or to
the Seller or the Purchaser under this Agreement shall be in writing and
personally delivered or mailed by certified mail, return receipt requested (or
in the form of telex or facsimile notice, followed by written notice delivered
as aforesaid) and shall be deemed to have been duly given upon receipt: (a) in
the case of the Purchaser, to Banc One ABS Corporation,
___________________________________________, Attention: Chief Financial Officer
(telephone: (___) ________; facsimile: (___) ________); and (b) in the case of
the Seller, to Bank One, Arizona, NA, ___________________________, __________,
Arizona, ____, Attention: __________, (telephone: (___) ________; facsimile:
(___) ________); or, as to each of the foregoing, at such other address as shall
be designated by written notice to the other parties.
SECTION 5.3 ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, this Agreement may be assigned by the Purchaser at any time
without the consent of the Seller upon five (5) Business Days prior written
notice to the Seller and Seller. Except as provided in Section 4.2, the
obligations of the Seller hereunder may not be assigned without the prior
written consent of the Purchaser. The Seller hereby acknowledges and consents
to the assignment by the Purchaser of any or all of the Purchaser's rights and
obligations under this Agreement to the Trustee for the benefit of the Trust and
the Certificateholders.
SECTION 5.4 LIMITATIONS ON RIGHTS OF OTHERS. Except as provided in
Section 5.3, the provisions of this Agreement are solely for the benefit of the
parties hereto and nothing in this Agreement, whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy or
claim under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 5.5 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 5.6 SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 5.7 HEADINGS. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions
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<PAGE>
hereof. References to Articles, Sections, Exhibits or Schedules are references
to Articles, Sections, Exhibits or Schedules in or to this Agreement unless
otherwise specified.
SECTION 5.8 MERGER AND INTEGRATION. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified except as provided herein.
SECTION 5.9 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Arizona, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
BANC ONE ABS CORPORATION,
in its capacity as Purchaser
By:
-------------------------------------
Its:
------------------------------------
BANK ONE, ARIZONA, NA, in its
capacity as Seller
By:
-------------------------------------
Its:
------------------------------------
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<PAGE>
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Loan Sale Agreement (the
"Agreement") dated as of June 1, 1996, between BANK ONE, ARIZONA, NA (the
"Seller") and BANC ONE ABS CORPORATION (the "Purchaser"), the Seller does hereby
sell, transfer, assign, set over and otherwise convey to the Purchaser, without
recourse (subject to its obligations under the Agreement) all its right, title
and interest in, to and under: (i) the Receivables existing on the Cutoff Date
and listed on Schedule A hereto, and all moneys due or to become due with
respect thereto and the related computer file or microfiche list, and all
proceeds (including "proceeds" as defined in the UCC, and Recoveries thereon);
(ii) all right, title and interest of the Seller in the security interests in
the Financed Vehicles granted by Obligors pursuant to the Receivables and any
other interest of the Seller in the Financed Vehicles; (iii) the interest of the
Seller in any proceeds with respect to the Receivables from claims on any
physical damage, theft, credit life or disability insurance policies covering
Financed Vehicles or Obligors; (iv) the interest of the Seller in any proceeds
from any Receivable repurchased by a Dealer, pursuant to a Dealer Agreement, as
a result of a breach of representation or warranty in the related Dealer
Agreement or a default by an Obligor resulting in the repossession of the
Financed Vehicle under such Dealer Agreement; and (v) the proceeds of any and
all of the foregoing.
The foregoing sale does not constitute and is not intended to result in the
creation or assumption by the Purchaser of any obligations of the Seller or any
other Person in connection with the Receivables or under any agreement or
instrument relating thereto, including any obligation to Obligors or insurers.
This assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Agreement and is to be governed by the Agreement.
Capitalized terms used but not defined herein shall have the meaning
assigned to them in the Agreement, which also contains rules as to usage that
shall be applicable herein.
IN WITNESS WHEREOF, the undersigned has caused this assignment to be duly
executed as of June 1, 1996.
BANK ONE, ARIZONA, NA, as Seller
By:
-------------------------------------
Its:
------------------------------------
<PAGE>
SCHEDULE A
DESCRIPTION OF RECEIVABLES
[To be provided by Seller for Receivables to be transferred
as of the Cutoff Date]
<PAGE>
SCHEDULE B
LOCATION OF RECEIVABLE FILES
[Complete address of each location where actual Receivable Files will be
maintained, including title and telephone number of person responsible for the
Receivable Files]
<PAGE>
EXHIBIT B
[Calculation formula for determining amount to be paid by Banc One ABS
Corporation to Bank One, Arizona, NA for purchase of Receivables]
