<PAGE>
As filed with the Securities and Exchange Commission on September __, 1996
Registration No. 333-7961
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
_______________
NORWEST AUTO RECEIVABLES CORPORATION
as Seller to the Trusts described herein
(Exact name of Registrant as specified in its charter)
Delaware Not Available
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
NORWEST CENTER
SIXTH AND MARQUETTE
MINNEAPOLIS, MINNESOTA 55479
(612) 667-1234
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
Stanley S. Stroup
Executive Vice President and General Counsel
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
(612) 667-8858
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Mary E. Schaffner, Esq. Stuart M. Litwin, Esq.
Norwest Corporation Mayer, Brown & Platt
Sixth and Marquette 190 South La Salle Street
Minneapolis, Minnesota 55479-1026 Chicago, Illinois 60603
(612) 667-2367 (312) 782-0600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after this Registration Statement becomes effective as
determined by market conditions.
_______________
If any of the 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, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following
box: [x]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, 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, please 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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================
Proposed Proposed
Title of maximum maximum
each class of offering aggregate
securities to Amount to be price per offering Amount of
be registered registered unit price registration
(2) (1)(2) (1)(2) fee
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed
Notes and
Certificates(2) $1,000,000 100% $1,000,000 $344.83(3)
==============================================================================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Also registered hereby are secondary market sales in Asset Backed Notes
and Asset Backed Certificates to be effected by Norwest Investment
Services, Inc., the volume of which cannot be determined.
(3) Previously paid.
</TABLE>
_____________________
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 SECTION 8(A), MAY DETERMINE.
<PAGE>
INTRODUCTORY STATEMENT
This Registration Statement contains (i) the form of Prospectus
relating to the offering of series of Asset Backed Notes and/or Asset
Backed Certificates by various Norwest Auto Trusts created from time to
time by Norwest Auto Receivables Corporation, (ii) two forms of Prospectus
Supplement relating to the offering by Norwest Auto Trust 199__-__ of the
particular series of Asset Backed Certificates (such form of Prospectus
Supplement is identified on the outside front cover page thereof as the
"Grantor Trust Prospectus Supplement") or of Asset Backed Notes and Asset
Backed Certificates (such form of Prospectus Supplement is identified on
the outside front cover page thereof as the "Owner Trust Prospectus
Supplement" and, together with the form of Grantor Trust Prospectus
Supplement, the "Prospectus Supplement Forms") described therein and (iii)
the form of Owner Trust Prospectus Supplement relating to the offering by
Norwest Auto Trust 1996-A of the particular series of Asset Backed Notes and
Asset Backed Certificates described therein (such form of Prospectus
Supplement is identifiable by the reference to Norwest Auto Trust 1996-A on
the outside front cover page thereof). Each Prospectus Supplement Form
relates only to the securities described therein and is a form which may be
used by the Seller to offer Asset Backed Notes and/or Asset Backed
Certificates under this Registration Statement. Because an affiliate of the
Seller intends to make a market in the Securities for which it acts as an
underwriter, immediately following the form of the Owner Trust Prospectus
Supplement relating to the offering of Securities by Norwest Auto Trust
1996-A there follow (a) alternate pages of the form of Owner Trust Prospectus
Supplement relating to the offering of Asset Backed Notes and Asset Backed
Certificates by Norwest Auto Trust 1996-A, (b) alternate pages of the
Prospectus, (c) alternate pages of the form of Owner Trust Prospectus
Supplement and (d) alternate pages of the form of Grantor Trust Prospectus
Supplement, which will be used by such affiliate in connection with any
offers and sales relating to market-making transactions in the Asset Backed
Notes and/or Asset Backed Certificates. All other pages of the form of
Grantor Trust Prospectus Supplement, the form of Owner Trust Prospectus
Supplement and the Prospectus are also to be used for the market-making
Prospectus Supplement and Prospectus.
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>
PROSPECTUS
SUBJECT TO COMPLETION, DATED SEPTEMBER __, 1996
NORWEST AUTO TRUSTS
Asset Backed Notes
Asset Backed Certificates
[NORWEST LOGO]
NORWEST AUTO RECEIVABLES CORPORATION
Seller
NORWEST BANK MINNESOTA, N.A.
Servicer
The Asset Backed Notes (the "Notes") and the Asset Backed Certificates
(the "Certificates" and, together with the Notes, the "Securities")
described herein may be sold from time to time in one or more series, in
amounts, at prices and on terms to be determined at the time of sale and to
be set forth in a supplement to this Prospectus (a "Prospectus
Supplement"). Each series of Securities, which may include one or more
classes of Notes or one or more classes of Certificates (or both), will be
issued by a trust to be formed on or before the issuance date for that
series (each, a "Trust"). Each Trust will be formed pursuant to either a
Trust Agreement to be entered into among Norwest Auto Receivables
Corporation, a Delaware corporation, as seller (the "Seller"), Norwest Bank
Minnesota, N.A., in its capacity as servicer (in such capacity, the
"Servicer"), and the trustee specified in the related Prospectus Supplement
(the "Trustee") or a Pooling and Servicing Agreement to be entered into
among the Trustee, the Seller and the Servicer. If a series of Securities
includes Notes, such Notes of a series will be issued and secured pursuant
to an Indenture between the Trust and the indenture trustee specified in
the related Prospectus Supplement (the "Indenture Trustee") and will
represent indebtedness of the related Trust. The Certificates of a series
will represent fractional undivided interests in the related Trust.
Certain capitalized terms used in this Prospectus are defined in this
Prospectus on the pages indicated in the "Index of Terms" on page [___] of
this Prospectus.
The related Prospectus Supplement will specify which class or classes
of Notes, if any, and which class or classes of Certificates, if any, of
the related series are being offered thereby. The property of each Trust
will include a pool of promissory notes and security agreements and/or
retail installment sales contracts secured by new or used automobiles and
light duty trucks (collectively, the "Receivables"), payments received
thereunder on and after the applicable Cutoff Date set forth in the related
Prospectus Supplement, security interests in the vehicles financed thereby,
rights under dealer agreements, rights with respect to deposit accounts in
which collections are held or that serve as credit enhancement, any other
credit enhancements, the proceeds of the foregoing and any proceeds from
claims on insurance policies with respect to the Financed Vehicles, all as
described herein and in the related Prospectus Supplement. See "The
Trusts." Each class of Securities of any series other than any Strip Notes
and Strip Certificates will represent the right to receive a specified
amount of payments of principal and interest on the related Receivables, at
the rates, on the dates and in the manner described herein and in the
related Prospectus Supplement. See "Description of the Notes,"
"Description of the Certificates" and "Description of the Securities"
herein and in the related Prospectus Supplement.
Prospective investors should consider the "Risk Factors" set forth at page
[16] herein.
____________________
ANY NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF A
SERIES REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND DO
NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER NORWEST BANK,
NORWEST CORPORATION OR ANY OF THEIR AFFILIATES. NONE OF THE
NOTES, THE CERTIFICATES OR THE RECEIVABLES ARE GUARANTEED
OR INSURED BY, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
ANY OTHER GOVERNMENT AGENCY OR INSTRUMENTALITY, NORWEST
AUTO RECEIVABLES CORPORATION, NORWEST BANK MINNESOTA,
N.A., ANY OTHER NORWEST BANK, NORWEST INVESTMENT
SERVICES, INC., NORWEST CORPORATION OR ANY OF
THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus may not be used to consummate sales of Securities offered
hereby unless accompanied by a Prospectus Supplement.
The date of this Prospectus is _______ __, 1996.
If a series includes multiple classes of Securities, the rights of
one or more classes of Securities to receive payments may be senior or
subordinate to the rights of one or more of the other classes of
such series. Distributions on Certificates of a series may be
subordinated in priority to payments due on any related Notes or any
other Certificates to the extent described herein and in the related
Prospectus Supplement. See "Risk Factors-Subordination" herein and in
the related Prospectus Supplement. A series may include one or more
classes of Notes and/or Certificates which differ as to the timing
and priority of payment, interest rate or amount of distributions in
respect of principal or interest or both. A series may include one or
more classes of Notes or Certificates entitled to distributions in
respect of principal with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate,
nominal or no distributions in respect of principal. The rate of
payment in respect of the principal of any class of Notes and
distributions in respect of the Certificate Balance of any class of the
Certificates will depend on the priority of payment of such class
and the rate and timing of payments (including prepayments, defaults,
liquidations and repurchases of Receivables) on the related Receivables.
A rate of payment lower or higher than that anticipated may affect the
weighted average life of each class of Securities in the manner described
herein and in the related Prospectus Supplement. See "Weighted Average
Life of the Securities."
If the Securities are Strip Notes or Strip Certificates, they will be
extremely sensitive to the rate and timing of principal payments, including
prepayments, on the Receivables. Prospective investors should fully
consider the associated risk, including the risk that an extremely rapid
rate of principal prepayments could result in the failure of investors in
the Strip Notes or the Strip Certificates to recoup their initial
investment.
AVAILABLE INFORMATION
The Seller, as originator of each Trust, has filed with the Securities
and Exchange Commission (the "Commission") a Registration Statement
(together with all amendments and exhibits thereto, referred to herein as
the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Notes and 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 Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and 7 World Trade Center, Suite 1300, 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. In addition, the Commission
maintains a public access site on the Internet through the World Wide Web
at which site reports, information statements and other information,
including all electronic filings, may be viewed. The Internet address of
such World Wide Web site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Seller, as originator of any Trust,
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), subsequent to the date of
this Prospectus and prior to the termination of the offering of the
Securities shall be deemed to be incorporated by reference in this
Prospectus. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. See "Certain Information Regarding the Securities-Reports to
Securityholders."
The Seller will provide without charge to each person, including any
beneficial owner of Securities, to whom a copy of this Prospectus is
delivered, on the written or oral request of such person, a copy of any or
all of the documents incorporated herein or in any related Prospectus
Supplement by reference, except the exhibits to such documents (unless such
exhibits are specifically incorporated by reference in such documents).
Requests for such copies should be directed to the Seller, in care of
_____________________, Norwest Corporation, Norwest Center, Sixth and
Marquette, Minneapolis, Minnesota, 55479-____ (Telephone: (612) 667-____).
The Servicer intends to continue to file with respect to each Trust
periodic reports pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, for the period after such filings could be
discontinued in reliance on Section 15(d) thereof until the Securities
issued by such Trust are no longer outstanding.
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by
reference to the information with respect to the Securities of any series
contained in the related Prospectus Supplement to be prepared and delivered
in connection with the offering of such Securities. Certain capitalized
terms used in this summary are defined elsewhere in this Prospectus on the
pages indicated in the "Index of Terms" beginning on page [73].
Issuer................... The issuer (the "Issuer") with respect to
each series of Securities shall be the Trust
to be formed pursuant to either a Trust
Agreement (as amended and supplemented from
time to time, a "Trust Agreement") among the
Trustee for such Trust (the "Trustee"), the
Seller and the Servicer, or a Pooling and
Servicing Agreement (as amended and
supplemented from time to time, the "Pooling
and Servicing Agreement") among the Trustee,
the Seller and the Servicer.
Seller................... Norwest Auto Receivables Corporation, a
Delaware corporation (the "Seller"). See
"The Seller."
Servicer................. Norwest Bank Minnesota, N.A., a national
banking association (the "Bank" or, in its
capacity as servicer, the "Servicer").
Trustee.................. With respect to each series of Securities,
the Trustee specified in the related
Prospectus Supplement.
Indenture Trustee ....... With respect to each series of Securities
that includes any Notes, the Indenture
Trustee specified in the related Prospectus
Supplement.
The Notes................ The terms of the Notes generally are
described below.
A. General.............. A series of Securities may include one or
more classes of Notes, which will be issued
pursuant to an Indenture between the Trust
and the Indenture Trustee (as amended and
supplemented from time to time, an
"Indenture"). The related Prospectus
Supplement will specify which class or
classes, if any, of Notes of the related
series are being offered thereby.
B. Denomination; Book-Entry Notes will be available for purchase in
denominations specified in the related
Prospectus Supplement or, if not so
specified, in original denominations of
$1,000 and integral multiples thereof.
Notes may be issued in book-entry form or as
Definitive Notes as specified in the related
Prospectus Supplement. If Notes are issued
in book-entry form, beneficial owners of
Notes ("Note Owners") will be able to
receive Definitive Notes only in the limited
circumstances described herein or in the
related Prospectus Supplement. See "Certain
Information Regarding the
Securities-Definitive Securities."
C. Note Interest Rates.. Each class of Notes other than Strip Notes
will have a stated principal amount and will
bear interest at a specified rate or rates
(with respect to each class of Notes, the
"Interest Rate"). Each class of Notes may
have a different Interest Rate, which may be
a fixed, variable or adjustable Interest
Rate, or any combination of the foregoing.
The related Prospectus Supplement will
specify the Interest Rate for each class of
Notes, or the method for determining the
Interest Rate. See "Description of the
Notes" herein and in the related Prospectus
Supplement for any Trust that issues Notes.
D. Characteristics...... With respect to a series that includes two or
more classes of Notes, each class may differ
as to the timing and priority of payments,
seniority, Interest Rate or amount of
payments of principal or interest, or
payments of principal or interest in respect
of any such class or classes may or may not
be made upon the occurrence of specified
events or on the basis of collections from
designated portions of the Receivables Pool.
To the extent provided in the related
Prospectus Supplement, a series may include
one or more classes of Notes designated as
fixed payment notes, short term asset backed
notes, targeted amortization classes,
planned amortization classes or companion
classes. See "Description of the Notes--
Principal and Interest on the Notes."
E. Strip Notes.......... In addition, a series may include one or more
classes of Notes ("Strip Notes") entitled to
(i) principal payments with
disproportionate, nominal or no interest
payments or (ii) interest payments with
disproportionate, nominal or no principal
payments.
F. Clean-Up Call; Redemption If the Seller or Servicer exercises its
option to purchase the Receivables of a
Trust in the event the outstanding Pool
Balance is 5% or less of the Initial Pool
Balance, in the manner and on the respective
terms and conditions described under
"Description of the Transfer and Servicing
Agreements--Termination," the outstanding
Notes of such series will be redeemed as set
forth in the related Prospectus Supplement.
G. Pre-Funding Account;
Redemption......... If the related Prospectus Supplement provides
that the property of a Trust will include a
Pre-Funding Account (as such term is defined
in the related Prospectus Supplement, the
"Pre-Funding Account"), one or more classes
of the outstanding Notes of such series will
be subject to partial redemption on or
immediately following the end of the
applicable Funding Period (as such term is
defined in the related Prospectus Supplement,
the "Funding Period") in an amount and manner
specified in the related Prospectus
Supplement.
Thee Certificates......... The terms of the Certificates generally are
described below.
A. General.............. A series may include one or more classes of
Certificates and may or may not include any
Notes. The related Prospectus Supplement
will specify which class or classes, if any,
of the Certificates are being offered
thereby.
B. Denominations; Book-Entry Certificates will be available for purchase
in denominations specified in the related
Prospectus Supplement or, if not so
specified, minimum denominations of $1,000
and integral multiples of $1,000 in excess
thereof. Certificates may be issued in
book-entry form or as Definitive
Certificates, as specified in the related
Prospectus Supplement. If the Certificates
are issued in book-entry form, the
beneficial owners of Certificates
("Certificate Owners") will be able to
receive Definitive Certificates only in the
limited circumstances described herein or in
the related Prospectus Supplement. See
"Certain Information Regarding the
Securities-Definitive Securities".
C. Certificate Rate..... Each class of Certificates other than any
Strip Certificates will have a stated
Certificate Balance specified in the related
Prospectus Supplement (the "Certificate
Balance") and will accrue interest on such
Certificate Balance at a specified rate
(with respect to each class of Certificates,
the "Certificate Rate"). Each such class of
Certificates may have a different
Certificate Rate, which may be a fixed,
variable or adjustable Certificate Rate, or
any combination of the foregoing. The
related Prospectus Supplement will specify
the Certificate Rate for each class of
Certificates or the method for determining
the Certificate Rate. See "Description of
the Certificates" herein and in the related
Prospectus Supplement.
D. Characteristics...... With respect to a series that includes two or
more classes of Certificates, each class may
differ as to timing and priority of
distributions, seniority, allocations of
losses, Certificate Rate or amount of
distributions in respect of principal or
interest, or distributions in respect of
principal or interest in respect of any such
class or classes may or may not be made upon
the occurrence of specified events or on the
basis of collections from designated
portions of the Receivables Pool. In
addition, a series may include one or more
classes of Certificates ("Strip
Certificates") entitled to (i) distributions
in respect of principal with
disproportionate, nominal or no interest
distributions or (ii) interest distributions
with disproportionate, nominal or no
distributions in respect of principal.
E. Subordination to Securities
of the Same Trust.. If the series of Securities issued by a Trust
includes classes of Notes or more than one
class of Certificates, all of the Notes and
Certificates will be entitled to receive
payments and distributions from the same
Trust property, and distributions in respect
of the Certificates may be subordinated in
priority of payment to payments on the Notes
or to other classes of Certificates to the
extent specified in the related Prospectus
Supplement.
F. Clean-Up Call; Prepayment If the Seller or Servicer exercises its
option to purchase the Receivables of a
Trust in the event the outstanding Pool
Balance is 5% or less of the Initial Pool
Balance, in the manner and on the respective
terms and conditions described under
"Description of the Transfer and Servicing
Agreements--Termination," Certificateholders
will receive as a prepayment an amount in
respect of the Certificates of such series as
specified in the related Prospectus Supplement.
G. Pre-Funding Account; Partial
Prepayment......... If the related Prospectus Supplement provides
that the property of a Trust will include a
Pre-Funding Account, Certificateholders may
receive a partial prepayment of principal on
or immediately following the end of the
applicable Funding Period in an amount and
manner specified in the related Prospectus
Supplement.
The Trust Property....... The property of each Trust will include a
pool of motor vehicle promissory notes and
security agreements and/or retail
installment sales contracts secured by new
or used automobiles or light duty trucks
(collectively, the "Receivables"), including
rights to receive payments received under
such Receivables after the applicable Cutoff
Date, security interests in the vehicles
financed thereby (the "Financed Vehicles"),
rights under agreements with automobile or
light duty truck dealers ("Dealer
Agreements"), rights with respect to
Eligible Deposit Accounts, which will include
the Collection Account and may include a
Reserve Account and/or a Yield Supplement
Account, rights under the related Purchase
Agreements and any other credit enhancement
and the proceeds thereof and any proceeds from
claims on or rebates of premiums and other
amounts relating to insurance policies with
respect to the Financed Vehicles. On or
before the Closing Date specified in the
related Prospectus Supplement with respect
to a Trust, the Seller will sell or transfer
Receivables (the "Initial Receivables")
having an aggregate principal balance
specified in the related Prospectus
Supplement as of the dates specified therein
to such Trust pursuant to either a Sale and
Servicing Agreement among the Seller, the
Servicer and the Trust (as amended and
supplemented from time to time, the "Sale
and Servicing Agreement") or, if the Trust
is to be treated as a grantor trust for
federal income tax purposes, the related
Pooling and Servicing Agreement among the
Seller, the Servicer and the Trustee. The
property of each Trust will also include
amounts on deposit in certain trust
accounts, including the related Collection
Account, any Pre-Funding Account, any
Revolving Account, any Reserve Account and
any other account identified in the related
Prospectus Supplement. See "The Trusts"
herein and "The Trust" in the related
Prospectus Supplement.
In addition, to the extent provided in the
related Prospectus Supplement, from time to
time during the related Revolving Period
and/or Pre-Funding Period, as the case may
be, the Seller will purchase from Affiliates
additional Receivables ("Subsequent
Receivables") having an aggregate principal
balance approximately equal to the amount of
principal collections on the related
Receivables deposited in the Revolving
Account from time to time during the
Revolving Period and/or the amount deposited
in the Pre-Funding Account on the related
Closing Date (the "Pre-Funded Amount"), and
will transfer and assign such Subsequent
Receivables to the related Trust in exchange
for the payment to the Seller of funds on
deposit in such Revolving Account or
Pre-Funding Account equal to the aggregate
outstanding principal balance of the
Subsequent Receivables so transferred as of
the applicable subsequent cut-off date. See
"Pre-Funding Account" and "Revolving
Account" below in this summary and "Certain
Information Regarding the Securities-Funding
Period and Revolving Period."
The Receivables ......... The Receivables will generally consist of (i)
motor vehicle promissory notes and security
agreements executed by an Obligor in favor
of an Originator ("Direct Loans") and/or
(ii) motor vehicle retail installment sales
contracts between an Obligor and a dealer
that has signed a Dealer Agreement with an
Originator (a "Dealer"). "Originator"
means, with respect to any Direct Loan or
retail installment sales contract, the
Affiliate that was the lender with respect
to such Direct Loan or that acquired such
retail installment sales contract from a
Dealer. "Affiliate" means a bank or other
nonbank entity owned or acquired by Norwest
Corporation or by its subsidiaries.
Receivables that are to be included in any
Receivables Pool will be transferred by an
Affiliate to the Seller for purposes of sale
to the applicable Trust. In addition, the
related Receivables Pool may include
Receivables acquired by an Affiliate through
acquisitions. The Receivables for any given
Receivables Pool will be selected from the
contracts owned or to be owned by the Seller
based on the criteria specified in the Sale
and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, and
described herein and in the related
Prospectus Supplement. See "The Receivables
Pools" herein and "The Receivables Pool" in
the related Prospectus Supplement.
Credit and Cash
Flow Enhancement......... The form and amount of any credit enhancement
will be specified in the related Prospectus
Supplement. Credit enhancement with respect
to a Trust or any class or classes of
Securities may include any one or more of
the following: subordination of one or more
other classes of Securities, a reserve
account, over-collateralization, letters of
credit, credit or liquidity facilities,
surety bonds, guaranteed investment
contracts, swaps or other interest rate
protection agreements, repurchase
obligations, yield supplement agreements,
other agreements with respect to third party
payments or other support, cash deposits or
other arrangements. Certain forms of credit
enhancement may contain limitations on, and
exclusions from, coverage thereunder, which
will be described in the related Prospectus
Supplement. See "Description of the
Transfer and Servicing Agreements-Credit and
Cash Flow Enhancement" herein and in the
related Prospectus Supplement.
Pre-Funding Account...... If specified in the related Prospectus
Supplement, during a Funding Period until
the earliest of (a) the Determination Date
on which the amount on deposit in the
Pre-Funding Account is less than the minimum
amount specified in the related Prospectus
Supplement, (b) the occurrence of an Event
of Default under the Indenture or a Servicer
Termination Event under the Sale and
Servicing Agreement or the Pooling and
Servicing Agreement, as applicable, (c) the
occurrence of certain events of insolvency
with respect to the Seller or the Servicer
or (d) the close of business on a business
day not later than one year after the
applicable Closing Date, in the case of a
Trust that issues Notes, and 90 days after
the applicable Closing Date for any other
Trust, the Pre-Funding Account will be
maintained as a trust account in the name of
the Applicable Trustee. The Pre-Funded
Amount will initially equal the amount
specified in the related Prospectus
Supplement, which may be up to 100% of the
aggregate principal amount of the series of
Securities offered thereunder. During the
Funding Period, the Pre-Funded Amount will
be reduced by the amount thereof used to
purchase Subsequent Receivables in
accordance with the Sale and Servicing
Agreement or the Pooling and Servicing
Agreement, as applicable, and the amounts
thereof deposited in the Reserve Account in
connection with the purchase of such
Subsequent Receivables. Prior to being used
to purchase Subsequent Receivables or paid
to the Noteholders and Certificateholders,
the Pre-Funded Amount will be invested from
time to time in Eligible Investments other
than money market funds. See "Description
of the Transfer and Servicing
Agreements-Accounts" herein and in the
related Prospectus Supplement.
Revolving Account........ If specified in the related Prospectus
Supplement for anyTrust that issues Notes,
all principal collections received on the
related Receivables during the Revolving
Period (as such term is defined in the
related Prospectus Supplement, the
"Revolving Period") for such Trust and, on
each Distribution Date during such Revolving
Period, such other amounts described in the
related Prospectus Supplement, will be
deposited in the Revolving Account (as such
term is defined in such Prospectus
Supplement, the "Revolving Account") for
such Trust and, except as provided below, no
principal collections under the Receivables
will be distributed to the holders of a
series of Securities issued by such Trust on
any Distribution Date occurring during such
Revolving Period. If the amount on deposit
in a Revolving Account at the close of
business on the last day of a calendar month
during the Revolving Period exceeds the
maximum permitted Revolving Account balance
specified in the related Prospectus
Supplement, the holders of such series of
Securities will receive a distribution of
principal on their Securities on the next
Distribution Date in an amount equal to the
amount of such excess.
In addition, if the related Trust includes a
Revolving Account, a principal payment equal
to the sum of (a) the amount, if any, on
deposit in such Revolving Account as of the
close of business on the first business day
following the applicable Revolving Period
and (b) such other amounts described in the
related Prospectus Supplement for the next
Distribution Date thereafter will be
distributed to the holders of the related
series of Securities on such next
Distribution Date and thereafter principal
distributions will be made to the holders of
the related series of Securities in the
manner otherwise specified herein and in the
related Prospectus Supplement.
Reserve Account.......... If specified in the related Prospectus
Supplement, a Reserve Account will be
created for each Trust with an initial
deposit of cash or certain investments
having a value equal to the amount specified
in the related Prospectus Supplement. To
the extent specified in the related
Prospectus Supplement, funds in the Reserve
Account will thereafter be supplemented by
the deposit of amounts remaining on any
Distribution Date after making all other
distributions required on such date and any
amounts deposited from time to time from the
Pre-Funding Account and/or Revolving Account
in connection with a purchase of Subsequent
Receivables. Amounts in the Reserve Account
will be available to cover shortfalls in
amounts due to the holders of those classes
of Securities specified in the related
Prospectus Supplement in the manner and
under the circumstances specified therein.
The related Prospectus Supplement will also
specify to whom and the manner and
circumstances under which amounts on deposit
in the Reserve Account (after giving effect
to all other required distributions to be
made by the applicable Trust) in excess of
the Specified Reserve Account Balance (as
defined in the related Prospectus
Supplement, the "Specified Reserve Account
Balance") will be distributed. See
"Description of the Transfer and Servicing
Agreements-Accounts" herein and in the
related Prospectus Supplement.
Transfer and
Servicing Agreements..... With respect to each Trust, the Seller will
sell the related Receivables to such Trust
pursuant to a Sale and Servicing Agreement
or a Pooling and Servicing Agreement. The
rights and benefits of any Trust under a
Sale and Servicing Agreement will be
assigned to the Indenture Trustee as
collateral for the Notes of the related
series. The Servicer will agree with each
Trust to be responsible for servicing,
managing, maintaining custody of and making
collections on the related Receivables. The
Bank intends to delegate to certain Affiliates
responsibilities and obligations as Servicer
with respect to Receivables acquired by the
Seller from such Affiliates. Notwithstanding
any such delegation, the Servicer will
continue to be liable for all its servicing
obligations as if the Servicer alone were
servicing the Receivables. The Bank will
undertake certain administrative duties under
an Administration Agreement with respect to
any Trust that has issued Notes.
The Seller will be obligated to repurchase
any Receivable if the interest of the
applicable Trust in such Receivable is
materially and adversely affected by a
breach of any representation or warranty
made by the Seller with respect to the
Receivable, if such breach has not been
cured following the discovery by or notice
to the Seller of the breach.
The Servicer will be obligated to purchase
any Receivable if, among other things, it
extends the date for final payment by the
Obligor of such Receivable beyond the
applicable Final Scheduled Maturity Date (as
defined in the related Prospectus
Supplement, the "Final Scheduled Maturity
Date"), changes the annual percentage rate
("APR") or principal balance of such
Receivable (except for Add-On Balances on
Receivables owned by a Trust that issues
Notes) or fails to maintain a perfected
security interest in the related Financed
Vehicle. See "The Receivables
Pool-Insurance."
The Servicer will be entitled to receive a
fee for servicing the Receivables of each
Trust equal to a specified percentage of the
aggregate principal balance of the related
Receivables Pool, as set forth in the
related Prospectus Supplement, and, in
addition to such fee, is entitled to receive
certain late fees, extension fees,
prepayment charges, non-sufficient funds
charges and other administrative fees or
similar charges. See "Description of the
Transfer and Servicing Agreements-Servicing
Compensation and Payment of Expenses."
Advances................. To the extent provided in the related
Prospectus Supplement, on or before the
business day prior to each applicable
Distribution Date or Payment Date, the
Servicer will advance (an "Advance") an
amount generally equal to the lesser of (a)
the excess, if any, of (i) the amount of
interest that would be expected to be
received on the Receivables (other than
Non-Advance Receivables) over (ii) (A) the
actual interest collected by the Servicer
during such Collection Period minus (B)
unreimbursed prior Advances and (b) the
amount (if any) by which (i) the sum of any
unpaid Servicing Fees for the related
Collection Period and prior Collection
Periods and the amount of interest
distributable to Securityholders on the
following Distribution Date exceeds (ii) (A)
an amount equal to the actual interest
collected by the Servicer during such
Collection Period minus (B) unreimbursed
prior Advances. Advances will be made by
the Servicer only to the extent that the
Servicer, in its sole discretion, expects to
recoup the Advance from the following
month's collections of interest and the
funds in the Reserve Account, if any, or
other credit enhancement. The Servicer will
be entitled to be reimbursed for outstanding
Advances from subsequent payments on or with
respect to the Receivables to the extent
described herein and in the related
Prospectus Supplement. See "Description of
the Transfer and Servicing
Agreements-Advances" herein and in the
related Prospectus Supplement. As used
herein, "Non-Advance Receivables" means,
with respect to any Distribution Date, any
Receivables which became Defaulted
Receivables during the related Collection
Period or which the Servicer, in its sole
discretion, believes are likely to become
Defaulted Receivables. See "Description of
the Transfer and Servicing
Agreements-Advances" herein and in the
related Prospectus Supplement.
Material Legal Risks
of the Receivables;
Repurchase Obligations... Risk of Unenforceable Security Interest. In
connection with the sale of Receivables to a
Trust, security interests in the Financed
Vehicles securing such Receivables will be
assigned by the Seller to such Trust. Due
to administrative burden and expense, the
certificates of title to the Financed
Vehicles will not be amended to reflect the
assignment to such Trust. In the absence of
such an amendment, such Trust may not have a
perfected security interest in the Financed
Vehicles securing the Receivables in some
states. The Seller will be obligated to
repurchase any Receivable sold to a Trust as
to which the Seller has represented that it
has a first perfected security interest in
the name of the Seller in the Financed
Vehicle securing such Receivable, if a
breach of such representation materially and
adversely affects the interest of such Trust
in such Receivable and if a breach of such
representation has not been cured by the
last day of the month that includes the
sixtieth day (or, if the Seller elects, the
thirtieth day) following the discovery by or
notice to the Seller of such breach. If
such Trust does not have a perfected
security interest in a Financed Vehicle, its
ability to realize on such Financed Vehicle
in the event of a default may be adversely
affected.
Risk of Non-Priority. To the extent the
security interest is perfected, such Trust
will have a prior claim over subsequent
purchasers of such Financed Vehicles and
holders of subsequently perfected security
interests. However, as against liens for
repairs of Financed Vehicles or for taxes
unpaid by an Obligor under a Receivable, or
because of fraud or negligence (for example,
if an Originator or the Seller were to sell
or grant a security interest in Receivables
in violation of the applicable Transfer and
Servicing Agreements), such Trust could lose
the priority of its security interest or its
security interest in Financed Vehicles.
Neither the Seller nor the Servicer will
have any obligation to repurchase a
Receivable as to which any of the
aforementioned occurrences result in a
Trust's losing the priority of its security
interest or its security interest in such
Financed Vehicle after the Closing Date.
See "Certain Legal Aspects of the
Receivables."
Consumer Protection Laws. Federal and state
consumer protection laws impose requirements
upon creditors in connection with extensions
of credit and collections of retail
installment loans, and certain of these laws
make an assignee of such a loan liable to
the obligor thereon for any violation by the
lender. The Seller will be obligated to
repurchase any Receivable which fails to
comply with such requirements. Such
repurchase obligation would not protect the
Trust from expenses associated with a legal
action alleging a violation of such laws in
which the Trust is the prevailing party.
See "Certain Legal Aspects of the
Receivables-Consumer Protection Laws."
Material Risks........... There are material risks associated with an
investment in the Securities. Prospective
investors should consider the factors set
forth under "Risk Factors" on pages 16 to
24, and as are provided in the related
Prospectus Supplement.
No Recourse to Originators or
Servicer............... The Receivables sold and assigned to the
applicable Trust will be sold and assigned
by the Seller to such Trust without recourse
to the Seller, the Servicer or any of their
respective affiliates for credit losses on
such Receivables. The Notes of any series
will represent obligations solely of, and
the Certificates of any series will
represent interests solely in, the related
Trust and, except as may be set forth in an
applicable Prospectus Supplement in
connection with any credit enhancement,
neither the Notes nor the Certificates of
any series will be insured or guaranteed by
the Seller, the Servicer, the applicable
Trustee, any Indenture Trustee or any other
person or entity.
Tax Status............... Unless the Prospectus Supplement specifies
that the related Trust will be treated as a
grantor trust, upon the issuance of the
related series of Securities, Federal Tax
Counsel to such Trust will deliver an
opinion to the effect that, for federal
income tax purposes: (i) any Notes of such
series will be characterized as debt and
(ii) such Trust will not be classified as
an association (or a publicly traded
partnership) taxable as a corporation. In
respect of any such series, each Note Owner,
by the acceptance of a beneficial interest
in a Note of such series, will agree to
treat such Note as indebtedness, and each
Certificate Owner, by the acceptance of a
beneficial interest in a Certificate of such
series, will agree to treat such Trust as a
partnership in which such Certificate Owner
is a partner for federal, state and local
tax purposes.
If the Prospectus Supplement specifies that
the related Trust will be treated as a
grantor trust, upon the issuance of the
related series of Certificates, Federal Tax
Counsel to such Trust will deliver an
opinion to the effect that such Trust will
be treated as a grantor trust for federal
income tax purposes and will not be subject
to federal income tax. Accordingly, the
Certificate Owners would be treated as
owners of the Receivables for federal income
tax purposes.
See "Federal Income Tax Consequences" and
"State Tax Consequences" herein and
in the related Prospectus Supplement for
additional information concerning the
application of federal and state tax laws.
ERISA Considerations..... The related Prospectus Supplement will set
forth certain information as to whether each
class of Securities issued by the related
Trust will be eligible for purchase by
employee benefit plans subject to the
Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or by any
individual retirement account. See "ERISA
Considerations" herein and in the related
Prospectus Supplement.
Rating of Securities..... It is a condition to the issuance of each
class of Securities offered hereby that they
are rated by at least one nationally
recognized statistical rating agency in one
of its generic rating categories which
signifies investment grade. The ratings
of the Securities address the likelihood
of the timely payment of interest on and
the ultimate payment of principal of
the Securities pursuant to their terms.
There can be no assurance that such ratings
will not be lowered or withdrawn by a Rating
Agency if circumstances so warrant. See
"Risk Factors-Ratings of the Securities."
<PAGE>
RISK FACTORS
Limited Liquidity
There is currently no secondary market for the Securities. Each
Underwriter (as defined in the related Prospectus Supplement, an
"Underwriter") currently intends to make a market in the Securities for
which it is an Underwriter, but it is under no obligation to do so. There
can be no assurance that a secondary market will develop or, if a secondary
market does develop, that it will provide the Securityholders with
liquidity of investment or that it will continue for the life of the
Securities.
Risk of Prepayment and Possible Adverse Effect on Yield
All the Receivables are prepayable at any time without penalty to the
Obligor. (For this purpose the term "prepayments" includes prepayments in
full, partial prepayments and liquidations due to default, as well as receipts
of proceeds from physical damage, credit life and disability insurance
policies and certain other Receivables repurchased for administrative reasons).
The weighted average life (i.e., the average time in which each dollar of
principal is paid on the Securities) of the Securities may be reduced by full
or partial prepayments on the Receivables. The rate of prepayments on the
Receivables may be influenced by a variety of economic, social and other
factors, including the fact that an Obligor generally may not sell or transfer
the Financed Vehicle securing a Receivable without the payment in full of
such Receivable. In addition, under certain circumstances, the Seller will be
obligated to repurchase Receivables pursuant to a Sale and Servicing
Agreement or Pooling and Servicing Agreement as a result of uncured breaches
of representations and warranties and, under certain circumstances, the
Servicer will be obligated to purchase Receivables pursuant to such Sale
and Servicing Agreement or Pooling and Servicing Agreement as a result of
uncured breaches of certain covenants. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables" and "--Servicing
Procedures". Holders of Securities should also consider, in the case of
Securities purchased at a discount, the risk that a slower than anticipated
rate of principal payments on the Receivables could result in an actual
yield (i.e., the effective interest rate) that is less than the anticipated
yield and, in the case of Securities purchased at a premium, the risk that
a faster than anticipated rate of principal payments on the Receivables
could result in an actual yield that is less than the anticipated yield.
Any reinvestment risks (i.e., risks that amounts received will not be able
to be invested at interest rates that are greater than or equal to the
applicable Note Interest Rate or Certificate Rate) resulting from a faster
or slower incidence of prepayment of Receivables held by a given Trust will
be borne entirely by the Securityholders of the related series of
Securities. See also "Description of the Transfer and Servicing
Agreements-Termination" regarding the option of the Servicer and Seller to
purchase the remaining Receivables of a given Receivables Pool, "-Insolvency
Event" regarding the sale of the Receivables owned by a Trust that is not a
grantor trust if an Insolvency Event with respect to the Seller occurs and
"Risk Factors-Financial Institution Insolvency Risks" regarding the right
of the FDIC to prepay Securities in certain circumstances.
Risk of Non-Priority of Trust's Interest in Receivables
The Seller will cause financing statements to be filed with the
appropriate governmental authorities to perfect the interest of the related
Trust in its purchase of Receivables from the Seller and in the appropriate
jurisdictions in which the Affiliates are located to perfect the interest
of the Seller in its purchase of Receivables from the Affiliates in
accordance with the UCC in effect in the relevant jurisdiction. The
Servicer will hold the Receivables, either directly or through
subservicers, as custodian for the Applicable Trustee following the sale
and assignment of the Receivables to the related Trust. The Receivables
will not be segregated, stamped or otherwise marked to indicate that they
have been sold to the related Trust. If through inadvertence or otherwise
(for example, if an Affiliate or the Seller were to sell or grant a
security interest in Receivables in violation of the applicable Transfer
and Servicing Agreements), 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 related Trust's interest, the purchaser (or secured party) will
acquire an interest in the Receivables superior to the interest of the
related Trust. The Seller believes that it is customary for Receivables to
not be segregated or stamped or otherwise marked in connection with asset
securitizations of the type contemplated hereby.
Risk of Unenforceable Security Interest in Financed Vehicles
In connection with the sale of Receivables by each Affiliate to the
Seller and by the Seller to a Trust, security interests in the Financed
Vehicles securing such Receivables will be assigned by such Affiliate to the
Seller and by the Seller to such Trust simultaneously with the sale of such
Receivables by such Affiliate to the Seller and by the Seller to such Trust.
Due to administrative burden and expense, the certificates of title to the
Financed Vehicles will not be amended to reflect either the assignments
to the Seller or to the Trust. In the absence of such amendments, the Seller
and such Trust may not have a perfected security interest in the Financed
Vehicles securing the Receivables in some states. The Seller will be
obligated to repurchase any Receivable sold to such Trust as to which the
Seller has breached its representation that it has a perfected security
interest in the Financed Vehicle securing such Receivable as of the date such
Receivable is transferred to such Trust, if such breach shall materially and
adversely affect the interest of such Trust in such Receivable and if a breach
of such representation shall not have been cured by the last day of the month
that includes the sixtieth day (or, if the Seller elects, the thirtieth day)
following the discovery by or notice to the Seller of such breach. If such
Trust does not have a perfected security interest in a Financed Vehicle, its
ability to realize on such Financed Vehicle in the event of a default may be
adversely affected, which could result in delays in payments on the related
Notes (if any) and Certificates and possible reductions in the amount of
those payments. The applicable Affiliate will be obligated, pursuant to
the Purchase Agreement to which it is a party, to repurchase from the
Seller any Receivable sold by it thereunder that the Seller has repurchased
as a result of such a breach. The Seller will assign its rights under each
Purchase Agreement to the related Trust. The Seller believes that it is
customary for certificates of title or ownership to not be endorsed or amended
in connection with asset securitizations of the type contemplated hereby.
Risk of Non-Priority of Trust's Security Interest in Financed Vehicles
To the extent the security interest in the Financed Vehicles is
perfected, such Trust will have a prior claim over subsequent purchasers of
such Financed Vehicles and holders of subsequently perfected security
interests. However, as against liens for repairs of Financed Vehicles or for
taxes unpaid by an Obligor under a Receivable, or through fraud or negligence,
such Trust could lose the priority of its security interest or its security
interest in a Financed Vehicle, which could result in delays in payments on
the related Notes (if any) and Certificates and possible reductions in the
amount of those payments. Neither the Seller nor the Servicer will have an
obligation to repurchase a Receivable as to which any of the aforementioned
occurrences result in such Trust's losing the priority of its security
interest or its security interest in such Financed Vehicle after the date
such security interest was conveyed to such Trust. See "Certain Legal
Aspects of the Receivables-Security Interest in Vehicles".
Risk of Substantive Consolidation
Seller has taken steps in structuring the transactions described
herein and in the related Prospectus Supplement that are intended to ensure
that the voluntary or involuntary application for relief by Norwest
Corporation or any Affiliate subject to the United States Bankruptcy Code
(the "Bankruptcy Code") under the 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 Norwest Corporation or
such Affiliate. These steps include the creation of the Seller as a
separate, limited-purpose subsidiary pursuant to a certificate 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 independent 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 Norwest Corporation or any
Affiliate in a proceeding under any Insolvency Law. See "The Seller."
Risk of No "True Sale"
The Seller and each Affiliate subject to the Bankruptcy Code each
intend that the transfer of Receivables by it to the Trust, in the case of
the Seller, and to the Seller, in the case of such Affiliates, will
constitute a "true sale" of such Receivables. Notwithstanding the
foregoing, if the Seller or such an Affiliate were to become a debtor in a
bankruptcy case and a creditor or trustee in bankruptcy of the Seller or
such Affiliate or the Seller or such Affiliate itself were to take the
position that the transfer of Receivables by the Seller to the Trust, or by
such Affiliate to the Seller, as the case may be, should instead be treated
as a pledge of the Receivables to secure a borrowing of the Seller or such
Affiliate, as the case may be, 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 Trust
or by an Affiliate subject to the Bankruptcy Code to the Seller is treated
as a pledge instead of a sale, a tax or government lien on the property of
the Seller or such Affiliate, as the case may be, arising before the
transfer of the Receivables to the Trust may have priority over the Trust's
or the Seller's interest in the Receivables. If the conveyance by the
Seller or such an Affiliate of the Receivables is treated as a sale, the
Receivables would not be part of the bankruptcy estate of the Seller or
such Affiliate and would not be available to the creditors of the Seller or
such Affiliate, as the case may be.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir.
1993), cert. denied 114 S.Ct 554 (1993), the United States Court of Appeals
for the 10th Circuit suggested that even where a transfer of accounts from
a seller to a buyer constitutes a "true sale," the accounts would
nevertheless constitute property of the seller's bankruptcy estate in a
bankruptcy of the seller. If the Seller were to become subject to a
bankruptcy proceeding and a court were to follow the Octagon court's
reasoning, Securityholders might experience delays in payment or possibly
losses on their investment in the Securities. The Permanent Editorial
Board of the UCC has issued an official commentary (PEB Commentary No. 14)
which characterizes the Octagon court's interpretation of Article 9 of the
UCC as erroneous. Such commentary states that nothing in Article 9 is
intended to prevent the transfer of ownership of accounts or chattel paper.
However, such commentary is not legally binding on any court.
Financial Institution Insolvency Risks
Each Affiliate subject to the Financial Institutions Reform, Recovery
and Enforcement Act of 1989 ("FIRREA"), intends that the transfer of the
Receivables by it to the Seller constitutes a sale. In the event that an
Affiliate subject to FIRREA were to become insolvent, FIRREA sets forth
certain powers that the Federal Deposit Insurance Corporation (the "FDIC")
could exercise if it were appointed as receiver of such Affiliate. Subject
to certain qualifications, to the extent that the Seller or related Trust
has a valid perfected security interest in the Receivables, such security
interest should be enforceable (to the extent of the "actual direct
compensatory damages" of the Seller or such Trust) notwithstanding the
insolvency of, or the appointment of a receiver or conservator for, any
Affiliate, and payments to such Trust with respect to the Receivables
transferred to it from the Seller (up to the amount of such damages) should
not be subject to recovery by such a conservator or receiver. See "Certain
Legal Aspects of the Receivables-Other Limitations." If, however, the FDIC
were to assert a contrary position, such as by requiring the Seller or
related Trust to establish its right to those payments by submitting to and
completing the administrative claims procedure established under FIRREA,
delays in payments on the related Notes (if any) and the Certificates and
possible reductions in the amount of those payments could occur.
Alternatively, in such circumstances, the FDIC might have the right to
repudiate the applicable Purchase Agreement and pay damages to the Seller
which, in turn would prepay the related Notes (if any) and Certificates,
which would shorten their respective weighted average lives.
Seller Insolvency-Related Risks
With respect to each Trust that is not a grantor trust, if an
Insolvency Event occurs with respect to the Seller, the Indenture Trustee
or Trustee for such Trust is obligated to sell, dispose of or otherwise
liquidate the related Receivables in a commercially reasonable manner on
commercially reasonable terms, unless registered holders of each class of
Notes ("Noteholders") issued by such Trust representing more than 50% of
the aggregate principal balance of such registered Notes and holders of
Certificates ("Certificateholders" and together with any Noteholders,
"Securityholders") issued by such Trust representing more than 50% of the
aggregate Certificate Balance for such Trust direct otherwise. The
proceeds from any such sale, disposition or liquidation of Receivables will
be treated as collections on the Receivables and deposited in the
Collection Account of such Trust. If the proceeds from the liquidation of
the Receivables and any amounts on deposit in the Reserve Account, the Note
Distribution Account, if any, and the Certificate Distribution Account with
respect to any such Trust and any amounts available from any credit
enhancement are not sufficient to pay any Notes and the Certificates of the
related series in full, the amount of principal returned to any Noteholders
or the Certificateholders will be reduced and such Noteholders and
Certificateholders will incur a loss. See "Description of the Transfer and
Servicing Agreements-Insolvency Event".
The provisions described in the preceding paragraph have been
included in the Transfer and Servicing Agreements for reasons related to
treatment of a Trust that is not a grantor trust as a partnership for
federal income tax purposes. The IRS, however, has issued proposed
regulations that, if adopted as final regulations, would make the foregoing
provisions unnecessary. The amendment provisions of each of the Transfer and
Servicing Agreements, therefore, allow the Seller, the Servicer and the
related Trustee, upon satisfaction of certain conditions, to amend such
Transfer and Servicing Agreement, without the consent of any of the related
Noteholders or Certificateholders, to eliminate such provisions. The
rights of Noteholders and Certificateholders to vote on whether to continue
or dissolve a Trust upon the insolvency of the Seller could therefore be
eliminated without the consent of the Noteholders or Certificateholders.
Ratings of the Securities
It is a condition to the issuance of each class of Securities offered
hereby that they are rated by at least one nationally recognized
statistical rating agency in one of its generic rating categories which
signifies investment grade. A rating is not a recommendation to purchase,
hold or sell Securities, inasmuch as such rating does not comment as to
market price or suitability for a particular investor. The ratings of the
Securities address the likelihood of the timely payment of interest on and
the ultimate payment of principal of the Securities pursuant to their
terms. There can be no assurance that a rating will remain for any given
period of time or that a rating will not be lowered or withdrawn entirely
by a Rating Agency if in its judgment circumstances in the future so
warrant.
Realization Upon Financed Vehicles; Obligor Insolvency-Related Risks
Numerous statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured
party to realize upon collateral or to enforce a deficiency judgment
against an obligor. For example, in a Chapter 13 proceeding under the
federal bankruptcy law, a court may prevent a creditor from repossessing a
vehicle, and, as part of the obligor's rehabilitation plan, reduce the
amount of the secured indebtedness to the market value of the vehicle at
the time of bankruptcy (as determined by the court), leaving the creditor
as a general unsecured creditor for the remainder of the indebtedness. A
bankruptcy court may also reduce the monthly payments due under a contract
or change the rate of interest and time of repayment of the indebtedness.
In the event that the credit enhancement for such Trust were insufficient
to cover all such losses, such actions could result in an inability for
holders of the Notes (if any) and Certificates issued by such Trust to
recover payment in full of their respective principal amounts and interest
thereon or could result in delays in such payments.
Consumer Protection Laws
Federal and state consumer protection laws impose requirements upon
creditors in connection with retail installment loans and certain of these
laws make an assignee of such a loan (such as a Trust) liable to the
obligor thereon for any violation by the lender or subject to defenses
which could be asserted by the obligor against the applicable Dealer.
Application of such laws could render a Receivable unenforceable, cause the
Trust to be unable to collect any balance remaining due on the Receivable
or result in liability to the Trust. Such consequences could result in
delays in payments on the related Notes (if any) and Certificates and
possible reductions in the amount of those payments. The Seller will be
obligated to repurchase any Receivable which fails to comply with such
requirements. See "Certain Legal Aspects of the Receivables-Consumer
Protection Laws."
Lack of Recourse to the Seller, the Servicer and their Affiliates
None of the Seller, the Servicer or their affiliates is generally
obligated to make any payments in respect of any Notes, the Certificates or
the Receivables of a given Trust. The Securities will not be guaranteed
by, represent an interest in or obligation, either recourse or nonrecourse,
of the Seller, the Servicer or any person other than the Trust.
However, in connection with the sale of Receivables by the Seller to
a given Trust, the Seller will make representations and warranties with
respect to the characteristics of such Receivables and, in certain
circumstances, the Seller may be required to repurchase Receivables with
respect to which such representations and warranties have been breached.
See "Description of the Transfer and Servicing Agreements-Sale and
Assignment of Receivables". In addition, under certain circumstances, the
Servicer may be required to purchase Receivables. See "Description of the
Transfer and Servicing Agreements-Servicing Procedures". If collections on
any Receivable were reduced as a result of any matter giving rise to a
repurchase obligation on the part of the Seller or the Servicer, and the
Seller or the Servicer failed for any reason to perform in accordance with
that obligation, then delays in payments on the related Notes (if any) and
Certificates and possible reductions in the amount of those payments could
occur. Moreover, if the Bank were to cease acting as the Servicer, delays
in processing payments on the Receivables and information in respect
thereof could occur and result in delays in payments to the
Securityholders.
Subordination
To the extent specified in the related Prospectus Supplement,
distributions of interest and principal on one or more classes of
Certificates of a series may be subordinated in priority of payment to
interest and principal due on the Notes, if any, of such series or one or
more other classes of Certificates of such series. Because all of such
Securities will be issued by the same Trust and entitled to receive
payments and distributions from the same Trust Property, investors in any
such subordinated class or classes of Certificates should consider the risk
that losses on the Receivables will be borne by such investors if any
Reserve Account or any other credit enhancement is exhausted and could
result in the failure of such investors to recover their initial
investment.
Limited Assets; Risk of Credit Losses on Receivables
No Trust will have, or be permitted or expected to have, any
significant assets or sources of funds other than the Receivables and, to
the extent provided in the related Prospectus Supplement, a Pre-Funding
Account, a Revolving Account, a Reserve Account and any other credit
enhancement. The Notes of any series will represent obligations solely of,
and the Certificates of any series will represent interests solely in, the
related Trust and neither the Notes nor the Certificates of any series will
be insured or guaranteed by any Affiliate, the Seller, the Servicer, any
Trustee, any Indenture Trustee or any other person or entity.
Consequently, holders of the Securities of any series must rely for
repayment upon payments on the related Receivables and, if and to the
extent available, amounts on deposit in the Pre-Funding Account (if any),
the Revolving Account (if any), the Reserve Account (if any) and any other
credit enhancement, all as specified in the related Prospectus Supplement.
Amounts to be deposited in any such Reserve Account with respect to any
Trust will be limited in amount and the amount required to be on deposit in
such Reserve Account may be reduced as the Pool Balance is reduced. In
addition, funds in any such Reserve Account will be available on each
Distribution Date to cover shortfalls in distributions of interest and
principal on the related Securities. If any such Reserve Account is
depleted, the related Trust will depend solely on current payments on its
Receivables and other credit enhancement (if any) to make payments on the
related Securities. If losses occur which are not covered by the Reserve
Account (if any) or any other credit enhancement or which exceed the amount
covered by such credit enhancement, holders of Securities may not receive
payment in full of principal and interest on their respective Securities.
If so directed by the holders of the requisite percentage of
outstanding Notes of a series issued with respect to a Trust that issues
Notes, following an acceleration of the Notes upon an Event of Default, the
applicable Indenture Trustee may sell the related Receivables in certain
limited circumstances as specified in the related Indenture. See
"Description of the Notes-The Indenture-Events of Default; Rights upon
Event of Default". However, there is no assurance that the market value of
such Receivables will at any time be equal to or greater than the aggregate
principal amount of such outstanding Notes. Therefore, upon an Event of
Default with respect to the Notes of any series, there can be no assurance
that sufficient funds will be available to repay the related Noteholders in
full. In addition, the amount of principal required to be paid to
Noteholders of such series under the related Indenture will generally be
limited to amounts available to be deposited in the applicable Note
Distribution Account. Therefore, the failure to pay principal on a class of
Notes generally will not result in the occurrence of an Event of Default
until the Final Scheduled Distribution Date (as defined in the related
Prospectus Supplement, the "Final Scheduled Distribution Date") for such
class of Notes.
Risks Associated with Subsequent Receivables
If so specified in the applicable Prospectus Supplement, the property
of a Trust may include monies on deposit in a Pre-Funding Account or
Revolving Account, which monies will be used to purchase or otherwise acquire
Subsequent Receivables from the Seller from time to time during the Funding
Period or Revolving Period specified in the related Prospectus Supplement.
If a Pre-Funding Account or Revolving Account is included in the property
of a Trust, the ability of the Originators to generate Subsequent
Receivables to be conveyed to the Seller for subsequent conveyance to such
Trust will affect the amount on deposit in such account which is not applied
to the purchase of Subsequent Receivables during the Funding Period or
Revolving Period, as applicable. Such Funding Period may be up to one year in
length in the case of any Trust that issues Notes and 90 days after the
Closing Date for any other Trust. The duration of any Revolving Period will
be set forth in the related Prospectus Supplement. At the end of the Funding
Period or Revolving Period, as applicable, the holders of Securities issued
by such Trust may receive a prepayment of principal in an amount equal to
the amount remaining in the Pre-Funding Account or Revolving Account, as
applicable. The reinvestment risk associated with any such distribution of
principal will be borne by the holders of the Securities issued by such Trust.
The amount that may be initially deposited into a Pre-Funding Account may be
up to 100% of the principal amount of the Securities issued by a Trust.
There is no limitation on the percentage of a Trust's property which may be
represented by amounts on deposit in a Pre-Funding Account and
consequently, there is no limitation on the percentage of a series or class
of Securities which may be represented by amounts on deposit in a
Pre-Funding Account. Amounts on deposit in a Revolving Account will be
limited to the amount set forth in the related Prospectus Supplement.
Amounts on deposit in any Pre-Funding Account or Revolving Account may be
invested only in certain permitted investments deemed acceptable by the
Rating Agencies as consistent with the applicable ratings on the
Securities. Subsequent Receivables may be originated at a later date using
credit criteria different from those which were applied to any Initial
Receivables and may be of a different credit quality. In addition, following
the transfer of Subsequent Receivables to the applicable Trust, the
characteristics of the entire pool of Receivables included in such Trust may
vary significantly from those of the Initial Receivables transferred to such
Trust. Accordingly, it is possible that the credit quality of the
Receivables in a Trust, as a whole, may decline due to the transfer of
Subsequent Receivables to the Trust. The transfer of Subsequent Receivables
to the Trust may also result in an accelerated rate of payment to the
applicable Securityholders caused by an increased level of defaults on such
Receivables. Securityholders will bear all reinvestment risk associated with
a higher than expected rate of payment on the Securities. In addition, if
such Securities were purchased at a premium, a higher than expected rate of
payment would result in a reduction in the yield to maturity of any class of
Securities to which such payments are distributed. To the extent that amounts
on deposit in the Pre-Funding Account or Revolving Account have not been
fully applied to the purchase of Subsequent Receivables by a Trust by the end
of the applicable Funding Period or Revolving Period and such amounts exceed
the applicable amount described in the related Prospectus Supplement, the
holders of Securities issued by the related Trust will receive, on the
Distribution Date on or immediately following the last day of the applicable
Funding Period or Revolving Period, as applicable, a prepayment of principal
in an amount equal to the amount remaining in the Pre-Funding Account
or Revolving Account following the purchase of any Subsequent Receivables on
such Distribution Date. It is anticipated that the principal balance of
Subsequent Receivables sold to a Trust will not be exactly equal to the amount
on deposit in the Pre-Funding Account or Revolving Account, and that
therefore there will be at least a nominal amount of principal prepaid
to the holders of the Securities issued by such Trust. Holders of Securities
issued by a Trust the property of which includes a Pre-Funding Account or
Revolving Account will bear the reinvestment risk associated with any
such distribution of amounts on deposit in the Pre-Funding Account or
Revolving Account after the termination of the applicable Pre-Funding
Period or Revolving Period, as applicable. Any such distribution will
have the effect of a prepayment on the related Receivables and, if such
Securities were purchased at a premium, would result in a reduction in
the yield to maturity of any class of Securities to which such amounts
are distributed.
Extensions and Modifications of Receivables
Consistent with its customary servicing practices and procedures, the
Servicer or its designee may, in its discretion and on a case-by-case
basis, arrange with Obligors to extend or modify the terms of the related
Receivables. Some, but not all, of such arrangements will cause the
Servicer to be obligated to purchase such Receivables. Any such extensions
or modifications which do not result in a Servicer obligation to purchase
such Receivables may increase the weighted average life of the related
Securities. Any reinvestment risks resulting from purchases by the
Servicer of Receivables or faster or slower payment resulting from
extensions and modifications of payments on Receivables held by the Trust
will be borne entirely by the Securityholders of the related series of
Securities. The Servicer will not be permitted to grant any such extension
or modification if as a result the final scheduled payment on a Receivable
would fall after the related Final Scheduled Maturity Date, unless the
Servicer repurchases the affected Receivable. See "Risk Factors-Risk of
Prepayment and Possible Adverse Effect on Yield" and "Weighted Average Life
of the Securities."
Risk of Commingling
With respect to each Trust, the Servicer will deposit all payments on
the related Receivables (from whatever source) and all proceeds of such
Receivables collected during each Collection Period into the Collection
Account for such Trust or, during any Revolving Period, into the Revolving
Account for such Trust. For so long as the Bank satisfies certain
requirements for monthly or less frequent remittances and the Rating
Agencies (as such term is defined in the related Prospectus Supplement, the
"Rating Agencies") so permit in connection with the ratings of the related
Securities, then for so long as the Bank serves as the Servicer and
provided that (i) there exists no Servicer Termination Event and (ii) each
other condition to making such monthly or less frequent deposits as may be
described in the related Prospectus Supplement is satisfied, the Servicer
will not be required to deposit such amounts into the Collection Account
or, during any Revolving Period, into the Revolving Account of such Trust
until on or before the business day preceding each Distribution Date. The
Servicer will deposit the aggregate Purchase Amount of Receivables
purchased by the Servicer into the applicable Collection Account on or
before the business day preceding each Distribution Date. Pending deposit
into such Collection Account or, during any Revolving Period, into the
Revolving 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. If the Servicer were unable to remit such funds, the applicable
Securityholders might incur a loss. [For example, the Servicer might not
be able to remit such funds if it were to become a debtor in a bankruptcy
[or insolvency] proceeding. Under the UCC, the Trust's interest in cash
collected by the Servicer that has been commingled with other funds of the
Servicer would become unperfected ten days after receipt by the Servicer.
If the Servicer were to become a debtor in a bankruptcy [or insolvency]
proceeding, the Trust may be deemed an unsecured creditor with respect to
commingled funds held by the Servicer longer than ten days.] To the extent
set forth in the related Prospectus Supplement, the Servicer may, in order
to satisfy the requirements described above, obtain a letter of credit or
other security for the benefit of the related Trust to secure timely
remittances of collections on the related Receivables and payment of the
aggregate Purchase Amount with respect to Receivables purchased by the
Servicer.
Servicer Termination Events
With respect to a series of Securities that includes Notes, in the
event a Servicer Termination Event occurs, the Indenture Trustee or the
Noteholders with respect to such series, as described under "Description of
the Transfer and Servicing Agreements-Rights upon Servicer Termination
Event" may remove the Servicer without the consent of the Trustee or any of
the Certificateholders with respect to such series. The Trustee or the
Certificateholders with respect to such series will not have the ability to
remove the Servicer if a Servicer Termination Event occurs. In addition,
the Noteholders of such series will have the ability, with certain
specified exceptions, to waive Servicer Termination Events by the Servicer,
including Servicer Termination Events that could materially adversely affect
the Certificateholders of such series. See "Description of the Transfer
and Servicing Agreements - Waiver of Past Defaults".
Book-Entry Registration
Each class of Securities of a given series will be initially
represented by one or more certificates registered in the name of Cede &
Co. ("Cede"), or any other nominee for the Depository Trust Company ("DTC")
set forth in the related Prospectus Supplement (Cede, or such other
nominee, "DTC's Nominee"), and will not be registered in the names of the
beneficial owners of the Securities ("Security Owners") of such series or
their nominees unless Definitive Securities are issued. Because of this,
unless and until Definitive Securities for such series are issued, such
Security Owners will not be recognized by the Trustee or any applicable
Indenture Trustee as "Certificateholders", "Noteholders" or
"Securityholders", as the case may be (as such terms are used herein or in
the related Pooling and Servicing Agreement or related Indenture and Trust
Agreement, as applicable). Hence, until Definitive Securities are issued,
such Security Owners will only be able to exercise the rights of
Securityholders indirectly through DTC, Cedel or Euroclear and their
participating organizations. See "Certain Information Regarding the
Securities-Book-Entry Registration" and "-Definitive Securities".
THE TRUSTS
With respect to each series of Securities, the Seller will establish
a separate Trust pursuant to the respective Trust Agreement or Pooling and
Servicing Agreement, as applicable, for the transactions described herein
and in the related Prospectus Supplement. The property of each Trust will
include a pool (a "Receivables Pool") of Receivables pursuant to which a
purchaser (an "Obligor") of a Financed Vehicle is obligated. The property
of each Trust will also include all payments received with respect to any
Simple Interest Receivables on and after the Cutoff Date (as such term is
defined in the related Prospectus Supplement, a "Cutoff Date") and all
payments due with respect to Precomputed Receivables on and after the
applicable Cutoff Date. Pursuant to the Dealer Agreements, a Dealer is
obligated to purchase from the applicable Affiliate Receivables which do
not meet certain representations made by that Dealer, and, to the extent
set forth in the related Prospectus Supplement, any uncollectible
Receivables covered by recourse plans ("Dealer Recourse"). The Receivables
of each Receivables Pool will be serviced by the Servicer. See "The Servicer."
Receivables that are to be included in any Receivables Pool will be transferred
pursuant to a Purchase Agreement by an Affiliate to the Seller for purposes of
transfer to the applicable Trust. In addition, to the extent described in any
Prospectus Supplement, the related Receivables Pool may include Receivables
acquired by an Affiliate through acquisitions.
On or before the applicable Closing Date, the Seller will sell the
Initial Receivables of the applicable Receivables Pool to the Trust. To
the extent so provided in the related Prospectus Supplement, Subsequent
Receivables will be conveyed to the Trust as frequently as daily during a
Funding Period. Any Subsequent Receivables so conveyed will also be assets
of the applicable Trust, subject to the prior rights of the related
Indenture Trustee and the Noteholders, if any, therein. The property of
each Trust will also include (i) such amounts as from time to time may be
held in separate trust accounts established and maintained pursuant to the
related Sale and Servicing Agreement or Pooling and Servicing Agreement and
the proceeds of such accounts, as described herein and in the related
Prospectus Supplement (see "Description of the Transfer and Servicing
Agreement-Accounts" herein and in the related Prospectus Supplement); (ii)
security interests in the Financed Vehicles and any other interest of the
Seller in such Financed Vehicles; (iii) the Seller's rights to proceeds
from claims on physical damage, credit life and disability insurance
policies, if any, covering the Financed Vehicles or the Obligors, as the
case may be and rebates of premiums and other amounts relating to any
insurance policies and other items financed under the Receivables, to the
extent applied to reduce the principal balance of the related Receivable;
(iv) any property that shall have secured a Receivable and that shall have
been acquired by the applicable Trust; (v) any Dealer Recourse and other
rights of Affiliates under Dealer Agreements; (vi) the Seller's rights
under the related Purchase Agreements; (vii) the Seller's rights to
documents and instruments relating to the Receivables; and (viii) any and
all proceeds of the foregoing; provided that, with respect to any series of
Notes, the relevant rights and benefits with respect to such property will
be assigned by the Seller and the applicable Trustee to the related
Indenture Trustee for the benefit of the related Securityholders. To the
extent specified in the related Prospectus Supplement, a Pre-Funding
Account, a Revolving Account, a Reserve Account or other form of credit
enhancement may be a part of the property of any given Trust or may be held
by the Trustee or an Indenture Trustee for the benefit of holders of the
related Securities.
If so specified in the related Prospectus Supplement, a Trust may
acquire Initial Receivables pursuant to "warehousing" financing
arrangements entered into prior to the sale by that Trust of any Notes
offered hereby. "Warehousing financing" generally refers to interim
financing of Motor Vehicle Loans during the period from the purchase of the
Motor Vehicle Loans from Dealers until the securitization of the Motor
Vehicle Loans. Often, an Originator will obtain some or all of the funds
to purchase or fund Motor Vehicle Loans through internal funds. Any
remaining funds necessary may be borrowed from a bank or other third party.
In some cases, to the extent specified in the related Prospectus
Supplement, a Trust that issues Notes will acquire Receivables prior to the
issuance of the Notes and/or Certificates ultimately to be issued by that
Trust, the interim financing for which will be provided by the issuance by
the Trust of notes or certificates which were privately placed. Such notes
or certificates will be refinanced by the sale of the Notes and/or
Certificates. It will be a condition to the issuance of any Securities
which refinance other securities issued by any such Trust that such
warehouse financing be repaid to the extent provided in the related
Prospectus Supplement, and any related security interests released, at or
prior to the time of such issuance.
The Servicer will service the Receivables held by each Trust and will
receive fees for such services. See "Description of the Transfer and
Servicing Agreements-Servicing Compensation and Payment of Expenses" and
"-Servicing Compensation and Payment of Expenses" in the related Prospectus
Supplement. To facilitate the servicing of the Receivables, each Trustee
will authorize the Servicer or the applicable Originator acting as
subservicer, as the case may be, to retain physical possession of the
documents representing the Receivables held by each Trust and other
documents relating thereto as custodian for each such Trust. Due to
administrative burden and expense, the certificates of title to the
Financed Vehicles will not be amended to reflect the sale and assignment of
the security interest in the Financed Vehicles to the Seller or each Trust.
In the absence of such amendments, the Seller and such Trust may not have
a perfected security interest in the Financed Vehicles in all states.
See "Certain Legal Aspects of the Receivables" and "Description of the
Transfer and Servicing Agreements-Sale and Assignment of Receivables".
Notes and Certificates of a given Series will be issued by the same
Trust and payable from the same Trust property. If the protection provided
to any Noteholders of a given series by the subordination of the related
Certificates and by the Reserve Account (if any) or other credit
enhancement for such series, or the protection provided to
Certificateholders by any such Reserve Account or other credit enhancement
is insufficient, such Noteholders or Certificateholders, as the case may
be, would have to look principally to the Obligors on the related
Receivables, the proceeds from the repossession and sale of Financed
Vehicles which secure defaulted Receivables and the proceeds from any
recourse against Dealers with respect to such Receivables. In such event,
certain factors, such as the applicable Trust's not having perfected
security interests in the Financed Vehicles in all states, may affect the
Servicer's ability to repossess and sell the collateral securing the
Receivables, and thus may reduce the proceeds to be distributed to the
holders of the Securities of such series. See "Description of the Transfer
and Servicing Agreements-Distributions", "-Credit and Cash Flow
Enhancement" and "Certain Legal Aspects of the Receivables".
If so specified in the related Prospectus Supplement, a Trust may
make an election to be treated as a "financial asset securitization
investment trust" or "FASIT." The applicable Transfer and Servicing
Agreement for such a Trust may contain any such terms and provide for the
issuance of Notes or Certificates on such terms and conditions as are
permitted to a FASIT and provided in the related Prospectus Supplement.
See "Federal Income Tax Consequences-FASIT Legislation."
The principal offices of the applicable Trust (if any) and the
related Trustee will be specified in the related Prospectus Supplement.
The Trustee
The Trustee for each Trust will be specified in the related
Prospectus Supplement. The Trustee's liability in connection with the
issuance and sale of the related Securities is limited solely to the
express obligations of such Trustee set forth in the related Trust
Agreement and the Sale and Servicing Agreement or the related Pooling and
Servicing Agreement, as applicable. The Trustee under each Trust Agreement
will perform administrative functions under such Trust Agreement, including
making distributions from the Note Distribution Account and from the
Certificate Distribution Account. A Trustee may resign at any time, in
which event the Servicer, or its successor, will be obligated to appoint a
successor trustee. The Servicer may also remove the Trustee if the Trustee
ceases to be eligible to continue as Trustee under the related Trust
Agreement or Pooling and Servicing Agreement, as applicable, or if the
Trustee becomes insolvent. In such circumstances, the Servicer will be
obligated to appoint a successor trustee. Any resignation or removal of a
Trustee and appointment of a successor trustee will not become effective
until acceptance of the appointment by the successor trustee.
THE RECEIVABLES POOLS
General
The Receivables in each Receivables Pool are and will be retail
installment sales contracts and/or promissory notes and security agreements
(collectively, "Motor Vehicle Loans") that have been or will be originated
by a Dealer and purchased by an Originator pursuant to a Dealer Agreement
between the Originator and the Dealer. Receivables Pools may also include
Direct Loans made by an Originator to an Obligor. Receivables held by any
Affiliate may have been originated by other Affiliates. In addition, to
the extent described in any Prospectus Supplement, the related Receivables
Pool may include Receivables acquired by an Affiliate through acquisitions.
Receivables of an Affiliate that are to be included in any Receivables Pool
will be transferred pursuant to a Purchase Agreement by an Affiliate to the
Seller for purposes of sale to the applicable Trust.
Each Originator establishes and maintains relationships with Dealers.
An Originator selects Dealers based upon the Dealer's commercial
reputation, the prior experience of the Dealer (or a predecessor
organization) and, in some cases, financial review of the Dealer. Each Dealer
from whom any of the Originators purchases a Motor Vehicle Loan must
execute a Dealer Agreement with such Originator which sets out, among other
things, the guidelines and procedures of the purchasing process. Such
Dealer Agreements provide for the repurchase by the Dealer of any Motor
Vehicle Loan if any representations or warranties made by the Dealer
relating to the Motor Vehicle Loan are breached.
The Receivables to be held by each Trust will be selected from the
Motor Vehicle Loan portfolio of each Affiliate for inclusion in a
Receivables Pool by several criteria, including that each Receivable (i) is
secured by a new or used vehicle, (ii) was originated in the United States,
(iii) is a Precomputed Receivable or a Simple Interest Receivable and (iv)
as of the Cutoff Date (a) had an outstanding principal balance of at least
the amount set forth in the related Prospectus Supplement, (b) as of the
Cutoff Date, was not more than [60] days past due, (c) had a scheduled
maturity not later than the date set forth in the related Prospectus
Supplement, (d) had an original term to maturity of not more than the
period set forth in the related Prospectus Supplement and (e) had an APR of
not less than the rate per annum set forth in the related Prospectus
Supplement. No selection procedures believed by the Seller to be adverse to
the Securityholders of any series were or will be used in selecting the
related Receivables.
"Precomputed Receivables" consist of either (i) monthly actuarial
receivables ("Actuarial Receivables") or (ii) receivables that provide for
allocation of payments according to the "Rule of 78's" ("Rule of 78's
Receivables"). An Actuarial Receivable provides for amortization of the
loan over a series of fixed level payment monthly installments. Each
monthly installment, including the monthly installment representing the
final payment on the Receivable, consists of an amount of interest equal to
1/12 of the APR of the loan multiplied by the unpaid principal balance of
the loan, and an amount of principal equal to the remainder of the monthly
installment. A Rule of 78's Receivable provides for the payment by the
obligor of a specified total amount of payments, payable in equal monthly
installments on each due date, which total represents the principal amount
financed and add-on interest in an amount calculated on the stated APR for
the term of the receivable. The rate at which such amount of add-on
interest is earned and, correspondingly, the amount of each fixed monthly
installment allocated to reduction of the outstanding principal are
calculated in accordance with the "Rule of 78's."
"Simple Interest Receivables" are receivables that provide for the
amortization of the amount financed under each receivable over a series of
fixed level payment monthly installments. However, unlike the monthly
installment under an Actuarial Receivable, each monthly installment
consists of an amount 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 and
unpaid accrued interest. If a Receivable is prepaid, the Obligor is
required to pay interest only to the date of prepayment.
In the event of the prepayment in full (voluntarily or by
acceleration) of a Rule of 78's Receivable, under the terms of the
contract, a "refund" or "rebate" will be made to the obligor of the portion
of the total amount of payments then due and payable under the contract
allocable to "unearned" add-on interest, calculated in accordance with a
method equivalent to the Rule of 78's. If an Actuarial Receivable is
prepaid in full, with minor variations based upon state law, the Actuarial
Receivable requires that the rebate be calculated on the basis of a
constant interest rate. If a Simple Interest Receivable is prepaid, rather
than receive a rebate, the obligor is required to pay interest only to the
date of prepayment. The amount of a rebate under a Rule of 78's Receivable
generally will be less than the amount of a rebate on an Actuarial
Receivable and generally will be less than the remaining scheduled payments
of interest that would have been due under a Simple Interest Receivable for
which all payments were made on schedule.
Each Trust will account for the Rule of 78's Receivables as if such
Receivables were Actuarial Receivables. Amounts received upon prepayment
in full of a Rule of 78's Receivable in excess of the then outstanding
principal balance of such Receivable and accrued interest thereon
(calculated pursuant to the actuarial method) will not be paid to the
Noteholders or passed through to the Certificateholders of the applicable
series but will be paid to the Servicer as additional servicing
compensation.
Information with respect to each Receivables Pool will be set forth
in the related Prospectus Supplement, including, to the extent appropriate,
the composition, the geographic distribution and distribution by APR and
the portion of such Receivables Pool consisting of Precomputed Receivables
and of Simple Interest Receivables and the portion of such Receivables Pool
secured by new vehicles and by used vehicles.
Underwriting
The Receivables have been or will be originated or acquired by the
applicable Originator in accordance with such Originator's underwriting
standards (or, in the case of Receivables originated by an acquired entity,
the underwriting standards of such acquired entity), which standards are
based upon the vehicle buyer's ability to repay the obligation as well as
the value of the vehicle being financed. Each Originator's underwriting
standards also require physical damage insurance to be maintained on each
financed vehicle. The motor vehicle lending, underwriting and servicing
operations of the Originators are subject to the application of uniform
written underwriting and servicing guidelines (the "Guidelines"). The
Guidelines are not a fixed set of criteria which are required to be met by
all Motor Vehicle Loans and are not intended to replace the judgment of the
credit underwriter in reviewing a loan application. Applicants are required
to complete an application which generally includes such information as the
applicant's income, deposit accounts, liabilities, credit and employment
history and other personal information. The application is reviewed for
completeness and compliance with the Guidelines.
All applications for Motor Vehicle Loans are analyzed using a
combination of empirical (including a credit score based on a proprietary
score card) and subjective judgments based upon the Guidelines. Upon
receipt of an application, a credit bureau report on the applicant is
ordered. Based on information provided in the application and credit bureau
reports, the underwriter evaluates the relationships among the applicant's
income, debt and expenses, including debt and expenses related to the
proposed Motor Vehicle Loan. The credit underwriter then reviews the data
for stability in employment and residence, other banking relationships with
the Originator (or its Affiliates) and creditworthiness based on historical
information. Finally, the manufacturer's suggested retail price or average
retail value reported in the National Automotive Dealers Association's Used
Car Guide, as applicable, is verified for the vehicles and an evaluation is
made of the collateral and the applicant's ability to repay.
Under the Guidelines, an Originator generally will (i) require the
applicant's ratio of aggregate debt service to gross monthly income not to
exceed 50% and (ii) not finance more than 100% of the purchase price, in
the case of new vehicles and 100% of the average retail value, in the case
of used vehicles, plus related amounts financed in connection therewith, if
any, such as taxes, insurance and extended warranties. Motor Vehicle Loans
which do not conform to the Guidelines generally require approval by a more
senior credit underwriting employee than Motor Vehicle Loans which conform
to the Guidelines.
Neither the Seller, the Servicer nor any Originator monitors the
value of the financed vehicle in the ordinary course of business after a
Motor Vehicle Loan is originated and, consequently, there is no required
relationship between the outstanding principal balance of any Motor Vehicle
Loan included in a Trust and the value of the financed vehicle securing
such Motor Vehicle Loan.
Insurance
[Each Originator's underwriting standards require physical damage
insurance protection to be maintained on each Financed Vehicle. Although
such underwriting standards require the applicable Originator to confirm
the maintenance of physical damage insurance at the time each Motor Vehicle
Loan is originated, the maintenance of such insurance after that date is
not monitored by such Originator. If an Obligor fails to maintain the
required physical damage insurance, the Applicable Trustee may, but is not
obligated to, cause the Servicer to force-place (i.e. purchase a policy and
charge the Obligor for the amount of the premium (an "Add-On Balance")) an
insurance policy to cover the related Financed Vehicle. In the alternative,
the Applicable Trustee may fund the payment of any force-placed insurance
premium, in which case, such trustee will be entitled to receive any
payments from the related Obligor in respect of the resulting Add-On
Balance, in addition to the amounts to which the Trust is otherwise
entitled under the related Receivable. See "The Receivables
Pools--Insurance" in the Prospectus.
Subsequent Receivables
Subsequent Receivables may be originated at a later date using credit
criteria different from those which were applied to any Initial Receivables
and may be of a different credit quality. In addition, following the
transfer of Subsequent Receivables to the applicable Trust, the
characteristics of the entire pool of Receivables included in such Trust
may vary significantly from those of the Initial Receivables transferred to
such Trust. See "Risk Factors-Risks Associated with Subsequent
Receivables and the Pre-Funding Account." Each Prospectus Supplement for a
Trust that includes a Pre-Funding Account will describe the effects such
Subsequent Receivables may have on the Receivables Pool of such Trust.
Regular periodic information regarding the Subsequent Receivables will be
included under Item 5 in each Current Report filed on Form 8-K with the
Commission pursuant to the Exchange Act and with respect to each Trust to
which Subsequent Receivables have been transferred.
Delinquencies and Net Losses
Certain information concerning the experience of the Servicer [or the
applicable Affiliates] pertaining to delinquencies and net losses with
respect to new and used retail automobile and light duty truck Motor
Vehicle Loans will be set forth in the related Prospectus Supplement.
There can be no assurance that the delinquency and net loss experience on
any Receivables Pool will be comparable to prior experience or to such
information.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the Notes, if any, and the Certificates
of any series will generally be influenced by the rate at which the
principal balances of the related Receivables are paid, which payment may
be in the form of scheduled amortization or prepayments. (For this purpose,
the term "prepayments" includes prepayments in full, partial prepayments,
liquidations due to default, as well as receipts of proceeds from physical
damage, credit life and disability insurance policies and certain other
Receivables repurchased by the Seller or the Servicer for administrative
reasons). All of the Receivables are repayable at any time without penalty
to the Obligor. The rate of prepayment of automotive receivables is
influenced by a variety of economic, social and other factors, including
decreases in the general level of prevailing interest rates, the desire of
the Obligor to purchase a new vehicle and the fact that an Obligor
generally may not sell or transfer the Financed Vehicle securing a
Receivable unless such Receivable is paid in full. In addition, under
certain circumstances, the Seller will be obligated to repurchase
Receivables from a given Trust pursuant to the related Sale and Servicing
Agreement or Pooling and Servicing Agreement as a result of breaches of
representations and warranties and the Servicer will be obligated to
purchase Receivables from such Trust pursuant to such Sale and Servicing
Agreement or Pooling and Servicing Agreement as a result of breaches of
certain covenants. Holders of Securities should consider, in the case of
Securities purchased at a discount, the risk that a slower than anticipated
rate of principal payments on the Receivables could result in an actual
yield that is less than the anticipated yield and, in the case of
Securities purchased at a premium, the risk that a faster than anticipated
rate of principal payments on the Receivables could result in an actual
yield that is less than the anticipated yield. See "Description of the
Transfer and Servicing Agreements-Sale and Assignment of Receivables" and
"-Servicing Procedures". See also "Description of the Transfer and
Servicing Agreements-Termination" regarding the option of the Seller and
Servicer to purchase the Receivables from a given Trust, "-Insolvency
Event" regarding the sale of the Receivables owned by a Trust that is not a
grantor trust if an Insolvency Event with respect to the Seller occurs and
"Risk Factors-Financial Institution Insolvency Risks" regarding the right
of the FDIC to prepay Securities in certain circumstances.
No prediction can be made as to the rate of prepayment on the
Receivables. The Servicer maintains limited records of the historical
prepayment experience of the Motor Vehicle Loans included in its portfolio
and is not aware of any publicly available industry statistics for the
entire industry on an aggregate basis that set forth principal prepayment
experience for Motor Vehicle Loans similar to the Receivables over an
extended period of time.
In light of the above considerations, there can be no assurance as to
the amount of principal payments to be made on the Notes, if any, or the
Certificates of a given series on each Payment Date or Distribution Date,
as applicable, since such amount will depend, in part, on the amount of
principal collected on the related Receivables Pool during the applicable
Collection Period. Any reinvestment risks resulting from a faster or
slower incidence of prepayment of Receivables will be borne entirely by the
Noteholders, if any, and the Certificateholders of a given series. The
related Prospectus Supplement may set forth certain additional information
with respect to the maturity and prepayment considerations applicable to
the particular Receivables Pool and the related series of Securities.
Consistent with its customary servicing practices and procedures, the
Servicer or its designee may, in its discretion and on a case-by-case
basis, arrange with Obligors to extend or modify the terms of the related
Receivables. On an annual basis, the Servicer generally permits obligors
who have timely made at least the [six] previous monthly payments and whose
Receivables are not delinquent to defer either the principal portion or the
full scheduled amount of a loan payment for one month, extending the term
of the loan by one month. In addition, the Servicer generally grants
extensions or modifications in situations where the Servicer believes such
action is likely to maximize the amount collected, for example, an obligor
who becomes unemployed and is actively seeking employment. Extensions are
not granted to forestall an inevitable loss. Any such extensions or
modifications which do not result in a Servicer obligation to purchase such
Receivables may increase the weighted average life of the related
Securities. Unless the Servicer repurchases the affected Receivable, the
Servicer will not be permitted to voluntarily (i) make modifications to the
Receivables that reduce the original rates of interest or the aggregate
principal amount of scheduled payments on the Receivables, (ii) grant any
extension or modification if as a result the final scheduled payment on a
Receivable would fall after the related Final Scheduled Maturity Date or
(iii) amend or otherwise modify such Receivable if such amendment or
modification would result in a deemed exchange of such Receivable under
Section 1001 of the Code.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit
decimal which the Servicer will compute prior to each distribution with
respect to such class of Notes expressing the remaining outstanding
principal balance of such class of Notes, as of the applicable Payment Date
(after giving effect to payments to be made on such Payment Date), as a
fraction of the initial outstanding principal balance of such class of
Notes. The "Certificate Pool Factor" for each class of Certificates will
be a seven-digit decimal which the Servicer will compute prior to each
distribution with respect to such class of Certificates expressing the
remaining Certificate Balance of such class of Certificates, as of the
applicable Distribution Date (after giving effect to distributions to be
made on such Distribution Date), as a fraction of the initial Certificate
Balance of such class of Certificates. Each Note Pool Factor and each
Certificate Pool Factor will initially be 1.0000000 and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable class of Notes, or the reduction of the Certificate Balance of
the applicable class of Certificates, as the case may be. A Noteholder's
portion of the aggregate outstanding principal balance of the related class
of Notes is the product of (i) the original denomination of such
Noteholder's Note and (ii) the applicable Note Pool Factor. A
Certificateholder's portion of the aggregate outstanding Certificate
Balance for the related class of Certificates is the product of (i) the
original denomination of such Certificateholder's Certificate and (ii) the
applicable Certificate Pool Factor.
The Noteholders, if any, and the Certificateholders will receive
reports on or about each Payment Date concerning payments received on the
Receivables, the Pool Balance (as such term is defined in the related
Prospectus Supplement, the "Pool Balance"), each Certificate Pool Factor or
Note Pool Factor, as applicable, and various other items of information,
including amounts allocated or distributed for such Payment Date. In
addition, Securityholders of record during any calendar year will be
furnished information for tax reporting purposes not later than the latest
date permitted by law. See "Certain Information Regarding the
Securities-Reports to Securityholders".
USE OF PROCEEDS
The net proceeds from the sale of the Securities of a given series
will be applied by the Seller or the applicable Trust (i) to the purchase
of the Receivables and/or repayment of any related Warehouse Financing,
(ii) to make the initial deposit into the Reserve Account, if any, (iii) to
make the deposit of the Pre-Funded Amount into the Pre-Funding Account, if
any, and (iv) such other uses as may be set forth in the related Prospectus
Supplement. The portion of the net proceeds paid to the Seller will be
used to purchase the Receivables from the Affiliates.
THE SELLER
The Seller is a wholly-owned subsidiary of Norwest Corporation, a
diversified financial services company incorporated under the laws of the
State of Delaware and registered under the Bank Holding Company Act of
1956, as amended. The Seller was incorporated in the State of Delaware on
July 3, 1996. The principal executive offices of the Seller are located at
100 West Commons Boulevard, Suite 212, New Castle, Delaware, 19720.
The Seller has taken steps in structuring the transactions described
herein and in the Prospectus Supplement that are intended to ensure that
the voluntary or involuntary application for relief by Norwest Corporation
under any Insolvency Laws will not result in consolidation of the assets
and liabilities of the Seller with those of Norwest Corporation. These
steps include the creation of the Seller as a separate, limited-purpose
subsidiary pursuant to a restated certificate 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 independent directors). Such certificate of
incorporation includes a provision that requires the Seller to have two
directors who qualify under the certificate of incorporation as
"Independent 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
Norwest Corporation in a proceeding under any Insolvency Law. See "Risk
Factors-Risk of Substantive Consolidation."
The Seller will warrant to the Trust in the Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, 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 BANK
Norwest Bank Minnesota, N.A., a national banking association, is a
wholly-owned subsidiary of Norwest Corporation, a diversified financial
services company incorporated under the laws of the State of Delaware and
registered under the Bank Holding Company Act of 1956, as amended. Norwest
Bank Minnesota, N.A. is engaged in banking and related activities,
including providing automotive financing services to its customers and to
automotive dealers and their customers. The principal executive offices of
Norwest Bank Minnesota, N.A. are located at Norwest Center, Sixth and
Marquette, Minneapolis, Minnesota, 55479, and its telephone number is (612)
667-1234.
DESCRIPTION OF THE NOTES
General
With respect to each Trust that issues Notes, one or more classes of
Notes of the related series will be issued pursuant to the terms of an
Indenture, a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following summary
describes the material terms and provisions of the Indenture and Notes, but
it does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the applicable Notes
and the Indenture.
Each class of Notes will initially be represented by one or more
Notes, in each case registered in the name of a nominee of DTC (together
with any successor depository selected by the Trust, the "Depository")
except as set forth below. See "Certain Information Regarding the
Securities-Definitive Securities." Notes will be available for purchase in
denominations specified in the related Prospectus Supplement or, if not so
specified, in denominations of $1,000 and integral multiples thereof.
Notes may be issued in book-entry form or as Definitive Notes and if not
otherwise specified in the related Prospectus Supplement, will be issued in
book-entry form only. As to Notes issued in book-entry form, the Seller
has been informed by DTC that DTC's nominee will be Cede, unless another
nominee is specified in the related Prospectus Supplement. Accordingly,
such nominee is expected to be the holder of record of the Notes of each
such class. Unless and until Definitive Notes are issued in replacement
for book-entry Notes under the limited circumstances described herein or in
the related Prospectus Supplement, no Note Owner will be entitled to
receive a physical certificate representing a Note. See "Certain
Information Regarding the Securities-Definitive Securities." As to the
Notes issued in book-entry form, all references herein and in the related
Prospectus Supplement to actions by Noteholders refer to actions taken by
DTC upon instructions from its participating organizations (the
"Participants") and all references herein and in the related Prospectus
Supplement to distributions, notices, reports and statements to Noteholders
refer to distributions, notices, reports and statements to DTC or its
nominee, as the registered holder of the Notes, for distribution to
Noteholders in accordance with DTC's procedures with respect thereto. See
"Certain Information Regarding the Securities-Book-Entry Registration" and
"-Definitive Securities".
Principal and Interest on the Notes
The timing and priority of payment, seniority, Interest Rate and
amount of or method of determining payments of principal and interest on
each class of Notes of a given series will be described in the related
Prospectus Supplement. The right of holders of any class of Notes to
receive payments of principal and interest may be senior or subordinate to
the rights of holders of any other class or classes of Notes of such
series, as described in the related Prospectus Supplement. The dates for
payments of interest and principal on the Notes of such series may be
different from the Distribution Dates for the Certificates of such series.
To the extent specified in the related Prospectus Supplement, payments of
interest on the Notes other than certain Strip Notes of such series will be
made prior to payments of principal thereon. To the extent provided in the
related Prospectus Supplement, a series may include one or more classes of
Strip Notes entitled to (i) principal payments with disproportionate,
nominal or no interest payments or (ii) interest payments with
disproportionate, nominal or no principal payments. Each class of Notes
may have a different Interest Rate, which may be a fixed, variable or
adjustable Interest Rate (and which may be zero for certain classes of
Strip Notes), or any combination of the foregoing. The related Prospectus
Supplement will specify the Interest Rate for each class of Notes of a
given series or the method for determining such Interest Rate. See also
"Certain Information Regarding the Securities-Fixed Rate Securities" and
"-Floating Rate Securities". One or more classes of Notes of a series may
be redeemable in whole or in part under the circumstances specified in the
related Prospectus Supplement, including at the end of the Funding Period
(if any) or as a result of the exercise by the Seller or Servicer of its
option to purchase the related Receivables Pool.
To the extent specified in the related Prospectus Supplement,
payments to Noteholders of all classes within a series in respect of
interest will have the same priority. Under certain circumstances, the
amount available for such payments could be less than the amount of
interest payable on the Notes on any of the dates specified for payments in
the related Prospectus Supplement (each, a "Payment Date", which may be the
same date as each applicable Distribution Date as specified in the related
Prospectus Supplement), in which case each class of Noteholders will
receive its ratable share (based upon the aggregate amount of interest due
to such class of Noteholders) of the aggregate amount available to be
distributed in respect of interest on the Notes of such series. See
"Description of the Transfer and Servicing Agreements-Distributions" and
"-Credit and Cash Flow Enhancement".
In the case of a series of Notes which includes two or more classes
of Notes, the sequential order and priority of payment in respect of
principal and interest, and any schedule or formula or other provisions
applicable to the determination thereof, of each such class will be set
forth in the related Prospectus Supplement. Payments in respect of
principal and interest of any class of Notes will be made on a pro rata
basis among all the Noteholders of such class.
Fixed Payment Notes. To the extent specified in any Prospectus
Supplement, one or more classes of Notes of a given series may have fixed
principal payment schedules. Noteholders of such Notes would be entitled to
receive as payments of principal on any given Payment Date the
applicable amounts set forth on such schedule with respect to such Notes,
in the manner and to the extent set forth in the related Prospectus
Supplement.
Short Term Asset Backed Notes. To the extent specified in any
Prospectus Supplement, one or more classes of Notes of a given series may
be entitled to receive principal payments prior to the receipt of principal
payments by other classes of Securities issued by the applicable Trust. If
so provided in the related Prospectus Supplement, such class or classes of
Notes will have a final scheduled maturity date of less than 397 days from
the initial trade date related thereto and such class or classes will have
received a short-term rating by a Rating Agency that is in one of the two
highest short-term rating categories. The failure to pay such a class of
Notes on or prior to the related Final Scheduled Maturity Date would
constitute an event of default under the related Indenture. In general,
such class or classes of Notes will otherwise be similar to Notes which are
described in this Prospectus.
Planned Amortization Class. To the extent specified in any
Prospectus Supplement, one or more classes of Notes of a given series may
be structured as a planned amortization class ("PAC"). A PAC will be
retired according to a predetermined amortization schedule set forth in the
related Prospectus Supplement and structured to be substantially independent
of the prepayment rate on the Receivables. The timing of distributions in
respect of the other classes of Securities in the related series in some
instances may be slowed down or accelerated so that the PAC scheduled
amortization may be met as provided in the related Prospectus Supplement.
The planned amortization for a PAC set forth in the related Prospectus
Supplement generally will require scheduled sinking fund payments for the PAC
on each Payment Date. Payments to the other classes of Securities in the
related series will be allocated as otherwise set forth in the related
Prospectus Supplement only after the scheduled sinking fund payments or
scheduled amortization payments to the PAC have been made.
Targeted Amortization Class. To the extent specified in any
Prospectus Supplement, one or more classes of Notes of a given series may
be structured as a targeted amortization class ("TAC"). Any TAC will be
similar to a PAC, with support classes providing protection against prepayment
risks to the TAC. However, a TAC will differ from a PAC in that it
generally will not receive as much protection against prepayments as a PAC.
In particular, a TAC will generally provide no protection against the risk
of prepayments occurring more slowly than assumed and generally will not be
structured to permit expected cash flows from non-TAC classes of Securities
to be diverted to the TAC.
Companion Class. To the extent specified in any Prospectus
Supplement, one or more classes of Notes of a given series may be designed
to receive principal payments on a Payment Date only if principal
payments have been made on a specified planned amortization class of Notes
or targeted amortization class of Notes, and to receive any excess payments
over the amount required to reduce the principal amount of the planned
amortization class or targeted amortization class to the planned or
targeted balance for such Payment Date.
The Indenture
Modification of Indenture. With respect to each Trust that has
issued Notes pursuant to an Indenture, the Trust and the Indenture Trustee
may, with the consent of the holders of a majority of the outstanding Notes
of the related series, execute a supplemental indenture to add provisions
to, change in any manner or eliminate any provisions of, the related
Indenture, or modify (except as provided below) in any manner the rights of
the related Noteholders.
With respect to the Notes of a given series, without the consent of
the holder of each outstanding Note affected thereby, no supplemental
indenture will: (i) change the due date of any installment of principal of
or interest on any such Note or reduce the principal amount thereof, the
Interest Rate specified thereon or the redemption price with respect
thereto or change any place of payment where or the coin or currency in
which any such Note or any interest thereon is payable; (ii) impair the
right to institute suit for the enforcement of certain provisions of the
related Indenture regarding payment; (iii) reduce the percentage of the
aggregate amount of the outstanding Notes of such series, the consent of
the holders of which is required for any such supplemental indenture or the
consent of the holders of which is required for any waiver of compliance
with certain provisions of the related Indenture or of certain defaults
thereunder and their consequences as provided for in such Indenture; (iv)
modify or alter the provisions of the related Indenture regarding the
voting of Notes held by the applicable Trust, any other obligor on such
Notes, the Seller or an affiliate of any of them; (v) reduce the percentage
of the aggregate outstanding amount of such Notes, the consent of the
holders of which is required to direct the related Indenture Trustee to
sell or liquidate the Receivables; (vi) decrease the percentage of the
aggregate principal amount of such Notes required to amend the sections of
the related Indenture which specify the applicable percentage of aggregate
principal amount of the Notes of such series necessary to amend such
Indenture or certain other related agreements; or (vii) permit the creation
of any lien ranking prior to or on a parity with the lien of the related
Indenture with respect to any of the collateral for such Notes or, except
as otherwise permitted or contemplated in such Indenture, terminate the
lien of such Indenture on any such collateral or deprive the holder of any
such Note of the security afforded by the lien of such Indenture.
The Trust and the applicable Indenture Trustee may also enter into
supplemental indentures, without obtaining the consent of the Noteholders
of the related series, for the purpose of, among other things, adding any
provisions to or changing in any manner or eliminating any of the
provisions of the related Indenture or of modifying in any manner the
rights of such Noteholders; provided that such action will not materially
and adversely affect the interest of any such Noteholder.
Events Of Default; Rights Upon Event of Default. With respect to the
Notes of a given series, "Events of Default" under the related Indenture
will consist of: (i) a default for five days or more in the payment of any
interest on any such Note; (ii) a default in the payment of the principal
of or any installment of the principal of any such Note when the same
becomes due and payable; (iii) a default in the observance or performance
of any covenant or agreement of the applicable Trust made in the related
Indenture and the continuation of any such default for a period of 30 days
(or for such longer period, not in excess of 90 days, as may be reasonably
necessary to remedy such default; provided that such default is capable of
remedy within 90 days or less and the Servicer on behalf of the related
Indenture Trustee delivers an officer's certificate to the Trustee to the
effect that such Trust has commenced, or will promptly commence and
diligently pursue, all reasonable efforts to remedy such default) after
notice thereof is given to such Trust by the applicable Indenture Trustee
or to such Trust and such Indenture Trustee by the holders of at least 25%
in principal amount of such Notes then outstanding; (iv) any representation
or warranty made by such Trust in the related Indenture or in any
certificate delivered pursuant thereto or in connection therewith having
been incorrect in a material respect as of the time made, and such breach
not having been cured within 30 days (or for such longer period, not in
excess of 90 days, as may be reasonably necessary to remedy such default;
provided that such default is capable of remedy within 90 days or less and
the Servicer on behalf of the related Indenture Trustee delivers an
officer's certificate to the related Indenture Trustee to the effect that
such Trust has commenced, or will promptly commence and diligently pursue,
all reasonable efforts to remedy such default) after notice thereof is
given to such Trust by the applicable Indenture Trustee or to such Trust
and such Indenture Trustee by the holders of at least 25% in principal
amount of such Notes then outstanding; or (v) certain events of bankruptcy,
insolvency, receivership or liquidation of the applicable Trust or the
Seller. However, the amount of principal required to be paid to
Noteholders of such series under the related Indenture will generally be
limited to amounts available to be deposited in the applicable Note
Distribution Account. Therefore, the failure to pay principal on a class
of Notes generally will not result in the occurrence of an Event of Default
until the final scheduled Payment Date for such class of Notes.
If an Event of Default should occur and be continuing with respect to
the Notes of any series, the related Indenture Trustee or holders of a
majority in principal amount of such Notes then outstanding may declare the
principal of such Notes to be immediately due and payable. Such
declaration may, under certain circumstances, be rescinded by the holders
of a percentage of the principal amount of Notes then outstanding specified
in the related Prospectus Supplement and, if not so specified, may be
rescinded by the holder of a majority in principal amount of such Notes
then outstanding.
If the Notes of any series are due and payable following an Event of
Default with respect thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on Trust property, exercise
remedies as a secured party, sell the related Receivables or elect to have
the applicable Trust maintain possession of such Receivables and continue
to apply collections on such Receivables as if there had been no
declaration of acceleration. Such Indenture Trustee is prohibited from
selling the related Receivables following an Event of Default, other than a
default in the payment of any principal of or a default for five days or
more in the payment of any interest on any Note of such series, unless (i)
the holders of all such outstanding Notes consent to such sale, (ii) the
proceeds of such sale are sufficient to pay in full the principal of and
the accrued interest on such outstanding Notes at the date of such sale, or
(iii) such Indenture Trustee determines that the proceeds of Receivables
would not be sufficient on an ongoing basis to make all payments on such
Notes as such payments would have become due if such obligations had not
been declared due and payable, and such Indenture Trustee obtains the
consent of the holders of 66-2/3% of the aggregate outstanding amount of
such Notes.
If an Event of Default occurs and is continuing with respect to a
series of Notes, such Indenture Trustee will be under no obligation to
exercise any of the rights or powers under such Indenture at the request or
direction of any of the holders of such Notes, if such Indenture Trustee
believes it will not be adequately indemnified against the costs, expenses
and liabilities which might be incurred by it in complying with such
request. Subject to the provisions for indemnification and certain
limitations contained in the related Indenture, the holders of a majority
in principal amount of the outstanding Notes of a given series will have
the right to direct the time, method and place of conducting any proceeding
or any remedy available to the applicable Indenture Trustee, and the
holders of a majority in principal amount of such Notes then outstanding
may, in certain cases, waive any default with respect thereto, except a
default in the payment of principal or interest or a default in respect of
a covenant or provision of such Indenture that cannot be modified without
the waiver or consent of all the holders of such outstanding Notes.
No holder of a Note of any series will have the right to institute
any proceeding with respect to the related Indenture, unless (i) such
holder previously has given to the applicable Indenture Trustee written
notice of a continuing Event of Default, (ii) the holders of not less than
25% in principal amount of the outstanding Notes of such series have made
written request to such Indenture Trustee to institute such proceeding in
its own name as Indenture Trustee, (iii) such holder or holders have
offered such Indenture Trustee satisfactory indemnity, (iv) such Indenture
Trustee has for 60 days failed to institute such proceeding, and (v) no
direction inconsistent with such written request has been given to such
Indenture Trustee during such 60-day period by the holders of a majority in
principal amount of such outstanding Notes.
With respect to any Trust, neither the related Indenture Trustee nor
the related Trustee in its individual capacity, nor any holder of a
Certificate representing an ownership interest in such Trust nor any of
their respective owners, beneficiaries, agents, officers, directors,
employees, affiliates, successors or assigns will, in the absence of an
express agreement to the contrary, be personally liable for the payment of
the principal of or interest on the related Notes or for the agreements of
such Trust contained in the applicable Indenture.
Certain Covenants
Each Indenture will provide that the related Trust may not
consolidate with or merge into any other entity, unless (i) the entity
formed by or surviving such consolidation or merger is organized under the
laws of the United States or any state, (ii) such entity expressly assumes
such Trust's obligation to make due and punctual payments upon the Notes of
the related series and the performance or observance of every agreement and
covenant of such Trust under the Indenture, (iii) no Event of Default shall
have occurred and be continuing immediately after such merger or
consolidation, (iv) such Trust has been advised that the rating of the
Notes or the Certificates of such series then in effect would not be
reduced or withdrawn by the Rating Agencies as a result of such merger or
consolidation, (v) such Trust has received an opinion of counsel to the
effect that such consolidation or merger would have no material adverse tax
consequence to the Trust or to any related Noteholder or Certificateholder,
and (vi) any action necessary to maintain the lien and security interest
under the Indenture has been taken.
Each Trust will not, among other things, (i) except as expressly
permitted by the applicable Indenture, the applicable Transfer and
Servicing Agreements or certain related documents with respect to such
Trust (collectively, the "Related Documents"), sell, transfer, exchange or
otherwise dispose of any of the assets of such Trust, (ii) claim any credit
on or make any deduction from the principal and interest payable in respect
of the Notes of the related series (other than amounts withheld under the
Code or applicable state law) or assert any claim against any present or
former holder of such Notes because of the payment of taxes levied or
assessed upon such Trust, (iii) permit the validity or effectiveness of the
related Indenture to be impaired or permit any person to be released from
any covenants or obligations with respect to such Notes under such
Indenture except as may be expressly permitted thereby, (iv) permit any
lien, charge, excise, claim, security interest, mortgage or other
encumbrance (other than certain liens that arise by operation of law) to be
created on or extend to or otherwise arise upon or burden the assets of
such Trust or any part thereof, or any interest therein or the proceeds
thereof, or (v) permit the lien of the related Indenture not to constitute
a valid first priority (other than certain liens that arise by operation of
law) security interest in the assets of such Trust.
No Trust may engage in any activity other than as specified under the
section of the related Prospectus Supplement entitled "The Trust". No
Trust will incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the related Notes and the related
Indenture, pursuant to any Advances made to it by the Servicer or otherwise
in accordance with the Related Documents.
Annual Compliance Statement. Each Trust will be required to file
annually with the related Indenture Trustee a written statement as to the
fulfillment of its obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee for each
Trust will be required to mail each year to all related Noteholders a brief
report relating to its eligibility and qualification to continue as
Indenture Trustee under the related Indenture, any amounts advanced by it
under the Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by such Trust to the applicable Indenture Trustee in its
individual capacity, the property and funds physically held by such
Indenture Trustee as such and any action taken by it that materially
affects the related Notes and that has not been previously reported.
Satisfaction and Discharge of Indenture. An Indenture will be
discharged with respect to the collateral securing the related Notes upon
the delivery to the related Indenture Trustee for cancellation of all such
Notes or, with certain limitations, upon deposit with such Indenture
Trustee of funds sufficient for the payment in full of all such Notes.
The Indenture Trustee
The Indenture Trustee for a series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any series may
resign at any time, in which event the Issuer will be obligated to appoint
a successor trustee for such series. The Issuer may also remove any such
Indenture Trustee if such Indenture Trustee ceases to be eligible to
continue as such under the related Indenture or if such Indenture Trustee
becomes insolvent. In such circumstances, the Issuer will be obligated to
appoint a successor trustee for the applicable series of Notes. Any
resignation or removal of the Indenture Trustee and appointment of a
successor trustee for any series of Notes does not become effective until
acceptance of the appointment by the successor trustee for such series.
DESCRIPTION OF THE CERTIFICATES
General
With respect to each Trust, one or more classes of Certificates of
the related series will be issued pursuant to the terms of a Trust
Agreement or a Pooling and Servicing Agreement, a form of each of which has
been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. The following summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference
to, all the provisions of the Certificates and the Trust Agreement or
Pooling and Servicing Agreement, as applicable.
Except for the Certificates, if any, of a given series purchased by
the Seller, each class of Certificates will initially be represented by one
or more Certificates registered in the name of the Depository, except as
set forth below. See "Certain Information Regarding the Securities -
Definitive Securities." Except for the Certificates, if any, of a given
series purchased by the Seller, the Certificates will be available for
purchase in minimum denominations specified in the related Prospectus
Supplement, or if not so specified, in denominations of $1,000 and integral
multiples of $1,000 in excess thereof. Certificates may be issued in
book-entry form or as Definitive Certificates and if not otherwise
specified in the related Prospectus Supplement will be available in
book-entry form only. As to the Certificates issued in book-entry form,
the Seller has been informed by DTC that DTC's nominee will be Cede, unless
another nominee is specified in the related Prospectus Supplement.
Accordingly, such nominee is expected to be the holder of record of the
Certificates of any series that are not purchased by the Seller. Unless
and until Definitive Certificates are issued in replacement for book-entry
Certificates under the limited circumstances described herein or in the
related Prospectus Supplement, no Certificate Owner (other than the Seller)
will be entitled to receive a physical certificate representing a
Certificate. See "Certain Information Regarding the Securities-
Definitive Securities." As to Certificates issued in book-entry form, all
references herein and in the related Prospectus Supplement to actions by
Certificateholders refer to actions taken by DTC upon instructions from the
Participants and all references herein and in the related Prospectus
Supplement to distributions, notices, reports and statements to
Certificateholders refer to distributions, notices, reports and statements
to DTC or its nominee, as the case may be, as the registered holder of the
Certificates, for distribution to Certificateholders in accordance with
DTC's procedures with respect thereto. See "Certain Information Regarding
the Securities--Book-Entry Registration" and "-Definitive Securities".
Any Certificates of such series owned by the Seller or its affiliates will
be entitled to equal and proportionate benefits under the applicable Trust
Agreement, except that such Certificates will be deemed not to be
outstanding for the purpose of determining whether the requisite percentage
of Certificateholders have given any request, demand, authorization,
direction, notice, consent or other action under the Related Documents
(other than the commencement by the related Trust of a voluntary proceeding
in bankruptcy as described under "Description of the Transfer and Servicing
Agreements-Insolvency Event").
Distributions of Principal and Interest
The timing and priority of distributions, seniority, allocations of
losses, Certificate Rate and amount of or method of determining
distributions with respect to principal and interest of each class of
Certificates will be described in the related Prospectus Supplement.
Distributions of interest on such Certificates other than certain Strip
Certificates will be made on the dates specified in the related Prospectus
Supplement (each, a "Distribution Date") and will be made prior to
distributions with respect to principal of such Certificates. To the
extent provided in the related Prospectus Supplement, a series may include
one or more classes of Strip Certificates entitled to (i) distributions in
respect of principal with disproportionate, nominal or no interest
distributions, or (ii) interest distributions with disproportionate,
nominal or no distributions in respect of principal. Each class of
Certificates may have a different Certificate Rate, which may be a fixed,
variable or adjustable Certificate Rate (and which may be zero for certain
classes of Strip Certificates) or any combination of the foregoing. The
related Prospectus Supplement will specify the Certificate Rate for each
class of Certificates of a given series or the method for determining such
Certificate Rate. See also "Certain Information Regarding the
Securities-Fixed Rate Securities" and "-Floating Rate Securities". If a
series of Securities includes classes of Notes, such Notes and Certificates
will be issued by the same Trust and payable from the same Trust property,
to the extent specified in the related Prospectus Supplement, distributions
in respect of the Certificates of such series will be subordinate to
payments in respect of the Notes of such series as more fully described in
the related Prospectus Supplement. Distributions in respect of interest on
and principal of any class of Certificates will be made on a pro rata basis
among all the Certificateholders of such class.
In the case of a series of Certificates which includes two or more
classes of Certificates, the timing, sequential order, priority of payment
or amount of distributions in respect of interest and principal, and any
schedule or formula or other provisions applicable to the determination
thereof, of each such class shall be as set forth in the related Prospectus
Supplement.
CERTAIN INFORMATION REGARDING THE SECURITIES
Fixed Rate Securities
Each class of Securities (other than certain classes of Strip Notes
or Strip Certificates) may bear interest at a fixed rate per annum ("Fixed
Rate Securities") or at a variable or adjustable rate per annum ("Floating
Rate Securities"), as more fully described below and in the related
Prospectus Supplement. Each class of Fixed Rate Securities will bear
interest at the applicable per annum Interest Rate or Certificate Rate, as
the case may be, specified in the related Prospectus Supplement. Interest
on each class of Fixed Rate Securities will be computed on the basis of a
360-day year of twelve 30-day months or on such other day count basis as is
specified in the applicable Prospectus Supplement. See "Description of the
Notes-Principal and Interest on the Notes" and "Description of the
Certificates- Distributions of Principal and Interest".
Floating Rate Securities
Each class of Floating Rate Securities will bear interest for each
applicable Interest Reset Period (as such term is defined in the related
Prospectus Supplement with respect to a class of Floating Rate Securities,
"Interest Reset Period") at a rate per annum determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in
the related Prospectus Supplement. The "Spread" is the number of basis
points (one basis point equals one one-hundredth of a percentage point)
that may be specified in the applicable Prospectus Supplement as being
applicable to such class, and the "Spread Multiplier" is the percentage
that may be specified in the applicable Prospectus Supplement as being
applicable to such class.
The applicable Prospectus Supplement will designate a Base Rate for a
given Floating Rate Security based on the London interbank offered rate
("LIBOR"), commercial paper rates, Federal funds rates, U.S. Government
treasury securities rates, negotiable certificates of deposit rates or
another rate as set forth in such Prospectus Supplement.
As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following
(in each case expressed as a rate per annum): (i) a maximum limitation, or
ceiling, on the rate at which interest may accrue during any interest
period and (ii) a minimum limitation, or floor, on the rate at which
interest may accrue during any interest period. In addition to any maximum
interest rate that may be applicable to any class of Floating Rate
Securities, the interest rate applicable to any class of Floating Rate
Securities will in no event be higher than the maximum rate permitted by
applicable law, as the same may be modified by United States law of general
application.
Each Trust with respect to which a class of Floating Rate Securities
will be issued will appoint, and enter into agreements with, a calculation
agent (each, a "Calculation Agent") to calculate interest rates on each
such class of Floating Rate Securities issued with respect thereto. The
applicable Prospectus Supplement will set forth the identity of the
Calculation Agent for each such class of Floating Rate Securities of a
given series, which may be either the Trustee or Indenture Trustee with
respect to such series. All determinations of interest by the Calculation
Agent shall, in the absence of manifest error, be conclusive for all
purposes and binding on the holders of Floating Rate Securities of a given
class. All percentages resulting from any calculation of the rate of
interest on a Floating Rate Security will be rounded, if necessary, in the
manner specified in the related Prospectus Supplement or, if not so
specified to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward.
Book-Entry Registration
With respect to each class of Securities of a given series issued in
book-entry form, Securityholders may hold their Securities through DTC (in
the United States) or Cedel or Euroclear (in Europe) if they are
participants of such systems, or indirectly through organizations that are
participants in such systems. DTC's Nominee will hold the global
Securities. Cedel and Euroclear will hold omnibus positions on behalf of
the Cedel Participants and the Euroclear Participants, respectively,
through customers' securities accounts in Cedel's and Euroclear's names on
the books of their respective depositories (collectively, the
"Depositaries") which in turn will hold such positions in customers'
securities accounts in the Depositaries' 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 New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities for its Participants ("DTC
Participants") and facilitates the clearance and settlement among DTC
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic book-entry changes in DTC
Participants' accounts, thereby eliminating the need for physical movement
of securities certificates. DTC Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to the DTC system is also available to
others such as securities brokers and dealers, banks, and trust companies
that clear through or maintain a custodial relationship with a DTC
Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and DTC Participants are on file with the
Securities and Exchange Commission.
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between Cedel Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in
DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established
deadlines (European time). The relevant European international clearing
system will, if the transaction meets its settlement requirements, deliver
instructions to its Depositary to take action to effect final settlement on
its behalf by delivering or receiving securities in DTC, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Cedel Participants and Euroclear Participants
may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business
day following the DTC settlement date, and such credits or any transactions
in such securities settled during such processing will be reported to the
relevant Cedel Participant or Euroclear Participant on such business day.
Cash received in Cedel or Euroclear as a result of sales of securities by
or through a Cedel Participant or a Euroclear Participant to a DTC
Participant will be received with value on the DTC settlement date but will
be available in the relevant Cedel or Euroclear cash account only as of the
business day following settlement in DTC.
Purchases of Securities under the DTC system must be made by or
through DTC Participants, which will receive a credit for the Securities on
DTC's records. The ownership interest of each actual Security Owner is in
turn to be recorded on the DTC Participants' and Indirect Participants'
records. Security Owners will not receive written confirmation from DTC of
their purchase, but Security Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the DTC Participant or Indirect
Participant through which the Security Owner entered into the transaction.
Transfers of ownership interests in the Securities are to be accomplished
by entries made on the books of DTC Participants acting on behalf of
Security Owners. Security Owners will not receive certificates representing
their ownership interest in Securities, except in the event that use of the
book-entry system for the Securities is discontinued. Except to the extent
Seller holds Certificates with respect to any series of Securities, it is
anticipated that the only "Securityholder", "Noteholder" and
"Certificateholder" will be DTC's Nominee. Note Owners will not be
recognized by each Indenture Trustee as Noteholders, as such term is used
in each Indenture, and Note Owners will be permitted to exercise the rights
of Noteholders only indirectly through DTC and DTC Participants.
Similarly, Certificate Owners will not be recognized by each Trustee as
Certificateholders as such term is used in each Trust Agreement or Pooling
and Servicing Agreement, and Certificate Owners will be permitted to
exercise the rights of Certificateholders only indirectly through DTC and
DTC Participants.
To facilitate subsequent transfers, all Securities deposited by DTC
Participants with DTC are registered in the name of DTC's Nominee. The
deposit of Securities with DTC and their registration in the name of DTC's
Nominee effects no change in beneficial ownership. DTC has no knowledge of
the actual Security Owners of the Securities; DTC's records reflect only
the identity of the DTC Participants to whose accounts such Securities are
credited, which may or may not be the Security Owners. The DTC Participants
will remain responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other communications by DTC to DTC
Participants, by DTC Participants to Indirect Participants, and by DTC
Participants and Indirect Participants to Security Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither DTC nor DTC's Nominee will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an omnibus proxy to the
issuer as soon as possible after the record date, which assigns DTC's
Nominees's consenting or voting rights to those DTC Participants to whose
accounts the Securities are credited on the record date (identified in a
listing attached thereto).
Principal and interest payments on the Securities will be made to
DTC. DTC's practice is to credit Participants' accounts on the applicable
Distribution Date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive
payment on such Distribution Date. Payments by DTC Participants to Security
Owners will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers in bearer
form or registered in "street name" and will be the responsibility of such
DTC Participant and not of DTC, the related Indenture Trustee or the
related Trustee, as applicable (the "Applicable Trustee") or the Seller,
subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal and interest to DTC is the
responsibility of the Applicable Trustee, disbursement of such payments to
DTC Participants shall be the responsibility of DTC, and disbursement of
such payments to Security Owners shall be the responsibility of DTC
Participants and Indirect Participants. Under a book-entry format,
Securityholders may experience some delay in their receipt of payments,
since such payments will be forwarded by the Applicable Trustee to DTC's
Nominee. DTC will forward such payments to DTC Participants which
thereafter will forward them to Indirect Participants or Security Owners.
Because DTC can only act on behalf of DTC Participants, who in turn
act on behalf of Indirect Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or otherwise take actions with respect to
such Securities, may be limited due to the lack of a physical certificate
for such Securities.
DTC has advised the Seller that it will take any action permitted to
be taken by a Noteholder under the related Indenture or a Certificateholder
under the related Trust Agreement or Pooling and Servicing Agreement only
at the direction of one or more DTC Participants to whose accounts with DTC
the applicable Notes or 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 Participants whose holdings
include such undivided interests.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Seller believes to be
reliable, but the Seller takes no responsibility for the accuracy thereof.
Cedel Bank, societe anonyme ("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 32 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 and may include the underwriters of any series of
Securities. 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.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("Euroclear Participants") and to
clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk
from lack of simultaneous transfers of securities and cash. Transactions
may now be settled in any of 32 currencies, including United States
dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in 25
countries generally similar to the arrangements for cross-market transfers
with DTC described above. The Euroclear System is operated by Morgan
Guaranty Trust Company of New York, Brussels, Belgium office (the
"Euroclear Operator" or "Euroclear"), under contract with Euroclear
Clearance System, Societe Cooperative, 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 Board establishes policy for the Euroclear
System. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial
intermediaries and may include the underwriters of any series of
Securities. Indirect access to the Euroclear System is also available to
other firms that maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such,
it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York State Banking Department, as well as the
Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments
with respect to securities in the Euroclear System. All securities in the
Euroclear System are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The
Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Securities 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 Depositary. Such distributions
will be subject to tax reporting in accordance with relevant United States
tax laws and regulations. See "Federal Income Tax Consequences." Cedel or
the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by a Securityholder under a related Agreement on
behalf of a Cedel Participant or Euroclear Participant only in accordance
with its relevant rules and procedures and subject to its Depositary's
ability to effect such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Securities among
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. Under such circumstances, in the event that a
successor securities depository for DTC is not obtained, Definitive
Securities are required to be printed and delivered. The Seller may decide
to discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that event, Definitive Securities will
be delivered to Securityholders. See "-Definitive Securities."
NONE OF THE TRUST, THE SELLER, THE BANK, THE SERVICER, ANY
SUBSERVICER, ANY APPLICABLE TRUSTEE NOR ANY OF THE UNDERWRITERS WILL HAVE
ANY RESPONSIBILITY OR OBLIGATION TO ANY DTC 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 SECURITY OWNER IN
RESPECT OF THE PRINCIPAL BALANCE OF, OR INTEREST ON, THE SECURITIES, (3)
THE DELIVERY BY ANY DTC PARTICIPANT, CEDEL PARTICIPANT, OR EUROCLEAR
PARTICIPANT OF ANY NOTICE TO ANY SECURITY OWNER WHICH IS REQUIRED OR
PERMITTED UNDER THE TERMS OF THE APPLICABLE AGREEMENTS TO BE GIVEN TO
SECURITYHOLDERS OR (4) ANY OTHER ACTION TAKEN BY DTC OR DTC'S NOMINEE AS
THE SECURITYHOLDER.
Definitive Securities
With respect to any series of Notes and any series of Certificates
issued in book-entry form, such Notes or Certificates will be issued in
fully registered, certificated form ("Definitive Notes" and "Definitive
Certificates", respectively, and collectively referred to herein as
"Definitive Securities") to Noteholders or Certificateholders or their
respective nominees, rather than to DTC or its nominee, if the related
Prospectus Supplement so provides with respect to the initial issuance of
any such Securities thereunder and, if the related Prospectus Supplement
does not so provide, only if (i) Seller advises the related Trustee that
DTC is no longer willing or able to discharge properly its responsibilities
as depository with respect to such Securities and such Trustee is unable to
locate a qualified successor, (ii) the Seller at its option, advises the
related Trustee that it elects to terminate the book-entry system through
DTC, or (iii) after the occurrence of an Event of Default or a Servicer
Termination Event with respect to such Securities, holders representing at
least a majority of the outstanding principal amount of the Notes or the
Certificates, as the case may be, of such series advise the Applicable
Trustee and DTC through its Participants in writing that the continuation
of a book-entry system through DTC (or a successor thereto) with respect to
such Notes or Certificates is no longer in the best interest of the holders
of such Securities.
Upon the occurrence of any event described in the immediately
preceding paragraph, the Applicable Trustee will be required to notify all
applicable Security Owners of a given series through Participants of the
availability of Definitive Securities. Upon surrender by DTC of the
definitive certificates representing the corresponding Securities and
receipt of instructions for re-registration, the Applicable Trustee will
reissue such Securities as Definitive Securities to such Securityholders.
Distributions of principal of, and interest on, Definitive Securities
will be made by the Applicable Trustee in accordance with the procedures
set forth in the related Indenture or the related Trust Agreement or
Pooling and Servicing Agreement, as applicable, directly to holders of
Definitive Securities in whose names the Definitive Securities were
registered at the close of business on the applicable record date specified
for such Securities in the related Prospectus Supplement. Such
distributions will be made by check mailed to the address of such holder as
it appears on the register maintained by the Applicable Trustee. The final
payment on any such Definitive Security, however, will be made only upon
presentation and surrender of such Definitive Security at the office or
agency specified in the notice of final distribution to the applicable
Securityholders.
Definitive Securities will be transferable and exchangeable at the
offices of the Applicable Trustee or of a registrar named in a notice
delivered to holders of Definitive Securities. No service charge will be
imposed for any registration of transfer or exchange, but the Applicable
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
List of Securityholders
Three or more holders of the Notes of a given series or one or more
holders of such Notes evidencing not less than 25% of the aggregate
outstanding principal balance of such Notes may, by written request to the
related Indenture Trustee, obtain access to the list of all Noteholders of
such series maintained by such Indenture Trustee for the purpose of
communicating with other Noteholders with respect to their rights under the
related Indenture or under such Notes. Unless Definitive Notes have been
issued, the only "Noteholder" appearing on the list maintained by the
related Indenture Trustee will be Cede, as nominee for DTC. In such
circumstances, any Note Owner wishing to communicate with other Note Owners
will not be able to identify those Note Owners through the Indenture
Trustee and instead will have to attempt to identify them through DTC and
its Participants or such other means as such Note Owner may find available.
Three or more holders of the Certificates of a given series or one or
more holders of such Certificates evidencing not less than 25% of the
Certificate Balance of such Certificates may, by written request to the
related Trustee, obtain access to the list of all Certificateholders of
such series maintained by such Trustee for the purpose of communicating
with other Certificateholders with respect to their rights under the
related Trust Agreement or Pooling and Servicing Agreement or under such
Certificates. Unless Definitive Certificates have been issued, the only
"Certificateholder" appearing on the list maintained by the related Trustee
will be Cede, as nominee for DTC. In such circumstances, any Certificate
Owner wishing to communicate with other Certificate Owners will not be able
to identify those Certificate Owners through the Trustee and instead will
have to attempt to identify them through DTC and its Participants or such
other means as such Certificate Owner may find available.
Reports to Securityholders
With respect to each series of Securities, on or prior to each
Payment Date or Distribution Date, as applicable, the Servicer will prepare
and provide to the related Trustee a statement to be delivered to the
related Securityholders. With respect to each series of Securities, each
such statement to be delivered to Noteholders will include (to the extent
applicable) the following information (and any other information so
specified in the related Prospectus Supplement) as to the Notes of such
series with respect to such Payment Date or the period since the previous
Payment Date, as applicable, and each such statement to be delivered to
Certificateholders will include (to the extent applicable) the following
information (and any other information so specified in the related
Prospectus Supplement) as to the Certificates of such series with respect
to such Distribution Date or the period since the previous Distribution
Date, as applicable:
(i) the amount of the distribution allocable to principal of
each class of such Notes and to the Certificate Balance of each class
of such Certificates;
(ii) the amount of the distribution allocable to interest on or
with respect to each class of Securities of such series;
(iii) the amount of the distribution allocable to draws from the
Reserve Account (if any), any Yield Supplement Account or payments in
respect of any other credit or cash flow enhancement arrangement;
(iv) the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
(v) the aggregate outstanding principal balance and the Note
Pool Factor for each class of such Notes, and the Certificate Balance
and the Certificate Pool Factor for each class of such Certificates,
each after giving effect to all payments reported under clause (i)
above on such date;
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period or Collection Periods, as the
case may be;
(vii) the Interest Rate or Certificate Rate for the next period
for any class of Notes or Certificates of such series with variable or
adjustable rates;
(viii) the amount of the aggregate realized losses, if any, for
the preceding Collection Period;
(ix) the Noteholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover Shortfall, the Certificateholders'
Interest Carryover Shortfall and the Certificateholders' Principal
Carryover Shortfall (each as defined in the related Prospectus
Supplement), if any, in each case as applicable to each class of
Securities, and the change in such amounts from the preceding
statement;
(x) the aggregate Purchase Amounts for Receivables, if any,
that were repurchased in such Collection Period;
(xi) the balance of any Yield Supplement Account or the Reserve
Account (if any) on such date, after giving effect to changes therein
on such date;
(xii) for each such date during the Funding Period (if any), the
remaining Pre-Funded Amount;
(xiii) for the first such date that is on or immediately
following the end of the Funding Period (if any), the amount of any
remaining Pre-Funded Amount that has not been used to fund the
purchase of Subsequent Receivables and is being passed through as
payments of principal on the Securities of such series; and
(xiv) the amount of Advances on such date.
Each amount set forth pursuant to subclauses (i), (ii), (vi) and (ix)
with respect to the Notes or the Certificates of any series will be
expressed as a dollar amount per $1,000 of the initial principal balance of
such Notes or the initial Certificate Balance of such Certificates, as
applicable.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of each Trust, the Applicable
Trustee will mail to each person who at any time during such calendar year
has been a Securityholder with respect to such Trust and received any
payment thereon a statement containing certain information for the purposes
of such Securityholder's preparation of federal income tax returns. See
"Federal Income Tax Consequences".
Funding Period or Revolving Period
If specified in the related Prospectus Supplement, during a Funding
Period and/or Revolving Period, the Pre-Funding Account and/or Revolving
Account will be maintained as a trust account in the name of the Applicable
Trustee. The Pre-Funded Amount will initially equal the amount specified in
the related Prospectus Supplement, which may be up to 100% of the aggregate
principal amount of the series of Securities offered thereunder. During the
Funding Period, the Pre-Funded Amount will be reduced by the amount thereof
used to purchase Subsequent Receivables in accordance with the Sale and
Servicing Agreement or the Pooling and Servicing Agreement, as applicable,
and the amounts thereof deposited in the Reserve Account in connection with
the purchase of such Subsequent Receivables.
Prior to being used to purchase Subsequent Receivables or paid to the
Noteholders and Certificateholders, the Pre-Funded Amount and amounts or
deposit in the Revolving Account will be invested from time to time in
Eligible Investments other than, in the case of a Pre-Funding Account, money
market funds. See "Description of the Transfer and Servicing
Agreements-Accounts."
If specified in the related Prospectus Supplement for a Trust that
issues Notes, during a Revolving Period, the Applicable Trustee will
deposit in the related Revolving Account the principal collections on the
related Receivables as described above. In addition, on each Distribution
Date or Payment Date, as applicable, during the Revolving Period, the
applicable Trustee will deposit in the related Revolving Account any other
amount described in the related Prospectus Supplement. Funds on deposit in
a Revolving Account will be withdrawn from time to time during the related
Revolving Period for delivery to the Seller in exchange for the transfer and
assignment of Subsequent Receivables to the related Trust in the manner
specified in the related Prospectus Supplement. In addition, on the
Distribution Date or Payment Date, as applicable, following the end of the
related Revolving Period, the Applicable Trustee will transfer the amount,
if any, on deposit in the related Revolving Account at the close of business
on the last day of such Revolving Period, less any investment earnings on
deposit therein, to the related Collection Account for distribution to the
related Securityholders on such Distribution Date or Payment Date.
In addition, on each Distribution Date or Payment Date, as applicable, during
the related Revolving Period, the Applicable Trustee will transfer to the
related Collection Account for distribution to the related Securityholders
on such Distribution Date or Payment Date the amount, if any, by which the
amount on deposit in the related Revolving Account at the close of business
on the last day of the preceding calendar month, less any investment earnings
on deposit therein, exceeds the maximum permitted Revolving Account balance
specified in the related Prospectus Supplement.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes the material terms of each Sale and
Servicing Agreement or Pooling and Servicing Agreement pursuant to which a
Trust will purchase Receivables from the Seller and the Servicer will agree
to service such Receivables and each Trust Agreement (in the case of a
grantor trust, the Pooling and Servicing Agreement) pursuant to which a
Trust will be created and Certificates will be issued and pursuant to which
the Trustee will undertake certain administrative duties with respect to a
Trust that issues Notes (collectively, the "Transfer and Servicing
Agreements"). Forms of the Transfer and Servicing Agreements have been
filed as exhibits to the Registration Statement of which this Prospectus
forms a part. This summary does not purport to be complete and is subject
to, and qualified in its entirety by reference to, all the provisions of
the Transfer and Servicing Agreements.
Sale and Assignment of Receivables
Prior to or at the time of issuance of the Securities of a given
Trust, pursuant to a related Purchase Agreement, each Affiliate will sell
and assign to the Seller, without recourse, its entire interest in the
Initial Receivables, if any, of the related Receivables Pool, including its
security interests in the related Financed Vehicles. The Seller will, if so
specified in the related Prospectus Supplement, transfer and assign to the
Applicable Trustee, without recourse, pursuant to a Transfer and Servicing
Agreement, its entire interest in the Initial Receivables, if any, of the
related Receivables Pool, including its security interests in the related
Financed Vehicles. The Trustee will not independently verify the existence
and qualification of any Receivables. The Trustee will, concurrently with
such sale and assignment, execute, authenticate, and deliver the related
Notes and/or Certificates to the Seller in exchange for the Receivables.
Each such Receivable will be identified in a schedule delivered pursuant to
such Transfer and Servicing Agreement (a "Schedule of Receivables"). The net
proceeds received by the Seller from the sale of the Certificates and the
Notes of a given series will be applied to the purchase of the related
Receivables from each Affiliate and, to the extent specified in the related
Prospectus Supplement, to the repayment of any Warehouse Financing or
deposit of the Pre-Funded Amount into the Pre-Funding Account and to make
any required initial deposit in any Reserve Account. The related Prospectus
Supplement for a given Trust will specify whether, and the terms, conditions
and manner under which, Subsequent Receivables will be sold by the Seller to
the applicable Trust from time to time during any Funding Period on each date
specified as a transfer date in the related Prospectus Supplement (each,
a "Subsequent Transfer Date").
The purchase price for the Receivables purchased by the Trust from the
Seller and by the Seller from any Affiliate may be more or less than the
aggregate principal balance thereof. If any Receivables are purchased for
a purchase price less than their respective principal balances, a portion of
the collections or proceeds in respect of principal from such Receivables
may be deemed collections or proceeds in respect of interest on such
Receivables for the purposes of allocating distributions on the Securities.
If so specified in the related Prospectus Supplement, a Trust may
acquire Initial Receivables pursuant to "warehousing" financing
arrangements entered into prior to the issuance by that Trust of any
Securities offered hereby. It will be a condition to the issuance of
Securities by any such Trust that any Warehouse Financing be repaid in
full, and any related security interests released, at or prior to the time
of such issuance.
In each Purchasing Agreement, each Affiliate will represent and
warrant to the Seller and in each Sale and Servicing Agreement or Pooling and
Servicing Agreement, the Seller will represent and warrant to the applicable
Trust, among other things, that: (i) the information provided in the related
Schedule of Receivables is correct in all material respects; (ii) the
Obligor on each related Receivable is required to maintain physical damage
insurance covering the Financed Vehicle; (iii) as of the applicable Closing
Date or the applicable Subsequent Transfer Date, if any, to the best of its
knowledge, the Financed Vehicle securing the related Receivable is free and
clear of all security interests, liens, charges and encumbrances that are
or may be prior to the lien granted by such Receivable; (iv) as of the
Closing Date or the applicable Subsequent Transfer Date, if any, each of
such Receivables is owned by Seller free and clear of any lien and is
secured by a first perfected security interest in favor of the Seller in
the Financed Vehicle; (v) each related Receivable, at the time it was
originated, complied and, as of the Closing Date or the applicable
Subsequent Transfer Date, if any, 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) any other representations and warranties that may be set forth in the
related Prospectus Supplement.
As of the last day of the month that includes the sixtieth day (or if
the Seller elects, the thirtieth day) following the discovery by or notice
to the Seller of a breach of any representation or warranty of the Seller
that materially and adversely affects the interests of the related Trust in
any Receivable, the Seller, unless the breach is cured, will repurchase
such Receivable from such Trust at a price equal to the amount that would
be required to be paid by the related Obligor on such date to prepay such
Receivable, after giving effect to the receipt of any moneys collected
(from whatever source) on such Receivable, if any (the "Purchase Amount").
The repurchase obligation constitutes the sole remedy available to the
Certificateholders or the Trustee and any Noteholders or Indenture Trustee
in respect of such Trust for any such uncured breach.
Pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement, to assure uniform quality in servicing the Receivables and to
reduce administrative costs, the Seller and each Trust will designate the
Servicer or an Affiliate as custodian to maintain possession, as such
Trust's agent, of the related motor vehicle retail installment sales
contract or promissory note and security agreement and any other documents
relating to the Receivables. The Receivables will not be segregated,
stamped or otherwise marked to indicate that they have been sold to the
related Trust. The accounting records and computer systems of each
Affiliate, the Servicer and the Seller will reflect the sales and
assignments of the related Receivables to the Seller or a Trust, as
applicable, and Uniform Commercial Code ("UCC") financing statements
reflecting such sales and assignments will be filed. 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 related Trust's interest, the purchaser (or secured party) will
acquire an interest in the Receivables superior to the interest of the
related Trust. See "Certain Legal Aspects of the Receivables-Security
Interest in Vehicles."
Accounts
With respect to each Trust that issues Notes, the Servicer will
establish and maintain with the related Indenture Trustee one or more
accounts, in the name of the Indenture Trustee on behalf of the related
Noteholders and Certificateholders, into which all payments made on or with
respect to the related Receivables will be deposited (the "Collection
Account"). The Servicer will establish and maintain with such Indenture
Trustee an account, in the name of such Indenture Trustee on behalf of such
Noteholders, into which amounts released from the Collection Account and
any Pre-Funding Account, Revolving Account, Reserve Account or other credit
enhancement for payment to such Noteholders will be deposited and from
which all distributions to such Noteholders will be made (the "Note
Distribution Account"). The Servicer will establish and maintain with the
related Trustee one or more accounts, in the name of such Trustee on behalf
of such Certificateholders, into which amounts released from the Collection
Account and any Pre-Funding Account, Revolving Account, Reserve Account or
other credit or cash flow enhancement for distribution to such
Certificateholders will be deposited and from which all distributions to
such Certificateholders will be made (each, a "Certificate Distribution
Account"). With respect to each Trust that does not issue Notes, the
Servicer will also establish and maintain the Collection Account and any
other Trust Account in the name of the related Trustee on behalf of the
related Certificateholders.
If so provided in the related Prospectus Supplement, the Servicer will
establish an additional account (the "Payahead Account"), into which, to
the extent required by the Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, early payments by or on behalf of
Obligors on Precomputed Receivables which do not constitute scheduled
payments, full prepayments, nor certain partial prepayments that result
in a reduction of the Obligor's periodic payment below the scheduled
payment as of the applicable Cutoff Date ("Payaheads") will be deposited
until such time as the payment falls due. Until such time as payments
are transferred from the Payahead Account to the Collection Account,
they will not constitute collected interest or collected principal and
will not be available for distribution to the applicable Noteholders or
Certificateholders. For each Trust that issues Notes, the Payahead
Account will initially be maintained with and in the name of the
applicable Indenture Trustee. With respect to each Trust that
does not issue Notes, the Servicer will establish and maintain with the
related Trustee the Payahead Account in the name of such Trustee. So long
as the Bank is the Servicer and provided that (i) there exists no Servicer
Termination Event and (ii) each other condition to holding Payaheads as may
be required by the applicable Sale and Servicing Agreement or Pooling and
Servicing Agreement is satisfied, Payaheads may be retained by the Servicer
until the applicable Payment Date or Distribution Date.
Any other accounts to be established with respect to a Trust,
including any Pre-Funding Account, Revolving Account, Yield Supplement
Account (as such term is defined in the related Prospectus Supplement, the
"Yield Supplement Account") or Reserve Account, will be described in the
related Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the
Note Distribution Account, the Certificate Distribution Account(s) and any
Pre-Funding Account, Revolving Account, Reserve Account and other accounts
identified as such in the related Prospectus Supplement (collectively, the
"Trust Accounts") will be invested as provided in the related Sale and
Servicing Agreement or Pooling and Servicing Agreement in Eligible
Investments.
"Eligible Investments" (except as set forth in clause (g) below)
consist of 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 (but excluding depository
receipts issued by any such institution or trust company); provided 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 short term unsecured debt rating acceptable to the
Rating Agencies; (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 short term
unsecured debt rating acceptable to the Rating Agencies; (d) investments in
money market funds (including funds for which the Seller, Indenture Trustee
or Trustee or any of their respective affiliates is investment manager or
advisor) having a rating acceptable to the Rating Agencies; (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;] (g) Motor
Vehicle Loans; and (h) any other investment which would not cause either
Rating Agency to downgrade or withdraw its then current rating of any class
of Notes or the Certificates. Investments of the types described in
clauses (d) and (h) above will be "Eligible Investments" only so long as
making such investments will not require the related Trust to register as
an investment company under the Investment Company Act of 1940, as amended.
Eligible Investments generally are limited to obligations or
securities that mature on or before the date of the next distribution for
such series. However, to the extent permitted by the Rating Agencies,
funds in any Reserve Account may be invested in securities that will not
mature prior to the date of the next distribution with respect to such
Certificates or Notes and will not be sold to meet any shortfalls. Thus,
the amount of cash in any Reserve Account at any time may be less than the
balance of the Reserve Account. If the amount required to be withdrawn
from any Reserve Account to cover shortfalls in collections on the related
Receivables (as provided in the related Prospectus Supplement) exceeds the
amount of cash in the Reserve Account, a temporary shortfall in the amounts
distributed to the related Noteholders or Certificateholders could result,
which could, in turn, increase the average life of the Notes or the
Certificates of such series. To the extent specified in the related
Prospectus Supplement, investment earnings on funds deposited in the Trust
Accounts, net of losses and investment expenses (collectively, "Investment
Earnings"), will be either deposited in the applicable Collection Account
on each Distribution Date and shall be treated as collections of interest
on the related Receivables or distributed to the Servicer and not be
treated as collections on the Receivables or otherwise be available for
Noteholders or Certificateholders.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (x) a segregated account with an
Eligible Institution or (y) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of
the United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such depository institution
have a credit rating from each Rating Agency in one of its generic rating
categories which signifies investment grade. "Eligible Institution" means,
with respect to a Trust, (a) the corporate trust department of the related
Indenture Trustee or the related Trustee, as applicable, or (b) a
depository institution organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or
any domestic branch of a foreign bank), in each case (i) which has either
(A) a long-term unsecured debt rating acceptable to the Rating Agencies or
(B) a short-term unsecured debt rating or certificate of deposit rating
acceptable to the Rating Agencies and (ii) whose deposits are insured by
the FDIC.
Servicing Procedures
The Servicer will make reasonable efforts to collect all payments due
with respect to the Receivables held by any Trust and will, consistent with
the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, follow such collection procedures as it follows with respect to
comparable motor vehicle retail installment sales contracts and promissory
note and security agreements it services for itself or others. Consistent
with its customary procedures, the Servicer may, in its discretion, arrange
with the Obligor on a Receivable to extend or modify the payment schedule,
but no such arrangement will, for purposes of any Sale and Servicing
Agreement or Pooling and Servicing Agreement, modify the principal balance
or Interest Rate of any Receivable or modify any Receivable if such
amendment or modification would extend the final payment date of any
Receivable beyond the Final Scheduled Maturity Date. Some of such
arrangements may result in the Servicer purchasing the Receivable for the
Purchase Amount. See "Risk Factors-Risk of Prepayment and Possible Adverse
Effect on Yield." The Servicer may sell the Financed Vehicle securing the
respective Receivable at public or private sale, or take any other action
permitted by applicable law. See "Certain Legal Aspects of the
Receivables".
Pursuant to the Sale and Servicing Agreement or the Pooling and
Servicing Agreement, as applicable, the Bank, as Servicer, has the right to
delegate any or all of its responsibilities and obligations as Servicer to
any of its affiliates and to delegate specific duties to third-party
service providers who are in the business of performing such duties. The
Bank intends to delegate to certain Affiliates responsibilities and
obligations as Servicer with respect to Receivables acquired by the Seller
from such Affiliates. Notwithstanding any delegation of its
responsibilities and obligations to any other entity, the Servicer will
continue to be liable for all its servicing obligations under the
applicable Sale and Servicing Agreement or Pooling and Servicing Agreement
as if the Servicer alone were servicing the Receivables.
Collections
With respect to each Trust, the Servicer will deposit all payments on
the related Receivables received from Obligors and all proceeds of the
related Receivables collected during each collection period specified in
the related Prospectus Supplement (each, a "Collection Period") into the
related Collection Account not later than two business days after receipt.
However, so long as the Bank is the Servicer and provided that (i) there
exists no Servicer Termination Event and (ii) each other condition to
making monthly deposits as may be required by the related Sale and
Servicing Agreement or Pooling and Servicing Agreement is satisfied, the
Servicer may retain such amounts until the Business Day (as defined in the
related Prospectus Supplement) prior to the applicable Distribution Date or
Payment Date. The Servicer or the Seller, as the case may be, will remit
the aggregate Purchase Amount of any Receivables to be purchased from a
Trust to the related Collection Account on the Business Day prior to the
applicable Distribution Date or Payment Date. Pending deposit into the
Collection Account, collections may be employed by the Servicer at its own
risk and for its own benefit and will not be segregated from its own funds.
To the extent set forth in the related Prospectus Supplement, the Servicer
may, in order to satisfy the requirements described above, obtain a letter
of credit or other security for the benefit of the related Trust to secure
timely remittances of collections on the related Receivables and payment of
the aggregate Purchase Amount with respect to Receivables purchased by the
Servicer.
If so provided in the related Prospectus Supplement, to the extent the
collections on a Precomputed Receivable for a Collection Period are less
than the scheduled payment, the amount of Payaheads made on such
Precomputed Receivable not previously applied (the "Payahead Balance"), if
any, with respect to such Precomputed Receivable shall be applied by the
Servicer to the extent of the shortfall. In addition, if so provided in
the related Prospectus Supplement, on or before the business day prior to
each applicable Distribution Date or Payment Date, the Servicer shall
deposit into the related Collection Account an amount generally equal to
the lesser of (a) the excess, if any, of (i) the amount of interest that
would be expected to be received on the Receivables (other than
Non-Defaulted Receivables) during the related Collection Period over (ii)
the actual interest collected by the Servicer during such Collection Period
minus unreimbursed prior Advances and (b) the amount (if any) by which (i)
the sum of any unpaid Servicing Fees for the related Collection Period and
all prior Collection Periods and the amount of interest distributable to
Securityholders on the following Distribution Date exceeds (ii) an amount
equal to the actual interest collected by the Servicer during such
Collection Period minus unreimbursed prior Advances. No advances of
principal will be made with respect to the Receivables. The Servicer will
be entitled to be reimbursed for outstanding Advances on the Distribution
Date in the following month to the extent of Interest Collections for such
Distribution Date and, to the extent such Interest Collections are
insufficient, to the extent of funds available in the Reserve Account. The
Servicer will be obligated to make such an Advance except to the extent
that the Servicer reasonably determines that the Advance is unlikely to be
recoverable from the following month's collections of interest and the
funds in the Reserve Account.
Servicing Compensation and Payment of Expenses
On each Distribution Date, the Servicer will be entitled to receive
the Servicing Fee for the related Collection Period in an amount generally
equal to a specified percentage per annum (as set forth in the related
Prospectus Supplement, the "Servicing Fee Rate") of the Pool Balance as of
the first day of such Collection Period (the "Servicing Fee"). If it is
acceptable to each Rating Agency without a reduction in the rating of any
of the Securities, the Servicing Fee in respect of a Collection Period
(together with any portion of a Servicing Fee that remains unpaid from
prior Distribution Dates) at the option of the Servicer may be paid at or
as soon as possible after the beginning of such Collection Period out of
the first collections of interest received on the Receivables for such
Collection Period.
The Servicer will also collect and retain any late fees, extension
fees, prepayment charges and certain non-sufficient funds charges and other
administrative fees or similar charges ("Supplemental Servicing Fees")
allowed by applicable law with respect to the related Receivables and will
be entitled to reimbursement from such Trust for certain liabilities.
Payments by or on behalf of Obligors will be allocated to scheduled
payments and late fees and other charges in accordance with the Servicer's
customary practices and procedures. To the extent specified in the related
Prospectus Supplement, Supplemental Servicing Fees will include investment
earnings on investments of funds deposited in the Trust Accounts and other
accounts with respect to a Trust.
The Servicing Fee and Supplemental Servicing Fee will compensate the
Servicer for performing the functions of a third party servicer of motor
vehicle receivables as an agent for its beneficial owner, including
collecting and posting all payments, responding to inquiries of Obligors on
the Receivables, investigating delinquencies, sending billing information
to Obligors, reporting tax information to Obligors, paying costs of
collections and disposition of defaults and policing the collateral. The
Servicing Fee also will compensate the Servicer for administering the
particular Receivables Pool, including making Advances, accounting for
collections and furnishing monthly and annual statements to the related
Trustee and Indenture Trustee with respect to distributions and generating
federal income tax information for such Trust and for the related
Noteholders and Certificateholders. The Servicing Fee also will reimburse
the Servicer for certain taxes, the fees of the related Trustee and
Indenture Trustee, if any, accounting fees, outside auditor fees, data
processing costs and other costs incurred in connection with administering
the applicable Receivables Pool.
Distributions
With respect to each series of Securities, beginning on the Payment
Date or Distribution Date, as applicable, specified in the related
Prospectus Supplement, distributions of principal and interest (or, where
applicable, of principal or interest only) on each class of such Securities
entitled thereto will be made by the Applicable Trustee to the Noteholders
and the Certificateholders of such series. The timing, calculation,
allocation, order, source, priorities of and requirements for all payments
to each class of Noteholders and all distributions to each class of
Certificateholders of such series will be set forth in the related
Prospectus Supplement.
With respect to each Trust, on each Payment Date and Distribution
Date, as applicable, collections on the related Receivables will be
transferred from the Collection Account to the Note Distribution Account
for distribution to Noteholders, if any, and to each Certificate
Distribution Account for distribution to Certificateholders to the extent
provided in the related Prospectus Supplement. Credit enhancement, such as
a Reserve Account, will be available to cover any shortfalls in the amount
available for distribution on such date to the extent specified in the
related Prospectus Supplement. As more fully described in the related
Prospectus Supplement, distributions in respect of principal of a class of
Securities of a given series will be subordinate to distributions in
respect of interest on such class, and distributions in respect of one or
more classes of Certificates of such series may be subordinate to payments
in respect of Notes, if any, of such series or other classes of
Certificates of such series.
Credit and Cash Flow Enhancement
The amounts and types of credit and cash flow enhancement arrangements
and the provider thereof, if applicable, with respect to each class of
Securities of a given series, if any, will be set forth in the related
Prospectus Supplement. If and to the extent provided in the related
Prospectus Supplement, credit and cash flow enhancement may be in the form
of subordination of one or more classes of Securities, Reserve Accounts,
over-collateralization, letters of credit, credit or liquidity facilities,
surety bonds, guaranteed investment contracts, guaranteed rate agreements,
swaps or other interest rate protection agreements, repurchase obligations,
yield supplement agreements, other agreements with respect to third party
payments or other support, cash deposits or such other arrangements as may
be described in the related Prospectus Supplement or any combination of two
or more of the foregoing. If specified in the related Prospectus
Supplement, credit or cash flow enhancement for a class of Securities may
cover one or more other classes of Securities of the same series, and
credit or cash flow enhancement for a series of Securities may cover one or
more other series of Securities.
The presence of a Reserve Account and other forms of credit
enhancement for the benefit of any class or series of Securities is
intended to enhance the likelihood of receipt by the Securityholders of
such class or series of the full amount of principal and interest due
thereon and to decrease the likelihood that such Securityholders will
experience losses. The credit enhancement for a class or series of
Securities will not provide protection against all risks of loss and will
not guarantee repayment of the entire principal balance and interest
thereon except to the extent so specified in the related Prospectus
Supplement. If losses occur which exceed the amount covered by any credit
enhancement or which are not covered by any credit enhancement,
Securityholders of any class or series will bear their allocable share of
deficiencies, as described in the related Prospectus Supplement. In
addition, if a form of credit enhancement covers more than one series of
Securities, Securityholders of any such series will be subject to the risk
that such credit enhancement will be exhausted by the claims of
Securityholders of other series.
Reserve Account. If so provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, the Seller will establish for a series or class of
Securities an account, as specified in the related Prospectus Supplement
(the "Reserve Account"), which will be maintained with the related Trustee
or Indenture Trustee, as applicable. The Reserve Account will be funded by
an initial deposit on the Closing Date in the amount (if any) set forth in
the related Prospectus Supplement and, if the related series has a Funding
Period, will also be funded on each Subsequent Transfer Date to the extent
described in the related Prospectus Supplement. To the extent described in
the related Prospectus Supplement, the amount (if any) on deposit in the
Reserve Account will be increased on each Distribution Date or Payment Date
thereafter up to the Specified Reserve Account Balance (as defined in the
related Prospectus Supplement) by the deposit therein of the amount of
collections on the related Receivables remaining on each such Distribution
Date or Payment Date after the payment of all other required payments and
distributions on such date. The related Prospectus Supplement will
describe the circumstances and manner under which distributions may be made
out of the Reserve Account, either to holders of the Securities covered
thereby or to the Seller.
The Seller may at any time, without consent of the Securityholders,
sell, transfer, convey or assign in any manner its rights to and interests
in distributions from the Reserve Account provided that (i) the Rating
Agencies confirm in writing that such action will not result in a reduction
or withdrawal of the rating of any class of Securities, (ii) the Seller
provides to the applicable trustee and any Indenture Trustee an opinion of
counsel from independent counsel that such action will not cause the
related Trust to be classified as an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes and
(iii) such transferee or assignee agrees in writing to take positions for
federal income tax purposes consistent with the federal income tax
positions agreed to be taken by the Seller.
Yield Supplement Account; Yield Supplement Agreement. If so provided
in the related Prospectus Supplement, pursuant to the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, the Affiliates, the
Seller or another person will enter into a Yield Supplement Agreement (as
such term is defined in the related Prospectus Supplement, the "Yield
Supplement Agreement") pursuant to which the Affiliates, the Seller or such
other person will establish for a series a Yield Supplement Account which
will be maintained with the same entity at which the related Collection
Account is maintained and, if so specified in the related Prospectus
Supplement, will be created with an initial deposit by the Seller. Each
Yield Supplement Account will be designed solely to hold funds to be
applied by the Indenture Trustee or applicable Trustee to provide payments
to Securityholders in respect of Receivables the APR of which is less than
the Required Rate (as such term is defined in the related Prospectus
Supplement, the "Required Rate").
On each Distribution Date, the obligor under the Yield Supplement
Agreement will pay to the Trust an amount equal to the Yield Supplement
Amount (as such term is defined in the related Prospectus Supplement, the
"Yield Supplement Amount") in respect of the Receivables for such
Distribution Date. If so specified in the Prospectus Supplement, in the
event that such obligor defaults on its obligation to make payments under
the Yield Supplement Agreement, the related Prospectus Supplement will
describe the manner and circumstances in which amounts on deposit on any
Distribution Date in the Yield Supplement Account in excess of the Required
Yield Supplement Amount (as such term is defined in the related Prospectus
Supplement, the "Required Yield Supplement Amount") will be released, and
to whom such amounts will be distributed. Monies on deposit in the Yield
Supplement Account may be invested in Eligible Investments under the
circumstances and in the manner described in the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable. If so
specified in the related Prospectus Supplement, investment earnings on
investment of funds in a Yield Supplement Account will be deposited into
such Yield Supplement Account. The related Prospectus Supplement will
describe the manner in which any monies remaining on deposit in a Yield
Supplement Account upon the termination of the related Trust pursuant to
its terms will be released and to whom such amounts will be distributed.
If a Yield Supplement Account is established with respect to any Trust
as to which a Pre-Funding Account has been established, the Seller and the
related Indenture Trustee or applicable Trustee will enter into a Yield
Supplement Agreement pursuant to which, on each Subsequent Transfer Date,
the Seller will deposit into the Yield Supplement Account the Additional
Yield Supplement Amount (as such term is defined in the related Prospectus
Supplement, the "Additional Yield Supplement Amount") in respect of the
related Subsequent Receivables. Each Yield Supplement Agreement will affect
only Receivables having an APR less than the related Required Rate.
Net Deposits
As an administrative convenience if certain conditions acceptable to
the Rating Agencies are satisfied, the Servicer will be permitted to make
the deposit of collections, aggregate Advances and Purchase Amounts for any
Trust for or with respect to the related Collection Period net of
distributions to be made to the Servicer for such Trust with respect to
such Collection Period. See "-Collections." With respect to any Trust
that issues both Certificates and Notes, if the related Payment Dates do
not coincide with Distribution Dates, all distributions, deposits or other
remittances made on a Payment Date will be treated as having been
distributed, deposited or remitted on the Distribution Date for the
applicable Collection Period for purposes of determining other amounts
required to be distributed, deposited or otherwise remitted on such
Distribution Date. Similarly, the Servicer may cause to be made a single,
net transfer from the Collection Account to the related Payahead Account,
if any, or vice versa. The Servicer, however, will account to the Trustee,
any Indenture Trustee, the Noteholders, if any, and the Certificateholders
with respect to each Trust as if all deposits, distributions, and transfers
were made individually.
Statements to Trustees and Trust
Prior to each Distribution Date with respect to each series of
Securities, the Servicer will provide to the applicable Indenture Trustee,
if any, and the Applicable Trustee as of the close of business on the last
day of the preceding Collection Period a statement setting forth
substantially the same information as is required to be provided in the
periodic reports provided to Securityholders of such series described under
"Certain Information Regarding the Securities - Reports to
Securityholders".
Evidence as to Compliance
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that the Servicer will furnish to the related Trust and
Indenture Trustee or Trustee, as applicable, annually a statement of a firm
of independent certified public accountants (or other evidence satisfactory
to the applicable Rating Agencies) as to compliance by the Servicer during
the preceding twelve months (or, in the case of the first such certificate,
from the applicable Closing Date) with certain standards relating to the
servicing of the applicable Receivables, the Servicer's accounting records
and computer files with respect thereto and certain other matters.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will also provide for delivery to the related Trust and Indenture Trustee
or Trustee, as applicable, substantially simultaneously with the delivery
of such accountants' statement referred to above, of a certificate signed
by an officer of the Servicer stating that the Servicer has fulfilled its
obligations under the Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, throughout the preceding twelve months (or, in
the case of the first such certificate, from the Closing Date) or, if there
has been a default in the fulfillment of any such obligation, describing
each such default. The Servicer has agreed to give each Indenture Trustee
and each Trustee notice of certain Servicer Termination Events under the
related Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Applicable Trustee
at the appropriate address set forth in the Prospectus Supplement.
Certain Matters Regarding the Servicer
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that the Servicer may not resign from its obligations and
duties as Servicer thereunder, except upon determination that the
Servicer's performance of such duties is no longer permissible under
applicable law. No such resignation will become effective until the
related Indenture Trustee or Trustee, as applicable, or a successor
servicer, has assumed the Servicer's servicing obligations and duties under
such Sale and Servicing Agreement or Pooling and Servicing Agreement.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will further provide that neither the Servicer nor any of its directors,
officers, employees and agents will be under any liability to the related
Trust or the related Noteholders or Certificateholders for taking any
action or for refraining from taking any action pursuant to such Sale and
Servicing Agreement or Pooling and Servicing Agreement or for errors in
judgment; except 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 the
Servicer's duties thereunder or by reason of reckless disregard of its
obligations and duties thereunder. In addition, each Sale and Servicing
Agreement and Pooling and Servicing Agreement will provide that the
Servicer is under no obligation to appear in, prosecute or defend any legal
action that is not incidental to the Servicer's servicing responsibilities
under such Sale and Servicing Agreement or Pooling and Servicing Agreement
and that, in its opinion, may cause it to incur any expense or liability.
Under the circumstances specified in each Sale and Servicing Agreement
and Pooling and Servicing Agreement, any entity into which the Servicer may
be merged or consolidated, or any entity resulting from any merger or
consolidation to which the Servicer is a party, or any entity succeeding to
the business of the Servicer or, with respect to its obligations as
Servicer, any corporation 50% or more of the voting stock of which is
owned, directly or indirectly, by Norwest Corporation, which corporation or
other entity in each of the foregoing cases assumes the obligations of the
Servicer, will be the successor of the Servicer under such Sale and
Servicing Agreement or Pooling and Servicing Agreement.
Servicer Termination Events
"Servicer Termination Events" under each Sale and Servicing Agreement
and Pooling and Servicing Agreement will consist of (i) any failure by the
Servicer to deliver to the Applicable Trustee for deposit in any of the
Trust Accounts any required payment or to direct the Applicable Trustee to
make any required distributions therefrom, which failure continues
unremedied for five business days after written notice from the Applicable
Trustee is received by the Servicer 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 such Sale and
Servicing Agreement or Pooling and Servicing Agreement, which failure
materially and adversely affects the rights of the Noteholders or the
Certificateholders of the related series and which continues unremedied for
60 days after the giving of written notice of such failure (A) to the
Servicer by the Applicable Trustee or (B) to the Servicer and to the
Applicable Trustee by holders of Notes or Certificates of such series, as
applicable, evidencing not less than 25% in principal amount of such
outstanding Notes or of such Certificate Balance (or, in either case, 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 officer's certificate
to the Applicable Trustee to such effect and to the effect that Servicer
has commenced or will promptly commence, and will diligently pursue, all
reasonable efforts to remedy such default); and (iii) the occurrence of an
Insolvency Event with respect to the Servicer. "Insolvency Event" means,
with respect to any person, any of the following events or actions: certain
events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings with respect to such person and certain
actions by such person indicating its insolvency, reorganization pursuant
to bankruptcy proceedings or inability to pay its obligations.
Rights Upon Servicer Termination Events
In the case of any Trust that has issued Notes, as long as a Servicer
Termination Event under a Sale and Servicing Agreement remains unremedied,
the related Indenture Trustee or holders of Notes of the related series
evidencing greater than 50% of the principal amount of such Notes then
outstanding may terminate all the rights and obligations of the Servicer
under such Sale and Servicing Agreement, whereupon such Indenture Trustee
or a successor servicer appointed by such Indenture Trustee will succeed to
all the responsibilities, duties and liabilities of the Servicer under such
Sale and Servicing Agreement and will be entitled to similar compensation
arrangements. In the case of any Trust that has not issued Notes, as long
as a Servicer Termination Event under the related Sale and Servicing
Agreement remains unremedied, the related Trustee or holders of
Certificates of the related series evidencing greater than 50% of the
principal amount of such Certificates then outstanding may terminate all
the rights and obligations of the Servicer under such Sale and Servicing
Agreement or Pooling and Servicing Agreement, whereupon such Trustee or a
successor servicer appointed by such Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer under such Sale
and Servicing Agreement or Pooling and Servicing Agreement and will be
entitled to similar compensation arrangements. If, however, a conservator,
receiver or similar official has been appointed for the Servicer, and no
Servicer Termination Event other than such appointment has occurred, such
official may have the power to prevent such Indenture Trustee, such
Noteholders, such Trustee or such Certificateholders from effecting a
transfer of servicing. In the event that such Indenture Trustee or Trustee
is unwilling or unable to so act, it may appoint, or petition a court of
competent jurisdiction for the appointment of, a successor with a net worth
of at least $50,000,000 and whose regular business includes the servicing
of motor vehicle receivables. Such Indenture Trustee or Trustee may make
such arrangements for compensation to be paid, which in no event may be
greater than the servicing compensation to the Servicer under such Sale and
Servicing Agreement or Pooling and Servicing Agreement.
Waiver of Past Servicer Termination Events
With respect to each Trust that has issued Notes, the holders of Notes
evidencing at least a majority in principal amount of the then outstanding
Notes of the related series (or the holders of the Certificates of such
series evidencing not less than a majority of the outstanding Certificate
Balance, in the case of any Servicer Termination Event which does not
adversely affect the related Indenture Trustee or such Noteholders) may, on
behalf of all such Noteholders and Certificateholders, waive any Servicer
Termination Event by the Servicer in the performance of its obligations
under the related Sale and Servicing Agreement and its consequences, except
a Servicer Termination Event in making any required deposits to or payments
from any of the Trust Accounts in accordance with such Sale and Servicing
Agreement. With respect to each Trust that has not issued Notes, holders
of Certificates of such series evidencing not less than a majority of the
principal amount of such Certificates then outstanding may, on behalf of
all such Certificateholders, waive any Servicer Termination Event by the
Servicer in the performance of its obligations under the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, except a Servicer
Termination Event in making any required deposits to or payments from the
related Trust Accounts in accordance with such Sale and Servicing Agreement
or Pooling and Servicing Agreement. No such waiver will impair such
Noteholders' or Certificateholders' rights with respect to subsequent
defaults.
Amendment
Each of the Transfer and Servicing Agreements may be amended by the
parties thereto, without the consent of the related Noteholders or
Certificateholders, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of such Transfer and
Servicing Agreements or of modifying in any manner the rights of such
Noteholders or Certificateholders; provided that such action will not, in
the opinion of counsel satisfactory to the related Trustee or Indenture
Trustee, as applicable, materially and adversely affect the interest of any
such Noteholder or Certificateholder. The Transfer and Servicing
Agreements may also be amended by the Seller, the Servicer, the related
Trustee and any related Indenture Trustee with the consent of the holders
of Notes evidencing at least a majority in principal amount of then
outstanding Notes, if any, of the related series and the holders of the
Certificates of such series evidencing at least a majority of the
Certificate Balance of such Certificates then outstanding, for the purpose
of adding any provisions to or changing in any manner or eliminating any of
the provisions of such Transfer and Servicing Agreements or of modifying in
any manner the rights of such Noteholders or Certificateholders; 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 the related Receivables or distributions that are required to
be made for the benefit of such Noteholders or Certificateholders or (ii)
reduce the aforesaid percentage of the Notes or Certificates of such series
which are required to consent to any such amendment, without the consent of
the holders of all the outstanding Notes or Certificates, as the case may
be, of such series.
Additionally, each of the Transfer and Servicing Agreements may be
amended by the parties thereto at the direction of the Seller or Servicer
without the consent of any of the Securityholders (i) to add, modify or
eliminate such provisions as may be necessary or advisable in order to
enable all or a portion of a Trust to qualify as, and to permit an election
to be made to cause all or a portion of a Trust to be treated as, a
"financial asset securitization investment trust" as described in the
provisions of the "Small Business Job Protection Act of 1996," H.R. 3448,
and, in connection with any such election, to modify or eliminate existing
provisions of a Transfer and Servicing Agreement relating to the intended
federal income tax treatment of the Securities and the related Trust in the
absence of the election or (ii) to enable all or a portion of a Trust to
qualify as a partnership for federal income tax purposes under applicable
regulations on the classification of entities as partnerships or corporations
under the Code adopted as final regulations, and to the extent such regulations
eliminate or modify the need therefor, to modify or eliminate existing
provisions of a Transfer and Servicing Agreement relating to the intended
availability of a partnership treatment of the Trust for federal income tax
purposes. See "Federal Income Tax Consequences-FASIT Legislation" and
"Description of the Transfer and Servicing Agreements-Insolvency Event."
It is a condition to any such amendment that each Rating Agency will have
notified the Seller, the Servicer and the Applicable Trustee in writing
that the amendment will not result in a reduction or withdrawal of the
rating of any outstanding Securities with respect to which it is a Rating
Agency. The amendment which may be made in connection with any election
described above without the consent of Securityholders may include, without
limitation, the elimination of any sale of Receivables and termination of
each Trust upon the occurrence of an event of receivership or insolvency
with respect to the Seller.
Additionally, each of the Transfer and Servicing Agreements may be
amended by the parties thereto at the direction of the Seller or Servicer
without the consent of any of the Securityholders (i) to add, modify or
eliminate such provisions as may be necessary or advisable in order to
enable (a) the transfer to the Trust of all or any portion of the
Receivables to be derecognized under generally accepted accounting
principles ("GAAP") by the Seller to the applicable Trust or (b) the
applicable Trust to avoid becoming a member of the Seller's consolidated
group under GAAP, and (ii) in connection with any such addition,
modification or elimination, without limiting the generality of the
foregoing clause (i), to cause the Receivables to be transferred by the
Seller first to a bankruptcy remote affiliate and from such affiliate to a
Trust; provided, however, that it is a condition to any such amendment that
(i) the Seller delivers an officer's certificate to the related Trustee to
the effect that such amendment meets the requirements set forth in this
paragraph and (ii) such amendment will not result in a withdrawal or
reduction of the rating of any outstanding series of Securities under the
related Trust.
Insolvency Event
With respect to a Trust that is not a grantor trust, if an Insolvency
Event occurs with respect to the Seller, the related Receivables of such
Trust will be liquidated and the Trust will be terminated 90 days after the
date of such Insolvency Event, unless, before the end of such 90-day
period, the related Trustee shall have received written instructions from
holders of each class of Notes issued by such Trust representing a majority
of the aggregate principal balance of each such class of Notes, holders of
Certificates holding a majority of the Certificate Balance (not including
the Certificate Balance held by the Seller) and any other persons set forth
in the related Prospectus Supplement, to the effect that they disapprove of
the liquidation of such Receivables and termination of such Trust.
Promptly after the occurrence of an Insolvency Event with respect to the
Seller, notice thereof is required to be given to the Certificateholders
and Noteholders; provided that any failure to give such required notice
will not prevent or delay termination of such Trust. Upon termination of
any Trust, the related Trustee shall, or shall direct the related Indenture
Trustee to, promptly sell the assets of such Trust (other than the Trust
Accounts) in a commercially reasonable manner and on commercially
reasonable terms. The proceeds from any such sale, disposition or
liquidation of the Receivables of such Trust will be treated as collections
on such Receivables and deposited in the related Collection Account. With
respect to any Trust, if the proceeds from the liquidation of the related
Receivables and any amounts on deposit in the Reserve Account (if any), the
Payahead Account (if any), the Note Distribution Account (if any) and the
Certificate Distribution Account are not sufficient to pay the Notes, if
any, and the Certificates of the related series in full, the amount of
principal returned to Noteholders and Certificateholders thereof will be
reduced and some or all of such Noteholders and Certificateholders will
incur a loss.
The provisions described in the preceding paragraph have been included
in the Agreement for reasons related to treatment of a Trust that is not a
grantor trust as a partnership for federal income tax purposes. The IRS
has issued proposed regulations that, if adopted as final regulations,
would make the foregoing provisions unnecessary. The amendment provisions
of each of the Transfer and Servicing Agreements, therefore, allow the
Seller, the Servicer and the related Trustee to amend such Transfer and
Servicing Agreement, without the consent of any of the related Noteholders
or Certificateholders, to eliminate such provisions upon (i) the adoption
of final regulations whose applicable provisions are substantially the same
as the corresponding provisions of the proposed regulations and (ii) the
receipt of an opinion that the deletion of such provisions will not
adversely affect the ability of such Trust to be characterized as a
partnership for federal income tax purposes. The rights of Noteholders and
Certificateholders to vote on whether to continue or dissolve a Trust upon
the insolvency of the Seller could therefore be eliminated without the
consent of the Noteholders and Certificateholders.
Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with
respect to the related Trust without the unanimous prior approval of all
Certificateholders (including the Seller) of such Trust and the delivery to
such Trustee by each such Certificateholder (including the Seller) of a
certificate certifying that such Certificateholder reasonably believes that
such Trust is insolvent.
Non-Recourse Sale and Assignment
The Notes of any series will represent obligations solely of, and the
Certificates of any series will represent interests solely in, the related
Trust and neither the Notes nor the Certificates of any series will be
insured or guaranteed by any Affiliate, the Seller, the Servicer, any
Trustee, any Indenture Trustee or any other person or entity.
Payment of Notes
Upon the payment in full of all outstanding Notes of a given series
and the satisfaction and discharge of the related Indenture, the related
Trustee will succeed to all the rights of the Indenture Trustee, and the
Certificateholders of such series will succeed to all the rights of the
Noteholders of such series, under the related Sale and Servicing Agreement,
except as otherwise provided therein.
Seller Liability
Under each Trust Agreement, the Seller with respect to the related Trust
will agree to be liable directly to an injured party for the entire amount
of any losses, claims, damages or liabilities (other than those incurred by
a Noteholder or a Certificateholder in the capacity of an investor with
respect to such Trust) arising out of or based on the arrangement created
by such Trust Agreement as though such arrangement created a partnership
under the Delaware Revised Uniform Limited Partnership Act in which Seller
was a general partner.
Termination
With respect to each Trust, the obligations of the Servicer, the
Seller, the related Trustee and the related Indenture Trustee, if any,
pursuant to the Transfer and Servicing Agreements will terminate upon the
earlier of (i) the maturity or other liquidation of the last related
Receivable and the disposition of any amounts received upon liquidation of
any such remaining Receivables, (ii) the payment to Noteholders, if any,
and Certificateholders of the related series of all amounts required to be
paid to them pursuant to the Transfer and Servicing Agreements and (iii)
the occurrence of either event described below.
In order to avoid excessive administrative expense, each of the Seller
and the Servicer will be permitted at its respective option to purchase
from each Trust, as of the end of any applicable Collection Period, if the
then outstanding Pool Balance with respect to the Receivables held by such
Trust is 5% or less of the Initial Pool Balance (as defined in the related
Prospectus Supplement, the "Initial Pool Balance"), all remaining related
Receivables at a price equal to the aggregate of the Purchase Amounts
thereof as of the end of such Collection Period.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to
them pursuant to the applicable Trust Agreement or Pooling and Servicing
Agreement will effect early retirement of the Certificates of such series.
Administration Agreement
The Bank, in its capacity as administrator (the "Administrator"), will
enter into an agreement (as amended and supplemented from time to time, an
"Administration Agreement") with each Trust that issues Notes and the
related Indenture Trustee pursuant to which the Administrator will agree,
to the extent provided in such Administration Agreement, to provide the
notices and to perform other administrative obligations required by the
related Indenture. With respect to any such Trust, as compensation for the
performance of the Administrator's obligations under the applicable
Administration Agreement and as reimbursement for its expenses related
thereto, the Administrator will be entitled to a monthly administration fee
in an amount equal to such amount as may be set forth in the related
Prospectus Supplement (the "Administration Fee"), which fee will be paid by
the Seller.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Rights in the Receivables
The Receivables are "chattel paper" as defined in the UCC. Pursuant
to the UCC, 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 to perfect the interest of the related Trust in
its purchase of Receivables from the Seller and in the appropriate
jurisdictions in which the Affiliates are located to perfect the interest
of the Seller in its purchase of Receivables from the Affiliates.
Pursuant to the Pooling and Servicing Agreement or Sale and Servicing
Agreement, as applicable, an Originator will hold the Receivables as
custodian for the Applicable Trustee following the sale and assignment of
the Receivables to the related Trust. The Seller will take such action as
is required to perfect the rights of the Applicable Trustee in the
Receivables. The Receivables will not be segregated, stamped or otherwise
marked, to indicate that they have been sold to the related 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 related Trust's interest, the purchaser (or secured party)
will acquire an interest in the Receivables superior to the interest of the
related Trust.
Under the Pooling and Servicing Agreement or Sale and Servicing
Agreement, as applicable, the Servicer will be obligated from time to time
to take such actions as are necessary to protect and perfect the related
Trust's interest in the Receivables and their proceeds.
Security Interest in Vehicles
Each retail installment sales contract or promissory note and security
agreement evidencing a Receivable grants a security interest in the
Financed Vehicle under the applicable UCC. Perfection of security
interests in automobiles and light duty trucks is generally governed by the
motor vehicle registration laws of the state in which the vehicle is
located. In most states in which the Receivables are originated, a
security interest in automobiles and light duty trucks is perfected by
notation of the secured party's lien on the vehicles' certificate of title.
Each Affiliate takes all actions necessary under the laws of the state in
which the financed vehicle is located to perfect its security interest in
the financed vehicle securing a retail installment sales contract purchased
by it from a Dealer or Direct Loan made by such Affiliate, including, where
applicable, having a notation of its lien recorded on such vehicle's
certificate of title. Because the Servicer continues to service the
contracts and loans, the Obligors on the contracts and loans will not be
notified of the sales from an Affiliate to the Seller or from the Seller to
the Trust, and no action will be taken to record the transfer of the
security interest from an Affiliate to the Seller or from the Seller to the
Trust by amendment of the certificates of title for the Financed Vehicles
or otherwise.
Pursuant to each Purchase Agreement, each Affiliate will assign to the
Seller its interests in the Financed Vehicles securing the Receivables
assigned by that Affiliate to the Seller and, with respect to each Trust,
pursuant to the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, the Seller will assign its interests in the Financed
Vehicles securing the related Receivables to such Trust. However, because
of the administrative burden and expense, none of the Affiliates, the
Seller, the Servicer or the related Trustee will amend any certificate of
title to identify either the Seller or such Trust as the new secured party on
such certificate of title relating to a Financed Vehicle. Also, each
Affiliate will continue to hold any certificates of title relating to the
Financed Vehicles in its possession as custodian for the Seller and such
Trust pursuant to the related Sale and Servicing Agreement or Pooling
and Servicing Agreement. See "Description of the Transfer and Servicing
Agreements-Sale and Assignment of Receivables".
In most states, an assignment such as that under each Sale and
Servicing Agreement or Pooling and Servicing Agreement is an effective
conveyance of a security interest without amendment of any lien noted on a
vehicle's certificate of title, and the assignee succeeds thereby to the
assignor's rights as secured party. However, by not identifying the
related Trust as the secured party on the certificate of title, the
security interest of such Trust in the vehicle could be defeated through
fraud or negligence. In most states, in the absence of fraud or forgery by
the vehicle owner or an Affiliate or administrative error by state or local
agencies, the notation of the lien of the applicable Affiliate on the
certificates of title will be sufficient to protect the related Trust against
the rights of subsequent purchasers of a Financed Vehicle or subsequent
lenders who take a security interest in a Financed Vehicle. If there are
any Financed Vehicles as to which the Seller failed to obtain and assign to
the related Trust a perfected security interest, the security interest of
such Trust would be subordinate to, among others, subsequent purchasers of
the Financed Vehicles and holders of perfected security interests. Such a
failure, however, would constitute a breach of the warranties of the Seller
under the related Sale and Servicing Agreement or Pooling and Servicing
Agreement and would create an obligation of the Seller to repurchase the
related Receivable unless the breach is cured. Pursuant to each Sale and
Servicing Agreement and Pooling and Servicing Agreement, the Seller will
assign such rights to the related Trust. See "Description of the Transfer
and Servicing Agreements-Sale and Assignment of Receivables" and "Risk
Factors-Risk of Unenforceable Security Interest in Financed Vehicles."
Under the laws of most states, the perfected security interest in a
vehicle would continue for four months after the vehicle is moved to a
state other than the state in which it is initially registered and
thereafter until the owner thereof re-registers the vehicle in the new
state. A majority of states generally require surrender of a certificate
of title to re-register a vehicle. Accordingly, a secured party must
surrender possession if it holds the certificate of title to the vehicle
or, in the case of a vehicle registered in a state providing for the
notation of a lien on the certificate of title but not possession by the
secured party, the secured party would receive notice of surrender if the
security interest is noted on the certificate of title. Thus, the secured
party would have the opportunity to re-perfect its security interest in the
vehicle in the state of relocation. In states that do not require a
certificate of title for registration of a motor vehicle, re-registration
could defeat perfection. In the ordinary course of servicing motor vehicle
receivables, the applicable Affiliate takes any necessary steps to effect
re-perfection upon receipt of notice of re-registration or information from
the Obligor as to relocation. Similarly, when an Obligor sells a vehicle,
the applicable Affiliate must surrender possession of the certificate of
title or will receive notice as a result of its lien noted thereon and
accordingly will have an opportunity to require satisfaction of the related
Receivable before release of the lien. Under each Sale and Servicing
Agreement and Pooling and Servicing Agreement, the Servicer is obligated to
take appropriate steps, at the Servicer's expense, to maintain perfection
of security interests in the Financed Vehicles and is obligated to purchase
the related Receivable if it fails to do so.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes take priority over even a perfected
security interest in a financed vehicle. The Code also grants priority to
certain federal tax liens over the lien of a secured party. The laws of
certain states and federal law permit the confiscation of vehicles by
governmental authorities under certain circumstances if used in unlawful
activities, which may result in the loss of a secured party's perfected
security interest in the confiscated vehicle. Under each Sale and
Servicing Agreement and Pooling and Servicing Agreement, the Seller will
represent to the related Trust that, as of the date the related Receivable
is sold to such Trust, each security interest in a Financed Vehicle is or
will be prior to all other present liens (other than tax liens and other
liens that arise by operation of law) upon and security interests in such
Financed Vehicle. However, liens for repairs or taxes could arise, or the
confiscation of a Financed Vehicle could occur, at any time during the term
of a Receivable. No notice will be given to the Trustee, any Indenture
Trustee, any Noteholders or the Certificateholders in respect of a given
Trust if such a lien arises or confiscation occurs.
Repossession
In the event of default by vehicle purchasers, the holder of the motor
vehicle retail installment sales contract or Direct Loan has all the
remedies of a secured party under the UCC, except where specifically
limited by other state laws. Among the UCC remedies, the secured party has
the right to perform self-help repossession unless such act would
constitute a breach of the peace. Self-help is the method employed by the
Servicer in most cases and is accomplished simply by retaking possession of
the financed vehicle. In the event of default by the obligor, some
jurisdictions require that the obligor be notified of the default and be
given a time period within which he may cure the default prior to
repossession. Generally, the right of reinstatement may be exercised on a
limited number of occasions in any one-year period. In cases where the
obligor objects or raises a defense to repossession, or if otherwise
required by applicable state law, a court order must be obtained from the
appropriate state court, and the vehicle must then be repossessed in
accordance with that order.
Notice of Sale; Redemption Rights
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time and place of any public
sale and/or the date after which any private sale of the collateral may be
held. The obligor has the right to redeem the collateral prior to actual
sale by paying the secured party the unpaid principal balance of the
obligation plus reasonable expenses for repossessing, holding and preparing
the collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees, or, in some states, by payment
of delinquent installments or the unpaid balance.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of the vehicles generally will be applied first
to the expenses of resale and repossession and then to the satisfaction of
the indebtedness. While some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in those
states that do not prohibit or limit such judgments. However, the
deficiency judgment would be a personal judgment against the obligor for
the shortfall, and a defaulting obligor can be expected to have very little
capital or sources of income available following repossession. Therefore,
in many cases, it may not be useful to seek a deficiency judgment or, if
one is obtained, it may be settled at a significant discount.
Occasionally, after resale of a vehicle and payment of all expenses
and all indebtedness, there is a surplus of funds. In that case, the UCC
requires the creditor to remit the surplus to any holder of a lien with
respect to the vehicle or if no such lienholder exists or there are
remaining funds, to remit the surplus to the former owner of the vehicle.
Soldiers' and Sailors Civil Relief Act
The Soldiers' and Sailors Civil Relief Act of 1940 (the "Relief Act")
imposes certain limitations upon the actions of creditors with respect to
persons serving in the Armed Forces of the United States, and, to a more
limited extent, their dependents and guarantors and sureties of debt
incurred by such persons. An obligation incurred by a person prior to
entering military service cannot bear interest at a rate in excess of 6%
during the person's term of military service, unless the obligee petitions
a court which determines that the person's military service does not impair
his or her ability to pay interest at a higher rate. Further, a secured
party may not repossess during a person's military service a motor vehicle
subject to an installment sales contract or a promissory note entered into
prior to the person's entering military service, for a loan default which
occurred prior to or during such service, without court action. The Relief
Act imposes penalties for knowingly repossessing property in contravention
of its provisions. Additionally, dependents of military personnel are
entitled to the protection of the Relief Act, upon application to a court,
if such court determines the obligation of such dependent has been
materially impaired by reason of military service. To the extent an
obligation is unenforceable against the person in military service or a
dependent, any guarantor or surety of such obligation will not be liable
for performance.
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 Procedures Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations B, Z and AA, the Relief Act, state adoptions of
the National Consumer Act and of the Uniform Consumer Credit Code and state
motor vehicle retail installment sales acts, retail installment sales acts
and other similar laws. In addition to Federal law, state consumer
protection statutes regulate, among other things, the terms and conditions
of the motor vehicle retail installment sales contracts and promissory
notes and security agreements pursuant to which purchasers finance the
acquisition of motor vehicles. These laws place finance charge ceilings
and other restrictions on consumer transactions and require contract
disclosures in addition to those required under federal law. These
requirements impose specific statutory liabilities upon creditors who fail
to comply. In some cases, this liability could affect the ability of an
assignee, such as the Applicable Trustee, to enforce consumer finance
contracts such as the Receivables. The "Credit Practices" Rule of the
Federal Trade Commission imposes additional restrictions on contract
provisions and credit practices.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally
duplicated by the Uniform Consumer Credit Code, other statutes or the
common law, has the effect of subjecting a seller in a consumer credit
transaction (and certain related creditors and their assignees) to all
claims and defenses which the obligor in the transaction could assert
against the seller of the goods. Liability under the FTC Rule is limited to
the amounts paid by the obligor under the contract and the holder of the
contract may also be unable to collect any balance remaining due thereunder
from the obligor.
Most of the Receivables will be subject to the requirements of the FTC
Rule. Accordingly, each Trust, as holder of the related Receivables, will
be subject to any claims or defenses that the purchaser of the applicable
Financed Vehicle may assert against the seller of the Financed Vehicle.
Such claims are limited to a maximum liability equal to the amounts paid by
the Obligor on the Receivable. If an Obligor were successful in asserting
any such claim or defense, such claim or defense would constitute a breach
of the Seller's warranties under the related Sale and Servicing Agreement
or Pooling and Servicing Agreement and would create an obligation of the
Seller to repurchase the Receivable unless the breach is cured. See
"Description of the Transfer and Servicing Agreements-Sale and Assignment
of Receivables".
Under the motor vehicle dealer licensing laws of 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 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 the Affiliates are not sellers of motor vehicles and are
not subject to these laws, a violation thereof may form the basis for a
claim or defense against applicable Affiliate, the Seller or the Applicable
Trustee as holder of the Receivables.
Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an Obligor from some
or all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the
United States. Courts have generally upheld the notice provisions of the
UCC and related laws as reasonable or have found that the repossession and
resale by the creditor do not involve sufficient state action to afford
constitutional protection to borrowers.
Under each Sale and Servicing Agreement and Pooling and Servicing
Agreement, the Seller will warrant to the related Trust that each
Receivable complies with all requirements of law in all material respects.
Accordingly, if an Obligor has a claim against a Trust for violation of any
law and such claim materially and adversely affects such Trust's interest
in a Receivable, such violation would constitute a breach of the warranties
of the Seller under such Sale and Servicing Agreement or Pooling and
Servicing Agreement and would create an obligation of the Seller to
repurchase the Receivable unless the breach is cured. See "Description of
the Transfer and Servicing Agreements - Sale and Assignment of
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 secured
party to realize upon collateral or to enforce a deficiency judgment. For
example, in a Chapter 13 proceeding under the federal bankruptcy law, a
court may prevent a creditor from repossessing a vehicle, and, as part of
the rehabilitation plan, reduce the amount of the secured indebtedness to
the market value of the vehicle at the time of bankruptcy (as determined by
the court), leaving the creditor as a general unsecured creditor for the
remainder of the indebtedness. A bankruptcy court may also reduce the
monthly payments due under a contract or change the rate of interest and
time of repayment of the indebtedness.
Each Affiliate subject to FIRREA intends that the transfer of the
Receivables by it under a Purchase Agreement constitutes a sale. In the
event that an Affiliate that is subject to FIRREA were to become insolvent,
FIRREA sets forth certain powers that the FDIC could exercise if it were
appointed as receiver of such Affiliate. Subject to clarification by FDIC
regulations or interpretations, it would appear from the positions taken by
the FDIC before and after the passage of FIRREA that the FDIC in its
capacity as receiver for an Affiliate would not interfere with the timely
transfer to the Trust of payments collected on the Receivables. If the
transfer of Receivables by an Affiliate to the Seller were to be
characterized as a secured loan, to the extent that such Affiliate would be
deemed to have granted a security interest in the Receivables to the Seller
or the related Trust, and that interest had been validly perfected before
the insolvency of such Affiliate, and had not been taken in contemplation
of insolvency, that security interest should not be subject to avoidance
and payments to the Trust (to the extent of the "actual direct compensatory
damages" of the Seller or Trust) with respect to the Receivables should not
be subject to recovery by the FDIC as receiver of such Affiliate.
If the FDIC were to assert a position contrary to its position with
respect to secured loans described in the preceding paragraph, such as by
requiring the Seller or the related Trust to establish its right to those
payments by submitting to and completing the administrative claims
procedure established under FIRREA, delays in payments on the related Notes
(if any) and the Certificates and possible reductions in the amount of
those payments could occur. Alternatively, in such circumstances, the FDIC
might have the right to repudiate the applicable Purchase Agreement and pay
damages to the Seller which, in turn would prepay the related Notes (if
any) and Certificates, which would shorten their respective weighted
average lives.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of material federal income tax
consequences of the purchase, ownership and disposition of the Notes and
the Certificates. To the extent that the following summary relates to
matters of law or legal conclusions with respect thereto, such summary
represents the opinion of Mayer, Brown & Platt, special federal tax counsel
for the Seller ("Federal Tax Counsel") subject to the qualifications set
forth herein. Federal Tax Counsel have prepared or reviewed the statements
in this Prospectus under the heading "Federal Income Tax Consequences," and
are of the opinion that such statements are correct in all material
respects. The following summary is intended as an explanatory discussion
of the possible effects of certain federal income tax consequences to
Holders generally, but does not purport to furnish information in the level
of detail or with the attention to a Holder's specific tax circumstances
that would be provided by a Holder's own tax advisor. For example, it does
not discuss the tax treatment of Noteholders or Certificateholders that are
insurance companies, regulated investment companies or dealers in
securities. In addition, the discussion regarding the Notes is limited to
the federal income tax consequences of the initial Noteholders and not a
purchaser in the secondary market. Moreover, there are no cases or
Internal Revenue Service ("IRS") rulings on similar transactions involving
both debt and equity interests issued by a trust with terms similar to
those of the Notes and the Certificates. As a result, the IRS may disagree
with all or a part of the discussion below. Prospective investors are
urged to consult their own tax advisors in determining the federal, state,
local, foreign and any other tax consequences to them of the purchase,
ownership and disposition of the Notes and the Certificates.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. Each Trust will be
provided with an opinion of Federal Tax Counsel, regarding certain federal
income tax matters discussed below. An opinion of Federal Tax Counsel,
however, is not binding on the IRS or the courts. No ruling on any of the
issues discussed below will be sought from the IRS. For purposes of the
following summary, references to the Trust, the Notes, the Certificates and
related terms, parties and documents shall be deemed to refer, unless
otherwise specified herein, to each Trust and the Notes, Certificates and
related terms, parties and documents applicable to such Trust.
The federal income tax consequences to Certificateholders will vary
depending on whether the Trust is intended to be treated as a partnership
under the Code or as a grantor trust. The Prospectus Supplement for each
series of Certificates will specify whether a partnership election will be
made or the Trust will be treated as a grantor trust. In addition, to the
extent set forth in the related Prospectus Supplement, the tax consequences
to Securityholders may vary depending upon whether the related Prospectus
Supplement provides for a Revolving Period for Trusts that issue Notes.
FASIT LEGISLATION
In August, 1996, the United States Congress passed and President
Clinton signed into law the "Small Business Job Protection Act of 1996,"
H.R. 3448 (the "Act"). The Act creates a new type of entity for federal
income tax purposes called a "financial asset securitization investment
trust" or "FASIT." The effective date of the FASIT provisions of the Act
is September 1, 1997. The Act enables certain arrangements similar to a
Trust to elect to be treated as a FASIT. Under the FASIT provisions of the
Act, a FASIT generally would avoid federal income taxation and could issue
securities substantially similar to the Certificates and Notes, and those
securities would be treated as debt for federal income tax purposes. If so
specified in the related Prospectus Supplement, a Trust may make an
election to be treated as a FASIT. The applicable Transfer and Servicing
Agreement for such a Trust may contain any such terms and provide for the
issuance of Notes or Certificates on such terms and conditions as are
permitted to a FASIT and provided in the related Prospectus Supplement.
In addition, upon satisfying certain conditions set forth in the Transfer
and Servicing Agreements, the Seller and Servicer will be permitted to amend
the Transfer and Servicing Agreements in order to enable all or a portion of a
Trust to qualify as a FASIT and to permit a FASIT election to be made with
respect thereto, and to make such modifications to a Transfer and Servicing
Agreement as may be permitted by reason of the making of such an election.
See "Description of the Transfer and Servicing Agreements-Amendments."
However, there can be no assurance that the Seller will or will not cause
any permissible FASIT election to be made with respect to a Trust or amend
a Transfer and Servicing Agreement in connection with any election. In
addition, if such an election is made, it may cause a holder to recognize
gain (but not loss) with respect to any Notes or Certificates held by it,
even though Federal Tax Counsel will deliver its opinion that a Note will be
treated as debt for federal income tax purposes without regard to the election
and the Note or Certificate would be treated as debt following the election.
Additionally, any such election and any related amendments to a Transfer
and Servicing Agreement may have other tax and non-tax consequences to
Securityholders. Accordingly, prospective Securityholders should consult
their tax advisors with regard to the effects of any such election and any
permitted related amendments on them in their particular circumstances.
TRUSTS TREATED AS PARTNERSHIPS
Tax Characterization of the Trust as a Partnership
Federal Tax Counsel will deliver its opinion that a Trust which the
Trust Agreement specifies is intended to be treated as a partnership will
not be an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes. A copy of such opinion of
Federal Tax Counsel will be filed with the Commission with a Form 8-K
following an issuance of Securities by such Trust. This opinion will be
based on the assumption that the terms of the Trust Agreement and related
documents will be complied with, and on Federal Tax Counsel's conclusions
that (1) the Trust will not have certain characteristics necessary for a
business trust to be classified as an association taxable as a corporation
and (2) the nature of the income of the Trust will exempt it from the rule
that certain publicly traded partnerships are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax
purposes, the Trust would be subject to corporate income tax on its taxable
income. The Trust's taxable income would include all its income on the
Receivables, reduced by its interest expense on the Notes provided the
Notes are respected as debt for federal income tax purposes (see discussion
in the following paragraph). Any such corporate income tax could
materially reduce cash available to make payments on the Notes and
distributions on the Certificates, and Certificateholders could be liable
for any such tax that is unpaid by the Trust.
Tax Consequences to Holders of the Notes
Treatment of the Notes as Indebtedness. The Seller will agree, and
the Noteholders will agree by their purchase of Notes, to treat the Notes
as debt for federal, state and local income and franchise tax purposes.
Federal Tax Counsel will deliver its opinion that the Notes will be
classified as debt for federal income tax purposes. A copy of such opinion
of Federal Tax Counsel will be filed with the Commission with a Form 8-K
following the issuance of the Notes. The discussion below assumes this
characterization of the Notes is correct.
OID, Strip Notes, etc. The discussion below assumes that all payments
on the Notes are denominated in U.S. dollars, and that the Notes are not
Strip Notes. Moreover, the discussion assumes that the interest formula
for the Notes meets the requirements for "qualified stated interest" under
Treasury regulations (the "OID regulations") relating to original issue
discount ("OID"), and that any OID on the Notes (i.e., any excess of the
principal amount of the Notes over their issue price) does not exceed a de
minimis amount (i.e., 1/4% of their principal amount multiplied by the
number of full years included in their term), all within the meaning of the
OID regulations. If these conditions are not satisfied with respect to any
given series of Notes and as a result the Notes are treated as issued with
OID, additional tax considerations with respect to such Notes will be
disclosed in the related Prospectus Supplement.
Interest Income on the Notes. Based on the above assumptions, except
as discussed in the following paragraph, the Notes will not be considered
issued with OID. The stated interest thereon will be taxable to a
Noteholder as ordinary interest income when received or accrued in
accordance with such Noteholder's method of tax accounting. Under the OID
regulations, a holder of a Note issued with a de minimis amount of OID must
include such OID in income, on a pro rata basis, as principal payments are
made on the Note. It is believed that any prepayment premium paid as a
result of a mandatory redemption will be taxable as contingent interest
when it becomes fixed and unconditionally payable. A purchaser who buys a
Note for more or less than its principal amount will generally be subject,
respectively, to the premium amortization or market discount rules of the
Code.
Sale or Other Disposition. If a Noteholder sells a Note, the holder
will recognize gain or loss in an amount equal to the difference between
the amount realized on the sale and the holder's adjusted tax basis in the
Note. The adjusted tax basis of a Note to a particular Noteholder will
equal the holder's cost for the Note, increased by any market discount, OID
and gain previously included by such Noteholder in income with respect to
the Note and decreased by the amount of bond premium (if any) previously
amortized and by the amount of principal payments previously received by
such Noteholder with respect to such Note. Any such gain or loss will be
capital gain or loss if the Note was held as a capital asset, except for
gain representing accrued interest and accrued market discount not
previously included in income. Capital losses generally may be used by a
corporate taxpayer only to offset capital gains, and by an individual
taxpayer only to the extent of capital gains plus $3,000 of other income.
Foreign Holders. Interest payments made (or accrued) to a Noteholder
who is a nonresident alien, foreign corporation or other non-United States
person (a "foreign person") generally will be considered "portfolio
interest", and generally will not be subject to United States federal
income tax and withholding tax, if the interest is not effectively
connected with the conduct of a trade or business within the United States
by the foreign person and the foreign person (i) is not actually or
constructively a "10 percent shareholder" of the Trust or the Seller
(including a holder of 10% of the outstanding Certificates) or a
"controlled foreign corporation" with respect to which the Trust or the
Seller is a "related person" within the meaning of the Code and (ii)
provides the Trustee or other person who is otherwise required to withhold
U.S. tax with respect to the Notes with an appropriate statement (on Form
W-8 or a similar form), signed under penalties of perjury, certifying that
the beneficial owner of the Note is a foreign person and providing the
foreign person's name and address. If a Note is held through a securities
clearing organization or certain other financial institutions, the
organization or institution may provide the relevant signed statement to
the withholding agent; in that case, however, the signed statement must be
accompanied by a Form W-8 or substitute form provided by the foreign person
that owns the Note. If such interest is not portfolio interest, then it
will be subject to United States federal income and withholding tax at a
rate of 30 percent, unless reduced or eliminated pursuant to an applicable
tax treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from
United States federal income and withholding tax, provided that (i) such
gain is not effectively connected with the conduct of a trade or business
in the United States by the foreign person and (ii) in the case of an
individual foreign person, the foreign person is not present in the United
States for 183 days or more in the taxable year.
Backup Withholding. Each holder of a Note (other than an exempt
holder such as a corporation, tax exempt organization, qualified pension
and profit sharing trust, individual retirement account or nonresident
alien who provides certification as to status as a nonresident) will be
required to provide, under penalties of perjury, a certificate containing
the holder's name, address, correct federal taxpayer identification number
and a statement that the holder is not subject to backup withholding.
Should a nonexempt Noteholder fail to provide the required certification,
the Trust will be required to withhold 31 percent of the amount otherwise
payable to the holder, and remit the withheld amount to the IRS as a credit
against the holder's federal income tax liability. Noteholders should
consult with their tax advisors as to their eligibility for exemption from
backup withholding and the procedure for obtaining the exemption.
Possible Alternative Treatments of the Notes. If, contrary to the
opinion of Federal Tax Counsel, the IRS successfully asserted that one or
more of the Notes did not represent debt for federal income tax purposes,
the Notes might be treated as equity interests in the Trust. If so
treated, the Trust might be taxable as a corporation with the adverse
consequences described above (and the taxable corporation would not be able
to reduce its taxable income by deductions for interest expense on Notes
recharacterized as equity). Alternatively, and most likely in the view of
Federal Tax Counsel, the Trust might be treated as a publicly traded
partnership that would not be taxable as a corporation because it would
meet certain qualifying income tests. Nonetheless, treatment of the Notes
as equity interests in such a publicly traded partnership could have
adverse tax consequences to certain holders. For example, income to
certain tax-exempt entities (including pension funds) would be "unrelated
business taxable income", income to foreign holders generally would be
subject to U.S. tax and U.S. tax return filing and withholding
requirements, and individual holders might be subject to certain
limitations on their ability to deduct their share of Trust expenses.
Furthermore, such a characterization could subject holders to state and
local taxation in jurisdictions in which they are not currently subject to
tax.
Tax Consequences to Holders of the Certificates
Treatment of the Trust as a Partnership. The Seller, the Servicer,
the Trustee, and the Certificateholders, by their purchase of Certificates,
will agree to treat the Trust as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in
part by income, with the assets of the partnership being the assets held by
the Trust, the partners of the partnership being the Certificateholders,
and the Notes being debt of the partnership. However, the proper
characterization of the arrangement involving the Trust, the Certificates,
the Notes, the Seller, and the Servicer is not clear because there is no
authority on transactions closely comparable to that contemplated herein.
A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Seller or the Trust. Any such
characterization would not result in materially adverse tax consequences to
Certificateholders as compared to the intended consequences from treatment
of the Certificates as equity in a partnership, described below. The
following discussion assumes that the Certificates represent equity
interests in a partnership.
The following discussion assumes that all payments on the Certificates
are denominated in U.S. dollars, none of the Certificates are Strip
Certificates, and that a series of Securities includes a single class of
Certificates. If these conditions are not satisfied with respect to any
given series of Certificates, additional tax considerations with respect to
such Certificates will be disclosed in the related Prospectus Supplement.
Partnership Taxation. As a partnership, the Trust will not be subject
to federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's accruals of guaranteed payments
from the Trust and its allocated share of other income, gains, losses,
deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the Receivables
(including appropriate adjustments for market discount, OID and bond
premium) and any gain upon collection or disposition of Receivables. The
Trust's deductions will consist primarily of interest accruing with respect
to the Notes, guaranteed payments on the Certificates, servicing and other
fees, and losses or deductions upon collection or disposition of
Receivables.
The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership
agreement (here, the Trust Agreement and related documents). Under the
Trust Agreement, interest payments on the Certificates at the Certificate
Rate (including interest on amounts previously due on the Certificates but
not yet distributed) will be treated as "guaranteed payments" under Section
707(c) of the Code. Guaranteed payments are payments to partners for the
use of their capital and, in the present circumstances, are treated as
deductible to the Trust and ordinary income to the Certificateholders. The
Trust will have a calendar year tax year and will deduct the guaranteed
payments under the accrual method of accounting. Certificateholders with a
calendar year tax year are required to include the accruals of guaranteed
payments in income in their taxable year that corresponds to the year in
which the Trust deducts the payments, and Certificateholders with a
different taxable year are required to include the payments in income in
their taxable year that includes the December 31 of the Trust year in which
the Trust deducts the payments. It is possible that guaranteed payments
will not be treated as interest for all purposes of the Code.
In addition, the Trust Agreement will provide, in general, that the
Certificateholders will be allocated taxable income of the Trust for each
Collection Period equal to the sum of (i) any Trust income attributable to
discount on the Receivables that corresponds to any excess of the principal
amount of the Certificates over their initial issue price, (ii) prepayment
premium, if any, payable to the Certificateholders for such month and (iii)
any other amounts of income payable to the Certificateholders for such
month. Such allocation will be reduced by any amortization by the Trust of
premium on Receivables that corresponds to any excess of the issue price of
Certificates over their principal amount. All remaining items of taxable
income, gain, loss and deduction of the Trust, if any, will be allocated to
the Seller.
Based on the economic arrangement of the parties, this approach for
allocating Trust income arguably should be permissible under applicable
Treasury regulations, although no assurance can be given that the IRS would
not require a greater amount of income to be allocated to
Certificateholders. Moreover, even under the foregoing method of
allocation, Certificateholders may be allocated income equal to the entire
Certificate Rate plus the other items described above even though the Trust
might not have sufficient cash to make current cash distributions of such
amount. Thus, cash basis holders would, in effect, be required to report
income from the Certificates on the accrual basis and Certificateholders
may become liable for taxes on Trust income even if they have not received
cash from the Trust to pay such taxes. In addition, because tax
allocations and tax reporting will be done on a uniform basis for all
Certificateholders but Certificateholders may be purchasing Certificates at
different times and at different prices, Certificateholders may be required
to report on their tax returns taxable income that is greater or less than
the amount reported to them by the Trust.
All of the guaranteed payments and taxable income allocated to a
Certificateholder that is a pension, profit sharing or employee benefit
plan or other tax-exempt entity (including an individual retirement
account) will constitute "unrelated business taxable income" generally
taxable to such a holder under the Code.
An individual taxpayer's share of expenses of the Trust (including
fees to the Servicer but not interest expense) would be miscellaneous
itemized deductions. Such deductions might be disallowed to the individual
in whole or in part and might result in such holder being taxed on an
amount of income that exceeds the amount of cash actually distributed to
such holder over the life of the Trust. It is not clear whether these
rules would be applicable to a Certificateholder accruing guaranteed
payments.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were
to require that such calculations be made separately for each Receivable,
the Trust might be required to incur additional expense but it is believed
that there would not be a material adverse effect on Certificateholders.
Discount and Premium. It is believed that the Receivables were not
issued with OID, and, therefore, the Trust should not have OID income.
However, the purchase price paid by the Trust for the Receivables may be
greater or less than the remaining principal balance of the Receivables at
the time of purchase. If so, the Receivables will have been acquired at a
premium or discount, as the case may be. (As indicated above, the Trust
will make this calculation on an aggregate basis, but might be required to
recompute it on a Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium,
the Trust will elect to include any such discount in income currently as it
accrues over the life of the Receivables or to offset any such premium
against interest income on the Receivables. As indicated above, a portion
of such market discount income or premium deduction may be allocated to
Certificateholders.
Section 708 Termination. Under Section 708 of the Code, the Trust
will be deemed to terminate for federal income tax purposes if 50% or more
of the capital and profits interests in the Trust are sold or exchanged
within a 12-month period. If such a termination occurs, under current
Treasury regulations the Trust will be considered to distribute its assets
to the partners, who would then be treated as recontributing those assets
to the Trust, as a new partnership. Proposed Treasury regulations would
modify this treatment. The Trust will not comply with certain technical
requirements that might apply when such a constructive termination occurs.
As a result, the Trust may be subject to certain tax penalties and may
incur additional expenses if it is required to comply with those
requirements. Furthermore, the Trust might not be able to comply due to
lack of data.
Disposition of Certificates. Subject to the discussion in the
immediately following paragraph, generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates
sold. A Certificateholder's tax basis in a Certificate will generally
equal the holder's cost increased by the holder's share of Trust income
(includible in income) and decreased by any distributions received with
respect to such Certificate. In addition, both the tax basis in the
Certificates and the amount realized on a sale of a Certificate would
include the holder's share of the Notes and other liabilities of the Trust.
A holder acquiring Certificates at different prices may be required to
maintain a single aggregate adjusted tax basis in such Certificates, and,
upon sale or other disposition of some of the Certificates, allocate a
portion of such aggregate tax basis to the Certificates sold (rather than
maintaining a separate tax basis in each Certificate for purposes of
computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's
share of unrecognized accrued market discount on the Receivables would
generally be treated as ordinary income to the holder and would give rise
to special tax reporting requirements. The Trust does not expect to have
any other assets that would give rise to such special reporting
requirements. Thus, to avoid those special reporting requirements, the
Trust will elect to include market discount in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the
aggregate cash distributions with respect thereto, such excess will
generally give rise to a capital loss upon the retirement of the
Certificates.
Allocations Between Transferors and Transferees. In general, the
Trust's taxable income and losses will be determined monthly and the tax
items for a particular calendar month will be apportioned among the
Certificateholders in proportion to the principal amount of Certificates
owned by them as of the close of the last day of such month. As a result,
a holder purchasing Certificates may be allocated tax items (which will
affect its tax liability and tax basis) attributable to periods before the
actual purchase.
The use of such a monthly convention may not be permitted by existing
Treasury regulations. If a monthly convention is not allowed (or only
applies to transfers of less than all of the partner's interest), taxable
income or losses of the Trust might be reallocated among the
Certificateholders. The Seller is authorized to revise the Trust's method
of allocation between transferors and transferees to conform to a method
permitted by future regulations.
Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (loss), the purchasing Certificateholder will have
a higher (lower) basis in the Certificates than the selling
Certificateholder had. The tax basis of the Trust's assets will not be
adjusted to reflect that higher (or lower) basis unless the Trust were to
file an election under Section 754 of the Code. In order to avoid the
administrative complexities that would be involved in keeping accurate
accounting records, as well as potentially onerous information reporting
requirements, the Trust will not make such election. As a result,
Certificateholders might be allocated a greater or lesser amount of Trust
income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Trustee is required to keep or have kept
complete and accurate books of the Trust. Such books will be maintained
for financial reporting and tax purposes on an accrual basis and the fiscal
year of the Trust will be the calendar year. The Trustee will file a
partnership information return (IRS Form 1065) with the IRS for each
taxable year of the Trust and will report each Certificateholder's
allocable share of items of Trust income and expense to holders and the IRS
on Schedule K-1. The Trust will provide the Schedule K-1 information to
nominees that fail to provide the Trust with the information statement
described below and such nominees will be required to forward such
information to the beneficial owners of the Certificates. Generally,
holders must file tax returns that are consistent with the information
return filed by the Trust or be subject to penalties unless the holder
notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as
a nominee at any time during a calendar year is required to furnish the
Trust with a statement containing certain information on the nominee, the
beneficial owners and the Certificates so held. Such information includes
(i) the name, address and taxpayer identification number of the nominee and
(ii) as to each beneficial owner (x) the name, address and identification
number of such person, (y) whether such person is a United States person, a
tax-exempt entity or a foreign government, an international organization,
or any wholly owned agency or instrumentality of either of the foregoing,
and (z) certain information on Certificates that were held, bought or sold
on behalf of such person throughout the year. In addition, brokers and
financial institutions that hold Certificates through a nominee are
required to furnish directly to the Trust information as to themselves and
their ownership of Certificates. A clearing agency registered under
Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for
any calendar year must be furnished to the Trust on or before the following
January 31. Nominees, brokers and financial institutions that fail to
provide the Trust with the information described above may be subject to
penalties.
The Seller will be designated as the tax matters partner in the
related Trust Agreement and, as such, will be responsible for representing
the Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on
which the partnership information return is filed. Any adverse
determination following an audit of the return of the Trust by the
appropriate taxing authorities could result in an adjustment of the returns
of the Certificateholders, and, under certain circumstances, a
Certificateholder may be precluded from separately litigating a proposed
adjustment to the items of the Trust. An adjustment could also result in
an audit of a Certificateholder's returns and adjustments of items not
related to the income and losses of the Trust.
Tax Consequences to Foreign Certificateholders. It is not clear
whether the Trust would be considered to be engaged in a trade or business
in the United States for purposes of federal withholding taxes with respect
to non-U.S. persons because there is no clear authority dealing with that
issue under facts substantially similar to those described herein.
Although it is not expected that the Trust would be engaged in a trade or
business in the United States for such purposes, the Trust will withhold as
if it were so engaged in order to protect the Trust from possible adverse
consequences of a failure to withhold. The Trust expects to withhold on
the portion of its taxable income that is allocable to foreign
Certificateholders pursuant to Section 1446 of the Code, as if such income
were effectively connected to a U.S. trade or business, at a rate of 35%
for foreign holders that are taxable as corporations and 39.6% for all
other foreign holders. Subsequent adoption of Treasury regulations or the
issuance of other administrative pronouncements may require the Trust to
change its withholding procedures. In determining a holder's withholding
status, the Trust may rely on IRS Form W-8, IRS Form W-9 or the holder's
certification of nonforeign status signed under penalties of perjury.
Each foreign holder might be required to file a U.S. individual or
corporate income tax return and pay U.S. income tax on the amount computed
therein (including, in the case of a corporation, the branch profits tax)
on its share of accruals of guaranteed payments and the Trust's income.
Each foreign holder must obtain a taxpayer identification number from the
IRS and submit that number to the Trust on Form W-8 in order to assure
appropriate crediting of the taxes withheld. A foreign holder generally
would be entitled to file with the IRS a claim for refund with respect to
taxes withheld by the Trust, taking the position that no taxes were due
because the Trust was not engaged in a U.S. trade or business. However,
the IRS may assert additional taxes are due, and no assurance can be given
as to the appropriate amount of tax liability.
Backup Withholding. Distributions made on the Certificates and
proceeds from the sale of the Certificates will be subject to a "backup"
withholding tax of 31% if, in general, the Certificateholder fails to
comply with certain identification procedures, unless the holder is an
exempt recipient under applicable provisions of the Code.
Certificateholders should consult with their tax advisors as to their
eligibility for exemption to backup withholding and the procedure for
obtaining the exemption.
TRUSTS TREATED AS GRANTOR TRUSTS
Tax Characterization of the Trust as a Grantor Trust
With respect to any Trust which is not intended to be characterized as
a partnership, Federal Tax Counsel will deliver its opinion that the Trust
will not be classified as an association taxable as a corporation and that
such Trust will be classified as a grantor trust under subpart E, Part 1 of
subchapter J of the Code. A copy of such opinion of Federal Tax Counsel
will be filed with the Commission with a Form 8-K following the issuance of
the Certificates by a Trust not intended to be characterized as a
partnership. In this case, owners of Certificates (referred to herein as
"Grantor Trust Certificateholders") will be treated for federal income tax
purposes as owners of a portion of the Trust's assets as described below.
The Certificates issued by a Trust that is treated as a grantor trust are
referred to herein as "Grantor Trust Certificates".
Characterization. Each Grantor Trust Certificateholder will be
treated as the owner of a pro rata undivided interest in the interest and
principal portions of the Trust represented by the Grantor Trust
Certificates and will be considered the equitable owner of a pro rata
undivided interest in each of the Receivables in the Trust. Any amounts
received by a Grantor Trust Certificateholder in lieu of amounts due with
respect to any Receivable because of a default or delinquency in payment
will be treated for federal income tax purposes as having the same
character as the payments they replace.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire
income from the Receivables in the Trust represented by the Grantor Trust
Certificates, including interest, OID, if any, market discount, if any,
prepayment fees, assumption fees, any gain recognized upon an assumption
and late payment charges received by the Servicer. Under Sections 162 or
212 of the Code each Grantor Trust Certificateholder will be entitled to
deduct its pro rata share of servicing fees, prepayment fees, assumption
fees, any loss recognized upon an assumption and late payment charges
retained by the Servicer, provided that such amounts are reasonable
compensation for services rendered to the Trust. Grantor Trust
Certificateholders that are individuals, estates or trusts will be entitled
to deduct their share of expenses only to the extent such expenses plus all
other Section 212 expenses exceed two percent of its adjusted gross income.
In addition, the Code provides that the amount of itemized deductions
otherwise allowable for the taxable year for an individual whose adjusted
gross income exceeds a threshold amount specified in the Code adjusted for
inflation ($117,950 in 1996, in the case of a joint return) will be reduced
by the lesser of (i) 3% of the excess of adjusted gross income over the
specified threshold amount or (ii) 80% of the amount of itemized deductions
otherwise allowable for such taxable year. A Grantor Trust
Certificateholder using the cash method of accounting must take into
account its pro rata share of income and deductions as and when collected
by or paid to the Servicer. A Grantor Trust Certificateholder using an
accrual method of accounting must take into account its pro rata share of
income and deductions as they become due or are paid to the Servicer,
whichever is earlier. If the servicing fees paid to the Servicer are
deemed to exceed reasonable servicing compensation, the amount of such
excess could be considered as an ownership interest retained by the
Servicer (or any person to whom the Servicer assigned for value all or a
portion of the servicing fees) in a portion of the interest payments on the
Receivables. The Receivables would then be subject to the "coupon
stripping" rules of the Code discussed below.
Premium. The price paid for a Grantor Trust Certificate by a holder
will be allocated to such holder's undivided interest in each Receivable
based on each Receivable's relative fair market value, so that such
holder's undivided interest in each Receivable will have its own tax basis.
A Grantor Trust Certificateholder that acquires an interest in Receivables
at a premium may elect to amortize such premium under a constant yield
method. Amortizable bond premium will be treated as an offset to interest
income on such Grantor Trust Certificate. The basis for such Grantor Trust
Certificate will be reduced to the extent that amortizable premium is
applied to offset interest payments. A Grantor Trust Certificateholder
that makes this election for a Grantor Trust Certificate that is acquired
at a premium will be deemed to have made an election to amortize bond
premium with respect to all debt instruments having amortizable bond
premium that such Grantor Trust Certificateholder acquires during the year
of the election or thereafter. Absent such an election, the premium will
be deductible as an ordinary loss only upon disposition of the Certificate
or pro rata as principal is paid on the Receivables.
Stripped Bonds and Stripped Coupons
To the extent a transaction is determined to involve "excess
servicing" (as described above), or that the classes of Certificates
represent stripped interests in the underlying Receivables, the Grantor
Trust Certificates will represent interests in stripped bonds for federal
income tax purposes. Although the tax treatment of stripped bonds is not
entirely clear, based on recent guidance by the IRS, each purchaser of a
Grantor Trust Certificate will be treated as the purchaser of a stripped
bond which generally should be treated as a single debt instrument issued
on the day it is purchased for purposes of calculating any OID. Generally,
under Treasury regulations (the "Section 1286 Treasury Regulations"), if
the discount on a stripped bond is larger than a de minimis amount (as
calculated for purposes of the OID rules of the Code) such stripped bond
will be considered to have been issued with OID. If OID rules were to
apply, all of the taxable income to be recognized with respect to the
Certificates would be includible in income as OID but would not be
includible again when the interest is actually received. Regulations do
not adequately address the circumstances in which payment of interest on
Certificates such as the Grantor Trust Certificates would not be considered
unconditionally payable, and thus, it is expected that Federal Tax Counsel
will be unable to opine as to the extent to which interest payments on the
Certificates would be treated as qualified stated interest.
Market Discount and Premium. A Grantor Trust Certificateholder that
acquires an undivided interest in Receivables may be subject to the market
discount rules of Code Sections 1276 through 1278 to the extent an
undivided interest in a Receivable is considered to have been purchased at
a "market discount." Generally, the amount of market discount is equal to
the excess of the portion of the principal amount of such Receivable
allocable to such holder's undivided interest over such holder's tax basis
in such interest. Market discount with respect to a Grantor Trust
Certificate will be considered to be zero if the amount allocable to the
Grantor Trust Certificate is less than 0.25% of the Grantor Trust
Certificate's stated redemption price at maturity multiplied by the
weighted average maturity remaining after the date of purchase. Treasury
regulations implementing the market discount rules have not yet been
issued; therefore, investors should consult their own tax advisors
regarding the application of these rules and the advisability of making any
of the elections allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain on disposition of a market discount
bond shall be treated as ordinary income to the extent that it does not
exceed the accrued market discount at the time of such payment. The amount
of accrued market discount for purposes of determining the tax treatment of
subsequent principal payments or dispositions of the market discount bond
is to be reduced by the amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on
debt instruments, the principal of which is payable in more than one
installment. While the Treasury Department has not yet issued regulations,
rules described in the relevant legislative history will apply. Under
those rules, the holder of a market discount bond may elect to accrue
market discount on the basis of a constant yield method.
A holder who acquired a Grantor Trust Certificate at a market discount
may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to
purchase or carry such Grantor Trust Certificate purchased with market
discount. For these purposes, the de minimis rule referred to above
applies. Any such deferred interest expense would not exceed the market
discount that accrues during such taxable year and is, in general, allowed
as a deduction not later than the year in which such market discount is
includible in income. If such holder elects to include market discount in
income currently as it accrues on all market discount instruments acquired
by such holder in that taxable year or thereafter, the interest deferral
rule described above will not apply.
To the extent a Grantor Trust Certificateholder is considered to have
purchased an undivided interest in a Receivable for an amount that is
greater than its stated redemption price at maturity of such Receivable,
such Grantor Trust Certificateholder will be considered to have purchased
the Receivable with "amortizable bond premium" equal in amount to such
excess. See "-Premium."
Election to Treat All Interest as OID. The OID regulations permit a
Grantor Trust Certificateholder to elect to accrue all interest, discount
(including de minimis market or OID) and premium in income as interest,
based on a constant yield method. If such an election were to be made with
respect to a Grantor Trust Certificate with market discount, the
Certificateholder would be deemed to have made an election to include in
income currently market discount with respect to all other debt instruments
having market discount that such Grantor Trust Certificateholder acquires
during the year of the election or thereafter. Similarly, a Grantor Trust
Certificateholder that makes this election for a Grantor Trust Certificate
that is acquired at a premium will be deemed to have made an election to
amortize bond premium with respect to all debt instruments having
amortizable bond premium that such Grantor Trust Certificateholder owns or
acquires. See "-Premium." The election to accrue interest, discount and
premium on a constant yield method with respect to a Grantor Trust
Certificate is generally irrevocable.
Sale or Exchange of a Grantor Trust Certificate. Sale or exchange of
a Grantor Trust Certificate prior to its maturity will result in gain or
loss equal to the difference, if any, between the amount received and the
owner's adjusted basis in the Grantor Trust Certificate. Such adjusted
basis generally will equal the seller's purchase price for the Grantor
Trust Certificate, increased by the OID included in the seller's gross
income with respect to the Grantor Trust Certificate, and reduced by
principal payments on the Grantor Trust Certificate previously received by
the seller. Such gain or loss will be capital gain or loss to an owner for
which a Grantor Trust Certificate is a "capital asset" within the meaning
of Code Section 1221, and will be long-term or short-term depending on
whether the Grantor Trust Certificate has been owned for the long-term
capital gain holding period (currently more than one year).
Grantor Trust Certificates will be "evidences of indebtedness" within
the meaning of Code Section 582(c)(1), so that gain or loss recognized from
the sale of a Grantor Trust Certificate by a bank or a thrift institution
to which such section applies will be treated as ordinary income or loss.
Non-U.S. Persons. Generally, interest or OID paid by the person
required to withhold tax under Code Section 1441 or 1442 to (i) an owner
that is not a U.S. Person (as defined below) or (ii) a Grantor Trust
Certificateholder holding on behalf of an owner that is not a U.S. Person
would not be subject to withholding if such Grantor Trust Certificateholder
complies with certain identification requirements (including delivery of a
statement, signed by the Grantor Trust Certificateholder under penalties of
perjury, certifying that such Grantor Trust Certificateholder is not a U.S.
Person and providing the name and address of such Grantor Trust
Certificateholder).
As used herein, a "U.S. Person" means a citizen or resident of the
United States, a corporation or a partnership organized in or under the
laws of the United States or any political subdivision thereof or an estate
or trust, the income of which from sources outside the United States is
includible in gross income for federal income tax purposes regardless of
its connection with the conduct of a trade or business within the United
States.
Information Reporting and Backup Withholding. The Servicer will
finish or make available, within a reasonable time after the end of each
calendar year, to each person who was a Grantor Trust Certificateholder at
any time during such year, such information as may be deemed necessary or
desirable to assist Grantor Trust Certificateholders in preparing their
federal income tax returns, or to enable holders to make such information
available to beneficial owners or financial intermediaries that hold
Grantor Trust Certificates as nominees on behalf of beneficial owners. If
a holder, beneficial owner, financial intermediary or other recipient of a
payment on behalf of a beneficial owner fails to supply a certified
taxpayer identification number or if the Secretary of the Treasury
determines that such person has not reported all interest and dividend
income required to be shown on its federal income tax return, 31% backup
withholding may be required with respect to any payments. Any amounts
deducted and withheld from a distribution to a recipient would be allowed
as a credit against such recipient's federal income tax liability.
STATE TAX CONSEQUENCES
The above discussion does not address the tax treatment of any Tax
Partnership, Grantor Trust, Notes, Certificates, Noteholders or
Certificateholders under any state tax laws. Prospective investors are
urged to consult with their own tax advisors regarding the state tax
treatment of any Tax Partnership or Grantor Trust as well as any state tax
consequences to them of purchasing, holding and disposing of Notes or
Certificates.
* * *
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
NOTEHOLDER'S OR CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE
PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES
AND CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL
OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan subject to ERISA, as well as
individual retirement accounts, certain types of Keogh Plans and other
plans subject to Section 4975 of the Code (each a "Benefit Plan"), from
engaging in certain transactions with persons that are "parties in
interest" under ERISA or "disqualified persons" under the Code with respect
to such Benefit Plan. A violation of these "prohibited transaction" rules
may result in an excise tax or other penalties and liabilities under ERISA
and the Code for such persons.
A fiduciary of a Benefit Plan considering the purchase of Securities
of any series should carefully review with its legal and other advisors
whether the assets of the related Trust would be considered plan assets,
whether the purchase or holding of the Securities could give rise to a
transaction prohibited or otherwise impermissible under ERISA or the Code,
and should refer to the discussion under "ERISA Considerations" in the
related Prospectus Supplement regarding any restrictions on the purchase or
holding of the Securities offered thereby.
Certain employee benefit plans, such as governmental plans (as defined
in Section 3(32) of ERISA) and certain church plans (as defined in Section
3(33) of ERISA) are not subject to the fiduciary and prohibited transaction
provisions under ERISA or the Code discussed herein, but governmental plans
may be subject to comparable restrictions under applicable state law.
Trusts That Issue Notes
The following discussion applies only to Trusts that issue Notes.
Certain transactions involving a Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit
Plan that purchased Notes or Certificates if assets of the Trust were
deemed to be assets of the Benefit Plan. Under a regulation issued by the
United States Department of Labor (the "Plan Asset Regulation"), the assets
of a Trust would be treated as plan assets of a Benefit Plan for the
purposes of ERISA and the Code only if the Benefit Plan acquired an "equity
interest" in the Trust and none of the exceptions contained in the Plan
Asset Regulation was applicable. An equity interest is defined under the
Plan Asset Regulation as an interest other than an instrument which is
treated as indebtedness under applicable local law and which has no
substantial equity features. Although there is little guidance on the
subject to the extent provided in the related Prospectus Supplement, the
Seller believes that, at the time of their issuance, the Notes of each
Series should be treated as indebtedness without substantial equity
features for purpose of the Plan Asset Regulation. The debt status of the
Notes could be affected, after their initial issuance, by certain changes
in the financial condition of the related Trust.
Regardless of whether the Notes are treated as an equity interest for
purposes of the Plan Asset Regulation, the acquisition or holding of such
Notes with plan assets of a Benefit Plan could be considered to give rise
to a prohibited transaction if the Seller, the Servicer or the applicable
Issuer, Trustee or Indenture Trustee is or becomes a party in interest
under ERISA or a disqualified person under the Code with respect to such
Benefit Plan. In such case, certain exemptions from the prohibited
transactions rules may be available, depending upon the type and
circumstances of the Benefit Plan fiduciary making the decision to purchase
the Notes with assets of the Benefit Plan. Included among these exemptions
are Prohibited Transaction Exemption ("PTE") 84-14, applicable to certain
transactions effected by a qualified professional asset manager; PTE 90-1,
applicable to certain transactions entered into by an insurance company
separate account; PTE 91-38, applicable to certain transactions entered
into by a bank collective investment trust; PTE 95-60, applicable to
certain transactions entered into by an insurance company general account;
and PTE 96-23, applicable to certain transactions entered into by an
in-house asset manager. Purchasers acquiring Notes of any series with the
assets of a Benefit Plan shall be deemed to represent and warrant that such
purchase and holding will not give rise to a nonexempt prohibited
transaction.
Because the Certificates issued by a Trust that also issues Notes will
most likely be treated as equity interests under the Plan Asset Regulation,
such Certificates may not be acquired with the assets of any Benefit Plan.
Purchasers of the Certificates issued by a Trust that also issues Notes
shall be deemed to represent and warrant that they are not purchasing the
Certificates with the assets of a Benefit Plan.
Trusts That Do Not Issue Notes
The following discussion applies only to nonsubordinated Certificates
(referred to herein as "Senior Certificates") issued by a Trust that does
not issue Notes.
The related Prospectus Supplement will indicate whether the lead
underwriter named therein has been granted by the U.S. Department of Labor,
an exemption (the "Exemption") from certain of the prohibited transaction
rules of ERISA with respect to the initial purchase, the holding and the
subsequent resale by Benefit Plans of certificates representing interests
in asset-backed pass-through trusts that consist of certain receivables,
loans and other obligations that meet the conditions and requirements of
the Exemption. The receivables covered by the Exemption include motor
vehicle installment sales contracts such as the Receivables. The fact that
a portion of the Receivables in certain Trusts may be acquired subsequent
to closing with the assets held in a Pre-Funding Account raises an issue as
to whether the Trust can be characterized as containing a "fixed pool" of
receivables, as required by the Exemption, during the Funding Period. In
addition, the assets held in a Pre-Funding Account prior to the acquisition
of Receivables are not within the list of permitted assets for purposes of
the Exemption. Accordingly, it is not clear whether the terms of the
Exemption will be satisfied during the Funding Period with respect to
Senior Certificates issued by a Trust with Prefunding Account. The
Department of Labor has under consideration an amendment to the Exemption
to extend its application to trusts with prefunding accounts.
Among the conditions which must be satisfied for the Exemption to
apply to the Senior Certificates are the following:
(1) the acquisition of the Senior Certificates by a Benefit
Plan is on terms (including the price for the Senior Certificates)
that are at least as favorable to the Benefit Plan as they would be in
an arm's length transaction with an unrelated party;
(2) the rights and interests evidenced by the Senior
Certificates acquired by the Benefit Plan are not subordinated to the
rights and interests evidenced by other certificates of the Trust;
(3) the Senior Certificates acquired by the Benefit Plan have
received a rating at the time of such acquisition that is in one of
the three highest generic rating categories from either Standard &
Poor's Ratings Services, Moody's Investors Service, Inc., Duff &
Phelps Credit Rating Co. or Fitch Investors Service, L.P.;
(4) the Trustee is not an affiliate of any other member of the
Restricted Group (as defined below);
(5) the sum of all payments made to the underwriters in
connection with the distribution of the Senior Certificates represents
not more than reasonable compensation for underwriting the Senior
Certificates; the sum of all payments made to and retained by the
Seller pursuant to the sale of the Receivables to the Trust represents
not more than the fair market value of such Receivables; and the sum
of all payments made to and retained by the Servicer represents not
more than reasonable compensation for the Servicer's services under
the Sale and Servicing Agreement and reimbursement of the Servicer's
reasonable expenses in connection therewith; and
(6) the Benefit Plan investing in the Senior Certificates is an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D of
the Commission under the Securities Act.
Moreover, the Exemption would provide relief from certain
self-dealing/conflict of interest or prohibited transactions only if, among
other requirements, (i) in the case of the acquisition of Senior
Certificates in connection with the initial issuance, at least fifty (50)
percent of the Senior Certificates are acquired by persons independent of
the Restricted Group, (ii) the Benefit Plan's investment in Senior
Certificates does not exceed twenty-five (25) percent of all of the Senior
Certificates outstanding at the time of the acquisition, and (iii)
immediately after the acquisition, no more than twenty-five (25) percent of
the assets of the Benefit Plan are invested in certificates representing an
interest in one or more trusts containing assets sold or serviced by the
same entity. The Exemption does not apply to Benefit Plans sponsored by
the Seller, any underwriter, the Trustee, the Servicer, any Obligor with
respect to Receivables included in the Trust constituting more than five
percent of the aggregate unamortized principal balance of the assets in the
Trust, or any affiliate of such parties (the "Restricted Group").
The related Prospectus Supplement will indicate whether the Seller
believes that all conditions of the Exemption other than those within the
control of the investors have been met with respect to the Senior
Certificates, and whether the Senior Certificates may be acquired by
Benefit Plans.
Because any Certificates issued by a Trust that are subordinate to any
other class of Securities (the "Subordinate Certificates") will not be
eligible for the relief afforded by the Exemption, such Subordinate
Certificates may not be acquired with the assets of a Benefit Plan. Each
purchaser of a Subordinate Certificate shall be deemed to represent and
warrant that it is not acquiring or holding the Subordinate Certificate
with the assets of a Benefit Plan.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement
with respect to the Notes, if any, of a given series and an underwriting
agreement with respect to the Certificates of such series (collectively,
the "Underwriting Agreements"), the Seller will agree to cause the related
Trust to sell to the underwriters named therein and in the related
Prospectus Supplement, and each of such underwriters will severally agree
to purchase, the principal amount of each class of Notes and Certificates,
as the case may be, of the related series set forth therein and in the
related Prospectus Supplement.
In each of the Underwriting Agreements with respect to any given
series of Securities, the several underwriters will agree, subject to the
terms and conditions set forth therein, to purchase all the Notes and
Certificates, as the case may be, described therein which are offered
hereby and by the related Prospectus Supplement if any of such Notes and
Certificates, as the case may be, are purchased.
Each Prospectus Supplement will either (i) set forth the price at
which each class of Notes and Certificates, as the case may be, being
offered thereby will be offered to the public and any concessions that may
be offered to certain dealers, if any, participating in the offering of
such Notes and Certificates or (ii) specify that the related Notes and
Certificates, as the case may be, are to be resold by the underwriters in
negotiated transactions at varying prices to be determined at the time of
such sale. After the initial public offering of any such Notes and
Certificates, such public offering prices and such concessions may be
changed.
Each Underwriting Agreement will provide that the Seller will
indemnify the underwriters against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the several
underwriters may be required to make in respect thereof.
Each Trust may, from time to time, invest the funds in its Trust
Accounts in Eligible Investments acquired from such underwriters or from
the Seller.
Pursuant to each Underwriting Agreement with respect to a given series
of Securities, the closing of the sale of any class of Securities subject
to such Underwriting Agreement will be conditioned on the closing of the
sale of all other such classes of Securities of that series.
The place and time of delivery for the Securities in respect of which
this Prospectus is delivered will be set forth in the related Prospectus
Supplement.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the Securities in Canada is being made only on a
private placement basis exempt from the requirement that each Trust prepare
and file a prospectus with the securities regulatory authorities in each
province where trades of the Securities are effected. Accordingly, any
resale of the Securities in Canada must be made in accordance with
applicable securities law 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
Securities.
Representation of Purchasers
Each purchaser of Securities in Canada who receives a purchase
confirmation will be deemed to represent to the Seller, the applicable
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 Securities without the benefit of a prospectus qualified
under such securities laws, (ii) where required by law, that such purchaser
is purchasing as principal and not as agent, and (iii) such purchaser has
reviewed the text above under "Resale Restrictions."
Rights of Action and Enforcement
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a
result, Ontario purchasers must rely on other remedies that may be
available, including common law rights of action for damages or rescission
or rights of action under the civil liability provisions of the U.S.
federal securities laws.
The applicable Trust, the Seller, the Bank, the Servicer and the
Applicable 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 Seller or such persons. All or a
substantial portion of the assets of the Seller and such persons may be
located outside of Canada and, as a result, it may not be possible to
satisfy a judgment against the Seller or such persons in Canada or to
enforce a judgment obtained in Canadian courts against such Seller or
persons outside of Canada.
Notice to British Columbia Residents
A purchaser of the Securities 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 Securities 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 Securities acquired on the same date and under
the same prospectus exemption.
LEGAL OPINIONS
Certain legal matters relating to the Securities of any series will be
passed upon for the related Trust, the Seller and the Servicer by Stanley
S. Stroup, Executive Vice President and General Counsel of Norwest
Corporation and by Mayer, Brown & Platt, Chicago, Illinois. Mayer, Brown &
Platt may from time to time render legal services to the Seller, the
Servicer and their affiliates. Certain legal matters will be passed upon
for the Underwriters by Mayer, Brown & Platt, Chicago, Illinois.
<PAGE>
INDEX OF TERMS
Add-On Balance........................................................27
Additional Yield Supplement Amount....................................51
Administration Agreement..............................................57
Administration Fee....................................................57
Administrator.........................................................57
Advance...............................................................11
Affiliate..............................................................7
Applicable Trustee....................................................39
APR...................................................................10
Bank...................................................................3
Bankruptcy Code.......................................................16
Base Rate.............................................................37
Benefit Plan..........................................................72
Bill..................................................................62
Calculation Agent.....................................................37
Cede..................................................................22
Cedel.................................................................39
Cedel Participants....................................................39
Certificate Balance....................................................5
Certificate Distribution Account......................................46
Certificate Owners.....................................................5
Certificate Pool Factor...............................................28
Certificate Rate.......................................................5
Certificateholders....................................................18
Certificates...........................................................1
Code..................................................................62
Collection Account....................................................46
Collection Period.....................................................48
Commission.............................................................2
Cooperative...........................................................40
Cutoff Date...........................................................22
Dealer Agreements......................................................6
Dealer Recourse.......................................................22
Definitive Certificates...............................................41
Definitive Notes......................................................41
Definitive Securities.................................................41
Depositaries..........................................................37
Depository............................................................30
Direct Loans...........................................................7
Distribution Date.....................................................36
DTC...................................................................22
DTC Participants......................................................38
DTC's Nominee.........................................................22
Eligible Deposit Account..............................................47
Eligible Institution..................................................47
Eligible Investments..................................................46
ERISA.................................................................13
Euroclear.............................................................40
Euroclear Operator....................................................40
Euroclear Participants................................................40
Events of Default.....................................................33
Exchange Act...........................................................2
Exemption.............................................................74
FDIC..................................................................61
Federal Tax Counsel...................................................62
Final Scheduled Distribution Date.....................................20
Final Scheduled Maturity Date.........................................10
Financed Vehicles......................................................6
FIRREA................................................................17
Fixed Rate Securities.................................................36
Floating Rate Securities..............................................36
Foreign person........................................................64
FTC Rule..............................................................60
Funding Period.........................................................5
GAAP..................................................................55
Grantor Trust Certificateholders......................................69
Grantor Trust Certificates............................................69
Indenture..............................................................3
Indenture Trustee......................................................1
Indirect Participants.................................................38
Initial Pool Balance..................................................56
Insolvency Event......................................................53
Insolvency Laws.......................................................16
Interest Rate..........................................................4
Interest Reset Period.................................................37
Investment Earnings...................................................47
IRS...................................................................62
Issuer.................................................................3
LIBOR.................................................................37
Motor Vehicle Loans...................................................24
Non-Advance Receivables...............................................11
Note Distribution Account.............................................46
Note Owners............................................................3
Note Pool Factor......................................................28
Noteholders...........................................................18
Notes..................................................................1
Obligor...............................................................22
OID...................................................................63
OID regulations.......................................................63
Originator.............................................................7
Participants..........................................................30
Payahead Account......................................................46
Payahead Balance......................................................48
Payaheads.............................................................46
Plan Assets Regulation................................................73
Pool Balance..........................................................29
Pooling and Servicing Agreement........................................3
Portfolio interest....................................................64
Pre-Funded Amount......................................................7
Pre-Funding Account....................................................4
Precomputed Receivables...............................................25
Prepayments...........................................................15
Prospectus Supplement..................................................1
Purchase Amount.......................................................45
Qualified stated interest.............................................63
Rating Agencies.......................................................21
Receivables............................................................6
Receivables Pool......................................................22
Registration Statement.................................................2
Related Documents.....................................................34
Relief Act............................................................59
Required Rate.........................................................51
Required Yield Supplement Amount......................................51
Reserve Account.......................................................50
Restricted Group......................................................74
Revolving Account......................................................9
Revolving Period.......................................................9
Rule of 78's Receivables..............................................25
Sale and Servicing Agreement...........................................7
Schedule of Receivables...............................................44
Section 1286 Treasury Regulations.....................................70
Securities.............................................................1
Securities Act.........................................................2
Security Owners.......................................................22
Securityholders.......................................................18
Seller.................................................................3
Senior Certificates...................................................73
Servicer...............................................................3
Servicer Termination Events...........................................53
Servicing Fee.........................................................49
Servicing Fee Rate....................................................49
Simple Interest Receivables...........................................25
Specified Reserve Account Balance.....................................10
Spread................................................................37
Spread Multiplier.....................................................37
Strip Certificates.....................................................5
Strip Notes............................................................4
Subsequent Transfer Date..............................................45
Supplemental Servicing Fees...........................................49
Terms and Conditions..................................................40
Transfer and Servicing Agreements.....................................44
Trust..................................................................1
Trust Accounts........................................................46
Trust Agreement........................................................3
U.S. Person...........................................................72
UCC...................................................................45
Underwriter...........................................................15
Underwriting Agreements...............................................75
Warehouse Financing...................................................45
Yield Supplement Account..............................................46
Yield Supplement Agreement............................................51
Yield Supplement Amount...............................................51
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Norwest
Auto Trust Asset Backed Notes and Asset Backed Certificates (the "Global
Securities") will be available only in book-entry form. Investors in the
Global Securities may hold such Global Securities through any of The
Depository Trust Company ("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 Securities will be effected on a
delivery-against-payment basis through the respective Depositaries
of Cedel and Euroclear (in such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on
their behalf as direct and indirect Participants in DTC. As a result, Cedel
and Euroclear will hold positions on behalf of their participants through
their respective Depositaries, 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 applicable to U.S. corporate debt
obligations. Investor securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. Global Securities will be
credited to the securities custody accounts on the settlement date against
payment in same-day funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S.
corporate debt obligations 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 Depositary, 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. Payment
will then be made by the respective Depositary to the DTC Participant's
account against delivery of the Global Securities. After settlement has
been completed, the Global Securities will be credited to the respective
clearing system and by the clearing system, in accordance with its usual
procedures, to the Cedel Participant's or Euroclear Participant's account.
The Global Securities credit will appear the next day (European time) and
the cash debit 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 debit 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
pre-position 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
pre-position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedel Participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for
one day, assuming they cleared the overdraft when the Global Securities
were credited to their accounts. However, interest on the Global Securities
would accrue from the value date. Therefore, in many cases the investment
income on the Global Securities earned during that one-day period may
substantially reduce or offset the amount of such overdraft charges,
although 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 Depositary 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 Participant 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 Depositary, 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 Depositary, 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 coupon payment date to and
excluding the settlement date. 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 debit in
anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft charges incurred over that
one-day period. If settlement is not completed on the intended value date
(i.e., the trade fails), receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would instead be valued as
of the actual settlement date. Finally, day traders that use Cedel or
Euroclear and that purchase Global Securities from DTC Participants for
delivery to Cedel Participants or Euroclear Participants should note that
these trades would automatically fail on the sale side unless affirmative
action were taken. At least three techniques should be readily available to
eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would give
the Global Securities sufficient time to be reflected in their Cedel or
Euroclear account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC Participant
is at least one day prior to the value date for the sale to the Cedel
Participant or Euroclear Participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through Cedel
or Euroclear (or through DTC if the holder has an address outside the U.S.)
will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other
financial institution that holds customers' securities in the ordinary
course of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes
one of the following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
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 Security Owners residing
in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing
Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty
provides only for a reduced rate, withholding tax will be imposed at that
rate unless the filer alternatively files Form W-8. Form 1001 may be filed
by the Security Owner 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 (Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Security Owner of a
Global Security or in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom
it holds (the clearing agency, in the case of persons holding directly on
the books of the clearing agency). Form W-8 and Form 1001 are effective for
three calendar years and Form 4224 is effective for one calendar year.
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 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 advisers for specific tax advice concerning their
holding and disposing of the Global Securities.
On April 15, 1996, proposed Treasury Regulations (the "1996 Proposed
Regulations") were issued which, if adopted in final form, could affect the
United States taxation of non-U.S. holders. The 1996 Proposed Regulations
are generally proposed to be effective for payments after December 31, 1997,
subject to certain transition rules. It cannot be predicted at this time
whether the 1996 Proposed Regulations will become effective as proposed or
what, if any, modifications may be made to them. The 1996 Proposed
Regulations would, if adopted, alter the rules under this heading in
certain respects. Prospective investors are urged to consult their tax
advisors with respect to the effect the 1996 Proposed Regulations may have
if adopted.
<PAGE>
SUBJECT TO COMPLETION, DATED __________, 199_
[Grantor Trust Supplement]
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 199_)
[$______________]
Norwest Auto Trust 199_ - _
$______________ Class ____% Asset Backed Certificates, Class A
$______________ Class ____% Asset Backed Certificates, Class B
Norwest Auto Receivables Corporation
Seller
Norwest Bank Minnesota, N.A.
Servicer
The Norwest Auto Trust 199__-__ (the "Trust") will be formed pursuant
to a Pooling and Servicing Agreement, to be dated as of _________, 199__,
among Norwest Auto Receivables Corporation, as seller (the "Seller"),
Norwest Bank Minnesota, N.A., in its capacity as servicer (in such
capacity, the "Servicer"), and ___________, as Trustee. The Trust will
issue $_________ aggregate principal amount of ____% Asset Backed
Certificates, Class A (the "Class A Certificates"), and $________ aggregate
principal amount of ____% Asset Backed Certificates, Class B (the "Class B
Certificates" and, together with the Class A Certificates, the
"Certificates"). The Class A Certificates will evidence in the aggregate
an approximate ___% undivided ownership in the Trust and the Class B
Certificates will evidence in the aggregate an approximate ___% undivided
ownership interest in the Trust. The rights of the Class B
Certificateholders to receive distributions with respect to the Receivables
are subordinated to the rights of the Class A Certificateholders to the
extent described herein. The Trust property will include a pool of motor
vehicle promissory notes and security agreements and/or retail installment
sale contracts secured by new or used automobiles and light duty trucks
(collectively, the "Receivables"), certain monies received thereunder after
_________, 199__, security interests in the motor vehicles financed thereby,
certain rights under Dealer Agreements, certain Eligible Deposit Accounts in
which collections are held, any proceeds from claims on certain insurance
policies and the proceeds of the foregoing. Certain capitalized terms used
in this Prospectus Supplement are defined in this Prospectus Supplement on
the pages indicated in the "Index of Terms" on page ___ of this Prospectus
Supplement or, to the extent not defined herein, have the meanings assigned
to such terms in the Prospectus.
(continued on following 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.
Prospective investors should consider the "Risk Factors" set forth at
page S-__ herein and at page ___ in the accompanying
Prospectus (the "Prospectus").
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN THE NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER NORWEST BANK,
NORWEST CORPORATION OR ANY OF THEIR AFFILIATES. NEITHER THE
CERTIFICATES NOR THE RECEIVABLES ARE INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY NORWEST
AUTO RECEIVABLES CORPORATION, NORWEST BANK MINNESOTA,
N.A., ANY OTHER NORWEST BANK, NORWEST INVESTMENT
SERVICES, INC., NORWEST CORPORATION OR ANY OF
THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
___________________________
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions the Seller(1)(2)
<S> <C> <C> <C>
Per Class A Certificate % % %
Per Class B Certificate % % %
Total $__________ $__________ $__________
__________________________
<FN>
(1) Plus accrued interest, if any, from _______, 199__.
(2) Before deducting expenses, estimated to be $_________.
</TABLE>
The Certificates are offered by the Underwriters when, as and if
issued 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
will be made in book-entry form through the Same Day Funds Settlement System
of The Depository Trust Company, or through Cedel Bank, societe anonyme or
the Euroclear System, on or about _______, 199__.
____________, 199__.
Principal and interest to the extent of the Class A Certificate Rate
or Class B Certificate Rate, as appropriate, generally will be distributed
on the [15th] day of each month (the "Distribution Date") commencing
________, 199__. The Final Scheduled Distribution Date on the Certificates
will be in ____________, 199__ (the "Final Scheduled Distribution Date").
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION
ABOUT THE OFFERING OF THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED
IN THE PROSPECTUS, AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CERTIFICATES
MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
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.
There is currently no secondary market for the Certificates offered
hereby and there is no assurance that one will develop. Each Underwriter
expects, but it is not obligated, to make a market in the Certificates.
There can be no assurance that a secondary market will develop, or that it
will provide Certificateholders with liquidity of investment or that it
will continue for the life of the Certificates offered hereby.
<PAGE>
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and
annual unaudited reports containing information concerning the Receivables
will be prepared by the Servicer and sent on behalf of the Trust only to
Cede & Co., as nominee of the Depository Trust Company and registered
holder of the Certificates. See "Certain Information Regarding the
Securities--Book-Entry Registration" and "--Reports to Securityholders" in
the accompanying Prospectus. Such reports will not constitute financial
statements prepared in accordance with generally accepted accounting
principles. The Seller, as originator of the Trust, will file with the
Securities and Exchange Commission (the "Commission") such periodic reports
as are required under the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and
in the Prospectus. Certain capitalized terms used herein are defined
elsewhere in this Prospectus Supplement on the pages indicated in the
"Index of Terms" or, to the extent not defined herein, have the meanings
assigned to such terms in the Prospectus.
Issuer................. Norwest Auto Trust 199_-_ (the "Trust" or the
"Issuer"), a trust established pursuant to a
Pooling and Servicing Agreement, to be dated
as of ______, 199__ (as amended and
supplemented from time to time, the
"Agreement"), among the Seller, the Servicer
and the Trustee.
Seller................. Norwest Auto Receivables Corporation, a
_____________ corporation (the "Seller").
See "The Seller."
Servicer............... Norwest Bank Minnesota, N.A., a national
banking association (the "Bank" or in its
capacity as servicer, the "Servicer").
Trustee................ _________________________, a ____________
banking corporation, as trustee under the
Agreement (the "Trustee"). The principal
offices of the Trustee are located in
_______________.
The Certificates....... The Trust will issue Asset Backed Certificates
pursuant to the Agreement in an aggregate
initial principal amount of $_______. The
Certificates represent fractional undivided
interests in the Trust.
The Certificates will consist of $_____
aggregate principal amount of ____% Asset
Backed Certificates, Class A (the "Class A
Certificates"), and $_____ aggregate
principal amount of ____% Asset Backed
Certificates, Class B (the "Class B
Certificates"). The Trust assets will include
a pool of motor vehicle promissory notes and
security agreements and/or retail installment
sale contracts secured by new or used automo-
biles or light duty trucks (collectively,
the "Receivables"), all monies received
thereunder on and after ________, 199__
(the "Cutoff Date"), security interests in
the vehicles financed thereby (the
"Financed Vehicles"), certain rights under
Dealer Agreements, certain Eligible Deposit
Accounts in which collections are held, any
proceeds from claims on certain insurance
policies and the proceeds of the foregoing.
The Certificates will be issued in fully
registered form in denominations of $1,000
and integral multiples thereof.
The Class A Certificates will evidence in the
aggregate an approximate ___% undivided
ownership interest (the "Class A Percentage")
in the Trust, and the Class B Certificates
will evidence in the aggregate an approximate
_____% undivided ownership interest (the
"Class B Percentage") in the Trust. The Class
B Certificates are subordinated to the Class
A Certificates to the extent described
herein.
The Receivables........ On __________, 199__ (the "Closing Date"),
pursuant to the Agreement, the Trust will
purchase from the Seller Receivables having
an aggregate principal balance of
approximately $______________ as of the
Cutoff Date.
The Receivables will generally consist of (i)
motor vehicle promissory notes and security
agreements executed by an Obligor in favor of
an Originator ("Direct Loans") and/or (ii) motor
vehicle retail installment sale contracts
(together with Direct Loans, "Motor Vehicle
Loans") between an Obligor and a Dealer.
Receivables that are to be included in any
Receivables Pool will be transferred by an
Affiliate to the Seller for purposes of sale
to the applicable Trust. Receivables
constituting approximately ___% of the
aggregate principal balance of Receivables as
of the Cutoff Date (the "Acquired Receivables")
were acquired by the Affiliates through
acquisitions.
All of the Receivables provide for the
allocation of payments to principal and
interest in accordance with the "simple
interest" method. The Receivables have been
selected from the Motor Vehicle Loans owned
by the Affiliate based on the criteria
specified in the Agreement and described herein
and in the Prospectus. No Receivable has or will
have a scheduled maturity that, after giving
prospective effect to any permitted
extensions or deferrals, would be later than
_________, 199__ (the "Final Scheduled
Maturity Date"). As of the Cutoff Date, the
weighted average annual percentage rate of
the Receivables was approximately ______% per
annum, the weighted average remaining term to
maturity of the Receivables was approximately
_____ months and the weighted average
original term to maturity of the Receivables
was approximately _____ months. As of the
Cutoff Date, approximately _____% of the
aggregate principal balance of the
Receivables represented financing of new
vehicles and the remainder represented
financing of used vehicles.
The "Pool Balance" means, at any time, the sum
of the outstanding Principal Balances of the
Receivables. The "Principal Balance" for any
Receivable, at any time, means the principal
balance of such Receivable at the end of the
preceding Collection Period, after giving
effect to all payments received from Obligors
and Purchase Amounts to be remitted by the
Servicer or the Seller, as the case may be,
for such Collection Period and all losses
realized on Receivables liquidated during
such Collection Period.
Terms of the Certificates
A. Distribution Dates Distributions with respect to the Certificates
will be made on the 15th day of each month
or, if any such day is not a Business Day, on
the next succeeding Business Day (each, a
"Distribution Date"), commencing __________,
199__. Distributions will be made to
Certificateholders of record as of the last
day of the Collection Period immediately
preceding the applicable Distribution Date
(each, a "Record Date"). A "Business Day" is
a day that is not a Saturday or a Sunday and
that in New York City and in the city in
which the corporate trust office of the
Trustee is located is neither a legal holiday
nor a day on which banking institutions are
authorized by law, regulation or executive
order to be closed. "Collection Period" means
(a) the period from (but not including) the
Cutoff Date to and including __________,
199__ and (b) thereafter, each calendar month
during the term of the Agreement.
B. Class A Certificate Rate ____% per annum (the "Class A Certificate Rate").
C. Class B Certificate Rate ____% per annum (the "Class B Certificate Rate").
D. Interest.......... On each Distribution Date, interest at the
Class A Certificate Rate on the Class A
Certificate Balance and interest at the Class
B Certificate Rate on the Class B Certificate
Balance, in each case as of the immediately
preceding Distribution Date (after giving
effect to all payments of principal made on
such preceding Distribution Date) will be
paid to the holders of record of the Class A
Certificates ("Class A Certificateholders")
and the holders of record of the Class B
Certificates ("Class B Certificateholders";
the Class A Certificateholders and the Class
B Certificateholders are collectively
referred to herein as the "Certificateholders")
as of the Record Date to the extent that
sufficient funds are on deposit for such
Distribution Date in the Collection Account
or available in the Reserve Account to make
such distribution. See "Description of the
Certificates--Distributions" and "--Accounts"
herein. The rights of Class B
Certificateholders to receive payments of
interest will be subordinated to the rights
of the Class A Certificateholders to receive
payments of interest to the extent described
herein. Interest in respect of a Distribution
Date will accrue from the preceding
Distribution Date (or, for the first
Distribution Date, from ______, 199__) to and
including such Distribution Date.
E. Principal......... On each Distribution Date, all payments of
principal on the Receivables received by the
Servicer during the preceding Collection
Period, as described more fully herein, plus
an amount equal to the aggregate principal
balance of any Receivables which became
Defaulted Receivables during the preceding
Collection Period, will be distributed by the
Trustee pro rata to the Class A
Certificateholders and to the Class B
Certificateholders of record on the preceding
Record Date, to the extent that sufficient
funds are on deposit in the Collection
Account or available in the Reserve Account
to make such distribution. See "Description
of the Certificates--Distributions" and
"--Accounts." The rights of the Class B
Certificateholders to receive payments of
principal will be subordinated to the rights
of the Class A Certificateholders to receive
payments of interest and principal to the
extent described herein. The "Class A
Certificate Balance" and "Class B Certificate
Balance" will initially equal $________ and
$_________, respectively, and, in each case,
will thereafter equal the initial Class A
Certificate Balance or the initial Class B
Certificate Balance, as the case may be,
reduced by all principal distributions on the
Class A Certificates and the Class B
Certificates, respectively.
F. Optional Prepayment If the Pool Balance as of the last day of a
Collection Period has declined to 5% or less
of the Original Pool Balance, the Seller or
Servicer may purchase all remaining Trust
Property on any Distribution Date occurring in
a subsequent Collection Period at a purchase
price equal to the aggregate of the Purchase
Amounts of the remaining Receivables (other
than Defaulted Receivables), which would result
in a prepayment of the Certificates. The
"Original Pool Balance" will equal the Pool
Balance as of the Cutoff Date. See
"Description of the Certificates--Optional
Prepayment."
Subordination of Class B
Certificates........... Distributions of interest and principal on the
Class B Certificates will be subordinated in
priority of payment to interest and principal
due on the Class A Certificates to the extent
described herein. 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. The
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. See "Risk
Factors--Subordination" and "--Limited Assets"
in the Prospectus.
Advances............... On or prior to the Business Day preceding each
Distribution Date (the "Deposit Date"), the
Servicer will advance (an "Advance") in an
amount equal to the lesser of (a) the excess,
if any, of the amount of interest that would
be expected to be received on the Receivables
(other than Non-Advance Receivables) during
the related Collection Period over the actual
interest collected by the Servicer during
such Collection Period minus unreimbursed
prior Advances and (b) the amount (if any) by
which the sum of any unpaid Servicing Fees
for the related Collection Period and prior
Collection Periods and the amount of interest
distributable to the Certificateholders on
the following Distribution Date exceeds the
actual interest collected by the Servicer
during the related Collection Period minus
unreimbursed prior Advances, subject to
certain limitations described below. The
Servicer will be entitled to be reimbursed
for outstanding Advances on the Distribution
Date in the following month to the extent of
interest collections for such Distribution
Date and, to the extent such collections are
insufficient, to the extent of funds in the
Reserve Account. The Servicer will be
obligated to make such an Advance except to
the extent that the Servicer reasonably
determines that the Advance is unlikely to be
recoverable from the following month's
collections of interest and the funds in the
Reserve Account. See "Description of the
Certificates-Advances."
Reserve Account........ A reserve account (the "Reserve Account") will
be created with an initial deposit by the
Seller of cash or certain investments having
a value of at least $________ (the "Reserve
Account Initial Deposit"). In addition, on
each Distribution Date, any amounts on
deposit in the Collection Account with
respect to the preceding Collection Period
after payments to the Certificateholders and
the Servicer have been made will be deposited
into the Reserve Account until the amount on
deposit in the Reserve Account is equal to
the Specified Reserve Account Balance.
On or prior to each Deposit Date, the Trustee
will withdraw funds from the Reserve Account,
to the extent of the funds therein (exclusive
of investment earnings), (a) to the extent
required to reimburse the Servicer for
Outstanding Advances and (b) to the extent
(i) the sum of the amounts required to be
distributed to Certificateholders and the
Servicer on the related Distribution Date
exceeds (ii) the amount on deposit in the
Collection Account with respect to the
preceding Collection Period (net of
investment income). If the amount on deposit
in the Reserve Account is reduced to zero,
Certificateholders will bear the credit and
other risks associated with ownership of the
Receivables, including the risk that the
Trust may not have a perfected security
interest in the Financed Vehicles. See "Risk
Factors" herein and in the Prospectus,
"Description of the Certificates--Accounts"
herein and "Certain Legal Aspects of the
Receivables" in the Prospectus.
Prepayment Considerations.. The weighted average life of the Certificates
may be reduced by full or partial prepayments
on the Receivables. The Receivables are
prepayable at any time. Prepayments may also
result from liquidations due to default, the
receipt of monthly installments earlier than
the scheduled due dates for such
installments, the receipt of proceeds from
credit life, disability, theft or physical
damage insurance, repurchases by the Seller
as a result of certain uncured breaches of
the warranties made by it in the Pooling and
Servicing Agreement with respect to the
Receivables, purchases by the Servicer as a
result of certain uncured breaches of the
covenants made by it in the Pooling and
Servicing Agreement with respect to the
Receivables, or the Seller or Servicer
exercising its optional purchase right. The
rate of prepayments on the Receivables may be
influenced by a variety of economic, social,
and other factors, including decreases in
interest rates and the fact that the Obligor
may not sell or transfer the Financed Vehicle
securing a Receivable without the consent of
the applicable Affiliate. No prediction
can be made as to the actual prepayment rates
which will be experienced on the Receivables.
If prepayments were to occur after a decline
in interest rates, investors seeking to
reinvest their funds might be required to
invest at a return lower than the applicable
Interest Rate or the Certificate Rate, as the
case may be. Certificate Owners will bear
all reinvestment risk resulting from
prepayment of the Receivables. See "Risk
Factors--Prepayment Considerations" and
"Weighted Average Life of the Securities" in
the Prospectus and "Weighted Average Life of
the Certificates" herein.
Tax Status............. In the opinion of Mayer, Brown & Platt, the
Trust will be treated as a grantor trust for
federal income tax purposes and will not be
subject to federal income tax. Accordingly,
the Certificateholders will be treated as
owners of the Receivables for federal income
tax purposes. Certificateholders will report
their pro rata share of all income earned on
the Receivables (other than amounts, if any,
treated as "stripped coupons") and, subject
to certain limitations in the case of
Certificateholders who are individuals,
trusts, or estates, may deduct their pro rata
share of reasonable servicing and other fees.
See "Federal Income Tax Consequences" and
"Certain State Tax Consequences" in the
Prospectus for additional information
concerning the application of federal and
state tax laws to the Trust and the
Securities.
ERISA Considerations... Subject to the considerations discussed under
"ERISA Considerations" herein and in the
Prospectus, the Class A Certificates are
eligible for purchase by employee benefit
plans.
The Class B Certificates and any beneficial
interest in such Class B Certificates may not
be acquired with the assets of an employee
benefit plan subject to the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"), or with the assets of an
individual retirement account. See "ERISA
Considerations" herein and in the Prospectus.
Risk Factors........... See "Risk Factors" herein and in the Prospectus
for a discussion of certain factors that
potential investors should consider in
determining whether to invest in the
Certificates.
Ratings of the It is a condition to the issuance of the Class
Certificates........... A Certificates that they be rated in the
highest investment rating category by at
least two nationally recognized rating
agencies (the "Rating Agencies"), and it is a
condition to the issuance of the Class B
Certificates that they be rated by at least
two nationally recognized rating agencies in
the "A" category. There can be no assurance
that a rating will not be lowered or
withdrawn by a rating agency if circumstances
so warrant. See "Risk Factors--Ratings of the
Securities" in the Prospectus and "Risk
Factors--Ratings of the Certificates" herein.
RISK FACTORS
In addition to the other information contained herein and in the
Prospectus, prospective investors should consider carefully the following
risk factors and the information contained in "Risk Factors" in the
Prospectus.
Geographic Concentration
Economic conditions in 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 mailing addresses of
Obligors with respect to approximately ______% by aggregate principal
balance of the Receivables were located in ____________, and the mailing
addresses of Obligors with respect to approximately ______% by aggregate
principal balance of the Receivables were located in ______________,
collectively. See "The Receivables Pool."
Subordination
Distributions of interest and principal on the Class B Certificates
will be subordinated in priority of payment to interest on the Class A
Certificates. No distributions with respect to a Collection Period will be
made on the Class B Certificates until the full amount of interest on and
principal of the Class A Certificates on the related Distribution Date has
been distributed to the Class A Certificateholders.
Limited Assets
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the
Reserve Account. Holders of the Certificates must rely for repayment upon
payments on the Receivables and, if and to the extent available, amounts on
deposit in the Reserve Account. Similarly, although funds in the Reserve
Account will be available on each Distribution Date to cover shortfalls in
distributions of interest and principal on the Certificates, amounts to be
deposited in the Reserve Account are limited in amount. If the Reserve
Account is exhausted, the Trust will depend solely on current distributions
on the Receivables to make payments on the Certificates.
Amounts on deposit in the Reserve Account will be available on any
Distribution Date first to cover shortfalls in reimbursement of outstanding
Advances and payment of Servicing Fees to the Servicer, then shortfalls in
distributions of interest on the Class A Certificates and then shortfalls
in distributions of interest on the Class B Certificates. After
distributions of interest on the Certificates have been made, the remaining
amounts on deposit in the Reserve Account will be available first to cover
shortfalls in distributions of principal on the Class A Certificates and
then shortfalls in distributions of principal on the Class B Certificates.
If the Reserve Account is exhausted, the Trust will depend solely on
payments on the Receivables to make distributions on the Certificates, and
Certificateholders will bear the risk of delinquency, loan losses and
repossessions with respect to the Receivables. There can be no assurance
that the future delinquency, loan loss and repossession experience of the
Trust with respect to the Receivables will be better or worse than that set
forth herein with respect to the Motor Vehicle Loans serviced by the Servicer.
Any amounts released from the Reserve Account to the Seller will not be
available to the Certificateholders. See "The Receivables Pool--Pool
Composition" and "Delinquency and Net Losses" and "The Receivables Pools"
in the Prospectus and "Description of the Certificates--Reserve Account" and
"Distributions."
Maturity and Prepayment Considerations
As the rate of payment of principal of each class of the Certificates
depends on the rate of payment (including prepayments) of the principal
balance of the Receivables, the final distribution in respect of each class
of the Certificates could occur significantly earlier than the Final
Scheduled Distribution Date. It is expected that the final distribution in
respect of the Certificates will occur on or prior to the Final Scheduled
Distribution Date. However, if sufficient funds are not available to
reduce the aggregate Certificate Balance of either class of Certificates to
zero on or prior to the Final Scheduled Distribution Date, the final
distribution in respect of such class of Certificates could occur later
than such date. See "Weighted Average Life of the Certificates" herein and
"Weighted Average Life of the Securities" in the Prospectus.
Ratings of the Certificates
It is a condition to the issuance of the Class A Certificates that
they be rated in the highest investment rating category by at least two
Rating Agencies, and it is a condition to the issuance of the Class B
Certificates that they be rated by at least two Rating Agencies in the "A"
category. 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
address the likelihood of the payment of principal and interest 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 in the future so warrant.
THE TRUST
The Seller will establish the Trust by selling and assigning the
Trust property, as described below, to the Trustee in exchange for the
Certificates. The Servicer will service the Receivables pursuant to the
Agreement and will be compensated for acting as the Servicer. See
"Description of the Certificates--Servicing Compensation and Payment of
Expenses." To facilitate servicing and to minimize administrative burden
and expense, each Originator will be appointed to act as custodian for
the Receivables originated by it or purchased by it from a Dealer, but the
Trustee will not stamp the Receivables to reflect the sale and assignment of
the Receivables to the Trust or amend the certificates of title to the
Financed Vehicles. In the absence of amendments to the certificates of title,
the Trustee may not have perfected security interests in the Financed Vehicles
securing the Receivables originated in some states. See "Certain Legal Aspects
of the Receivables" in the Prospectus.
If the protection provided to the investment of the
Certificateholders by the Reserve Account and, in the case of the Class A
Certificateholders, the subordination of the Class B Certificates, is
insufficient, the Trust will look only to the Obligors on the Receivables,
the proceeds from the repossession and sale of Financed Vehicles which
secure defaulted Receivables and the proceeds from any Dealer Recourse.
In such event, certain factors, such as the Trust's not having first
priority perfected security interests in some of the Financed Vehicles, may
affect the Trust's ability to realize on the collateral securing the
Receivables, and thus may reduce the proceeds to be distributed to
Certificateholders with respect to the Certificates. See "Description of
the Certificates--Distributions" and "--Accounts" herein and "Certain Legal
Aspects of the Receivables" in the Prospectus.
Each Certificate represents a fractional undivided ownership interest
in the Trust. The Trust property includes Direct Loans and/or retail
installment sale contracts secured by new or used automobiles or light duty
trucks, and all payments received thereunder after the Cutoff Date. The Trust
property also includes (a) such amounts as from time to time may be held in one
or more trust accounts established and maintained by the Servicer pursuant to
the Agreement, as described below; (b) security interests in the Financed
Vehicles and any accessions thereto; (c) the rights to proceeds with respect to
the Receivables from claims on certain insurance policies covering the Financed
Vehicles; (d) any property that shall have secured a Receivable and that shall
have been acquired by the Trustee; (e) any Dealer Recourse and any other rights
of Affiliates under Dealer Agreements; (f) certain rights under the Purchase
Agreement; (g) the Seller's rights to certain documents and instruments
relating to the Receivables; (h) certain rebates of premiums and other amounts
relating to certain insurance policies and other items financed under the
Receivables; and (i) any and all proceeds of the foregoing. The Reserve Account
will be maintained by the Trustee for the benefit of the Certificateholders,
but will not be part of the Trust.
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will consist of
Receivables purchased as of the Cutoff Date. The Receivables have been
selected from the portfolio of each Affiliate for inclusion in the Receivables
Pool by several criteria, some of which are set forth in the Prospectus under
"The Receivables Pool," as well as the requirement that each Receivable (a) has
an outstanding principal balance of at least $_____, (b) as of the Cutoff Date,
was not more than 30 days past due, (c) has a scheduled maturity not later
than six months before the Final Scheduled Maturity Date, and (d) has an
original term to maturity of not more than ___ months. No selection
procedures believed by any Affiliate to be adverse to the Certificateholders
were used in selecting the Receivables.
Approximately ___% of the aggregate principal balance of Receivables
as of the Cutoff Date constituted Acquired Receivables.
<PAGE>
Pool Composition
Set forth in the following tables is information concerning the
composition, distribution by APR and the geographic distribution of the
Receivables to be conveyed by the Seller to the Trust as of the Cutoff
Date.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Composition of the Receivables
as of the Cutoff Date(1)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Weighted Weighted
Weighted Aggregate Average Average Average
Average APR Principal Number of Remaining Original Principal
of Receivables Balance Receivables Term Term Balance
- -------------- --------- ----------- --------- --------- ---------
% $ months months $
- ----------------------
<FN>
(1) The figures are summations or weighted averages of the Receivables
transferred to the Trust as of the Cutoff Date.
<PAGE>
<CAPTION>
----------------------------------------------------------------
Distribution by APR of the Receivables
as of the Cutoff Date(1)
----------------------------------------------------------------
<S> <C> <C> <C>
Percentage of
Aggregate
Number of Aggregate Principal Principal
APR Range Receivables Balance Balance(2)
--------- ----------- ------------------- --------------
(Dollars in Thousands)
$ %
- ------------------------
<FN>
(1) The figures are summations or weighted averages of the Receivables
transferred as of the Cutoff Date.
(2) Percentages may not add to 100% because of rounding.
</TABLE>
<PAGE>
Approximately ___% of the aggregate principal balance of the Receivables,
constituting ___% of the number of such Receivables, as of the Cutoff Date
represented financing of new vehicles and the remainder represented
financing of used vehicles.
Geographic Distribution of the Receivables Pool
as of the Initial Cutoff Date(1)<F3>
Percent of
Aggregate
Loan
State Value
----- ----------
___________________ _.__%
___________________ _.__
___________________ _.__
- -----------------------
<F3>
(1) No more than __% of the aggregate principal balance of the Receivables
as of the Cutoff Date were originated by Motor Vehicle Loans made to
Obligors that currently reside in any state other than __________________
or _____________________.</F3>
Delinquencies and Net Losses
Set forth below is certain information concerning the historical
experience of the Originators pertaining to Motor Vehicle Loans. There can
be no assurance that the delinquency and net loss experience on the
Receivables of the Trust will be comparable to that set forth below.
<PAGE>
<TABLE>
<CAPTION>
Delinquency Experience(1)
At December 31,
-----------------------------------------------------------------------------
1995 1994 1993 1992 1991
-------------- -------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Dollar Percent Dollar Percent Dollar Percent Dollar Percent Dollar Percent
------ ------- ------ ------- ------ ------- ------ ------- ------ -------
(Dollars in Millions)
Amount of Motor Vehicle
Loans Outstanding...
Period of Delinquency:
31-60 days..........
60-91 days..........
over 90 days........
Repossessions.........
Total.................
Delinquencies...........
- ----------------------
<FN>
(1) All amounts and percentages are based on the gross amount scheduled to
be paid on each Motor Vehicle Loan, including unearned finance and other
charges.
<PAGE>
<CAPTION>
Historical Net Loss Experience
Year Ended December 31,
------------------------------------------
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
(Dollars in Thousands)
Principal Amount of Motor Vehicle Loans
Outstanding (1)....................................
Average Principal Amount of Motor Vehicle
Loans Outstanding..................................
Number of Motor Vehicle Loans Outstanding............
Average Number of Motor Vehicle Loans Outstanding....
Net Losses(2)........................................
Net Losses as a Percent of Principal Amount
Outstanding(2).......................................
Net Losses as a Percent of Average Principal Amount
Outstanding(2).......................................
___________________
<FN>
(1) Amount represents net principal amounts of Motor Vehicle Loans
outstanding.
(2) Amount represents the aggregate balance of all Motor Vehicle Loans
which are determined to be uncollectible in the period, less any
recoveries on Motor Vehicle Loans charged-off in the period or any
prior period.
</TABLE>
<PAGE>
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 of the Trust may differ from those shown in the tables.
THE SELLER, THE SERVICER AND NORWEST CORPORATION
Information regarding the Seller is set forth under "The Seller" in
the Prospectus and information regarding the Servicer is set forth under
"The Bank" in the Prospectus. Norwest Corporation operates through
subsidiaries engaged in banking and a variety of related businesses.
Norwest Corporation provides retail, commercial and corporate
banking services to customers through banks in 16 states and provides
additional financial services to its customers through subsidiaries engaged
in various businesses, principally mortgage banking, consumer finance,
equipment leasing, agricultural finance, commercial finance, securities
brokerage and investment banking, insurance agency services, computer and
data processing services, trust services, mortgage backed securities
servicing, and venture capital investment. As of March 31, 1996, Norwest
Corporation had consolidated total assets of $73.9 billion, total deposits
of $43.1 billion, and total stockholders' equity of $5.4 billion.
Based on total assets as of March 31, 1996, Norwest Corporation was the
eleventh largest commercial banking organization in the United States.
[Norwest Corporation has agreed to guaranty the performance by the Seller of
its repurchase obligation with respect to Receivables for which there has
been an uncured breach of any representation or warranty that materially and
adversely affects the interests of the Trust in such Receivables. See
"Description of the Transfer and Servicing Agreements--Sale and Assignment
of Receivables" in the Prospectus.]
WEIGHTED AVERAGE LIFE OF THE CERTIFICATES
Information regarding certain maturity and prepayment considerations
with respect to the Certificates is set forth under "Weighted Average Life
of the Securities" in the Prospectus. As the rate of payment of principal
of each class of the Certificates depends primarily on the rate of payment
(including prepayments and liquidations due to default) of the aggregate
principal balance of the Receivables, the final distribution in respect of
the Certificates could occur significantly earlier than the Final Scheduled
Distribution Date. Consistent with its customary servicing practices and
procedures, the Servicer may, in its discretion and on a case-by-case basis,
arrange with Obligors to extend or modify the terms of Receivables. Any such
extension or modification will have the effect of extending the weighted
average life of the Certificates. However, the Servicer will not be permitted
to grant any such deferral or extension if as a result the final scheduled
payment on a Receivable would fall after the Final Scheduled Maturity Date,
unless the Servicer repurchases such Receivable. Certificateholders will bear
the risk of being able to reinvest principal payments on the Certificates at
yields at least equal to the yield on their respective Certificates.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the terms of the
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the Agreement will be filed with the Commission
following the issuance of the Certificates. The following summary describes
certain terms of the Certificates and the Agreement. The summary does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Certificates and the Agreement. The
following summary supplements the description of the general terms and
provisions of the Certificates of any given series and the related
Agreement set forth in the Prospectus, to which description reference is
hereby made.
General
The Certificates will evidence interests in the Trust created
pursuant to the Agreement. The Class A Certificates will evidence in the
aggregate an undivided ownership interest of approximately ___% (the "Class
A Percentage") in the Trust and the Class B Certificates will evidence in
the aggregate an undivided ownership interest of approximately ___% (the
"Class B Percentage") in the Trust. In general, it is intended that Class A
Certificateholders receive, on each Distribution Date, the Class A
Percentage of the Principal Distribution Amount plus interest at the Class
A Certificate Rate on the Class A Certificate Balance. Subject to the prior
rights of the Class A Certificateholders, it is intended that the Class B
Certificateholders receive, on each Distribution Date, the Class B
Percentage of the Principal Distribution Amount plus interest at the Class
B Certificate Rate on the Class B Principal Certificate.
"Principal Distribution Amount" means, for any Distribution
Date, the sum of the Available Principal for such Distribution Date
plus the Realized Losses with respect to the related Collection
Period.
"Available Principal" means, for any Distribution Date, the sum
of the following amounts with respect to the preceding Collection
Period: (a) that portion of all collections on the Receivables
received during such Collection Period and allocable to principal in
accordance with the Servicer's customary servicing procedures; and
(b) to the extent attributable to principal, the Purchase Amount
received with respect to each Receivable repurchased by the Seller or
purchased by the Servicer under an obligation which arose during the
related Collection Period. "Available Principal" on any Distribution
Date shall exclude all payments and proceeds of any Receivables the
Purchase Amount of which has been distributed on a prior Distribution
Date.
"Defaulted Receivable" means, with respect to any Collection
Period, a Receivable (other than a Purchased Receivable) which the
Servicer has determined to charge off during such Collection Period
in accordance with its customary servicing practices; provided, that
any Receivable which the Seller or Servicer is obligated to
repurchase or purchase shall be deemed to have become a Defaulted
Receivable during a Collection Period if the Seller or Servicer fails
to deposit the Purchase Amount on the related Deposit Date when due.
"Purchased Receivable" means, at any time, a Receivable as to
which payment of the Purchase Amount has previously been made by the
Seller or the Servicer pursuant to the Agreement.
"Realized Losses" means, for any Collection Period, the
aggregate principal balances of any Receivables that became Defaulted
Receivables during such Collection Period.
Optional Prepayment
If the Pool Balance as of the last day of a Collection Period has
declined to 5% or less of the Original Pool Balance, the Seller or Servicer
may purchase all remaining Trust Property on any Distribution Date occurring
in a subsequent Collection Period at a purchase price equal to the aggregate
of the Purchase Amounts of the remaining Receivables (other than Defaulted
Receivables), which purchases would result in a prepayment of the
Certificates. See "Description of the Transfer and Servicing
Agreements-Termination" in the Prospectus.
Accounts
Separate Certificate Distribution Accounts will be established for
the Class A Certificates (the "Class A Distribution Account") and the Class
B Certificates (the "Class B Distribution Account"). In addition to those
accounts and a Collection Account for the Trust (see "Description of the
Transfer and Servicing Agreements--Accounts" in the Prospectus), the Seller
will also establish and maintain in the name of the Trustee, the Reserve
Account. The Reserve Account will be created with an initial deposit by the
Seller of cash or Eligible Investments having a value of at least equal to
the Reserve Account Initial Deposit. In addition, on each Distribution
Date, any amounts on deposit in the Collection Account with respect to the
preceding Collection Period after payments to the Certificateholders and
the Servicer have been made will be deposited into the Reserve Account
until the amount on deposit in the Reserve Account is equal to the
Specified Reserve Account Balance. All investment earnings on funds
deposited in the Trust Accounts, net of losses and investment expenses,
will be distributed to the Seller and not be treated as collections on the
Receivables or otherwise be available for Certificateholders.
The Reserve Account will be an Eligible Deposit Account which the
Seller shall establish and maintain in the name of the Trustee. Funds on
deposit in the Reserve Account will be invested in Eligible Investments
selected by the Seller and, if permitted by the Rating Agencies, funds on
deposit in the Reserve Account may be invested in Eligible Investments that
mature later than the next Deposit Date. The Reserve Account and any
amounts therein will not be property of the Trust, but will be pledged to
and held for the benefit of the Trustee, as secured party.
On each Distribution Date, the amount available in the Reserve
Account (the "Available Reserve Amount") will equal the lesser of (a) the
amount on deposit in the Reserve Account (exclusive of investment earnings)
and (b) the Specified Reserve Account Balance.
On each Deposit Date, the Trustee will withdraw funds from the
Reserve Account (a) to the extent required to make reimbursements of
Outstanding Advances (after application of Interest Collections for that
purpose) and (b) to the extent (i) the sum of the amounts required to be
distributed to Certificateholders and the accrued and unpaid Servicing Fees
payable to the Servicer on such Distribution Date exceeds (ii) the amount
on deposit in the Collection Account with respect to the preceding
Collection Period (net of investment income). Such deficiencies in the
Collection Account may result from, among other things, Receivables
becoming Defaulted Receivables or the failure by the Servicer to make any
remittance required to be made under the Agreement. The aggregate amount to
be withdrawn from the Reserve Account on any Deposit Date will not exceed
the Available Reserve Amount with respect to the related Distribution Date.
The Trustee will deposit the proceeds of such withdrawal into the
Collection Account on or before the Distribution Date with respect to which
such withdrawal was made.
The "Specified Reserve Account Balance" with respect to any
Distribution Date will, subject to reduction as described below, be equal
to ___% of the Pool Balance as of the last day of the preceding Collection
Period, but in any event will not be less than the lesser of (i)
$____________ and (ii) the sum of such Pool Balance plus an amount
sufficient to pay interest on (a) the Class A Percentage times such Pool
Balance at a rate equal to the sum of the Class A Certificate Rate and the
Servicing Fee Rate through the Final Scheduled Distribution Date and (b)
the Class B Percentage times such Pool Balance at a rate equal to the sum
of the Class B Certificate Rate and the Servicing Fee Rate through the
Final Scheduled Distribution Date; provided that the Specified Reserve
Account Balance will be calculated using a percentage of __% for any
Distribution Date (beginning ________, 199__) on which the Average Net Loss
Ratio exceeds __% or the Average Delinquency Ratio exceeds ___%. The
Specified Reserve Account Balance may be reduced to a lesser amount as
determined by the Seller so long as such reduction does not cause either
Rating Agency to withdraw or downgrade its rating of the Certificates. The
time necessary for the Reserve Account to reach and maintain the Specified
Reserve Account Balance at any time after the Closing Date will be affected
by the delinquency, credit loss, repossession and prepayment experience of
the Receivables and, therefore, cannot be accurately predicted. Amounts on
deposit in the Reserve Account will be released to the Servicer on each
Distribution Date to the extent that the amount on deposit in the Reserve
Account would exceed the Specified Reserve Account Balance. The Trustee
also will cause all investment earnings attributable to the Reserve Account
to be distributed on each Distribution Date to the Seller. Upon any
distribution to the Servicer of amounts from the Reserve Account, the
Certificateholders will not have any rights in, or claims to, such amounts.
"Aggregate Net Losses" means, for any Collection Period, the
aggregate amount allocable to principal of all Receivables newly
designated during such Collection Period as Defaulted Receivables
minus all Liquidation Proceeds collected during such Collection
Period with respect to all Defaulted Receivables (whether or not
newly designated as such).
"Average Delinquency Ratio" means, as of any Distribution Date,
the average of the Delinquency Ratios for the preceding three
Collection Periods.
"Average Net Loss Ratio" means, as of any Distribution Date, the
average of the Net Loss Ratios for the preceding three Collection
Periods.
"Delinquency Ratio" means, for any Collection Period, the ratio,
expressed as a percentage, of (a) the principal amount of all
outstanding Receivables (other than Purchased Receivables and
Defaulted Receivables) which are 30 or more days delinquent as of the
end of such Collection Period, determined in accordance with
Servicer's customary practices, divided by (b) the Pool Balance as of
the last day of such Collection Period.
"Liquidation Proceeds" means, with respect to any Receivable
that has become a Defaulted Receivable, (a) insurance proceeds
received by the Servicer, with respect to insurance policies relating
to the Financed Vehicles or the Obligors any proceeds from lender's
single interest insurance policies to the extent not included in
collections distributable to Certificateholders, (b) amounts received
by the Servicer in connection with such Defaulted Receivable pursuant
to the exercise of rights under the related Motor Vehicle Loan, and
(c) the monies collected by the Servicer (from whatever source,
including, but not limited to proceeds of a sale of a Financed Vehicle
or deficiency balance recovered after the charge-off of the related
Receivable or as a result of the exercise of any rights against the
related Dealer) on such Defaulted Receivable net of any expenses
incurred by the Servicer in connection therewith and any payments
required by law to be remitted to the Obligor.
"Net Loss Ratio" means, for any Collection Period, an amount,
expressed as a percentage, equal to (a) the Aggregate Net Losses for
such Collection Period, divided by (b) the average of the Pool
Balances on each of the first day of such Collection Period and the
last day of such Collection Period.
If funds in the Reserve Account are reduced to zero, the
Certificateholders will bear the credit and other risks associated with
ownership of the Receivables. In such a case, the amount available for
distribution may be less than that described below, and the
Certificateholders may experience delays or suffer losses as a result,
among other things, of defaults or delinquencies by the Obligors or
previous extensions made by the Servicer.
Advances
On or prior to each Deposit Date, the Servicer will be required to
advance any Interest Shortfall with respect to the related Distribution
Date by depositing the amount of such Interest Shortfall into the
Collection Account. The Servicer will be obligated to make such an Advance
except to the extent that the Servicer reasonably determines that the
Advance is unlikely to be recoverable as set forth below.
On each Distribution Date, prior to making any of the distributions
set forth in "--Distributions" below, the Servicer shall be reimbursed for
all Outstanding Advances with respect to prior Distribution Dates, to the
extent of the Interest Collections for such Distribution Date and, to the
extent such Interest Collections are insufficient, to the extent of the
funds in the Reserve Account. If it is acceptable to each Rating Agency
without a reduction in the rating of the Certificates, the Outstanding
Advances at the option of the Servicer may be paid at or as soon as
possible after the beginning of the related Collection Period out of the
first collections of interest received on the Receivables for such
Collection Period.
"Expected Interest" means, with respect to any Distribution
Date, an amount equal to the sum of (a) with respect to all Simple
Interest Receivables, the product of (i) one-twelfth of the Weighted
Average APR for such Receivables for the related Collection Period
multiplied by (b) an amount equal to the aggregate Principal Balance
of such Receivables as of the first day of the related Collection
Period minus the sum of the Principal Balances of the Non-Advance
Receivables that are Simple Interest Receivables for such
Distribution Date plus (b) with respect to all Precomputed
Receivables, that portion of the collections on such Receivables
received during the related Collection Period that is allocable to
interest in accordance with the Servicer's customary procedures.
"Interest Collections" for a Distribution Date means the sum of
the following amounts with respect to the related Collection Period:
(a) that portion of the collections on the Receivables received
during the related Collection Period that is allocable to interest in
accordance with the Servicer's customary procedures; (b) all
Liquidation Proceeds received during such Collection Period; and (c)
all Purchase Amounts, each to the extent attributable to accrued
interest, of all Receivables that are repurchased by the Seller or
purchased by the Servicer under an obligation which arose during the
related Collection Period. "Interest Collections" for any
Distribution Date shall exclude all payments and proceeds of any
Receivables the Purchase Amount of which has been distributed on a
prior Distribution Date.
"Interest Shortfall" means, with respect to any Distribution
Date, the lesser of (a) the amount (if any) by which the Expected
Interest for such Distribution Date exceeds the Net Interest
Collections for such Distribution Date and (b) the amount (if any) by
which the sum of any unpaid Servicing Fees for the related Collection
Period and prior Collection Periods and the Class A Interest
Distributable Amount and the Class B Interest Distributable Amount
for such Distribution Date exceeds the Net Interest Collections for
such Distribution Date.
"Net Interest Collections" means, with respect to any
Distribution Date, the greater of (a) zero and (b) Interest
Collections for such Distribution Date minus the Outstanding Advances
as of such Distribution Date.
"Non-Advance Receivables" means, with respect to any
Distribution Date, any Receivables which became Defaulted Receivables
during the related Collection Period or which the Servicer, in its
sole discretion, believes are likely to become Defaulted Receivables.
"Outstanding Advances" means, as of any date, all Advances made
by the Servicer with respect to prior Distribution Dates which have
not been reimbursed.
"Weighted Average APR" means, with respect to any Simple
Interest Receivables or any Precomputed Receivables during any
Collection Period, the weighted average of the APR of such
Receivables (excluding Non-Advance Receivables), weighted based on
the Principal Balance of each such Receivable as of the first day of
such Collection Period.
Servicing Compensation and Payment of Expenses
The Servicing Fee Rate will be 1.0% per annum of the Pool Balance as
of the first day of the related Collection Period (after giving effect to
the distributions to be made on the following Distribution Date). The
Servicing Fee (together with any portion of the Servicing Fee that remains
unpaid from prior Distribution Dates) will be paid on each Distribution
Date solely to the extent of the Available Interest. See "Description of
the Transfer and Servicing Agreements--Servicing Compensation and Payment of
Expenses" in the Prospectus. The Servicer will also collect and retain any
late fees, extension fees, prepayment charges and certain non-sufficient
funds charges and other administrative fees or similar charges (the
"Supplemental Servicing Fee") allowed by applicable law with respect to the
Receivables. 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. See "Description of the
Transfer and Servicing Agreements--Servicing Compensation and Payment of
Expenses" in the Prospectus.
"Available Interest" means, with respect to any Distribution
Date, the excess of (a) the sum of (i) Interest Collections for such
Distribution Date and (ii) all Advances made by the Servicer with
respect to such Distribution Date, over (b) the amount of Outstanding
Advances to be reimbursed on or with respect to such Distribution
Date.
Distributions
Deposits to Collection Account. On or before the eighth calendar day
of each month, or if such eighth day is not a Business Day, the immediately
preceding Business Day (the "Determination Date"), the Servicer will
provide the Trustee with a report (the "Servicer's Report") containing
certain information with respect to the preceding Collection Period,
including the amount of aggregate collections on the Receivables during
such Collection Period, the aggregate amount of Receivables which became
Defaulted Receivables during such Collection Period, the aggregate Purchase
Amounts of Receivables to be repurchased by the Seller or to be purchased
by the Servicer on the related Deposit Date and the aggregate amount to be
withdrawn from the Reserve Account. Trustee has agreed to act as Servicer's
agent for the purpose of preparing and delivering Servicer's Reports, and
so long as Trustee timely prepares and delivers Servicer's Report, Servicer
shall not be required to do so. Any failure by Trustee to prepare and
deliver a Servicer's Report, or inaccuracy in any Servicer's Report so
prepared and delivered shall (so long as Servicer shall also not timely
prepare and deliver such Servicer's Report or correct any such inaccuracy)
have the same effect as would such a failure by Servicer or inaccuracy in a
Servicer's Report prepared and filed by Servicer.
On or before each Deposit Date, (a) the Servicer will cause all
collections and Liquidation Proceeds to be deposited into the Collection
Account and will deposit into the Collection Account all Purchase Amounts
of Receivables to be purchased by the Servicer on such Deposit Date, (b)
the Seller will deposit into the Collection Account all Purchase Amounts of
Receivables to be repurchased by the Seller on such Deposit Date, (c) the
Trustee will make any required withdrawals for the related Distribution
Date from the Reserve Account and deposit such amounts into the Collection
Account and (d) the Servicer will deposit all Advances for the related
Distribution Date into the Collection Account.
Deposits to the Distribution Accounts. On each Distribution Date,
after making reimbursements of Outstanding Advances to the Servicer based
on the related Servicer's Report, the Trustee will make the following
deposits and distributions from the Collection Account, to the extent of
the sum of Available Interest and any Available Reserve Amount remaining
after such reimbursements (and, in the case of shortfalls occurring under
clause (b) below in the Class A Interest Distributable Amount, the Class B
Percentage of Available Principal to the extent of such shortfalls), in the
following priority:
(a) to the Servicer, any unpaid Servicing Fee for the related
Collection Period and all unpaid Servicing Fees from prior
Collection Periods;
(b) to the Class A Distribution Account, the Class A Interest
Distributable Amount for such Distribution Date; and
(c) to the Class B Distribution Account, the Class B Interest
Distributable Amount for such Distribution Date.
On each Distribution Date based on the related Servicer's Report, the
Trustee will make the following deposits and distributions, to the extent
of Available Principal and the portions of Available Interest and Available
Reserve Amount remaining after the application of clauses (a), (b) and (c)
above, in the following priority:
(d) to the Class A Distribution Account, the Class A Principal
Distributable Amount for such Distribution Date;
(e) to the Class B Distribution Account, the Class B Principal
Distributable Amount for such Distribution Date;
(f) to the Reserve Account, any amounts remaining, until the amount
on deposit in the Reserve Account equals the Specified Reserve
Account Balance; and
(g) to the Seller, any amounts remaining.
On each Distribution Date, all amounts on deposit in the Class A
Distribution Account will be distributed to the Class A Certificateholders
as of the Record Date and all amounts on deposit in the Class B
Distribution Account will be distributed to the Class B Certificateholders
as of the Record Date by the Trustee.
"Class A Interest Carryover Shortfall" means, (a) with respect
to the initial Distribution Date, zero, and (b) with respect to any
other 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 Certificate Rate.
"Class A Interest Distributable Amount" 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 of the Class A Certificate Rate
multiplied by the Class A Certificate 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, as of the Closing Date.
"Class A Monthly Principal" means, with respect to any
Distribution Date, the Class A Percentage of the Principal
Distribution Amount for such Distribution Date.
"Class A Principal Carryover Shortfall" means, as of the close
of business on any Distribution Date, the excess of Class A Monthly
Principal for such Distribution Date and any outstanding Class A
Principal Carryover Shortfall from the preceding Distribution Date
over the amount in respect of principal that is actually deposited in
the Class A Distribution Account on such Distribution Date.
"Class A Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of Class A Monthly Principal for such
Distribution Date and, in the case of any Distribution Date other
than the initial Distribution Date, the Class A Principal Carryover
Shortfall as of the close of business on the preceding Distribution
Date; provided, however, that the Class A Principal Distributable
Amount shall not exceed the outstanding aggregate principal balance
of the Class A Certificates prior to such Distribution Date. In
addition, on the Final Scheduled Distribution Date, the Class A
Principal Distributable Amount shall include any additional amount
available to reduce the outstanding aggregate principal balance of
the Class A Certificates to zero.
"Class B Interest Carryover Shortfall" means, (a) with respect
to the initial Distribution Date, zero, and (b) with respect to any
other 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 Certificate Rate.
"Class B Interest Distributable Amount" 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 of the Class B Certificate Rate
multiplied by the Class B Certificate 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, as of the Closing Date.
"Class B Monthly Principal" means, with respect to any
Distribution Date, the Class B Percentage of the Principal
Distribution Amount for such Distribution Date.
"Class B Principal Carryover Shortfall" means, as of the close
of business on any Distribution Date, the excess of Class B Monthly
Principal for such Distribution Date and any outstanding Class B
Principal Carryover Shortfall from the preceding Distribution Date
over the amount in respect of principal that is actually deposited in
the Class B Distribution Account on such Distribution Date.
"Class B Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of Class B Monthly Principal for such
Distribution Date and, in the case of any Distribution Date other
than the initial Distribution Date, the Class B Principal Carryover
Shortfall as of the close of business on the preceding Distribution
Date; provided, however, that the Class B Interest Distributable
Amount shall not exceed the outstanding aggregate principal balance
of the Class B Certificates prior to such Distribution Date. In
addition, on the Final Scheduled Distribution Date, the Class B
Interest Distributable Amount will include any additional amount
available to reduce the outstanding aggregate principal balance of
the Class B Certificates to zero.
The following chart sets forth an example of the application of the
foregoing provisions to a hypothetical monthly distribution:
March 1 - March 31............. Collection Period. The Servicer receives
monthly payments, prepayments, and other
proceeds in respect of the Receivables.
March 31....................... Record Date. Distributions on the next
Distribution Date are made to
Certificateholders of record at the close
of business on this date.
April 8........................ Determination Date. On or before this
date, the Servicer, delivers to the
Trustee the Servicer's Report, which
notifies the Trustee of the amounts
required to be distributed and the amounts
available for distribution on the next
Distribution Date.
April 12....................... Deposit Date. All Collections and Advances
relating to the preceding Collection
Period are required to be deposited in the
Collection Account on or before this date.
The Trustee withdraws funds from the
Reserve Account to the extent necessary.
April 15....................... Distribution Date. The Trustee distributes
to Certificateholders amounts payable in
respect of the Certificates, pays the
Servicing Fee and reimburses Outstanding
Advances to the Servicer, deposits any
excess funds to the Reserve Account and,
if the Reserve Account is equal to the
Specified Reserve Account Balance, pays
any remaining funds to the Seller.
<PAGE>
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Information regarding certain legal aspects of the Receivables is set
forth under "Certain Legal Aspects of the Receivables" in the Prospectus.
ERISA CONSIDERATIONS
The Class A Certificates
Subject to the considerations set forth under "ERISA
Considerations-Trusts That Do Not Issue Notes" in the Prospectus, the Class
A Certificates may be purchased with the assets of an employee benefit plan
or an individual retirement account (a "Plan") subject to ERISA or Section
4975 of the Internal Revenue Code of 1986, as amended (the "Code"). A
fiduciary of a Plan must determine that the purchase of a Class A
Certificate is consistent with its fiduciary duties under ERISA and does
not result in a nonexempt prohibited transaction as defined in Section 406
of ERISA or Section 4975 of the Code. For additional information regarding
treatment of the Class A Certificates under ERISA, see "ERISA
Considerations" in the Prospectus.
The Class B Certificates
The Class B Certificates and any beneficial interest in such Class B
Certificates may not be acquired (a) with the assets of an employee benefit
plan (as defined in Section 3(3) of ERISA) that is subject to the
provisions of Title I of ERISA, (b) by a plan described in Section
4975(e)(1) of the Code or (c) by any entity whose underlying assets include
plan assets by reason of a plan's investment in the entity. By its
acceptance of a Class B Certificate, each Class B Certificateholder will be
deemed to have represented and warranted that it is not subject to the
foregoing limitation. For additional information regarding treatment of the
Class B Certificates under ERISA, see "ERISA Considerations" in the
Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement, the Seller has agreed to cause the Trust to sell to each of the
underwriters listed below (each, an "Underwriter"), and each of the
Underwriters has agreed to purchase, the principal amount of the
Certificates set forth opposite its name below. Under the terms and
conditions of the Underwriting Agreement, each of the Underwriters is
obligated to take and pay for all of the Certificates, if any are taken.
Principal Amount of Principal Amount of
Class A Certificates Class B Certificates
-------------------- --------------------
_______________________.....$_____________________ $________________________
_______________________..... _____________________ ________________________
_______________________..... _____________________ ________________________
Total $_____________________ $________________________
The Seller has been advised by the Underwriters that they propose
initially to offer the Certificates to the public at the prices set forth
herein, and to certain dealers at such prices less the initial concession
not in excess of _____% per Class A Certificate and ____% per Class B
Certificate. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of ____% per Class A Certificate and ____% per
Class B Certificate to certain other dealers. After the initial public
offering of the Certificates, the public offering prices and such
concessions may be changed.
The Seller does not intend to apply for listing of the Certificates
on a national securities exchange, but has been advised by the Underwriters
that they intend to make a market in the Certificates. The Underwriters are
not obligated, however, to make a market in the Certificates and may
discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Certificates.
The Seller has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
In the ordinary course of their respective businesses, each
Underwriter and its affiliates have engaged and may in the future engage in
commercial banking and investment banking transactions with the Seller.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain federal income tax and other legal matters will be passed upon for
the Trust by Mayer, Brown & Platt, Chicago, Illinois. Mayer, Brown & Platt
may from time to time render legal services to the Seller, the Servicer and
its affiliates. Certain legal matters will be passed upon for the
Underwriters by Mayer, Brown & Platt, Chicago, Illinois.
<PAGE>
INDEX OF DEFINED TERMS
Page
Acquired Receivables.................................................S-4
Advance..............................................................S-5
Affiliate............................................................S-3
Aggregate Net Losses................................................S-16
Agreement............................................................S-3
Available Interest..................................................S-17
Available Principal.................................................S-14
Available Reserve Amount............................................S-15
Average Delinquency Ratio...........................................S-16
Average Net Loss Ratio..............................................S-16
Bank.................................................................S-3
Business Day.........................................................S-4
Certificate Rate.....................................................S-4
Certificateholders...................................................S-5
Certificates.........................................................S-1
Class A Certificate Balance..........................................S-5
Class A Certificate Rate.............................................S-4
Class A Certificateholders...........................................S-4
Class A Certificates.................................................S-1
Class A Distribution Account........................................S-15
Class A Interest Carryover Shortfall................................S-18
Class A Interest Distributable Amount...............................S-18
Class A Monthly Interest............................................S-18
Class A Monthly Principal...........................................S-18
Class A Percentage...................................................S-3
Class A Principal Carryover Shortfall...............................S-19
Class A Principal Distributable Amount..............................S-19
Class B Certificate Balance..........................................S-5
Class B Certificate Rate.............................................S-4
Class B Certificateholders...........................................S-5
Class B Certificates.................................................S-1
Class B Distribution Account........................................S-15
Class B Interest Carryover Shortfall................................S-19
Class B Interest Distributable Amount...............................S-19
Class B Monthly Interest............................................S-19
Class B Monthly Principal...........................................S-19
Class B Percentage...................................................S-3
Class B Principal Carryover Shortfall...............................S-19
Class B Principal Distributable Amount..............................S-19
Closing Date.........................................................S-3
Code................................................................S-20
Collection Period....................................................S-4
Commission...........................................................S-2
Cutoff Date..........................................................S-3
Dealer Agreements....................................................S-3
Dealers..............................................................S-3
Defaulted Receivable................................................S-15
Delinquency Ratio...................................................S-16
Deposit Date.........................................................S-5
Determination Date..................................................S-17
Distribution Date....................................................S-2
ERISA................................................................S-7
Expected Interest...................................................S-16
Final Scheduled Distribution Date....................................S-2
Final Scheduled Maturity Date........................................S-4
Financed Vehicles....................................................S-3
Interest Collections................................................S-17
Interest Shortfall..................................................S-17
Issuer...............................................................S-3
Liquidation Proceeds................................................S-16
Net Interest Collections............................................S-17
Net Loss Ratio......................................................S-16
Non-Advance Receivables.............................................S-17
Norwest Bank.........................................................S-3
Original Pool Balance................................................S-5
Outstanding Advances................................................S-17
Plan................................................................S-20
Pool Balance.........................................................S-4
Principal Balance....................................................S-4
Principal Distribution Amount.......................................S-14
Prospectus...........................................................S-1
Purchased Receivable................................................S-15
Rating Agencies......................................................S-7
Realized Losses.....................................................S-15
Receivables..........................................................S-1
Receivables Pool....................................................S-10
Record Date..........................................................S-4
Reserve Account......................................................S-6
Reserve Account Initial Deposit......................................S-6
Seller...............................................................S-1
Servicer.............................................................S-1
Servicer's Report...................................................S-17
Specified Reserve Account Balance...................................S-15
Supplemental Servicing Fee..........................................S-17
Trust................................................................S-1
Trustee..............................................................S-3
Underwriter.........................................................S-20
Weighted Average APR................................................S-17
<PAGE>
==================================== ====================================
No dealer, salesman or other person
has been authorized to give any
information or to make any
representation not contained in this
Prospectus Supplement or the Prospectus
and, if given or made, such information
or representation must not be relied
upon as having been authorized by the
Seller or the Underwriters. This
Prospectus Supplement and the
Prospectus do not constitute an
offer of any securities other than
those to which they relate or an
offer to sell, or a solicitation of
an offer to buy, to any person in
any jurisdiction where such an offer
or solicitation would be unlawful.
Neither the delivery of this
Prospectus Supplement and the $________________________
Prospectus nor any sale made hereunder (Approximate)
shall, under any circumstances,
create any implication that the
information contained herein is correct
as of any time subsequent to their
respective dates.
___________________________
TABLE OF CONTENTS
NORWEST AUTO
Prospectus Supplement RECEIVABLES CORPORATION
(Seller)
Page
Reports to Certificateholders S-2
Summary of Terms.............. S-3
Risk Factors.................. S-9
The Trust..................... S-10
The Receivables Pool.......... S-10
The Seller, the Servicer
and Norwest Corporation...... S-14
Weighted Average Life of the
Certificates................. S-14
Description of the Certificates S-14
Certain Legal Aspects of the
Receivables.................. S-20 $__________________
ERISA Considerations.......... S-20 __% Asset Backed
Underwriting.................. S-21 Certificates
Legal Opinions................ S-21 Class A
Index of Defined Terms........ S-22
<PAGE>
Prospectus
Page
Available Information.........
Incorporation of Certain
Documents by Reference...... $__________________
Summary of Terms.............. __% Asset Backed
Risk Factors.................. Certificates
The Trusts.................... Class B
The Receivables Pools.........
Weighted Average Life of the
Securities..................
Pool Factors and Trading
Information.................
Use of Proceeds...............
The Seller....................
The Bank and Norwest
Corporation.................
Description of the Notes......
Description of the
Certificates................
Certain Information Regarding
the Securities............. ================
Description of the Transfer
and Servicing Agreements.... PROSPECTUS SUPPLEMENT
Certain Legal Aspects of the ______________, 199__
Receivables.................
Federal Income Tax ================
Consequences................
Certain State Tax
Consequences................
ERISA Considerations..........
Plan of Distribution..........
Notice to Canadian Residents..
Legal Opinions................
Index of Defined Terms........
Global Clearance, Settlement
and Tax Documentation
Procedures..................
Until 90 days after the date of this
Prospectus Supplement, all dealers
effecting transactions in the securities
described in this Prospectus
Supplement, whether or not participating
in this distribution, may be required to
deliver this Prospectus Supplement and
the Prospectus. This is in addition to
the obligation of dealers to deliver
this Prospectus Supplement and the
Prospectus when acting as underwriters
and with respect to their unsold
allotments or subscriptions.
====================================== ===================================
<PAGE>
SUBJECT TO COMPLETION, DATED __________, 199_
[Owner Trust Supplement]
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 199_)
[$______________]
Norwest Auto Trust 199_ - _
$______________ Class A-1 ____% Asset Backed Notes
$______________ Class A-2 ____% Asset Backed Notes
$______________ ____% Asset Backed Certificates
Norwest Auto Receivables Corporation
Seller
Norwest Bank Minnesota, N.A.
Servicer
The Norwest Auto Trust 199_-__ (the "Trust") will be governed
by a Trust Agreement, to be dated as of ____________, 199_, between Norwest
Auto Receivables Corporation, as seller (the "Seller") and
___________________________, as Owner Trustee. The Trust will issue
$_____________ aggregate principal amount of Class A-1 ___% Money Market
Asset Backed Notes (the "Class A-1 Notes"), and $____________ aggregate
principal amount of Class A-2 ___% Asset Backed Notes (the "Class A-2
Notes" and, together with the Class A-1 Notes, the "Notes") pursuant to an
Indenture to be dated as of _____________, 199_, between the Trust and
___________________, as Indenture Trustee. The Trust will also issue
$__________________ aggregate principal amount of ___% Asset Backed
Certificates (the "Certificates" and, together with the Notes, the
"Securities"). The assets of the Trust will include a pool of motor
vehicle promissory notes and security agreements and/or retail installment
sale contracts secured by new or used automobiles and light duty trucks
(collectively, the "Receivables"), payments received thereunder after
____________, 199__, security interests in the motor vehicles financed
thereby, rights under Dealer Agreements, certain deposit accounts
in which collections are held, any proceeds from claims on insurance policies
relating to the Financed Vehicles and the proceeds of the foregoing.
(continued on following page)
___________________________
Prospective investors should consider the "Risk Factors" set forth at page
S-__ herein and at page ___ in the accompanying Prospectus (the "Prospectus").
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT
BENEFICIAL INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER
NORWEST BANK OR ANY OF THEIR AFFILIATES. NEITHER
THE SECURITIES NOR THE RECEIVABLES ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, ANY OTHER GOVERNMENTAL AGENCY
OR INSTRUMENTALITY OR BY NORWEST AUTO
RECEIVABLES CORPORATION, NORWEST BANK
MINNESOTA, N.A., ANY OTHER NORWEST
BANK, NORWEST INVESTMENT SERVICES,
INC. OR ANY OF THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
___________________________
<PAGE>
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions the Seller(1)(2)
--------------- ----------------- -----------------
<S> <C> <C> <C>
Per Class A-1 Note % % %
Per Class A-2 Note % % %
Per Certificate % % %
Total $____________ $____________ $____________
- ----------------------
<FN>
(1) Plus accrued interest, if any, from ___________, 199__.
(2) Before deducting expenses, estimated to be $___________.
</TABLE>
<PAGE>
The Notes and Certificates are offered by the Underwriters when,
as and if issued 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 Notes and the Certificates will be made in book-entry form only
through the Same Day Funds Settlement System of The Depository Trust
Company, or through Cedel Bank, societe anonyme or the Euroclear System, on
or about __________, 199__.
_____________, 199__.
<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.
The assets of the Trust will be transferred by the Seller to
the Trust on or prior to the Closing Date. The Notes will be secured by the
assets of the Trust pursuant to the Indenture. Certain capitalized terms
used in this Prospectus Supplement are defined in this Prospectus
Supplement on the pages indicated in the "Index of Terms" on page ___ of
this Prospectus Supplement or, to the extent not defined herein, have the
meanings assigned to such terms in the Prospectus. Interest on all classes
of Notes will accrue at the fixed per annum interest rates specified above.
Interest on the Notes will generally be payable on the [15th] day of each
month (each, a "Distribution Date"), commencing _______, 199_. Principal
of the Notes will be payable on each Distribution Date to the extent
described herein, except that no principal will be paid on the Class A-2
Notes until the Class A-1 Notes have been paid in full. See "Description of
the Notes--Payments of Interest."
The Certificates will represent fractional undivided interests
in the Trust. Interest, at the Certificate Rate, will be distributed to
the Certificateholders on each Distribution Date to the extent of available
funds. Principal, to the extent described herein, will be distributed to
the Certificateholders on each Distribution Date commencing with the
Distribution Date on which the Notes were paid in full to the extent of
available funds. See "Description of the Certificates--Distributions of
Principal Payments." Distributions of interest and principal on the
Certificates will be subordinated in priority to payments due on the Notes
as described herein. See "Description of the Transfer and Servicing
Agreements--Subordination of Certificates."
Each class of the Notes and the Certificates will be payable
in full on the applicable final scheduled Distribution Date as set forth
herein. However, payment in full of a class of Notes or of the
Certificates could occur earlier or later than such dates as described
herein. See "Weighted Average Life of the Securities." In addition,
the Class A-2 Notes and the Certificates will be subject to prepayment
in whole, but not in part, on any Distribution Date on which Norwest
Bank Minnesota, N.A. in its capacity as servicer (in such capacity,
the "Servicer"), or the Seller exercises its option to purchase
the Receivables. The Seller or Servicer may purchase the Receivables when
the aggregate principal balance of the Receivables has declined to 5% or
less of the initial aggregate principal balance of the Receivables purchased
by the Trust.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION
ABOUT THE OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL
INFORMATION IS CONTAINED IN THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE
URGED TO READ BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL.
SALES OF THE NOTES OR THE CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE
PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
TO THE EXTENT ANY STATEMENTS IN THIS PROSPECTUS SUPPLEMENT SUPPLEMENT OR
SPECIFY ADDITIONAL INFORMATION WITH RESPECT TO STATEMENTS IN THE
PROSPECTUS, THE STATEMENTS IN THIS PROSPECTUS SUPPLEMENT SHALL CONTROL.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICES OF THE NOTES AND THE CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
There is currently no secondary market for the Securities
offered hereby. Each Underwriter expects, but is not obligated to make a
market in the Notes and Certificates. There can be no assurance that a
secondary market will develop or that it will provide Securityholders with
liquidity of investment or that it will continue for the life of the
Securities offered hereby.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates
are issued, monthly and annual unaudited reports containing information
concerning the Receivables will be prepared by the Servicer and sent on
behalf of the Trust only to Cede & Co., as nominee of the Depository Trust
Company and registered holder of the Notes and the Certificates. See
"Certain Information Regarding the Securities--Book-Entry Registration" and
"--Reports to Securityholders" in the accompanying Prospectus. Such reports
will not constitute financial statements prepared in accordance with
generally accepted accounting principles. The Seller, as originator of the
Trust, will file with the Securities and Exchange Commission (the
"Commission") such periodic reports as are required under the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder. In addition, the Commission maintains a public access
site on the Internet through the World Wide Web at which site reports,
information statements and other information, including all electronic
filings, may be viewed. The Internet address of such World Wide Web site
is http:/www.sec.gov.
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by
reference to the detailed information appearing elsewhere in this
Prospectus Supplement and in the Prospectus. Certain capitalized terms
used herein are defined elsewhere in this Prospectus Supplement on the
pages indicated in the "Index of Terms" beginning at page S-__ or, to the
extent not defined herein, have the meanings assigned to such terms in the
Prospectus.
Issuer................ Norwest Auto Trust 199_-__ (the "Trust" or the
"Issuer"), a Delaware business trust
established pursuant to a trust agreement (as
amended and supplemented, the "Trust
Agreement"), dated as of ________________,
199_ between the Seller and the Owner Trustee.
Seller................ Norwest Auto Receivables Corporation, a
___________ corporation (the "Seller"). See
"The Seller."
Servicer.............. Norwest Bank Minnesota, N.A., a national banking
association (the "Bank" or in its capacity as
servicer, the "Servicer").
Indenture Trustee..... ____________________, as trustee under the
Indenture (the "Indenture Trustee").
Owner Trustee......... ____________________, as trustee under the Trust
Agreement (the "Owner Trustee").
The Notes............. The Trust will issue Asset Backed Notes (the
"Notes"), pursuant to an Indenture to be dated
as of _______________, 199_ (as amended and
supplemented from time to time, the
"Indenture"), between the Issuer and the
Indenture Trustee, as follows: (a) Class A-1
__% Money Market Asset Backed Notes (the
"Class A-1 Notes") in the aggregate initial
principal amount of $______________; and (b)
Class A-2 __% Asset Backed Notes (the "Class
A-2 Notes") in the aggregate initial principal
amount of $____________.
The Notes will be secured by the assets of the
Trust pursuant to the Indenture.
The Certificates...... The Trust will issue __% Asset Backed
Certificates (the "Certificates" and, together
with the Notes, the "Securities") with an
aggregate initial Certificate Balance of
$________________. The Certificates will
represent fractional undivided interests in
the Trust and will be issued pursuant to the
Trust Agreement.
The Receivables....... On or prior to __________, 199_ (the "Closing
Date"), the Trust will purchase a pool of
motor vehicle promissory notes and security
agreements and/or retail installment sale
contracts secured by new or used automobiles or
light duty trucks (collectively, the
"Receivables"), including rights to receive
certain payments made with respect to such
Receivables, security interests in the vehicles
financed thereby (the "Financed Vehicles"),
rights under Dealer Agreements, certain deposit
accounts in which collections are held, any
proceeds from claims on insurance policies and
the proceeds of the foregoing, having an
aggregate principal balance of approximately
$___________ as of ____________, 199_ (the
"Cutoff Date"), from the Seller pursuant to a
Sale and Servicing Agreement to be dated as
of ____________, 199_ (as amended and
supplemented from time to time, the "Sale and
Servicing Agreement"), among the Trust, the
Seller and the Servicer. See "Description of
the Transfer and Servicing Agreements" herein
and in the Prospectus.
The Receivables will generally consist of (i)
motor vehicle promissory notes and security
agreements executed by an Obligor in favor of
an Originator ("Direct Loans") and/or (ii) motor
vehicle retail installment sale contracts
(together with Direct Loans, "Motor Vehicle
Loans") between an Obligor and a Dealer.
Receivables that are to be included in any
Receivables Pool will be transferred by an
Affiliate to the Seller for purposes
of sale to the applicable Trust. Receivables
constituting approximately ___% of the aggregate
principal balance of Receivables as of the
Cutoff Date (the "Acquired Receivables") were
acquired by the Affiliates through acquisitions.
All the Receivables provide for the allocation
of payments to principal and interest in
accordance with the "simple interest" method.
The Receivables have been selected from Motor
Vehicle Loans owned by the Affiliates based
on the criteria specified in the Sale and
Servicing Agreement and described herein and
in the Prospectus. See "The Receivables Pool"
herein and "The Receivables Pools" in the
Prospectus. No Receivable will have
a scheduled maturity that, after giving
prospective effect to any permitted extensions
or such deferrals, would be later than
____________ (the "Final Scheduled Maturity
Date"). As of the Cutoff Date, the weighted
average remaining maturity of the Receivables
was approximately _____ months and the weighted
average original maturity of the Receivables
was approximately ____ months. As of the
Cutoff Date, approximately ____% of the
aggregate principal balance of the Receivables
represented financing of new vehicles and the
remainder represented financing of used
vehicles.
The "Pool Balance" means, at any time, the sum
of the outstanding Principal Balances of the
Receivables. The "Principal Balance" for any
Receivable, at any time, means the principal
balance of such Receivable at the end of the
preceding Collection Period, after giving
effect to all payments received from Obligors
and Purchase Amounts to be remitted by the
Servicer or the Seller, as the case may be,
for such Collection Period and all losses
realized on Receivables liquidated during such
Collection Period.
Terms of the Notes
A. Distribution Dates Payments of interest and principal on the Notes
will be made on the [15th] day of each month
or, if any such day is not a Business Day, on
the next succeeding Business Day (each, a
"Distribution Date"), commencing
______________, 199_. Each reference to a
"Payment Date" in the Prospectus shall refer
to a Distribution Date herein. Payments will
be made to holders of record of the Notes (the
"Noteholders") as of the day immediately
preceding such Distribution Date or, if
Definitive Notes are issued, as of the [30th]
day of the preceding month (a "Record Date").
A "Business Day" is a day other than a
Saturday, a Sunday and that in New York City
and in the city in which the corporate trust
office of the Trustee is located is neither a
legal holiday nor a day on which banking
institutions are authorized by law, regulation
or executive order to be closed.
B. Interest Rates.... The Class A-1 Notes will bear interest at the
rate of __% per annum (the "Class A-1 Interest
Rate") and the Class A-2 Notes will bear
interest at the rate of __% per annum (the
"Class A-2 Interest Rate"). The Class A-1
Interest Rate and the Class A-2 Interest Rate
are referred to herein collectively as
"Interest Rates".
C. Interest.......... Interest on the outstanding principal amount of
the Notes of each class will accrue at the
applicable Interest Rate from the Closing Date
(in the case of the first Distribution Date)
and thereafter from the preceding Distribution
Date through the current Distribution Date
(each an "Interest Period"). Interest on the
Notes will be calculated on the basis of a
360-day year consisting of twelve 30-day
months. See "Description of the
Notes--Payments of Interest."
D. Principal......... Principal of the Notes will be payable on each
Distribution Date in an amount equal to the
Noteholders' Principal Distributable Amount
for the calendar month (the "Collection
Period") preceding such Distribution Date (in
the case of the first Distribution Date, the
period from (but not including) the Cutoff
Date to and including ___________, 199_) to
the extent of funds available therefor.
No principal payments will be made on the Class
A-2 Notes until the Class A-1 Notes have been
paid in full.
The outstanding principal amount of the Class
A-1 Notes, to the extent not previously paid,
will be payable on the _____________, 199_
Distribution Date (the "Class A-1 Final
Scheduled Distribution Date"); and the
outstanding principal amount of the Class A-2
Notes, to the extent not previously paid, will
be payable on the ____________, 199_
Distribution Date (the "Class A-2 Final
Scheduled Distribution Date").
E. Significant
Characteristics
of Class Notes....... [Interest will accrue on the Class __ Notes from
[the Closing Date] but no interest will be payable
on the Class __ Notes until [[the Distribution]
[Payment] Date]] [the [Distribution] [Payment]
Date on or after which the Class __ Notes have
been paid in full]. [The Class __ Notes [do not
bear interest] [bear interest at a nominal rate]
and principal thereon is due and payable on [and
after] [the [Distribution] [Payment] Date
following the [Distribution] [Payment] Date on
or after which the Class __ Notes have been paid
in full] [each [Distribution] [Payment] Date to
the extent that principal available to be paid on
the Class __ Notes exceeds the amount necessary
to reduce the outstanding principal balance of the
Class __ Notes to the [planned balance] for such
[Distribution] [Payment] Date. [No principal
is payable with respect to the Class __ Notes.
The Class __ Notes are entitled only to interest
on the [nominal] [notional] amount thereof, as
described above under "Principal."] As a result
the yield to maturity on the Class __ Notes will
be particularly sensitive to the rate and timing
of repayment, repurchase and defaults on the
Receivables.] [See "Risk Factors" and "The
Receivables Pool -- Weighted Average Life of the
Securities."]
F. Optional Redemption After the Class A-1 Notes have been paid in
full, the Class A-2 Notes will be redeemed in
whole, but not in part, on any Distribution
Date on which the Seller or Servicer exercises
its option to purchase the Receivables, which
can occur after the Pool Balance declines to 5%
or less of the Original Pool Balance, at a
redemption price equal to the unpaid principal
amount of the Class A-2 Notes plus accrued and
unpaid interest thereon. See "Description of
the Notes--Optional Redemption." The "Original
Pool Balance" will equal the aggregate
principal balance of the Receivables as of the
Cutoff Date.
Terms of the Certificates
A. Distribution Dates Distributions with respect to the Certificates
will be made on each Distribution Date,
commencing __________, 199_. Distributions
will be made to holders of record of the
Certificates (the "Certificateholders" and,
together with the Noteholders, the
"Securityholders") as of the related Record
Date (which will be the [30th] day of the
preceding month if Definitive Certificates are
issued).
B. Certificate Rate ___% per annum (the "Certificate Rate").
C. Interest.......... On each Distribution Date, the Owner Trustee
will distribute pro rata to Certificateholders
accrued interest at the Certificate Rate on
the outstanding Certificate Balance generally
to the extent of funds available following
payment of the Servicing Fee and distributions
in respect of interest on the Notes from the
Total Distribution Amount and the Reserve
Account. Interest will be calculated on the
basis of a 360-day year consisting of twelve
30-day months. Interest in respect of a
Distribution Date will accrue from the Closing
Date (in the case of the first Distribution
Date) and thereafter from the preceding
Distribution Date to and including such
Distribution Date.
D. Principal......... No distributions of principal on the
Certificates will be made until all of the
Notes have been paid in full. On each
Distribution Date commencing on the
Distribution Date on which the Class A-2 Notes
are paid in full, principal of the
Certificates will be payable in an amount
generally equal to the Certificateholders'
Principal Distributable Amount for the
Collection Period preceding such Distribution
Date, to the extent of funds available
therefor following payment of the Servicing
Fee, payments of interest and principal, if
any, due in respect of the Notes and the
distribution of interest in respect of the
Certificates.
The outstanding principal amount, if any, of the
Certificates will be payable in full on the
__________ Distribution Date (the "Certificate
Final Scheduled Distribution Date").
E. Optional Prepayment If the Pool Balance as of the last day of a
Collection Period has declined to 5% or less
of the Original Pool Balance, the Seller or
Servicer may purchase all remaining Trust
Property on any Distribution Date occurring in
a subsequent Collection Period at a purchase
price equal to the aggregate of the Purchase
Amounts of the remaining Receivables (other
than Defaulted Receivables), which would result
in a prepayment of the Certificates. See
"Description of the Certificates--Optional
Prepayment."
Advances.............. On or prior to the Business Day preceding each
Distribution Date (the "Deposit Date"), the
Servicer will advance (an "Advance") in an
amount equal to the lesser of (a) the excess,
if any, of the amount of interest that would
be expected to be received on the Receivables
(other than Non-Advance Receivables) during
the related Collection Period over the actual
interest collected by the Servicer during such
Collection Period minus unreimbursed prior
Advances and (b) the amount (if any) by which
the sum of any unpaid Servicing Fees for the
related Collection Period and prior Collection
Periods and the amount of interest
distributable to the Securityholders on the
following Distribution Date exceeds the actual
interest collected by the Servicer during the
related Collection Period minus unreimbursed
prior Advances, subject to certain limitations
described below. The Servicer will be entitled
to be reimbursed for outstanding Advances on
the Distribution Date in the following month
to the extent of interest collections for such
Distribution Date and, to the extent such
collections are insufficient, to the extent of
funds in the Reserve Account. The Servicer
will be obligated to make such an Advance
except to the extent that the Servicer
reasonably determines that the Advance is
unlikely to be recoverable from the following
month's collections of interest and the funds
in the Reserve Account. See "Description of
the Transfer and Servicing Agreements--Advances."
Reserve Account....... A reserve account (the "Reserve Account") will
be created with an initial deposit by the
Seller of cash or certain investments having a
value of at least $________ (the "Reserve
Account Deposit"). In addition, on each
Distribution Date, any amounts on deposit in
the Collection Account with respect to the
preceding Collection Period after payments to
the Certificateholders and the Servicer have
been made will be deposited into the Reserve
Account until the amount of the Reserve
Account is equal to the Specified Reserve
Account Balance.
On or prior to each Deposit Date, the Indenture
Trustee will withdraw funds from the Reserve
Account, to the extent of the funds therein
(exclusive of investment earnings), (a) to the
extent required to reimburse the Servicer for
Outstanding Advances and (b) to the extent (i)
the sum of the amounts required to be
distributed to Certificateholders and the
Servicer on the related Distribution Date
exceeds (ii) the amount on deposit in the
Collection Account with respect to the
preceding Collection Period (net of investment
income). If the amount in the Reserve Account
is reduced to zero, Certificateholders will
bear the credit and other risks associated
with ownership of the Receivables, including
the risk that the Trust may not have a
perfected security interest in the Financed
Vehicles. See "Risk Factors" herein and in
the Prospectus, "Description of the
Certificates--The Reserve Account"; and
"Certain Legal Aspects of the Receivables" in
the Prospectus.
Prepayment Considerations The weighted average life of the Securities may
be reduced by full or partial prepayments on
the Receivables. The Receivables are
prepayable at any time. Prepayments may also
result from liquidations due to default, the
receipt of monthly installments earlier than
the scheduled due dates for such installments,
the receipt of proceeds from credit life,
disability, theft or physical damage
insurance, repurchases by the Seller as a
result of certain uncured breaches of the
warranties made by it in the Sale and
Servicing Agreement with respect to the
Receivables, purchases by the Servicer as a
result of certain uncured breaches of the
covenants made by it in the Sale and Servicing
Agreement with respect to the Receivables, or
the Seller or Servicer exercising its optional
purchase right. The rate of prepayments on the
Receivables may be influenced by a variety of
economic, social, and other factors, including
decreases in interest rates and the fact that
the Obligor may not sell or transfer the
Financed Vehicle securing a Receivable without
the consent of the applicable Affiliate.
No prediction can be made as to the actual
prepayment rates which will be experienced on
the Receivables. If prepayments were to occur
after a decline in interest rates, investors
seeking to reinvest their funds might be
required to invest at a return lower than the
applicable Interest Rate or the Certificate
Rate, as the case may be. Security Owners
will bear all reinvestment risk resulting from
prepayment of the Receivables. See "Risk
Factors--Prepayment Considerations" and
"Weighted Average Life of the Securities" in
the Prospectus and "Weighted Average Life of
the Securities" herein.
Tax Status............ In the opinion of Mayer, Brown & Platt, for
federal income tax purposes, the Notes will be
characterized as debt, and the Trust will not
be characterized as an association (or a
publicly traded partnership) taxable as a
corporation. In the opinion of _____________,
____________ tax counsel to the Trust, the
same characterizations would apply for
____________ income tax purposes as for
federal income tax purposes. Each Noteholder,
by the acceptance of a Note, will agree to
treat the Notes as indebtedness, and each
Certificateholder, by the acceptance of a
Certificate, will agree to treat the Trust as
a partnership in which the Certificateholders
are partners for federal, state and local
income tax purposes. Alternative
characterizations of the Trust and the
Certificates are possible, but would not
result in materially adverse tax consequences
to Certificateholders. See "Federal
Income Tax Consequences" and "Certain State
Tax Consequences" in the Prospectus for
additional information concerning the
application of federal and state tax laws to
the Trust and the Securities.
ERISA Considerations... Subject to the considerations discussed under
"ERISA Considerations" herein and in the
Prospectus, the Notes are eligible for
purchase by employee benefit plans.
The Certificates may not be acquired with the
assets of any employee benefit plan subject to
the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of
the Internal Revenue Code of 1986, as amended
(the "Code"), or with the assets of an
individual retirement account. See "ERISA
Considerations" herein and in the Prospectus.
Legal Investment...... The Class A-1 Notes will be eligible securities
for purchase by money market funds under
paragraph (a)(5) of Rule 2a-7 under the
Investment Company Act of 1940, as amended.
Risk Factors.......... See "Risk Factors" herein and in the Prospectus
for a discussion of certain factors that
potential investors should consider in
determining whether to invest in the Securities.
[No] Listing of
Securities............ [The [Securities]/[Notes]/[Certificates] will not
be listed on any national securities exchange or
automated quotation system of a registered
securities association.] [The Certificates]
[Notes] [Securities] will be listed on
_________________.]
Rating of the Notes... It is a condition to the issuance of the Notes
that the Class A-1 Notes be rated in the
highest short-term rating category and that
the Class A-2 Notes be rated in the highest
long-term rating category by at least two
nationally recognized rating agencies (the
"Rating Agencies"). There can be no assurance
that a rating will not be lowered or withdrawn
by a Rating Agency if circumstances so
warrant. See "Risk Factors--Ratings of the
Securities" herein and in the Prospectus.
Rating of the
Certificates ....... It is a condition to the issuance of the
Certificates that they be rated at least "A"
or its equivalent by at least two nationally
recognized rating agencies. There can be no
assurance that a rating will not be lowered or
withdrawn by a rating agency if circumstances
so warrant. See "Risk Factors--Ratings of the
Securities" in the Prospectus.
RISK FACTORS
In addition to the other information contained herein and in the
Prospectus, prospective investors should consider carefully the following
risk factors and the information contained in "Risk Factors" in the
Prospectus.
Geographic Concentration
Economic conditions in 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 mailing addresses
of Obligors with respect to approximately __% by principal balance of the
Receivables were located in ____________, and the mailing addresses of
Obligors with respect to approximately __% by principal balance of the
Receivables were located in ____________ and ________________ collectively.
See "The Receivables Pool."
Subordination
Distributions of interest and principal on the Certificates
will be subordinated in priority of payment to interest and principal due
on the Class A-1 Notes and Class A-2 Notes. Consequently, the
Certificateholders will not receive any distributions with respect to a
Collection Period until the full amount of interest on and principal of the
Notes on such Distribution Date has been deposited in the Note Distribution
Account. The Certificateholders will not receive any distributions of
principal until the Distribution Date on which the Class A-2 Notes were
paid in full. However, upon the occurrence and during the continuation of
an Event of Default which has resulted in an acceleration of the Notes,
distributions of the amounts on the Certificates will be subordinated in
priority of payment to payment in full of principal of the Notes.
If an Event of Default occurs, the Indenture Trustee or the
holders of a majority of the aggregate principal amount of all the Notes
may declare the principal of the Notes to be immediately due and payable,
and the Indenture Trustee may institute or be required to institute
proceedings to collect amounts due or exercise its remedies as a secured
party (including foreclosure or sale of the Receivables). In the event of
a sale of Receivables by the Indenture Trustee following an Event of
Default, there is no assurance that the proceeds of such sale will be equal
to or greater than the aggregate outstanding principal amount of the Notes
and the Certificate Balance plus accrued interest. Because neither
interest nor principal is distributed to Certificateholders upon sale of
the Receivables following an Event of Default and acceleration of the Notes
under the Indenture until all the Notes have been paid in full, the
interests of Noteholders and the Certificateholders may conflict, and the
exercise by the Indenture Trustee of its right to sell the Receivables or
exercise other remedies under the Indenture and applicable law may cause
the Certificateholders to suffer a loss of all or part of their investment.
See "Description of the Notes--The Indenture--Events of Default; Rights upon
Event of Default" and "Description of the Transfer and Servicing
Agreements--Insolvency Event" in the Prospectus.
In general, the Seller may, and in certain circumstances the
Certificateholders may, direct the Owner Trustee in the administration of
the Trust. However, because the Trust has pledged the property of the
Trust to the Indenture Trustee to secure the payment of the Notes,
including in such pledge certain rights of the Trust under the Sale and
Servicing Agreement, the Indenture Trustee and not the Seller or the
Certificateholders has the power to direct the Trust to take certain
actions in connection with the administration of the property of the Trust
until the Notes have been paid in full and the lien of the Indenture has
been released. In addition, the Seller and Certificateholders are not
allowed to direct the Owner Trustee to take any action which conflicts with
the provisions of any of the Sale and Servicing Agreement, the Trust
Agreement or the Indenture (together the "Basic Documents"). The Indenture
specifically prohibits the Issuer from taking any action which would impair
the Indenture Trustee's security interest in the Trust and generally
requires the Owner Trustee to obtain the consent of the Indenture Trustee
or the holders of a majority of the aggregate principal amount of the Notes
before modifying, amending, supplementing, waiving or terminating any Basic
Document or any provision of any Basic Document. Therefore, until the
Notes have been paid in full, the ability to direct the Trust with respect
to certain actions permitted to be taken by it under the Basic Documents
rests with the Indenture Trustee and the Noteholders instead of the Seller
or the Certificateholders.
If an Event of Servicing Termination were to occur, the holders
of a majority of the outstanding principal amount of the Notes, the
Indenture Trustee acting on behalf of the Noteholders, or the Owner Trustee
and not the Seller or the Certificateholders, would have the right to
terminate the Servicer as the servicer of the Receivables without
consideration of the effect such termination would have on
Certificateholders. In addition, the holders of not less than a majority
of the outstanding principal amount of the Notes would have the right to
waive certain Events of Servicing Termination, without consideration of the
effect such waiver would have on Certificateholders. See "Description of
the Transfer and Servicing Agreements--Events of Servicing Termination" and
"--Rights upon Event of Servicing Termination" in the Prospectus.
Limited Assets
The Trust will not have, nor is it permitted or expected to
have, any significant assets or sources of funds other than the Receivables
and the Reserve Account. Holders of the Notes and the Certificates must
rely for repayment upon payments on the Receivables and, if and to the
extent available, amounts on deposit in the Reserve Account. Similarly,
although funds in the Reserve Account will be available on each
Distribution Date to cover shortfalls in distributions of interest and
principal on the Notes and the Certificates, amounts to be deposited in the
Reserve Account are limited in amount. If the Reserve Account is
exhausted, the Trust will depend solely on current distributions on the
Receivables to make payments on the Notes and the Certificates.
Amounts on deposit in the Reserve Account will be available
on any Distribution Date first to cover shortfalls in reimbursement of
outstanding Advances and payment of Servicing Fees to the Servicer, then
shortfalls in distributions of interest on the Notes then shortfalls in
distributions of interest on Certificates. After distributions of interest
on the Certificates have been made, the remaining amounts on deposit in the
Reserve Account will be available first to cover shortfalls in
distributions of principal on the Notes and then shortfalls in
distributions of principal on the Certificates. If the Reserve Account is
exhausted, the Trust will depend solely on payments on the Receivables to
make distributions on the Securities, and Securityholders will bear the
risk of delinquency, loan losses and repossessions with respect to the
Receivables. There can be no assurance that the future delinquency, loan
loss and repossession experience of the Trust with respect to the
Receivables will be better or worse than that set forth herein with respect
to the portfolio of Motor Vehicle Loans serviced by the Servicer. Any amounts
released from the Reserve Account to the Seller will not be available to the
Securityholders. See "The Receivables Pool--Pool Composition" and
"Delinquency and Net Losses" herein and "The Receivables Pools" in the
Prospectus and "Description of the Transfer and Servicing
Agreements--Subordination of Certificateholders; Reserve Account" and
"--Distributions" herein.
Maturity and Prepayment Considerations
The Certificates will not receive any principal payments until
the Notes have been paid in full. In addition, no principal payments on
the Certificates will be made until the Distribution Date on which the
Notes are paid in full. As the rate of payment of principal of the Notes
and the Certificates depends on the rate of payment (including prepayments)
of the principal balance of the Receivables, final payment of the Notes and
the final distribution in respect of the Certificates could occur
significantly earlier than the applicable Final Scheduled Distribution
Date. It is expected that final payment of the Notes and the final
distribution in respect of the Certificates will occur on or prior to the
applicable Final Scheduled Distribution Date. However, if sufficient funds
are not available to pay the Notes or the Certificates in full on or prior
to the applicable Final Scheduled Distribution Date, final payment of the
Notes and the final distribution in respect of the Certificates could occur
later than such date. See "Weighted Average Life of the Securities" herein
and in the Prospectus.
[THE YIELD ON THE CLASS ___ NOTES WILL BE EXTREMELY SENSITIVE TO THE
RATE AND TIMING OF PAYMENTS (INCLUDING PREPAYMENTS) ON THE RECEIVABLES.
[AN INVESTOR PURCHASING A CLASS ___ NOTE AT A SIGNIFICANT PREMIUM COULD,
UNDER CERTAIN PREPAYMENT SCENARIOS, FAIL TO RECOUP ITS ORIGINAL INVESTMENT.]
[THE YIELD TO MATURITY ON THE CLASS ___ NOTES WILL BE ADVERSELY AFFECTED
BY A LOWER THAN ANTICIPATED RATE OF PAYMENT ON THE RECEIVABLES.] [The
reinvestment risk to an investor in the Class ___ Notes may be exacerbated
in the event of [an increase in the rate of payment on the Receivables in a
decreasing interest rate environment] [a decrease in the rate of payment on
the Receivables in an increasing rate environment]. Any ratings assigned
to the Class ___ Notes by a Rating Agency will reflect only such Rating
Agency's assessment of the likelihood that timely distributions will be
made with respect to the Class ___ Notes in accordance with the Sale and
Servicing Agreement and the Indenture. Such rating will not constitute an
assessment of the likelihood that principal prepayments on the Receivables
will occur or of the degree to which the rate of such prepayments might
differ from that originally anticipated. As a result, such rating will not
address the possibility that prepayment rates higher or lower than
anticipated by an investor may cause [such investor to experience a lower
than anticipated yield] [an investor purchasing a Class ___ Note at a
significant premium might fail to recoup its investment]. See "The
Receivables Pool--Sensitivity of the Class ___ Notes to Prepayments."]
Ratings of the Securities
It is a condition to the issuance of the Notes and of the
Certificates that the Class A-1 Notes be rated in the highest short-term
rating category and that the Class A-2 Notes be rated in the highest
long-term rating category, and that the Certificates be rated at least "A"
or its equivalent, by at least two nationally recognized rating agencies.
A rating is not a recommendation to purchase, hold or sell Securities,
inasmuch as such rating does not comment as to market price or suitability
for a particular investor. The ratings of the Securities address the
likelihood of the payment of principal and interest on the Securities
pursuant to their terms. There can be no assurance that a rating will
remain for any given period of time or that a rating will not be lowered or
withdrawn entirely by a Rating Agency if in its judgment circumstances in
the future so warrant.
THE TRUST
General
The Issuer, Norwest Auto Trust 199_-_, is a business trust
formed under the laws of the State of Delaware pursuant to the Trust
Agreement for the transactions described in this Prospectus Supplement.
After its formation, the Trust will not engage in any activity other than
(a) acquiring, holding and managing the Receivables and the other assets of
the Trust and proceeds therefrom, (b) from time to time prior to the
Closing Date, issuing indebtedness or other securities to finance its
purchase of the Receivables and such other assets and, on and after the
Closing Date, issuing the Notes and the Certificates to finance such
assets, (c) making payments on the indebtedness and other securities and
the Notes and the Certificates issued by it, and (d) engaging in other
activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.
At the time the Notes and Certificates are issued, the Trust
will be capitalized with equity in an amount equal to the Certificate
Balance of $__________, excluding amounts deposited in the Reserve Account.
On the Closing Date, Certificates with an original principal balance of
$______________ will be sold to the Seller, and the remaining equity
interest will be sold to third party investors that are expected to be
unaffiliated with the Seller, the Servicer or their affiliates or the
Trust. The equity of the Trust, together with the net proceeds from the
sale of the Notes, will be used by the Trust to purchase the Receivables
from the Seller pursuant to the Sale and Servicing Agreement or to
repayment of any related Warehouse Financing.
If the protection provided to the investment of the
Securityholders by the Reserve Account is insufficient, the Trust will look
only to the Obligors on the Receivables, the proceeds from the repossession
and sale of Financed Vehicles which secure defaulted Receivables and the
proceeds from any Dealer Recourse. In such event, certain factors, such
as the Trust's not having first priority perfected security interests in
some of the Financed Vehicles, may affect the Trust's ability to realize on
the collateral securing the Receivables, and thus may reduce the proceeds
to be distributed to Securityholders with respect to the Securities. See
"Description of the Transfer and Servicing Agreements--Distributions" and
"--Reserve Account" and "Certain Legal Aspects of the Receivables" in the
Prospectus.
The Trust's principal offices are in Delaware, in care of
__________________, as Owner Trustee, at the address listed below under
"--The Owner Trustee".
Capitalization of the Trust
The following table illustrates the capitalization of the
Trust as of the Closing Date, as if the issuance and sale of the Notes and
the Certificates have taken place on such date:
Class A-1 __% Money Market Asset Backed Notes. . . $___________
Class A-2 __% Asset Backed Notes . . . . . . . . . ___________
__% Asset Backed Certificates. . . . . . . . . . . ___________
Total. . . . . . . . . . . . . . . . . . . . . . . $
===========
The Owner Trustee
_______________ is the Owner Trustee under the Trust Agreement.
_____________ is a __________________ and its principal offices where
information can be obtained relating to the Trust and the Certificates are
located at _____________________. The Seller and its affiliates may maintain
normal commercial banking relations with the Owner Trustee and its
affiliates.
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will consist of
Receivables purchased as of the Cutoff Date. The Receivables have been
selected from the portfolio of each Affiliate for inclusion in the Receivables
Pool by several criteria, some of which are set forth in the Prospectus under
"The Receivables Pool," as well as the requirement that each Receivable (a)
has an outstanding principal balance of at least $_____, (b) as of the Cutoff
Date, was not more than 30 days past due, (c) has a scheduled maturity not
later than six months before the Final Scheduled Maturity Date, and (d) has
an original term to maturity of not more than ___ months. No selection
procedures believed by any Affiliate to be adverse to the Certificateholders
were used in selecting the Receivables. Approximately ___% of the aggregate
principal balance of Receivables as of the Cutoff Date constituted Acquired
Receivables.
<PAGE>
Pool Composition
Set forth in the following tables is information concerning
the composition, distribution by APR and the geographic distribution of the
Receivables to be conveyed by the Seller to the Trust as of the Cutoff
Date.
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Composition of the Receivables
as of the Cutoff Date(1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Weighted Aggregate
Average APR Principal Number of Weighted Average Weighted Average Average
of Receivables Balance Receivables Remaining Term Original Term Principal Balance
- --------------- ---------- ----------- ---------------- ---------------- -----------------
% $ months months $
- --------------------------------
<FN>
(1) The figures are summations or weighted averages of the Receivables
transferred to the Trust as of the Cutoff Date.
<PAGE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Distribution by APR of the Receivables
as of the Cutoff Date(1)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Percentage of
Number of Aggregate Principal Aggregate Principal
APR Range Receivables Balance Balance(2)
- ---------- ------------ ------------------- -------------------
(Dollars in Thousands)
$ %
- -----------------------------
<FN>
(1) The figures are summations or weighted averages of the Receivables
transferred as of the Cutoff Date.
(2) Percentages may not add to 100% because of rounding.
Approximately ___% of the aggregate principal balance of the Receivables,
constituting ___% of the number of such Receivables, as of the Cutoff Date
represented financing of new vehicles and the remainder represented
financing of used vehicles.
<PAGE>
<CAPTION>
Geographic Distribution of the Receivables
Pool as of the Initial Cutoff Date(1)
Percent of
Aggregate
Loan
State Value
===== ----------
___________________ _.__%
___________________ _.__%
___________________ _.__%
________________________________
<FN>
(1) No more than __% of the aggregate principal balance of the Receivables
as of the Cutoff Date were originated by Motor Vehicle Loans made to
Obligors that currently reside in any state other than ________________
or __________________.
</TABLE>
Delinquencies and Net Losses
Set forth below is certain information concerning the historical
experience of the Originators pertaining to Motor Vehicle Loans. There can
be no assurance that the delinquency and net loss experience on the
Receivables of the Trust will be comparable to that set forth below.
<PAGE>
<TABLE>
<CAPTION>
Delinquency Experience(1)
At December 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
--------------- --------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Dollar Percent Dollar Percent Dollar Percent Dollar Percent Dollar Percent
------- ------- ------- ------- ------ ------- ------ ------- ------ -------
(Dollars in Millions)
Amount of Motor Vehicle
Loans Outstanding.....
Period of Delinquency:
31-60 days..........
60-91 days..........
over 90 days........
Repossessions.........
Total.................
Delinquencies...........
- ----------------------
<FN>
(1) All amounts and percentages are based on the gross amount scheduled to
be paid on each Motor Vehicle Loan, including unearned finance and other
charges.
<PAGE>
<CAPTION>
Historical Net Loss Experience
Year Ended December 31,
------------------------------------------
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
(Dollars in Thousands)
Principal Amount of Motor Vehicle Loans
Outstanding(1).......................................
Average Principal Amount of Motor Vehicle
Loans Outstanding....................................
Number of Motor Vehicle Loans Outstanding............
Average Number of Motor Vehicle Loans Outstanding....
Gross Charge-Offs....................................
Recoveries...........................................
Net Losses(2)........................................
Net Losses as a Percent of Principal Amount
Outstanding(2).......................................
Net Losses as a Percent of Average Principal Amount
Outstanding(2).......................................
<FN>
(1) Amount represents net principal amounts of Motor Vehicle Loans
outstanding.
(2) Amount represents the aggregate balance of all Motor Vehicle Loans
which are determined to be uncollectible in the period, less any
recoveries on Motor Vehicle Loans charged-off in the period of any
prior period.
</TABLE>
Delinquencies and net charge-offs are affected by a number of
social, economic and other factors that may affect an Obligor's ability or
willingness to pay, such as the amount or types of indebtedness incurred by
such Obligor in addition to the Receivable on which such Obligor is
indebted, 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 SELLER, THE SERVICER AND NORWEST CORPORATION
Information regarding the Seller is set forth under "The Seller"
in the Prospectus and information regarding the Servicer is set forth under
"The Bank" in the Prospectus. Norwest Corporation operates through
subsidiaries engaged in banking and a variety of related businesses. Norwest
Corporation provides retail, commercial and corporate banking services to
customers through banks in 16 states and provides additional financial
services to its customers through subsidiaries engaged in various businesses,
principally mortgage banking, consumer finance, equipment leasing,
agricultural finance, commercial finance, securities brokerage and investment
banking, insurance agency services, computer and data processing services,
trust services, mortgage backed securities servicing, and venture capital
investment. As of March 31, 1996, Norwest Corporation had consolidated total
assets of $73.9 billion, total deposits of $43.1 billion, and total
stockholders' equity of $5.4 billion. Based on total assets as of March 31,
1996, Norwest Corporation was the eleventh largest commercial banking
organization in the United States. [Norwest Corporation has agreed to
guaranty the performance by the Seller of its repurchase obligation with
respect to Receivables for which there has been an uncured breach of any
representation or warranty that materially and adversely affects the
interests of the Trust in such Receivables. See "Description of the Transfer
and Servicing Agreements--Sale and Assignment of Receivables" in the
Prospectus.]
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Information regarding certain maturity and prepayment
considerations with respect to the Securities is set forth under "Weighted
Average Life of Securities" in the Prospectus. No principal payments will
be made on the Class A-2 Notes until all Class A-1 Notes have been paid in
full. In addition, no principal payments on the Certificates will be made
until all of the Notes have been paid in full. See "Description of the
Notes--Payments of Principal" and "Description of the
Certificates--Distributions of Principal Payments." As the rate of payment
of principal of each class of Notes and the Certificates depends primarily
on the rate of payment (including prepayments) of the principal balance of
the Receivables, final payment of any class of the Notes and the final
distribution in respect of the Certificates could occur significantly
earlier than the respective Final Scheduled Distribution Dates. It is
expected that final payment of the Notes and the final distribution in
respect of the Certificates will occur on or prior to the applicable Final
Scheduled Distribution Date. However, if sufficient funds are not
available to pay the Notes or the Certificates in full on or prior to the
applicable Final Scheduled Distribution Date, final payment of the Notes
and the final distribution in respect of the Certificates could occur later
than such date.
Loan extensions, deferrals or modifications may have the effect
of increasing the weighted average life of the Notes and Certificates.
Consistent with its customary servicing practices and procedures, the
Servicer may, in its discretion and on a case-by-case basis, arrange with
Obligors to extend or modify the terms of Receivables. Any such extension
or modification will have the effect of extending the weighted average life
of the Certificates. However, the Servicer will not be permitted to grant
any such extension or modification if as a result the final scheduled
payment on a Receivable would fall after the Final Scheduled Maturity Date,
unless the Servicer repurchases such Receivable. Securityholders will bear
the risk of being able to reinvest principal payments on the Securities at
yields at least equal to the yields on their respective Securities.
Prepayments on motor vehicle receivables can be measured relative
to a prepayment standard or model. The model used in this Prospectus
Supplement, the Absolute Prepayment Model ("ABS"), represents an assumed
rate of prepayment each month relative to the original number of
receivables in a pool of receivables. ABS further assumes that all the
receivables are the same size and amortize at the same rate and that each
receivable in each month of its life will either be paid as scheduled or be
prepaid in full. For example, in a pool of receivables originally
containing 10,000 receivables, a 1% ABS rate means that 100 receivables
prepay each month. ABS does not purport to be an historical description of
prepayment experience or a prediction of the anticipated rate of prepayment
of any pool of receivables, including the Receivables.
As the rate of payment of principal with respect of the Securities
will depend on the rate of payment (including prepayments) of the principal
balance of the Receivables, final payment of any class of Notes could occur
significantly earlier than the Class A-1 or Class A-2 Final Scheduled
Distribution Date, as applicable. The final distribution in respect of the
Certificates also could occur prior to the Certificate Final Scheduled
Distribution Date. Reinvestment risk associated with early payment of the
Notes and the Certificates will be borne exclusively by the Noteholders and
the Certificateholders, respectively.
The table captioned "Percent of Initial Note Principal Balance or
Initial Certificate Balance at Various ABS Percentages" (the "ABS Table")
has been prepared on the basis of the characteristics of the Receivables.
The ABS Table assumes that (a) the Receivables prepay in full at the
specified constant percentage of ABS monthly, with no defaults, losses or
repurchases, (b) each scheduled monthly payment on the Receivables is made
on the last day of each month and each month has 30 days, (c) payments on
the Notes and distributions on the Certificates are made on each
Distribution Date (and each such date is assumed to be the 15th day of each
applicable month), (d) the balance in the Reserve Account on each
Distribution Date is equal to the Specified Reserve Account Balance, and
(e) the Seller or Servicer does not exercise its option to purchase the
Receivables. The pool has an assumed cutoff date of the Cutoff Date. The
ABS Table indicates the projected weighted average life of each class of Notes
and the Certificates and sets forth the percent of the initial principal
amount of each class of Notes and the percent of the initial Certificate
Balance that is projected to be outstanding after each of the Distribution
Dates shown at various constant ABS percentages.
The actual characteristics and performance of the Receivables
will differ from the assumptions used in constructing the ABS Table. The
assumptions used are hypothetical and have been provided only to give a
general sense of how the principal cash flows might behave under varying
prepayment scenarios. For example, it is very unlikely that the
Receivables will prepay at a constant level of ABS until maturity or that
all of the Receivables will prepay at the same level of ABS. Moreover, the
diverse terms of Receivables within each of the four hypothetical pools
could produce slower or faster principal distributions than indicated in
the ABS Table at the various constant percentages of ABS specified, even if
the original and remaining terms to maturity of the Receivables are as
assumed. Any difference between such assumptions and the actual
characteristics and performance of the Receivables, or actual prepayment
experience, will affect the percentages of initial balances outstanding
over time and the weighted average lives of each class of Notes and the
Certificates.
<PAGE>
<TABLE>
<CAPTION>
Percent of Initial Note Principal Balance at Various ABS Percentages
Class A-1 Notes Class A-2 Notes
------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Distribution Date 0.5% 1.0% 1.2% 1.5% 0.5% 1.0% 1.2% 1.5%
- ------------------- ---- ---- ---- ---- ---- ---- ---- ----
Closing Date......
April 1996........
May 1996..........
June 1996.........
July 1996.........
August 1996.......
September 1996....
October 1996......
November 1996.....
December 1996.....
January 1997......
February 1997.....
March 1997........
April 1997........
Weighted Average Life
(years)(1)......
_______________________
<FN>
(1) The weighted average life of a Class A-1 Note or Class A-2 Note is
determined by (a) multiplying the amount of each principal payment of
such Note by the number of years from the date of the issuance of
such Note to the related Distribution Date, (b) adding the results
and (c) dividing the sum by the related initial principal amount of
such Note.
<PAGE>
<CAPTION>
The ABS Table has been prepared based on the assumptions described above
(including the assumptions regarding the characteristics and performance of
the Receivables which will differ from the actual characteristics and
performance thereof) and should be read in conjunction therewith.
Percent of Initial Certificate Balance at Various ABS Percentages
Certificates
----------------------------
Distribution Date 0.5% 1.0% 1.2% 1.5%
- ----------------- ---- ---- ---- ----
Closing Date........................
April 1996..........................
May 1996............................
June 1996...........................
July 1996...........................
August 1996.........................
September 1996......................
October 1996........................
November 1996.......................
December 1996.......................
January 1997........................
February 1997.......................
March 1997..........................
April 1997..........................
Weighted Average Life (years)(1)....
_________________________
<FN>
(1) The weighted average life of a Certificate is determined by (a)
multiplying the amount of each distribution in respect of the
Certificate Balance of such Certificate by the number of years
from the date of the issuance of such Certificate to the related
Distribution Date, (b) adding the results and (c) dividing the
sum by the original Certificate Balance of such Certificate.
</TABLE>
<PAGE>
The ABS Tables have been prepared based on the assumptions described above
(including the assumptions regarding the characteristics and performance of
the Receivables which will differ from the actual characteristics and
performance thereof) and should be read in conjunction therewith.
[SENSITIVITY OF THE CLASS ___ NOTES TO PREPAYMENTS
[Describe method of calculating principal and interest payable on the
Class ___ Notes, including setting forth notional balance for each
[Distribution] [Payment] Date, if applicable. Set forth in tabular form
relationship between yield to maturity of the Class ___ Notes and assumed
prepayment speeds. State assumptions, including as to purchase price of the
Class ___ Notes, if applicable, used in calculating the data set forth in the
table.]
DESCRIPTION OF THE NOTES
General
The Notes will be issued pursuant to the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. A copy
of the Indenture will be filed with the Commission following the issuance
of the Securities. The following summary describes certain terms of the
Notes and the Indenture. The summary describes the material terms of the
Notes and the Indenture, but it does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, all the
provisions of the Notes and the Indenture. Where particular provisions or
terms used in the Indenture are referred to, the actual provisions
(including definitions of terms) are incorporated by reference as part of
such summary. The following summary supplements the description of the
general terms and provisions of the Notes of any given series and the
related Indenture set forth in the Prospectus, to which description
reference is hereby made. _____________________ will be the Indenture
Trustee under the Indenture. The address of the Indenture Trustee at which
information regarding the Trust and Notes may be obtained in _______________.
Payments of Interest
Each class of the Notes will constitute Fixed Rate Securities,
as such term is defined under "Certain Information Regarding the
Securities--Fixed Rate Securities" in the Prospectus. Interest on the
principal balances of the classes of the Notes will accrue at their
respective per annum Interest Rates and will be payable to the Noteholders
monthly on each Distribution Date, commencing ______, 199__. Interest on
the outstanding principal amount of the Notes will accrue at the applicable
Interest Rate for the applicable Interest Accrual Period. Interest
distributions due for any Distribution Date but not distributed on such
Distribution Date will be due on the next Distribution Date increased by an
amount equal to interest on such amount at the applicable Interest Rate (to
the extent lawful). Interest on the Notes will be calculated on the basis
of a 360-day year consisting of twelve 30-day months. Interest payments on
the Notes will generally be derived from the Total Distribution Amount
remaining after the payment of the Servicing Fee. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account."
<PAGE>
Interest payments to both classes of Noteholders will have the
same priority. Under certain circumstances, the amount available for
interest payments could be less than the amount of interest payable on the
Notes on any Distribution Date, in which case each class of Noteholders
will receive their ratable share (based upon the aggregate amount of
interest due to such class of Noteholders) of the aggregate amount
available to be distributed in respect of interest on the Notes.
Payments of Principal
Principal payments will be made to the Noteholders on each
Distribution Date in an amount generally equal to the Noteholders'
Principal Distributable Amount. Principal payments on the Notes will
generally be derived from the Total Distribution Amount remaining after the
payment of the Servicing Fee and the Noteholders' Interest Distributable
Amount. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account."
On the Business Day immediately preceding each Distribution
Date (a "Determination Date"), the Indenture Trustee shall determine the
amount in the Collection Account allocable to interest and the amount
allocable to principal.
On each Distribution Date, principal payments on the Notes
will be applied in the following order of priority: (a) to the principal
balance of the Class A-1 Notes until the principal balance of the Class A-1
Notes is reduced to zero; and (b) to the principal balance of the Class A-2
Notes until the principal balance of the Class A-2 Notes is reduced to
zero. The principal balance of the Class A-1 Notes, to the extent not
previously paid, will be due on the Class A-1 Final Scheduled Distribution
Date and the principal balance of the Class A-2 Notes, to the extent not
previously paid, will be due on the Class A-2 Final Scheduled Distribution
Date. The actual date on which the aggregate outstanding principal amount
of either class of Notes is paid may be earlier than the respective final
scheduled Distribution Dates set forth above based on a variety of factors,
including those described under "Weighted Average Life of the Securities"
herein and in the Prospectus.
Optional Redemption
On any Distribution Date after the Class A-1 Notes have been
paid in full, the Class A-2 Notes will be redeemed in whole, but not in
part, if the Seller or Servicer exercises its option to purchase the
Receivables. The Seller or Servicer may purchase the Receivables when the
Pool Balance shall have declined to 5% or less of the Original Pool Balance,
as described in the Prospectus under "Description of the Transfer and
Servicing Agreements--Termination". The redemption price will be equal to the
unpaid principal amount of the Class A-2 Notes plus accrued and unpaid
interest thereon.
DESCRIPTION OF THE CERTIFICATES
General
The Certificates will be issued pursuant to the Trust Agreement,
a form of which has been filed as an exhibit to the Registration Statement.
A copy of the Trust Agreement will be filed with the Commission following
the issuance of the Securities. The following summary describes certain
terms of the Certificates and the Trust Agreement. The summary describes
the material terms of the Certificates and the Trust Agreement, but it does
not purport to be complete and is subject to, and qualified in its entirety
by reference to, all the provisions of the Certificates and the Trust
Agreement. The following summary supplements the description of the
general terms and provisions of the Certificates of any given series and
the related Trust Agreement set forth in the Prospectus, to which
description reference is hereby made.
Distribution of Interest Income
On each Distribution Date, commencing _______, 199__, the
Certificateholders will be entitled to distributions in an amount equal to
the amount of interest that would accrue on the Certificate Balance at the
Certificate Rate. The Certificates will constitute Fixed Rate Securities,
as such term is defined under "Certain Information Regarding the
Securities--Fixed Rate Securities" in the Prospectus. Interest in respect
of a Distribution Date will accrue from the Closing Date (in the case of
the First Distribution Date) and thereafter, from the [15th] day of the
month preceding the month of the Distribution Date to and including the ___
day of the month of such Distribution Date. Interest distributions due for
any Distribution Date but not distributed on such Distribution Date will be
due on the next Distribution Date increased by an amount equal to interest
on such amount at the Certificate Rate (to the extent lawful). Interest
distributions with respect to the Certificates will generally be funded
from the portion of the Total Distribution Amount and the funds in the
Reserve Account remaining after the distribution of the Servicing Fee and
the Noteholders' Interest Distributable Amount. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account."
Distributions of Principal Payments
Certificateholders will be entitled to distributions of
principal on each Distribution Date, commencing with the Distribution Date
on which the Notes are paid in full, in an amount generally equal to the
Principal Distribution Amount (less on the Distribution Date on which the
Notes are paid in full, the portion thereof payable on the Notes).
Distributions with respect to principal payments will generally be funded
from the portion of the Total Distribution Amount remaining after the
distribution of the Servicing Fee, the Noteholders' Distributable Amount
(on the Distribution Date on which the Notes are paid in full) and the
Certificateholders' Interest Distributable Amount. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account".
Optional Prepayment
If the Seller or Servicer exercises its option to purchase the
Receivables when the Pool Balance declines to 5% or less of the Original Pool
Balance, the Seller or Servicer may purchase all remaining Trust Property on
any Distribution Date occurring in a subsequent Collection Period at a purchase
price equal to the aggregate of the Purchase Amounts of the remaining
Receivables (other than Defaulted Receivables), which purchases would result
in a prepayment of the Certificates. The proceeds from any such purchase
would first be applied to any unpaid principal amount on the Class A-2
Notes and accrued interest thereon and then to the Certificates and accrued
interest thereon. See "Description of the Transfer and Servicing
Agreements--Termination" in the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Sale and
Servicing Agreement and the Trust Agreement (collectively, the "Transfer
and Servicing Agreements"). Forms of the Transfer and Servicing Agreements
have been filed as exhibits to the Registration Statement. A copy of the
Sale and Servicing Agreement will be filed with the Commission following
the issuance of the Securities. The summary describes the material terms
of the Transfer and Servicing Agreements, but it does not purport to be
complete and is subject to, and qualified in its entirety by reference to,
all the provisions of the Transfer and Servicing Agreements. The following
summary supplements the description of the general terms and provisions of
the Transfer and Servicing Agreements set forth in the Prospectus, to which
description reference is hereby made.
Accounts
Accounts referred to under "Description of the Transfer and
Servicing Agreements--Accounts" in the Prospectus, as well as the Reserve
Account, will be established by the Servicer and maintained in the name of
the Indenture Trustee on behalf of the Noteholders and the
Certificateholders. Amounts held from time to time in the Reserve Account
will be held for the benefit of Noteholders and Certificateholders. Funds
on deposit in the Reserve Account will be invested in Eligible Investments
selected by the Seller and, if permitted by the Rating Agencies, funds on
deposit in the Reserve Account may be invested in Eligible Investments that
mature later than the next Deposit Date. All investment earnings on funds
deposited in the Trust Accounts, net of losses and investment expenses,
will be distributed to the Servicer and will not be treated as Collections
on the Receivables or otherwise be available for Noteholders or
Certificateholders. Upon any distribution to the Servicer of amounts from
the Reserve Account, the Securityholders will not have any rights in, or
claims to, such amounts.
On each Deposit Date, prior to making any of the distributions
described above in "Deposits to the Distribution Accounts", Servicer shall
be reimbursed for all Outstanding Advances with respect to prior
Distribution Dates, to the extent of the Interest Collections for such
Distribution Date and, to the extent such Interest Collections are
insufficient, to the extent of the funds in the Reserve Account. On or
before each Distribution Date, funds in the amount of the Reserve Account
Transfer Amount for such Distribution Date will be withdrawn from the
Reserve Account and deposited in the Collection Account.
On each Distribution Date, the amount available in the Reserve
Account (the "Available Reserve Amount") will equal the lesser of (a) the
amount on deposit in the Reserve Account (exclusive of investment earnings)
and (b) the Specified Reserve Account Balance.
On each Deposit Date, the Trustee will withdraw funds from the
Reserve Account (a) to the extent required to make reimbursements of
Outstanding Advances (after application of Interest Collections for that
purpose) and (b) The Reserve Account Transfer Amount. Such excess may
result from, among other things, Receivables becoming Defaulted Receivables
or the failure by the Servicer to make any remittance required to be made
under the Agreement. The aggregate amount to be withdrawn from the Reserve
Account on any Deposit Date will not exceed the Available Reserve Amount
with respect to the related Distribution Date. The Trustee will deposit the
proceeds of such withdrawal into the Collection Account on or before the
Distribution Date with respect to which such withdrawal was made.
"Specified Reserve Account Balance" means, for (a) any
Distribution Date prior to the Distribution Date on which the outstanding
amount of the Class A-1 Notes has been paid in full, $__________ and (b)
any Distribution Date on or after the Distribution Date on which the
outstanding amount of the Class A-1 Notes has been paid in full the greater
of (i) ____% of the sum of the aggregate outstanding principal amount of
each class of Notes plus the outstanding Certificate Balance on such
Distribution Date (after giving effect to all payments on the Notes and
distributions with respect to the Certificates to be made on such
Distribution Date); or (ii) ___% of the sum of the aggregate initial
principal of the Notes plus the initial Certificate Balance except that, if
on any Distribution Date (x) the Average Net Loss Ratio exceeds ___% or (y)
the Average Delinquency Ratio for the three preceding Collection Periods
exceeds ___%, then the Specified Reserve Account Balance shall be an amount
equal to ___% of the sum of the aggregate outstanding principal amount of
each class of Notes and the aggregate outstanding principal amount of each
class of Notes and the aggregate outstanding Certificate Balance on such
Distribution Date (after giving effect to all payments on the Notes and
distributions with respect to the Certificates to be made on such
Distribution Date). The Specified Reserve Account Balance may be reduced
to a lesser amount as determined by the Seller so long as such reduction
does not cause either Rating Agency to withdraw or downgrade its rating of
the Certificates. The time necessary for the Reserve Account to reach and
maintain the Specified Reserve Account Balance at any time after the
Closing Date will be affected by the delinquency, credit loss, repossession
and prepayment experience of the Receivables and, therefore, cannot be
accurately predicted. Amounts on deposit in the Reserve Account will be
released to the Servicer on each Distribution Date to the extent that the
amount on deposit in the Reserve Account would exceed the Specified Reserve
Account Balance.
"Aggregate Net Losses" means, for any Collection
Period, the aggregate amount allocable to principal of all Receivables
newly designated during such Collection Period as Defaulted
Receivables minus all Liquidation Proceeds collected during such
Collection Period with respect to all Defaulted Receivables (whether
or not newly designated as such).
"Average Delinquency Ratio" means, as of any
Distribution Date, the average of the Delinquency Ratios for the
preceding three Collection Periods.
"Average Net Loss Ratio" means, as of any
Distribution Date, the average of the Net Loss Ratios for the
preceding three Collection Periods.
"Delinquency Ratio" means, for any Collection
Period, the ratio, expressed as a percentage, of (a) the principal
amount of all outstanding Receivables (other than Purchased
Receivables and Defaulted Receivables) which are ___ or more days
delinquent as of the end of such Collection Period, determined in
accordance with Servicer's customary practices, divided by (b) the
Pool Balance as of the last day of such Collection Period.
"Liquidation Proceeds" means, with respect to any
Receivable that has become a Defaulted Receivable, (a) insurance
proceeds received by the Servicer, with respect to insurance policies
relating to the Financed Vehicles or the Obligors any proceeds from
lender's single interest insurance policies to the extent not included
in collections distributable to Securityholders, (b) amounts received
by the Servicer in connection with such Defaulted Receivable pursuant
to the exercise of rights under the related Motor Vehicle Loan, and
(c) the monies collected by the Servicer (from whatever source,
including, but not limited to proceeds of a sale of a Financed Vehicle
or deficiency balance recovered after the charge-off of the related
Receivable) on such Defaulted Receivable, net of any expenses incurred
by the Servicer in connection therewith and any payments required by
law to be remitted to the Obligor.
"Net Loss Ratio" means, for any Collection Period, an amount,
expressed as a percentage, equal to (a) the Aggregate Net Losses for
such Collection Period, divided by (b) the average of the Pool
Balances on each of the first day of such Collection Period and the
last day of such Collection Period.
"Reserve Account Transfer Amount" means, on any
Distribution Date, an amount equal to the lesser of (a) the amount of
cash or other immediately available funds on deposit in the Reserve
Account on such Distribution Date (before giving effect to any
withdrawals therefrom relating to such Distribution Date) or (b) the
amount, if any, by which (i) the sum of the Servicing Fee for the
related Collection Period and all accrued and unpaid Servicing Fees
for prior Collection Periods, the Noteholders' Interest Distributable
Amount, the Certificateholders' Interest Distributable Amount, the
Noteholders' Principal Distributable Amount and the
Certificateholders' Principal Distributable Amount for such
Distribution Date exceeds (ii) the sum of the Available Interest and
the Available Principal for such Distribution Date.
If funds in the Reserve Account are reduced to zero, the
Securityholders will bear the credit and other risks associated with
ownership of the Receivables. In such a case, the amount available for
distribution may be less than that described below, and the
Certificateholders may experience delays or suffer losses as a result,
among other things, of defaults or delinquencies by the Obligors or
previous extensions made by the Servicer.
Advances
On or prior to each Deposit Date, the Servicer will advance any
Interest Shortfall with respect to the related Distribution Date by
depositing the amount of such Interest Shortfall into the Collection
Account. The Servicer will be obligated to make such an Advance except to
the extent that the Servicer reasonably determines that the Advance is
unlikely to be recoverable as set forth below.
On each Distribution Date, prior to making any of the
distributions set forth in "--Distributions", the Servicer shall be
reimbursed for all Outstanding Advances with respect to prior Distribution
Dates, to the extent of the Interest Collections for such Distribution Date
and, to the extent such Interest Collections are insufficient, to the
extent of the funds in the Reserve Account. If it is acceptable to each
Rating Agency without a reduction in the rating of the Certificates, the
Outstanding Advances at the option of the Servicer may be paid at or as
soon as possible after the beginning of the related Collection Period out
of the first collections of interest received on the Receivables for such
Collection Period.
"APR" means, with respect to a Receivable, the rate
per annum of interest charged on the outstanding principal balance of
such Receivable.
"Defaulted Receivable" means, with respect to any
Collection Period, a Receivable (other than a Purchased Receivable)
which the Servicer has determined to charge off during such Collection
Period in accordance with its customary servicing practices; provided,
however, that any Receivable which the Seller or Servicer is obligated
to repurchase or purchase shall be deemed to have become a Defaulted
Receivable during a Collection Period if the Seller or Servicer fails
to deposit the Purchase Amount on the related Deposit Date when due.
"Expected Interest" means, with respect to any Distribution Date,
an amount equal to the sum of (a) with respect to all Simple Interest
Receivables, the product of (i) one-twelfth of the Weighted Average APR
for such Receivables for the related Collection Period multiplied by
(b) an amount equal to the aggregate Principal Balance of such
Receivables as of the first day of the related Collection Period minus
the sum of the Principal Balances of the Non-Advance Receivables that
are Simple Interest Receivables for such Distribution Date plus (b)
with respect to all Precomputed Receivables, that portion of the
collections on such Receivables received during the related Collection
Period that is allocable to interest in accordance with the Servicer's
customary procedures.
"Interest Collections" for a Distribution Date shall
mean the sum of the following amounts with respect to the related
Collection Period: (a) that portion of the Collections on the
Receivables received during the related Collection Period that is
allocable to interest in accordance with the Servicer's customary
procedures; (b) all Liquidation Proceeds received during such
Collection Period; and (c) all Purchase Amounts, to the extent
attributable to accrued interest, of all Receivables that are
repurchased by the Seller or purchased by the Servicer under an
obligation which arose during the related Collection Period.
"Interest Collections" for any Distribution Date shall exclude all
payments and proceeds of any Receivables the Purchase Amount of which
has been distributed on a prior Distribution Date.
"Interest Shortfall" means, with respect to any
Distribution Date, the lesser of (a) the amount (if any) by which the
Expected Interest for such Distribution Date exceeds the Net Interest
Collections for such Distribution Date and (b) the amount (if any) by
which the sum of the Servicing Fee for the related Collection Period
and all accrued and unpaid Servicing Fees for prior Collection
Periods, the Noteholders' Interest Distributable Amount and the
Certificateholders' Interest Distributable for such Distribution Date
exceeds the Net Interest Collections for such Distribution Date.
"Net Interest Collections" means, with respect to any
Distribution Date, the greater of (a) zero and (b) Interest
Collections for such Distribution Date minus the Outstanding Advances
as of such Distribution Date.
"Non-Advance Receivables" means, with respect to any
Distribution Date, any Receivables which became Defaulted Receivables
during the related Collection Period or which the Servicer, in its
sole discretion, believes are likely to become Defaulted Receivables.
"Outstanding Advances" means, as of any date, all Advances
made by the Servicer with respect to prior Distribution Dates which
have not been reimbursed.
"Purchase Amount" means the amount, as of the close of
business on the last day of a Collection Period, required to prepay in
full the respective Receivable under the terms thereof including
interest at the APR to the end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of
the close of business on the last day of a Collection Period by the
Servicer or repurchased by the Seller pursuant to the Sale and
Servicing Agreement.
"Weighted Average APR" means, with respect to any Simple
Interest Receivables or any Precomputed Receivables during any
Collection Period, the weighted average of the APR of such Receivables
(excluding Non-Advance Receivables), weighted based on the Principal
Balance of each such Receivable as of the first day of such Collection
Period.
Servicing Compensation and Payment of Expenses
The Servicing Fee Rate shall be 1.0% per annum, calculated on
the basis of a 360-day year consisting of twelve 30-day months. The
Servicing Fee, with respect to any Distribution Date, will be an amount
equal to the product of (a) one-twelfth of the Servicing Fee Rate,
multiplied by (b) the Pool Balance as of the first day of the preceding
Collection Period. The Servicing Fee in respect of a Collection Period
(together with any portion of the Servicing Fee that remains unpaid from
prior Distribution Dates) may be paid at the beginning of such Collection
Period out of collections for such Collection Period. See "Description of
the Transfer and Servicing Agreements--Servicing Compensation and Payment of
Expenses" in the Prospectus.
The Servicer will also collect and retain any late fees,
extension fees, prepayment charges and certain non-sufficient funds charges
and other administrative fees or similar charges (the "Supplemental
Servicing Fee") allowed by applicable law with respect to the Receivables.
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. See "Description of the Transfer and
Servicing Agreements--Servicing Compensation and Payment of Expenses" in the
Prospectus.
Distributions
Deposits to Collection Account. On or before each Distribution
Date, the Servicer will cause all collections and other amounts
constituting the Total Distribution Amount to be deposited into the
Collection Account.
"Available Interest" means, with respect to any
Distribution Date, the excess of (a) the sum of (i) Interest
Collections for such Distribution Date and (ii) all Advances made by
Servicer with respect to such Distribution Date, over (b) the amount
of Outstanding Advances to be reimbursed on or with respect to such
Distribution Date.
"Available Principal" for a Distribution Date means the sum
of the following amounts with respect to the preceding Collection
Period: (a) that portion of all Collections received during such
Collection Period and allocable to principal in accordance with
Servicer's customary servicing procedures; and (b) to the extent
attributable to principal, the Purchase Amount received with respect
to each Receivable repurchased by Seller or purchased by Servicer
under an obligation which arose during the related Collection Period.
"Available Principal" on any Distribution Date shall exclude all
payments and proceeds of any Receivables the Purchase Amount of which
has been distributed on a prior Distribution Date.
"Certificate Balance" equals, initially, $___________ and,
thereafter, equals the initial Certificate Balance, reduced by all
amounts allocable to principal previously distributed to
Certificateholders.
"Certificateholders' Interest Carryover Shortfall" means,
with respect to any Distribution Date, the excess of the
Certificateholders' Monthly Interest Distributable Amount for the
preceding Distribution Date and any outstanding Certificateholders'
Interest Carryover Shortfall on such preceding Distribution Date, over
the amount in respect of interest that is actually deposited in the
Certificate Distribution Account on such preceding Distribution Date,
plus interest on such excess, to the extent permitted by law, at the
Certificate Rate from and including such preceding Distribution Date
to but excluding the current Distribution Date.
"Certificateholders' Interest Distributable Amount" means,
for any Distribution Date, the sum of the Certificateholders' Monthly
Interest Distributable Amount for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such Distribution
Date.
"Certificateholders' Monthly Interest Distributable Amount"
means, for any Distribution Date, the amount of interest accrued on
the Certificates at the Certificate Rate during the related Interest
Period (calculated on the basis of a 360-day year and twelve 30-day
months).
"Certificateholders' Percentage" means 100% minus the
Noteholders' Percentage.
"Certificateholders' Principal Distributable Amount" means,
for any Distribution Date, the sum of the Certificateholders' Monthly
Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of
the preceding Distribution Date; provided that the Certificateholders'
Principal Distributable Amount shall not exceed the Certificate
Balance. In addition, on the Certificate Final Scheduled Distribution
Date, the principal required to be distributed to Certificateholders
will include the lesser of (a) any payments of principal due and
remaining unpaid on each Receivable owned by Issuer as of ___________
or (b) the portion of the amount that is necessary (after giving
effect to the other amounts to be deposited in the Certificate
Distribution Account on such Distribution Date and allocable to
principal) to reduce the Certificate Balance to zero, in either case
after giving effect to any required distribution of the Noteholders'
Principal Distributable Amount to the Note Distribution Account. In
addition, on any Distribution Date on which, after giving effect to
all distributions to Servicer, the Noteholders and the
Certificateholders on such Distribution Date, (i) the outstanding
principal balance of the Notes is zero and (ii) the amount on deposit
in the Reserve Account is equal to or greater than the Certificate
Balance, Certificateholders' Principal Distributable Amount shall
include an amount equal to such Certificate Balance.
"Certificateholder's Monthly Principal Distributable Amount"
means, for any Distribution Date, the Certificateholders' Percentage
of the Principal Distribution Amount or, for any Distribution Date on
or after the Distribution Date on which the outstanding principal
balance of the Class A-2 Notes is reduced to zero, 100% of the
Principal Distribution Amount (less any amount required on the first
such Distribution Date to reduce the outstanding principal balance of
the Class A-2 Notes to zero, which shall be deposited into the Note
Distribution Account).
"Certificateholders' Principal Carryover Shortfall" means,
as of the close of any Distribution Date, the excess of the
Certificateholders' Monthly Principal Distributable Amount and any
outstanding Certificateholders' Principal Carryover Shortfall from the
preceding Distribution Date, over the amount in respect of principal
that is actually deposited in the Certificate Distribution Account.
"Principal Distribution Amount" means, for any Distribution
Date, the sum of (a) the Available Principal for such Distribution
Date, and (b) the amount of Realized Losses for the related Collection
Period.
"Realized Losses" means, for any Collection Period, the
aggregate principal balances of any Receivables that became Defaulted
Receivables during such Collection Period.
"Total Distribution Amount" means, for each Distribution Date,
the sum of (a) the Available Interest, (b) the Available Principal and
(c) the Reserve Account Transfer Amount, in each case in respect of
such Distribution Date.
Deposits to the Distribution Accounts. On each Distribution Date,
after making the reimbursements to Servicer of Outstanding Advances,
Servicer shall instruct Indenture Trustee or, in the event that the
Collection Account is maintained with an institution other than Indenture
Trustee, instruct and cause such institution (based on the information
contained in the Servicer's Report delivered on the related Determination
Date) to make, and Indenture Trustee or such other institution shall make,
the following deposits and distributions from the Collection Account for
deposit in the applicable account by 11:00 a.m. (New York time), to the
extent of the Total Distribution Amount, in the following order of
priority:
(a) to Servicer, from the Total Distribution Amount, the
Servicing Fee for the related Collection Period and all accrued and
unpaid Servicing Fees for prior Collection Periods;
(b) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (a), the
Noteholders' Interest Distributable Amount;
(c) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clause (a) and clause (b), the
Certificateholders' Interest Distributable Amount;
(d) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (a)
through (c), the Noteholders' Principal Distributable Amount;
(e) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (a) through (d), the
Certificateholders' Principal Distributable Amount;
(f) to the Reserve Account until the amount on deposit
in the Reserve Account equals the Specified Reserve Account Balance;
and
(g) to Seller, any amounts remaining.
On each Determination Date (other than the first Determination Date),
the Servicer will provide the Owner Trustee and the Indenture Trustee with
certain information with respect to the Collection Period related to the
prior Distribution Date, including the amount of aggregate collections on
the Receivables, the aggregate amount of Receivables which were written off
and the aggregate Purchase Amount of Receivables to be repurchased by the
Seller or to be purchased by the Servicer.
For purposes hereof, the following terms shall have the following
meanings:
"Noteholders' Distributable Amount" means, with respect
to any Distribution Date, the sum of the Noteholders' Principal
Distributable Amount and the Noteholders' Interest Distributable
Amount.
"Noteholders' Interest Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Noteholders'
Monthly Interest Distributable Amount for the preceding Distribution
Date and any outstanding Noteholders' Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Note Distribution Account
on such preceding Distribution Date, plus interest on the amount of
interest due but not paid to Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the respective Interest Rates
borne by each class of Notes from such preceding Distribution Date
through the current Distribution Date.
"Noteholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders'
Interest Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means,
for any Distribution Date and for each class of Notes, the amount of
interest accrued on such class at its respective Interest Rate during
the related Interest Period (calculated on the basis of a 360-day year
and twelve 30-day months).
"Noteholders' Monthly Principal Distributable Amount" means,
for any Distribution Date, the Noteholders' Percentage of the
Principal Distribution Amount.
"Noteholders' Percentage" means 100% until the point in time
at which Class A-1 Notes and Class A-2 Notes have been paid in full
and zero thereafter.
"Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Noteholders' Monthly
Principal Distributable Amount and any outstanding Noteholders'
Principal Carryover Shortfall from the preceding Distribution Date
over the amount in respect of principal that is actually deposited in
the Note Distribution Account.
"Noteholders' Principal Distributable Amount" means, for any
Distribution Date, the sum of the Noteholder's Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders'
Principal Carryover Shortfall as of the close of the preceding
Distribution Date; provided that the Noteholders' Principal
Distributable Amount shall not exceed the outstanding principal
balance of the Notes. In addition, on the Final Scheduled Distribution
Date of each class of Notes, the principal required to be deposited in
the Note Distribution Account will include the amount necessary (after
giving effect to the other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to
principal) to reduce the outstanding amount of such class of Notes to
zero.
On each Distribution Date, all amounts on deposit in the Note
Distribution Account (other than investment earnings) will be generally
paid in the following order of priority:
(a) to the applicable Noteholders, accrued and unpaid
interest on the outstanding principal balance of the applicable class
of Notes at the applicable Interest Rate;
(b) the Noteholders' Principal Distributable Amount in the
following order of priority:
(i) to the Holders of the Class A-1 Notes in
reduction of principal until the principal balance of the
Class A-1 Notes has been reduced to zero; and
(ii) to the Holders of the Class A-2 Notes in
reduction of principal until the principal balance of the
Class A-2 Notes has been reduced to zero.
On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders in the
following priority:
(a) first, to the Certificateholders, on a pro rata basis,
an amount equal to the Certificateholders' Interest Distributable
Amount; and
(b) second, to the Certificateholders, on a pro rata basis,
an amount equal to the Certificateholders' Principal Distributable
Amount.
Subordination of Certificateholders
The rights of the Certificateholders to receive distributions with
respect to the Receivables generally will be subordinated to the rights of
the Noteholders in the event of defaults and delinquencies on the
Receivables as provided in the Sale and Servicing Agreement. The
protection afforded to the Noteholders through subordination will be
effected both by the preferential right of the Noteholders to receive
current distributions with respect to the Receivables and by the
establishment of the Reserve Account. If on any Distribution Date the
entire Noteholders' Interest Distributable Amount for such Distribution
Date (after giving effect to any amounts withdrawn from the Reserve
Account) is not deposited in the Note Distribution Account, the
Certificateholders will not receive any distributions.
The subordination of the Certificates and the Reserve Account are
intended to enhance the likelihood of receipt by Noteholders of the full
amount of principal and interest due them and to decrease the likelihood
that the Noteholders will experience losses. In addition, the Reserve
Account is intended to enhance the likelihood of receipt by
Certificateholders of the full amount of principal and interest due them
and to decrease the likelihood that the Certificateholders will experience
losses. However, in certain circumstances, the Reserve Account could be
depleted. If the amount required to be withdrawn from the Reserve Account
to cover shortfalls in collections on the Receivables exceeds the amount of
available cash in the Reserve Account, Noteholders or Certificateholders
could incur losses or a temporary shortfall in the amounts distributed to
the Noteholders or the Certificateholders could result, which could, in
turn, increase the average life of the Notes or the Certificates.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Information regarding certain legal aspects of the Receivables is set
forth under "Certain Legal Aspects of the Receivables" in the Prospectus.
LEGAL INVESTMENT
The Class A-1 Notes will be eligible for purchase by money market funds
under paragraph (a)(5) of Rule 2a-7 under the Investment Company Act of
1940, as amended.
ERISA CONSIDERATIONS
The Notes
The Notes may be purchased by an employee benefit plan or an
individual retirement account (a "Plan") subject to ERISA or Section 4975
of the Code. A fiduciary of a Plan must determine that the purchase of a
Note is consistent with its fiduciary duties under ERISA and does not
result in the assets of the Trust being deemed to constitute plan assets or
in a nonexempt prohibited transaction as defined in Section 406 of ERISA or
Section 4975 of the Code. For additional information regarding the likely
treatment of the Notes as debt under ERISA, see "ERISA Considerations" in
the Prospectus.
However, without regard to whether the Notes are treated as an
equity interest for such purposes, the acquisition or holding of Notes by
or on behalf of a Plan could be considered to give rise to a prohibited
transaction if an Affiliate, the Seller, the Trust, the Servicer, the
Indenture Trustee or the Owner Trustee is or becomes a party in interest
under ERISA or disqualified person under the Code with respect to such
Plan. Certain exemptions from the prohibited transaction rules could be
applicable to the purchase and holding of Notes by a Plan depending on the
type and circumstances of the plan fiduciary making the decision to acquire
such Notes. Included among these exemptions, each of which contains
several conditions which must be satisfied before the exemption applies,
are: Prohibited Transaction Class Exemption ("PTCE") 95-60, regarding
investments by insurance company general accounts, PTCE 91-38, regarding
investments by bank collective investment funds; PTCE 90-1, regarding
investments by insurance company separate accounts, and PTCE 84-14,
regarding transactions effected by "qualified professional asset managers".
By its acceptance of a Note, each Noteholder shall be deemed to have
represented and warranted that its purchase and holding of the Note will
not result in a nonexempt prohibited transaction under Section 406(a) of
ERISA or Section 4975 of the Code.
The Certificates
The Certificates may not be acquired (a) with the assets of an
employee benefit plan (as defined in Section 3(3) of ERISA) that is subject
to the provisions of Title I of ERISA, (b) by a plan described in Section
4975(e) (1) of the Code or (c) by any entity whose underlying assets
include plan assets by reason of a plan's investment in the entity or which
uses plan assets to acquire Certificates. By its acceptance of a
Certificate, each Certificateholder will be deemed to have represented and
warranted that it is not subject to the foregoing limitation. In this
regard, purchasers that are insurance companies should consult with their
counsel with respect to the United States Supreme Court case interpreting
the fiduciary responsibility rules of ERISA, John Hancock Mutual Life
Insurance Co. v. Harris Trust and Savings Bank (decided December 13, 1993).
In John Hancock, the Supreme Court ruled that assets held in an insurance
company's general account may be deemed to be "plan assets" for ERISA
purposes under certain circumstances. Prospective purchasers should
determine whether the decision affects their ability to make purchases of
the Certificates. For additional information regarding treatment of the
Certificates under ERISA, see "ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement, the Seller has agreed to cause the Trust to sell to each of the
underwriters listed below (each, an "Underwriter"), and each of the
Underwriters has agreed to purchase, the principal amount of the Securities
set forth opposite its name below. Under the terms and conditions of the
Underwriting Agreement, each of the Underwriters is obligated to take and
pay for all of the Securities if any are taken.
Principal Amount of Principal Amount
Class A-1 Money of Class A-2 Principal Amount
Market Asset- Asset-Backed of Asset-Backed
Backed Notes Notes Certificates
------------------- ---------------- ----------------
_________________ $__________________ $_________________ $_________________
_________________ __________________ _________________ _________________
_________________ __________________ _________________ _________________
Total: $ $ $
================== ================= =================
The Seller has been advised by the Underwriters that they propose
initially to offer the Securities to the public at the prices set forth
herein, and to certain dealers at such prices less the initial concession
not in excess of ____% per Class A-1 Note; _____% per Class A-2 Note; and
_____% per Certificate. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of .__% of the principal amount of the
Securities to certain other dealers. After the initial public offering, the
public offering price and such concessions may be changed.
The Seller does not intend to apply for listing of the Notes or the
Certificates on a national securities exchange, but has been advised by the
Underwriters that they intend to make a market in the Notes and
Certificates. The Underwriters are not obligated, however, to make a
market in the Notes and the Certificates and may discontinue market making
at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes or the Certificates.
The Seller has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
In the ordinary course of their respective businesses, each
Underwriter and its affiliates have engaged and may in the future engage in
commercial banking and investment banking transactions with the Seller.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain legal matters relating to the Notes and the Certificates and
certain federal income tax and other matters will be passed upon for the
Trust by _________, and by Mayer, Brown & Platt, Chicago, Illinois. Mayer,
Brown & Platt may from time to time render legal services to the Seller,
the Servicer and its affiliates. Certain legal matters will be passed upon
for the Underwriters by Mayer, Brown & Platt, Chicago, Illinois.
<PAGE>
INDEX OF DEFINED TERMS
Page
-----
ABS..................................................................S-19
ABS Table............................................................S-19
Acquired Receivables..................................................S-4
Advance...............................................................S-7
Aggregate Net Losses.................................................S-25
APR..................................................................S-26
Available Reserve Amount.............................................S-24
Average Delinquency Ratio............................................S-25
Average Net Loss Ratio...............................................S-25
Basic Documents.......................................................S-11
Business Day..........................................................S-5
Certificate Balance..................................................S-28
Certificate Final Scheduled Distribution Date.........................S-7
Certificate Rate......................................................S-7
Certificateholder's Monthly Principal Distributable Amount...........S-29
Certificateholders....................................................S-6
Certificateholders' Interest Carryover Shortfall.....................S-28
Certificateholders' Interest Distributable Amount....................S-28
Certificateholders' Monthly Interest Distributable Amount............S-28
Certificateholders' Principal Carryover Shortfall....................S-29
Certificateholders' Principal Distributable Amount...................S-28
Certificates..........................................................S-1
Class A-1 Final Scheduled Distribution Date...........................S-5
Class A-1 Interest Rate...............................................S-5
Class A-1 Notes.......................................................S-1
Class A-2 Final Scheduled Distribution Date...........................S-6
Class A-2 Interest Rate...............................................S-5
Class A-2 Notes.......................................................S-1
Closing Date..........................................................S-3
Code..................................................................S-9
Collection Period.....................................................S-5
Commission............................................................S-2
Cutoff Date...........................................................S-4
Defaulted Receivable.................................................S-26
Delinquency Ratio....................................................S-25
Deposit Date......................................................S-7,S-8
Determination Date...................................................S-22
Direct Loans..........................................................S-4
Distribution Date.....................................................S-5
ERISA.................................................................S-9
Expected Interest....................................................S-26
Final Scheduled Maturity Date.........................................S-4
Financed Vehicles.....................................................S-4
Indenture.............................................................S-3
Indenture Trustee.....................................................S-3
Interest Accrual Period...............................................S-5
Interest Collections.................................................S-27
Interest Period.......................................................S-5
Interest Rates........................................................S-5
Interest Shortfall...................................................S-27
Issuer................................................................S-3
Liquidation Proceeds.................................................S-25
Motor Vehicle Loans...................................................S-4
Net Interest Collections.............................................S-27
Net Loss Ratio.......................................................S-26
Non-Advance Receivables..............................................S-27
Noteholders...........................................................S-5
Noteholders' Distributable Amount....................................S-30
Noteholders' Interest Carryover Shortfall............................S-30
Noteholders' Interest Distributable Amount...........................S-30
Noteholders' Monthly Interest Distributable Amount...................S-30
Noteholders' Monthly Principal Distributable Amount..................S-30
Noteholders' Principal Carryover Shortfall...........................S-30
Noteholders' Principal Distributable Amount..........................S-31
Notes.................................................................S-3
Original Pool Balance.................................................S-6
Originators...........................................................S-27
Outstanding Advances.................................................S-27
Owner Trustee.........................................................S-3
Payment Date..........................................................S-5
Plan.................................................................S-32
Pool Balance..........................................................S-4
Principal Balance.....................................................S-4
Prospectus............................................................S-1
Purchase Amount......................................................S-27
Purchased Receivable.................................................S-27
Rating Agencies.......................................................S-10
Realized Losses......................................................S-29
Receivables...........................................................S-1
Receivables Pool.....................................................S-14
Record Date...........................................................S-5
Reserve Account.......................................................S-8
Reserve Account Deposit...............................................S-8
Sale and Servicing Agreement..........................................S-4
Securities............................................................S-3
Securityholders.......................................................S-6
Seller................................................................S-3
Servicer..............................................................S-2
Specified Reserve Account Balance....................................S-25
Supplemental Servicing Fee...........................................S-28
Total Distribution Amount............................................S-29
Transfer and Servicing Agreements....................................S-24
Trust.................................................................S-3
Trust Agreement.......................................................S-3
Underwriter..........................................................S-33
Weighted Average APR.................................................S-27
<PAGE>
==================================== ====================================
No dealer, salesman or other person
has been authorized to give any
information or to make any
representation not contained in this
Prospectus Supplement or the Prospectus
and, if given or made, such information
or representation must not be relied
upon as having been authorized by the
Seller or the Underwriters. This
Prospectus Supplement and the
Prospectus do not constitute an
offer of any securities other than
those to which they relate or an
offer to sell, or a solicitation of
an offer to buy, to any person in
any jurisdiction where such an offer
or solicitation would be unlawful.
Neither the delivery of this
Prospectus Supplement and the $________________________
Prospectus nor any sale made hereunder (Approximate)
shall, under any circumstances,
create any implication that the
information contained herein is correct
as of any time subsequent to their
respective dates.
___________________________
TABLE OF CONTENTS
NORWEST AUTO
Prospectus Supplement RECEIVABLES CORPORATION
(Seller)
Page
-----
Reports to Securityholders.... S-2
Summary of Terms.............. S-3
Risk Factors.................. S-9
The Trust..................... S-11
The Receivables Pool.......... S-11
The Seller, the Servicer
and Norwest Corporation...... S-15
Weighted Average Life of the
Securities................... S-15
Description of the Notes...... S-17
Description of the Certificates S-18
Description of the Transfer
and Servicing Agreements..... S-19
Certain Legal Aspects of the
Receivables.................. S-26
Legal Investment.............. S-26 $__________________
ERISA Considerations.......... S-26 Class A-1
Underwriting.................. S-27 ___% Money Market
Legal Opinions................ S-27 Asset Backed Notes
Index of Defined Terms........ S-28
Prospectus
Page
Available Information.........
Incorporation of Certain
Documents by Reference...... $_________________
Summary of Terms.............. Class A-2 ____%
Risk Factors.................. Asset Backed Notes
The Trusts....................
The Receivables Pools.........
Weighted Average Life of the
Securities..................
Pool Factors and Trading
Information.................
Use of Proceeds...............
The Seller....................
The Bank and Norwest
Corporation................. $________________
Description of the Notes...... ____%
Description of the Asset Backed Certificates
Certificates................
Certain Information Regarding
the Securities.............
Description of the Transfer
and Servicing Agreements....
Certain Legal Aspects of the
Receivables.................
Federal Income Tax =====================
Consequences................
Certain State Tax PROSPECTUS SUPPLEMENT
Consequences................ ______________, 199__
ERISA Considerations..........
Plan of Distribution.......... =====================
Notice to Canadian Residents..
Legal Opinions................
Index of Defined Terms........
Global Clearance, Settlement
and Documentation
Procedures..................
Until 90 days after the date of this
Prospectus Supplement, all dealers
effecting transactions in the Securities
described in this Prospectus
Supplement, whether or not participating
in this distribution, may be required to
deliver this Prospectus Supplement and
the Prospectus. This is in addition to
the obligation of dealers to deliver
this Prospectus Supplement and the
Prospectus when acting as underwriter
and with respect to their unsold
allotments or subscriptions.
====================================== ===================================
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER __, 1996
[Owner Trust Supplement]
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 1996)
[$______________]
Norwest Auto Trust 1996 - A
$______________ Class A-1 ____% Asset Backed Notes
$______________ Class A-2 ____% Asset Backed Notes
$______________ Class A-3 ____% Asset Backed Notes
$______________ Class A-4 ____% Asset Backed Notes
$______________ ____% Asset Backed Certificates
Norwest Auto Receivables Corporation
Seller
Norwest Bank Minnesota, N.A.
Servicer
The Norwest Auto Trust 1996-A (the "Trust") will be governed by a
Trust Agreement, to be dated as of ____________, 1996, between Norwest Auto
Receivables Corporation, as seller (the "Seller") and Wilmington Trust
Company, as Owner Trustee. The Trust will issue $_____________ aggregate
principal amount of Class A-1 ___% Asset Backed Notes (the "Class A-1
Notes"), $____________ aggregate principal amount of Class A-2 ___% Asset
Backed Notes (the "Class A-2 Notes"), $___________ aggregate principal
amount of Class A-3 Asset Backed Notes (the "Class A-3 Notes"), and
$_____________ aggregate principal amount of Class A-4 Asset Backed Notes
(the "Class A-4 Notes" and, together with the Class A-1 Notes, the Class
A-2 Notes and the Class A-3 Notes, the "Notes") pursuant to an Indenture to
be dated as of _____________, 1996, between the Trust and Chase Manhattan
Bank, as Indenture Trustee. The Trust will also issue $______________
aggregate principal amount of ___% Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities").
(continued on following page)
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus supplement and the related 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>
Prospective investors should consider the "Risk Factors" set forth at page S-__
herein and at page ___ in the accompanying Prospectus (the "Prospectus").
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT
BENEFICIAL INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER
NORWEST BANK, NORWEST CORPORATION OR ANY OF THEIR
AFFILIATES. NEITHER THE SECURITIES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, ANY
OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY,
NORWEST AUTO RECEIVABLES CORPORATION, NORWEST
BANK MINNESOTA, N.A., ANY OTHER NORWEST BANK,
NORWEST INVESTMENT SERVICES, INC., NORWEST
CORPORATION OR ANY OF THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Price to Underwriting Proceeds to
Public(1) Discounts the Seller(1)(2)
Per Class A-1 Note % % %
Per Class A-2 Note % % %
Per Class A-3 Note % % %
Per Class A-4 Note % % %
Per Certificate % % %
Total $__________ $__________ $_________
_________________
[FN]
(1) Plus accrued interest, if any, from ___________, 1996.
(2) Before deducting expenses, estimated to be $___________.
The Notes and Certificates are offered by the Underwriters when, as
and if issued 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
Notes and the Certificates will be made in book-entry form only through the
Same Day Funds Settlement System of The Depository Trust Company, or
through Cedel Bank, societe anonyme or the Euroclear System, on or about
__________, 1996.
September __, 1996
<PAGE>
The assets of the Trust will include a pool of retail installment
sale contracts or similar agreements (collectively, the "Receivables"),
payments received thereunder on or after September 1, 1996, security
interests in the motor vehicles financed thereby, rights under Dealer
Agreements, deposit accounts in which collections are held, any proceeds
from claims on insurance policies relating to the Financed Vehicles and the
proceeds of the foregoing. The assets of the Trust will be transferred by
the Seller to the Trust on or prior to the Closing Date. The Notes will be
secured by the assets of the Trust pursuant to the Indenture. Certain
capitalized terms used herein are defined in the "Index of Terms" on page
___ of this Prospectus Supplement or, to the extent not defined herein,
have the meanings assigned to such terms in the Prospectus. Interest on
all classes of Notes will accrue at the fixed per annum interest rates
specified above. Interest on the Notes will generally be payable on the
15th day of each month (each, a "Distribution Date"), commencing October
15, 1996. Principal of the Notes will be payable on each Distribution Date
to the extent described herein, except that no principal will be paid on
the Class A-2 Notes until the Class A-1 Notes have been paid in full and no
principal will be paid on the Class A-3 Notes until the Class A-2 Notes
have been paid in full and no principal will be paid on the Class A-4 Notes
until the Class A-3 Notes have been paid in full. See "Description of the
Notes--Payments of Interest."
The Certificates will represent fractional undivided interests in the
Trust. Interest at the Certificate Rate will be distributed to the
Certificateholders on each Distribution Date to the extent of available
funds. Principal, to the extent described herein, will be distributed to
the Certificateholders on each Distribution Date commencing with the
Distribution Date on which the Notes were paid in full to the extent of
available funds. See "Description of the Certificates--Distributions of
Principal Payments." Distributions of interest and principal on the
Certificates will be subordinated in priority to payments due on the Notes
as described herein. See "Description of the Transfer and Servicing
Agreements--Subordination of Certificateholders."
The Class A-1 Notes will be payable in full on the __________
Distribution Date, the Class A-2 Notes will be payable in full on the
____________ Distribution Date, the Class A-3 Notes will be payable in full
on the ___________ Distribution Date, and the Class A-4 Notes will be
payable in full on the _____________ Distribution Date. The Final
Scheduled Date with respect to the Certificates will be the _________
Distribution Date. However, payment in full of a class of Notes or of the
Certificates could occur earlier or later than such dates as described
herein. See "Weighted Average Life of the Securities." The Class A-4
Notes and the Certificates will be subject to prepayment in whole, but not
in part, in the event Norwest Bank Minnesota, N.A., in its capacity as
servicer (in such capacity, the "Servicer"), or the Seller exercises its
option to purchase the Receivables on any Distribution Date when the
aggregate principal balance of the Receivables has declined to 5% or less
of the initial aggregate principal balance of the Receivables purchased by
the Trust.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPETE INFORMATION ABOUT
THE OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL INFORMATION IS
CONTAINED IN THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ
BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE
NOTES OR THE CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS
RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. TO THE EXTENT
ANY STATEMENTS IN THIS PROSPECTUS SUPPLEMENT OR SPECIFY ADDITIONAL
INFORMATION WITH RESPECT TO STATEMENTS IN THE PROSPECTUS, THE STATEMENTS IN
THIS PROSPECTUS SUPPLEMENT SHALL CONTROL.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
NOTES AND THE CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
There is currently no secondary market for the Securities offered
hereby. Each Underwriter expects, but is not obligated to make a market in
the Notes and Certificates. There can be no assurance that a secondary
market will develop or that it will provide Securityholders with liquidity
of investment or that it will continue for the life of the Securities
offered hereby.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates are
issued, monthly and annual unaudited reports containing information
concerning the Receivables will be prepared by the Servicer and sent on
behalf of the Trust only to Cede & Co., as nominee of the Depository Trust
Company and registered holder of the Notes and the Certificates. See
"Certain Information Regarding the Securities--Book-Entry Registration" and
"--Reports to Securityholders" in the accompanying Prospectus. Such reports
will not constitute financial statements prepared in accordance with
generally accepted accounting principles. The Seller, as originator of the
Trust, will file with the Securities and Exchange Commission (the
"Commission") such periodic reports as are required under the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder. In addition, the Commission maintains a public
access site on the Internet through the World Wide Web at which site
reports, information statements and other information, including all
electronic filings, may be viewed. The Internet address of such World Wide
Web site is http://www.sec.gov.
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and
in the Prospectus. Certain capitalized terms used herein are defined
elsewhere in this Prospectus Supplement on the pages indicated in the
"Index of Terms" beginning at page S-13 or, to the extent not defined
herein, have the meanings assigned to such terms in the Prospectus.
Issuer................. Norwest Auto Trust 1996-A (the "Trust" or the
"Issuer"), a Delaware business trust
established pursuant to a trust agreement (as
amended and supplemented, the "Trust
Agreement"), dated as of ________________,
1996 between the Seller and the Owner
Trustee.
Seller................. Norwest Auto Receivables Corporation, a
Delaware corporation (the "Seller"). See
"The Seller."
Servicer............... Norwest Bank Minnesota, N.A., a national
banking association (the "Bank" or in its
capacity as servicer, the "Servicer").
Indenture Trustee...... Chase Manhattan Bank, as trustee under the
Indenture (the "Indenture Trustee").
Owner Trustee.......... Wilmington Trust Company, as trustee under the
Trust Agreement (the "Owner Trustee").
The Notes.............. The Trust will issue four classes of Asset
Backed Notes (the "Notes"), pursuant to an
Indenture to be dated as of _______________,
1996 (as amended and supplemented from time
to time, the "Indenture"), between the Issuer
and the Indenture Trustee, as follows: (a)
Class A-1 __% Asset Backed Notes (the "Class
A-1 Notes") in the aggregate initial
principal amount of $______________; (b)
Class A-2 __% Asset Backed Notes (the "Class
A-2 Notes") in the aggregate initial
principal amount of $_________; (c) Class A-3
__% Asset Backed Notes (the "Class A-3
Notes") in the aggregate initial principal
amount of $____________; and (d) Class A-4
___% Asset Backed Notes (the "Class A-4
Notes") in the aggregate principal amount of
$___________.
The Notes will be secured by the assets of the
Trust pursuant to the Indenture.
The Certificates....... The Trust will issue __% Asset Backed
Certificates (the "Certificates" and,
together with the Notes, the "Securities")
with an aggregate initial Certificate Balance
of $________________. The Certificates will
represent fractional undivided interests in
the Trust and will be issued pursuant to the
Trust Agreement.
The Receivables........ On or prior to __________, 1996 (the "Closing
Date"), the Trust will purchase a pool of
retail installment sale contracts or similar
agreements secured by new or used automobiles
or light duty trucks (collectively, the
"Receivables"), including rights to receive
certain payments made with respect to such
Receivables, security interests in the
vehicles financed thereby (the "Financed
Vehicles"), rights under Dealer Agreements,
rights with respect to Eligible Deposit
Accounts in which collections are held, any
proceeds from claims on or rebates of
premiums and other amounts relating to
insurance policies and the proceeds of the
foregoing. The Receivables have an aggregate
principal balance of approximately
$___________ as of September 1, 1996 (the
"Cutoff Date"), and will be purchased by the
Trust from the Seller pursuant to a Sale and
Servicing Agreement to be dated as of the
Closing Date (as amended and supplemented
from time to time, the "Sale and Servicing
Agreement"), among the Trust, the Seller and
the Servicer. See "Description of the
Transfer and Servicing Agreements" herein and
in the Prospectus.
The Receivables will generally consist of
retail installment sale contracts or similar
agreements ("Motor Vehicle Loans") between an
Obligor and a Dealer. The Receivables will
be transferred by Affiliates to the Seller
for purposes of sale to the Trust.
All the Receivables provide for the allocation
of payments to principal and interest in
accordance with the "simple interest" method.
The Receivables have been selected from Motor
Vehicle Loans owned by the Affiliates based
on the criteria specified in the Sale and
Servicing Agreement and described herein and
in the Prospectus. See "The Receivables
Pool" herein and "The Receivables Pools" in
the Prospectus. No Receivable will have a
scheduled maturity that, after giving
prospective effect to any permitted
extensions or deferrals, would be later than
____________ (the "Final Scheduled Maturity
Date"). As of the Cutoff Date, the weighted
average remaining number of scheduled
payments of the Receivables was approximately
_____ and the weighted average original
number of scheduled payments of the
Receivables was approximately ____. As of
the Cutoff Date, approximately ____% of the
aggregate principal balance of the
Receivables represented financing of new
vehicles and the remainder represented
financing of used vehicles.
The "Pool Balance" means, at any time, the sum
of the outstanding Principal Balances of the
Receivables. The "Principal Balance" for any
Receivable, at any time, means the principal
balance of such Receivable at the end of the
preceding Collection Period, after giving
effect to all payments received from Obligors
and other amounts customarily applied by the
Servicer to reduce the Principal Balance of
such Receivables during such Collection
Period.
Terms of the Notes
A. Distribution Dates. Payments of interest and principal on the Notes
will be made on the 15th day of each month
or, if any such day is not a Business Day, on
the next succeeding Business Day (each, a
"Distribution Date"), commencing October 15,
1996. Each reference to a "Payment Date" in
the Prospectus shall refer to a Distribution
Date herein. Payments will be made to
holders of record of the Notes (the
"Noteholders") as of the day immediately
preceding such Distribution Date or, if
Definitive Notes are issued, as of the last
day of the preceding month (a "Record Date").
A "Business Day" is a day other than a
Saturday, a Sunday and that in New York City
and in the city in which the corporate trust
office of the Trustee is located is neither a
legal holiday nor a day on which banking
institutions are authorized by law,
regulation or executive order to be closed.
B. Interest Rates..... The Class A-1 Notes will bear interest at the
rate of __% per annum (the "Class A-1
Interest Rate"); the Class A-2 Notes will
bear interest at the rate of __% per annum
(the "Class A-2 Interest Rate"), the Class
A-3 Notes will bear interest at the rate of
__% per annum (the "Class A-3 Interest Rate")
and the Class A-4 Notes will bear interest at
the rate of ___% per annum (the "Class A-4
Interest Rate"). The Class A-1 Interest
Rate, the Class A-2 Interest Rate, the Class
A-3 Interest Rate and the Class A-4 Interest
Rate are referred to herein collectively as
"Interest Rates".
C. Interest........... On each Distribution Date, the Indenture
Trustee will distribute pro rata to the
Noteholders of each class of Notes, accrued
interest at the applicable Interest Rate on
the outstanding principal amount of the Notes
of each class generally to the extent of
funds available following reimbursement of
Outstanding Advances and payment of the
Servicing Fee from the Total Distribution
Amount. Interest on the outstanding
principal amount of the Notes of each class
will accrue at the applicable Interest Rate
from and including the Closing Date (in the
case of the first Distribution Date) and
thereafter from and including the preceding
Distribution Date to but excluding the
current Distribution Date (each an "Interest
Period"). With respect to any Distribution
Date, interest on the Class A-1 Notes will be
calculated on the basis of a 360-day year
based upon the actual number of days elapsed
during the related Interest Period and
interest on the Class A-2 Notes, Class A-3
Notes and Class A-4 Notes will be calculated
on the basis of a 360-day year consisting of
twelve 30-day months. See "Description of
the Notes--Payments of Interest."
D. Principal.......... Principal of the Notes will be payable on each
Distribution Date in an amount equal to the
Noteholders' Principal Distributable Amount
for the calendar month (the "Collection
Period") preceding such Distribution Date (in
the case of the first Distribution Date, the
period from and including the Cutoff Date to
but excluding October 1, 1996. "Noteholders'
Principal Distributable Amount" generally
means, for any Distribution Date, the sum of
the Noteholder's Monthly Principal
Distributable Amount for such Distribution
Date and the Noteholders' Principal Carryover
Shortfall as of the close of the preceding
Distribution Date. "Noteholders' Monthly
Principal Distributable Amount" means, for
any Distribution Date, the Noteholders'
Percentage of the sum of (a) that portion of
all collections (other than Liquidation
Proceeds) received during the related
Collection Period and allocable to principal
in accordance with the Servicer's customary
servicing procedures, (b) to the extent
attributable to principal, the Purchase
Amount received with respect to each
Receivable repurchased by Seller or purchased
by Servicer under an obligation which arose
during the related Collection Period, and (c)
the amount of Realized Losses for the related
Collection Period. "Noteholders' Principal
Carryover Shortfall" means, as of the close
of any Distribution Date, the excess of the
Noteholders' Monthly Principal Distributable
Amount and any outstanding Noteholders'
Principal Carryover Shortfall from the
preceding Distribution Date over the amount
in respect of principal that is actually
deposited in the Note Distribution Account
for such Distribution Date. "Noteholders'
Percentage" means 100% until the point in
time at which the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes and Class A-4 Notes
have been paid in full and zero thereafter.
No principal payments will be made on the Class
A-2 Notes until the Class A-1 Notes have been
paid in full, no principal payments will be
made on the Class A-3 Notes until the Class
A-2 Notes have been paid in full and no
principal payments will be made on the Class
A-4 Notes until the Class A-3 Notes have been
paid in full.
The outstanding principal amount of the Class
A-1 Notes, to the extent not previously paid,
will be payable on the _____________, 199_
Distribution Date (the "Class A-1 Final
Scheduled Distribution Date"); the
outstanding principal amount of the Class A-2
Notes, to the extent not previously paid,
will be payable on the ____________, 199_
Distribution Date (the "Class A-2 Final
Scheduled Distribution Date"), the
outstanding principal amount of the Class A-3
Notes, to the extent not previously paid,
will be payable on the ____________, 199_
Distribution Date (the "Class A-3 Final
Scheduled Distribution Date") and the
outstanding principal amount of the Class A-4
Notes, to the extent not previously paid,
will be payable on the __________, _____
Distribution Date (the "Class A-4 Final
Distribution Date").
E. Optional Redemption After the Class A-3 Notes have been paid in
full, the Class A-4 Notes will be redeemed in
whole, but not in part, on any Distribution
Date on which the Seller or Servicer
exercises its option to purchase the
Receivables, which can occur on any
Distribution Date on which the Pool Balance
has declined to 5% or less of the Original
Pool Balance, at a redemption price equal to
the unpaid principal amount of the Class A-4
Notes plus accrued and unpaid interest
thereon. See "Description of the
Notes--Optional Redemption." The "Original
Pool Balance" will equal the aggregate
principal balance of the Receivables as of
the Cutoff Date.
Terms of the Certificates
A. Distribution Dates. Distributions with respect to the Certificates
will be made on each Distribution Date,
commencing October 15, 1996. Distributions
will be made to holders of record of the
Certificates (the "Certificateholders" and,
together with the Noteholders, the
"Securityholders") as of the related Record
Date (which will be the last day of the
preceding month if Definitive Certificates
are issued).
B. Certificate Rate... ___% per annum (the "Certificate Rate").
C. Interest........... On each Distribution Date, the Trustee will
distribute pro rata to the
Certificateholders, accrued interest at the
Certificate Rate on the outstanding
Certificate Balance generally to the extent
of funds available following reimbursement of
Outstanding Advances, payment of the
Servicing Fee and payment of interest and
principal in respect of the Notes from the
Total Distribution Amount; provided, however,
that upon the occurrence and during the
continuation of an Event of Default which has
resulted in an acceleration of the Notes, all
distributions of any amounts on the
Certificates will be subordinated in priority
to payment in full of principal of and
accrued interest on the Notes. Interest on
the Certificates will be calculated on the
basis of a 360-day year consisting of twelve
30-day months. Interest in respect of a
Distribution Date will accrue from and
including the Closing Date (in the case of
the first Distribution Date) and thereafter
from and including the preceding Distribution
Date to but excluding such Distribution Date.
D. Principal.......... No distributions of principal on the
Certificates will be made until all of the
Notes have been paid in full. On each
Distribution Date commencing on the
Distribution Date on which the Class A-4
Notes are paid in full, principal of the
Certificates will be payable in an amount
generally equal to the Certificateholders'
Principal Distributable Amount for the
Collection Period preceding such Distribution
Date, to the extent of funds available
therefor following payment of the Servicing
Fee, payments of interest and principal, if
any, due in respect of the Notes and the
distribution of interest in respect of the
Certificates. "Certificateholders' Principal
Distributable Amount" generally means, for
any Distribution Date, the sum of the
Certificateholder's Monthly Principal
Distributable Amount for such Distribution
Date and the Certificateholders' Principal
Carryover Shortfall as of the close of the
preceding Distribution Date.
"Certificateholders' Monthly Principal
Distributable Amount" means, for any
Distribution Date, the Certificateholders'
Percentage of the sum of (a) that portion of
all collections (other than Liquidation
Proceeds) received during the related
Collection Period and allocable to principal
in accordance with the Servicer's customary
servicing procedures, (b) to the extent
attributable to principal, the Purchase
Amount received with respect to each
Receivable repurchased by Seller or purchased
by Servicer under an obligation which arose
during the related Collection Period, and (c)
the amount of Realized Losses for the related
Collection Period. "Certificateholders'
Principal Carryover Shortfall" means, as of
the close of any Distribution Date, the
excess of the Certificateholders' Monthly
Principal Distributable Amount and any
outstanding Certificateholders' Principal
Carryover Shortfall from the preceding
Distribution Date over the amount in respect
of principal that is actually deposited in
the Certificate Distribution Account for such
Distribution Date. "Certificateholders'
Percentage" at any time means 100% minus the
Noteholders' Percentage at such time.
The outstanding principal amount, if any, of
the Certificates will be payable in full on
the __________ __, __ Distribution Date (the
"Certificate Final Scheduled Distribution
Date" and, together with the Class A-1 Final
Schedule Distribution Date, the Class A-2
Final Scheduled Distribution Date, the Class
A-3 Final Scheduled Distribution Date, and
the Class A-4 Final Scheduled Distribution
Date, each a "Final Scheduled Distribution
Date").
E. Optional Prepayment If the Seller or the Servicer exercises its
option to purchase the Receivables, which can
occur after the Pool Balance declines to 5%
or less of the Original Pool Balance, the
Certificateholders will receive an amount in
respect of the Certificates equal to the
Certificate Balance together with accrued
interest at the Certificate Rate, and the
Certificates will be retired. See
"Description of the Certificates -- Optional
Prepayment."
Advances............... On or prior to the Business Day preceding each
Distribution Date (the "Deposit Date"), the
Servicer will advance (an "Advance") in an
amount equal to the lesser of (a) the excess,
if any, of (i) the amount of interest that
would be expected to be received on the
Receivables (other than Non-Advance
Receivables) during the related Collection
Period over (ii)(A) the actual interest
collected by the Servicer during such
Collection Period minus (B) unreimbursed
prior Advances and (b) the amount (if any) by
which (i) the sum of (A) any unpaid Servicing
Fees for the related Collection Period and
prior Collection Periods and (B) the amount
of interest distributable to the
Securityholders on the following Distribution
Date exceeds (ii)(A) the actual interest
collected by the Servicer during the related
Collection Period minus (B) unreimbursed
prior Advances, subject to certain
limitations described below. The Servicer
will be entitled to be reimbursed for
outstanding Advances on the Distribution Date
in the following month to the extent of
interest collections for such Distribution
Date and, to the extent such collections are
insufficient, to the extent of funds in the
Reserve Account. The Servicer will be
obligated to make such an Advance except to
the extent that the Servicer reasonably
determines that the Advance is unlikely to be
recoverable from the following month's
collections of interest and the funds in the
Reserve Account. See "Description of the
Transfer and Servicing Agreements--Advances."
Reserve Account........ A reserve account (the "Reserve Account") will
be created with an initial deposit by the
Seller of cash or certain investments having
a value of at least $________ (the "Reserve
Account Deposit"). In addition, on each
Distribution Date, any amounts on deposit in
the Collection Account with respect to the
preceding Collection Period after payments to
the Securityholders and the Servicer have
been made will be deposited into the Reserve
Account until the amount of the Reserve
Account is equal to the Specified Reserve
Account Balance.
On or prior to each Deposit Date, the Indenture
Trustee will withdraw funds from the Reserve
Account, to the extent of the funds therein,
(a) to the extent required to reimburse the
Servicer for Outstanding Advances and (b) to
the extent (i) the sum of the amounts
required to be distributed to Securityholders
and the Servicer on the related Distribution
Date exceeds (ii) the amount on deposit in
the Collection Account with respect to the
preceding Collection Period. If the amount in
the Reserve Account is reduced to zero,
Securityholders will bear the credit and
other risks associated with ownership of the
Receivables, including the risk that the
Trust may not have a perfected security
interest in the Financed Vehicles. See "Risk
Factors" herein and in the Prospectus,
"Description of the Transfer and Servicing
Agreements--Credit and Cash Flow Enhancement;"
and "Certain Legal Aspects of the
Receivables" in the Prospectus.
Prepayment Considerations The weighted average life of the Securities may
be reduced by full or partial prepayments on
the Receivables. The Receivables are
prepayable at any time. Prepayments may also
result from liquidations due to default, the
receipt of monthly installments earlier than
the scheduled due dates for such
installments, the receipt of proceeds from
credit life, disability, theft or physical
damage insurance, repurchases by the Seller
as a result of certain uncured breached of
the warranties made by it in the Sale and
Servicing Agreement with respect to the
Receivables, purchases by the Servicer as a
result of certain uncured breaches of the
covenants made by it in the Sale and
Servicing Agreement with respect to the
Receivables, or the Seller or Servicer
exercising its optional purchase right. The
rate of prepayments on the Receivables may be
influenced by a variety of economic, social,
and other factors, including decreases in
interest rates and the fact that the Obligor
may not sell or transfer the Financed Vehicle
securing a Receivable without the consent of
the applicable Affiliate. No prediction can
be made as to the actual prepayment rates
which will be experienced on the Receivables.
If prepayments were to occur after a decline
in interest rates, investors seeking to
reinvest their funds might be required to
invest at a return lower than the applicable
Interest Rate or the Certificate Rate, as the
case may be. Security Owners will bear all
reinvestment risk resulting from prepayment
of the Receivables. See "Risk Factors--Risk
of Prepayment and Possible Adverse Effect on
Yield" and "Weighted Average Life of the
Securities" in the Prospectus and "Weighted
Average Life of the Securities" herein.
Tax Status............. In the opinion of Mayer, Brown & Platt, for
federal income tax purposes, the Notes will
be characterized as debt, and the Trust will
not be characterized as an association (or a
publicly traded partnership) taxable as a
corporation. In the opinion of Faegre &
Benson, Minnesota tax counsel to the Trust,
the same characterizations would apply for
Minnesota income tax purposes as for federal
income tax purposes. Each Noteholder, by the
acceptance of a Note, will agree to treat the
Notes as indebtedness, and each
Certificateholder, by the acceptance of a
Certificate, will agree to treat the Trust as
a partnership in which the Certificateholders
are partners for federal, state and local
income tax purposes. See "Federal Income Tax
Consequences" and "Certain State Tax
Consequences" in the Prospectus for
additional information concerning the
application of federal and state tax laws to
the Trust and the Securities.
ERISA Considerations... Subject to the considerations discussed under
"ERISA Considerations" herein and in the
Prospectus, the Notes are eligible for
purchase by employee benefit plans.
The Certificates may not be acquired with the
assets of any employee benefit plan subject
to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), or with the assets of
an individual retirement account. See "ERISA
Considerations" herein and in the Prospectus.
Legal Investment....... The Class A-1 Notes will be eligible securities
for purchase by money market funds under
paragraph (a)(5) of Rule 2a-7 under the
Investment Company Act of 1940, as amended.
Risk Factors........... See "Risk Factors" herein and in the Prospectus
for a discussion of certain factors that
potential investors should consider in
determining whether to invest in the
Securities.
No Listing of Securities The Securities will not be listed on any
national securities exchange or automated
quotation system of a registered securities
association.
Rating of the Notes.... It is a condition to the issuance of the Notes
that the Class A-1 Notes be rated in the
highest short-term rating category and that
the Class A-2 Notes, Class A-3 Notes and
Class A-4 Notes be rated in the highest
long-term rating category by at least two
nationally recognized rating agencies (the
"Rating Agencies"). There can be no
assurance that a rating will not be lowered
or withdrawn by a Rating Agency if
circumstances so warrant. See "Risk
Factors-Ratings of the Securities" herein and
in the Prospectus.
Rating of the Certificates It is a condition to the issuance of the
Certificates that they be rated at least "A"
or its equivalent by at least two nationally
recognized rating agencies. There can be no
assurance that a rating will not be lowered
or withdrawn by a rating agency if
circumstances so warrant. See "Risk
Factors--Ratings of the Securities" in the
Prospectus.
<PAGE>
RISK FACTORS
In addition to the other information contained herein and in the
Prospectus, prospective investors should consider carefully the following
risk factors and the information contained in "Risk Factors" in the
Prospectus.
Geographic Concentration
Economic conditions in 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 mailing addresses
of Obligors on Receivables representing approximately 40.65% by principal
balance of the Receivables were located in Minnesota, and the mailing
addresses of Obligors on Receivables representing approximately 14.15% and
13.38% by principal balance of the Receivables were located in Iowa and
Nebraska, respectively. As a result, economic conditions in such states
may have a disproportionate impact on the Trust. In particular, an
economic downturn in one or more of such states could adversely affect the
performance of the Trust as a whole (even if national economic conditions
remain unchanged or improve) as Obligors in such state or states experience
the effects of such a downturn and face greater difficulty in making
payments on their Financed Vehicles. See "The Receivables Pool."
Subordination
Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the
Notes. Consequently, the Certificateholders will not receive any
distributions with respect to a Collection Period until the full amount of
interest on and principal of the Notes payable on such Distribution Date
has been deposited in the Note Distribution Account. The
Certificateholders will not receive any distributions of principal until
the Distribution Date on which the Class A-4 Notes were paid in full.
However, upon the occurrence and during the continuation of an Event of
Default which has resulted in an acceleration of the Notes, all
distributions on the Certificates will be subordinated in priority of
payment to payment in full of principal of and accrued interest on the
Notes.
If an Event of Default occurs, the Indenture Trustee or the holders
of a majority of the aggregate principal amount of all the Notes may
declare the principal of the Notes to be immediately due and payable, and
the Indenture Trustee may institute or be required to institute proceedings
to collect amounts due or exercise its remedies as a secured party
(including foreclosure or sale of the Receivables). In the event of a sale
of Receivables by the Indenture Trustee following an Event of Default,
there is no assurance that the proceeds of such sale will be equal to or
greater than the aggregate outstanding principal amount of the Notes and
the Certificate Balance plus accrued interest. Because neither interest
nor principal is distributed to Certificateholders upon sale of the
Receivables following an Event of Default and acceleration of the Notes
under the Indenture until all the Notes have been paid in full, the
interests of Noteholders and the Certificateholders may conflict, and the
exercise by the Indenture Trustee of its right to sell the Receivables or
exercise other remedies under the Indenture and applicable law may cause
the Certificateholders to suffer a loss of all or part of their investment.
See "Description of the Notes-The Indenture--Events of Default; Rights upon
Event of Default" and "Description of the Transfer and Servicing
Agreements--Insolvency Event" in the Prospectus.
In general, the Seller may, and in certain circumstances the
Certificateholders may, direct the Owner Trustee in the administration of
the Trust. However, because the Trust has pledged the property of the
Trust to the Indenture Trustee to secure the payment of the Notes,
including in such pledge certain rights of the Trust under the Sale and
Servicing Agreement, the Indenture Trustee and not the Seller or the
Certificateholders has the power to direct the Trust to take certain
actions in connection with the administration of the property of the Trust
until the Notes have been paid in full and the lien of the Indenture has
been released. In addition, the Seller and Certificateholders are not
allowed to direct the Owner Trustee to take any action which conflicts with
the provisions of any of the Sale and Servicing Agreement, the Trust
Agreement or the Indenture (together the "Basic Documents"). The Indenture
specifically prohibits the Issuer from taking any action which would impair
the Indenture Trustee's security interest in the Trust and generally
requires the Owner Trustee to obtain the consent of the Indenture Trustee
or the holders of a majority of the aggregate principal amount of the Notes
before modifying, amending, supplementing, waiving or terminating any Basic
Document or any provision of any Basic Document. Therefore, until the
Notes have been paid in full, the ability to direct the Trust with respect
to certain actions permitted to be taken by it under the Basic Documents
rests with the Indenture Trustee and the Noteholders instead of the Seller
or the Certificateholders.
If an Event of Servicing Termination were to occur, the holders of a
majority of the outstanding principal amount of the Notes, the Indenture
Trustee acting on behalf of the Noteholders, or the Owner Trustee and not
the Seller or the Certificateholders, would have the right to terminate the
Servicer as the servicer of the Receivables without consideration of the
effect such termination would have on Certificateholders. In addition, the
holders of not less than a majority of the outstanding principal amount of
the Notes would have the right to waive certain Events of Servicing
Termination, without consideration of the effect such waiver would have on
Certificateholders. See "Description of the Transfer and Servicing
Agreements--Events of Servicing Termination" and "--Rights upon Event of
Servicing Termination" in the Prospectus.
Limited Assets
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the
Reserve Account. Holders of the Notes and the Certificates must rely for
repayment upon payments on the Receivables and, if and to the extent
available, amounts on deposit in the Reserve Account. Similarly, although
funds in the Reserve Account will be available on each Distribution Date to
cover shortfalls in distributions of interest and principal on the Notes
and the Certificates, amounts to be deposited in the Reserve Account are
limited in amount. If the Reserve Account is exhausted, the Trust will
depend solely on current distributions on the Receivables to make payments
on the Notes and the Certificates.
Amounts on deposit in the Reserve Account will be available on any
Distribution Date first to cover shortfalls in reimbursement of Outstanding
Advances and payment of Servicing Fees to the Servicer, then shortfalls in
distributions of interest on the Notes then shortfalls in distributions of
principal on the Notes. After distributions of interest and principal on
the Notes have been made, the remaining amounts on deposit in the Reserve
Account will be available first to cover shortfalls in distributions of
interest on the Certificates and then shortfalls in distributions of
principal on the Certificates. If the Reserve Account is exhausted, the
Trust will depend solely on payments on the Receivables to make
distributions on the Securities, and Securityholders will bear the risk of
delinquency, loan losses and repossessions with respect to the Receivables.
There can be no assurance that the future delinquency, loan loss and
repossession experience of the Trust with respect to the Receivables will
be better or worse than that set forth herein with respect to the portfolio
of Motor Vehicle Loans serviced by the Servicer. Any amounts released from
the Reserve Account to the Seller will not be available to the
Securityholders. See "The Receivables Pool--Pool Composition" and
"Delinquency and Net Losses" herein and "The Receivables Pools" in the
Prospectus and "Description of the Transfer and Servicing
Agreements--Subordination of Certificateholders" and "--Distributions"
herein.
Maturity and Prepayment Considerations
The Class A-2 Notes will not receive any principal payments until the
Class A-1 Notes are paid in full, the Class A-3 Notes will not receive any
principal payments until the Class A-2 Notes are paid in full and the Class
A-4 Notes will not receive any principal payments until the Class A-3 Notes
are paid in full. In addition, no principal payments on the Certificates
will be made until the Distribution Date on which the Notes are paid in
full. As the rate of payment of principal of the Notes and the
Certificates depends on the rate of payment (including prepayments) of the
principal balance of the Receivables, final payment of the Notes and the
final distribution in respect of the Certificates could occur significantly
earlier or later than the applicable Final Scheduled Distribution Date. It
is expected that final payment of the Notes and the final distribution in
respect of the Certificates will occur on or prior to the applicable Final
Scheduled Distribution Date. However, if sufficient funds are not
available to pay the Notes or the Certificates in full on or prior to the
applicable Final Scheduled Distribution Date, final payment of the Notes
and the final distribution in respect of the Certificates could occur later
than such date. See "Weighted Average Life of the Securities" herein and in
the Prospectus.
Ratings of the Securities
It is a condition to the issuance of the Notes and of the
Certificates that the Class A-1 Notes be rated in the highest short-term
rating category and that the Class A-2 Notes, Class A-3 Notes and the Class
A-4 Notes be rated in the highest long-term rating category, and that the
Certificates be rated at least "A" or its equivalent, by at least two
nationally recognized rating agencies. A rating is not a recommendation to
purchase, hold or sell Securities, inasmuch as such rating does not comment
as to market price or suitability for a particular investor. The ratings
of the Securities address the likelihood of the payment of principal and
interest on the Securities pursuant to their terms. There can be no
assurance that a rating will remain for any given period of time or that a
rating will not be lowered or withdrawn entirely by a Rating Agency if in
its judgment circumstances in the future so warrant.
THE TRUST
General
The Issuer, Norwest Auto Trust 1996-A, is a business trust formed
under the laws of the State of Delaware pursuant to the Trust Agreement for
the transactions described in this Prospectus Supplement. After its
formation, the Trust will not engage in any activity other than (a)
acquiring, holding and managing the Receivables and the other assets of the
Trust and proceeds therefrom, (b) from time to time prior to the Closing
Date, issuing indebtedness or other securities to finance its purchase of
the Receivables and such other assets and, on and after the Closing Date,
issuing the Notes and the Certificates to finance such assets, (c) making
payments on the indebtedness and other securities and the Notes and the
Certificates issued by it, and (d) engaging in other activities that are
necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith.
At the time the Notes and Certificates are issued, the Trust will be
capitalized with equity in an amount equal to the Certificate Balance of
$__________, excluding amounts deposited in the Reserve Account. On the
Closing Date, Certificates with an original principal balance of
$______________ will be issued to the Seller, and the remaining equity
interest will be sold to third party investors unaffiliated with the
Seller, the Servicer or their affiliates. The equity of the Trust,
together with the net proceeds from the sale of the Notes, will be used by
the Trust to purchase the Receivables from the Seller pursuant to the Sale
and Servicing Agreement or to repayment of any related Warehouse Financing.
See "Risk Factors--Seller Insolvency--Related Risks" and "The Seller" in the
Prospectus.
If the protection provided to the investment of the Securityholders
by the Reserve Account is insufficient, the Trust will look only to the
Obligors on the Receivables and the proceeds from the repossession and sale
of Financed Vehicles which secure defaulted Receivables. In such event,
certain factors, such as the Trust's not having first priority perfected
security interests in some of the Financed Vehicles, may affect the Trust's
ability to realize on the collateral securing the Receivables, and thus may
reduce the proceeds to be distributed to Securityholders with respect to
the Securities. See "Risk Factors--Limited Assets" and "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account" and
"Certain Legal Aspects of the Receivables" in the Prospectus.
The Trust's principal offices are in Delaware, in care of Wilmington
Trust Company, as Owner Trustee, at the address listed below under "--The
Owner Trustee."
Capitalization of the Trust
The following table illustrates the capitalization of the Trust as of
the Closing Date, as if the issuance and sale of the Notes and the
Certificates have taken place on such date:
Class A-1 __% Asset Backed Notes..... $__________
Class A-2 __% Asset Backed Notes..... __________
Class A-3 __% Asset Backed Notes..... __________
Class A-4 __% Asset Backed Notes..... __________
__% Asset Backed Certificates........ __________
Total................................ $
==========
The Owner Trustee
Wilmington Trust Company is the Owner Trustee under the Trust
Agreement. Wilmington Trust Company is a Delaware banking corporation and
its principal offices where information can be obtained relating to the
Trust and the Certificates are located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware, 19890. The Seller and its affiliates
may maintain normal commercial banking relations with the Owner Trustee and
its affiliates.
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will consist of
Receivables purchased as of the Cutoff Date. The Receivables have been
selected from the portfolio of each Affiliate for inclusion in the
Receivables Pool by several criteria, some of which are set forth in the
Prospectus under "The Receivables Pool," as well as the requirement that
each Receivable (a) has an outstanding principal balance of at least
$500.00, (b) as of the Cutoff Date, was not more than 30 days past due, (c)
has a remaining number of scheduled payments of not more than 72, (d) has
an original scheduled number of payments of not more than 72, (e) has an
APR of not less than 7.0% and not more than 21.99%; and (f) is a fixed
rate, Simple Interest Receivable. No selection procedures believed by the
Seller to be adverse to the Securityholders were used in selecting the
Receivables.
Pool Composition
Set forth in the following tables is information concerning the
composition, distribution by annual percentage rate, distribution by
remaining principal, distribution by remaining number of scheduled
payments, the geographic distribution and distribution by new or used motor
vehicles of the Receivables as of the Cutoff Date.
Composition of the Receivables
Weighted Average APR............................... 9.792%
Range of APRs...................................... 7.00% to 21.99%
Aggregate Principal Balance........................ $1,118,988,159.59
Number of Receivables.............................. 127,371
Weighted Average of Remaining Number of Scheduled
Payments......................................... 41.68
Range of Remaining Number of Scheduled Payments.... 13 to 72
Weighted Average Original Number of Scheduled Payments 56.07
Range of Original Number of Scheduled Payments..... 14 to 72
Average Remaining Principal Balance................ $8,785.27
Range of Remaining Principal Balances............. $500.12 to $58,691.04
Average Original Amount Financed................... $12,106.06
Range of Original Amounts Financed................. $950.00 to $77,796.00
<TABLE>
<CAPTION>
Distribution by Annual Percentage Rate of the Receivables
Number of Aggregate % of Pool
APR Range Receivables Principal Balance Balance(1)
--------- ----------- ----------------- -----------
<S> <C> <C> <C>
7.00 to 7.99 15,647 $ 119,890,992.67 10.71
8.00 to 8.99 28,087 257,107,457.71 22.98
9.00 to 9.99 34,080 340,926,614.53 30.47
10.00 to 10.99 24,265 221,863,925.87 19.83
11.00 to 11.99 12,581 101,142,177.50 9.04
12.00 to 12.99 7,978 53,862,268.88 4.81
13.00 to 13.99 2,371 13,620,336.59 1.22
14.00 to 14.99 1,213 5,806,335.73 0.52
15.00 to 21.99 1,149 4,768,050.11 0.43
------- ------------------ -------
Total 127,371 $1,118,988,159.59 100.00
__________________________
<FN>
(1) Percentages may not add to 100% because of rounding.
<PAGE>
<CAPTION>
Distribution by Remaining Principal Balance
of the Receivables
Range of Remaining Number of Aggregate % of Pool
Principal Balance Receivables Principal Balance Balance(1)
- ------------------ ----------- ----------------- ----------
<S> <C> <C> <C>
$ 500.00 to 2,000.00 2,618 $ 4,170,263.62 0.37
2,000.01 to 4,000.00 16,625 51,918,667.78 4.64
4,000.01 to 6,000.00 23,198 116,314,827.78 10.39
6,000.01 to 8,000.00 22,500 157,195,384.19 14.05
8,000.01 to 10,000.00 19,202 172,103,730.32 15.38
10,000.01 to 12,000.00 14,978 163,905,325.47 14.65
12,000.01 to 14,000.00 10,472 135,524,107.93 12.11
14,000.01 to 16,000.00 7,015 104,679,949.79 9.35
16,000.01 to 18,000.00 4,313 72,885,838.84 6.51
18,000.01 to 20,000.00 2,555 48,356,111.49 4.32
20,000.01 to 40,000.00 3,879 91,188,521.35 8.15
40,000.01 to 58,691.04 16 745,431.03 0.07
------- ---------------- -------
Total 127,371 $1,118,988,159.59 100.00
======= ================ =======
____________________
<FN>
(1) Percentages may not add to 100% because of rounding.
<CAPTION>
Distribution by Remaining Number of Payments on the Receivables
Range of Remaining Number of Aggregate % of Pool
Number of Payments Receivables Principal Balance Balance(1)
- ------------------ ----------- ----------------- ----------
<S> <C> <C> <C>
12 to 23 24,414 $ 101,194,184.99 9.04
24 to 35 37,954 259,294,333.04 23.17
36 to 47 37,996 376,294,681.17 33.63
48 to 59 24,319 330,553,481.58 29.54
60 to 71 2,665 51,099,455.93 4.57
72 23 552,022.88 0.05
------- ---------------- ------
Total 127,371 $1,118,988,159.59 100.00
======= ================ ======
<FN>
(1) Percentages may not add to 100.00% because of rounding.
<PAGE>
<CAPTION>
Geographic Distribution of the Receivables Pool
Number of Aggregate % of Pool
State Receivables Principal Balance Balance(1)
----- ----------- ----------------- ----------
<S> <C> <C> <C>
Minnesota 49,037 $454,891,884.04 40.65
Iowa 18,484 158,284,293.49 14.15
Nebraska 17,610 149,717,073.23 13.38
Wisconsin 9,138 81,571,999.60 7.29
Indiana 8,974 75,821,370.76 6.78
South Dakota 8,132 65,029,529.63 5.81
Other 15,996 133,672,008.84 11.95
------- ---------------- -------
Total(2) 127,371 $1,118,988,159.59 100.00
======= ================ =======
__________________
<FN>
(1) Percentages may not add to 100.00% because of rounding.
(2) No more than 5.0% of the Pool Balance as of the Cutoff Date was
originated by Motor Vehicle Loans made to Obligors that currently
reside in any state other than the states set forth above.
<CAPTION>
Distribution of the Receivables by New/Used Motor Vehicles
Number of Aggregate % of Pool
Receivables Principal Balance Balance
----------- ----------------- ---------
<S> <C> <C> <C>
New Motor Vehicles 48,168 $520,301,378.36 46.50
Used Motor Vehicles 79,203 598,686,781.23 53.50
------- ---------------- ------
Total Receivables 127,371 $1,118,988,159.59 100.00
======= ================ ======
</TABLE>
<PAGE>
Delinquencies and Net Losses
Set forth below is certain information concerning the historical
experience of the following [Affiliates] pertaining to Motor Vehicle Loans:
Norwest Bank Illinois, N.A.
Norwest Bank Indiana, N.A.
Norwest Bank Iowa, N.A.
Norwest Bank LaCrosse, N.A.
Norwest Bank Minnesota North, N.A.
Norwest Bank Minnesota South, N.A.
Norwest Bank Minnesota Southwest, N.A.
Norwest Bank Minnesota West, N.A.
Norwest Bank Minnesota, N.A.
Norwest Bank Nebraska, N.A.
Norwest Bank North Dakota, N.A.
Norwest Bank Ohio, N.A.
Norwest Bank Red Wing, N.A.
Norwest Bank South Dakota, N.A.
Norwest Bank Wisconsin, N.A.
There can be no assurance that the delinquency and net loss experience on
the Receivables of the Trust will be comparable to that set forth below.
<PAGE>
<TABLE>
<CAPTION>
Delinquency Experience(1)
At June 30, At December 31,
---------------------------------------- --------------------------------------------------------------
1996 1995 1995 1994 1993
------------------- ------------------- ------------------- ------------------- -------------------
Number Amount Number Amount Number Amount Number Amount Number Amount
------- ---------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Motor Vehicle Loans
Outstanding........... 182,858 $1,413,553 197,451 $1,564,522 192,259 $1,503,257 260,475 $1,618,700 181,615 $1,370,814
Period of Delinquency:
31-59 days............ 2,875 $ 20,445 2,440 $ 17,861 3,136 $ 22,838 2,725 $ 18,694 2,078 $ 12,892
60-89 days............ 743 5,541 623 4,627 774 5,583 670 4,655 498 52,926
90 days or more....... 695 5,393 600 4,462 699 6,160 525 3,620 435 2,865
Total Delinquencies..... 4,313 $ 31,289 3,663 $ 26,950 4,609 $ 33,680 3,920 $ 26,968 3,012 $ 18,684
Total Delinquencies as a
Percent of Motor Vehicle
Loans Outstanding........ 2.36% 2.21% 1.85% 1.72% 2.40% 2.24% 1.96% 1.67% 1.66% 1.36%
____________________________
<FN>
(1) Amounts represent net principal amounts of Motor Vehicle Loans Outstanding.
<PAGE>
<CAPTION>
Historical Net Loss Experience (1)
Six Months Ended June 30, Year Ended December 31,
------------------------- ----------------------------------
1996 1995 1995 1994 1993
---------- ------------ ---------- ---------- ----------
(Dollars in Thousands)
Motor Vehicle Loans
Outstanding.................... $1,413,554 $1,564,520 $1,503,257 $1,618,701 $1,370,814
Average Motor Vehicle Loans
Outstanding(2)................. $1,450,493 $1,564,520 $1,503,257 $1,618,701 $1,370,814
Average Number of Motor Vehicle
Loans Outstanding(2)........... 188,003 199,852 197,930 189,862 165,543
Gross Charge-Offs(2)........... $ 6,691 $ 6,539 $ 14,179 $ 12,986 $ 10,996
Net Losses(3).................. $ 3,700 $ 2,994 $ 7,504 $ 5,381 $ 5,043
Net Losses as a Percent of
Principal Balance
Outstanding(4)................. 0.53% 0.38% 0.50% 0.33% 0.37%
Net Losses as a Percent of
Average Principal Balance
Outstanding.................... 0.51% 0.38% 0.48% 0.36% 0.41%
_____________________________
<FN>
(1) Percentage amounts with respect to the sixth month periods ended June 30
are annualized.
(2) Amount represents average of balances at the beginning of period and
each subsequent quarter ended during such period.
(3) Gross Charge-Offs and Net Losses exclude repossession and disposition
expenses.
(4) Amount represents the aggregate balance of all Motor Vehicle Loans which
are determined to be uncollectible in the period, less any recoveries on
Motor Vehicle Loans charged-off in the period or any prior period.
/TABLE
<PAGE>
Delinquencies and net losses are affected by a number of social,
economic and other factors that may affect an Obligor's ability or
willingness to pay, such as the amount or types of indebtedness incurred by
such Obligor in addition to the Receivable on which such Obligor is
indebted, and there can be no assurance as to the level of future total
delinquencies or the severity of future net losses. As a result, the
delinquency and net loss experience of the Receivables may differ from
those shown in the tables.
Extensions and Modifications of Receivables
For a description of the Servicer's practices with respect to the
extension and modification of Receivables, see "Risk Factors--Extensions and
Modifications of Receivables" in the Prospectus.
THE SELLER, THE SERVICER AND NORWEST CORPORATION
Information regarding the Seller is set forth under "The Seller" in
the Prospectus and information regarding the Servicer is set forth under
"The Bank" in the Prospectus. Norwest Corporation is a diversified
financial services company incorporated under the laws of the State of
Delaware and registered under the Bank Holding Company Act of 1956, as
amended. Norwest Corporation owns subsidiaries engaged in banking and a
variety of related businesses. Norwest Corporation provides retail,
commercial and corporate banking services to customers through banks in 16
states and provides additional financial services to its customers through
subsidiaries engaged in various businesses, principally mortgage banking,
consumer finance, equipment leasing, agricultural finance, commercial
finance, securities brokerage and investment banking, insurance agency
services, computer and data processing services, trust services, mortgage
backed securities servicing, and venture capital investment. As of June
30, 1996, Norwest Corporation had consolidated total assets of $77.8
billion, total deposits of $46.3 billion, and total stockholders' equity of
$5.6 billion. Based on total assets as of June 30, 1996, Norwest
Corporation was the twelfth largest commercial banking organization in the
United States. Norwest Corporation has agreed to guaranty the performance
by the Seller of its repurchase obligation with respect to Receivables for
which there has been an uncured breach of any representation or warranty
that materially and adversely affects the interests of the Trust in such
Receivables. See "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables" in the Prospectus.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Information regarding certain maturity and prepayment considerations
with respect to the Securities is set forth under "Weighted Average Life of
Securities" in the Prospectus. No principal payments will be made on the
Class A-2 Notes until all Class A-1 Notes have been paid in full, no
principal payments will be made on the Class A-3 Notes until the Class A-2
Notes have been paid in full and no principal payments will be made on the
Class A-4 Notes until the Class A-3 Notes have been paid in full. In
addition, no principal payments on the Certificates will be made until all
of the Notes have been paid in full. See "Description of the
Notes--Payments of Principal" and "Description of the
Certificates--Distributions of Principal Payments." As the rate of payment
of principal of each class of Notes and the Certificates depends primarily
on the rate of payment (including prepayments) of the principal balance of
the Receivables, final payment of any class of the Notes and the final
distribution in respect of the Certificates could occur significantly
earlier than the respective Final Scheduled Distribution Dates. It is
expected that final payment of the Notes and the final distribution in
respect of the Certificates will occur on or prior to the applicable Final
Scheduled Distribution Date. However, if sufficient funds are not
available to pay the Notes or the Certificates in full on or prior to the
applicable Final Scheduled Distribution Date, final payment of the Notes
and the final distribution in respect of the Certificates could occur later
than such date.
Consistent with its customary servicing practices and procedures, the
Servicer or its designee may, in its discretion and on a case-by-case
basis, arrange with Obligors to extend or modify the terms of the related
Receivables. In addition, the Servicer may grant extensions or
modifications in situations where the Servicer believes such action is
likely to maximize the amount collected, for example, an obligor who
becomes unemployed and is actively seeking employment. Extensions are not
granted to forestall an inevitable loss. Any such extensions or
modifications which do not result in a Servicer obligation to purchase such
Receivables may increase the weighted average life of the related
Securities. Unless the Servicer repurchases the affected Receivable, the
Servicer will not be permitted to voluntarily (i) make modifications to the
Receivables that reduce the original rates of interest or the aggregate
principal amount of scheduled payments on the Receivables (ii) grant any
extension or modification if as a result the final scheduled payment on a
Receivable would fall after the related Final Scheduled Maturity Date or
(iii) amend or otherwise modify such Receivable if such amendment or
modification would result in a deemed exchange of such Receivable under
Section 1001 of the Code. Securityholders will bear the risk of being able
to reinvest principal payments on the Securities at yields at least equal
to the yields on their respective Securities. See "Weighted Average Life
of the Securities" in the Prospectus.
Prepayments on motor vehicle receivables can be measured relative to
a prepayment standard or model. The model used in this Prospectus
Supplement, the Absolute Prepayment Model ("ABS"), represents an assumed
rate of prepayment each month relative to the original number of
receivables in a pool of receivables. ABS further assumes that all the
receivables are the same size and amortize at the same rate and that each
receivable in each month of its life will either be paid as scheduled or be
prepaid in full. For example, in a pool of receivables originally
containing 10,000 receivables, a 1% ABS rate means that 100 receivables
prepay each month. ABS does not purport to be an historical description of
prepayment experience or a prediction of the anticipated rate of prepayment
of any pool of receivables, including the Receivables.
<PAGE>
As the rate of payment of principal with respect of the Securities
will depend on the rate of payment (including prepayments) of the principal
balance of the Receivables, final payment of any class of Notes could occur
significantly earlier than its applicable Final Scheduled Distribution
Date. The final distribution in respect of the Certificates also could
occur prior to the Certificate Final Scheduled Distribution Date.
Reinvestment risk associated with early payment of the Notes and the
Certificates will be borne exclusively by the Noteholders and the
Certificateholders, respectively.
The tables captioned "Percent of Initial Note Principal Balance at
Various ABS Percentages" and "Percent of Initial Certificate Balance at
Various ABS Percentages" (each an "ABS Table") have been prepared on the
basis of the characteristics of the Receivables. Each ABS Table assumes
that (a) the Receivables prepay in full at the specified constant
percentage of ABS monthly, with no defaults, losses or repurchases, (b)
each scheduled monthly payment on the Receivables is made on the last day
of each month and each month has 30 days, (c) payments on the Notes and
distributions on the Certificates are made on each Distribution Date (and
each such date is assumed to be the 15th day of each applicable month), (d)
the balance in the Reserve Account on each Distribution Date is equal to
the Specified Reserve Account Balance, and (e) the Seller or Servicer does
not exercise its option to purchase the Receivables. The pool has an
assumed cutoff date of the Cutoff Date. Each ABS Table indicates the
projected weighted average life of each class of Notes and the
Certificates, as applicable, and sets forth the percent of the initial
principal amount of each class of Notes and the percent of the initial
Certificate Balance, as applicable, that is projected to be outstanding
after each of the Distribution Dates shown at various constant ABS
percentages.
The ABS Tables also assume that the Receivables have been aggregated
into hypothetical pools with all of the Receivables within each such pool
having the following characteristics and that the level scheduled monthly
payment for each of the pools (which is based on its aggregate principal
balance, APR, original number of scheduled payments and remaining number of
scheduled payments as of the Cut-Off Date) will be such that each pool will
be fully amortized by the end of its remaining term to maturity.
Original Number Remaining Number
Aggregate of Scheduled of Scheduled
Pool Principal Balance APR Payments Payments
- -------- ----------------- ----- --------------- ---------------
1....... $ %
The actual characteristics and performance of the Receivables will
differ from the assumptions used in constructing each ABS Table. The
assumptions used are hypothetical and have been provided only to give a
general sense of how the principal cash flows might behave under varying
prepayment scenarios. For example, it is very unlikely that the
Receivables will prepay at a constant level of ABS until maturity or that
all of the Receivables will prepay at the same level of ABS. Moreover, the
diverse terms of Receivables within each of the four hypothetical pools
could produce slower or faster principal distributions than indicated in
the ABS Table at the various constant percentages of ABS specified, even if
the original and remaining terms to maturity of the Receivables are as
assumed. Any difference between such assumptions and the actual
characteristics and performance of the Receivables, or actual prepayment
experience, will affect the percentages of initial balances outstanding
over time and the weighted average lives of each class of Notes and the
Certificates.
The ABS Tables have been prepared based on the assumptions described above
(including the assumptions regarding the characteristics and performance of
the Receivables which will differ from the actual characteristics and
performance thereof) and should be read in conjunction therewith.
<TABLE>
<CAPTION>
Percent of Initial Note Principal Balance at Various ABS Percentages
Class A-1 Notes Class A-2 Notes
------------------------ ---------------------------
<S> <C> <C>
Distribution Dates 0.0% 0.5% 1.0% 1.5% 2.0% 0.0% 0.5% 1.0% 1.5% 2.0%
- ------------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Closing Date....
October 1996....
November 1996...
December 1996...
January 1997....
February 1997...
March 1997......
April 1997......
May 1997........
June 1997.......
July 1997.......
August 1997.....
September 1997..
Weighted Average
Life (years)(1)
<PAGE>
<CAPTION>
Class A-3 Notes Class A-4 Notes
------------------------ ---------------------------
<S> <C> <C>
Distribution Dates 0.0% 0.5% 1.0% 1.5% 2.0% 0.0% 0.5% 1.0% 1.5% 2.0%
- ------------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Closing Date....
October 1996....
November 1996...
December 1996...
January 1997....
February 1997...
March 1997......
April 1997......
May 1997........
June 1997.......
July 1997.......
August 1997.....
September 1997..
Weighted Average
Life (years)(1)
___________________________
<FN>
(1) The weighted average life of a Note is determined by (a) multiplying the
amount of each principal payment of such Note by the number of years
from the date of the issuance of such Note to the related Distribution
Date, (b) adding the results and (c) dividing the sum by the related
initial principal amount of such Note.
<PAGE>
<CAPTION>
Percent of Initial Certificate Balance at Various ABS Percentages
Certificates
-----------------------------------
<S> <C> <C> <C> <C> <C>
Distribution Date 0.0.% 0.5% 1.0% 1.5% 2.0%
- ----------------- ----- ---- ---- ---- ----
Closing Date.........................
October 1996.........................
November 1996........................
December 1996........................
January 1997.........................
February 1997........................
March 1997...........................
April 1997...........................
May 1997.............................
June 1997............................
July 1997............................
August 1997..........................
September 1997.......................
Weighted Average Life (years)(1).....
________________________________
<FN>
(1) The weighted average life of a Certificate is determined by (a)
multiplying the amount of each distribution in respect of the
Certificate Balance of such Certificate by the number of years from the
date of the issuance of such Certificate to the related Distribution
Date, (b) adding the results and (c) dividing the sum by the original
Certificate Balance of such Certificate.
</TABLE>
DESCRIPTION OF THE NOTES
General
The Notes will be issued pursuant to the Indenture, a form of which
has been filed as an exhibit to the Registration Statement. A copy of the
Indenture will be filed with the Commission following the issuance of the
Securities. The following summary describes the material terms of the
Notes and the Indenture, but it does not purport to be a complete
description of the Notes and the Indenture and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Notes
and the Indenture. Where particular provisions or terms used in the
Indenture are referred to, the actual provisions (including definitions of
terms) are incorporated by reference as part of such summary. The
following summary supplements the description of the general terms and
provisions of the Notes of any given series and the related Indenture set
forth in the Prospectus, to which description reference is hereby made.
_____________________ will be the Indenture Trustee under the Indenture.
The address of the Indenture Trustee at which information regarding the
Trust and Notes may be obtained is ________________.
Payments of Interest
Each class of the Notes will constitute Fixed Rate Securities, as
such term is defined under "Certain Information Regarding the
Securities--Fixed Rate Securities" in the Prospectus. Interest on the
principal balances of the classes of the Notes will accrue at their
respective per annum Interest Rates and will be payable to the Noteholders
monthly on each Distribution Date, commencing , 1996. Interest on the
outstanding principal amount of the Notes will accrue at the applicable
Interest Rate for the applicable Interest Period. Interest distributions
due for any Distribution Date but not distributed on such Distribution Date
will be due on the next Distribution Date increased by an amount equal to
interest on such amount at the applicable Interest Rate (to the extent
lawful). With respect to any Distribution Date, interest on the Class A-1
Notes will be calculated on the basis of a 360-day year based upon the
actual number of days elapsed during the related Interest Period and
interest on the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes will
be calculated on the basis of a 360-day year consisting of twelve 30-day
months. Interest payments on the Notes will generally be derived from the
Total Distribution Amount remaining after the reimbursement of Outstanding
Advances and payment of the Servicing Fee. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account."
Interest payments to each class of Noteholders will have the same
priority. Under certain circumstances, the amount available for interest
payments could be less than the amount of interest payable on the Notes on
any Distribution Date, in which case each class of Noteholders will receive
their ratable share (based upon the aggregate amount of interest due to
such class of Noteholders) of the aggregate amount available to be
distributed in respect of interest on the Notes.
Payments of Principal
Principal payments will be made to the Noteholders on each
Distribution Date in an amount generally equal to the Noteholders'
Principal Distributable Amount. Principal payments on the Notes will
generally be derived from the Total Distribution Amount remaining after the
payment of the Servicing Fee and the Noteholders' Interest Distributable
Amount. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account."
On the Business Day immediately preceding each Distribution Date (a
"Determination Date"), the Indenture Trustee shall determine the amount in
the Collection Account allocable to interest and the amount allocable to
principal.
On each Distribution Date, principal payments on the Notes will be
applied in the following order of priority: (a) to the principal balance
of the Class A-1 Notes until the principal balance of the Class A-1 Notes
is reduced to zero; (b) to the principal balance of the Class A-2 Notes
until the principal balance of the Class A-2 Notes is reduced to zero; (c)
to the principal balance of the Class A-3 Notes until the principal balance
of the Class A-3 Notes is reduced to zero; and (d) to the principal balance
of the Class A-4 Notes until the principal balance of the Class A-4 Notes
is reduced to zero. The principal balance of the Class A-1 Notes, to the
extent not previously paid, will be due on the Class A-1 Final Scheduled
Distribution Date, the principal balance of the Class A-2 Notes, to the
extent not previously paid, will be due on the Class A-2 Final Distribution
Date, the principal balance of the Class A-3 Notes, to the extent not
previously paid, will be due on the Class A-3 Final Scheduled Distribution
Date and the principal amount of the Class A-4 Notes, to the extent not
previously paid, will be due on the Class A-4 Final Scheduled Distribution
Date. The actual date on which the aggregate outstanding principal amount
of any class of Notes is paid may be earlier or later than the respective
Final Scheduled Distribution Dates set forth above based on a variety of
factors, including those described under "Weighted Average Life of the
Securities" herein and in the Prospectus.
Optional Redemption
If the Seller or Servicer exercises its option to purchase the
Receivables when the Pool Balance declines to 5% or less of the Original
Pool Balance and all classes of Notes other than the Class A-4 Notes have
been paid in full, the Class A-4 Notes will be redeemed at a price equal to
the unpaid principal amount of the Class A-4 Notes plus accrued and unpaid
interest thereon.
DESCRIPTION OF THE CERTIFICATES
General
The Certificates will be issued pursuant to the Trust Agreement, a
form of which has been filed as an exhibit to the Registration Statement.
A copy of the Trust Agreement will be filed with the Commission following
the issuance of the Securities. The following summary describes the
material terms of the Certificates and the Trust Agreement, but it does not
purport to be a complete description of the Certificates and the Trust
Agreement and is subject to, and qualified in its entirety by reference to,
all the provisions of the Certificates and the Trust Agreement. The
following summary supplements the description of the general terms and
provisions of the Certificates of any given series and the related Trust
Agreement set forth in the Prospectus, to which description reference is
hereby made.
Distribution of Interest Income
On each Distribution Date, commencing October 15, 1996, the
Certificateholders will be entitled to distributions in an amount equal to
the amount of interest that would accrue on the Certificate Balance at the
Certificate Rate for the applicable Interest Period. The Certificates will
constitute Fixed Rate Securities, as such term is defined under "Certain
Information Regarding the Securities--Fixed Rate Securities" in the
Prospectus. Interest distributions due for any Distribution Date but not
distributed on such Distribution Date will be due on the next Distribution
Date increased by an amount equal to interest on such amount at the
Certificate Rate (to the extent lawful). Interest distributions with
respect to the Certificates will generally be funded from the portion of
the Total Distribution Amount remaining after the distribution of the
Servicing Fee and the Noteholders' Distributable Amount. See "Description
of the Transfer and Servicing Agreements--Distributions" and "--Reserve
Account."
Distributions of Principal Payments
Certificateholders will be entitled to distributions of principal on
each Distribution Date, commencing with the Distribution Date on which the
Notes are paid in full, in an amount generally equal to the Principal
Distribution Amount (less on the Distribution Date on which the Notes are
paid in full, the portion thereof payable on the Notes). Distributions with
respect to principal payments will generally be funded from the portion of
the Total Distribution Amount remaining after the distribution of the
Servicing Fee, the Noteholders' Distributable Amount (on the Distribution
Date on which the Notes are paid in full) and the Certificateholders'
Interest Distributable Amount. See "Description of the Transfer and
Servicing Agreements--Distributions" and "--Reserve Account."
<PAGE>
Optional Prepayment
If the Seller or Servicer exercises its option to purchase the
Receivables when the Pool Balance declines to 5% or less of the Original
Pool Balance, Certificateholders will receive an amount in respect of the
Certificates equal to the outstanding Certificate Balance together with
accrued interest at the Certificate Rate, which distribution shall effect
early retirement of the Certificates. See "Description of the Transfer and
Servicing Agreements--Termination" in the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Sale and
Servicing Agreement and the Trust Agreement (collectively, the "Transfer
and Servicing Agreements"). Forms of the Transfer and Servicing Agreements
have been filed as exhibits to the Registration Statement. A copy of the
Sale and Servicing Agreement will be filed with the Commission following
the issuance of the Securities. The summary describes the material terms
of the Transfer and Servicing Agreements, but it does not purport to be
complete and is subject to, and qualified in its entirety by reference to,
all the provisions of the Transfer and Servicing Agreements. The following
summary supplements the description of the general terms and provisions of
the Transfer and Servicing Agreements set forth in the Prospectus, to which
description reference is hereby made.
Accounts
Accounts referred to under "Description of the Transfer and Servicing
Agreements--Accounts" in the Prospectus, as well as the Reserve Account,
will be established by the Servicer and maintained in the name of the
Indenture Trustee on behalf of the Noteholders and the Certificateholders.
Amounts held from time to time in the Reserve Account will be held for the
benefit of Noteholders and Certificateholders. Funds on deposit in the
Reserve Account will be invested in Eligible Investments selected by the
Seller and, if permitted by the Rating Agencies, funds on deposit in the
Reserve Account may be invested in Eligible Investments that mature later
than the next Deposit Date. All net investment earnings on funds deposited
in the Collection Account net of losses and investment expenses, will be
treated as Interest Collections. All net investment earnings on funds
deposited in the Reserve Account during any Interest Period will be
included in the Available Reserve Amount for the related Distribution Date.
Upon any distribution to the Servicer after such Distribution Date of
amounts from the Reserve Account, the Securityholders will not have any
rights in, or claims to, such amounts. All net investment earnings on
funds invested in any other Trust Account will be distributed to the
Servicer and will not be treated as collections on the Receivables or
otherwise be available for Securityholders.
On each Deposit Date, prior to making any of the distributions
described above in "Deposits to the Distribution Accounts", Servicer shall
be reimbursed for all Outstanding Advances with respect to prior
Distribution Dates, to the extent of the Interest Collections for such
Distribution Date and, to the extent such Interest Collections are
insufficient, to the extent of the funds in the Reserve Account. On or
before each Distribution Date, funds in the amount of the Reserve Account
Transfer Amount for such Distribution Date will be withdrawn from the
Reserve Account and deposited in the Collection Account.
<PAGE>
On each Distribution Date, the amount available in the Reserve
Account (the "Available Reserve Amount") will equal the lesser of (a) the
amount on deposit in the Reserve Account (exclusive of investment earnings)
and (b) the Specified Reserve Account Balance.
On each Deposit Date, the Trustee will withdraw funds from the
Reserve Account (a) to the extent required to make reimbursements of
Outstanding Advances (after application of Interest Collections for that
purpose) and (b) the Reserve Account Transfer Amount. Such excess may
result from, among other things, Receivables becoming Defaulted Receivables
or the failure by the Servicer to make any remittance required to be made
under the Agreement. The aggregate amount to be withdrawn from the Reserve
Account on any Deposit Date will not exceed the Available Reserve Amount
with respect to the related Distribution Date. The Trustee will deposit the
proceeds of such withdrawal into the Collection Account on or before the
Distribution Date with respect to which such withdrawal was made.
"Specified Reserve Account Balance" means, for (a) any Distribution
Date prior to the Distribution Date on which the outstanding amount of the
Class A-1 Notes has been paid in full, $__________ and (b) any Distribution
Date on or after the Distribution Date on which the outstanding amount of
the Class A-1 Notes has been paid in full the greater of (i) ____% of the
sum of the aggregate outstanding principal amount of each class of Notes
plus the outstanding Certificate Balance on such Distribution Date (after
giving effect to all payments on the Notes and distributions with respect
to the Certificates to be made on such Distribution Date); or (ii) ___% of
the sum of the aggregate initial principal of the Notes plus the initial
Certificate Balance except that, if on such Distribution Date (x) the
Average Net Loss Ratio exceeds ___% or (y) the Average Delinquency Ratio
for the three preceding Collection Periods exceeds ___%, then the Specified
Reserve Account Balance shall be an amount equal to ___% of the sum of the
aggregate outstanding principal amount of each class of Notes and the
aggregate outstanding Certificate Balance on such Distribution Date (after
giving effect to all payments on the Notes and distributions with respect
to the Certificates to be made on such Distribution Date). In any event,
on any Distribution Date, the Specified Reserve Account Balance will not
exceed the aggregate outstanding principal amount of the Notes plus the
aggregate outstanding Certificate Balance on such Distribution Date and may
be reduced to a lesser amount, as determined by the Seller, so long as such
reduction does not cause either Rating Agency to withdraw or downgrade its
rating of the Certificates. The time necessary for the Reserve Account to
reach and maintain the Specified Reserve Account Balance at any time after
the Closing Date will be affected by the delinquency, credit loss,
repossession and prepayment experience of the Receivables and, therefore,
cannot be accurately predicted. Amounts on deposit in the Reserve Account
will be released to the Servicer on each Distribution Date to the extent
that the amount on deposit in the Reserve Account would exceed the
Specified Reserve Account Balance after giving effect to any withdrawal
from the Reserve Account on such Distribution Date.
"Aggregate Net Losses" means, for any Collection Period, the
aggregate amount allocable to principal of all Receivables newly
designated during such Collection Period as Defaulted Receivables
minus all Liquidation Proceeds collected during such Collection
Period with respect to all Defaulted Receivables (whether or not
newly designated as such).
"Average Delinquency Ratio" means, as of any Distribution Date,
the average of the Delinquency Ratios for the preceding three
Collection Periods.
"Average Net Loss Ratio" means, as of any Distribution Date, the
average of the Net Loss Ratios for the preceding three Collection
Periods.
"Delinquency Ratio" means, for any Collection Period, the ratio,
expressed as a percentage, of (a) the principal amount of all
outstanding Receivables (other than Purchased Receivables and
Defaulted Receivables) which are ___ or more days delinquent as of
the end of such Collection Period, determined in accordance with
Servicer's customary practices, divided by (b) the Pool Balance as of
the last day of such Collection Period.
"Liquidation Proceeds" means, with respect to any Receivable
that has become a Defaulted Receivable in a prior Collection Period,
(a) insurance proceeds received by the Servicer, with respect to
insurance policies relating to the Financed Vehicles or the Obligors
and any proceeds from lender's single interest insurance policies to
the extent not included in collections distributable to
Securityholders, (b) amounts received by the Servicer in connection
with such Defaulted Receivable pursuant to the exercise of rights
under the related Motor Vehicle Loan, and (c) the monies collected by
the Servicer (from whatever source, including, but not limited to
proceeds of a sale of a Financed Vehicle or deficiency balance
recovered after the charge-off of the related Receivable) on such
Defaulted Receivable, net of any expenses incurred by the Servicer in
connection therewith and any payments required by law to be remitted
to the Obligor.
"Net Loss Ratio" means, for any Collection Period, an amount,
expressed as a percentage, equal to (a) the Aggregate Net Losses for
such Collection Period, divided by (b) the average of the Pool
Balances on each of the first day of such Collection Period and the
last day of such Collection Period.
"Reserve Account Transfer Amount" means, on any Distribution
Date, an amount equal to the lesser of (a) the amount of cash or
other immediately available funds on deposit in the Reserve Account
on such Distribution Date (before giving effect to any withdrawals
therefrom relating to such Distribution Date) or (b) the amount, if
any, by which (i) the sum of the Servicing Fee for the related
Collection Period and all accrued and unpaid Servicing Fees for prior
Collection Periods, the Noteholders' Interest Distributable Amount,
the Certificateholders' Interest Distributable Amount, the
Noteholders' Principal Distributable Amount and the
Certificateholders' Principal Distributable Amount for such
Distribution Date exceeds (ii) the sum of the Available Interest and
the Available Principal for such Distribution Date.
If funds in the Reserve Account are reduced to zero, the
Securityholders will bear the credit and other risks associated with
ownership of the Receivables. In such a case, the amount available for
distribution may be less than that described below, and the Securityholders
may experience delays or suffer losses as a result, among other things, of
defaults or delinquencies by the Obligors or previous extensions made by
the Servicer.
Advances
On or prior to each Deposit Date, the Servicer will advance any
Interest Shortfall with respect to the related Distribution Date by
depositing the amount of such Interest Shortfall into the Collection
Account. The Servicer will be obligated to make such an Advance except to
the extent that the Servicer reasonably determines that the Advance is
unlikely to be recoverable as set forth below.
On each Distribution Date, prior to making any of the distributions
set forth in "--Distributions", the Servicer shall be reimbursed for all
Outstanding Advances with respect to prior Distribution Dates, to the
extent of the Interest Collections for such Distribution Date and, to the
extent such Interest Collections are insufficient, to the extent of the
funds in the Reserve Account. If it is acceptable to each Rating Agency
without a reduction in the rating of the Certificates, the Outstanding
Advances at the option of the Servicer may be paid at or as soon as
possible after the beginning of the related Collection Period out of the
first collections of interest received on the Receivables for such
Collection Period.
"APR" means, with respect to a Receivable, the rate per annum of
interest charged on the outstanding principal balance of such
Receivable.
"Defaulted Receivable" means, with respect to any Collection
Period, a Receivable (other than a Purchased Receivable) which the
Servicer has determined to charge off during such Collection Period
in accordance with its customary servicing practices; provided,
however, that any Receivable which the Seller or Servicer is
obligated to repurchase or purchase shall be deemed to have become a
Defaulted Receivable during a Collection Period if the Seller or
Servicer fails to deposit the Purchase Amount on the related Deposit
Date when due.
"Expected Interest" means, with respect to any Distribution
Date, an amount equal to the sum of the product of (a) one-twelfth of
the Weighted Average APR for the related Collection Period multiplied
by (b) an amount equal to the Pool Balance as of the first day of the
related Collection Period minus the sum of the Principal Balances of
Non-Advance Receivables for such Distribution Date.
"Interest Collections" for a Distribution Date shall mean the
sum of the following amounts with respect to the related Collection
Period: (a) that portion of the collections on the Receivables
received during the related Collection Period that is allocable to
interest in accordance with the Servicer's customary procedures; (b)
all Liquidation Proceeds received during such Collection Period; (c)
all Purchase Amounts, to the extent attributable to accrued interest,
of all Receivables that are repurchased by the Seller or purchased by
the Servicer under an obligation which arose during the related
Collection Period; and (d) the net investment income earned on
balances held in the Collection Account during such Collection
Period. "Interest Collections" for any Distribution Date shall
exclude all payments and proceeds of any Receivables the Purchase
Amount of which has been distributed on a prior Distribution Date.
"Interest Shortfall" means, with respect to any Distribution
Date, the lesser of (a) the amount (if any) by which the Expected
Interest for such Distribution Date exceeds the Net Interest
Collections for such Distribution Date and (b) the amount (if any) by
which the sum of the Servicing Fee for the related Collection Period
and all accrued and unpaid Servicing Fees for prior Collection
Periods, the Noteholders' Interest Distributable Amount and the
Certificateholders' Interest Distributable for such Distribution Date
exceeds the Net Interest Collections for such Distribution Date.
"Net Interest Collections" means, with respect to any
Distribution Date, the greater of (a) zero and (b) Interest
Collections for such Distribution Date minus the Outstanding Advances
as of such Distribution Date.
"Non-Advance Receivables" means, with respect to any
Distribution Date, any Receivables which became Defaulted Receivables
during the related Collection Period or which the Servicer, in its
sole discretion, believes are likely to become Defaulted Receivables.
"Outstanding Advances" means, as of any date, all Advances made
by the Servicer with respect to prior Distribution Dates which have
not been reimbursed.
"Purchase Amount" means the amount, as of the close of business
on the last day of a Collection Period, required to prepay in full
the respective Receivable under the terms thereof including interest
at the APR to the end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of the
close of business on the last day of a Collection Period by the
Servicer or repurchased by the Seller pursuant to the Sale and
Servicing Agreement.
"Weighted Average APR" means, with respect to any Collection
Period, the weighted average of the APR of the Receivables (excluding
Non-Advance Receivables), weighted based on the Principal Balance of
each such Receivable as of the first day of such Collection Period.
Servicing Compensation and Payment of Expenses
The Servicing Fee Rate shall be 1.0% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months. The Servicing
Fee, with respect to any Distribution Date, will be an amount equal to the
product of (a) one-twelfth of the Servicing Fee Rate, multiplied by (b) the
Pool Balance as of the first day of the preceding Collection Period. The
Servicing Fee in respect of a Collection Period (together with any portion
of the Servicing Fee that remains unpaid from prior Distribution Dates) may
be paid at the beginning of such Collection Period out of collections for
such Collection Period. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" in the
Prospectus.
The Servicer will also collect and retain any late fees, extension
fees, prepayment charges and certain non-sufficient funds charges and other
administrative fees or similar charges (the "Supplemental Servicing Fee")
allowed by applicable law with respect to the Receivables. 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. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" in the
Prospectus.
Distributions
Deposits to Collection Account. On or before each Distribution Date,
the Servicer will cause all collections and other amounts constituting the
Total Distribution Amount to be deposited into the Collection Account.
"Available Interest" means, with respect to any Distribution
Date, the excess of (a) the sum of (i) Interest Collections for such
Distribution Date and (ii) all Advances made by Servicer with respect
to such Distribution Date, over (b) the amount of Outstanding
Advances to be reimbursed on or with respect to such Distribution
Date.
"Available Principal" for a Distribution Date means the sum of
the following amounts with respect to the preceding Collection
Period: (a) that portion of all collections (other than Liquidation
Proceeds) received during such Collection Period and allocable to
principal in accordance with Servicer's customary servicing
procedures; and (b) to the extent attributable to principal, the
Purchase Amount received with respect to each Receivable repurchased
by Seller or purchased by Servicer under an obligation which arose
during the related Collection Period. "Available Principal" on any
Distribution Date shall exclude all payments and proceeds of any
Receivables the Purchase Amount of which has been distributed on a
prior Distribution Date.
"Certificate Balance" equals, initially, $ and,
thereafter, equals the initial Certificate Balance, reduced by all
amounts allocable to principal previously distributed to
Certificateholders.
"Certificateholders' Interest Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the
Certificateholders' Monthly Interest Distributable Amount for the
preceding Distribution Date and any outstanding Certificateholders'
Interest Carryover Shortfall on such preceding Distribution Date,
over the amount in respect of interest that is actually deposited in
the Certificate Distribution Account on such preceding Distribution
Date, plus interest on such excess, to the extent permitted by law,
at the Certificate Rate from and including such preceding
Distribution Date to but excluding the current Distribution Date.
"Certificateholders' Interest Distributable Amount" means, for
any Distribution Date, the sum of the Certificateholders' Monthly
Interest Distributable Amount for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such
Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount"
means, for any Distribution Date, the amount of interest accrued on
the Certificates at the Certificate Rate during the related Interest
Period (calculated on the basis of a 360-day year and twelve 30-day
months).
"Certificateholders' Percentage" means 100% minus the
Noteholders' Percentage.
"Certificateholders' Principal Distributable Amount" means, for
any Distribution Date, the sum of the Certificateholders' Monthly
Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of
the preceding Distribution Date; provided that the
Certificateholders' Principal Distributable Amount shall not exceed
the Certificate Balance. In addition, on the Certificate Final
Scheduled Distribution Date, the principal required to be distributed
to Certificateholders will include the lesser of (a) any payments of
principal due and remaining unpaid on each Receivable owned by Issuer
as of ___________ or (b) the portion of the amount that is necessary
(after giving effect to the other amounts to be deposited in the
Certificate Distribution Account on such Distribution Date and
allocable to principal) to reduce the Certificate Balance to zero, in
either case after giving effect to any required distribution of the
Noteholders' Principal Distributable Amount to the Note Distribution
Account.
"Certificateholder's Monthly Principal Distributable Amount"
means, for any Distribution Date, the Certificateholders' Percentage
of the Principal Distribution Amount or, for any Distribution Date on
or after the Distribution Date on which the outstanding principal
balance of the Class A-4 Notes is reduced to zero, 100% of the
Principal Distribution Amount (less any amount required on the first
such Distribution Date to reduce the outstanding principal balance of
the Class A-4 Notes to zero, which shall be deposited into the Note
Distribution Account).
"Certificateholders' Principal Carryover Shortfall" means, as of
the close of any Distribution Date, the excess of the
Certificateholders' Monthly Principal Distributable Amount and any
outstanding Certificateholders' Principal Carryover Shortfall from
the preceding Distribution Date, over the amount in respect of
principal that is actually deposited in the Certificate Distribution
Account.
"Principal Distribution Amount" means, for any Distribution
Date, the sum of (a) the Available Principal for such Distribution
Date, and (b) the amount of Realized Losses for the related
Collection Period.
"Realized Losses" means, for any Collection Period, the
aggregate principal balances of any Receivables that became Defaulted
Receivables during such Collection Period.
"Total Distribution Amount" means, for each Distribution Date,
the sum of (a) the Available Interest, (b) the Available Principal
and (c) the Reserve Account Transfer Amount, in each case in respect
of such Distribution Date.
Deposits to the Distribution Accounts. On each Distribution Date,
after making the reimbursements to Servicer of Outstanding Advances,
Servicer shall instruct Indenture Trustee or, in the event that the
Collection Account is maintained with an institution other than Indenture
Trustee, instruct and cause such institution (based on the information
contained in the Servicer's Report delivered on the related Determination
Date) to make, and Indenture Trustee or such other institution shall make,
the following deposits and distributions from the Collection Account for
deposit in the applicable account by 11:00 a.m. (New York time), to the
extent of the Total Distribution Amount, in the following order of
priority:
(a) to Servicer, from the Total Distribution Amount, the
Servicing Fee for the related Collection Period and all accrued and
unpaid Servicing Fees for prior Collection Periods;
(b) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (a),
the Noteholders' Interest Distributable Amount;
(c) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (a) and
clause (b), the Noteholders' Principal Distributable Amount;
(d) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (a) through (c), the
Certificateholders' Interest Distributable Amount;
(e) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (a) through (d), the
Certificateholders' Principal Distributable Amount;
(f) to the Reserve Account until the amount on deposit in the
Reserve Account equals the Specified Reserve Account Balance; and
(g) to Seller, any amounts remaining.
On each Determination Date (other than the first Determination Date),
the Servicer will provide the Owner Trustee and the Indenture Trustee with
certain information with respect to the Collection Period related to the
prior Distribution Date, including the amount of aggregate collections on
the Receivables, the aggregate amount of Receivables which were written off
and the aggregate Purchase Amount of Receivables to be repurchased by the
Seller or to be purchased by the Servicer.
For purposes hereof, the following terms shall have the following
meanings:
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal
Distributable Amount and the Noteholders' Interest Distributable
Amount.
"Noteholders' Interest Carryover Shortfall" means, with respect
to any Distribution Date, the excess of the Noteholders' Monthly
Interest Distributable Amount for the preceding Distribution Date and
any outstanding Noteholders' Interest Carryover Shortfall on such
preceding Distribution Date, over the amount in respect of interest
that is actually deposited in the Note Distribution Account on such
preceding Distribution Date, plus interest on the amount of interest
due but not paid to Noteholders on the preceding Distribution Date,
to the extent permitted by law, at the respective Interest Rates
borne by each class of Notes from such preceding Distribution Date
through the current Distribution Date.
"Noteholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders'
Interest Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, for
any Distribution Date and for each class of Notes, the amount of
interest accrued on such class at its respective Interest Rate during
the related Interest Period (calculated on the basis of a 360-day
year and the actual number of days elapsed for the Class A-1 Notes
and on the basis of a 360-day year and twelve 30-day months in the
case of the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes).
"Noteholders' Monthly Principal Distributable Amount" means, for
any Distribution Date, the Noteholders' Percentage of the Principal
Distribution Amount.
"Noteholders' Percentage" means 100% until the point in time at
which the Notes have been paid in full and zero thereafter.
"Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Noteholders'
Monthly Principal Distributable Amount and any outstanding
Noteholders' Principal Carryover Shortfall from the preceding
Distribution Date over the amount in respect of principal that is
actually deposited in the Note Distribution Account for such
Distribution Date.
"Noteholders' Principal Distributable Amount" means, for any
Distribution Date, the sum of the Noteholder's Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders'
Principal Carryover Shortfall as of the close of the preceding
Distribution Date; provided that the Noteholders' Principal
Distributable Amount shall not exceed the outstanding principal
balance of the Notes. In addition, on the Final Scheduled
Distribution Date of each class of Notes, the principal required to
be deposited in the Note Distribution Account will include the amount
necessary (after giving effect to the other amounts to be deposited
in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the outstanding amount of such
class of Notes to zero.
On each Distribution Date, all amounts on deposit in the Note
Distribution Account (other than investment earnings) will be generally
paid in the following order of priority:
(a) to the applicable Noteholders, accrued and unpaid interest
on the outstanding principal balance of the applicable class of Notes
at the applicable Interest Rate;
(b) the Noteholders' Principal Distributable Amount in the
following order of priority:
(i) to the Holders of the Class A-1 Notes in reduction of
principal until the principal balance of the Class A-1 Notes has
been reduced to zero;
(ii) to the Holders of the Class A-2 Notes in reduction
of principal until the principal balance of the Class A-2 Notes
has been reduced to zero;
(iii) to the Holders of the Class A-3 Notes in reduction
of principal until the principal balance of the Class A-3 Notes
has been reduced to zero; and
(iv) to the Holders of the Class A-4 Notes in reduction
of principal until the principal balance of the Class A-4 Notes
has been reduced to zero.
On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders in the
following priority:
(a) first, to the Certificateholders, on a pro rata basis, an
amount equal to the Certificateholders' Interest Distributable
Amount; and
(b) second, to the Certificateholders, on a pro rata basis, an
amount equal to the Certificateholders' Principal Distributable
Amount.
Subordination of Certificateholders
The rights of the Certificateholders to receive distributions with
respect to the Receivables generally will be subordinated to the rights of
the Noteholders in the event of defaults and delinquencies on the
Receivables as provided in the Sale and Servicing Agreement. The
protection afforded to the Noteholders through subordination will be
effected both by the preferential right of the Noteholders to receive
current distributions with respect to the Receivables and by the
establishment of the Reserve Account. If on any Distribution Date the
entire Noteholders' Distributable Amount for such Distribution Date (after
giving effect to any amounts withdrawn from the Reserve Account) is not
deposited in the Note Distribution Account, the Certificateholders will not
receive any distributions.
The subordination of the Certificates and the Reserve Account are
intended to enhance the likelihood of receipt by Noteholders of the full
amount of principal and interest due them and to decrease the likelihood
that the Noteholders will experience losses. In addition, the Reserve
Account is intended to enhance the likelihood of receipt by
Certificateholders of the full amount of principal and interest due them
and to decrease the likelihood that the Certificateholders will experience
losses. However, in certain circumstances, the Reserve Account could be
depleted. If the amount required to be withdrawn from the Reserve Account
to cover shortfalls in collections on the Receivables exceeds the amount of
available cash in the Reserve Account, Noteholders or Certificateholders
could incur losses or a temporary shortfall in the amounts distributed to
the Noteholders or the Certificateholders could result, which could, in
turn, increase the average life of the Notes or the Certificates.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Information regarding certain legal aspects of the Receivables is set
forth under "Certain Legal Aspects of the Receivables" in the Prospectus.
LEGAL INVESTMENT
The Class A-1 Notes will be eligible for purchase by money market
funds under paragraph (a)(5) of Rule 2a-7 under the Investment Company Act
of 1940, as amended.
ERISA CONSIDERATIONS
The Notes
The Notes may be purchased by an employee benefit plan or an
individual retirement account (a "Plan") subject to ERISA or Section 4975
of the Code. A fiduciary of a Plan must determine that the purchase of a
Note is consistent with its fiduciary duties under ERISA and does not
result in the assets of the Trust being deemed to constitute plan assets or
in a nonexempt prohibited transaction as defined in Section 406 of ERISA or
Section 4975 of the Code. For additional information regarding the likely
treatment of the Notes as debt under ERISA, see "ERISA Considerations" in
the Prospectus.
However, without regard to whether the Notes are treated as an equity
interest for such purposes, the acquisition or holding of Notes by or on
behalf of a Plan could be considered to give rise to a prohibited
transaction if an Affiliate, the Seller, the Trust, the Servicer, the
Indenture Trustee or the Owner Trustee is or becomes a party in interest
under ERISA or disqualified person under the Code with respect to such
Plan. Certain exemptions from the prohibited transaction rules could be
applicable to the purchase and holding of Notes by a Plan depending on the
type and circumstances of the plan fiduciary making the decision to acquire
such Notes. Included among these exemptions, each of which contains
several conditions which must be satisfied before the exemption applies,
are: Prohibited Transaction Class Exemption ("PTCE") 95-60, regarding
investments by insurance company general accounts, PTCE 91-38, regarding
investments by bank collective investment funds; PTCE 90-1, regarding
investments by insurance company separate accounts, and PTCE 84-14,
regarding transactions effected by "qualified professional asset managers."
By its acceptance of a Note, each Noteholder shall be deemed to have
represented and warranted that its purchase and holding of the Note will
not result in a nonexempt prohibited transaction under Section 406(a) of
ERISA or Section 4975 of the Code.
The Certificates
The Certificates may not be acquired (a) with the assets of an
employee benefit plan (as defined in Section 3(3) of ERISA) that is subject
to the provisions of Title I of ERISA, (b) by a plan described in Section
4975(e) (1) of the Code or (c) by any entity whose underlying assets
include plan assets by reason of a plan's investment in the entity or which
uses plan assets to acquire Certificates. By its acceptance of a
Certificate, each Certificateholder will be deemed to have represented and
warranted that it is not subject to the foregoing limitation. In this
regard, purchasers that are insurance companies should consult with their
counsel with respect to the United States Supreme Court case interpreting
the fiduciary responsibility rules of ERISA, John Hancock Mutual Life
Insurance Co. v. Harris Trust and Savings Bank (decided December 13, 1993).
In John Hancock, the Supreme Court ruled that assets held in an insurance
company's general account may be deemed to be "plan assets" for ERISA
purposes under certain circumstances. Prospective purchasers should
determine whether the decision affects their ability to make purchases of
the Certificates. For additional information regarding treatment of the
Certificates under ERISA, see "ERISA Considerations" in the Prospectus.
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement, the Seller has agreed to cause the Trust to sell to each of the
underwriters listed below (each, an "Underwriter"), and each of the
Underwriters has agreed to purchase, the principal amount of the Securities
set forth opposite its name below. Under the terms and conditions of the
Underwriting Agreement, each of the Underwriters is obligated to take and
pay for all of the Securities if any are taken.
<TABLE>
<CAPTION>
Principal Amount Principal Amount Principal Amount Principal Amount Principal Amount
of Class A-1 of Class A-2 of Class A-3 of Class A-4 of Asset-Backed
Asset-Backed Notes Asset-Backed Notes Asset-Backed Notes Asset-Backed Notes Certificates
<S> <C> <C> <C> <C> <C>
- ------------------ $------------- $----------- $------------ $------------ $-----------
- ------------------ ------------- ----------- ------------ ------------ -----------
- ------------------ ------------- ----------- ------------ ------------ -----------
Total: $ $ $ $ $
============ =========== ============ ============ ===========
</TABLE>
<PAGE>
The Seller has been advised by the Underwriters that they propose
initially to offer the Securities to the public at the prices set forth
herein, and to certain dealers at such prices less the initial concession
not in excess of ____% per Class A-1 Note; _____% per Class A-2 Note;
_____% per Class A-3 Note; ___% per Class A-4 Note; and _____% per
Certificate. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of .__% of the principal amount of the Securities
to certain other dealers. After the initial public offering, the public
offering price and such concessions may be changed.
The Seller does not intend to apply for listing of the Notes or the
Certificates on a national securities exchange, but has been advised by the
Underwriters that they intend to make a market in the Notes and
Certificates. The Underwriters are not obligated, however, to make a
market in the Notes and the Certificates and may discontinue market making
at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes or the Certificates.
The Seller has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
In the ordinary course of their respective businesses, each
Underwriter and its affiliates have engaged and may in the future engage in
commercial banking and investment banking transactions with the Seller.
<PAGE>
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain legal matters relating to the Notes and the Certificates and
certain federal income tax and other matters will be passed upon for the
Trust by Mayer, Brown & Platt, Chicago, Illinois and certain Minnesota tax
matters will be passed upon by Faegre & Benson, Minneapolis, Minnesota.
Each of Faegre & Benson and Mayer, Brown & Platt may from time to time
render legal services to the Seller, the Servicer and its affiliates.
Certain legal matters will be passed upon for the Underwriters by Mayer,
Brown & Platt, Chicago, Illinois.
<PAGE>
INDEX OF DEFINED TERMS
Page
ABS.................................................................S-22
ABS Table...........................................................S-23
Advance..............................................................S-9
Aggregate Net Losses................................................S-29
APR.................................................................S-30
Available Interest..................................................S-31
Available Principal.................................................S-32
Available Reserve Amount............................................S-28
Average Delinquency Ratio...........................................S-29
Average Net Loss Ratio..............................................S-29
Bank.................................................................S-4
Basic Documents.....................................................S-13
Business Day.........................................................S-6
Certificate Balance.................................................S-32
Certificate Final Scheduled Distribution Date........................S-9
Certificate Rate.....................................................S-8
Certificateholder's Monthly Principal Distributable Amount..........S-32
Certificateholders...................................................S-8
Certificateholders' Interest Carryover Shortfall....................S-32
Certificateholders' Interest Distributable Amount...................S-32
Certificateholders' Monthly Interest Distributable Amount...........S-32
Certificateholders' Monthly Principal Distributable Amount...........S-9
Certificateholders' Percentage.......................................S-9
Certificateholders' Principal Carryover Shortfall...................S-32
Certificateholders' Principal Distributable Amount..................S-32
Certificates.........................................................S-4
Class A-1 Final Scheduled Distribution Date..........................S-7
Class A-1 Interest Rate..............................................S-6
Class A-1 Notes......................................................S-4
Class A-2 Final Scheduled Distribution Date..........................S-7
Class A-2 Interest Rate..............................................S-6
Class A-2 Notes......................................................S-4
Class A-3 Interest Rate..............................................S-6
Class A-3 Notes......................................................S-4
Class A-4 Final Distribution Date....................................S-8
Class A-4 Interest Rate..............................................S-6
Class A-4 Notes......................................................S-4
Closing Date.........................................................S-4
Code................................................................S-12
Collection Period....................................................S-7
Commission...........................................................S-2
Cutoff Date..........................................................S-5
Defaulted Receivable................................................S-30
Delinquency Ratio...................................................S-29
Deposit Date.........................................................S-9
Determination Date..................................................S-26
Distribution Date....................................................S-6
ERISA...............................................................S-12
Expected Interest...................................................S-30
Final Scheduled Distribution Date....................................S-9
Final Scheduled Maturity Date........................................S-5
Financed Vehicles....................................................S-5
Indenture............................................................S-4
Indenture Trustee....................................................S-4
Interest Collections................................................S-30
Interest Period......................................................S-6
Interest Rates.......................................................S-6
Interest Shortfall..................................................S-30
Issuer...............................................................S-4
Liquidation Proceeds................................................S-29
Motor Vehicle Loans..................................................S-5
Net Interest Collections............................................S-31
Net Loss Ratio......................................................S-29
Non-Advance Receivables.............................................S-31
Noteholders..........................................................S-6
Noteholders' Distributable Amount...................................S-34
Noteholders' Interest Carryover Shortfall...........................S-34
Noteholders' Interest Distributable Amount..........................S-34
Noteholders' Monthly Interest Distributable Amount..................S-34
Noteholders' Monthly Principal Distributable Amount.................S-34
Noteholders' Percentage.............................................S-34
Noteholders' Principal Carryover Shortfall..........................S-34
Noteholders' Principal Distributable Amount.........................S-34
Notes................................................................S-4
Original Pool Balance................................................S-8
Outstanding Advances................................................S-31
Owner Trustee........................................................S-4
Payment Date.........................................................S-6
Plan................................................................S-36
Pool Balance.........................................................S-5
Principal Balance....................................................S-5
Principal Distribution Amount.......................................S-33
Prospectus...........................................................S-1
Purchase Amount.....................................................S-31
Purchased Receivable................................................S-31
Rating Agencies.....................................................S-12
Realized Losses.....................................................S-33
Receivables..........................................................S-5
Receivables Pool....................................................S-16
Record Date..........................................................S-6
Reserve Account.....................................................S-10
Reserve Account Deposit.............................................S-10
Reserve Account Transfer Amount.....................................S-29
Sale and Servicing Agreement.........................................S-5
Securities...........................................................S-4
Securityholders......................................................S-8
Seller...............................................................S-4
Servicer.............................................................S-4
Specified Reserve Account Balance...................................S-28
Supplemental Servicing Fee..........................................S-31
Total Distribution Amount...........................................S-33
Transfer and Servicing Agreements...................................S-27
Trust................................................................S-4
Trust Agreement......................................................S-4
Underwriter.........................................................S-36
Weighted Average APR................................................S-31
<PAGE>
========================================
No dealer, salesman or other person
has been authorized to give any
information or to make any represen-
tation not contained in this Prospectus
Supplement or the Prospectus and, if
given or made, such information or
representation must not be relied upon
as having been authorized by the
Seller or the Underwriters. This
Prospectus Supplement and the Prospectus
do not constitute an offer of any
securities other than those to which
they relate or an offer to sell, or a
solicitation of an offer to buy, to any
person in any jurisdiction where such
an offer or solicitation would be
unlawful. Neither the delivery of this
Prospectus Supplement and the
Prospectus nor any sale made hereunder
shall, under any circumstances,
create any implication that the
information contained herein is correct
as of any time subsequent to their
respective dates.
___________________________
TABLE OF CONTENTS
Prospectus Supplement
Page
----
Reports to Securityholders.. S-2
Summary of Terms............ S-4
Risk Factors................ S-13
The Trust................... S-15
The Receivables Pool........ S-16
The Seller, the Servicer and
Norwest Corporation....... S-21
Weighted Average Life of the
Securities................ S-22
Description of the Notes.... S-25
Description of the
Certificates.............. S-27
Description of the Transfer
and Servicing Agreements.. S-27
Certain Legal Aspects of
the Receivables............. S-35
Legal Investment............ S-36
ERISA Considerations........ S-36
Underwriting................ S-37
Legal Opinions.............. S-37
Index of Defined Terms...... S-38
<PAGE>
Prospectus
Page
----
Available Information.......
Incorporation of Certain
Documents by Reference....
Summary of Terms............
Risk Factors................
The Trusts..................
The Receivables Pools.......
Weighted Average Life of
the Securities..............
Pool Factors and Trading
Information...............
Use of Proceeds.............
The Seller..................
The Bank and Norwest
Corporation...............
Description of the Notes....
Description of the
Certificates..............
Certain Information Regarding
the Securities............
Description of the Transfer
and Servicing Agreements..
Certain Legal Aspects of
the Receivables...........
Federal Income Tax
Consequences..............
Certain State Tax
Consequences..............
ERISA Considerations........
Plan of Distribution........
Notice to Canadian
Residents.................
Legal Opinions..............
Index of Defined Terms......
Global Clearance, Settlement
and Documentation
Procedures................
Until 90 days after the date of this
Prospectus Supplement, all dealers
effecting transactions in the
Securities described in this Prospectus
Supplement, whether or not participating
in this distribution, may be
required to deliver this Prospectus
Supplement and the Prospectus. This is
in addition to the obligation of
dealers to deliver this Prospectus
Supplement and the Prospectus when
acting as underwriter and with respect
to their unsold allotments or
subscriptions.
===========================================
<PAGE>
==================================
$_________________________
(Approximate)
Norwest Auto
Receivables Corporation
(Seller)
$______________
Class A-1 ____%
Asset Backed Notes
$______________
Class A-2 ____%
Asset Backed Notes
$______________
Class A-3____%
Asset Backed Notes
$______________
Class A-4____%
Asset Backed Notes
$______________
____%
Asset Backed Certificates
=======================
PROSPECTUS SUPPLEMENT
______________, 199__
=======================
==============================
<PAGE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus supplement and the related prospectus
shall not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of these securities in any State in which
such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED _________ __, 1996
[ALTERNATE COVER]
[Owner Trust Supplement]
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 1996)
[$____________________]
Norwest Auto Trust 1996 - A
$______________ Class A-1 ____% Asset Backed Notes
$______________ Class A-2 ____% Asset Backed Notes
$______________ Class A-3 ____% Asset Backed Notes
$______________ Class A-4 ____% Asset Backed Notes
$______________ ____% Asset Backed Certificates
Norwest Auto Receivables Corporation
Seller
Norwest Bank Minnesota, N.A.
Servicer
The Norwest Auto Trust 1996-A (the "Trust") will be governed by a
Trust Agreement, to be dated as of ____________, 1996, between Norwest Auto
Receivables Corporation, as seller (the "Seller") and Wilmington Trust
Company, as Owner Trustee. The Trust will issue $_____________ aggregate
principal amount of Class A-1 ___% Asset Backed Notes (the "Class A-1
Notes"), $____________ aggregate principal amount of Class A-2 ___% Asset
Backed Notes (the "Class A-2 Notes"), $___________ aggregate principal
amount of Class A-3 Asset Backed Notes (the "Class A-3 Notes"), and
$_____________ aggregate principal amount of Class A-4 Asset Backed Notes
(the "Class A-4 Notes" and, together with the Class A-1 Notes, the Class
A-2 Notes and the Class A-3 Notes, the "Notes") pursuant to an Indenture to
be dated as of _____________, 1996, between the Trust and Chase Manhattan
Bank, as Indenture Trustee. The Trust will also issue $______________
aggregate principal amount of ___% Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities").
(continued on following page)
------------------
Prospective investors should consider the "Risk Factors" set forth at page
S-__ herein and at page ___ in the accompanying Prospectus (the "Prospectus").
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR
INTERESTS IN NORWEST AUTO RECEIVABLES CORPORATION, NORWEST BANK
MINNESOTA, N.A., ANY OTHER NORWEST BANK, NORWEST CORPORATION
OR ANY OF THEIR AFFILIATES. NEITHER THE SECURITIES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, ANY OTHER GOVERN-
MENTAL AGENCY OR INSTRUMENTALITY,NORWEST AUTO
RECEIVABLES CORPORATION, NORWEST BANK
MINNESOTA, N.A., ANY OTHER NORWEST
BANK, NORWEST INVESTMENT SERVICES,
INC., NORWEST CORPORATION OR ANY
OF THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public(1) Discounts the Seller(1)(2)
<S> <C> <C> <C>
Per Class A-1 Note % % %
Per Class A-2 Note % % %
Per Class A-3 Note % % %
Per Class A-4 Note % % %
Per Certificate % % %
Total $____________ $___________ $____________
- ----------------------
<FN>
(1) Plus accrued interest, if any, from ___________, 1996.
(2) Before deducting expenses, estimated to be $___________.
</TABLE>
This Prospectus Supplement and related Prospectus may be used by
Norwest Investment Services, Inc., an affiliate of the Seller, in
connection with market making transactions in the Certificates and Notes.
Norwest Investment Services, Inc. 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
Supplement will be updated from time to time as described in "Incorporation
of Certain Documents by Reference."
Norwest Investment Services, Inc.
September __, 1996
<PAGE>
[ALTERNATE PAGE]
UNDERWRITING
This Prospectus Supplement and the related Prospectus may be used by
Norwest Investment Services, Inc., an affiliate of the Seller, the Servicer
and the Affiliates, in connection with offers and sales relating to market
making transactions in the Certificates. Norwest Investment Services, Inc.
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. Norwest
Investment Services, Inc. does not have any obligation to make a market in
the Notes or the Certificates, and it may discontinue any such
market-making activities at any time without notice, in its sole
discretion. Norwest Investment Services, Inc. is among the underwriters
participating in the initial distribution of the Notes and the
Certificates.
LEGAL OPINION
In addition to the legal opinions described in the Prospectus,
certain legal matters relating to the Notes and the Certificates and
certain federal income tax and other matters will be passed upon for the
Trust by Mayer, Brown & Platt, Chicago, Illinois and certain Minnesota tax
matters will be passed upon by Faegre & Benson, Minneapolis, Minnesota.
Each of Faegre & Benson and Mayer, Brown & Platt may from time to time
render legal services to the Seller, the Servicer and its affiliates.
Certain legal matters will be passed upon for the Underwriters by Mayer,
Brown & Platt, Chicago, Illinois.
<PAGE>
No dealer, salesman or other person
has been authorized to give any
information or to make any
representation not contained in this
Prospectus Supplement or the Prospectus
and, if given or made, such information
or representation must not be relied
upon as having been authorized by the
Seller or the Underwriters. This
Prospectus Supplement and the
Prospectus do not constitute an offer
of any securities other than those
to which they relate or an offer to
sell, or a solicitation of an offer to
buy, to any person in any jurisdiction
where such an offer or solicitation
would be unlawful. Neither the
delivery of this Prospectus Supplement
and the Prospectus nor any sale made
hereunder shall, under any circumstances,
create any implication that the
information contained herein is correct
as of any time subsequent to their
respective dates.
---------------------------
TABLE OF CONTENTS
Prospectus Supplement
Page
-----
Reports to Securityholders.................... S-2
Summary of Terms.............................. S-4
Risk Factors.................................. S-13
The Trust..................................... S-15
The Receivables Pool.......................... S-16
The Seller, the Servicer and Norwest
Corporation................................. S-21
Weighted Average Life of the Securities....... S-22
Description of the Notes...................... S-25
Description of the Certificates............... S-27
Description of the Transfer and Servicing
Agreements.................................. S-27
Certain Legal Aspects of the Receivables...... S-35
Legal Investment.............................. S-36
ERISA Considerations.......................... S-36
Underwriting.................................. S-37
Legal Opinions................................ S-37
Index of Defined Terms........................ S-38
Prospectus
Page
-----
Available Information.........................
Incorporation of Certain Documents
by Reference................................
Summary of Terms..............................
Risk Factors..................................
The Trusts....................................
The Receivables Pools.........................
Weighted Average Life of the Securities.......
Pool Factors and Trading Information..........
Use of Proceeds...............................
The Seller....................................
The Bank and Norwest Corporation..............
Description of the Notes......................
Description of the Certificates...............
Certain Information Regarding the
Securities..................................
Description of the Transfer and Servicing
Agreements
Certain Legal Aspects of the Receivables......
Federal Income Tax Consequences...............
Certain State Tax Consequences................
ERISA Considerations..........................
Plan of Distribution..........................
Notice to Canadian Residents..................
Legal Opinions................................
Index of Defined Terms........................
Global Clearance, Settlement and
Documentation Procedures....................
Until 90 days after the date of this Prospectus
Supplement, all dealers effecting transactions
in the Securities described in this Prospectus
Supplement, whether or not participating
in this distribution, may be required to deliver
this Prospectus Supplement and the Prospectus.
This is in addition to the obligation of
dealers to deliver this Prospectus
Supplement and the Prospectus when acting as
underwriter and with respect to their unsold
allotments or subscriptions.
<PAGE>
[ALTERNATE BACK COVER]
$-------------------------
(Approximate)
NORWEST AUTO
RECEIVABLES CORPORATION
(Seller)
$--------------
Class A-1 ____%
Asset Backed Notes
$--------------
Class A-2 ____%
Asset Backed Notes
$--------------
Class A-3____%
Asset Backed Notes
$--------------
Class A-4____%
Asset Backed Notes
$--------------
----%
Asset Backed Certificates
=======================
PROSPECTUS SUPPLEMENT
_______________, 199__
=======================
Norwest Investment Services, Inc.
<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.
PROSPECTUS
SUBJECT TO COMPLETION, DATED __________ __, 1996
[ALTERNATE COVER]
NORWEST AUTO TRUSTS
Asset Backed Notes
Asset Backed Certificates
[NORWEST LOGO]
NORWEST AUTO RECEIVABLES CORPORATION
Seller
NORWEST BANK MINNESOTA, N.A.
Servicer
The Asset Backed Notes (the "Notes") and the Asset Backed
Certificates (the "Certificates" and, together with the Notes, the
"Securities") described herein may be sold from time to time in one or more
series, in amounts, at prices and on terms to be determined at the time of
sale and to be set forth in a supplement to this Prospectus (a "Prospectus
Supplement"). Each series of Securities, which may include one or more
classes of Notes or one or more classes of Certificates (or both), will be
issued by a trust to be formed on or before the issuance date for that
series (each, a "Trust"). Each Trust will be formed pursuant to either a
Trust Agreement to be entered into among Norwest Auto Receivables
Corporation, a Delaware corporation, as seller (the "Seller"), Norwest Bank
Minnesota, N.A., in its capacity as servicer (in such capacity, the
"Servicer"), and the trustee specified in the related Prospectus Supplement
(the "Trustee") or a Pooling and Servicing Agreement to be entered into
among the Trustee, the Seller and the Servicer. If a series of Securities
includes Notes, such Notes of a series will be issued and secured pursuant
to an Indenture between the Trust and the indenture trustee specified in
the related Prospectus Supplement (the "Indenture Trustee") and will
represent indebtedness of the related Trust. The Certificates of a series
will represent fractional undivided interests in the related Trust. Certain
capitalized terms used in this Prospectus are defined in this Prospectus on
the pages indicated in the "Index of Terms" on page [___] of this
Prospectus.
The related Prospectus Supplement will specify which class or
classes of Notes, if any, and which class or classes of Certificates, if
any, of the related series are being offered thereby. The property of each
Trust will include a pool of promissory notes and security agreements
and/or retail installment sales contracts secured by new or used
automobiles and light duty trucks (collectively, the "Receivables"),
payments received thereunder on and after the applicable Cutoff Date set
forth in the related Prospectus Supplement, security interests in the
vehicles financed thereby, rights under dealer agreements, rights with
respect to deposit accounts in which collections are held or that serve as
credit enhancement, any other credit enhancements, the proceeds of the
foregoing and any proceeds from claims on insurance policies with respect
to the Financed Vehicles, all as described herein and in the related
Prospectus Supplement. See "The Trusts."
Prospective investors should consider the "Risk Factors"
set forth at page [16] herein.
ANY NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF A
SERIES REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND DO
NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER NORWEST BANK,
NORWEST CORPORATION OR ANY OF THEIR AFFILIATES. NONE OF THE NOTES,
NOTES, THE CERTIFICATES OR THE RECEIVABLES ARE GUARANTEED OR
INSURED BY, THE FEDERAL DEPOSIT INSURANCE CORPORATION, ANY
OTHER GOVERNMENT AGENCY OR INSTRUMENTALITY, NORWEST AUTO
RECEIVABLES CORPORATION, NORWEST BANK MINNESOTA, N.A.,
ANY OTHER NORWEST BANK, NORWEST INVESTMENT SERVICES,
INC., NORWEST CORPORATION OR
ANY OF THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
This Prospectus may not be used to consummate sales of Securities offered
hereby unless accompanied by a Prospectus Supplement.
Norwest Investment Services, Inc.
The date of this Prospectus is _______ __, 1996.
<PAGE>
[ALTERNATE PAGE]
The related Prospectus Supplement will indicate whether the Seller
believes that all conditions of the Exemption other than those within the
control of the investors have been met with respect to the Senior
Certificates, and whether the Senior Certificates may be acquired by
Benefit Plans.
Because any Certificates issued by a Trust that are subordinate to
any other class of Securities (the "Subordinate Certificates") will not be
eligible for the relief afforded by the Exemption, such Subordinate
Certificates may not be acquired with the assets of a Benefit Plan. Each
purchaser of a Subordinate Certificate shall be deemed to represent and
warrant that it is not acquiring or holding the Subordinate Certificate
with the assets of a Benefit Plan.
PLAN OF DISTRIBUTION
This Prospectus is to be used by Norwest Investment Services, Inc.
("NISI"), an affiliate of the Affiliates, the Servicer, the Seller and
Norwest Corporation, in connection with offers and sales related to
market-making transactions in the Securities in which NISI acts as
principal. NISI may also act as agent in such transactions. NISI is a
broker/dealer and a member of the National Association of Securities
Dealers, Inc. and the Securities Investor Protection Corporation. Sales
will be made at prices related to the prevailing prices at the time of
sale. NISI is not a bank or thrift, is a subsidiary of Norwest Corporation
and an entity separate from any Affiliate, and is solely responsible for
its contractual obligations and commitments. The portion of the net
proceeds paid to the Seller will be used to purchase the Receivables from
the Affiliates.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the Securities in Canada is being made only on
a private placement basis exempt from the requirement that each Trust
prepare and file a prospectus with the securities regulatory authorities in
each province where trades of the Securities are effected. Accordingly, any
resale of the Securities in Canada must be made in accordance with
applicable securities law 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
Securities.
Representation of Purchasers
Each purchaser of Securities in Canada who receives a purchase
confirmation will be deemed to represent to the Seller, the applicable
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 Securities without the benefit of a prospectus qualified
under such securities laws, (ii) where required by law, that such purchaser
is purchasing as principal and not as agent, and (iii) such purchaser has
reviewed the text above under "Resale Restrictions."
Rights of Action and Enforcement
The securities being offered are those of a foreign issuer and
Ontario purchasers will not receive the contractual right of action
prescribed by section 32 of the Regulation under the Securities Act
(Ontario). As a result, Ontario purchasers must rely on other remedies that
may be available, including common law rights of action for damages or
rescission or rights of action under the civil liability provisions of the
U.S. federal securities laws.
<PAGE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED __________, 199_
[Owner Trust Supplement]
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 199_)
[ALTERNATE COVER]
[$______________]
Norwest Auto Trust 199_ - _
$______________ Class A-1 ____% Asset Backed Notes
$______________ Class A-2 ____% Asset Backed Notes
$______________ ____% Asset Backed Certificates
Norwest Auto Receivables Corporation
Seller
Norwest Bank Minnesota, N.A.
Servicer
The Norwest Auto Trust 199_-__ (the "Trust") will be governed by a
Trust Agreement, to be dated as of ____________, 199_, between Norwest Auto
Receivables Corporation, as seller (the "Seller") and
___________________________, as Owner Trustee. The Trust will issue
$_____________ aggregate principal amount of Class A-1 ___% Money Market
Asset Backed Notes (the "Class A-1 Notes"), and $____________ aggregate
principal amount of Class A-2 ___% Asset Backed Notes (the "Class A-2
Notes" and, together with the Class A-1 Notes, the "Notes") pursuant to an
Indenture to be dated as of _____________, 199_, between the Trust and
___________________, as Indenture Trustee. The Trust will also issue
$__________________ aggregate principal amount of ___% Asset Backed
Certificates (the "Certificates" and, together with the Notes, the
"Securities"). The assets of the Trust will include a pool of motor vehicle
promissory notes and security agreements and/or retail installment sale
contracts secured by new or used automobiles and light duty trucks
(collectively, the "Receivables"), payments received thereunder after
_________, 199__, security interests in the motor vehicles financed
thereby, rights under Dealer Agreements, certain deposit accounts in which
collections are held, any proceeds from claims on insurance policies
relating to the Financed Vehicles and the proceeds of the foregoing.
(continued on following page)
---------------------------
Prospective investors should consider the "Risk
Factors" set forth at page S-__ herein and at page
___ in the accompanying Prospectus (the
"Prospectus").
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS
RECEIVABLES CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER NORWEST
BANK OR ANY OF THEIR AFFILIATES. NEITHER THE SECURITIES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, ANY OTHER GOVERNMENTAL AGENCY
OR INSTRUMENTALITY OR BY NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A.,
ANY OTHER NORWEST BANK, NORWEST
INVESTMENT SERVICES, INC. OR
OR ANY OF THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions the Seller(1)(2)
------------ ------------- ----------------
<S> <C> <C> <C>
Per Class A-1 Note % % %
Per Class A-2 Note % % %
Per Certificate % % %
Total $____________ $____________ $____________
- ----------------------
<FN>
(1) Plus accrued interest, if any, from ___________, 199__.
(2) Before deducting expenses, estimated to be $___________.
This Prospectus Supplement and the related Prospectus may be used
by Norwest Investment Services, Inc., an affiliate of the Seller, in
connection with market making transactions in the Certificates and Notes.
Norwest Investment Services, Inc. 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
Supplement will be updated from time to time as described in "Incorporation
of Certain Documents by Reference."
Norwest Investment Services, Inc.
_____________, 199__.
[ALTERNATE PAGE]
UNDERWRITING
This Prospectus Supplement and the related Prospectus may be used by
Norwest Investment Services, Inc., an affiliate of the Seller, the Servicer
and the Affiliates, in connection with offers and sales relating to market
making transactions in the Certificates. Norwest Investment Services, Inc.
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. Norwest
Investment Services, Inc. does not have any obligation to make a market in
the Notes or the Certificates, and it may discontinue any such
market-making activities at any time without notice, in its sole
discretion. Norwest Investment Services, Inc. is among the underwriters
participating in the initial distribution of the Notes and the Certificates.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain legal matters relating to the Notes and the Certificates and
certain federal income tax and other matters will be passed upon for the
Trust by _________, and by Mayer, Brown & Platt, Chicago, Illinois. Mayer,
Brown & Platt may from time to time render legal services to the Seller,
the Servicer and its affiliates. Certain legal matters will be passed upon
for the Underwriters by Mayer, Brown & Platt, Chicago, Illinois.
<PAGE>
====================================
No dealer, salesman or other person
has been authorized to give
any information or to make any
representation not contained in this
Prospectus Supplement or the
Prospectus and, if given or made,
such information or representation
must not be relied upon as
having been authorized by the Seller
or the Underwriters. This
Prospectus Supplement and the
Prospectus do not constitute an
offer of any securities other than
those to which they relate or an
offer to sell, or a solicitation of
an offer to buy, to any person in
any jurisdiction where such an offer
or solicitation would be
unlawful. Neither the delivery of
this Prospectus Supplement and
the Prospectus nor any sale made
hereunder shall, under any
circumstances, create any implication
that the information
contained herein is correct as of any
time subsequent to their
respective dates.
---------------------------
TABLE OF CONTENTS
Prospectus Supplement
Page
----
Reports to Securityholders.................... S-2
Summary of Terms.............................. S-3
Risk Factors.................................. S-9
The Trust..................................... S-11
The Receivables Pool.......................... S-11
The Seller, the Servicer and Norwest
Corporation................................. S-15
Weighted Average Life of the Securities....... S-15
Description of the Notes...................... S-17
Description of the Certificates............... S-18
Description of the Transfer and Servicing
Agreements.................................. S-19
Certain Legal Aspects of the Receivables...... S-26
Legal Investment.............................. S-26
ERISA Considerations.......................... S-26
Underwriting.................................. S-27
Legal Opinions................................ S-27
Index of Defined Terms........................ S-28
Prospectus
Page
----
Available Information.........................
Incorporation of Certain Documents
by Reference................................
Summary of Terms..............................
Risk Factors..................................
The Trusts....................................
The Receivables Pools.........................
Weighted Average Life of the Securities.......
Pool Factors and Trading Information..........
Use of Proceeds...............................
The Seller....................................
The Bank and Norwest Corporation..............
Description of the Notes......................
Description of the Certificates...............
Certain Information Regarding the
Securities..................................
Description of the Transfer and Servicing
Agreements..................................
Certain Legal Aspects of the Receivables......
Federal Income Tax Consequences...............
Certain State Tax Consequences................
ERISA Considerations..........................
Plan of Distribution..........................
Notice to Canadian Residents..................
Legal Opinions................................
Index of Defined Terms........................
Global Clearance, Settlement and
Documentation Procedures....................
Until 90 days after the date of this Prospectus
Supplement, all dealers effecting transactions
in the Securities described in this Prospectus
Supplement, whether or not participating in this
distribution, may be required to deliver this
Prospectus Supplement
====================================
<PAGE>
====================================
$-------------------------
(Approximate)
NORWEST AUTO
RECEIVABLES CORPORATION
(Seller)
$--------------
Class A-1
___% Money Market
Asset Backed Notes
$--------------
----%
Asset Backed Certificates
=======================
PROSPECTUS SUPPLEMENT
_______________, 199__
=======================
Norwest Investment Services, Inc.
====================================<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED __________, 199_
Exhibit 4.4
-----------
[Grantor Trust Supplement]
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 199_)
[$______________]
Norwest Auto Trust 199_ - _
$______________ Class ____% Asset Backed Certificates, Class A
$______________ Class ____% Asset Backed Certificates, Class B
Norwest Auto Receivables Corporation
Seller
Norwest Bank Minnesota, N.A.
Servicer
..............................................The Norwest Auto Trust
199__-__ (the "Trust") will be formed pursuant to a Pooling and Servicing
Agreement, to be dated as of _________, 199__, among Norwest Auto
Receivables Corporation, as seller (the "Seller"), Norwest Bank Minnesota,
N.A., in its capacity as servicer (in such capacity, the "Servicer"), and
___________, as Trustee. The Trust will issue $_________ aggregate
principal amount of ____% Asset Backed Certificates, Class A (the "Class A
Certificates"), and $________ aggregate principal amount of ____% Asset
Backed Certificates, Class B (the "Class B Certificates" and, together with
the Class A Certificates, the "Certificates"). The Class A Certificates
will evidence in the aggregate an approximate ___% undivided ownership in
the Trust and the Class B Certificates will evidence in the aggregate an
approximate ___% undivided ownership interest in the Trust. The rights of
the Class B Certificateholders to receive distributions with respect to the
Receivables are subordinated to the rights of the Class A
Certificateholders to the extent described herein. See "Description of the
Certificates--Distributions." The Trust property will include a pool of
motor vehicle promissory notes and security agreements and/or retail
installment sale contracts secured by new or used automobiles and light
duty trucks (collectively, the "Receivables"), payments received thereunder
after _________, 199__, security interests in the motor vehicles financed
thereby, rights under Dealer Agreements, certain deposit accounts in which
collections are held, any proceeds from claims on certain insurance
policies and the proceeds of the foregoing. Certain capitalized terms used
in this Prospectus Supplement are defined in this Prospectus Supplement on
the pages indicated in the "Index of Terms" on page ___ of this Prospectus
Supplement or, to the extent not defined herein, have the meanings assigned
to such terms in the Prospectus.
(continued on following page)
---------------------------
Prospective investors should consider the "Risk Factors"
set forth at page S-__ herein and at page ___
in the accompanying Prospectus (the
"Prospectus").
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN THE NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER NORWEST BANK,
NORWEST CORPORATION OR ANY OF THEIR AFFILIATES. NEITHER THE
CERTIFICATES NOR THE RECEIVABLES ARE INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY NORWEST
AUTO RECEIVABLES CORPORATION, NORWEST BANK
MINNESOTA, N.A., ANY OTHER NORWEST BANK,
NORWEST INVESTMENT SERVICES, INC.,
NORWEST CORPORATION OR ANY OF
THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions the Seller(1)(2)
----------- -------------- ----------------
<S> <C> <C> <C>
Per Class A Certificate % % %
Per Class B Certificate % % %
Total $____________ $____________ $____________
- --------------------------
<FN>
(1) Plus accrued interest, if any, from _______, 199__.
(2) Before deducting expenses, estimated to be $_________.
</TABLE>
This Prospectus Supplement and the related Prospectus may be used
by Norwest Investment Services, Inc., an affiliate of the Seller, in
connection with market making transactions in the Certificates. Norwest
Investment Services, Inc. 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
Supplement will be updated from time to time as described in "Incorporation
of Certain Documents by Reference."
Norwest Investment Services, Inc.
___________, 19__.
<PAGE>
[ALTERNATE PAGE]
UNDERWRITING
After the initial distribution of the Certificates by the
Underwriters, this Prospectus Supplement may be used by Norwest Investment
Services, Inc., an affiliate of the Seller, the Servicer and the
Affiliates, in connection with offers and sales relating to market making
transactions in the Certificates. Norwest Investment Services, Inc. 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.Norwest
Investment Services, Inc. does not have any obligation to make a market in
the Notes or the Certificates, and it may discontinue any such
market-making activities at any time without notice, in its sole discretion.
Norwest Investment Services, Inc. is among the underwriters participating
in the initial distribution of the Notes and the Certificates.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain federal income tax and other legal matters will be passed upon for
the Trust by Mayer, Brown & Platt, Chicago, Illinois. Mayer, Brown & Platt
may from time to time render legal services to the Seller, the Servicer and
its affiliates. Certain legal matters will be passed upon for the
Underwriters by Mayer, Brown & Platt, Chicago, Illinois.
<PAGE>
[ALTERNATE PAGE]
==========================================
No dealer, salesman or other person has
been authorized to give any information
or to make any representation not contained
in this Prospectus Supplement or the
Prospectus and, if given or made,
such information or representation must
not be relied upon as having been
authorized by the Seller or the
Underwriters. This Prospectus Supplement
and the Prospectus do not constitute an
offer of any securities other than those
to which they relate or an offer to sell,
or a solicitation of an offer to buy,
to any person in any jurisdiction where
such an offer or solicitation would be
unlawful. Neither the delivery of this
Prospectus Supplement and the Prospectus
nor any sale made hereunder shall, under any
circumstances, create any implication that
the information contained herein is correct
as of any time subsequent to their
respective dates.
---------------------------
TABLE OF CONTENTS
Prospectus Supplement
Page
-----
Reports to Certificateholders................. S-2
Summary of Terms.............................. S-3
Risk Factors.................................. S-9
The Trust..................................... S-10
The Receivables Pool.......................... S-10
The Seller, the Servicer and Norwest
Corporation................................. S-14
Weighted Average Life of the Certificates..... S-14
Description of the Certificates............... S-14
Certain Legal Aspects of the Receivables...... S-20
ERISA Considerations.......................... S-20
Underwriting.................................. S-21
Legal Opinions................................ S-21
Index of Defined Terms........................ S-22
Prospectus
Page
----
Available Information.........................
Incorporation of Certain Documents
by Reference................................
Summary of Terms..............................
Risk Factors..................................
The Trusts....................................
The Receivables Pools.........................
Weighted Average Life of the Securities.......
Pool Factors and Trading Information..........
Use of Proceeds...............................
The Seller....................................
The Bank and Norwest Corporation..............
Description of the Notes......................
Description of the Certificates...............
Certain Information Regarding the
Securities..................................
Description of the Transfer and Servicing
Agreements..................................
Certain Legal Aspects of the Receivables......
Federal Income Tax Consequences...............
Certain State Tax Consequences................
ERISA Considerations..........................
Plan of Distribution..........................
Notice to Canadian Residents..................
Legal Opinions................................
Index of Defined Terms........................
Global Clearance, Settlement and Tax
Documentation Procedures....................
Until 90 days after the date of this Prospectus
Supplement, all dealers effecting transactions
in the securities described in this Prospectus
Supplement, whether or not participating
in this distribution, may be
required to deliver this Prospectus
Supplement and the Prospectus. This is
in addition to the obligation of
dealers to deliver this Prospectus
Supplement and the Prospectus when acting
as underwriters and with respect
to their unsold allotments
or subscriptions.
================================================
<PAGE>
================================================
$-------------------------
(Approximate)
NORWEST AUTO
RECEIVABLES CORPORATION
(Seller)
$_____________
__% Asset Backed
Certificates
Class A
$_____________
__% Asset Backed
Certificates
Class B
=======================
PROSPECTUS SUPPLEMENT
_______________, 199__
=======================
Norwest Investment Services, 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.
Registration Fee...................................... $1,084,490
"Blue Sky" Registration Fees.......................... 5,000
Printing and Engraving Expenses....................... 60,000
Trustee Fees and Expenses............................. 75,000
Legal Fees and Expenses............................... 225,000
Accountants' Fees and Expenses........................ 60,000
Rating Agencies' Fees................................. 300,000
Miscellaneous......................................... 50,000
Total................................. $ 1,809,490
=========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware provides as follows:
145. Indemnification of officers, directors, employees and
agents; insurance
(a) A corporation may indemnify any person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact
that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith
and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or
agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
to in subsections (a) and (b) of this section, or in defense of
any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of
this section (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in subsections
(a) and (b) of this section. Such determination shall be made
(1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum,
or (2) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or
(3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending a civil, criminal,
administrative or investigative action, suit or proceeding may
be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in
this section. Such expenses (including attorneys' fees)
incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the board of directors deems
appropriate.
(f) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other subsections of
this section shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another
capacity while holding such office.
<PAGE>
(g) A corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity,
or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such
liability under this section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors,
officers, and employees or agents, so that any person who is or
was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise, shall stand in the same position under this
section with respect to the resulting or surviving corporation
as he would have with respect to such constituent corporation if
its separate existence had continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving
at the request of the corporation" shall include any service as
a director, officer, employee, or agent of the corporation which
imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted
in good faith and in a manner he reasonably believed to be in
the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner
"not opposed to the best interests of the corporation" as
referred to in this section.
(j) The indemnification and advancement of expenses
provided by, or granted pursuant to, this section shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement
of expenses or indemnification brought under this section or
under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise. The Court of Chancery
may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees).
Article XI of the By-Laws of Norwest Auto Receivables Corporation
(referred to as the "Company" therein) provides as follows:
Section 1. Coverage. Each person who was or is made a party or
is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative
or investigative ("proceeding"), by reason of the fact that he or she
is or was a director, officer or agent of the Company (which term
shall include any predecessor corporation of the Company) or is or
was serving at the request of the Company as a director, officer,
employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to
employee benefit plan ("indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as
a director, officer, employee or agent, shall be indemnified and held
harmless by the Company to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide
prior to such amendment), against all expenses, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such
indemnification shall continue as to an indemnitee who has ceased to
be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators;
provided, however, that, except as provided in Section 2 of this
Article XI with respect to proceedings to enforce rights to
indemnification, the Company shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such
indemnitee only if such proceeding (or part thereof) was authorized
by the Board of Directors. The right to indemnification conferred in
this Article XI shall be a contract right and shall include the right
to be paid by the Company the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however,
that, if the Delaware General Corporation Law requires, the payment
of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such indemnitee, including,
without limitation, service to an employee benefit plan) shall be
made in advance of the final disposition of a proceeding only upon
delivery to the Company of an undertaking, by or on behalf of such
indemnitee, to repay all amounts so advanced if it ultimately be
determined by final judicial decision from which there is no further
right to appeal that such indemnitee is not entitled to be
indemnified for such expenses under this Article XI or otherwise.
Expenses incurred by agents in defending in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
may be paid by the Company upon such terms and conditions, if any, as
the Board of Directors deems appropriate.
Section 2. Claims. If a claim under Section 1 of this Article
XI is not paid in full by the Company within sixty (60) days after a
written claim has been received by the Company, except in the case of
a claim for expenses incurred in defending a proceeding in advance of
its final disposition, in which case the applicable period shall be
thirty (30) days, the indemnitee may at any time thereafter bring
suit against the Company to recover the unpaid amount of the claim.
If successful in whole or in part in any such suit or in a suit
brought by the Company to recover payments by the Company or expenses
incurred by an indemnitee in defending in his or her capacity as a
director or officer, a proceeding in advance of its final
disposition, the indemnitee shall be entitled to be paid also for the
expense of prosecuting or defending such claim. In any action
brought by the indemnitee to enforce a right to indemnification
hereunder (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered
to the Company) or by the Company to recover payments by the Company
of expenses incurred by an indemnitee in defending, in his or her
capacity as a director or officer, a proceeding in advance of its
final disposition, the burden of proving that the indemnitee is not
entitled to be indemnified under this Article XI or otherwise shall
be on the Company. Neither the failure of the Company (including the
Board of Directors, independent legal counsel, or its stockholders)
to have made a determination prior to the commencement of such action
that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set
forth in the Delaware General Corporation Law, nor an actual
determination by the Company (including the Board of Directors,
independent legal counsel or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall be a
presumption that the indemnitee has not met the applicable standard
of conduct, or in the case of such an action brought by the
indemnitee, be a defense to the action.
Section 3. Rights Not Exclusive. The rights conferred on any
person by Sections 1 and 2 of this Article XI shall not be exclusive
of any other right which such person may have or hereafter acquire
under any statute, the Certificate of Incorporation of the Company,
these By-laws, any agreement, a vote of stockholders or disinterested
directors or otherwise.
Section 4. Employees. Persons who are not included as
indemnitees under Section 1 of this Article XI but are employees of
the Company or any subsidiary may be indemnified to the extent
authorized at any time or from time to time by the Board of
Directors.
The Company also maintains insurance coverage relating to certain
liabilities of directors and officers.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
(a) All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
1.1 Form of Underwriting Agreement.***
3.1 Restated Certificate of Incorporation of Norwest Auto
Receivables Corporation***
3.2 By-Laws of Norwest Auto Receivables Corporation***
3.3 Form of Certificate of Trust for Norwest Auto Trusts (included
in Exhibit 4.2).**
4.1 Form of Indenture between the Trust and the Indenture Trustee
(including forms of Notes). **
4.2 Form of Trust Agreement between the Registrant and the Trustee
(including forms of Certificates).**
4.3 Form of Pooling and Servicing Agreement, among the Registrant,
the Servicer and the Trustee (including forms of
Certificates).**
4.4 Form of Prospectus Supplement (for Trusts that do not issue
Notes).*
4.5 Form of Prospectus Supplement (for Trusts that do issue
Notes).*
5.1 Opinion of Mayer, Brown & Platt with respect to legality.**
8.1 Opinion of Mayer, Brown & Platt with respect to federal tax
matters**
23.1 Consent of Mayer, Brown & Platt (included in its opinions filed
as Exhibits 5.1 and 8.1).**
24.1 Powers of Attorney (included in the signature page).*
25.1 Form of T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of Chase Manhattan Bank.***
99.1 Form of Sale and Servicing Agreement among the Registrant, the
Servicer and the Trust.**
99.2 Form of Administration Agreement among the Seller, the Servicer
and the Indenture Trustee**
_____________________________
* Previously filed.
** Filed herewith.
*** To be filed by amendment.
<PAGE>
ITEM 17. UNDERTAKINGS
(a) As to Rule 415:
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, 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, as amended (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most
recent post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in this registration statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
provided, however, that the understandings set forth in clauses (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, as amended, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) For purposes of determining any liability under 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.
(b) As to documents subsequently filed that are incorporated by
reference:
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended,
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, that is
incorporated by reference in this registration statement shall be deemed to
be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) As to Equity Offerings of Nonreporting Registrants:
The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required
by the underwriter to permit prompt delivery to each purchaser.
(d) As to indemnification:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers
and controlling persons of the registrant pursuant to the provisions
described under Item 15 above, 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
of 1933, as amended, 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 such Securities Act of 1933, as amended, and
will be governed by the final adjudication of such issue.
(e) As to qualification of Trust Indentures under Trust Indenture
Act of 1939 for delayed offerings:
The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Act.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Minneapolis, State of Minnesota, on the ____ day of
September, 1996.
By: /s/ William H. Queenan
-------------------------
William H. Queenan
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- ---------- ------ -----
/s/ William H. Queenan President September __, 1996
William H. Queenan (principal executive
officer) and Director
/s/ John T. Thornton Treasurer September __, 1996
John T. Thornton (principal financial
and accounting officer)
and Director
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit Sequential
No. Description of Exhibit Page Number
- ------- ----------------------- -----------
<S> <C> <C>
1.1 Form of Underwriting Agreement.***
3.1 Restated Certificate of Incorporation of
Norwest Auto Receivables Corporation.***
3.2 By-Laws of Norwest Auto Receivables Corporation.***
3.3 Form of Certificate of Trust for Norwest Auto
Trusts (included in Exhibit 4.2).**
4.1 Form of Indenture between the Trust and the
Indenture Trustee (including forms of Notes).**
4.2 Form of Trust Agreement between the Registrant
and the Trustee (including forms of Certificates).**
4.3 Form of Pooling and Servicing Agreement, among
the Registrant, the Servicer and the Trustee
(including forms of Certificates).**
4.4 Form of Prospectus Supplement (for Trusts that
do not issue Notes).*
4.5 Form of Prospectus Supplement (for Trusts that
do issue Notes).*
5.1 Opinion of Mayer, Brown & Platt with respect
to legality.**
8.1 Opinion of Mayer, Brown & Platt with respect to
federal tax matters**
23.1 Consent of Mayer, Brown & Platt (included in its
opinions filed as Exhibits 5.1 and 8.1).**
24.1 Powers of Attorney (included in the signature page).*
25.1 Form of T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of Chase Manhattan Bank.***
99.1 Form of Sale and Servicing Agreement among the
Registrant, the Servicer and the Trust.**
99.2 Form of Administration Agreement among the Seller,
the Servicer and the Indenture Trustee**
<FN>
___________________
* Previously filed.
** Filed herewith.
*** To be filed by amendment.
</TABLE>
<PAGE>
EXHIBIT 4.1
==============================================================================
NORWEST AUTO TRUST 199_-_
Class A-1 _____% Asset Backed Notes
Class A-2 _____% Asset Backed Notes
----------------------------
INDENTURE
Dated as of ________, 199_
____________________________
as Trustee
==============================================================================
<TABLE>
<CAPTION>
CROSS REFERENCE TABLE<F1>
TIA Indenture
Section Section
<S> <C> <C>
310 (a) (1)...................................... 6.11
(a) (2)...................................... 6.11
(a) (3)...................................... 6.10
(a) (4)...................................... N.A <F2>
(a) (5)...................................... 6.11
(b).......................................... 6.8; 6.11
(c).......................................... N.A.
311 (a).......................................... 6.12
(b).......................................... 6.12
(c).......................................... N.A.
312 (a).......................................... 7.1
(b).......................................... 7.2
(c).......................................... 7.2
(d).......................................... 7.4
313 (a).......................................... 7.4
(b) (1)...................................... 7.4
(b) (2)...................................... 11.5
(c).......................................... 7.4
(d).......................................... 7.3
314 (a).......................................... 11.15
(b).......................................... 11.1
(c) (1)...................................... 11.1
(c) (2)...................................... 11.1
(c) (3)...................................... 11.1
(d).......................................... 11.1
(e).......................................... 11.1
(f).......................................... 11.1
315 (a).......................................... 6.1
(b).......................................... 6.5; 11.5
(c).......................................... 6.1
(d).......................................... 6.1
(e).......................................... 5.13
316 (a) (last sentence).......................... 2.7
(a) (1) (A).................................. 5.11
(a) (1) (B).................................. 5.12
(a) (2)...................................... N.A.
(b).......................................... 5.7
(c).......................................... N.A.
317 (a) (1)...................................... 5.3
(a) (2)...................................... 5.3
(b).......................................... 3.3
318 (a).......................................... 11.7
- -------------------
<F1> Note: This Cross Reference Table shall not, for any purpose,
be deemed to be part of this Indenture.</F1>
<F2> N.A. means Not Applicable.</F2>
</TABLE>
<PAGE>
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.......... 2
SECTION 1.1 Definitions.................................. 2
SECTION 1.2 Incorporation by Reference of Trust Indenture
Act..................................... 2
SECTION 1.3 Other Interpretive Provisions................ 2
ARTICLE II THE NOTES.......................................... 3
SECTION 2.1 Form......................................... 3
SECTION 2.2 Execution, Authentication and Delivery....... 4
SECTION 2.3 Temporary Notes.............................. 4
SECTION 2.4 Registration of Transfer and Exchange........ 5
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes... 6
SECTION 2.6 Persons Deemed Owner......................... 7
SECTION 2.7 Payment of Principal and Interest; Defaulted
Interest................................. 7
SECTION 2.8 Cancellation................................. 8
SECTION 2.9 Release of Collateral........................ 9
SECTION 2.10 Book-Entry Notes............................ 9
SECTION 2.11 Notices to Clearing Agency.................. 10
SECTION 2.12 Definitive Notes............................ 10
ARTICLE III COVENANTS......................................... 10
SECTION 3.1 Payment of Principal and Interest............ 10
SECTION 3.2 Maintenance of Office or Agency.............. 11
SECTION 3.3 Money for Payments To Be Held in Trust....... 11
SECTION 3.4 Existence.................................... 13
SECTION 3.5 Protection of Trust Estate................... 13
SECTION 3.6 Opinions as to Trust Estate.................. 13
SECTION 3.7 Performance of Obligations; Servicing of
Receivables.............................. 14
SECTION 3.8 Negative Covenants........................... 16
SECTION 3.9 Annual Statement as to Compliance............ 17
SECTION 3.10 Issuer May Consolidate, Etc................. 17
SECTION 3.11 Successor or Transferee..................... 19
SECTION 3.12 No Other Business........................... 19
SECTION 3.13 No Borrowing................................ 20
SECTION 3.14 Servicer's Obligations...................... 20
SECTION 3.15 Guarantees, Loans, Advances and Other
Liabilities.............................. 20
SECTION 3.16 Capital Expenditures........................ 20
SECTION 3.17 Restricted Payments......................... 20
SECTION 3.18 Notice of Events of Default................. 20
SECTION 3.19 Further Instruments and Acts................ 21
ARTICLE IV SATISFACTION AND DISCHARGE......................... 21
SECTION 4.1 Satisfaction and Discharge of Indenture...... 21
SECTION 4.2 Application of Trust Money................... 22
SECTION 4.3 Repayment of Moneys Held by Paying Agent..... 22
ARTICLE V REMEDIES............................................ 23
SECTION 5.1 Events of Default............................ 23
SECTION 5.2 Acceleration of Maturity; Rescission and
Annulment................................ 24
SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Trustee................... 25
SECTION 5.4 Remedies; Priorities......................... 27
SECTION 5.5 Optional Preservation of the Receivables..... 28
SECTION 5.6 Limitation of Suits.......................... 29
SECTION 5.7 Unconditional Rights of Noteholders To Receive
Principal and Interest................... 30
SECTION 5.8 Restoration of Rights and Remedies........... 30
SECTION 5.9 Rights and Remedies Cumulative............... 30
SECTION 5.10 Delay or Omission Not a Waiver.............. 30
SECTION 5.11 Control by Noteholders...................... 30
SECTION 5.12 Waiver of Past Defaults..................... 31
SECTION 5.13 Undertaking for Costs....................... 31
SECTION 5.14 Waiver of Stay or Extension Laws............ 32
SECTION 5.15 Action on Notes............................. 32
SECTION 5.16 Performance and Enforcement of Certain
Obligations.............................. 32
ARTICLE VI TRUSTEE............................................ 33
SECTION 6.1 Duties of Trustee............................ 33
SECTION 6.2 Rights of Trustee............................ 34
SECTION 6.3 Individual Rights of Trustee................. 35
SECTION 6.4 Trustee's Disclaimer......................... 35
SECTION 6.5 Notice of Defaults........................... 35
SECTION 6.6 Reports by Trustee to Holders................ 35
SECTION 6.7 Compensation and Indemnity................... 35
SECTION 6.8 Replacement of Trustee....................... 36
SECTION 6.9 Successor Trustee by Merger.................. 37
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee 37
SECTION 6.11 Eligibility; Disqualification............... 39
SECTION 6.12 Preferential Collection of Claims Against
Issuer................................... 39
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS.................... 39
SECTION 7.1 Issuer To Furnish Trustee Names and Addresses of
Noteholders.............................. 39
SECTION 7.2 Preservation of Information; Communications to
Noteholders.............................. 39
SECTION 7.3 Reports by Issuer............................ 40
SECTION 7.4 Reports by Trustee........................... 40
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES............. 40
SECTION 8.1 Collection of Money.......................... 40
SECTION 8.2 Trust Accounts............................... 41
SECTION 8.3 General Provisions Regarding Accounts........ 41
SECTION 8.4 Release of Trust Estate...................... 42
SECTION 8.5 Opinion of Counsel........................... 43
ARTICLE IX SUPPLEMENTAL INDENTURES............................ 43
SECTION 9.1 Supplemental Indentures Without Consent of
Noteholders.............................. 43
SECTION 9.2 Supplemental Indentures with Consent of
Noteholders.............................. 44
SECTION 9.3 Execution of Supplemental Indentures......... 46
SECTION 9.4 Effect of Supplemental Indenture............. 46
SECTION 9.5 Conformity With Trust Indenture Act.......... 47
SECTION 9.6 Reference in Notes to Supplemental Indentures 47
ARTICLE X REDEMPTION OF NOTES................................. 47
SECTION 10.1 Redemption.................................. 47
SECTION 10.2 Form of Redemption Notice................... 48
SECTION 10.3 Notes Payable on Redemption Date............ 48
ARTICLE XI MISCELLANEOUS...................................... 49
SECTION 11.1 Compliance Certificates and Opinions, etc... 49
SECTION 11.2 Form of Documents Delivered to Trustee...... 50
SECTION 11.3 Acts of Noteholders......................... 51
SECTION 11.4 Notices, etc., to Trustee, Issuer and Rating
Agencies................................. 52
SECTION 11.5 Notices to Noteholders; Waiver.............. 53
SECTION 11.6 Alternate Payment and Notice Provisions..... 53
SECTION 11.7 Conflict with Trust Indenture Act........... 54
SECTION 11.8 Effect of Headings and Table of Contents.... 54
SECTION 11.9 Successors and Assigns...................... 54
SECTION 11.10 Separability............................... 54
SECTION 11.11 Benefits of Indenture...................... 54
SECTION 11.12 Legal Holidays............................. 54
SECTION 11.13 GOVERNING LAW.............................. 55
SECTION 11.14 Counterparts............................... 55
SECTION 11.15 Recording of Indenture..................... 55
SECTION 11.16 Trust Obligation........................... 55
SECTION 11.17 No Petition................................ 55
SECTION 11.18 Inspection................................. 56
Exhibit A Schedule of Receivables
Exhibit B Form of Sale and Servicing Agreement
Exhibit C Form of Note Depository Agreement
Exhibit D Form of Class A-1 Note
Exhibit E Form of Class A-2 Note
INDENTURE dated as of __________, 199__, between NORWEST AUTO TRUST
199_-_, a Delaware business trust ("Issuer"), and
_____________________________, a ____________________, solely as trustee
and not in its individual capacity ("Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of Issuer's Class A-1
_______% Asset Backed Notes (the "Class A-1 Notes"), and Class A-2 ____%
Asset Backed Notes (the "Class A-2 Notes" and, together with the Class A-1
Notes, the "Notes"):
GRANTING CLAUSE
Issuer hereby Grants to Trustee at the Closing Date, as Trustee for
the benefit of the Holders of the Notes, all of Issuer's right, title and
interest in and to (a) the Receivables, and all moneys received thereon on
or after the Cutoff Date; (b) the security interests in the Financed
Vehicles granted by Obligors pursuant to the Receivables and any other
interest of Issuer in the Financed Vehicles; (c) any proceeds with respect
to (i) 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 (ii) arising from a default by an Obligor
resulting in the repossession of the Financed Vehicle or any other property
that shall have secured a Receivable; (d) any proceeds with respect to the
Receivables from claims on any Insurance Policies covering Financed
Vehicles or Obligors; (e) any Dealer Recourse and other rights of
Affiliates under Dealer Agreements; (f) Seller's rights to all documents
and information contained in the Receivables Files; (g) certain rebates of
premiums and other amounts relating to insurance policies and other items
financed under the Receivables; (h) all the Seller's rights under the
Purchase Agreements, including the right of the Seller to cause an
Affiliate to repurchase Receivables from the Seller; (i) all funds on
deposit from time to time in the Trust Accounts and in all investments and
proceeds thereof (but excluding all investment income thereon); (j) the
Sale and Servicing Agreement; and (k) all present and future claims,
demands, causes and choses in action in respect of any or all of the
foregoing and all payments on or under and all proceeds of every kind and
nature whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion, voluntary or involuntary, into cash or other
liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and
other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds
of any of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of,
the Notes, equally and ratably without prejudice, priority or distinction
except as set forth herein, and to secure compliance with the provisions of
this Indenture, all as provided in this Indenture.
Trustee, as Trustee on behalf of the Holders of the Notes,
acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end
that the interests of the Holders of the Notes may be adequately and
effectively protected.
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.
SECTION 1.1 Definitions. Capitalized terms are used in this Indenture
as defined in Appendix X to the Sale and Servicing Agreement dated as of
____________, 199_, among Norwest Auto Receivables Corporation, as Seller,
the Issuer and Norwest Bank Minnesota, N.A., as Servicer.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means Trustee.
"obligor" on the indenture securities means Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission
rule have the meaning assigned to them by such definitions.
SECTION 1.3 Other Interpretive Provisions. All terms defined in this
Indenture shall have the defined meanings when used in any certificate or
other document delivered pursuant hereto unless otherwise defined therein.
For purposes of this Indenture and all such certificates and other
documents, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Indenture, and accounting terms partly defined in
this Indenture to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles; (b)
terms defined in Article 9 of the UCC as in effect in the State of New York
and not otherwise defined in this Indenture are used as defined in that
Article; (c) references to any amount as on deposit or outstanding on any
particular date means such amount at the close of business on such day; (d)
the words "hereof," "herein" and "hereunder" and words of similar import
refer to this Indenture (or the certificate or other document in which they
are used) as a whole and not to any particular provision of this Indenture
(or such certificate or document); (e) references to any Section, Schedule
or Exhibit are references to Sections, Schedules and Exhibits in or to this
Indenture (or the certificate or other document in which the reference is
made), and references to any paragraph, subsection, clause or other
subdivision within any Section or definition refer to such paragraph,
subsection, clause or other subdivision of such Section or definition; (f)
the term "including" means "including without limitation"; (g) references
to any law or regulation refer to that law or regulation as amended from
time to time and include any successor law or regulation; (h) references to
any Person include that Person's successors and assigns; and (i) headings
are for purposes of reference only and shall not otherwise affect the
meaning or interpretation of any provision hereof.
ARTICLE II THE NOTES.
SECTION 2.1 Form. The Class A-1 Notes and the Class A-2 Notes, in
each case together with Trustee's certificate of authentication, shall be
in substantially the forms set forth in Exhibits D and E, respectively,
with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by
the officers executing such Notes, as evidenced by their execution of the
Notes. Any portion of the text of any Note may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the officers executing such
Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibits D and E are part of the terms of this
Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The Notes shall
be executed on behalf of Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of Issuer shall bind Issuer,
notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
Trustee shall upon Issuer Order authenticate and deliver Class A-1
Notes for original issue in an aggregate principal amount of $____________
and Class A-2 Notes for original issue in the aggregate principal amount of
_________________. The aggregate principal amount of Class A-1 Notes and
Class A-2 Notes outstanding at any time may not exceed such amounts except
as provided in Section 2.5.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000
and in integral multiples thereof (except for one Note of each class which
may be issued in a denomination other than an integral multiple of $1,000).
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated
and delivered hereunder.
SECTION 2.3 Temporary Notes. Pending the preparation of Definitive
Notes, Issuer may execute, and upon receipt of an Issuer Order Trustee
shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor
of the Definitive Notes in lieu of which they are issued and with such
variations not inconsistent with the terms of this Indenture as the
officers executing such Notes may determine, as evidenced by their
execution of such Notes.
If temporary Notes are issued, Issuer will cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of Issuer to be
maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, Issuer shall
execute and Trustee shall authenticate and deliver in exchange therefor a
like principal amount of Definitive Notes of authorized denominations.
Until so exchanged, the temporary Notes shall in all respects be entitled
to the same benefits under this Indenture as Definitive Notes.
SECTION 2.4 Registration of Transfer and Exchange. Issuer shall cause
to be kept a register (the "Note Register") in which, subject to such
reasonable regulations as it may prescribe, Issuer shall provide for the
registration of Notes and the registration of transfers of Notes. Trustee
shall initially be "Note Registrar" for the purpose of registering Notes
and transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, Issuer shall promptly appoint a successor or, if it elects not
to make such an appointment, assume the duties of Note Registrar.
If a Person other than Trustee is appointed by Issuer as Note
Registrar, Issuer will give Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in
the location, of the Note Register, and Trustee shall have the right to
inspect the Note Register at all reasonable times and to obtain copies
thereof, and Trustee shall have the right to conclusively rely upon a
certificate executed on behalf of Note Registrar by an Executive Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of Issuer to be maintained as provided in Section 3.2, if the
requirements of Section 8-401(1) of the UCC are met Issuer shall execute
and upon its written request Trustee shall authenticate and the Noteholder
shall obtain from Trustee, in the name of the designated transferee or
transferees, one or more new Notes, in any authorized denominations, of the
same class and a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any authorized denominations, of the same class and a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange, if
the requirements of Section 8-401(1) of the UCC are met Issuer shall
execute and upon its written request Trustee shall authenticate and the
Noteholder shall obtain from Trustee, the Notes which the Noteholder making
the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to Trustee duly executed by,
the Holder thereof or such Holder's attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of Note Registrar which requirements include
membership or participation in Securities Transfer Agents Medallion Program
("Stamp") or such other "signature guarantee program" as may be determined
by Note Registrar in addition to, or in substitution for, Stamp, all in
accordance with the Exchange Act, and (ii) accompanied by such other
documents as Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 2.3 or 9.6 not involving
any transfer.
The preceding provisions of this section notwithstanding, Issuer shall
not be required to make and Note Registrar need not register transfers or
exchanges of Notes selected for redemption or of any Note for a period of
15 days preceding the due date for any payment with respect to the Note.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to Trustee, or Trustee receives evidence to
its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to Trustee such security or indemnity as may be required
by it to hold Issuer and Trustee harmless, then, in the absence of notice
to Issuer, Note Registrar or Trustee that such Note has been acquired by a
bona fide purchaser, and provided that the requirements of Section 8-405 of
the UCC are met, Issuer shall execute and upon its written request Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note; provided
that if any such destroyed, lost or stolen Note, but not a mutilated Note,
shall have become or within seven days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note,
Issuer may pay such destroyed, lost or stolen Note when so due or payable
or upon the Redemption Date without surrender thereof. If, after the
delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide
purchaser of the original Note in lieu of which such replacement Note was
issued presents for payment such original Note, Issuer and Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person
to whom it was delivered or any Person taking such replacement Note from
such Person to whom such replacement Note was delivered or any assignee of
such Person, except a bona fide purchaser, and shall be entitled to recover
upon the security or indemnity provided therefor to the extent of any loss,
damage, cost or expense incurred by Issuer or Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section, Issuer
may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses
of Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Notes duly issued
hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, Issuer, Trustee and any agent of
Issuer or Trustee may treat the Person in whose name any Note is registered
(as of the day of determination) as the owner of such Note for the purpose
of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue,
and neither Issuer, Trustee nor any agent of Issuer or Trustee shall be
affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest as provided in the forms of the Class
A-1 Note and the Class A-2 Note, set forth in Exhibits D and E,
respectively, and such interest shall be payable on each Distribution Date
as specified therein. Any installment of interest or principal, if any,
payable on any Note which is punctually paid or duly provided for by Issuer
on the applicable Distribution Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered on the
Record Date, by check mailed first-class, postage prepaid, to such Person's
address as it appears on the Note Register on such Record Date, except
that, unless Definitive Notes have been issued pursuant to Section 2.12,
with respect to Notes registered on the Record Date in the name of the
nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payment will be made by wire transfer in immediately available funds to the
account designated by such nominee and except for the final installment of
principal payable with respect to such Note on a Distribution Date or on
the Final Scheduled Distribution Date (and except for the Redemption Price
for any Note called for redemption pursuant to Section 10.1(a)) which shall
be payable as provided below. The funds represented by any such checks
returned undelivered shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments on
each Distribution Date as provided in the forms of the Class A-1 Note and
the Class A-2 Note, set forth in Exhibits D and E, respectively.
Notwithstanding the foregoing, the entire unpaid principal amount of the
Notes shall be due and payable, if not previously paid, on the date on
which an Event of Default shall have occurred and be continuing, if Trustee
or the Holders of the Notes representing not less than a majority of the
Outstanding Amount of the Notes have declared the Notes to be immediately
due and payable in the manner provided in Section 5.2. All principal
payments on each class of Notes shall be made pro rata to the Noteholders
of such class entitled thereto. Trustee shall notify the Person in whose
name a Note is registered at the close of business on the Record Date
preceding the Distribution Date on which Issuer expects that the final
installment of principal of and interest on such Note will be paid. Such
notice shall be mailed or transmitted by facsimile prior to such final
Distribution Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify
the place where such Note may be presented and surrendered for payment of
such installment. Notices in connection with redemptions of Notes shall be
mailed to Noteholders as provided in Section 10.2.
(c) If Issuer defaults in a payment of interest on the Notes, Issuer
shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the applicable Interest Rate in any lawful manner.
Issuer may pay such defaulted interest to the Persons who are Noteholders
on a subsequent special record date, which date shall be at least five
Business Days prior to the payment date. Issuer shall fix or cause to be
fixed any such special record date and payment date, and, at least 15 days
before any such special record date, Issuer shall mail to each Noteholder
and Trustee a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.8 Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to
any Person other than Trustee, be delivered to Trustee and shall be
promptly cancelled by Trustee. Issuer may at any time deliver to Trustee
for cancellation any Notes previously authenticated and delivered hereunder
which Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly cancelled by Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided
in this Section, except as expressly permitted by this Indenture. All
cancelled Notes may be held or disposed of by Trustee in accordance with
its standard retention or disposal policy as in effect at the time unless
Issuer shall direct by an Issuer Order that they be destroyed or returned
to it; provided that such Issuer Order is timely and the Notes have not
been previously disposed of by Trustee.
SECTION 2.9 Release of Collateral. Subject to Section 11.1, Trustee
shall release property from the lien of this Indenture only upon receipt of
an Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and Independent Certificates in accordance with TIA Sections 314(c)
and 314(d)(1) or an Opinion of Counsel in lieu of such Independent
Certificates to the effect that the TIA does not require any such
Independent Certificates.
SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance,
will be issued in the form of typewritten Notes representing the Book-Entry
Notes, to be delivered to _____________________, as agent for The
Depository Trust Company, the initial Clearing Agency, by, or on behalf of,
Issuer. Such Notes shall initially be registered on the Note Register in
the name of Cede & Co., the nominee of the initial Clearing Agency, and no
Note Owner will receive a Definitive Note representing such Note Owner's
interest in such Note, except as provided in Section 2.12. Unless and until
definitive, fully registered Notes (the "Definitive Notes") have been
issued to Note Owners pursuant to Section 2.12:
(a) the provisions of this Section shall be in full force and
effect;
(b) Note Registrar and Trustee shall be entitled to deal with
the Clearing Agency for all purposes of this Indenture (including the
payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole Holder of the Notes,
and shall have no obligation to the Note Owners;
(c) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this
Section shall control;
(d) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law
and agreements between such Note Owners and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to the Note Depository
Agreement, unless and until Definitive Notes are issued pursuant to
Section 2.12, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit payments of principal of and interest on the Notes to such
Clearing Agency Participants; and
(e) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to
such effect from Note Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the
beneficial interest in the Notes and has delivered such instructions
to Trustee.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless
and until Definitive Notes shall have been issued to Note Owners pursuant
to Section 2.12, Trustee shall give all such notices and communications
specified herein to be given to Holders of the Notes to the Clearing
Agency, and shall have no obligation to the Note Owners.
SECTION 2.12 Definitive Notes. If (a) Seller advises Trustee in
writing that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities with respect to the Notes, and Seller is
unable to locate a qualified successor, (b) Seller at its option advises
Trustee in writing that it elects to terminate the book-entry system
through the Clearing Agency or (c) after the occurrence of an Event of
Default, Note Owners representing beneficial interests aggregating at least
a majority of the Outstanding Amount of the Notes advise Trustee through
the Clearing Agency in writing that the continuation of a book entry system
through the Clearing Agency is no longer in the best interests of the Note
Owners, then the Clearing Agency shall notify all Note Owners and Trustee
of the occurrence of any such event and of the availability of Definitive
Notes to Note Owners requesting the same. Upon surrender to Trustee of the
typewritten Note or Notes representing the Book-Entry Notes by the Clearing
Agency, accompanied by registration instructions, Issuer shall execute and
Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Clearing Agency. None of Issuer, Note Registrar or
Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Notes, Trustee shall
recognize the Holders of the Definitive Notes as Noteholders.
ARTICLE III COVENANTS.
SECTION 3.1 Payment of Principal and Interest. Issuer will duly and
punctually pay the principal of and interest on the Notes in accordance
with the terms of the Notes and this Indenture. Without limiting the
foregoing, subject to Section 8.2(c), Issuer will cause to be distributed
all amounts on deposit in the Note Distribution Account on a Distribution
Date deposited therein pursuant to the Sale and Servicing Agreement (i) for
the benefit of the Class A-1 Notes, to Class A-1 Noteholders and (ii) for
the benefit of the Class A-2 Notes, to Class A-2 Noteholders. Amounts
properly withheld under the Code by any Person from a payment to any
Noteholder of interest and/or principal shall be considered as having been
paid by Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.2 Maintenance of Office or Agency. Issuer will maintain in
the Borough of Manhattan, The City of New York, an office or agency where
Notes may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon Issuer in respect of the Notes and
this Indenture may be served. Issuer hereby initially appoints Trustee to
serve as its agent for the foregoing purposes. Issuer will give prompt
written notice to Trustee of the location, and of any change in the
location, of any such office or agency. If at any time Issuer shall fail to
maintain any such office or agency or shall fail to furnish Trustee with
the address thereof, such surrenders, notices and demands may be made or
served at the Corporate Trust Office, and Issuer hereby appoints Trustee as
its agent to receive all such surrenders, notices and demands.
SECTION 3.3 Money for Payments To Be Held in Trust. As provided in
Sections 8.2(a) and (b), all payments of amounts due and payable with
respect to any Notes that are to be made from amounts withdrawn from the
Collection Account and the Note Distribution Account pursuant to Section
8.2(c) shall be made on behalf of Issuer by Trustee or by another Paying
Agent, and no amounts so withdrawn from the Collection Account and the Note
Distribution Account for payments of Notes shall be paid over to Issuer
except as provided in this Section.
On or before each Distribution Date and Redemption Date, Issuer shall
deposit or cause to be deposited in the Note Distribution Account an
aggregate sum sufficient to pay the amounts then becoming due under the
Notes, such sum to be held in trust for the benefit of the Persons entitled
thereto and (unless the Paying Agent is Trustee) shall promptly notify
Trustee of its action or failure so to act.
Issuer will cause each Paying Agent other than Trustee to execute and
deliver to Trustee an instrument in which such Paying Agent shall agree
with Trustee (and if Trustee acts as Paying Agent, it hereby so agrees),
subject to the provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give Trustee notice of any default by Issuer of which it
has actual knowledge (or any other obligor upon the Notes) in the
making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of Trustee, forthwith pay to Trustee all sums
so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
Trustee all sums held by it in trust for the payment of Notes if at
any time it ceases to meet the standards required to be met by a
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order
direct any Paying Agent to pay to Trustee all sums held in trust by such
Paying Agent, such sums to be held by Trustee upon the same trusts as those
upon which the sums were held by such Paying Agent; and upon such a payment
by any Paying Agent to Trustee, such Paying Agent shall be released from
all further liability with respect to such money.
Subject to applicable laws with respect to the escheat of funds, any
money held by Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such
trust and be paid to Issuer on Issuer Request; and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to Issuer for
payment thereof (but only to the extent of the amounts so paid to Issuer),
and all liability of Trustee or such Paying Agent with respect to such
trust money shall thereupon cease; provided that Trustee or such Paying
Agent, before being required to make any such repayment, shall at the
expense of Issuer cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of
general circulation in The City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to Issuer. Trustee shall also
adopt and employ, at the expense of Issuer, any other reasonable means of
notification of such repayment (including, but not limited to, mailing
notice of such repayment to Holders whose Notes have been called but have
not been surrendered for redemption or whose right to or interest in moneys
due and payable but not claimed is determinable from the records of Trustee
or of any Paying Agent, at the last address of record for each such
Holder).
SECTION 3.4 Existence. Except as otherwise permitted by the
provisions of Section 3.10, Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other state or of the United
States of America, in which case Issuer will keep in full effect its
existence, rights and franchises under the laws of such other jurisdiction)
and will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Indenture, the Notes, the
Collateral and each other instrument or agreement included in the Trust
Estate.
SECTION 3.5 Protection of Trust Estate. Issuer will from time to time
prepare (or shall cause to be prepared), execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other
instruments, and will take such other action necessary or advisable to:
(a) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively
the purposes hereof;
(b) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(c) enforce any of the Collateral; or
(d) preserve and defend title to the Trust Estate and the
rights of Trustee and the Noteholders in such Trust Estate against the
claims of all persons and parties.
Issuer hereby designates Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required by Trustee pursuant to this Section.
SECTION 3.6 Opinions as to Trust Estate. (a) On the Closing Date,
Issuer shall furnish to Trustee an Opinion of Counsel either stating that,
in the opinion of such counsel, such action has been taken with respect to
the recording and filing of this Indenture, any indentures supplemental
hereto, and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation
statements, as are necessary to perfect and make effective the lien and
security interest of this Indenture and reciting the details of such
action, or stating that, in the opinion of such counsel, no such action is
necessary to make such lien and security interest effective.
(b) Within 120 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than three months
after the Cutoff Date, Issuer shall furnish to Trustee an Opinion of
Counsel either stating that, in the opinion of such counsel, such action
has been taken with respect to the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any
other requisite documents and with respect to the execution and filing of
any financing statements and continuation statements as are necessary to
maintain the lien and security interest created by this Indenture and
reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe the recording,
filing, re-recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and the execution and
filing of any financing statements and continuation statements that will,
in the opinion of such counsel, be required to maintain the lien and
security interest of this Indenture until January 30 in the following
calendar year.
SECTION 3.7 Performance of Obligations; Servicing of Receivables. (a)
Issuer will not take any action and will use its best efforts not to permit
any action to be taken by others that would release any Person from any of
such Person's material covenants or obligations under any instrument or
agreement included in the Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any such instrument or agreement,
except as ordered by any bankruptcy or other court or as expressly provided
in this Indenture, the Basic Documents or such other instrument or
agreement.
(b) Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a
Person identified to Trustee in an Officer's Certificate of Issuer shall be
deemed to be action taken by Issuer. Initially, Issuer has contracted with
Servicer and the Administrator to assist Issuer in performing its duties
under this Indenture.
(c) Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, the Basic Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to preparing (or causing to prepared) and filing (or causing to be
filed) all UCC financing statements and continuation statements required to
be filed by the terms of this Indenture and the Sale and Servicing
Agreement in accordance with and within the time periods provided for
herein and therein. Except as otherwise expressly provided therein, Issuer
shall not waive, amend, modify, supplement or terminate any Basic Document
or any provision thereof without the consent of Trustee or the Holders of
at least a majority of the Outstanding Amount of the Notes.
(d) If Issuer shall have knowledge of the occurrence of a Servicer
Default under the Sale and Servicing Agreement, Issuer shall promptly
notify Trustee and the Rating Agencies thereof in accordance with Section
11.4, and shall specify in such notice the action, if any, Issuer is taking
in respect of such default. If a Servicer Default shall arise from the
failure of Servicer to perform any of its duties or obligations under the
Sale and Servicing Agreement with respect to the Receivables, Issuer shall
take all reasonable steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of termination
to Servicer of Servicer's rights and powers pursuant to Section 8.1 of the
Sale and Servicing Agreement, Issuer shall appoint a successor servicer
(the "Successor Servicer"), and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to Trustee. In the
event that a Successor Servicer has not been appointed and accepted its
appointment at the time when Servicer ceases to act as Servicer, Trustee
without further action shall automatically be appointed the Successor
Servicer. Trustee may resign as Servicer by giving written notice of such
resignation to Issuer and in such event will be released from such duties
and obligations, such release not to be effective until the date a new
servicer enters into a servicing agreement with Issuer as provided below.
Upon delivery of any such notice to Issuer, Issuer shall obtain a new
servicer as the Successor Servicer under the Sale and Servicing Agreement.
Any Successor Servicer other than Trustee shall (i) be an established
financial institution having a net worth of not less than $50,000,000 and
whose regular business includes the servicing of motor vehicle loans and
(ii) enter into a servicing agreement with Issuer having substantially the
same provisions as the provisions of the Sale and Servicing Agreement
applicable to Servicer. If within 30 days after the delivery of the notice
referred to above, Issuer shall not have obtained such a new servicer,
Trustee may appoint, or may petition a court of competent jurisdiction to
appoint, a Successor Servicer. In connection with any such appointment,
Trustee may make such arrangements for the compensation of such successor
as it and such successor shall agree, subject to the limitations set forth
below and in the Sale and Servicing Agreement, and in accordance with
Section 8.2 of the Sale and Servicing Agreement, Issuer shall enter into an
agreement with such successor for the servicing of the Receivables (such
agreement to be in form and substance satisfactory to Trustee). If Trustee
shall succeed to Servicer's duties as servicer of the Receivables as
provided herein, it shall do so in its individual capacity and not in its
capacity as Trustee and, accordingly, the provisions of Article VI shall be
inapplicable to Trustee in its duties as the successor to Servicer and the
servicing of the Receivables. In case Trustee shall become successor to
Servicer under the Sale and Servicing Agreement, Trustee shall be entitled
to appoint as Servicer any one of its Affiliates, or delegate any of its
responsibilities as Servicer to agents, subject to the terms of the Sale
and Servicing Agreement, provided that such appointment or delegation shall
not affect or alter in any way the liability of Trustee as a successor for
the performance of the duties and obligations of Servicer in accordance
with the terms hereof.
(f) Upon any termination of Servicer's rights and powers pursuant to
the Sale and Servicing Agreement, Issuer shall promptly notify Trustee. As
soon as a Successor Servicer (other than Trustee) is appointed, Issuer
shall notify Trustee of such appointment, specifying in such notice the
name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to Trustee under this Indenture or the rights of Trustee hereunder,
Issuer agrees that, unless such action is specifically permitted hereunder
or under the Basic Documents, it will not, without the prior written
consent of Trustee or the Holders of at least a majority in Outstanding
Amount of the Notes, amend, modify, waive, supplement, terminate or
surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms of any Collateral or the
Basic Documents, or waive timely performance or observance by Servicer or
Seller under the Sale and Servicing Agreement; provided that no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, distributions that are required to be
made for the benefit of the Noteholders, or (ii) reduce the aforesaid
percentage of the Notes which are required to consent to any such
amendment, without the consent of the Holders of all the Outstanding Notes.
If any such amendment, modification, supplement or waiver shall be so
consented to by Trustee or such Holders, Issuer agrees, promptly following
a request by Trustee to do so, to execute and deliver, in its own name and
at its own expense, such agreements, instruments, consents and other
documents as Trustee may deem necessary or appropriate in the
circumstances.
SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding,
Issuer shall not:
(a) except as expressly permitted by this Indenture or the
Basic Documents, sell, transfer, exchange or otherwise dispose of any
of the properties or assets of Issuer, including those included in the
Trust Estate, unless directed to do so by Trustee;
(b) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust
Estate; or
(c) (i) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations with respect
to the Notes under this Indenture except as may be expressly permitted
hereby, (ii) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or
the proceeds thereof (other than tax liens, mechanics' liens and other
liens that arise by operation of law, in each case on a Financed
Vehicle and arising solely as a result of an action or omission of the
related Obligor) or (iii) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the Trust Estate.
SECTION 3.9 Annual Statement as to Compliance. Issuer will deliver to
Trustee, within 120 days after the end of each fiscal year of Issuer
(commencing with the fiscal year 199__), and otherwise in compliance with
the requirements of TIA Section 314(a)(4) an Officer's Certificate stating,
as to the Authorized Officer signing such Officer's Certificate, that
(a) a review of the activities of Issuer during such year and
of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based
on such review, Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a
default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms. (a)
Issuer shall not consolidate or merge with or into any other Person, unless
(i) the Person (if other than Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any state and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to Trustee, in form satisfactory to Trustee, the due and
punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture on the part of Issuer to be performed or observed, all as
provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to Trustee) to the effect that
such transaction will not have any material adverse tax consequence to
the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) Issuer shall have delivered to Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
(b) Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Trust Estate, to
any Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of Issuer the conveyance or transfer of which is
hereby restricted shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America
or any state, (B) expressly assume, by an indenture supplemental
hereto, executed and delivered to Trustee, in form satisfactory to
Trustee, the due and punctual payment of the principal of and interest
on all Notes and the performance or observance of every agreement and
covenant of this Indenture on the part of Issuer to be performed or
observed, all as provided herein, (C) expressly agree by means of such
supplemental indenture that all right, title and interest so conveyed
or transferred shall be subject and subordinate to the rights of
Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agree to indemnify, defend and hold
harmless Issuer against and from any loss, liability or expense
arising under or related to this Indenture and the Notes and (E)
expressly agree by means of such supplemental indenture that such
Person (or if a group of persons, then one specified Person) shall
prepare (or cause to be prepared) and make all filings with the
Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to Trustee) to the effect that
such transaction will not have any material adverse tax consequence to
the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) Issuer shall have delivered to Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
SECTION 3.11 Successor or Transferee. (a) Upon any consolidation or
merger of Issuer in accordance with Section 3.10(a), the Person formed by
or surviving such consolidation or merger (if other than Issuer) shall
succeed to, and be substituted for, and may exercise every right and power
of, Issuer under this Indenture with the same effect as if such Person had
been named as Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
Issuer pursuant to Section 3.10(b), Norwest Auto Trust 199_-_ will be
released from every covenant and agreement of this Indenture to be observed
or performed on the part of Issuer with respect to the Notes immediately
upon the delivery of written notice to Trustee stating that Norwest Auto
Trust 199_-_ is to be so released.
SECTION 3.12 No Other Business. Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the Basic
Documents and activities incidental thereto.
SECTION 3.13 No Borrowing. Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
SECTION 3.14 Servicer's Obligations. Issuer shall cause Servicer to
comply with Sections 4.9, 4.10, 4.11 and 5.8 of the Sale and Servicing
Agreement.
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Sale and Servicing Agreement or this
Indenture, Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability
of so doing or otherwise), endorse or otherwise become contingently liable,
directly or indirectly, in connection with the obligations, stocks or
dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or
any other interest in, or make any capital contribution to, any other
Person.
SECTION 3.16 Capital Expenditures. Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personalty).
SECTION 3.17 Restricted Payments. Issuer shall not, directly or
indirectly, (a) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a
combination thereof, to Owner Trustee or any owner of a beneficial interest
in Issuer or otherwise with respect to any ownership or equity interest or
security in or of Issuer or to Servicer or Administrator, (b) redeem,
purchase, retire or otherwise acquire for value any such ownership or
equity interest or security or (c) set aside or otherwise segregate any
amounts for any such purpose; provided that Issuer may make, or cause to be
made, (i) distributions to Servicer, Administrator, Owner Trustee, Trustee
and the Certificateholders as permitted by, and to the extent funds are
available for such purpose under, the Sale and Servicing Agreement or Trust
Agreement and (ii) distributions to the Indenture Trustee pursuant to
Section 2(a)(ii) of the Administration Agreement. Issuer will not, directly
or indirectly, make payments to or distributions from the Collection
Account except in accordance with this Indenture and the Basic Documents.
SECTION 3.18 Notice of Events of Default. Issuer agrees to give
Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and each default on the part of Servicer or Seller of its
obligations under the Sale and Servicing Agreement.
SECTION 3.19 Further Instruments and Acts. Upon request of Trustee,
Issuer will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 3.20 Removal of Administrator. For so long as any Notes are
Outstanding, the Issuer shall not remove the Administrator without cause
unless the Rating Agency Condition shall have been satisfied in connection
therewith.
ARTICLE IV SATISFACTION AND DISCHARGE.
SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to
(a) rights of registration of transfer and exchange, (b) substitution of
mutilated, destroyed, lost or stolen Notes, (c) rights of Noteholders to
receive payments of principal thereof and interest thereon, (d) Sections
3.3, 3.4, 3.5, 3.8, 3.10, 3.12 and 3.13, (e) the rights, obligations and
immunities of Trustee hereunder (including the rights of Trustee under
Section 6.7 and the obligations of Trustee under Section 4.2) and (f) the
rights of Noteholders as beneficiaries hereof with respect to the property
so deposited with Trustee payable to all or any of them, and Trustee, on
demand of and at the expense of Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to
the Notes, when
(i) either
(A) all Notes theretofore authenticated and delivered
(other than (1) Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section 2.5
and (2) Notes for which payment money has theretofore been
deposited in trust or segregated and held in trust by Issuer and
thereafter repaid to Issuer or discharged from such trust, as
provided in Section 3.3) have been delivered to Trustee for
cancellation; or
(B) all Notes not theretofore delivered to Trustee for
cancellation
(1) have become due and payable,
(2) will become due and payable at the Final
Scheduled Distribution Date within one year, or
(3) are to be called for redemption within one year
under arrangements satisfactory to Trustee for the giving
of notice of redemption by Trustee in the name, and at the
expense, of Issuer,
and Issuer, in the case of clauses (1), (2) or (3), has
irrevocably deposited or caused to be irrevocably deposited with
Trustee cash or direct obligations of or obligations guaranteed
by the United States of America (which will mature prior to the
date such amounts are payable), in trust for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness
on such Notes not theretofore delivered to Trustee for
cancellation when due to the Final Scheduled Distribution Date
or Redemption Date (if Notes shall have been called for
redemption pursuant to Section 10.1(a)), as the case may be;
(ii) Issuer has paid or caused to be paid all other sums
payable hereunder by Issuer; and
(iii) Issuer has delivered to Trustee an Officer's Certificate,
an Opinion of Counsel and (if required by the TIA or Trustee) an
Independent Certificate from a firm of certified public accountants,
each meeting the applicable requirements of Section 11.1(a) and each
stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been complied
with.
SECTION 4.2 Application of Trust Money. All moneys deposited with
Trustee pursuant to Section 4.1 shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as Trustee may
determine, to the Holders of the particular Notes for the payment or
redemption of which such moneys have been deposited with Trustee, of all
sums due and to become due thereon for principal and interest; but such
moneys need not be segregated from other funds except to the extent
required herein or in the Sale and Servicing Agreement or required by law.
SECTION 4.3 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the
Notes, all moneys then held by any Paying Agent other than Trustee under
the provisions of this Indenture with respect to such Notes shall, upon
demand of Issuer, be paid to Trustee to be held and applied according to
Section 3.3 and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.
ARTICLE V REMEDIES.
SECTION 5.1 Events of Default. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(a) default in the payment of any interest on any Note when the
same becomes due and payable, and such default shall continue for a
period of five days;
(b) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable;
(c) default in the observance or performance of any covenant or
agreement of Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any
representation or warranty of Issuer made in this Indenture or in any
certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days (or for such longer period, not in excess of 90
days, as may be reasonably necessary to remedy such default; provided
that such default is capable of remedy within 90 days or less and
Servicer on behalf of Owner Trustee delivers an Officer's Certificate
to Trustee to the effect that Issuer has commenced, or will promptly
commence and diligently pursue, all reasonable efforts to remedy such
default) after there shall have been given, by registered or certified
mail, to Issuer by Trustee or to Issuer and Trustee by the Holders of
at least 25% of the Outstanding Amount of the Notes, a written notice
specifying such default or incorrect representation or warranty and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder;
(d) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of Issuer or Seller or
any substantial part of the Trust Estate in an involuntary case under
any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of Issuer or Seller or for any substantial part of the Trust
Estate, or ordering the winding-up or liquidation of Issuer's affairs,
and such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(e) the commencement by Issuer or Seller 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 Issuer or
Seller to the entry of an order for relief in an involuntary case
under any such law, or the consent by Issuer or Seller to the
appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of Issuer or
Seller or for any substantial part of the Trust Estate, or the making
by Issuer or Seller of any general assignment for the benefit of
creditors, or the failure by Issuer or Seller generally to pay its
debts as such debts become due, or the taking of action by Issuer or
Seller in furtherance of any of the foregoing.
Issuer shall deliver to Trustee, within five days after the occurrence
thereof, written notice in the form of an Officer's Certificate of any
event which with the giving of notice and the lapse of time would become an
Event of Default under clause (c), its status and what action Issuer is
taking or proposes to take with respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such
case Trustee or the Holders of Notes representing not less than a majority
of the Outstanding Amount of the Notes may declare all the Notes to be
immediately due and payable, by a notice in writing to Issuer (and to
Trustee if given by Noteholders), and upon any such declaration the unpaid
principal amount of such Notes, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has
been obtained by Trustee as hereinafter in this, Article V provided, the
Holders of Notes representing a majority of the Outstanding Amount of the
Notes, by written notice to Issuer and Trustee, may rescind and annul such
declaration and its consequences if:
(a) Issuer has paid or deposited with Trustee a sum sufficient
to pay
(i) all payments of principal of and interest on all Notes
and all other amounts that would then be due hereunder or upon
such Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(ii) all sums paid or advanced by Trustee hereunder and
the reasonable compensation, expenses, disbursements and
advances of Trustee and its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee. (a) Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such
default continues for a period of five days, or (ii) default is made in the
payment of the principal of or any installment of the principal of any Note
when the same becomes due and payable, Issuer will, upon demand of Trustee,
pay to it, for the benefit of the Holders of the Notes, the whole amount
then due and payable on such Notes for principal and interest, with
interest upon the overdue principal, and, to the extent payment at such
rate of interest shall be legally enforceable, upon overdue installments of
interest, at the rate borne by the Notes and in addition thereto such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements
and advances of Trustee and its agents and counsel.
(b) In case Issuer shall fail forthwith to pay such amounts upon such
demand, Trustee, in its own name and as trustee of an express trust, may
institute a proceeding for the collection of the sums so due and unpaid,
and may prosecute such proceeding to judgment or final decree, and may
enforce the same against Issuer or other obligor upon such Notes and
collect in the manner provided by law out of the property of Issuer or
other obligor upon such Notes, wherever situated, the moneys adjudged or
decreed to be payable.
(c) If an Event of Default occurs and is continuing, Trustee may, as
more particularly provided in Section 5.4, in its discretion, proceed to
protect and enforce its rights and the rights of the Noteholders, by such
appropriate proceedings as Trustee shall deem most effective to protect and
enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, proceedings under Title 11 of the United
States Code or any other applicable Federal or state bankruptcy, insolvency
or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official
shall have been appointed for or taken possession of Issuer or its property
or such other obligor or Person, or in case of any other comparable
judicial proceedings relative to Issuer or other obligor upon the Notes, or
to the creditors or property of Issuer or such other obligor, Trustee,
irrespective of whether the principal of any Notes shall then be due and
payable as therein expressed or by declaration or otherwise and
irrespective of whether Trustee shall have made any demand pursuant to the
provisions of this Section, shall be entitled and empowered, by
intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable
in order to have the claims of Trustee (including any claim for
reasonable compensation to Trustee and each predecessor Trustee, and
their respective agents, attorneys and counsel, and for reimbursement
of all expenses and liabilities incurred, and all advances made, by
Trustee and each predecessor Trustee, except as a result of
negligence, bad faith or willful misconduct) and of the Noteholders
allowed in such proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or person performing similar functions in any such
proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the Noteholders and of
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of
Trustee or the Holders of Notes allowed in any judicial proceedings
relative to Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official
in any such proceeding is hereby authorized by each of such Noteholders to
make payments to Trustee, and, in the event that Trustee shall consent to
the making of payments directly to such Noteholders, to pay to Trustee such
amounts as shall be sufficient to cover reasonable compensation to Trustee,
each predecessor Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all advances
made, by Trustee and each predecessor Trustee except as a result of
negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize Trustee to vote in respect of the claim of any Noteholder in any
such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by Trustee without
the possession of any of the Notes or the production thereof in any trial
or other proceedings relative thereto, and any such action or proceedings
instituted by Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of Trustee, each predecessor
Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Holders of the Notes.
(g) In any proceedings brought by Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which
Trustee shall be a party), Trustee shall be held to represent all the
Holders of the Notes, and it shall not be necessary to make any Noteholder
a party to any such proceedings.
SECTION 5.4 Remedies; Priorities. (a) If an Event of Default shall
have occurred and be continuing, Trustee may do one or more of the
following (subject to Section 5.5):
(i) institute proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from Issuer and any other obligor upon such Notes moneys adjudged due;
(ii) institute proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the
rights and remedies of Trustee and the Holders of the Notes; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided that Trustee may not sell or otherwise liquidate the Trust Estate
following an Event of Default, other than an Event of Default described in
Section 5.1(a) or (b), unless (A) the Holders of 100% of the Outstanding
Amount of the Notes consent thereto, (B) the proceeds of such sale or
liquidation distributable to the Noteholders are sufficient to discharge in
full all amounts then due and unpaid upon such Notes for principal and
interest or (C) Trustee determines that the Trust Estate will not continue
to provide sufficient funds for the payment of principal of and interest on
the Notes as they would have become due if the Notes had not been declared
due and payable, and Trustee obtains the consent of Holders of 66-2/3% of
the Outstanding Amount of the Notes. In determining such sufficiency or
insufficiency with respect to clause (B) and (C), Trustee may, but need
not, obtain and rely upon an opinion of an Independent investment banking
or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such
purpose.
(b) If Trustee collects any money or property pursuant to this
Article V, it shall pay out such money or property (and other amounts
including amounts held on deposit in the Reserve Account) held as
Collateral for the benefit of the Noteholders in the following order:
FIRST: to Trustee for amounts due under Section 6.7;
SECOND: to Noteholders for amounts due and unpaid on the Notes
for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for interest;
THIRD: to Noteholders for amounts due and unpaid on the Notes
for principal, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal;
and
FOURTH: to Issuer for distribution to the Certificateholders.
Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section. At least 15 days before such record
date, Issuer shall mail to each Noteholder and Trustee a notice that states
the record date, the payment date and the amount to be paid.
SECTION 5.5 Optional Preservation of the Receivables. If the Notes
have been declared to be due and payable under Section 5.2 following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, Trustee may, but need not, elect to maintain
possession of the Trust Estate. It is the desire of the parties hereto and
the Noteholders that there be at all times sufficient funds for the payment
of principal of and interest on the Notes, and Trustee shall take such
desire into account when determining whether or not to maintain possession
of the Trust Estate. In determining whether to maintain possession of the
Trust Estate, Trustee may, but need not, obtain and rely upon an opinion of
an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of
the Trust Estate for such purpose.
SECTION 5.6 Limitation of Suits. No Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(a) such Holder has previously given written notice to Trustee
of a continuing Event of Default;
(b) the Holders of not less than 25% of the Outstanding Amount
of the Notes have made written request to Trustee to institute such
proceeding in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to Trustee indemnity
reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in complying with such request;
(d) Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceedings; and
(e) no direction inconsistent with such written request has
been given to Trustee during such 60-day period by the Holders of a
majority of the outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of
any other Holders of Notes or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided.
In the event Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes,
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the
Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any,
on such Note on or after the respective due dates thereof expressed in such
Note or in this Indenture (or, in the case of redemption, on or after the
Redemption Date) and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder.
SECTION 5.8 Restoration of Rights and Remedies. If Trustee or any
Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned
for any reason or has been determined adversely to Trustee or to such
Noteholder, then and in every such case Issuer, Trustee and the Noteholders
shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of Trustee and the Noteholders shall
continue as though no such proceeding had been instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to Trustee or to the Noteholders is intended to
be exclusive of any other right or remedy, and every right and remedy
shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any right
or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of
Trustee or any Holder of any Note to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy
or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by
law to Trustee or to the Noteholders may be exercised from time to time,
and as often as may be deemed expedient, by Trustee or by the Noteholders,
as the case may be.
SECTION 5.11 Control by Noteholders. The Holders of a majority of the
Outstanding Amount of the Notes shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to
Trustee with respect to the Notes or exercising any trust or power
conferred on Trustee; provided that
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) subject to the express terms of Section 5.4, any direction
to Trustee to sell or liquidate the Trust Estate shall be by the
Holders of Notes representing not less than 100% of the Outstanding
Amount of the Notes;
(c) if the conditions set forth in Section 5.5 have been
satisfied and Trustee elects to retain the Trust Estate pursuant to
such Section, then any direction to the trustee by Holders of Notes
representing less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Trust Estate shall be of no force and effect;
(d) Trustee may take any other action deemed proper by Trustee
that is not inconsistent with such direction; and
(e) such direction shall be in writing;
provided, further, that, subject to Section 6.1, Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such
action.
SECTION 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the
Holders of Notes of not less than a majority of the Outstanding Amount of
the Notes may waive any past Default or Event of Default and its
consequences except a Default (a) in payment of principal of or interest on
any of the Notes or (b) in respect of a covenant or provision hereof which
cannot be modified or amended without the consent of the Holder of each
Note. In the case of any such waiver, Issuer, Trustee and the Holders of
the Notes shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have
occurred, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereto.
SECTION 5.13 Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof
shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to (a) any
suit instituted by Trustee, (b) any suit instituted by any Noteholder, or
group of Noteholders, in each case holding in the aggregate more than 10%
of the Outstanding Amount of the Notes or (c) any suit instituted by any
Noteholder for the enforcement of the payment of principal of or interest
on any Note on or after the respective due dates expressed in such Note and
in this Indenture (or, in the case of redemption, on or after the
Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any
time hereafter in force, that may affect the covenants or the performance
of this Indenture; and Issuer (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any
power herein granted to Trustee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
SECTION 5.15 Action on Notes. Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of Trustee or the Noteholders shall be impaired by the recovery of
any judgment by Trustee against Issuer or by the levy of any execution
under such judgment upon any portion of the Trust Estate or upon any of the
assets of Issuer.
SECTION 5.16 Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from Trustee to do so and at Administrator's
expense, Issuer agrees to take all such lawful action as Trustee may
request to compel or secure the performance and observance by Seller and
Servicer, as applicable, of each of their obligations to Issuer under or in
connection with the Sale and Servicing Agreement in accordance with the
terms thereof, and to exercise any and all rights, remedies, powers and
privileges lawfully available to Issuer under or in connection with the
Sale and Servicing Agreement to the extent and in the manner directed by
Trustee, including the transmission of notices of default on the part of
Seller or Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by
Seller or Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, Trustee
may, and, at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of the Holders of
66-2/3% of the Outstanding Amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of Issuer against Seller or
Servicer under or in connection with the Sale and Servicing Agreement,
including the right or power to take any action to compel or secure
performance or observance by Seller or Servicer of each of their
obligations to Issuer thereunder and to give any consent, request, notice,
direction, approval, extension or waiver under the Sale and Servicing
Agreement, and any right of Issuer to take such action shall be suspended.
ARTICLE VI TRUSTEE.
SECTION 6.1 Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, of which a Responsible Officer of Trustee has
actual knowledge, Trustee shall exercise the rights and powers vested in it
by this Indenture and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against
Trustee; and
(ii) in the absence of bad faith on its part, Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to Trustee and conforming to the requirements of
this Indenture; however, Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own wilful misconduct,
except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it is proved that
Trustee was negligent in ascertaining the pertinent facts; and
(iii) Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.11.
(d) Trustee shall not be liable for interest on any money received by
it except as Trustee may agree in writing with Issuer.
(e) Money held in trust by Trustee need not be segregated from other
funds except to the extent required by law or the terms of this Indenture
or the Sale and Servicing Agreement.
(f) No provision of this Indenture shall require Trustee to expend or
risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or indemnity satisfactory to it against such risk
or liability is not assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 6.2 Rights of Trustee. (a) Trustee may conclusively rely on
any document believed by it to be genuine and to have been signed or
presented by the proper person. Trustee need not investigate any fact or
matter stated in the document.
(b) Before Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel. Trustee shall not be liable
for any action it takes, suffers or omits to take in good faith in reliance
on the Officer's Certificate or Opinion of Counsel.
(c) Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of,
Norwest Auto Receivables Corporation, Norwest Bank Minnesota, N.A., or any
other such agent, attorney, custodian or nominee appointed with due care by
it hereunder. Trustee shall have no duty to monitor the performance of
Issuer.
(d) Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights
or powers; provided, that Trustee's conduct does not constitute wilful
misconduct, negligence or bad faith.
(e) Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of
such counsel.
SECTION 6.3 Individual Rights of Trustee. Trustee in its individual
or any other capacity may become the owner or pledgee of Notes and may
otherwise deal with Issuer or its Affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent, Note Registrar, co-registrar
or co-paying agent may do the same with like rights. However, Trustee must
comply with Sections 6.11 and 6.12.
SECTION 6.4 Trustee's Disclaimer. Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this
Indenture or the Notes, shall not be accountable for Issuer's use of the
proceeds from the Notes, and shall not be responsible for any statement of
Issuer in the Indenture or in any document issued in connection with the
sale of the Notes or in the Notes other than Trustee's certificate of
authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing
and if it is either actually known or written notice of the existence
thereof has been delivered to a Responsible Officer of Trustee, Trustee
shall mail to each Noteholder notice of the Default within 90 days after
such knowledge or notice occurs. Except in the case of a Default in payment
of principal of or interest on any Note (including payments pursuant to the
mandatory redemption provisions of such Note), Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of
Noteholders.
SECTION 6.6 Reports by Trustee to Holders. Trustee shall deliver to
each Noteholder such information as may be reasonably required to enable
such Holder to prepare its Federal and state income tax returns.
SECTION 6.7 Compensation and Indemnity. Issuer shall or shall cause
Administrator to pay to Trustee from time to time compensation for its
services in accordance with a separate agreement between Servicer and
Trustee. Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. Issuer shall or shall cause
Administrator to reimburse Trustee for all reasonable out-of-pocket
expenses incurred or made by it, including costs of collection, in addition
to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of
Trustee's agents, counsel, accountants and experts. Subject to Section 11.3
of the Sale and Servicing Agreement, Issuer has caused Administrator to
agree to indemnify Trustee and its officers, directors, employees and
agents against any and all loss, liability or expense (including attorneys'
fees and expenses) incurred by it in connection with the acceptance or the
administration of this trust and the performance of its duties hereunder.
Neither Issuer nor Administrator need reimburse any expense or indemnify
against any loss, liability or expense incurred by Trustee through
Trustee's own wilful misconduct, negligence or bad faith.
Issuer's payment obligations to Trustee pursuant to this Section shall
survive the discharge of this Indenture subject to a satisfaction of the
Rating Agency Condition. When Trustee incurs expenses after the occurrence
of a Default specified in Section 5.1(d) or (e) with respect to Issuer, the
expenses are intended to constitute expenses of administration under Title
11 of the United States Code or any other applicable Federal or state
bankruptcy, insolvency or similar law.
SECTION 6.8 Replacement of Trustee. Trustee may resign at any time by
so notifying Issuer. The Holders of a majority in Outstanding Amount of the
Notes may remove Trustee by so notifying Trustee and may appoint a
successor Trustee. Issuer shall remove Trustee if:
(a) Trustee fails to comply with Section 6.11;
(b) Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of Trustee
or its property; or
(d) Trustee otherwise becomes incapable of acting.
If Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason (Trustee in such event being referred to herein
as the retiring Trustee), Issuer shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Issuer. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of
Trustee under this Indenture subject to satisfaction of the Rating Agency
Condition. The successor Trustee shall mail a notice of its succession to
Noteholders. The retiring Trustee shall promptly transfer all property held
by it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, Issuer or the
Holders of a majority in Outstanding Amount of the Notes may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of Trustee and
the appointment of a successor Trustee.
Any resignation or removal of Trustee and appointment of a Successor
Trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor Trustee pursuant
to Section 6.8 and payment of all fees and expenses owed to the outgoing
Trustee.
Notwithstanding the resignation or removal of Trustee pursuant to this
Section, Issuer's and Administrator's obligations under Section 6.7 shall
continue for the benefit of the retiring Trustee.
Trustee shall not be liable for the acts or omissions of any successor
Trustee.
SECTION 6.9 Successor Trustee by Merger. If Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee. Trustee shall provide the
Rating Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to Trustee may adopt the certificate of authentication
of any predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to Trustee may authenticate such Notes either in the name of any
predecessor hereunder or in the name of the successor to Trustee; and in
all such cases such certificates shall have the full force which it is
anywhere in the Notes or in this Indenture provided that the certificate of
Trustee shall have.
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for
the purpose of meeting any legal requirement of any jurisdiction in which
any part of Issuer may at the time be located, Trustee shall have the power
and may execute and deliver all instruments to appoint one or more Persons
to act as a co-trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person or
Persons, in such capacity and for the benefit of the Noteholders, such
title to the Trust, or any part hereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and
trusts as Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 6.11 and no notice to
Noteholders of the appointment of any co-trustee or separate trustee shall
be required under Section 6.8.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon Trustee shall be conferred or imposed upon and exercised
or performed by 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 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 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 Issuer 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 Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder, including acts
or omissions of predecessor or successor trustees; and
(iii) Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested
with the estates or property specified in its instrument of appointment,
either jointly with Trustee or separately, as may be provided therein,
subject to all the provisions of this Indenture, specifically including
every provision of this Indenture relating to the conduct of, affecting the
liability of, or affording protection to, Trustee. Every such instrument
shall be filed with Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
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 invest in and
be exercised by Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.11 Eligibility; Disqualification. Trustee shall at all
times satisfy the requirements of TIA Section 310(a)(1)(2)(5). Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in
its most recent published annual report of condition and shall have a long
term debt rating of BBB- or better by the Rating Agencies. Trustee shall
comply with TIA Section 310(b), including the optional provision permitted
by the second sentence of TIA Section 310(b)(9); provided that there shall
be excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities of Issuer are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer.
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or
been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS.
SECTION 7.1 Issuer To Furnish Trustee Names and Addresses of
Noteholders. Issuer will furnish or cause to be furnished to Trustee (a)
not more than five days after the earlier of (i) each Record Date and (ii)
three months after the last Record Date, a list, in such form as Trustee
may reasonably require, of the names and addresses of the Holders as of
such Record Date, (b) at such other times as Trustee may request in
writing, within 30 days after receipt by Issuer of any such request, a list
of similar form and content as of a date not more than 10 days prior to the
time such list is furnished; provided that so long as Trustee is Note
Registrar, no such list shall be required to be furnished.
SECTION 7.2 Preservation of Information; Communications to
Noteholders. (a) Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in
the most recent list furnished to Trustee as provided in Section 7.1 and
the names and addresses of Holders received by Trustee in its capacity as
Note Registrar. Trustee may destroy any list furnished to it as provided in
such Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under
the Notes.
(c) Issuer, Trustee and Note Registrar shall have the protection of
TIA Section 312(c).
SECTION 7.3 Reports by Issuer. (a) Issuer shall:
(i) file with Trustee, within 15 days after Issuer is required
to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which Issuer may be required
to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act;
(ii) file with Trustee and the Commission in accordance with
rules and regulations prescribed from time to time by the Commission
such additional information, documents and reports with respect to
compliance by Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to Trustee (and Trustee shall transmit by mail to
all Noteholders described in TIA Section 313(c)) such summaries of any
information, documents and reports required to be filed by Issuer
pursuant to clauses (i) and (ii) of this Section 7.3(a) as may be
required by rules and regulations prescribed from time to time by the
Commission.
(b) Unless Issuer otherwise determines, the fiscal year of Issuer
shall end on December 31 of each year.
SECTION 7.4 Reports by Trustee. If required by TIA Section 313(a),
within 60 days after each March 31, beginning with March 31, 199__, Trustee
shall mail to each Noteholder as required by TIA Section 313(c) a brief
report dated as of such date that complies with TIA Section 313(a). Trustee
also shall comply with TIA Section 313(b)(1). A copy of each report at the
time of its mailing to Noteholders shall be filed by Trustee with the
Commission and each stock exchange, if any, on which the Notes are listed.
Issuer shall notify Trustee if and when the Notes are listed on any stock
exchange.
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES.
SECTION 8.1 Collection of Money. Except as otherwise expressly
provided herein, Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to
or receivable by Trustee pursuant to this Indenture. Trustee shall apply
all such money received by it as provided in this Indenture. Except as
otherwise expressly provided in this Indenture, if any default occurs in
the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, Trustee may take such action as may be
appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings. Any such action
shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as
provided in Article V.
SECTION 8.2 Trust Accounts. (a) On or prior to the Closing Date,
Issuer shall cause Servicer to establish and maintain, in the name of
Trustee, for the benefit of the Noteholders and the Certificateholders, the
Trust Accounts as provided in Section 5.1 of the Sale and Servicing
Agreement.
(b) On or before each Distribution Date, the Total Distribution
Amount with respect to the preceding Collection Period will be deposited in
the Collection Account as provided in Section 5.2 of the Sale and Servicing
Agreement. On or before each Distribution Date, the Noteholders'
Distributable Amount with respect to the preceding Collection Period will
be transferred from the Collection Account and/or the Reserve Account to
the Note Distribution Account as provided in Sections 5.1 and 5.5 of the
Sale and Servicing Agreement.
(c) On each Distribution Date and Redemption Date, Trustee shall
distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid
on the Notes for principal and interest in the following amounts and in the
following order of priority (except as otherwise provided in Section
5.4(b)):
(i) accrued and unpaid interest on the Notes; provided that if
there are not sufficient funds in the Note Distribution Account to pay
the entire amount of accrued and unpaid interest then due on the
Notes, the amount in the Note Distribution Account shall be applied to
the payment of such interest on the Notes pro rata on the basis of the
total such interest due on the Notes;
(ii) to the Holders of the Class A-1 Notes until the
Outstanding Amount of the Class A-1 Notes is reduced to zero; and
(iii) to the Holders of the Class A-2 Notes until the
Outstanding Amount of the Class A-2 Notes is reduced to zero.
SECTION 8.3 General Provisions Regarding Accounts. (a) So long as
no Default or Event of Default shall have occurred and be continuing, all
or a portion of the funds in the Trust Accounts shall be invested in
Eligible Investments and reinvested by Trustee upon Issuer Order, subject
to the provisions of Section 5.1(b) of the Sale and Servicing Agreement.
All income or other gain from investments of moneys deposited in the Trust
Accounts shall be deposited (or caused to be deposited) by Trustee in the
Collection Account, and any loss resulting from such investments shall be
charged to such account. Issuer will not direct Trustee to make any
investment of any funds or to sell any investment held in any of the Trust
Accounts unless the security interest Granted and perfected in such account
will continue to be perfected in such investment or the proceeds of such
sale, in either case without any further action by any Person, and, in
connection with any direction to Trustee to make any such investment or
sale, if requested by Trustee, Issuer shall deliver to Trustee an Opinion
of Counsel, acceptable to Trustee, to such effect.
(b) Subject to Section 6.1(c), Trustee shall not in any way be held
liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except
for losses attributable to Trustee's failure to make payments on such
Eligible Investments issued by Trustee, in its commercial capacity as
principal obligor and not as trustee, in accordance with their terms.
(c) If (i) Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to Trustee by 11:00 a.m.
Eastern Time (or such other time as may be agreed by Issuer and Trustee) on
any Business Day; or (ii) a Default or Event of Default shall have occurred
and be continuing with respect to the Notes but the Notes shall not have
been declared due and payable pursuant to Section 5.2, or, if such Notes
shall have been declared due and payable following an Event of Default,
amounts collected or receivable from the Trust Estate are being applied in
accordance with Section 5.5 as if there had not been such a declaration;
then Trustee shall, to the fullest extent practicable, invest and reinvest
funds in the Trust Accounts in one or more Eligible Investments. Trustee
shall not be liable for losses in respect of such investments in Eligible
Investments that comply with the requirements of the Basic Documents.
SECTION 8.4 Release of Trust Estate. (a) Subject to the payment of
its fees and expenses pursuant to Section 6.7, Trustee may, and when
required by the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, or convey Trustee's
interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon
an instrument executed by Trustee as provided in this Article VIII shall be
bound to ascertain Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any moneys.
(b) Trustee shall, at such time as there are no Notes outstanding
and all sums due Trustee pursuant to Section 6.7 have been paid, release
any remaining portion of the Trust Estate that secured the Notes from the
lien of this Indenture and release to Issuer or any other Person entitled
thereto any funds then on deposit in the Trust Accounts. Trustee shall
release property from the lien of this Indenture pursuant to this Section
8.4(b) only upon receipt of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA) Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting
the applicable requirements of Section 11.1.
SECTION 8.5 Opinion of Counsel. Trustee shall receive at least seven
days' notice when requested by Issuer to take any action pursuant to
Section 8.4(a), accompanied by copies of any instruments involved, and
Trustee may also require as a condition to such action, an Opinion of
Counsel, in form and substance satisfactory to Trustee, stating the legal
effect of any such action, outlining the steps required to complete the
same, and concluding that all conditions precedent to the taking of such
action have been complied with and such action will not materially and
adversely impair the security for the Notes or the rights of the
Noteholders in contravention of the provisions of this Indenture; provided
that such Opinion of Counsel shall not be required to express an opinion as
to the fair value of the Trust Estate. Counsel rendering any such opinion
may rely, without independent investigation, on the accuracy and validity
of any certificate or other instrument delivered to Trustee in connection
with any such action.
ARTICLE IX SUPPLEMENTAL INDENTURES.
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior notice to
the Rating Agencies by Issuer, as evidenced to Trustee, Issuer and Trustee,
when authorized by an Issuer Order, at any time and from time to time, may
enter into one or more indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as in force at the date of the
execution thereof), in form satisfactory to Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of
this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to Issuer, and the
assumption by any such successor of the covenants of Issuer herein and
in the Notes contained;
(iii) to add to the covenants of Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein
conferred upon Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not adversely affect the
interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI;
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA; or
(viii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to give effect to the
amendments contemplated by clauses (ii), (iii) and (iv) of Section
11.1(a) of the Sale and Servicing Agreement.
Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) Issuer and Trustee, when authorized by an Issuer Order, may,
also without the consent of any of the Holders of the Notes but with prior
notice to the Rating Agencies by Issuer, as evidenced to Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of
the provisions of, this Indenture or of modifying in any manner the rights
of the Holders of the Notes under this Indenture; provided that such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder.
SECTION 9.2 Supplemental Indentures with Consent of Noteholders.
Issuer and Trustee, when authorized by an Issuer Order, also may, with
prior notice to the Rating Agencies and with the consent of the Holders of
not less than a majority of the outstanding Amount of the Notes, by Act of
such Holders delivered to Issuer and Trustee, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to,
or changing in any manner or eliminating any of the provisions of, this
Indenture or of modifying in any manner the rights of the Holders of the
Notes under this Indenture; provided that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Note affected
thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof,
the interest rate thereon or the Redemption Price with respect
thereto, change the provision of this Indenture relating to the
application of collections on, or the proceeds of the sale of, the
Trust Estate to payment of principal of or interest on the Notes, or
change any place of payment where, or the coin or currency in which,
any Note or the interest thereon is payable, or impair the right to
institute suit for the enforcement of the provisions of this Indenture
requiring the application of funds available therefor, as provided in
Article V, to the payment of any such amount due on the Notes on or
after the respective due dates thereof (or, in the case of redemption,
on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences
provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Notes required to direct Trustee to direct Issuer to sell or liquidate
the Trust Estate pursuant to Section 5.4;
(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified
or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Distribution Date
(including the calculation of any of the individual components of such
calculation) or to affect the rights of the Holders of Notes to the
benefit of any provisions for the mandatory redemption of the Notes
contained herein; or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein
or in the Basic Documents, terminate the lien of this Indenture on any
property at any time subject hereto or deprive the Holder of any Note
of the security provided by the lien of this Indenture.
Trustee may determine whether or not any Notes would be affected by
any supplemental indenture and any such determination shall be conclusive
upon the Holders of all Notes, whether theretofore or thereafter
authenticated and delivered hereunder. Trustee shall not be liable for any
such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the
substance thereof.
Promptly after the execution by Issuer and Trustee of any supplemental
indenture pursuant to this Section, Trustee shall mail to the Holders of
the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts
created by this Indenture, Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. Trustee may, but
shall not be obligated to, enter into any such supplemental indenture that
affects Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective
rights, limitations of rights, obligations, duties, liabilities and
immunities under this Indenture of Trustee, Issuer and the Holders of the
Notes shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the
terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
SECTION 9.5 Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as
then in effect so long as this Indenture shall then be qualified under the
Trust Indenture Act.
SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by Trustee
shall, bear a notation in form approved by Trustee as to any matter
provided for in such supplemental indenture. If Issuer or Trustee shall so
determine, new Notes so modified as to conform, in the opinion of Trustee
and Issuer, to any such supplemental indenture may be prepared and executed
by Issuer and authenticated and delivered by Trustee in exchange for
Outstanding Notes.
ARTICLE X REDEMPTION OF NOTES.
SECTION 10.1 Redemption. (a) The Class A-2 Notes are subject to
redemption in whole, but not in part, at the direction of Seller pursuant
to Section 9.1(a) of the Sale and Servicing Agreement, on any Distribution
Date on which Seller exercises its option to purchase the Trust Estate
pursuant to said Section 9.1(a), for a purchase price equal to the
Redemption Price; provided that Issuer has available funds sufficient to
pay the Redemption Price. Servicer or Issuer shall furnish the Rating
Agencies notice of such redemption. If the Class A-2 Notes are to be
redeemed pursuant to this Section 10.1(a), Servicer or Issuer shall furnish
notice of such election to Trustee not later than 25 days prior to the
Redemption Date and Issuer shall deposit with Trustee in the Note
Distribution Account the Redemption Price of the Class A-2 Notes to be
redeemed whereupon all such Class A-2 Notes shall be due and payable on the
Redemption Date upon the furnishing of a notice complying with Section 10.2
to each Holder of the Class A-2 Notes.
(b) If the assets of Issuer are sold pursuant to Section 9.2 of the
Trust Agreement, all amounts on deposit in the Note Distribution Account
shall be paid to the Noteholders up to the Outstanding Amount of the Notes
and all accrued and unpaid interest thereon. If amounts are to be paid to
Noteholders pursuant to this Section 10.1(b), Servicer or Issuer shall, to
the extent practicable, furnish notice of such event to Trustee not later
than 25 days prior to the Redemption Date whereupon all such amounts shall
be payable on the Redemption Date.
SECTION 10.2 Form of Redemption Notice. (a) Notice of redemption
under Section 10.1(a) shall be given by Trustee by facsimile or by
first-class mail, postage prepaid, transmitted or mailed prior to the
applicable Redemption Date to each Holder of Class A-2 Notes, as of the
close of business on the Record Date preceding the applicable Redemption
Date, at such Holder's address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such
Redemption Date is not applicable and that payments shall be made only
upon presentation and surrender of such Class A-2 Notes and the place
where such Class A-2 Notes are to be surrendered for payment of the
Redemption Price (which shall be the office or agency of Issuer to be
maintained as provided in Section 3.2); and
(iv) that interest on the Class A-2 Notes shall cease to accrue
on the Redemption Date.
Notice of redemption of the Class A-2 Notes shall be given by Trustee
in the name and at the expense of Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Class A-2 Note
shall not impair or affect the validity of the redemption of any other
Class A-2 Note.
(b) Prior notice of redemption under Sections 10.1(b) is not
required to be given to Noteholders.
SECTION 10.3 Notes Payable on Redemption Date. The Class A-2 Notes to
be redeemed shall, following notice of redemption as required by Section
10.2 (in the case of redemption pursuant to Section 10.1(a)), on the
Redemption Date become due and payable at the Redemption Price and (unless
Issuer shall default in the payment of the Redemption Price) no interest
shall accrue on the Redemption Price for any period after the date to which
accrued interest is calculated for purposes of calculating the Redemption
Price.
ARTICLE XI MISCELLANEOUS.
SECTION 11.1 Compliance Certificates and Opinions, etc. (a) Upon any
application or request by Issuer to Trustee to take any action under any
provision of this Indenture, Issuer shall furnish to Trustee (i) an
Officer's Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with
and (iii) (if required by the TIA) an Independent Certificate from a firm
of certified public accountants meeting the applicable requirements of this
Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as
to whether or not such covenant or condition has been complied with;
and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with Trustee that is to be made the basis for the release of any
property or securities subject to the lien of this Indenture, Issuer shall,
in addition to any obligation imposed in Section 11.1(a) or elsewhere in
this Indenture, furnish to Trustee an Officer's Certificate certifying or
stating the opinion of each person signing such certificate as to the fair
value (within 90 days of such deposit) to Issuer of the Collateral or other
property or securities to be so deposited.
(ii) Whenever Issuer is required to furnish to Trustee an
Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i), Issuer shall also
deliver to Trustee an Independent Certificate as to the same matters,
if the fair value to Issuer of the securities to be so deposited and
of all other such securities made the basis of any such withdrawal or
release since the commencement of the then-current fiscal year of
Issuer, as set forth in the certificates delivered pursuant to clause
(i) and this clause (ii), is 10% or more of the Outstanding Amount of
the Notes, but such a certificate need not be furnished with respect
to any securities so deposited, if the fair value thereof to Issuer as
set forth in the related Officer's Certificate is less than $25,000 or
less than one percent of the Outstanding Amount of the Notes.
(iii) Other than with respect to the release of any Purchased
Receivables or Liquidated Receivables, whenever any property or
securities are to be released from the lien of this Indenture, Issuer
shall also furnish to Trustee an Officer's Certificate certifying or
stating the opinion of each person signing such certificate as to the
fair value (within 90 days of such release) of the property or
securities proposed to be released and stating that in the opinion of
such person the proposed release will not impair the security under
this Indenture in contravention of the provisions hereof.
(iv) Whenever Issuer is required to furnish to Trustee an
Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii), Issuer shall also
furnish to Trustee an Independent Certificate as to the same matters
if the fair value of the property or securities and of all other
property other than Purchased Receivables and Defaulted Receivables,
or securities released from the lien of this Indenture since the
commencement of the then current calendar year, as set forth in the
certificates required by clause (iii) and this clause (iv), equals 10%
or more of the Outstanding Amount of the Notes, but such certificate
need not be furnished in the case of any release of property or
securities if the fair value thereof as set forth in the related
Officer's Certificate is less than $25,000 or less than one percent of
the then Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.9 or any other provision of this
Section, Issuer may (A) collect, liquidate, sell or otherwise dispose
of Receivables as and to the extent permitted or required by the Basic
Documents and (B) make cash payments out of the Trust Accounts as and
to the extent permitted or required by the Basic Documents.
SECTION 11.2 Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or
that they be so certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of Issuer may be
based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which his or
her certificate or opinion is based are erroneous. Any such certificate of
an Authorized Officer or Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of Servicer, Seller,
Administrator or Issuer, stating that the information with respect to such
factual matters is in the possession of Servicer, Seller, Administrator or
Issuer, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to Trustee, it is provided that Issuer shall deliver
any document as a condition of the granting of such application, or as
evidence of Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be),
of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of Issuer to have such application
granted or to the sufficiency of such certificate or report. The foregoing
shall not, however, be construed to affect Trustee's right to rely upon the
truth and accuracy of any statement or opinion contained in any such
document as provided in Article VI.
SECTION 11.3 Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided
by this Indenture to be given or taken by Noteholders may be embodied in
and evidenced by one or more instruments of substantially similar tenor
signed by such Noteholders in person or by agents duly appointed in
writing; and except as herein otherwise expressly provided such action
shall become effective when such instrument or instruments are delivered to
Trustee, and, where it is hereby expressly required, to Issuer. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1) conclusive
in favor of Trustee and Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any customary manner of Trustee.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of
every Note issued upon the registration thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be
done by Trustee or Issuer in reliance thereon, whether or not notation Of
such action is made upon such Note.
SECTION 11.4 Notices, etc., to Trustee, Issuer and Rating Agencies.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Noteholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to or filed with:
(a) Trustee by any Noteholder, Administrator or Issuer shall be
sufficient for every purpose hereunder if personally delivered,
delivered by overnight courier or mailed certified mail, return
receipt requested and shall be deemed to have been duly given upon
receipt to Trustee at its Corporate Trust Office, or
(b) Issuer by Trustee or by any Noteholder shall be sufficient
for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed certified mail, return receipt requested
and shall be deemed to have been duly given upon receipt to Issuer
addressed to: Norwest Auto Trust 199_-_, in care of Norwest Center,
Sixth and Marquette, Minneapolis, Minnesota, 55479-1026, Attention:
_____________________, with a copy to Administrator at
_____________________ Attention: ______________, or at any other
address previously furnished in writing to Trustee by Issuer or
Administrator. Issuer shall promptly transmit any notice received by
it from the Noteholders to Trustee.
Notices required to be given to the Rating Agencies by Issuer, Trustee
or Owner Trustee shall be in writing, personally delivered, delivered by
overnight courier or mailed certified mail, return receipt requested to (i)
in the case of Moody's, at the following address: Moody's Investors
Service, Inc., 99 Church Street, New York, New York 10004 and (ii) in the
case of S&P, at the following address: Standard & Poor's Ratings Services,
26 Broadway (15th Floor), New York, New York 10004, Attention of Asset
Backed Surveillance Department; or as to each of the foregoing, at such
other address as shall be designated by written notice to the other
parties.
SECTION 11.5 Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class, postage prepaid to each Noteholder
affected by such event, at his address as it appears on the Note Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such notice nor
any defect in any notice so mailed to any particular Noteholder shall
affect the sufficiency of such notice with respect to other Noteholders,
and any notice that is mailed in the manner herein provided shall
conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent
of such notice. Waivers of notice by Noteholders shall be filed with
Trustee but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to Trustee shall be
deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or
obligations created hereunder, and shall not under any circumstance
constitute a Default or Event of Default.
SECTION 11.6 Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, Issuer
may enter into any agreement with any Holder of a Note providing for a
method of payment, or notice by Trustee or any Paying Agent to such Holder,
that is different from the methods provided for in this Indenture for such
payments or notices, provided that such methods are reasonable and
consented to by Trustee (which consent shall not be unreasonably withheld).
Issuer will furnish to the trustee a copy of each such agreement and
Trustee will cause payments to be made and notices to be given in
accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the
Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience
only and shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of Trustee in this
Indenture shall bind its successors.
SECTION 11.10 Separability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
SECTION 11.11 Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other person with an ownership
interest in any part of the Trust Estate, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 11.12 Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the date on which nominally due, and no
interest shall accrue for the period from and after any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14 Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and
the same instrument.
SECTION 11.15 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to
be effected by Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to Trustee or any other counsel reasonably
acceptable to Trustee) to the effect that such recording is necessary
either for the protection of the Noteholders or any other person secured
hereunder or for the enforcement of any right or remedy granted to Trustee
under this Indenture.
SECTION 11.16 Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of Issuer, Seller, Servicer,
Owner Trustee or Trustee on the Notes or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) Seller, Servicer, Trustee or Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of
Seller, Servicer, Trustee or Owner Trustee in its individual capacity, any
holder of a beneficial interest in Issuer, Seller, Servicer, Owner Trustee
or Trustee or of any successor or assign of Seller, Servicer, Trustee or
Owner Trustee in its individual capacity, except as any such Person may
have expressly agreed (it being understood that Trustee and Owner Trustee
have no such obligations in their individual capacity) and except that any
such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to
such entity. For all purposes of this Indenture, in the performance of any
duties or obligations of Issuer hereunder, Owner Trustee shall be subject
to, and entitled to the benefits of, the terms and provisions of Article
VI, VII and VIII of the Trust Agreement.
SECTION 11.17 No Petition. Trustee, by entering into this Indenture,
and each Noteholder, by accepting a Note, hereby covenant and agree that
they will not at any time institute against Seller or Issuer, or join in
any institution against Seller or Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or
other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents.
SECTION 11.18 Inspection. Issuer agrees that, on reasonable prior
notice, it will permit any representative of Trustee, during Issuer's
normal business hours, to examine all the books of account, records,
reports, and other papers of Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent certified public
accountants, and to discuss Issuer's affairs, finances and accounts with
Issuer's officers, employees, and independent certified public accountants,
all at such reasonable times and as often as may be reasonably requested.
Trustee shall and shall cause its representatives to hold in confidence all
such information except to the extent disclosure may be required by law
(and all reasonable applications for confidential treatment are unavailing)
and except to the extent that Trustee may reasonably determine that such
disclosure is consistent with its Obligations hereunder.
IN WITNESS WHEREOF, Issuer and Trustee have caused this Indenture to
be duly executed by their respective officers, thereunto duly authorized,
all as of the day and year first above written.
NORWEST AUTO TRUST 199_-_,
By: ____________________________________,
not in its individual capacity but solely as
Owner Trustee,
By:___________________________________
Name:
Title:
____________________________,
not in its individual capacity
but solely as Trustee,
By:_________________________________________
Name:
Title:
EXHIBIT A
SCHEDULE OF RECEIVABLES
Delivered on Disk to Trustee
EXHIBIT B
FORM OF SALE AND SERVICING AGREEMENT
EXHIBIT C
FORM OF NOTE DEPOSITORY AGREEMENT
EXHIBIT D
FORM OF A-1 NOTES
REGISTERED $____________<F3>
No. R-___ CUSIP NO. ____________
- -------------------------
<F3>
Denominations of $1,000 and integral multiples of $1,000 in
excess thereof.</F3>
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or
its agent for registration of transfer, exchange or payment, and any Note
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NORWEST AUTO TRUST 199_-_
_____% CLASS A-1 ASSET BACKED NOTES
Norwest Auto Trust 199_-_, a trust organized and existing under the
laws of the State of Delaware (including any successor, the "Issuer"), for
value received, hereby promises to pay to CEDE & CO., or registered
assigns, the principal sum of __________________ DOLLARS ($___________),
partially payable on each Distribution Date in an amount equal to the
result obtained by multiplying (i) a fraction the numerator of which is
$___________ and the denominator of which is $___________ by (ii) the
aggregate amount, if any, payable from the Note Distribution Account in
respect of principal on the A-1 Notes pursuant to Section 3.1 of the
Indenture; provided that the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the _______________ Distribution
Date and the Redemption Date, if any, pursuant to Section 10.1(a) of the
Indenture. The Issuer will pay interest on this Note at the rate per annum
shown above, on each Distribution Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on
this Note will accrue for each Distribution Date from the most recent
Distribution Date on which interest has been paid to but excluding the then
current Distribution Date or, if no interest has yet been paid, from
________, 199__. Interest will be computed on the basis of actual days
elapsed in a 360-day year. Such principal of and interest on this Note
shall be paid in the manner specified in the Indenture.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of
this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this Note shall not be entitled
to any benefit under the Indenture referred to on the reverse hereof, or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Dated: _____________, 199__
NORWEST AUTO TRUST 199_-_
By: _____________________________,
not in its individual capacity
but solely as Owner Trustee under the
Trust Agreement
By: __________________________________
Name: ________________________________
Title:________________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ______________, 199__
______________________________,
not in its individual capacity,
but solely as Indenture Trustee
By: ___________________________
Authorized Signatory
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ______% Class A-1 Asset Backed Notes (herein called the
"A-1 Notes" or the "Notes"), all issued under an Indenture dated as of
__________, 199__ (such Indenture, as supplemented or amended, is herein
called the "Indenture"), between the Issuer and _____________________, not
in its individual capacity but solely as trustee (the "Indenture Trustee"),
which term includes any successor Indenture Trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Holders of the
Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are not otherwise defined herein and that are defined in
the Indenture shall have the meanings assigned to them in or pursuant to
the Indenture.
The Notes and the Class A-2 Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
The Issuer shall pay interest on overdue installments of interest at
the Class A-1 Interest Rate to the extent lawful.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in the Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of Issuer, Seller, Servicer, Owner Trustee or Trustee on the
Notes or under this Indenture or any certificate or other writing delivered
in connection herewith or therewith, against (i) Seller, Servicer, Trustee
or Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director, employee or agent of Seller, Servicer, Trustee or Owner
Trustee in its individual capacity, any holder of a beneficial interest in
Issuer, Seller, Servicer, Owner Trustee or Trustee or of any successor or
assign of Seller, Servicer, Trustee or Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that Trustee and Owner Trustee have no such obligations in their
individual capacity) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any
unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
It is the intent of the Seller, the Servicer, the Noteholders and the
Note Owners that, for purposes of Federal and State income tax and any
other tax measured in whole or in part by income, the Notes will qualify as
indebtedness of the Issuer. The Noteholders, by acceptance of a Note, agree
to treat, and to take no action inconsistent with the treatment of, the
Notes for such tax purposes as indebtedness of the Issuer.
Each Noteholder or Note Owner, by acceptance of a Note, or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that they will not at any time institute against Seller, or the Trust, or
join in any institution against Seller, or Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or
other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties
hereunder and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this
Note at the times, place and rate, and in the coin or currency, herein
prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither _________________, in its
individual capacity, any owner of a beneficial interest in the Issuer, nor
any of their respective partners, beneficiaries, agents, officers,
directors, employees, successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of
or interest on, or performance of, or omission to perform, any of the
covenants, obligations or indemnifications contained in this Note or the
Indenture, it being expressly understood that said covenants, obligations
and indemnifications have been made by the Indenture Trustee for the sole
purposes of binding the interests of the Indenture Trustee in the assets of
the Issuer. The Holder of this Note by the acceptance hereof agrees that,
except as expressly provided in the Basic Documents, in the case of an
Event of Default under the Indenture, the Holder shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
provided that nothing contained herein shall be taken to prevent recourse
to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in
this Note.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
_____________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto _______________________________
___________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ______________________, attorney, to transfer said
Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: _____________ _______________________________ */
Signature Guaranteed:
________________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Note Registrar, which requirements include
membership or participation in STAMP or such other
"signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
_________________________
*/ NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note
in every particular without alteration, enlargement or any change
whatsoever.
<PAGE>
EXHIBIT E
FORM OF A-2 NOTES
REGISTERED $____________<F4>
No. R-___ CUSIP NO._____________
____________________________
<F4>
Denominations of $1,000 and integral multiples of $1,000 in
excess thereof.</F4>
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or
its agent for registration of transfer, exchange or payment, and any Note
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NORWEST AUTO TRUST 199_-_
_____% CLASS A-2 ASSET BACKED NOTES
Norwest Auto Trust 199_-_, a trust organized and existing under the
laws of the State of Delaware (including any successor, the "Issuer"), for
value received, hereby promises to pay to CEDE & CO., or registered
assigns, the principal sum of __________________ DOLLARS ($___________),
partially payable on each Distribution Date in an amount equal to the
result obtained by multiplying (i) a fraction the numerator of which is
$___________ and the denominator of which is $___________ by (ii) the
aggregate amount, if any, payable from the Note Distribution Account in
respect of principal on the A-1 Notes pursuant to Section 3.1 of the
Indenture; provided that the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the _______________ Distribution
Date and the Redemption Date, if any, pursuant to Section 10.1(a) of the
Indenture. No payments of principal of the A-2 Notes will be made until the
principal of the A-1 Notes has been paid in full. The Issuer will pay
interest on this Note at the rate per annum shown above, on each
Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on
the preceding Distribution Date (after giving effect to all payments of
principal made on the preceding Distribution Date), subject to certain
limitations contained in Section 3.1 of the Indenture. Interest on this
Note will accrue for each Distribution Date from the most recent
Distribution Date on which interest has been paid to but excluding the then
current Distribution Date or, if no interest has yet been paid, from
________, 199__. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. Such principal of and interest on this Note shall
be paid in the manner specified in the Indenture.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of
this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this Note shall not be entitled
to any benefit under the Indenture referred to on the reverse hereof, or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Dated: _____________, 199__
NORWEST AUTO TRUST 199_-_
By: _____________________________,
not in its individual capacity
but solely as Owner Trustee under the
Trust Agreement
By: ____________________________
Name:_______________________
Title:______________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ______________, 199__
_____________________________,
not in its individual capacity,
but solely as Indenture Trustee
By: __________________________
Authorized Signatory
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ______% Class A-2 Asset Backed Notes (herein called the
"A-2 Notes" or the "Notes"), all issued under an Indenture dated as of
__________, 199__ (such Indenture, as supplemented or amended, is herein
called the "Indenture"), between the Issuer and _____________________, not
in its individual capacity but solely as trustee (the "Indenture Trustee"),
which term includes any successor Indenture Trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Holders of the
Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are not otherwise defined herein and that are defined in
the Indenture shall have the meanings assigned to them in or pursuant to
the Indenture.
The Notes and the Class A-1 Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
The Issuer shall pay interest on overdue installments of interest at
the Class A-2 Interest Rate to the extent lawful.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in the Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of Issuer, Seller, Servicer, Owner Trustee or Trustee on the
Notes or under this Indenture or any certificate or other writing delivered
in connection herewith or therewith, against (i) Seller, Servicer, Trustee
or Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director, employee or agent of Seller, Servicer, Trustee or Owner
Trustee in its individual capacity, any holder of a beneficial interest in
Issuer, Seller, Servicer, Owner Trustee or Trustee or of any successor or
assign of Seller, Servicer, Trustee or Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that Trustee and Owner Trustee have no such obligations in their
individual capacity) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any
unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
It is the intent of the Seller, the Servicer, the Noteholders and the
Note Owners that, for purposes of Federal and State income tax and any
other tax measured in whole or in part by income, the Notes will qualify as
indebtedness of the Issuer. The Noteholders, by acceptance of a Note, agree
to treat, and to take no action inconsistent with the treatment of, the
Notes for such tax purposes as indebtedness of the Issuer.
Each Noteholder or Note Owner, by acceptance of a Note, or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that they will not at any time institute against Seller, the Trust, or join
in any institution against Seller, or Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or
other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties
hereunder and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this
Note at the times, place and rate, and in the coin or currency, herein
prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither ________________________, in its
individual capacity, any owner of a beneficial interest in the Issuer, nor
any of their respective partners, beneficiaries, agents, officers,
directors, employees, successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of
or interest on, or performance of, or omission to perform, any of the
covenants, obligations or indemnifications contained in this Note or the
Indenture, it being expressly understood that said covenants, obligations
and indemnifications have been made by the Indenture Trustee for the sole
purposes of binding the interests of the Indenture Trustee in the assets of
the Issuer. The Holder of this Note by the acceptance hereof agrees that,
except as expressly provided in the Basic Documents, in the case of an
Event of Default under the Indenture, the Holder shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
provided that nothing contained herein shall be taken to prevent recourse
to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in
this Note.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
____________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto _______________________________
____________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ______________________, attorney, to transfer said
Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: _____________ _______________________________ */
Signature Guaranteed:
________________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Note Registrar, which requirements include
membership or participation in STAMP or such other
"signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
_________________________
*/ NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note
in every particular without alteration, enlargement or any change
whatsoever.
<PAGE>
EXHIBIT 4.2
===========================================================================
NORWEST AUTO TRUST 199_-_
TRUST AGREEMENT
between
NORWEST AUTO RECEIVABLES CORPORATION
and
_____________________________,
as Owner Trustee
Dated as of _______, 199_
==========================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS......................................... 1
SECTION 1.1. Capitalized Terms........................... 1
SECTION 1.2. Other Interpretive Provisions............... 1
ARTICLE II ORGANIZATION....................................... 2
SECTION 2.1. Name........................................ 2
SECTION 2.2. Office...................................... 2
SECTION 2.3. Purposes and Powers......................... 2
SECTION 2.4. Appointment of Owner Trustee................ 3
SECTION 2.5. Initial Capital Contribution of Trust Estate 3
SECTION 2.6. Declaration of Trust........................ 3
SECTION 2.7. Transfer of Interest to Funding Corp.;
Liability of the Holder of the Funding
Corp. Interest............................ 3
SECTION 2.8. Title to Issuer Property.................... 4
SECTION 2.9. Situs of Issuer............................. 4
SECTION 2.10. Representations and Warranties of Depositor. 4
SECTION 2.11. Federal Income Tax Allocations.............. 5
ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS............. 7
SECTION 3.1. Initial Ownership........................... 7
SECTION 3.2. The Certificates............................ 7
SECTION 3.3. Authentication of Certificates.............. 7
SECTION 3.4. Registration of Transfer and Exchange of
Certificates.............................. 7
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen
Certificates.............................. 8
SECTION 3.6. Persons Deemed Certificateholders........... 9
SECTION 3.7. Access to List of Certificateholders' Names
and Addresses............................. 9
SECTION 3.8. Maintenance of Office or Agency............. 9
SECTION 3.9. Appointment of Paying Agent................. 10
SECTION 3.10. Disposition by the Holder of the Funding
Corp. Interest.............................. 10
SECTION 3.11. Book-Entry Certificates.................... 10
SECTION 3.13. Definitive Certificates.................... 12
ARTICLE IV ACTIONS BY OWNER TRUSTEE........................... 12
SECTION 4.1. Prior Notice to Owners with Respect to
Certain Matters.......................... 12
SECTION 4.2. Action by Certificateholders with Respect to
Certain Matters.......................... 13
SECTION 4.3. Action by Certificateholders with Respect
to Bankruptcy............................ 13
SECTION 4.4. Restrictions on Certificateholders' Power... 14
SECTION 4.5. Majority Control............................ 14
ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES.......... 14
SECTION 5.1. Establishment of Certificate Distribution
Account................................... 14
SECTION 5.2. Application of Funds in Certificate
Distribution Account...................... 14
SECTION 5.3. Method of Payment........................... 15
SECTION 5.4. No Segregation of Monies; No Interest....... 15
SECTION 5.5. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue
Service and Others........................ 16
SECTION 5.6. Signature on Returns; Tax Matters Partner... 16
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE.............. 16
SECTION 6.1. General Authority........................... 16
SECTION 6.2. General Duties.............................. 17
SECTION 6.3. Action upon Instruction..................... 17
SECTION 6.4. No Duties Except as Specified in this
Agreement or in Instructions.............. 18
SECTION 6.5. No Action Except under Specified Documents
or Instructions........................... 19
SECTION 6.6. Restrictions................................ 19
ARTICLE VII CONCERNING OWNER TRUSTEE.......................... 19
SECTION 7.1. Acceptance of Trusts and Duties............. 19
SECTION 7.2. Furnishing of Documents..................... 20
SECTION 7.3. Representations and Warranties.............. 21
SECTION 7.4. Reliance; Advice of Counsel................. 21
SECTION 7.5. Not Acting in Individual Capacity........... 22
SECTION 7.6. Owner Trustee Not Liable for Certificates
or Receivables............................ 22
SECTION 7.7. Owner Trustee May Own Certificates and
Notes..................................... 23
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE.................... 23
SECTION 8.1. Owner Trustee's Fees and Expenses........... 23
SECTION 8.2. Indemnification............................. 23
SECTION 8.3. Payments to Owner Trustee................... 24
ARTICLE IX TERMINATION OF TRUST AGREEMENT..................... 24
SECTION 9.1. Termination of Trust Agreement.............. 24
SECTION 9.2. Dissolution upon Bankruptcy of Depositor.... 25
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL
OWNER TRUSTEES................................... 26
SECTION 10.1. Eligibility Requirements for Owner Trustee. 26
SECTION 10.2. Resignation or Removal of Owner Trustee.... 26
SECTION 10.3. Successor Owner Trustee.................... 27
SECTION 10.4. Merger or Consolidation of Owner Trustee... 27
SECTION 10.5. Appointment of Co-Trustee or Separate
Trustee.................................. 28
ARTICLE XI MISCELLANEOUS...................................... 29
SECTION 11.1. Supplements and Amendments................. 29
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders....................... 30
SECTION 11.3. Limitations on Rights of Others............ 31
SECTION 11.4. Notices.................................... 31
SECTION 11.5. Severability............................... 31
SECTION 11.6. Separate Counterparts...................... 31
SECTION 11.7. Successors and Assigns..................... 32
SECTION 11.8. No Petition................................ 32
SECTION 11.9. No Recourse................................ 32
SECTION 11.10. Headings................................... 32
SECTION 11.11. GOVERNING LAW.............................. 32
SECTION 11.12. Certificate Transfer Restrictions.......... 32
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
Exhibit C Form of Certificate Depository Agreement
TRUST AGREEMENT dated as of ________, 199_ between NORWEST AUTO
RECEIVABLES CORPORATION, a Delaware corporation, as Depositor, and
______________________, a Delaware banking corporation, as Owner Trustee.
ARTICLE I DEFINITIONS.
SECTION 1.1. Capitalized Terms. Capitalized terms are used in this
Agreement as defined in Appendix X to the Sale and Servicing Agreement
among the trust established by this Agreement, Norwest Auto Receivables
Corporation, as Seller, and Norwest Bank Minnesota, N.A., as Servicer,
dated as of ________, 199_, as the same may be amended and supplemented
from time to time.
SECTION 1.2. Other Interpretive Provisions. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or
other document delivered pursuant hereto unless otherwise defined therein.
For purposes of this Agreement and all such certificates and other
documents, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly defined in
this Agreement to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles; (b)
terms defined in Article 9 of the UCC as in effect in the State of Delaware
and not otherwise defined in this Agreement are used as defined in that
Article; (c) references to any amount as on deposit or outstanding on any
particular date means such amount at the close of business on such day; (d)
the words "hereof," "herein" and "hereunder" and words of similar import
refer to this Agreement (or the certificate or other document in which they
are used) as a whole and not to any particular provision of this Agreement
(or such certificate or document); (e) references to any Section, Schedule
or Exhibit are references to Sections, Schedules and Exhibits in or to this
Agreement (or the certificate or other document in which the reference is
made), and references to any paragraph, subsection, clause or other
subdivision within any Section or definition refer to such paragraph,
subsection, clause or other subdivision of such Section or definition; (f)
the term "including" means "including without limitation"; (g) references
to any law or regulation refer to that law or regulation as amended from
time to time and include any successor law or regulation; (h) references to
any Person include that Person's successors and assigns; and (i) headings
are for purposes of reference only and shall not otherwise affect the
meaning or interpretation of any provision hereof.
ARTICLE II ORGANIZATION.
SECTION 2.1. Name. The trust created hereby shall be known as
"Norwest Auto Trust 199_-_", in which name Owner Trustee may conduct the
business of such trust, make and execute contracts and other instruments on
behalf of such trust and sue and be sued.
SECTION 2.2. Office. The office of Issuer shall be in care of Owner
Trustee at the Corporate Trust Office or at such other address as Owner
Trustee may designate by written notice to the Certificateholders and
Depositor.
SECTION 2.3. Purposes and Powers. The purpose of Issuer is, and
Issuer shall have the power and authority, to engage in the following
activities:
(a) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement, and to sell the Notes and the
Certificates;
(b) with the proceeds of the sale of the Notes and the
Certificates, to fund the Reserve Account and to pay the
organizational, start-up and transactional expenses of Issuer and to
pay the balance to Depositor pursuant to the Sale and Servicing
Agreement;
(c) to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Certificateholders pursuant to the terms of the Sale
and Servicing Agreement any portion of the Trust Estate released from
the Lien of, and remitted to Issuer pursuant to, the Indenture;
(d) to enter into and perform its obligations under the Basic
Documents to which it is a party;
(e) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(f) subject to compliance with the Basic Documents, to engage
in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Certificateholders and the Noteholders.
Issuer is hereby authorized to engage in the foregoing activities. Issuer
shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Basic Documents.
SECTION 2.4. Appointment of Owner Trustee. Depositor hereby appoints
Owner Trustee as trustee of Issuer effective as of the date hereof, to have
all the rights, powers and duties set forth herein.
SECTION 2.5. Initial Capital Contribution of Trust Estate. Depositor
hereby sells, assigns, transfers, conveys and sets over to Owner Trustee,
as of the date hereof, the sum of $1. Owner Trustee hereby acknowledges
receipt in trust from Depositor, as of the date hereof, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and
shall be deposited in the Certificate Distribution Account.
SECTION 2.6. Declaration of Trust. Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the
Certificateholders, subject to the obligations of Issuer under the Basic
Documents. It is the intention of the parties hereto that Issuer constitute
a business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the
intention of the parties hereto that, solely for income and franchise tax
purposes, Issuer shall be treated as a partnership. The parties agree that,
unless otherwise required by appropriate tax authorities, Issuer will file
or cause to be filed annual or other necessary returns, reports and other
forms consistent with the characterization of Issuer as a partnership for
such tax purposes. Effective as of the date hereof, Owner Trustee shall
have all rights, powers and duties set forth herein and to the extent not
inconsistent herewith, in the Business Trust Statute with respect to
accomplishing the purposes of Issuer. Owner Trustee shall file the
Certificate of Trust with the Secretary of State of Delaware.
SECTION 2.7. Transfer of Interest to Funding Corp.; Liability of the
Holder of the Funding Corp. Interest. (a) Depositor shall retain a 1%
interest in the Certificates issued by Issuer. Depositor shall pay
organizational expenses of Issuer as they may arise or shall, upon the
request of Owner Trustee, promptly reimburse Owner Trustee for any such
expenses paid by Owner Trustee. Depositor shall also be liable directly to
and will indemnify the injured party for all losses, claims, damages,
liabilities and expenses of Issuer (including Expenses, to the extent not
paid out of the Owner Trust Estate) to the extent that Depositor would be
liable if Issuer were a partnership under the Delaware Revised Uniform
Limited Partnership Act in which the Depositor were a general partner;
provided that the Depositor shall not be liable for any losses incurred by
a Certificateholder in the capacity of an investor in the Certificates or a
Noteholder in the capacity of an investor in the Notes. In addition, any
third party creditors of Issuer (other than in connection with the
obligations described in the preceding sentence for which Depositor shall
not be liable) shall be deemed third party beneficiaries of this paragraph.
The obligations of the holder of the Depositor under this paragraph shall
be evidenced by the Certificates described in Section 3.10, which for
purposes of the Business Trust Statute shall be deemed to be a separate
class of Certificates from all other Certificates issued by the Trust.
(b) No Holder or Owner, other than to the extent set forth in clause
(a), shall have any personal liability for any liability or obligation of
the Trust.
SECTION 2.8. Title to Issuer Property. Legal title to all the Owner
Trust Estate shall be vested at all times in Issuer as a separate legal
entity except where applicable law in any jurisdiction requires title to
any part of the Owner Trust Estate to be vested in a trustee or trustees,
in which case title shall be deemed to be vested in Owner Trustee, a
co-trustee and/or a separate trustee, as the case may be.
SECTION 2.9. Situs of Issuer. Issuer will be located and administered
in the State of Delaware. All bank accounts maintained by Owner Trustee on
behalf of Issuer shall be located in the State of Delaware or the State of
New York. Payments will be received by Issuer only in Delaware or New York,
and payments will be made by Issuer only from Delaware or New York. The
only office of Issuer will be at the Corporate Trust Office in Delaware.
SECTION 2.10. Representations and Warranties of Depositor. Depositor
hereby represents and warrants to Owner Trustee that:
(a) Depositor is duly organized and validly existing as a
Delaware corporation with power and authority to own its properties
and to conduct its business as such properties are currently owned and
such business is presently conducted.
(b) Depositor is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such
qualifications.
(c) Depositor has the corporate power and authority to execute
and deliver this Agreement and to carry out its terms; Depositor has
full power and authority to sell and assign the property to be sold
and assigned to and deposited with Issuer and Depositor has duly
authorized such sale and assignment and deposit to Issuer by all
necessary corporate action; and the execution, delivery and
performance of this Agreement has been duly authorized by Depositor by
all necessary corporate action.
(d) This Agreement constitutes a legal, valid, and binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation and other similar laws and to general
equitable principles.
(e) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or by-laws of Depositor, or any material
indenture, agreement or other instrument to which Depositor is a party
or by which it is bound; nor result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the
Basic Documents); nor violate any law or, to the best of Depositor's
knowledge, any order, rule or regulation applicable to Depositor of
any court or of any Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
Depositor or its properties.
(f) There are no proceedings or investigations pending or, to
the Depositor's best knowledge, threatened before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its
properties: (i) asserting the invalidity of this Agreement, the
Indenture, any of the other Basic Documents, the Notes or the
Certificates, (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions
contemplated by this Agreement, the Indenture or any of the other
Basic Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Depositor or
its obligations under, or the validity or enforceability of, this
Agreement or (iv) which might adversely affect the federal income tax
attributes, or applicable state tax franchise or income tax
attributes, of the Notes and the Certificates.
SECTION 2.11. Federal Income Tax Allocations. Net income of Issuer
for any month as determined for Federal income tax purposes (and each item
of income, gain, loss, credit and deduction entering into the computation
thereof) shall be allocated:
(a) to the extent of available net income, among the
Certificateholders as of the first Record Date following the end of
such month, in proportion to their ownership of principal amount of
the Certificates on such date, an amount of net income up to the sum
of (i) the Certificateholders' Monthly Interest Distributable Amount
for such month, (ii) interest on the excess, if any, of the
Certificateholders' Interest Distributable Amount for the preceding
Distribution Date over the amount in respect of interest at the
Certificate Rate that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, to the
extent permitted by law, at the Certificate Rate from such preceding
Distribution Date through the current Distribution Date, and (iii) the
portion of the market discount on the Receivables accrued during such
month that is allocable to the excess of the initial aggregate
principal amount of the Certificates over their initial aggregate
issue price; and
(b) to the Depositor; to the extent of any remaining net
income.
If the net income of Issuer for any month is insufficient for the
allocations described in clause (a), subsequent net income shall first be
allocated to make up such shortfall before being allocated as provided in
clause (b). Net losses of Issuer, if any, for any month as determined for
Federal income tax purposes (and each item of income, gain, loss, credit
and deduction entering into the computation thereof) shall be allocated to
Depositor to the extent Depositor is reasonably expected as determined by
Servicer to bear the economic burden of such net losses, then net losses
shall be allocated among the Certificateholders as of the first Record Date
following the end of such month in proportion to their ownership of
principal amount of Certificates on such Record Date until the principal
balance of the Certificates is reduced to zero. Depositor is authorized to
modify the allocations in this paragraph if necessary or appropriate, in
its sole discretion, for the allocations to fairly reflect the economic
income, gain or loss to Depositor, the Certificateholders, or as otherwise
required by the Code. In the event that Depositor determines that it is
appropriate for the Trust to make the election contemplated in Internal
Revenue Service Notice 95-14 to elect that the Trust be classified as a
partnership for Federal income tax purposes in the event that the ability
to make such election becomes available to the Trust, the
Certificateholders agree to take such acts or actions (and to direct the
Owner Trustee to take such acts or actions) as Depositor (or the Owner
Trustee at the direction of Depositor) shall reasonably request in order to
effectuate such election.
ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS.
SECTION 3.1. Initial Ownership. Upon the formation of Issuer by the
contribution by Depositor pursuant to Section 2.5 and until the issuance of
the Certificates, Depositor shall be the sole beneficiary of the Trust.
SECTION 3.2. The Certificates. The Certificates shall be issued in
denominations of $1,000 and integral multiples thereof; provided that (a)
Certificates may be issued to Depositor pursuant to Section 2.7 in such
denominations as to represent at least 1% of the initial Certificate
Balance and (b) one Certificate may be issued in a denomination other than
an integral multiple of $1,000. The Certificates shall be executed on
behalf of Issuer by manual or facsimile signature of an authorized officer
of Owner 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 Issuer, shall be validly issued
and entitled to the benefit of this Agreement, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to
the authentication and delivery of such Certificates or did not hold such
offices at the date of authentication and delivery of such Certificates. A
transferee of a Certificate shall become a Certificateholder, and shall be
entitled to the rights and subject to the obligations of a
Certificateholder hereunder, upon due registration of such Certificate in
such transferee's name pursuant to Section 3.4.
SECTION 3.3. Authentication of Certificates. Concurrently with the
initial sale of the Receivables to Issuer pursuant to the Sale and
Servicing Agreement, Owner Trustee shall cause the Certificates in an
aggregate principal amount equal to the initial Certificate Balance to be
executed on behalf of Issuer, authenticated and delivered to or upon the
written order of Depositor, signed by its chairman of the board, its
president or any vice president, without further corporate action by
Depositor, in authorized denominations. No Certificate shall entitle its
Holder to any benefit under this Agreement, or be valid for any purpose,
unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed
by Owner Trustee or _________________________, as Owner Trustee's
authentication agent, by manual signature; such authentication shall
constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication.
SECTION 3.4. Registration of Transfer and Exchange of Certificates.
Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 3.8, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, Owner Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. ___________________________
shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.8, Owner Trustee shall
execute, authenticate and deliver (or shall cause ________________________
as its authenticating agent to authenticate and deliver), in the name of
the designated transferee or transferees, one or more new Certificates in
authorized denominations of a like class and aggregate face amount dated
the date of authentication by Owner Trustee or any authenticating agent. At
the option of a Holder, Certificates may be exchanged for other
Certificates of the same class in authorized denominations of a like
aggregate amount upon surrender of the Certificates to be exchanged at the
office or agency maintained pursuant to Section 3.8.
Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of
transfer in form satisfactory to Owner Trustee and Certificate Registrar
duly executed by the Certificateholder or his attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer or
exchange shall be canceled and subsequently disposed of by Owner Trustee in
accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but Owner Trustee or Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of
Certificates.
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate shall be surrendered to Certificate
Registrar, or if Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (b)
there shall be delivered to Certificate Registrar and Owner Trustee such
security or indemnity as may be required by them to save each of them
harmless, then in the absence of notice that such Certificate shall have
been acquired by a bona fide purchaser, Owner Trustee on behalf of Issuer
shall execute and Owner Trustee, or _____________________, as Owner
Trustee's authenticating agent, shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like class, tenor and denomination. In
connection with the issuance of any new Certificate under this Section,
Owner Trustee or Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant
to this Section shall constitute conclusive evidence of an ownership
interest in Issuer, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
SECTION 3.6. Persons Deemed Certificateholders. Every Person by
virtue of becoming a Certificateholder or Owner in accordance with this
Agreement shall be deemed to be bound by the terms of this Agreement. Prior
to due presentation of a Certificate for registration of transfer, Owner
Trustee or Certificate Registrar may treat the Person in whose name any
Certificate shall be registered in the Certificate Register as the owner of
such Certificate for the purpose of receiving distributions pursuant to
Section 5.2 and for all other purposes whatsoever, and neither Owner
Trustee nor Certificate Registrar shall be bound by any notice to the
contrary.
SECTION 3.7. Access to List of Certificateholders' Names and
Addresses. Owner Trustee shall furnish or cause to be furnished to Servicer
or Depositor, within 15 days after receipt by Owner Trustee of a request
therefor from Servicer or Depositor in writing, a list, in such form as
Servicer or Depositor may reasonably require, of the names and addresses of
the Certificateholders as of the most recent Record Date. If three or more
Holders of Certificates or one or more Holders of Certificates evidencing
not less than 25% of the Certificate Balance apply in writing to Owner
Trustee, and such application states that the applicants desire to
communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then Owner Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Certificate, shall be deemed to have agreed not to
hold either Depositor or Owner Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which
such information was derived.
SECTION 3.8. Maintenance of Office or Agency. Owner Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or
upon Owner Trustee in respect of the Certificates and the Basic Documents
may be served. Owner Trustee initially designates ____________________,
________________, New York, New York ________, as its principal corporate
trust office for such purposes. Owner Trustee shall give prompt written
notice to Depositor and to the Certificateholders of any change in the
location of the Certificate Register or any such office or agency.
SECTION 3.9. Appointment of Paying Agent. Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution
Account pursuant to Section 5.2 and shall report the amounts of such
distributions to Owner Trustee. Any Paying Agent shall have the revocable
power to withdraw funds from the Certificate Distribution Account for the
purpose of making the distributions referred to above. Owner Trustee may
revoke such power and remove Paying Agent if Owner Trustee determines in
its sole discretion that Paying Agent shall have failed to perform its
obligations under this Agreement in any material respect. Paying Agent
shall initially be ___________________, and any co-paying agent chosen by
_____________________, and acceptable to Owner Trustee. Paying Agent shall
be permitted to resign upon 30 days' written notice to Owner Trustee and
Servicer. In the event that ___________________ shall no longer be Paying
Agent, Owner Trustee shall appoint a successor to act as Paying Agent
(which shall be a bank or trust company). Owner Trustee shall cause such
successor Paying Agent or any additional Paying Agent appointed by Owner
Trustee to execute and deliver to Owner Trustee an instrument in which such
successor Paying Agent or additional Paying Agent shall agree with Owner
Trustee that as Paying Agent, such successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the
Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders.
Paying Agent shall return all unclaimed funds to Owner Trustee and upon
removal of a Paying Agent such Paying Agent shall also return all funds in
its possession to Owner Trustee. The provisions of Sections 7.1, 7.3, 7.4
and 8.1 shall apply to Owner Trustee also in its role as Paying Agent, for
so long as Owner Trustee shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in
this Agreement to Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 3.10. Disposition by the Holder of the Funding Corp.
Interest. On and after the Closing Date, Depositor shall retain beneficial
and record ownership of Certificates representing at least 1% of the
initial Certificate Balance. Any attempted transfer of any Certificate that
would reduce such interest of Depositor below 1% of the Certificate Balance
shall be void. Owner Trustee shall cause any Certificate issued to
Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE".
SECTION 3.11. Book-Entry Certificates. The Certificates, upon
original issuance, will be issued in the form of a typewritten Certificate
or Certificates representing Book-Entry Certificates, to be delivered to
The Depository Trust Company, the initial Clearing Agency, by or on behalf
of Issuer; provided that one Definitive Certificate may be issued to
Depositor pursuant to Section 2.7. Such Book-Entry Certificate
or Certificates shall initially be registered on the Certificate Register
in the name of Cede & Co., the nominee of the initial Clearing Agency, and
no beneficial owner (other than Depositor) will receive a Definitive
Certificate representing such beneficial owner's interest in such
Certificate, except as provided in Section 3.13. Unless and until
Definitive Certificates have been issued to beneficial owners pursuant to
Section 3.13:
(a) the provisions of this Section shall be in full force and
effect;
(b) Certificate Registrar, each Paying Agent and Owner Trustee
shall be entitled to deal with the Clearing Agency for all purposes of
this Agreement relating to the Book-Entry Certificates (including the
payment of principal of and interest on the Book-Entry Certificates
and the giving of instructions or directions to Owners of Book-Entry
Certificates) as the sole Holder of Book-Entry Certificates and shall
have no obligations to Owners thereof;
(c) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this
Section shall control;
(d) the rights of Owners of the Book-Entry Certificates shall
be exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Owners and the
Clearing Agency and/or Clearing Agency Participants. Pursuant to the
Certificate Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 3.13, the initial Clearing
Agency will make book-entry transfers among Clearing Agency
Participants and receive and transmit payments of principal of and
interest on the Book-Entry Certificates to such Clearing Agency
Participants; and
(e) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Holders of Certificates
evidencing a specified percentage of the Certificate Balance, the
Clearing Agency shall be deemed to represent such percentage only to
the extent that it has received instructions to such effect from
Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in
the Book-Entry Certificates and has delivered such instructions to
Owner Trustee.
SECTION 3.12. Notices to Clearing Agency. Whenever a notice or other
communication to Owners is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Owners pursuant to
Section 3.13, Owner Trustee and each Paying Agent shall give all such
notices and communications specified herein to be given to Owners to the
Clearing Agency, and shall have no obligations to Owners, except to
Depositor.
SECTION 3.13. Definitive Certificates. If (a) Servicer advises Owner
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities with respect to the Certificates,
and Servicer is unable to locate a qualified successor, (b) Servicer at its
option advises Owner Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency or (c) after the occurrence
of an Event of Default, Owners of Certificates representing beneficial
interests aggregating at least a majority of the Certificate Balance advise
the Clearing Agency in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interest of Owners of
Certificates, then the Clearing Agency shall notify all Owners and Owner
Trustee of the occurrence of any such event and of the availability of the
Definitive Certificates to Owners requesting the same. Upon surrender to
Owner Trustee of the typewritten Certificate or Certificates representing
the Book Entry Certificates by the Clearing Agency, accompanied by
registration instructions, Owner Trustee shall execute and authenticate, or
cause to be authenticated, the Definitive Certificates in accordance with
the instructions of the Clearing Agency. Neither Certificate Registrar nor
Owner 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, Owner Trustee and each Paying Agent shall recognize the
Holders of the Definitive Certificates as Certificateholders. The
Definitive Certificates shall be printed, lithographed or engraved or may
be produced in any other manner as is reasonably acceptable to Owner
Trustee, as evidenced by its execution thereof.
ARTICLE IV ACTIONS BY OWNER TRUSTEE.
SECTION 4.1. Prior Notice to Owners with Respect to Certain Matters.
With respect to the following matters, Owner Trustee shall not take action
unless at least 30 days before the taking of such action, Owner Trustee
shall have notified the Certificateholders in writing of the proposed
action and the Certificateholders shall not have notified Owner Trustee in
writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(a) the initiation of any material claim or lawsuit by Issuer
(except claims or lawsuits brought in connection with the collection
of the Receivables) and the compromise of any material action, claim
or lawsuit brought by or against Issuer (except with respect to the
aforementioned claims or lawsuits for collection of the Receivables);
(b) the election by Issuer to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed
under the Business Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is not required
and such amendment materially adversely affects the interest of the
Certificateholders;
(e) the amendment, change or modification of the Sale and
Servicing Agreement, except to cure any ambiguity or defect or to
amend or supplement any provision in a manner that would not
materially adversely affect the interests of the Certificateholders;
or
(f) the appointment pursuant to the Indenture of a successor
Trustee or the consent to the assignment by the Note Registrar, Paying
Agent or Trustee or Certificate Registrar of its obligations under the
Indenture or this Agreement, as applicable.
Owner Trustee shall notify the Certificateholders in writing of any
appointment of a successor Paying Agent or Certificate Registrar within
five Business Days thereof.
SECTION 4.2. Action by Certificateholders with Respect to Certain
Matters. Owner Trustee shall not have the power, except upon the direction
of the Certificateholders, to (a) remove Servicer under the Sale and
Servicing Agreement pursuant to Section 8.1 thereof, (b) except as
expressly provided in the Basic Documents, sell the Receivables after the
termination of the Indenture, (c) remove the Administrator under the
Administration Agreement pursuant to Section 9 thereof or (d) appoint a
successor Administrator pursuant to Section 9 of the Administration
Agreement. Owner Trustee shall take the actions referred to in the
preceding sentence only upon written instructions signed by the
Certificateholders.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.
Owner Trustee shall not have the power to commence a voluntary proceeding
in bankruptcy relating to Issuer without the unanimous prior approval of
all Certificateholders and the delivery to Owner Trustee by each such
Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that Issuer is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power. The
Certificateholders shall not direct Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any
obligation of Issuer or Owner Trustee under this Agreement or any of the
Basic Documents or would be contrary to Section 2.3 nor shall Owner Trustee
be obligated to follow any such direction, if given.
SECTION 4.5. Majority Control. Except as expressly provided herein,
any action that may be taken by the Certificateholders under this Agreement
may be taken by the Holders of Certificates evidencing not less than a
majority of the Certificate Balance. Except as expressly provided herein,
any written notice of the Certificateholders delivered pursuant to this
Agreement shall be effective if signed by Holders of Certificates
evidencing not less than a majority of the Certificate Balance at the time
of the delivery of such notice.
ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES.
SECTION 5.1. Establishment of Certificate Distribution Account. Owner
Trustee, for the benefit of the Certificateholders, shall establish and
maintain in the name of Issuer an Eligible Deposit Account (the
"Certificate Distribution Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Certificateholders. Except as otherwise provided herein, the Certificate
Distribution Account shall be under the sole dominion and control of Owner
Trustee for the benefit of the Certificateholders.
SECTION 5.2. Application of Funds in Certificate Distribution
Account. (a) On each Distribution Date, Owner Trustee will, based on the
information contained in Servicer's Report delivered on the related
Determination Date pursuant to Section 4.9 of the Sale and Servicing
Agreement, distribute to Certificateholders, to the extent of the funds
available, amounts deposited in the Certificate Distribution Account
pursuant to Section 5.5 of the Sale and Servicing Agreement on such
Distribution Date in the following order of priority:
(i) first, to the Certificateholders, on a pro rata basis, an
amount equal to the Certificateholders' Interest Distributable Amount;
and
(ii) second, to the Certificateholders, on a pro rata basis, an
amount equal to the Certificateholders' Principal Distributable
Amount.
(b) On each Distribution Date, Owner Trustee shall send, or cause to
be sent, to each Certificateholder the statement provided to Owner Trustee
by Servicer pursuant to Section 5.6 of the Sale and Servicing Agreement on
such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall
reduce the amount otherwise distributable to the Certificateholder in
accordance with this Section. Owner Trustee is hereby authorized and
directed to retain from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any tax that is
legally owed by Issuer (but such authorization shall not prevent Owner
Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome
of such proceedings). The amount of any withholding tax imposed with
respect to a Certificateholder shall be treated as cash distributed to such
Certificateholder at the time it is withheld by Issuer and remitted to the
appropriate taxing authority. If there is a possibility that withholding
tax is payable with respect to a distribution (such as a distribution to a
non-United States Certificateholder), Owner Trustee may in its sole
discretion withhold such amounts in accordance with this clause (c). In the
event that an Owner wishes to apply for a refund of any such withholding
tax, Owner Trustee shall reasonably cooperate with such Certificateholder
in making such claim so long as such Certificateholder agrees to reimburse
Owner Trustee for any out-of-pocket expenses incurred.
SECTION 5.3. Method of Payment. Subject to Section 9.1(c),
distributions required to be made to Certificateholders on any Distribution
Date shall be made to each Certificateholder of record on the preceding
Record Date either by wire transfer, in immediately available funds, to the
account of such Holder at a bank or other entity having appropriate
facilities therefor, if (a) such Certificateholder shall have provided to
Certificate Registrar appropriate written instructions at least five
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 (b) such Certificateholder is the Depositor, or an Affiliate
thereof, or, if not, by check mailed to such Certificateholder at the
address of such Holder appearing in the Certificate Register; provided
that, unless Definitive Certificates have been issued pursuant to Section
3.13, 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.), distributions will be made by wire transfer in immediately
available funds to the account designated by such nominee. Notwithstanding
the foregoing, the final distribution in respect of any Certificate
(whether on the Final Scheduled Distribution Date or otherwise) will be
payable only upon presentation and surrender of such Certificate at the
office or agency maintained for that purpose by Owner Trustee pursuant to
Section 3.8.
SECTION 5.4. No Segregation of Monies; No Interest. Subject to
Sections 5.1 and 5.2, monies received by Owner Trustee or any Paying Agent
hereunder need not be segregated in any manner except to the extent
required by law and may be deposited under such general conditions as may
be prescribed by law, and neither Owner Trustee nor any Paying Agent shall
not be liable for any interest thereon.
SECTION 5.5. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to
Sections 10.1(b)(iii) and 10.1(c) of the Sale and Servicing Agreement, the
Depositor shall (a) maintain (or cause to be maintained) the books of
Issuer on a calendar year basis on the accrual method of accounting, (b)
deliver (or cause to be delivered) to each Certificateholder, as may be
required by the Code and applicable Treasury Regulations, such information
as may be required (including Schedule K-1) to enable each
Certificateholder to prepare its Federal and state income tax returns, (c)
cause Trustee to prepare and file, in accordance with Section 10.1(c) of
the Sale and Servicing Agreement such tax returns relating to Issuer
(including a partnership information return, Form 1065), and make such
elections as may from time to time be required or appropriate under any
applicable state or Federal statute or rule or regulation thereunder so as
to maintain the Trust's characterization as a partnership for Federal
income tax purposes and (d) collect or cause to be collected any
withholding tax as described in and in accordance with Section 5.2(c) with
respect to income or distributions to Certificateholders. Owner Trustee
shall cooperate with the Depositor in making all elections pursuant to this
Section as directed in writing by the Depositor. Owner Trustee shall sign
all tax information returns filed pursuant to this Section 5.5 and any
other returns as may be required by law, and in doing so shall rely
entirely upon, and shall have no liability for information provided by,
Depositor. Depositor shall elect under Section 1278 of the Code to include
in income currently any market discount that accrues with respect to the
Receivables. Owner Trustee shall not make the election provided under
Section 754 of the Code.
SECTION 5.6. Signature on Returns; Tax Matters Partner. (a)
Notwithstanding the provisions of Section 5.5 and in accordance with
Section 10.1(c) of the Sale and Servicing Agreement, Depositor shall sign
on behalf of Issuer the tax returns of Issuer, unless applicable law
requires Owner Trustee to sign such documents, in which case such documents
shall be signed by Owner Trustee at the written direction of Depositor.
(b) Depositor shall be the "tax matters partner" of Issuer pursuant
to the Code.
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE.
SECTION 6.1. General Authority. Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which Issuer is
named as a party and each certificate or other document attached as an
exhibit to or contemplated by the Basic Documents to which Issuer is named
as a party and any amendment thereto, in each case, in such form as
Depositor shall approve as evidenced conclusively by Owner Trustee's
execution thereof, and on behalf of Issuer at the written direction of
Depositor, to direct Trustee to authenticate and deliver Class A-1 Notes in
the aggregate principal amount of $___________, and Class A-2 Notes in the
aggregate principal amount of $___________. In addition to the foregoing,
Owner Trustee is authorized, but shall not be obligated, to take all
actions required of Issuer pursuant to the Basic Documents. Owner Trustee
is further authorized from time to time to take such action as Servicer or
Administrator recommends or directs in writing with respect to the Basic
Documents.
SECTION 6.2. General Duties. It shall be the duty of Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant
to the terms of this Agreement and the other Basic Documents and to
administer Issuer in the interest of Owners, subject to the Basic Documents
and in accordance with the provisions of this Agreement. Notwithstanding
the foregoing, Owner Trustee shall be deemed to have discharged its duties
and responsibilities hereunder and under the Basic Documents to the extent
Administrator has agreed in the Administration Agreement to perform any act
or to discharge any duty of Owner Trustee or Issuer hereunder or under any
Basic Document, and Owner Trustee shall not be liable for the default or
failure of Administrator to carry out its obligations under the
Administration Agreement.
SECTION 6.3. Action upon Instruction. (a) Subject to Article IV, the
Certificateholders may, by written instruction, direct Owner Trustee in the
management of Issuer. Such direction may be exercised at any time by
written instruction of the Certificateholders pursuant to Article IV.
(b) Owner Trustee shall not be required to take any action hereunder
or under any Basic Document if Owner Trustee shall have obtained an Opinion
of Counsel to the effect that such action is likely to result in liability
on the part of Owner Trustee or is contrary to the terms hereof or of any
Basic Document or is otherwise contrary to law and a copy of such opinion
has been provided to Seller and Servicer.
(c) Whenever Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or
any Basic Document, Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Certificateholders
requesting instruction as to the course of action to be adopted, and to the
extent Owner Trustee acts in good faith in accordance with any written
instruction of the Certificateholders received, Owner Trustee shall not be
liable on account of such action to any Person. If Owner Trustee shall not
have received appropriate instruction within ten days of such notice (or
within such shorter period of time as reasonably may be specified in such
notice or may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action, not inconsistent
with this Agreement or the Basic Documents, as it shall deem to be in the
best interests of the Certificateholders, and shall have no liability to
any Person for such action or inaction.
(d) If Owner Trustee is unsure as to the application of any provision
of this Agreement or any Basic Document or any such provision is ambiguous
as to its application, or is, or appears to be, in conflict with any other
applicable provision, or in the event that this Agreement permits any
determination by Owner Trustee or is silent or is incomplete as to the
course of action that Owner Trustee is required to take with respect to a
particular set of facts, Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the Certificateholders
requesting instruction and, to the extent that Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty
to, take or refrain from taking such action, not inconsistent with this
Agreement or the Basic Documents, as it shall deem to be in the best
interests of the Certificateholders, and shall have no liability to any
Person for such action or inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions. Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose
of, or otherwise deal with the Owner Trust Estate, or to otherwise take or
refrain from taking any action under, or in connection with, any document
contemplated hereby to which Owner Trustee is a party, except as expressly
provided by the terms of this Agreement or in any document or written
instruction received by Owner Trustee pursuant to Section 6.3; and no
implied duties or obligations shall be read into this Agreement or any
Basic Document against Owner Trustee. Owner Trustee shall have no
responsibility for filing any financing or continuation statement in any
public office at any time or to otherwise perfect or maintain the
perfection of any security interest or lien granted to it hereunder or to
prepare or file any Commission filing for Issuer or to record this
Agreement or any Basic Document. Owner Trustee nevertheless agrees that it
will, at its own cost and expense, promptly take all action as may be
necessary to discharge any Liens on any part of the Owner Trust Estate that
result from actions by, or claims against, Owner Trustee that are not
related to the ownership or the administration of the Owner Trust Estate.
SECTION 6.5. No Action Except under Specified Documents or
Instructions. Owner Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon
Owner Trustee pursuant to this Agreement, (ii) in accordance with the Basic
Documents and (iii) in accordance with any document or instruction
delivered to Owner Trustee pursuant to Section 6.3.
SECTION 6.6. Restrictions. Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of Issuer set forth in Section
2.3 or (b) that, to the actual knowledge of the Owner Trustee, would result
in the Trust's becoming taxable as a corporation for Federal income tax
purposes. The Certificateholders shall not direct Owner Trustee to take
action that would violate the provisions of this Section.
ARTICLE VII CONCERNING OWNER TRUSTEE.
SECTION 7.1. Acceptance of Trusts and Duties. Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. Owner
Trustee also agrees to disburse all moneys actually received by it
constituting part of the Owner Trust Estate upon the terms of the Basic
Documents and this Agreement. Owner Trustee shall not be answerable or
accountable hereunder or under any Basic Document under any circumstances,
except (i) for its own willful misconduct, bad faith or negligence or (ii)
in the case of the inaccuracy of any representation or warranty contained
in Section 7.3 expressly made by Owner Trustee. In particular, but not by
way of limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) Owner Trustee shall not be liable for any error of judgment
made by a Responsible Officer of Owner Trustee;
(b) Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the
instructions of Depositor, Servicer, Administrator or any
Certificateholder;
(c) no provision of this Agreement or any Basic Document shall
require Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any Basic Document if Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured or provided to it;
(d) under no circumstances shall Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(e) Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution
hereof by Depositor or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for
or in respect of the validity or sufficiency of the Basic Documents,
other than the certificate of authentication on the Certificates, and
Owner Trustee shall in no event assume or incur any liability, duty or
obligation to any Noteholder or to any Certificateholder, other than
as expressly provided for herein and in the Basic Documents;
(f) Owner Trustee shall not be liable for the default or
misconduct of Trustee, Servicer or Administrator under any of the
Basic Documents or otherwise and Owner Trustee shall have no
obligation or liability to perform the obligations of Issuer under
this Agreement or the Basic Documents that are required to be
performed by Trustee under the Indenture, Servicer under the Sale and
Servicing Agreement or Administrator under the Administration
Agreement; and
(g) Owner Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any Basic Document, at
the request, order or direction of any of the Certificateholders,
unless such Certificateholders have offered to Owner Trustee security
or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by Owner Trustee therein or thereby.
The right of Owner Trustee to perform any discretionary act enumerated
in this Agreement or in any Basic Document shall not be construed as a
duty, and Owner Trustee shall not be answerable for other than its
negligence, bad faith or willful misconduct in the performance of any
such act.
SECTION 7.2. Furnishing of Documents. Owner Trustee shall furnish to
the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to
Owner Trustee under the Basic Documents.
SECTION 7.3. Representations and Warranties. Owner Trustee hereby
represents and warrants to Depositor, for the benefit of the
Certificateholders, that:
(a) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware and
having an office within the State of Delaware. It has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of Owner Trustee or
any judgment or order binding on it, or constitute any default under
its charter documents or by-laws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound.
SECTION 7.4. Reliance; Advice of Counsel. (a) Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument,
notice, resolution, request, consent, order, certificate, report, opinion,
bond or other document or paper believed by it to be genuine and believed
by it to be signed by the proper party or parties. Owner Trustee may accept
a certified copy of a resolution of the board of directors or other
governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full
force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer, secretary or other authorized officers of
the relevant party, as to such fact or matter, and such certificate shall
constitute full protection to Owner Trustee for any action taken or omitted
to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Basic Documents, Owner Trustee (i) may act directly or through its agents
or attorneys pursuant to agreements entered into with any of them, but
Owner Trustee shall be liable for the conduct or misconduct of such agents
or attorneys and (ii) may consult with counsel, accountants and other
skilled persons knowledgeable in the relevant area to be selected with
reasonable care and employed by it. Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with
the written opinion or advice of any such counsel, accountants or other
such persons and not contrary to this Agreement or any Basic Document.
SECTION 7.5. Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created
____________________ acts solely as Owner Trustee hereunder and not in its
individual capacity and all Persons having any claim against Owner Trustee
by reason of the transactions contemplated by this Agreement or any Basic
Document shall look only to the Owner Trust Estate for payment or
satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Certificates or
Receivables. The recitals contained herein and in the Certificates (other
than the signature and countersignature of Owner Trustee on the
Certificates) shall be taken as the statements of Depositor and Owner
Trustee assumes no responsibility for the correctness thereof. Owner
Trustee makes no representations as to the validity or sufficiency of this
Agreement, of any Basic Document or of the Certificates (other than the
signature and countersignature of Owner Trustee on the Certificates) or the
Notes, or of any Receivable or related documents. Owner Trustee shall at no
time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Receivable, or the perfection
and priority of any security interest created by any Receivable in any
Financed Vehicle or the maintenance of any such perfection and priority, or
for or with respect to the sufficiency of the Owner Trust Estate or its
ability to generate the payments to be distributed to Certificateholders
under this Agreement or the Noteholders under the Indenture, including: the
existence, condition and ownership of any Financed Vehicle; the existence
and enforceability of any insurance thereon; the existence and contents of
any Receivable on any computer or other record thereof; the validity of the
assignment of any Receivable to Issuer or of any intervening assignment;
the completeness of any Receivable; the performance or enforcement of any
Receivable; the compliance by Depositor or Servicer with any warranty or
representation made under any Basic Document or in any related document or
the accuracy of any such warranty or representation or any action of
Trustee, Administrator or Servicer or any subservicer taken in the name of
Owner Trustee.
SECTION 7.7. Owner Trustee May Own Certificates and Notes. Owner
Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates or Notes and may deal with Depositor, Trustee, and
Servicer in banking transactions with the same rights as it would have if
it were not Owner Trustee.
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE.
SECTION 8.1. Owner Trustee's Fees and Expenses. Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between Depositor and Owner
Trustee, and Owner Trustee shall be entitled to be reimbursed by Depositor
for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
SECTION 8.2. Indemnification. Depositor shall be liable as primary
obligor for, and shall indemnify Owner Trustee and its successors, assigns,
agents and servants (collectively, the "Indemnified Parties") from and
against, any and all liabilities, obligations, losses, damages, taxes,
claims, actions and suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind
and nature whatsoever (collectively, "Expenses") which may at any time be
imposed on, incurred by, or asserted against Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement,
the Basic Documents, the Owner Trust Estate, the administration of the
Owner Trust Estate or the action or inaction of Owner Trustee hereunder,
except only that Depositor shall not be liable for or required to indemnify
Owner Trustee from and against Expenses arising or resulting from any of
the matters described in the third sentence of Section 7.1. The indemnities
contained in this Section shall survive the resignation or termination of
Owner Trustee or the termination of this Agreement. If any suit, action,
proceeding (including any governmental or regulatory investigation), claim
or demand shall be brought or asserted against any Indemnified Party in
respect of which indemnity may be sought pursuant to this Section 7.2, such
Indemnified Party shall promptly notify Depositor in writing, and Depositor
upon request of the Indemnified Party, shall retain counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party
and any others Depositor may designate in such proceeding and shall pay the
reasonable fees and expenses of such counsel related to such proceeding.
Depositor shall not be liable for any settlement of any claim or proceeding
effected without its written consent, but if settled with such consent or
if there be a final judgment for the plaintiff, Depositor agrees to
indemnify any Indemnified Party from and against any loss or liability by
reason of such settlement or judgment. Depositor shall not, without the
prior written consent of the Indemnified Party, effect any settlement of
any pending or threatened proceeding in respect of which any Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such proceeding.
SECTION 8.3. Payments to Owner Trustee. Any amounts paid to Owner
Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
ARTICLE IX TERMINATION OF TRUST AGREEMENT.
SECTION 9.1. Termination of Trust Agreement. (a) This Agreement
(other than Article VIII) and Issuer shall terminate and be of no further
force or effect, (i) upon the final distribution by Owner Trustee of all
moneys or other property or proceeds of the Owner Trust Estate in
accordance with the terms of the Indenture, the Sale and Servicing
Agreement and Article V or (ii) at the time provided in Section 9.2. The
bankruptcy, liquidation, dissolution, death or incapacity of any
Certificateholder or Owner, other than Depositor as described in Section
9.2, shall not (x) operate to terminate this Agreement or Issuer, nor (y)
entitle such Certificateholder's or Owner's legal representatives or heirs
to claim an accounting or to take any action or proceeding in any court for
a partition or winding up of all or any part of Issuer or Owner Trust
Estate nor (z) otherwise affect the rights, obligations and liabilities of
the parties hereto.
(b) Except as provided in clause (a), neither Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of Issuer, specifying the Distribution
Date upon which the Certificateholders shall surrender their Certificates
to Paying Agent for payment of the final distribution and cancellation,
shall be given by Owner Trustee by letter to Certificateholders mailed
within five Business Days of receipt of notice of such termination from
Servicer given pursuant to Section 9.1(c) of the Sale and Servicing
Agreement, stating (i) the Distribution Date upon or with respect to which
final payment of the Certificates shall be made upon presentation and
surrender of the Certificates at the office of Paying Agent therein
designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of Paying Agent therein specified. Owner Trustee
shall give such notice to Certificate Registrar (if other than Owner
Trustee) and Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates,
Paying Agent shall cause to be distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to Section 5.2.
If all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in
the above mentioned written notice, Owner Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the
Certificates shall not have been surrendered for cancellation, Owner
Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of
the funds and other assets that shall remain subject to this Agreement. Any
funds remaining in Issuer after exhaustion of such remedies shall be
distributed, subject to applicable escheat laws, by Owner Trustee to
Depositor.
(d) Upon the winding up of Issuer and its termination, Owner Trustee
shall cause the Certificate of Trust to be canceled by filing a certificate
of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
SECTION 9.2. Dissolution upon Bankruptcy of Depositor. In the event
that an Insolvency Event shall occur with respect to Depositor, this
Agreement shall be terminated in accordance with Section 9.1, 90 days after
the date of such Insolvency Event, unless, before the end of such 90-day
period, Owner Trustee shall have received written instructions from
Noteholders holding a majority of the outstanding principal balance of each
of the Class A-1 Notes and the Class A-1 Notes and Certificateholders
holding a majority of the Certificate Balance (other than Depositor) to the
effect that each such party disapproves of the liquidation of the
Receivables and termination of Issuer. Promptly after the occurrence of any
Insolvency Event with respect to Depositor, (i) Depositor shall give
Trustee and Owner Trustee written notice of such Insolvency Event, (ii)
Owner Trustee shall, upon the receipt of such written notice from
Depositor, give prompt written notice to the Certificateholders and Trustee
of the occurrence of such event and (iii) Trustee shall, upon receipt of
written notice of such Insolvency Event from Owner Trustee or Depositor,
give prompt written notice to the Noteholders of the occurrence of such
event; provided that any failure to give a notice required by this sentence
shall not prevent or delay, in any manner, a termination of Issuer pursuant
to the first sentence of this Section 9.2. Upon a termination pursuant to
this Section, Owner Trustee shall direct Trustee promptly to sell the
assets of the Owner Trust Estate in a commercially reasonable manner and on
commercially reasonable terms. The proceeds of such a sale of the assets of
Issuer shall be treated as collections under the Sale and Servicing
Agreement and shall be distributed in accordance with Section 9.1(b)
thereof.
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL
OWNER TRUSTEES.
SECTION 10.1. Eligibility Requirements for Owner Trustee. Owner
Trustee shall at all times be a corporation authorized to exercise
corporate trust powers; and having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by Federal or
state authorities. If such corporation shall publish reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section,
the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section, Owner Trustee
shall resign immediately in the manner and with the effect specified in
Section 10.2. In addition, at all times Owner Trustee or a co-trustee shall
be a person that satisfies the requirements of Section 3807(a) of the
Business Trust Statute (the "Delaware Trustee").
SECTION 10.2. Resignation or Removal of Owner Trustee. Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to Administrator. Upon receiving such notice
of resignation, Administrator shall promptly appoint a successor Owner
Trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee. If no successor Owner Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Owner Trustee may petition any
court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.1 and shall fail to resign after written
request therefor by Administrator, or if at any time Owner Trustee shall be
legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then Administrator may remove Owner Trustee. If Administrator
shall remove Owner Trustee under the authority of the immediately preceding
sentence, Administrator shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the outgoing Owner Trustee so removed and one copy to the
successor Owner Trustee and payment of all fees owed to the outgoing Owner
Trustee.
Any resignation or removal of Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.3 and payment of all fees and expenses
owed to the outgoing Owner Trustee. Administrator shall provide notice of
such resignation or removal of Owner Trustee to each of the Rating
Agencies.
SECTION 10.3. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver
to Administrator and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become
effective and such successor Owner Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor under this Agreement, with like
effect as if originally named as Owner Trustee. The predecessor Owner
Trustee shall upon payment of its fees and expenses deliver to the
successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and Administrator and the predecessor Owner Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in
the successor Owner Trustee all such rights, powers, duties and
obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner
Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, Administrator shall mail notice of the successor of such
Owner Trustee to all Certificateholders, Trustee, the Noteholders and the
Rating Agencies. If Administrator shall fail to mail such notice within 10
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense
of Administrator.
SECTION 10.4. Merger or Consolidation of Owner Trustee. Any
corporation into which Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of Owner Trustee, shall be the successor of Owner Trustee
hereunder; provided that such corporation shall be eligible pursuant to
Section 10.1, 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; and provided further that Owner Trustee shall
mail notice of such merger or consolidation to the Rating Agencies.
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Financed Vehicle may at the time
be located, Administrator and Owner Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by Owner Trustee to act as co-trustee, jointly with Owner
Trustee, or separate trustee or separate trustees, of all or any part of
the Owner Trust Estate, and to vest in such Person, in such capacity, such
title to Issuer, or any part thereof, and, subject to the other provisions
of this Section, such powers, duties, obligations, rights and trusts as
Administrator and Owner Trustee may consider necessary or desirable. If
Administrator shall not have joined in such appointment within 15 days
after the receipt by it of a request so to do, Owner Trustee alone shall
have the power to make such appointment. If Delaware Trustee shall become
incapable of acting, resign or be removed, unless Owner Trustee is
qualified to act as Delaware Trustee, a successor co-trustee shall promptly
be appointed in the manner specified in this Section 10.5 to act as
Delaware Trustee. 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 10.1 and no notice of the appointment of any co-trustee
or separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon Owner Trustee shall be conferred upon and exercised or
performed by Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without Owner Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed, Owner Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the
holding of title to Issuer 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 Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) Administrator and Owner Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to Owner Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the
estates or property specified in its instrument of appointment, either
jointly with Owner Trustee or separately, as may be provided therein,
subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, Owner Trustee. Each such
instrument shall be filed with Owner Trustee and a copy thereof given to
Administrator.
Any separate trustee or co-trustee may at any time appoint Owner
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 become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
ARTICLE XI MISCELLANEOUS.
SECTION 11.1. Supplements and Amendments. This Agreement may be
amended by Depositor and Owner Trustee, with prior written notice to the
Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders (including Depositor), to cure any ambiguity or defect,
to correct or supplement any provisions in this Agreement or for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided
that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any Noteholder or
Certificateholder.
This Agreement may also be amended from time to time by Depositor and
Owner Trustee, with prior written notice to the Rating Agencies, with the
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and, to the extent affected thereby, the
consent of the Holders of Certificates evidencing not less than a majority
of the Certificate Balance for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided that no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing
of, collections of payments on Receivables or distributions that shall be
required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the
Outstanding Amount of the Notes and the Certificate Balance required to
consent to any such amendment, without the consent of the Holders of all
the outstanding Notes and Holders of all outstanding Certificates.
Promptly after the execution of any such amendment or consent, Owner
Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, Trustee and each of the
Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders or Trustee pursuant to this Section to approve the particular
form of any proposed amendment or consent, but it shall be sufficient if
such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in
this Agreement or in any other Basic Document) and of evidencing the
authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
the Trust, Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of the Trust, Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that all
conditions precedent to the execution and delivery of such amendment have
been satisfied. Owner Trustee may, but shall not be obligated to, enter
into any such amendment which affects Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to
any part of the Owner Trust Estate. The Certificateholders shall be
entitled to receive distributions with respect to their undivided ownership
interest therein only in accordance with Articles V and IX. No transfer, by
operation of law or otherwise, of any right, title or interest of the
Certificateholders to and in their ownership interest in the Owner Trust
Estate shall operate to terminate this Agreement or the trusts hereunder or
entitle any transferee to an accounting or to the transfer to it of legal
title to any part of the Owner Trust Estate.
SECTION 11.3. Limitations on Rights of Others. Except for Section
2.7, the provisions of this Agreement are solely for the benefit of Owner
Trustee, Depositor, Administrator, Certificateholders, Servicer and, to the
extent expressly provided herein, Trustee and the Noteholders, and nothing
in this Agreement, whether express or implied, shall be construed to give
to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 11.4. Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight
courier or mailed certified mail, return receipt requested and shall be
deemed to have been duly given upon receipt, if to Owner Trustee, addressed
to the Corporate Trust Office; if to Depositor, addressed to Norwest
Center, Sixth and Marquette, Minneapolis, Minnesota 55479-1026, Attention:
___________; or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at
the address of such Holder as shown in the Certificate Register. Any notice
so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION 11.5. 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 11.6. 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 11.7. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of,
Depositor, Owner Trustee and its successors and each Certificateholder and
its successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by a
Certificateholder shall bind the successors and assigns of such
Certificateholder.
SECTION 11.8. No Petition. Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement,
each Certificateholder, by accepting a Certificate, and Trustee and each
Noteholder by accepting the benefits of this Agreement, hereby covenants
and agrees that they will not at any time institute against Depositor, or
join in any institution against Depositor of any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or
other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the
Certificates, the Notes, this Agreement or any of the Basic Documents.
SECTION 11.9. No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates
represent beneficial interests in Issuer only and do not represent
interests in or obligations of Seller, Servicer, Administrator, Depositor,
Owner Trustee, Trustee or any Affiliate thereof and no recourse may be had
against such parties or their assets, except as may be expressly set forth
or contemplated in this Agreement, the Certificates or the Basic Documents.
SECTION 11.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.12. Certificate Transfer Restrictions. The Certificates
may not be acquired by or for the account of or with assets of (i) an
employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA")) that is subject to the
provisions of Title 1 of ERISA, (ii) a plan described in Section 4975(e)(1)
of the Code, or (iii) any entity whose underlying assets include plan
assets by reason of a plan's investment in the entity (each, a "Benefit
Plan"). By accepting and holding a Certificate, the Holder thereof shall be
deemed to have represented and warranted that it is not a Benefit Plan.
SECTION 11.13. Servicer. Servicer is authorized to execute on behalf
of Issuer all such documents, reports, filings, instruments, certificates
and opinions as it shall be the duty of Issuer to prepare, file or deliver
pursuant to the Basic Documents. Upon written request, Owner Trustee shall
execute and deliver to Servicer a power of attorney appointing Servicer as
Issuer's agent and attorney-in-fact to execute all such documents, reports,
filings, instruments, certificates and opinions.
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
___________________________,
as Owner Trustee
By:___________________________________
Name:
Title:
NORWEST AUTO RECEIVABLES CORPORATION, as
Depositor
By:___________________________________
Name:
Title:
EXHIBIT A
NUMBER $
R- CUSIP NO. _________
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE IN INSTALLMENTS AS
SET FORTH IN THE TRUST AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF
THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE
HEREOF.]
[THIS CERTIFICATE IS NOT TRANSFERABLE] 1<F4>
_________________________
<F4>
1 To be inserted on the Certificate to be held by Depositor.</F4>
NORWEST AUTO TRUST 199_-_
____% ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in certain distributions of
Issuer, as defined below, the property of which includes a pool of note and
security agreements secured by new or used automobiles or light duty trucks
and sold to Issuer by Norwest Auto Receivables Corporation.
(This Certificate does not represent an interest in or obligation of
Norwest Auto Receivables Corporation or any of its Affiliates, except to
the extent described below.)
THIS CERTIFIES THAT ________________ is the registered owner of ___________
DOLLARS nonassessable, fully-paid, beneficial ownership interest in certain
distributions of Norwest Auto Trust 199_-_ (the "Issuer") formed by Norwest
Auto Receivables Corporation, a Delaware corporation ("Seller"). This
Certificate has a Certificate Rate of ____% per annum.
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
______________ _________________________
or
as Owner Trustee as Owner Trustee
By ___________________
Authenticating Agent
By______________________
Issuer was created pursuant to a Trust Agreement dated as of ________,
199_ (the "Trust Agreement"), between Seller and _______________________,
as owner trustee ("Owner Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not otherwise defined
herein, the capitalized terms used herein have the meanings assigned to
them in Appendix X to the Sale and Servicing Agreement among Issuer,
Norwest Auto Receivables Corporation, as Seller, and Norwest Bank
Minnesota, N.A., as Servicer, dated as of _______ 199_, as the same may be
amended or supplemented from time to time.
This Certificate is one of the duly authorized Certificates designated
as "____% Asset Backed Certificates" (herein called the "Certificates").
Also issued under the Indenture dated as of ________, 199_, between Issuer
and __________, as trustee, are two classes of Notes designated as "Class
A-1 ______% Asset Backed Notes" (the "Class A-1 Notes"), and "Class A-2
____% Asset Backed Notes" (the "Class A-2 Notes" and, together with the
Class A-1 Notes, the "Notes"). This Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement, to
which Trust Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound.
The holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to
the rights of the Noteholders as described in the Sale and Servicing
Agreement, the Indenture and the Trust Agreement, as applicable.
It is the intent of Seller, Servicer, Depositor and Certificateholders
that, for purposes of Federal income taxes, Issuer will be treated as a
partnership and the Certificateholders (including Depositor) will be
treated as partners in that partnership. Depositor and the other
Certificateholders by acceptance of a Certificate, agree to treat, and to
take no action inconsistent with the treatment of, the Certificates for
such tax purposes as partnership interests in the Trust.
Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute
against Depositor, or join in any institution against Depositor of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, the Trust Agreement or any of the Basic
Documents.
Each Certificateholder, by its acceptance of a Certificate or a
beneficial interest in a Certificate, acknowledges and agrees that
Depositor is authorized to determine whether or not to cause the Trust
to make the election contemplated in Internal Revenue Service Notice 95-14
to elect that the Trust be classified as a partnership for Federal income
tax purposes in the event that the ability to make such election becomes
available to the Trust, and acknowledges and agrees that Depositor is
authorized to direct the Owner Trustee to take such acts or actions as may
be required to effectuate such election. Each Certificateholder, by its
acceptance of a Certificate or a beneficial interest in a Certificate,
agrees to take such actions (and direct the Owner Trustee to take such
acts or actions) as Depositor or Owner Trustee shall reasonably request
in order to effectuate such election.
The Certificates do not represent an obligation of, or an interest in,
Seller, Servicer, Administrator, Depositor, Owner Trustee or any Affiliates
of any of them and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated herein or in
the Trust Agreement, the Indenture or the Basic Documents.
The Certificates may not be acquired by or for the account of or with
the assets of (a) an employee benefit plan (as defined in Section 3(3) of
ERISA) that is subject to the provisions of Title 1 of ERISA, (b) a plan
described in Section 4975(e)(1) of the Code or (c) any entity whose
underlying assets include plan assets by reason of a plan's investment in
the entity (each, a "Benefit Plan"). By accepting and holding this
Certificate, the Holder hereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of Owner Trustee, by manual signature,
this Certificate shall not entitle the holder hereof to any benefit under
the Trust Agreement or the Sale and Servicing Agreement or be valid for any
purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, 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, Owner Trustee, on behalf of Issuer and not in its
individual capacity, has caused this Certificate to be duly executed.
NORWEST AUTO TRUST 199_-_
By: ____________________________,
not in its individual capacity,
but solely as Owner Trustee
Dated: By:________________________________
<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 Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
_____________________________________________________________ Attorney to
transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:
____________________*
Signature Guaranteed:
____________________*
___________________________
* NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or
any change whatever. Such signature must be guaranteed by a member
firm of the New York Stock Exchange or a commercial bank or trust
company.
<PAGE>
EXHIBIT B
[FORM OF]
CERTIFICATE OF TRUST OF
NORWEST AUTO TRUST 199_-_
THIS Certificate of Trust of Norwest Auto Trust 199_-_ (the "Trust"),
dated as of _______, 199_, is being duly executed and filed by
_____________________, a _____________ , and _______________, a
___________, as trustees, to form a business trust under the Delaware
Business Trust Act (12 Del. Code, Section 3801 et seq.).
1. Name. The name of the business trust formed hereby is NORWEST
AUTO TRUST 199_-_.
2. Delaware Trustee. The name and business address of the trustee
of the Trust resident in the State of Delaware is __________________.
3. This Certificate of Trust will be effective ________, 199_.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the
Trust, have executed this Certificate of Trust as of the date first above
written.
___________________________, not in its
individual capacity, but solely as owner
trustee of the Trust.
By:_________________________________
Name:
Title:
EXHIBIT C
CERTIFICATE DEPOSITORY AGREEMENT
Exhibit 4.3
===========================================================================
NORWEST AUTO RECEIVABLES CORPORATION
Seller and Servicer
and
_________________ BANK
Trustee
on behalf of the Holders
_______________________________
POOLING AND SERVICING AGREEMENT
_______________________________
Dated as of _______ __, 1996
NORWEST AUTO TRUST 1996-A
____% Asset Backed Certificates, Class A
____% Asset Backed Certificates, Class B
===========================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I. DEFINITIONS.............................................. 1
SECTION 1.1. Definitions............................................ 1
SECTION 1.2. Other Interpretative Provisions........................ 20
SECTION 1.3. Calculations........................................... 20
SECTION 1.4. References............................................. 20
SECTION 1.5. Action by or Consent of Holders........................ 20
ARTICLE II. THE TRUST PROPERTY...................................... 21
SECTION 2.1. Conveyance of Trust Property........................... 21
SECTION 2.2. Representations and Warranties as to Each Receivable... 21
SECTION 2.3. Representations and Warranties as to the Receivables in
the Aggregate and Actions of Seller................. 23
SECTION 2.4. Repurchase upon Breach................................. 25
SECTION 2.5. Custodian of Receivable Files.......................... 25
ARTICLE III. ADMINISTRATION AND SERVICING OF TRUST
PROPERTY............................................ 28
SECTION 3.1. Duties of Servicer..................................... 28
SECTION 3.2. Collection of Receivable Payments...................... 29
SECTION 3.3. Realization upon Receivables........................... 30
SECTION 3.4. Physical Damage Insurance.............................. 31
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles. 32
SECTION 3.6. Covenants of Servicer.................................. 32
SECTION 3.7. Purchase by Servicer upon Breach....................... 33
SECTION 3.8. Servicing Compensation................................. 33
SECTION 3.9. Servicer's Report...................................... 34
SECTION 3.10. Annual Statement as to Compliance...................... 35
SECTION 3.11. Independent Certified Public Accountants' Report....... 35
SECTION 3.12. Access to Certain Documentation and Information
Regarding Receivables............................... 36
SECTION 3.13. Reports to the Commission.............................. 36
SECTION 3.14. Reports to the Rating Agency........................... 36
ARTICLE IV. DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO HOLDERS............................... 36
SECTION 4.1. Establishment of Accounts.............................. 36
SECTION 4.2. Collections............................................ 37
SECTION 4.3. Advances............................................... 39
SECTION 4.4. Additional Deposits; Net Deposits...................... 39
SECTION 4.5. Distributions.......................................... 40
SECTION 4.6. Reserve Account........................................ 41
SECTION 4.7. Statements to Holders.................................. 45
ARTICLE V. THE CERTIFICATES......................................... 46
SECTION 5.1. The Certificates....................................... 46
SECTION 5.2. Authentication of Certificates......................... 47
SECTION 5.3. Registration of Transfer and Exchange of Certificates.. 47
SECTION 5.4. Mutilated, Destroyed, Lost or Stolen Certificates...... 47
SECTION 5.5. Persons Deemed Owners.................................. 48
SECTION 5.6. Access to List of Holders' Names and Addresses......... 48
SECTION 5.7. Maintenance of Office or Agency........................ 48
SECTION 5.8. Book Entry Certificates................................ 49
SECTION 5.9. Notices to Clearing Agency............................. 50
SECTION 5.10. Definitive Certificates................................ 50
ARTICLE VI. SELLER.................................................. 51
SECTION 6.1. Representations and Warranties of Seller............... 51
SECTION 6.2. Liability of Seller; Indemnities....................... 52
SECTION 6.3. Merger or Consolidation of Seller...................... 54
SECTION 6.4. Limitation on Liability of Seller and Others........... 54
SECTION 6.5. Seller May Own Certificates............................ 55
ARTICLE VII. SERVICER............................................... 55
SECTION 7.1. Representations and Warranties of Servicer............. 55
SECTION 7.2. Liability of Servicer; Indemnities..................... 56
SECTION 7.3. Merger or Consolidation of Servicer.................... 58
SECTION 7.4. Limitation on Liability of Servicer and Others......... 58
SECTION 7.5. Servicer Not to Resign................................. 59
SECTION 7.6. Servicer May Own Certificates.......................... 59
ARTICLE VIII. SERVICING TERMINATION................................. 59
SECTION 8.1. Servicer Termination Events............................ 59
SECTION 8.2. Trustee to Act; Appointment of Successor Servicer...... 62
SECTION 8.3. Effect of Servicing Transfer........................... 62
SECTION 8.4. Notification to Holders................................ 63
SECTION 8.5. Waiver of Past Servicer Termination Events............. 63
SECTION 8.6. Transfer of Accounts................................... 64
ARTICLE IX. TRUSTEE................................................. 64
SECTION 9.1. Acceptance by Trustee.................................. 64
SECTION 9.2. Duties of Trustee...................................... 64
SECTION 9.3. Trustee's Certificate.................................. 66
SECTION 9.4. Trustee's Assignment of Purchased Receivables.......... 66
SECTION 9.5. Certain Matters Affecting Trustee...................... 66
SECTION 9.6. Trustee Not Liable for Certificates or Receivables..... 68
SECTION 9.7. Trustee May Own Certificates........................... 70
SECTION 9.8. Trustee's Fees and Expenses............................ 70
SECTION 9.9. Eligibility Requirements for Trustee................... 71
SECTION 9.10. Resignation or Removal of Trustee...................... 71
SECTION 9.11. Successor Trustee...................................... 72
SECTION 9.12. Merger or Consolidation of Trustee..................... 72
SECTION 9.13. Appointment of Co-Trustee or Separate Trustee.......... 73
SECTION 9.14. Representations and Warranties of Trustee.............. 74
SECTION 9.15. Reports by Trustee..................................... 75
SECTION 9.16. Tax Returns............................................ 76
SECTION 9.17. Trustee May Enforce Claims Without Possession of
Certificates................................................... 76
ARTICLE X. TERMINATION.............................................. 76
SECTION 10.1. Termination of the Trust.............................. 76
SECTION 10.2. Optional Purchase of All Receivables.................. 77
ARTICLE XI. MISCELLANEOUS PROVISIONS................................ 78
SECTION 11.1. Amendment............................................. 78
SECTION 11.2. Protection of Title to Trust.......................... 80
SECTION 11.3. Limitation on Rights of Holders....................... 81
SECTION 11.4. Litigation and Indemnities............................ 82
SECTION 11.5. Governing Law
SECTION 11.6. Notices............................................... 83
SECTION 11.7. Severability of Provisions............................ 83
SECTION 11.8. Assignment............................................ 84
SECTION 11.9. Certificates Nonassessable and Fully Paid............. 84
SECTION 11.10. Intention of Parties.................................. 84
SECTION 11.11. Counterparts.......................................... 84
SCHEDULE
SCHEDULE A LOCATION OF RECEIVABLE FILES
EXHIBITS
EXHIBIT A FORM OF CLASS A CERTIFICATE
EXHIBIT B FORM OF CLASS B CERTIFICATE
EXHIBIT C FORM OF SERVICER'S REPORT
POOLING AND SERVICING AGREEMENT dated as of _______ __, 1996, between
NORWEST AUTO RECEIVABLES CORPORATION, a Delaware corporation, as Seller,
NORWEST BANK MINNESOTA, N.A., a national banking association, as Servicer,
and ___________ BANK, a _____________ corporation, as trustee hereunder.
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 capitalized words and phrases, unless the context otherwise
requires, have the following meanings:
"Accounts" means collectively the Collection Account, the Class A
Distribution Account and the Class B Distribution Account.
"Account Property" means all amounts and investments held from time to
time in any Account or the Reserve Account, as the case may be (whether in
the form of deposit accounts, instruments, certificated securities, book
entry securities, uncertificated securities or otherwise), and all proceeds
of the foregoing.
"Actuarial Receivable" means a Receivable that provides for
amortization of the loan over a series of fixed level payment monthly
installments and each monthly installment, including the monthly
installment representing the final payment on the Receivable, consists of
an amount of interest equal to 1/12 of the annual percentage rate of the
loan multiplied by the unpaid principal balance of the loan, and an amount
of principal equal to the remainder of the monthly installment.
"Acquired Receivable" means a Receivable acquired by a Seller
Affiliate through the acquisition of a financial institution that owned the
Receivable.
"Advances" means, with respect to any Distribution Date, the amount
required to be advanced by Servicer on the related Deposit Date pursuant to
Section 4.3.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with such specified Person and includes a bank
or other nonbank entity owned or acquired by Norwest Corporation or by its
subsidiaries. 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 specified Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Aggregate Net Losses" means, for any Collection Period, the aggregate
amount allocable to principal of all Receivables newly designated during
such Collection Period as Defaulted Receivables minus all Liquidation
Proceeds collected during such Collection Period with respect to all
Defaulted Receivables (whether or not newly designated as such).
"Agreement" means this Pooling and Servicing Agreement, including its
schedules and exhibits, as amended, modified or supplemented from time to
time.
"Authorized Officer" means any officer within the Corporate Trust
Office of Trustee, including any vice president, assistant vice president,
secretary, assistant secretary or any other officer of 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.
"Available Interest" means, with respect to any Distribution Date, the
excess of (a) the sum of (i) Interest Collections for such Distribution
Date and (ii) all Advances made by Servicer with respect to such
Distribution Date, over (b) the amount of Outstanding Advances to be
reimbursed on or with respect to such Distribution Date.
"Available Principal" for a Distribution Date means the sum of the
following amounts with respect to the preceding Collection Period: (a) that
portion of all Collections on the Receivables received during such
Collection Period and allocable to principal in accordance with Servicer's
customary servicing procedures; and (b) to the extent attributable to
principal, the Purchase Amount received with respect to each Receivable
repurchased by Seller or purchased by Servicer under an obligation which
arose during the related Collection Period. "Available Principal" on any
Distribution Date shall exclude all payments and proceeds of any
Receivables the Purchase Amount of which has been distributed on a prior
Distribution Date.
"Available Reserve Amount" is defined in Section 4.6.
"Average Delinquency Ratio" means, as of any Distribution Date, the
average of the Delinquency Ratios for the preceding three Collection
Periods.
"Average Net Loss Ratio" means, as of any Distribution Date, the
average of the Net Loss Ratios for the preceding three Collection Periods.
"Book Entry Certificate" means beneficial interests in the definitive
Certificates described in Section 5.8, 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 5.8.
"Business Day" means a day that is not a Saturday or a Sunday and that
in New York City and in the city in which the Corporate Trust Office is
located is neither a legal holiday nor a day on which banking institutions
are authorized by law, regulation or executive order to be closed.
"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).
"Certificate Register" means the register maintained by Trustee for
the registration of Certificates and of transfers and exchanges of
Certificates as provided in Section 5.3.
"Class A Certificate" means a certificate executed by Trustee on
behalf of the Trust and authenticated by Trustee substantially in the form
of Exhibit A.
"Class A Certificate Balance" means, at any time, the Original Class A
Certificate Balance, as reduced by all amounts allocable to principal on
the Class A Certificates distributed to Class A Holders prior to such time.
"Class A Certificate Rate" means ____% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
"Class A Distribution Account" means the account established,
maintained and designated as the "Class A Distribution Account" pursuant to
Section 4.1.
"Class A Holder" means the Person in whose name a Class A Certificate
is 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 Seller, Servicer, or any Person actually known to an Authorized
Officer of Trustee to be an Affiliate of Seller or 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 Interest Carryover Shortfall" means, (a) with respect to the
initial Distribution Date, zero, and (b) with respect to any other
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 Certificate Rate.
"Class A Interest Distributable Amount" 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 of the Class A Certificate Rate multiplied by the Class A
Certificate 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, as of
the Closing Date.
"Class A Monthly Principal" means, with respect to any Distribution
Date, the Class A Percentage of Available Principal for such Distribution
Date plus the Class A Percentage of Realized Losses with respect to the
related Collection Period.
"Class A Percentage" means ____%.
"Class A Pool Factor" means, with respect to any Distribution Date,
the Class A Certificate Balance as of the close of business on such
Distribution Date (after giving effect to any payments to be made on such
Distribution Date) divided by the Original Class A Certificate Balance,
expressed as a seven-digit decimal.
"Class A Principal Carryover Shortfall" means, as of the close of
business on any Distribution Date, the excess of Class A Monthly Principal
for such Distribution Date and any outstanding Class A Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect
of principal that is actually deposited in the Class A Distribution Account
on such Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of Class A Monthly Principal for such
Distribution Date and, in the case of any Distribution Date other than the
initial Distribution Date, the Class A Principal Carryover Shortfall as of
the close of business on the preceding Distribution Date; provided that the
Class A Principal Distributable Amount shall not exceed the outstanding
principal balance of the Class A Certificates prior to such Distribution
Date. In addition, on the Final Scheduled Distribution Date, the Class A
Principal Distributable Amount shall include any additional amount
available to reduce the outstanding principal balance of the Class A
Certificates to zero.
"Class B Certificate" means a certificate executed by Trustee on
behalf of the Trust and authenticated by Trustee substantially in the form
of Exhibit B.
"Class B Certificate Balance" means, at any time, the Original Class B
Certificate Balance, as reduced by all amounts allocable to principal on
the Class B Certificates distributed to Class B Holders prior to such time.
"Class B Certificate Owner" means, with respect to a Book Entry
Certificate representing a beneficial interest in the Class B Certificates,
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).
"Class B Certificate Rate" means ____% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
"Class B Distribution Account" means the account established,
maintained and designated as the "Class B Distribution Account" pursuant to
Section 4.1.
"Class B Holder" means the Person in whose name a Class B Certificate
is 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 Seller, Servicer, or any Person actually known to an Authorized
Officer of Trustee to be an Affiliate of Seller or 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 Interest Carryover Shortfall" means, (a) with respect to the
initial Distribution Date, zero, and (b) with respect to any other
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 Certificate Rate.
"Class B Interest Distributable Amount" 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 of the Class B Certificate Rate multiplied by the Class B
Certificate 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, as of
the Closing Date.
"Class B Monthly Principal" means, with respect to any Distribution
Date, the Class B Percentage of Available Principal for such Distribution
Date plus the Class B Percentage of Realized Losses with respect to the
related Collection Period.
"Class B Percentage" means ___%.
"Class B Pool Factor" means, with respect to any Distribution Date,
the Class B Certificate Balance as of the close of business on such
Distribution Date (after giving effect to any payments to be made on such
Distribution Date) divided by the Original Class B Certificate Balance,
expressed as a seven-digit decimal.
"Class B Principal Carryover Shortfall" means, as of the close of
business on any Distribution Date, the excess of Class B Monthly Principal
for such Distribution Date and any outstanding Class B Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect
of principal that is actually deposited in the Class B Distribution Account
on such Distribution Date.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of Class B Monthly Principal for such
Distribution Date and, in the case of any Distribution Date other than the
initial Distribution Date, the Class B Principal Carryover Shortfall as of
the close of business on the preceding Distribution Date; provided that the
Class B Principal Distributable Amount shall not exceed the outstanding
principal balance of the Class B Certificates prior to such Distribution
Date. In addition, on the Final Scheduled Distribution Date, the Class B
Principal Distributable Amount will include any additional amount available
to reduce the outstanding principal balance of the Class B Certificates to
zero.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act, as amended.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers of securities deposited with the
Clearing Agency.
"Closing Date" means the date of the initial issuance of the
Certificates hereunder.
"Code" means the Internal Revenue Code of 1986.
"Collection Period" means, (a) the period from (but not including) the
Cutoff Date to and including ______ __, 1996 and (b) thereafter, each
calendar month during the term of this Agreement. With respect to any
Determination Date, Deposit Date or Distribution Date, the "related
Collection Period" means the Collection Period preceding the month in which
such Determination Date, Deposit Date or Distribution Date occurs.
"Collection Account" means the segregated account or accounts
established, maintained and designated as the "Collection Account" pursuant
to Section 4.1.
"Collections" means all collections on the Receivables and any
proceeds from Insurance Policies and lender's single interest insurance
policies to the extent not included in Liquidation Proceeds.
"Commission" means the Securities and Exchange Commission.
"Contract Rate" means, with respect to a Receivable, the rate per
annum of interest charged on the outstanding principal balance of such
Receivable.
"Corporate Trust Office" means the principal office of Trustee at
which at any particular time its corporate trust business shall be
administered, which office at date of execution of this Agreement is
located at ______________, Attention: _____________, Telephone:
___________, Facsimile: _______________ or at such other address as Trustee
may designate from time to time by notice to the Holders, Seller and
Servicer, or the principal corporate trust office of any successor Trustee
(the address of which the successor Trustee will notify the Holders, Seller
and Servicer).
"Custodian" means Servicer in its capacity as agent of Trustee, as
custodian of the Receivable Files.
"Cutoff Date" means the close of business on ______ __, 1996.
"Cutoff Date Principal Balance" means, with respect to any Receivable,
the Initial Principal Balance of such Receivable minus the sum of the
portion of all payments received under such Receivable from or on behalf of
the related Obligor on or prior to the Cutoff Date and allocable to
principal in accordance with the terms of the Receivable.
"Dealer" means, with respect to any Receivable, the seller of the
related Financed Vehicle.
"Dealer Agreement" means an agreement between an Originator and a
Dealer pursuant to which such Originator acquires Motor Vehicle Loans from
a Dealer or gives such Dealer the right to induce persons to apply to such
Originator for loans in connection with the retail sale of Motor Vehicles
by such Dealer.
"Defaulted Receivable" means, with respect to any Collection Period, a
Receivable (other than a Purchased Receivable) which is ___ days or more
delinquent or which Servicer has determined to charge off during such
Collection Period in accordance with its customary servicing practices;
provided that any Receivable which Seller or Servicer is obligated to
repurchase or purchase shall be deemed to have become a Defaulted
Receivable during a Collection Period if Seller or Servicer fails to
deposit the Purchase Amount on the related Deposit Date when due.
"Definitive Certificates" is defined in Section 5.8.
"Delinquency Ratio" means, for any Collection Period, the ratio,
expressed as a percentage, of (a) the principal amount of all outstanding
Receivables (other than Purchased Receivables and Defaulted Receivables)
which are __ or more days delinquent as of the end of such Collection
Period, determined in accordance with Servicer's customary practices,
divided by (b) the Pool Balance as of the last day of such Collection
Period.
"Delivery" means with respect to any Account Property 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 UCC: (i)
book-entry registration of such Account Property to an appropriate
book-entry account containing only customers' assets maintained with a
Federal Reserve Bank by Trustee or by a Securities Intermediary and
issuance to Trustee or to the Securities Intermediary, as the case may be,
of a deposit advice or other written confirmation of such book-entry
registration, (ii) the making by any Securities Intermediary of entries in
its books and records crediting such book-entry security held through the
Federal Reserve System pursuant to federal book-entry regulations to the
Reserve Account, and (iii) such additional or alternative procedures as may
hereafter become appropriate to effect complete transfer of ownership of
any such Account Property to Trustee, consistent with changes in applicable
law or regulations or the interpretation thereof.
"Deposit Date" means, with respect to any Collection Period, the
Business Day preceding the related Distribution Date.
"Depository Agreement" means the agreement among Seller and Servicer,
Trustee and the initial Clearing Agency, dated the Closing Date.
"Determination Date" with respect to any Collection Period, means the
eighth day of the calendar month following such Collection Period (or, if
the eighth day is not a Business Day, the immediately preceding Business
Day).
"Direct Loan" means motor vehicle promissory notes and security
agreements executed by an Obligor in favor of an Originator.
"Distribution Date" means the __ day of each month (or, if the __ day
is not a Business Day, the next succeeding Business Day), commencing
_______ __, 1996.
"Eligible Bank" means any depository institution with trust powers
(which may be Servicer or Trustee), organized under the laws of the United
States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), which has a net worth
in excess of $50,000,000, the deposits of which are insured to the full
extent permitted by law by the Federal Deposit Insurance Corporation, which
is subject to supervision and examination by Federal or state banking
authorities and which has (a) a rating of at least P-1 from Moody's and
A-1+ from S&P with respect to short-term deposit obligations, or (b) a
rating of A2 or higher from Moody's and AAA from S&P with respect to
long-term unsecured debt obligations. If such depository institution
publishes reports of condition at least annually, pursuant to law or the
requirements of the aforesaid supervising or examining authority, then the
combined capital and surplus of such institution shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
"Eligible Deposit Account" means either (a) a segregated account with
an Eligible Bank or (b) a segregated trust account with the trust
department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District
of Columbia (or any domestic branch of a foreign bank), having trust
powers and acting as trustee for funds deposited in such account, so long
as the long-term unsecured debt of such depository institution shall have a
credit rating from each Rating Agency in one of its generic rating
categories which signifies investment grade. Any such accounts (other than
the Reserve Account) may be maintained with ___________, or any of its
Affiliates, if such accounts meet the requirements described in the
preceding sentence.
"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 any Affiliate of 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 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 any
Affiliate of 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 Trustee or any of its Affiliates or any of Seller's Affiliates
is investment manager or advisor) 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 any class
of Certificates.
"Eligible Servicer" means a Person which, at the time of its
appointment as Servicer, (a) has a net worth of not less than $50,000,000,
(b) is servicing a portfolio of motor vehicle retail installment sales
contracts and/or motor vehicle loans, (c) is legally qualified, and has the
capacity, to service the Receivables, (d) has demonstrated the ability to
service a portfolio of motor vehicle loans similar to the Receivables
professionally and competently in accordance with standards of skill and
care that are consistent with prudent industry standards, and (e) is
qualified and entitled to use pursuant to a license or other written
agreement, and agrees to maintain the confidentiality of, the software
which Servicer uses in connection with performing its duties and
responsibilities under this Agreement or obtains rights to use, or develops
at its own expense, software which is adequate to perform its duties and
responsibilities under this Agreement.
"ERISA" means the Employment Retirement Income Security Act of 1974.
"Exchange Act" means the Securities Exchange Act of 1934.
"Expected Interest" means, with respect to any Distribution Date, an
amount equal to the sum of (a) with respect to all Simple Interest
Receivables, the product of (i) one-twelfth of the Weighted Average
Contract Rate for such Receivables for the related Collection Period
multiplied by (ii) an amount equal to the aggregate Principal Balance of
such Receivables as of the beginning of the first day of the related
Collection Period minus the sum of the Principal Balances of the
Non-Advance Receivables that are Simple Interest Receivables for such
Distribution Date plus (b) with respect to all Precomputed Receivables,
that portion of the collections on such Receivables received during the
related Collection Period that is allocable to interest in accordance with
the Servicer's customary procedures.
"Final Scheduled Distribution Date" means the _________ ____
Distribution Date.
"Final Scheduled Maturity Date" means the last day of the Collection
Period immediately preceding the Collection Period during which the Final
Scheduled Distribution Date falls.
"Financed Vehicle" means, with respect to a Receivable, the Motor
Vehicle, together with all accessories and accessions thereto, securing or
purporting to secure the indebtedness under such Receivable.
"GAAP" is defined in Section 11.1(c).
"Holder" means the Person in whose name a Certificate is 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 Seller, Servicer or
any Person actually known to an Authorized Officer of Trustee to be an
Affiliate of Seller or 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.
"Indemnified Person" is defined in Section 11.4.
"Indemnifying Person" is defined in Section 11.4.
"Initial Principal Balance" means, in respect of a Receivable, the
amount advanced under the Receivable toward the purchase price of the
Financed Vehicle and related costs, including accessories, service and
warranty contracts, insurance premiums, other items customarily financed as
part of retail motor vehicle loans and/or retail installment sales
contracts and other fees charged by Seller Affiliate or Dealer and included
in the amount to be financed, the total of which is shown
as the initial principal balance in the note and security agreement
evidencing and securing such Receivable.
"Insurance Policies" means, all credit life and disability insurance
policies maintained by the Obligors and all Physical Damage Insurance
Policies.
"Interest Collections" means, for any Distribution Date, the sum of
the following amounts for the related Collection Period: (a) that portion
of the Collections on the Receivables received during the related
Collection Period that is allocable to interest in accordance with
Servicer's customary procedures; (b) all Liquidation Proceeds received
during the related Collection Period; and (c) all Purchase Amounts, to the
extent allocable to accrued interest, of all Receivables that are purchased
by Seller or Servicer under an obligation which arose during the related
Collection Period. "Interest Collections" for any Distribution Date shall
exclude all payments and proceeds of any Receivables the Purchase Amount of
which has been distributed on a prior Distribution Date.
"Interest Shortfall" means, with respect to any Distribution Date, the
lesser of (a) the amount (if any) by which the Expected Interest for such
Distribution Date exceeds the Net Interest Collections for such
Distribution Date and (b) the amount (if any) by which the sum of any
unpaid Servicing Fees for the related Collection Period and prior
Collection Periods and the Class A Interest Distributable Amount and the
Class B Interest Distributable Amount for such Distribution Date exceeds
the Net Interest Collections for such Distribution Date.
"Lien" means a security interest, lien, charge, pledge, preference,
participation interest or encumbrance of any kind, other than tax liens,
mechanics' or materialmen's liens and other liens for work, labor or
materials, judicial liens and any liens that may attach by operation of
law.
"Liquidation Proceeds" means, with respect to any Receivable which has
become a Defaulted Receivable, (a) insurance proceeds received by Servicer
with respect to the Insurance Policies and any proceeds from lender's
single interest insurance policies to the extent not included in
Collections, (b) amounts received by Servicer in connection with such
Defaulted Receivable pursuant to the exercise of rights under the related
note and security agreement, and (c) the monies collected by Servicer (from
whatever source, including proceeds of a sale of a Financed Vehicle or a
deficiency balance recovered after the charge-off of the related Receivable
or as a result of the exercise of any rights against the related Dealer) on
such Defaulted Receivable net of any expenses incurred by Servicer in
connection therewith (or, in the case of proceeds of deficiency claims, net
of expenses incurred by Servicer in connection with deficiency claims on an
aggregate basis) and any payments required by law to be remitted to the
Obligor.
"Majority Holders" means 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.
"Moody's" means Moody's Investors Service, Inc.
"Motor Vehicle" means a new or used automobile or light duty truck
which is financed by a Direct Loan and/or retail installment sales contract
originated by an Originator or another financial institution.
"Motor Vehicle Loan" means a Direct Loan and/or retail installment
sales contract secured by a Motor Vehicle originated by Seller or a Seller
Affiliate or another financial institution.
"NARCOR" means, Norwest Auto Receivables Corporation, a Delaware
corporation.
"Net Interest Collections" means, with respect to any Distribution
Date, the greater of (a) zero and (b) Interest Collections for such
Distribution Date minus the Outstanding Advances as of such Distribution
Date.
"Non-Advance Receivables" means, with respect to any Distribution
Date, any Receivables which became Defaulted Receivables during the related
Collection Period or which Servicer, in its sole discretion, believes are
likely to become Defaulted Receivables.
"Net Loss Ratio" means, for any Collection Period, an amount,
expressed as a percentage, equal to (a) the Aggregate Net Losses for such
Collection Period, divided by (b) the average of the Pool Balances on each
of the first day of such Collection Period and the last day of such
Collection Period.
"Norwest Bank" means, Norwest Bank Minnesota, N.A., a national banking
association.
"Obligor" means the borrower or co-borrowers under the related
Receivable, the proceeds of which were applied to purchase in part or in
whole a related Financed Vehicle, and any co-signer of the Receivable or
other Person who owes or may be primarily or secondarily liable for
payments under such Receivable.
"Officer's Certificate" means a certificate signed by the chairman,
the president, any vice president or the treasurer of Seller or Servicer,
as the case may be, and delivered to Trustee.
"Opinion of Counsel" means a written opinion of counsel (who may be an
employee of Seller or Servicer or any of their Affiliates) reasonably
acceptable in form to Trustee.
"Original Certificate Balance" means the sum of the Original Class A
Certificate Balance and the Original Class B Certificate Balance.
"Original Class A Certificate Balance" means $______________.
"Original Class B Certificate Balance" means $_______________.
"Original Pool Balance" means the Pool Balance as of the Cutoff Date.
"Originator" means, with respect to any Direct Loan or retail
installment sales contract, the Seller Affiliate that was the lender with
respect to such Direct Loan or that acquired such retail installment sales
contract from a Dealer.
"Outstanding Advances" means, as of any date, all Advances made by
Servicer with respect to prior Distribution Dates which have not been
reimbursed pursuant to Section 4.3.
"Payaheads" means early payments by or on behalf of Obligors on
Precomputed Receivables which do not constitute scheduled payments, full
prepayments, nor certain partial prepayments that result in a reduction of
the Obligor's periodic payment below the scheduled payment as of the
applicable Cutoff Date.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company,
trust, unincorporated organization, or government or any agency or
political subdivision thereof, or any other entity of whatever nature.
"Physical Damage Insurance Policy" means a theft and physical damage
insurance policy maintained by the Obligor under a Receivable, providing
coverage against loss or damage to or theft of the related Financed
Vehicle.
"Pool Balance" means, at any time, the sum of the outstanding
Principal Balances of the Receivables (excluding Defaulted Receivables) at
such time.
"Pool Factor" means, with respect to any Collection Period, the Pool
Balance as of the last day of such Collection Period divided by the
Original Pool Balance, expressed as a seven-digit decimal.
"Precomputed Receivable" means either (i) an Actuarial Receivable or
(ii) a Rule of 78's Receivable.
"Principal Balance" means, as of any time, for any Receivable, the
Cutoff Date Principal Balance minus the sum of the portions of all payments
received from or on behalf of the related Obligor after the Cutoff Date and
prior to such time that are allocable to principal in accordance with the
terms of the Receivable.
"Purchase Amount" of any Receivable means, with respect to any Deposit
Date, an amount equal to the sum of (a) the outstanding Principal Balance
of such Receivable as of the last day of the preceding Collection Period
and (b) the amount of accrued and unpaid interest on such Principal Balance
at the related Contract Rate from the date a payment was last made by or on
behalf of the Obligor through and including the last day of such preceding
Collection Period, in each case after giving effect to the receipt of
monies collected on such Receivable in such preceding Collection Period.
"Purchased Receivable" means, at any time, a Motor Vehicle Loan
included in the Schedule of Receivables as to which payment of the Purchase
Amount has previously been made by Seller or Servicer pursuant to this
Agreement.
"Rating Agencies" means Moody's and S&P.
"Realized Losses" means, for any Collection Period, the aggregate
principal balances of any Receivables that became Defaulted Receivables
during such Collection Period.
"Receivable" means each Motor Vehicle Loan described in the Schedule
of Receivables, but excluding Defaulted Receivables to the extent the
Principal Balances thereof have been deposited in the Collection Account
and any Purchased Receivables.
"Receivable File" is defined in Section 2.5.
"Record Date" means, subject to Section 1.4, with respect to any
Distribution Date, the last day of the related Collection Period.
"Related Agreements" means the Certificates, the Depository Agreement
and the underwriting agreement between Seller and the underwriter(s) of the
Certificates. The Related Agreements to be executed by any party are
referred to herein as "such party's Related Agreements", "its Related
Agreements" or by a similar expression.
"Required Rating" means a rating with respect to short term deposit
obligations of at least P-1 by Moody's and at least A-1 by S&P.
"Reserve Account" means the account established, maintained and
designated as the "Reserve Account" pursuant to Section 4.6.
"Reserve Account Initial Deposit" means cash or Eligible Investments
having a value of at least $___________.
"Reserve Account Property" is defined in Section 4.6.
"Rule of 78's Receivable" means a Receivable that provides for the
payment by the Obligor of a specified total amount of payments, payable in
equal monthly installments on each due date, which total represents the
principal amount financed and add-on interest in an amount calculated at
the stated annual percentage rate for the term of the receivable.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"Schedule of Receivables" means, the list identifying the Direct Loans
and/or retail installment sales contracts to be conveyed to the Trust by
Seller delivered to Trustee and on file at the offices of Seller and
Trustee.
"Securities Intermediary" means the institution at which the Reserve
Account is maintained from time to time.
"Seller" means Norwest Auto Receivables Corporation, in its capacity
as seller of the Receivables to the Trust under this Agreement, or any
successor pursuant to Section 6.3.
"Seller Affiliate" means each Affiliate of the Seller that is
transferring Receivables to Seller for purposes of sale to the Trust.
"Servicer" means Norwest Bank Minnesota, N.A., in its capacity as
servicer of the Receivables under this Agreement, any successor pursuant to
Section 7.3 or any successor Servicer appointed and acting pursuant to
Section 8.2.
"Servicer Termination Event" means an event specified in Section 8.1.
"Servicer's Report" is defined in Section 3.9.
"Servicing Fee" means, with respect to any Distribution Date, an
amount equal to the product of (a) one-twelfth of the Servicing Fee Rate,
multiplied by (b) the Pool Balance as of the beginning of the first day of
the preceding Collection Period.
"Servicing Fee Rate" shall be ___% per annum, calculated on the basis
of a 360-day year consisting of twelve 30-day months.
"Servicing Officer" means any individual involved in, or responsible
for, the administration and servicing of the Receivables, whose name
appears on a list of servicing officers attached to an Officer's
Certificate furnished to Trustee by Servicer, as such list may be amended
from time to time by Servicer in writing.
"Simple Interest Method" means the method of allocating a fixed level
payment monthly installments between principal and interest, pursuant to
which such installment is allocated first to accrued and unpaid interest at
the Contract Rate on the unpaid principal balance and the remainder of such
installment is allocable to principal.
"Simple Interest Receivable" means any Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Specified Reserve Account Balance" means with respect to any
Distribution Date, __% of the Pool Balance as of the last day of the
preceding Collection Period, but in any event will not be less than the
lesser of (a) $___________ and (b) the sum of (i) such Pool Balance, plus
(ii) an amount equal to the product of the Class A Percentage times such
Pool Balance times the sum of the Class A Certificate Rate and the
Servicing Fee Rate times a fraction the numerator of which is the number of
remaining Distribution Dates through and including the Final Scheduled
Distribution Date and the denominator of which is 12 plus (iii) the product
of the Class B Percentage times such Pool Balance times the sum of the
Class B Certificate Rate and the Servicing Fee Rate times a fraction the
numerator of which is the number of remaining Distribution Dates through
and including the Final Scheduled Distribution Date and the denominator of
which is 12; provided that the Specified Reserve Account Balance will be
calculated using a percentage of __% for any Distribution Date (beginning
_______ __, 1996) on which the Average Net Loss Ratio exceeds ____% or the
Average Delinquency Ratio exceeds ____%. The Specified Reserve Account
Balance may be reduced to a lesser amount as determined by Seller so long
as Seller and Trustee have received written confirmation from each Rating
Agency that such reduction will not cause such Rating Agency to withdraw or
downgrade its ratings of the Certificates.
"Supplemental Servicing Fee" is defined in Section 3.8.
"Trust" means the trust created by this Agreement, which shall be
known as Norwest Auto Trust 199_-_.
"Trustee" means ____________ Bank, a __________ corporation, as
Trustee under this Agreement and any successor Trustee appointed and acting
pursuant to this Agreement.
"Trust Property" means: the Receivables; all monies received under the
Receivables after the Cutoff Date; 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); security interests in the Financed Vehicles; Seller's rights (if
any) to receive proceeds from claims on Insurance Policies covering the
Financed Vehicles or the Obligors or from claims under any lender's single
interest insurance policy naming Seller or any Seller Affiliate relating to
any Receivable; proceeds of purchase of any Receivable by a Dealer under
the related Dealer Agreements; any property that shall have secured a
Receivable and is acquired by the Trust; any Dealer recourse and other
rights of Affiliates under Dealer Agreements; certain rights under the
related purchase agreements; the Seller's rights to all documents and
information contained in the Receivable Files; certain rebates of premiums
and other amounts relating to certain insurance policies and other items
financed under the Receivables; the rights of the Trust under this
Agreement; and all proceeds of the foregoing. Notwithstanding anything to
the contrary contained herein, the Trust Property shall not include, and
the Trust shall not have any right to, the Reserve Account or any funds
actually or deemed to be deposited in such account or any investments
therein.
"UCC" means the Uniform Commercial Code as in effect in the State of
Minnesota.
"Weighted Average Contract Rate" means, with respect to any Collection
Period, the weighted average of the Contract Rates of the Receivables (but
excluding any Non-Advance Receivable), weighted based on the Principal
Balance of each such Receivable as of the first day of such Collection
Period.
SECTION 1.2. Other Interpretative Provisions. All terms defined in
this Agreement shall have the defined meanings when used in any certificate
or other document delivered pursuant hereto unless otherwise defined
therein. For purposes of this Agreement and all such certificates and other
documents, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly defined in
this Agreement to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles; (b)
terms defined in Article 9 of the UCC as in effect in the State of New York
and not otherwise defined in this Agreement are used as defined in that
Article; (c) references to any amount as on deposit or outstanding on any
particular date means such amount at the close of business on such day; (d)
the words "hereof," "herein" and "hereunder" and words of similar import
refer to this Agreement (or the certificate or other document in which they
are used) as a whole and not to any particular provision of this Agreement
(or such certificate or document); (e) references to any Section, Schedule
or Exhibit are references to Sections, Schedules and Exhibits in or to this
Agreement (or the certificate or other document in which the reference is
made), and references to any paragraph, subsection, clause or other
subdivision within any Section or definition refer to such paragraph,
subsection, clause or other subdivision of such Section or definition; (f)
the term "including" means "including without limitation"; (g) references
to any law or regulation refer to that law or regulation as amended from
time to time and include any successor law or regulation; (h) references to
any Person include that Person's successors and assigns; and (i) headings
are for purposes of reference only and shall not otherwise affect the
meaning or interpretation of any provision hereof.
SECTION 1.3. Calculations. 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 Record Date prior to
the first Record Date in the life of the Trust shall be to the Closing
Date. 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. All
references herein to the close of business means the close of business,
Minneapolis, Minnesota time.
SECTION 1.5. Action by or Consent of Holders. Whenever any provision
of this Agreement refers to action to be taken, or consented to, by
Holders, such provision shall be deemed to refer to Holders of record as of
the Record Date immediately preceding the date on which such action is to
be taken, or consented to, by Holders.
ARTICLE II. THE TRUST PROPERTY.
SECTION 2.1. Conveyance of Trust Property. In consideration of
Trustee's delivery to Seller or its designee of authenticated Certificates,
in authorized denominations, in an aggregate amount equal to the Original
Certificate Balance, Seller hereby sells, transfers, assigns and conveys to
Trustee, upon the terms and conditions hereof, in trust for the benefit of
the Holders, the Trust Property, without recourse (except to the extent of
Seller's obligations under this Agreement and the Related Agreements). The
sale, transfer, assignment and conveyance made hereunder shall not
constitute and is not intended to result in an assumption by Trustee, any
Holder or any Certificate Owner of any obligation of Seller to the Obligors
or any other Person in connection with the Receivables and the other Trust
Property or any agreement, document or instrument related thereto.
SECTION 2.2. Representations and Warranties as to Each Receivable.
Seller hereby makes the following representations and warranties as to each
Receivable conveyed by it to the Trust hereunder on which Trustee shall
conclusively rely in accepting the Trust Property in trust and
authenticating the Certificates. Unless otherwise indicated, such
representations and warranties shall speak as of the Closing Date, but
shall survive the sale, transfer and assignment of the Receivables and the
other Trust Property to the Trust.
(a) Characteristics of Receivables. The Receivable has been
fully and properly executed by the parties thereto and (i) is a Direct
Loan or has been originated by an Originator through Dealers in the
ordinary course of its business and in accordance with such
Originator's underwriting standards to finance the retail sale by a
Dealer of the Financed Vehicle or acquired by a Seller Affiliate
through the acquisition of a financial institution that owned such
Receivable, (ii) was originated by an Originator the underwriting
standards of which require physical damage insurance to be maintained
on each Financed Vehicle, (iii) is secured by a valid, subsisting,
binding and enforceable first priority security interest in favor of
Seller or a Seller Affiliate in the Financed Vehicle (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), which security interest is assignable
together with such Receivable, and has been so assigned to Seller, and
subsequently assigned by Seller to Trustee, (iv) contains customary
and enforceable provisions such that the rights and remedies of the
holder thereof are adequate for realization against the collateral of
the benefits of the security, (v) provided, at origination, for level
monthly payments (provided that the amount of the last payment may be
different), which fully amortize the Initial Principal Balance over
the original term, (vi) provides for interest at the Contract Rate
specified in the Schedule of Receivables, (vii) was originated in the
United States and (viii) the Obligor of which is not a government or a
governmental subdivision or agency.
(b) Schedule of Receivables. The information set forth in the
Schedule of Receivables was true and correct as of the close of
business on the Cutoff Date.
(c) Compliance with Law. The Receivable complied at the time it
was originated or made, and will comply as of the Closing Date, in all
material respects with all requirements of applicable federal, state
and local laws, and regulations thereunder, including, to the extent
applicable, usury laws, the Federal Truth in Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, Federal Reserve
Board Regulations B and Z and any other consumer credit, consumer
protection, equal opportunity and disclosure laws.
(d) Binding Obligation. The Receivable constitutes the genuine,
legal, valid and binding payment obligation in writing of the Obligor,
enforceable in all material respects by the holder thereof in
accordance with its terms, and the Receivable is not subject to any
right of rescission, setoff, counterclaim or defense, including the
defense of usury.
(e) Lien in Force. Neither Seller nor any Seller Affiliate has
taken any action which would have the effect of releasing the related
Financed Vehicle from the Lien granted by the Receivable in whole or
in part.
(f) No Amendment or Waiver. No material provision of the
Receivable has been amended, waived, altered or modified in any
respect, except such waivers as would be permitted under this
Agreement, and no amendment, waiver, alteration or modification causes
such Receivable not to conform to the other representations or
warranties contained in this Section.
(g) No Liens. Neither Seller nor any Seller Affiliate has
received notice of any Liens or claims, including Liens for work,
labor, materials or unpaid state or federal taxes, relating to the
Financed Vehicle securing the Receivable, that are or may be prior to
or equal to the Lien granted by the Receivable.
(h) No Default. To the knowledge of Seller, no default, breach,
violation or event permitting acceleration under the terms of the
Receivable exists and no continuing condition that with notice or
lapse of time, or both, would constitute a default, breach, violation
or event permitting acceleration under the terms of the Receivable has
arisen except for payment delinquencies continuing for a period of not
more than 30 days as of the Cutoff Date.
(i) Insurance. The Receivable requires the Obligor to insure
the Financed Vehicle under a Physical Damage Insurance Policy, pay the
premiums for such insurance and keep such insurance in full force and
effect.
(j) Good Title. Immediately prior to the transfer and
assignment herein contemplated, Seller had good and marketable title
to the Receivable free and clear of any Lien and had full right and
power to transfer and assign the Receivable to the Trust and
immediately upon the transfer and assignment of the Receivable to the
Trust, the Trust shall have good and marketable title to the
Receivable, free and clear of any Lien; and the Trust's interest in
the Receivable resulting from the transfer has been perfected under
the UCC.
(k) Obligations. Each Seller Affiliate has duly fulfilled all
obligations on its part to be fulfilled under, or in connection with,
the Receivable.
(l) Possession. There is only one original executed Receivable,
and immediately prior to the Closing Date, the applicable Seller
Affiliate will have possession of such original executed Receivable.
SECTION 2.3. Representations and Warranties as to the Receivables in
the Aggregate and Actions of Seller. Seller hereby makes the following
representations and warranties as to the Receivables conveyed by it to the
Trust hereunder on which Trustee shall rely in accepting the Trust Property
in trust and authenticating the Certificates. Unless otherwise indicated,
such representations and warranties shall speak as of the Closing Date, but
shall survive the sale, transfer and assignment of the Receivables and the
other Trust Property to the Trust.
(a) Amounts. The Original Pool Balance was $_____________.
(b) Individual Characteristics. The Receivables have the
following individual characteristics as of the Cutoff Date: (i) each
Receivable is secured by either a new or used automobile or light duty
truck; (ii) each Receivable has a Contract Rate of at least ____% and
not more than _____%; (iii) each Receivable had an original term to
maturity of more than __ months and a remaining maturity, as of the
Cutoff Date, of not less than ___ months and not more than __ months;
(iv) each Receivable had an Initial Principal Balance of not more than
$__________ and a Cutoff Date Principal Balance of not less than
$_________ nor more than $_________; (v) no Receivable was more than
30 days past due as of the Cutoff Date; (vi) no Financed Vehicle had
been repossessed as of the Cutoff Date; (vii) no Receivable was
subject to a force-placed physical damage insurance policy on the
related Financed Vehicle; (viii) each Receivable is a Precomputed
Receivable or a Simple Interest Receivable; (ix) Seller or a Seller
Affiliate has received at least one payment on each Receivable; and
(x) the Dealer of the Financed Vehicle has no participation in, or
other right to receive, any proceeds of the Receivable. The
Receivables were selected using selection procedures that were not
intended by Seller to be adverse to the Holders.
(c) Aggregate Characteristics. The Receivables had the
following characteristics in the aggregate as of the Cutoff Date: (i)
approximately ____% of the Original Pool Balance was attributable to
loans for purchases of new Financed Vehicles (it being understood that
Servicer's computer records and data processors record a Financed
Vehicle as new for this purpose if the model year and year of the
related note and security agreement evidencing the Receivable are the
same, which causes some Financed Vehicles that may have had previous
owners to be classified as new), and approximately _____% of the
Original Pool Balance was attributable to loans for purchases of used
Financed Vehicles; (ii) approximately _____%, _____%, _____% and ____%
of the Original Pool Balance was attributable to Receivables the
mailing addresses of the Obligors with respect to which are located in
the States of ___________, ___________, ___________, and
_____________, respectively, and no other state accounts for more than
___% of the Original Pool Balance; (iii) the weighted average Contract
Rate of the Receivables was _____%; (iv) there are ________ Receivables
being conveyed by Seller to the Trust; (v) the average Cutoff Date
Principal Balance of the Receivables was $__________; (vi) the
weighted average original term and weighted average remaining term of
the Receivables were _____ months and ___ months, respectively; and
(vii) not more than _____% of the Original Principal Balance is
attributable to Acquired Receivables.
(d) Marking Records. By the Closing Date, Seller shall have
caused the portions of Seller's and each Seller Affiliate's electronic
master record of Motor Vehicle Loans relating to the Receivables to be
clearly and unambiguously marked to show that such Receivables
constitute part of the Trust Property and are owned by the Trust in
accordance with the terms of this Agreement.
(e) No Assignment. As of the Closing Date, Seller shall not
have taken any action to convey any right to any Person that would
result in such Person having a right to payments received under the
Insurance Policies or Dealer Agreements, or payments due under the
Receivables that is senior to, or equal with, that of the Trust.
SECTION 2.4. Repurchase upon Breach. Seller, Servicer or Trustee, as
the case may be, shall inform the other parties promptly, in writing, upon
the discovery of any breach or failure to be true of the warranties made by
Seller pursuant to Section 2.2 or 2.3, provided that (a) the failure to
give such notice shall not affect any obligation of Seller and (b) Trustee
shall not be deemed to have discovered any such breach or failure unless
Trustee has been notified of such breach or failure in accordance with
Section 11.6 or an Authorized Officer of Trustee otherwise has actual
knowledge of such breach or failure. If the breach or failure shall not
have been cured by the last day of the Collection Period which includes the
60th day after the date on which Seller becomes aware of, or receives
written notice from Trustee or Servicer of, such breach or failure and such
breach or failure materially and adversely affects the interests of the
Trust and the Holders in any Receivable, Seller shall repurchase each such
Receivable from the Trust as of such last day of such Collection Period. In
consideration of the purchase of a Receivable hereunder, Seller shall remit
the Purchase Amount of such Receivable, no later than the close of business
on the next Deposit Date, in the manner specified in Section 4.4. Except as
provided in Section 6.2, the sole remedy of the Trust, Trustee or the
Holders with respect to a breach or failure to be true of the warranties
made by Seller pursuant to Section 2.2 or 2.3 shall be to require Seller to
repurchase Receivables pursuant to this Section.
SECTION 2.5. Custodian of Receivable Files. (a) Custody. To assure
uniform quality in servicing the Receivables and to reduce administrative
costs, Trustee, upon the execution and delivery of this Agreement,
revocably appoints the Custodian, as agent, and the Custodian accepts such
appointment, to act as agent on behalf of Trustee to maintain custody of
the following documents or instruments, which are hereby constructively
delivered to Trustee with respect to each Receivable (collectively, a
"Receivable File"):
(i) the fully executed original of the Receivable;
(ii) any documents customarily delivered to or held by Seller
or Servicer evidencing the existence of any Physical Damage Insurance
Policies;
(iii) the original credit application, fully executed by the
Obligor;
(iv) the original certificate of title, or such other documents
as the applicable Seller Affiliate keeps on file, in accordance with
its customary procedures, evidencing the security interest of such
Seller Affiliate in the Financed Vehicle;
(v) electronic entries and originals or true copies of all
documents, instruments or writings relating to extensions, amendments
or waivers of the Receivable; and
(vi) any and all other documents or electronic records that
Seller or Servicer, as the case may be, keeps on file, in accordance
with its customary procedures, relating to the Receivable, the Obligor
or the Financed Vehicle.
(b) Safekeeping. Servicer, in its capacity as Custodian, shall hold
the Receivable Files as agent on behalf of Trustee for the benefit of all
present and future Holders, and maintain such accurate and complete
accounts, records and computer systems pertaining to each Receivable as
shall enable Servicer and Trustee to comply with the terms and provisions
of this Agreement applicable to them. In performing its duties as Custodian
hereunder, the Custodian shall act with reasonable care, exercising the
degree of skill, attention and care that Servicer exercises with respect to
receivable files relating to other similar motor vehicle loans owned and/or
serviced by the Custodian and that is consistent with industry standards.
The Custodian shall maintain the Receivable Files in such a manner as shall
enable Trustee to verify, if Trustee so elects, the accuracy of the record
keeping of Servicer. Servicer shall promptly report to Trustee 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. The Custodian hereby acknowledges
receipt of the Receivable File for each Receivable listed on the Schedule
of Receivables.
(c) Maintenance of and Access to Records. The Custodian shall
maintain each Receivable File at the location specified in Schedule A to
this Agreement, or at such other office of the Custodian within the United
States as shall be specified to Trustee by 30 days' prior written notice.
Upon Trustee's reasonable request, the Custodian shall make available to
Trustee or its agents (or, when requested in writing by Trustee, to its
attorneys or auditors) the Receivable Files and the related accounts,
records and computer systems maintained by the Custodian at such times
during the normal business hours of the Custodian for purposes of
inspecting, auditing or making copies or abstracts of the same.
(d) Release of Documents. Upon written instructions from Trustee, the
Custodian shall release any document in the Receivable Files to Trustee,
Trustee's agent or Trustee's designee, as the case may be, at such place or
places as Trustee may designate, as soon thereafter as is practicable. Any
document so released shall be handled by Trustee with due care and returned
to the Custodian for safekeeping as soon as Trustee or its agent or
designee, as the case may be, shall have no further need therefor.
(e) Title to Receivables. The Custodian agrees that, in respect of
any Receivable File held by the Custodian hereunder, the Custodian will not
at any time have or in any way attempt to assert any interest in such
Receivable File or the related Receivable, other than solely for the
purpose of collecting or enforcing the Receivable for the benefit of the
Trust and that the entire equitable interest in such Receivable and the
related Receivable File shall at all times be vested in the Trust.
(f) Instructions; Authority to Act. The Custodian 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
Trustee. A certified copy of excerpts of certain resolutions of the Board
of Directors of Trustee shall constitute conclusive evidence of the
authority of any such Authorized Officer to act and shall be considered in
full force and effect until receipt by the Custodian of written notice to
the contrary given by Trustee.
(g) Custodian's Indemnification. The Custodian shall indemnify and
hold harmless Trustee, its officers, directors, employees and agents and
the Holders from and against any and all liabilities, obligations, losses,
compensatory damages, payments, costs or expenses of any kind whatsoever
that may be imposed on, incurred or asserted against Trustee or the Holders
as the result of the negligence or willful misconduct of the Custodian
relating to the maintenance and custody of the Receivable Files; provided
that the Custodian shall not be liable hereunder to the extent that such
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses result from the willful misfeasance, bad faith or negligence of
Trustee. Indemnification under this Section 2.5(g) shall include reasonable
fees and expenses of counsel and expenses of litigation and shall survive
termination of this Agreement and the resignation or removal of Trustee. If
Custodian shall have made any indemnity payments to Trustee pursuant to
this Section and Trustee thereafter shall collect any of such amounts from
Persons other than Custodian, Trustee shall immediately upon receipt
thereof repay such amounts to Custodian, without interest.
(h) Effective Period and Termination. 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 subsection (h).
If Servicer shall resign as Servicer in accordance with Section 7.5 or if
all of the rights and obligations of Servicer shall have been terminated
under Section 8.1, the appointment of Servicer as Custodian hereunder may
be terminated by Trustee or by the Majority Holders, in the same manner as
Trustee or such Holders may terminate the rights and obligations of
Servicer under Section 8.1. Trustee may terminate Servicer's appointment as
Custodian hereunder at any time with cause, or with 30 days' prior notice
without cause, upon written notification to Servicer. As soon as
practicable after any termination of such appointment Servicer shall
deliver, or cause to be delivered, the Receivable Files to Trustee,
Trustee's agent or Trustee's designee at such place or places as Trustee
may reasonably designate. Notwithstanding any termination of Servicer as
Custodian hereunder (other than in connection with a termination resulting
from the termination of Servicer, as such, pursuant to Section 8.1), from
and after the date of such termination, and for so long as Servicer is
acting as such pursuant to this Agreement, Trustee shall provide, or cause
the successor Custodian to provide, access to the Receivable Files to
Servicer, at such times as Servicer shall reasonably request, for the
purpose of carrying out its duties and responsibilities with respect to the
servicing of the Receivables hereunder.
ARTICLE III. ADMINISTRATION AND SERVICING OF TRUST
PROPERTY.
SECTION 3.1. Duties of Servicer. (a) Servicer is hereby authorized
to act as agent for the Trust and in such capacity shall manage, service,
administer and make collections on the Receivables, and perform the other
actions required by Servicer under this Agreement, with reasonable care.
Without limiting the standard set forth in the preceding sentence, Servicer
shall use a degree of skill, attention and care that is not less than
Servicer exercises with respect to comparable motor vehicle loans that it
services for itself or others and that is consistent with prudent industry
standards. Servicer's duties shall include the collection and posting of
all payments, responding to inquiries by Obligors on the Receivables, or by
federal, state or local governmental authorities, investigating
delinquencies, sending payment coupons to Obligors, reporting required tax
information to Obligors, accounting for Collections, monitoring the status
of Physical Damage Insurance Policies with respect to the Financed
Vehicles, furnishing monthly and annual statements to Trustee with respect
to distributions, providing collection and repossession services in the
event of Obligor default and performing the other duties specified herein.
Servicer shall also administer and enforce all rights and responsibilities
of the holder of the Receivables provided for in the Physical Damage
Insurance Policies and the Dealer Agreements. Without limiting the
generality of the foregoing, Servicer is hereby authorized and empowered by
Trustee to execute and deliver, on behalf of itself, the Trust, Trustee and
the Holders, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments,
with respect to the Receivables or to the Financed Vehicles, all in
accordance with this Agreement; provided that notwithstanding the
foregoing, Servicer shall not, except pursuant to an order from a court of
competent jurisdiction, release an Obligor from payment of any unpaid
amount under any Receivable or waive the right to collect the unpaid
balance of any Receivable from the Obligor, except in connection with a de
minimis deficiency which Servicer would not attempt to collect in
accordance with its customary procedures. If Servicer shall commence a
legal proceeding to enforce a Receivable, Trustee shall thereupon be deemed
to have automatically assigned such Receivable to Servicer, which
assignment shall be solely for purposes of collection. Trustee shall
furnish Servicer with any powers of attorney and other documents or
instruments necessary or appropriate to enable Servicer to carry out its
servicing and administrative duties hereunder.
(b) Servicer may, at any time without notice or consent, delegate (i)
any or all duties under this Agreement to any Person more than 50% of the
voting securities of which are owned, directly or indirectly, by Norwest
Corporation, a Delaware corporation, so long as Norwest Bank acts as
Servicer, or (ii) specific duties to sub-contractors who are in the
business of performing such duties; provided that no such delegation shall
relieve Servicer of its responsibility with respect to such duties and
Servicer shall remain obligated and liable to Trustee and the Holders for
servicing and administering the Receivables in accordance with this
Agreement as if Servicer alone were performing such duties.
SECTION 3.2. Collection of Receivable Payments. (a) Servicer shall
make reasonable efforts to collect all payments called for under the terms
and provisions of the Receivables as and when the same shall become due,
and otherwise act with respect to the Receivables, the Physical Damage
Insurance Policies, the Dealer Agreements and the other Trust Property in
such manner as will, in the reasonable judgment of Servicer, maximize the
amount to be received by the Trust with respect thereto, in accordance with
the standard of care required by Section 3.1. Servicer shall be entitled to
amend or modify any Receivable in accordance with its customary procedures
if Servicer believes in good faith that such amendment or modification is
in the best interests of the Trust and may also permit extensions not more
than ____ per ____; provided that Servicer may not, unless ordered by a
court of competent jurisdiction or otherwise required by applicable law,
(i) extend a Receivable beyond the Final Scheduled Maturity Date, (ii)
amend or modify the Principal Balance or Contract Rate of any Receivable,
or (iii) amend or otherwise modify any Receivable if such amendment or
modification would result in a deemed exchange of such Receivable under
Section 1001 of the Code. In the event that Servicer fails to comply with
the provisions of the preceding sentence, Servicer shall be required to
purchase the Receivable or Receivables affected thereby, for the Purchase
Amount, in the manner specified in Section 3.7 as of the close of business
for the Collection Period in which such failure occurs. Servicer may, in
its discretion (in accordance with its customary standards, policies and
procedures), waive any prepayment charge, late payment charge, extension
fee or any other fee that may be collected in the ordinary course of
servicing a Receivable.
(b) If in the course of collecting payments under the Receivables,
Servicer determines to set off any obligation of Servicer to an Obligor
against an amount payable by the Obligor with respect to such Receivable,
Servicer shall deposit the amount so set off in the Collection Account, no
later than the close of business on the Deposit Date for the Collection
Period in which the set-off occurs. All references herein to payments or
Liquidation Proceeds collected by Servicer shall include amounts set-off by
Servicer.
SECTION 3.3. Realization upon Receivables. On behalf of the Trust,
Servicer shall charge off a Receivable as a Defaulted Receivable in
accordance with its customary standards (and, in no event later than ___
days after a Receivable shall have become delinquent) and shall use its
best efforts to repossess and liquidate the Financed Vehicle securing any
Defaulted Receivable as soon as feasible after default, in accordance with
the standard of care required by Section 3.1. In taking such action,
Servicer shall follow such customary and usual practices and procedures as
it shall deem necessary or advisable in its servicing of motor vehicle
loans, and as are otherwise consistent with the standard of care required
under Section 3.1, which shall include exercising any rights under the
Dealer Agreements and selling the Financed Vehicle at public or private
sale. Servicer shall be entitled to recover all reasonable expenses
incurred by it in the course of repossessing and liquidating a Financed
Vehicle into cash proceeds and pursuing any deficiency claim against the
related Obligor, but only out of the cash proceeds of such Financed Vehicle
or any deficiency obtained from the Obligor (except that the expenses of
pursuing deficiency claims may be deducted on a ratable basis from amounts
obtained from deficiency claims on an aggregate basis), which amounts may
be retained by Servicer (and shall not be required to be deposited in the
Collection Account) to the extent of such expenses. The foregoing shall be
subject to the provision that, in any case in which a Financed Vehicle
shall have suffered damage, Servicer shall not expend funds in connection
with the repair or the repossession of such Financed Vehicle unless it
shall determine in its discretion that such repair and/or repossession will
increase the Liquidation Proceeds of the related Receivable by an amount
equal to or greater than the amount of such expenses.
If Servicer elects to commence a legal proceeding to enforce a Dealer
Agreement, the act of commencement shall be deemed to be an automatic
assignment from Trustee to Servicer of the rights under such Dealer
Agreement. If, however, in any enforcement suit or legal proceeding, it is
held that Servicer may not enforce a Dealer Agreement on the grounds that
it is not a real party in interest or a Person entitled to enforce the
Dealer Agreement, Trustee, at Servicer's expense, or Seller, at Seller's
expense, shall take such steps as Servicer deems necessary to enforce the
Dealer Agreement, including bringing suit in its name or the names of the
Holders.
SECTION 3.4. Physical Damage Insurance. (a) The Receivables require
that each Financed Vehicle be insured under a Physical Damage Insurance
Policy. Servicer shall monitor the status of such physical damage insurance
coverage to the extent consistent with its customary servicing procedures.
If Servicer shall determine that an Obligor has failed to obtain or
maintain a Physical Damage Insurance Policy covering the related Financed
Vehicle, Servicer shall use its best efforts to enforce the rights of the
holder of the Receivable under the Receivable to require the Obligor to
obtain such physical damage insurance, provided that Servicer shall not be
required to take such actions if there is in place a lender's single
interest policy with respect to the related Financed Vehicle that complies
with Servicer's customary requirements or if the Obligor resides in the
State of Michigan. It is understood that Servicer will not "force-place"
any Physical Damage Insurance Policy on any Financed Vehicle.
(b) Servicer may sue to enforce or collect upon the Physical Damage
Insurance Policies, in its own name, if possible, or as agent for the
Trust. If Servicer elects to commence a legal proceeding to enforce a
Physical Damage Insurance Policy, the act of commencement shall be deemed
to be an automatic assignment of the rights of the Trust under such
Physical Damage Insurance Policy to Servicer for purposes of collection
only. If, however, in any enforcement suit or legal proceeding it is held
that Servicer may not enforce a Physical Damage Insurance Policy on the
grounds that it is not a real party in interest or a holder entitled to
enforce the Physical Damage Insurance Policy, Trustee, on behalf of the
Trust, at Servicer's expense, or Seller, at Servicer's expense, shall take
such steps as Servicer shall direct in writing to enforce such Physical
Damage Insurance Policy, including bringing suit in its name or the name of
Trustee for the benefit of the Holders. Servicer shall make all claims and
enforce its rights under any lender's single interest insurance policy (to
the extent such claims or rights related to Receivables) for the benefit of
the Trust and shall treat as Collections all related proceeds of such
policies.
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles.
Servicer, in accordance with the standard of care required under Section
3.1, shall take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed
Vehicle for the benefit of the Trust. Trustee, on behalf of the Trust,
hereby authorizes Servicer, and Servicer hereby agrees, to take such steps
as are necessary to re-perfect such security interest on behalf of the
Trust in the event Servicer receives notice of the relocation of a Financed
Vehicle. If there has been a Servicer Termination Event, upon the request
of Trustee, Seller and Servicer, at their expense, shall promptly and duly
execute and deliver such documents and instruments, and take such other
actions as may be necessary, as evidenced by an Opinion of Counsel
delivered to Trustee, to perfect the Trust's interest in the Trust Property
against all other Persons, including the delivery of the Receivables and
the Receivable Files to Trustee, its agent, or its designee, the
endorsement and delivery of the Physical Damage Insurance Policies or the
notification of the insurers thereunder, the execution of transfer
instruments, and the endorsement to Trustee and the delivery of the
certificates of title to the Financed Vehicles to the appropriate
department or departments of motor vehicles (or other appropriate
governmental agency).
SECTION 3.6. Covenants of Servicer. Servicer makes the following
covenants on which Trustee relies in accepting the Trust Property in trust
and in executing and authenticating the Certificates:
(a) Security Interest to Remain in Force. Servicer shall not
release any Financed Vehicle from the security interest granted by the
related Receivable in whole or in part, except upon payment in full of
the Receivable or as otherwise contemplated herein.
(b) No Impairment. Servicer shall not impair in any material
respect the rights of the Holders in the Receivables, the Dealer
Agreements or the Physical Damage Insurance Policies or, subject to
clause (c), otherwise amend or alter the terms thereof if, as a result
of such amendment or alteration, the interests of the Trust and the
Holders hereunder would be materially adversely affected.
(c) Amendments. Servicer shall not amend or otherwise modify
any Receivable (including the grant of any extension thereunder),
except in accordance with Section 3.2.
SECTION 3.7. Purchase by Servicer upon Breach. Seller, Servicer or
Trustee, as the case may be, shall inform the other parties promptly, in
writing, upon the discovery of any breach by Servicer of its covenants
under Sections 3.5 or 3.6; provided that (a) the failure to give such
notice shall not affect any obligation of Servicer and (b) Trustee shall
not be deemed to have discovered any such breach or failure unless Trustee
has been notified of such breach or failure in accordance with Section 11.6
or an Authorized Officer of Trustee otherwise has actual knowledge of such
breach or failure. Unless the breach shall have been cured by the last day
of the Collection Period which includes the 60th day (or, if Servicer
elects, the 30th day) after the date on which Servicer becomes aware of, or
receives written notice of, such breach, Servicer shall purchase the
Receivable or Receivables materially and adversely affected thereby on the
immediately succeeding Deposit Date; provided that in the case of a breach
of the covenant contained in Section 3.6(c), Servicer shall be obligated to
purchase the affected Receivable or Receivables on the Deposit Date
immediately succeeding the Collection Period during which Servicer becomes
aware of, or receives written notice of, such breach. In consideration of
the purchase of a Receivable hereunder, Servicer shall remit the Purchase
Amount of such Receivable in the manner specified in Section 4.4. Except as
provided in Section 7.2, the sole remedy of the Trust, Trustee, or the
Holders against Servicer with respect to a breach pursuant to Section 3.6
shall be to require Servicer to repurchase Receivables pursuant to this
Section.
SECTION 3.8. Servicing Compensation. On each Distribution Date
Servicer shall be paid the Servicing Fee for such Distribution Date and any
unpaid Servicing Fees from prior Distribution Dates to the extent of funds
available therefor in accordance with the provisions of Section 4.5. If it
would not cause either Rating Agency to downgrade or withdraw its rating of
the Certificates, the Servicing Fee in respect of a Collection Period
(together with any portion of a Servicing Fee that remains unpaid from
prior Distribution Dates) at the option of Servicer may be paid at or as
soon as possible after the beginning of such Collection Period out of the
first collections of interest received on the Receivables for such
Collection Period. In addition, Servicer shall retain any late fees,
prepayment charges, extension fees or other fees and charges collected
during the Collection Period and shall be paid any interest earned during
the Collection Period on deposits in the Accounts (the "Supplemental
Servicing Fee"). Any late fees, prepayment charges, extension fees or other
fees and charges collected during the Collection Period and any interest
earned during the Collection Period on deposits in the Accounts shall not
constitute Interest Collections or Available Principal. Servicer shall be
required to pay all expenses incurred by it in connection with its
activities hereunder (including fees and expenses of Trustee (and any
custodian appointed by Trustee) and independent accountants, any
subservicer, taxes imposed on Servicer or any subservicer, and expenses
incurred in connection with distributions and reports to Holders) except
expenses incurred in connection with realizing upon Receivables under
Section 3.3.
SECTION 3.9. Servicer's Report. (a) On or before the Determination
Date immediately preceding each Distribution Date, Servicer shall deliver
to Trustee a certificate of a Servicing Officer substantially in the form
of Exhibit C (a "Servicer's Report") and attached to a Servicer's report
containing, among other things, (i) all information necessary to make the
deposits, transfers and distributions required by Sections 4.5 and 4.6,
(ii) all information necessary for sending statements to Holders pursuant
to Section 4.7, (iii) all information necessary to prepare the certificate
described in Section 9.3, (iv) all information necessary to determine if
there has been a Servicer Termination Event under Section 8.1, and (v) all
information necessary to reconcile all deposits to, and withdrawals from,
the Collection Account for such Distribution Date and the related
Collection Period. Servicer also shall separately identify (by account
number of the Receivable as it appears in the Schedule of Receivables) to
Trustee in a written notice or a list in computer readable form the
Receivables to be repurchased by Seller or to be purchased by Servicer, as
the case may be, on the related Deposit Date, and each Receivable which
became a Defaulted Receivable during the related Collection Period.
Notwithstanding the foregoing, it is understood and agreed that Trustee has
agreed to act as Servicer's agent for the purpose of preparing and
delivering Servicer's Reports, and so long as Trustee timely prepares and
delivers Servicer's Report, Servicer shall not be required to do so. Any
failure by Trustee to prepare and deliver a Servicer's Report, or
inaccuracy in any Servicer's Report so prepared and delivered, shall (so
long as Servicer shall also not timely prepare and deliver such Servicer's
Report or correct any such inaccuracy) have the same consequences as would
such a failure by Servicer or inaccuracy in a Servicer's Report prepared
and filed by Servicer.
(b) Servicer shall provide Trustee with a magnetic tape containing
the database file for each Receivable (i) at or prior to closing (but with
information as of the Cutoff Date) and (ii) thereafter, as of the last day
of the preceding Monthly Period not later than the third Business Day
preceding each Determination Date. Servicer hereby represents, as of the
date of each such delivery, that such information is accurate and complete
in all material respects.
(c) Trustee shall not be responsible for delays attributable to
Servicer's failure to deliver information, defects in the information
supplied by Servicer or other circumstances beyond Trustee's control.
SECTION 3.10. Annual Statement as to Compliance. (a) Servicer shall
deliver to Trustee, on or before March 31 of each year, commencing March
31, 1997, an Officer's Certificate, stating that (i) a review of the
activities of Servicer during the preceding calendar year (or the period
from the Closing Date to and including the end of the preceding calendar
year, in the case of the first such Officer's Certificate) and of its
performance of its obligations under this Agreement has been made under
such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, Servicer has fulfilled all its obligations
under this Agreement throughout such year (or longer period, in the case of
the first such certificate), or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof.
(b) Servicer shall deliver to Trustee and each Rating Agency,
promptly upon having knowledge thereof, but in no event later than five
Business Days thereafter, written notice in an Officer's Certificate of any
event which constitutes, or with the giving of notice or lapse of time or
both, would become, a Servicer Termination Event under Section 8.1.
SECTION 3.11. Independent Certified Public Accountants' Report.
Servicer shall cause a firm of independent certified public accountants
(who may also render other services to Servicer and Seller) to deliver to
Trustee on or before March 31 of each year, commencing March 31, 1997, a
report of examination addressed to the Board of Directors of Servicer and
to Trustee to the effect that such firm has examined the Motor Vehicle Loan
servicing functions of Servicer over the previous calendar year (or the
period from the Closing Date to and including the end of the preceding
calendar year, in the case of the first such report) and that such
examination (i) included tests relating to Motor Vehicle Loans serviced for
others in accordance with the requirements of the Uniform Single Audit
Program for Mortgage Bankers, to the extent the procedures in such Program
are applicable to the servicing obligations set forth in this Agreement and
(ii) except as described in the report, disclosed no exceptions or errors
in the records relating to Motor Vehicle Loans serviced for others that, in
the firm's opinion, paragraph four of such Program requires such firm to
report; provided that Servicer shall not be required to cause the delivery
of such a report with respect to any period for which each Rating Agency
shall have waived such requirement in a written notice to Servicer and
Trustee.
SECTION 3.12. Access to Certain Documentation and Information
Regarding Receivables. Servicer shall provide Trustee and the Holders with
access to the Receivable Files (in the case of the Holders, where it shall
be required by applicable statutes or regulations to give access to such
documentation). Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of
Servicer. Nothing in this Section shall affect the obligation of Servicer
to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of Servicer to provide access to
information as a result of such obligation shall not constitute a breach of
this Section. Any Holder, by its acceptance of a Certificate, shall be
deemed to have agreed to keep any information obtained by it pursuant to
this Section confidential and not to use such information for any other
purpose, except as required by applicable law.
SECTION 3.13. Reports to the Commission. Servicer shall, on behalf of
the Trust, cause to be filed with the Commission any periodic reports
required to be filed under the provisions of the Exchange Act, and the
rules and regulations of the Commission thereunder. Seller shall, at its
expense, cooperate in any reasonable request made by Servicer in connection
with such filings.
SECTION 3.14. Reports to the Rating Agency. Servicer shall deliver to
each Rating Agency a copy of all reports or notices furnished or delivered
pursuant to this Article and a copy of any amendments, supplements or
modifications to this Agreement and any other information reasonably
requested by such Rating Agency to monitor this transaction.
ARTICLE IV. DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO HOLDERS.
SECTION 4.1. Establishment of Accounts. (a) Trustee, on behalf of
the Trust and for the benefit of the Holders, shall establish and maintain
in the name of Trustee one or more segregated Eligible Deposit Accounts
(collectively, the "Collection Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Holders. Trustee, on behalf of the Trust and for the benefit of the Class A
Holders, shall establish and maintain in the name of 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 Holders. Trustee, on behalf of the Trust and for the
benefit of the Class B Holders, shall establish and maintain in the name of
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 Holders. The Collection Account,
the Class A Distribution Account and the Class B Distribution Account shall
be initially established and maintained with the trust department of
Trustee.
(b) Funds on deposit in the Collection Account, the Class A
Distribution Account and the Class B Distribution Account shall be invested
by Trustee in Eligible Investments selected by Servicer and confirmed in
writing by Servicer to Trustee; provided that, it is understood and agreed
that Trustee shall not be liable for any loss arising from such investment
in Eligible Investments. All such Eligible Investments shall be held by
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 Servicer
and shall be paid to Servicer and shall not be available to the Holders.
Other than as permitted by each Rating Agency, funds on deposit in the
Accounts with respect to any Collection Period or Distribution Date shall
be invested only in Eligible Investments that, except for money market
funds, will mature so that such funds will be available at the close of
business on the related Deposit Date. Funds deposited in an Account on a
Deposit Date which immediately precedes a Distribution Date upon the
maturity of any Eligible Investments are not required to be (but may be)
invested overnight. No Eligible Investment with a stated maturity shall be
disposed of prior to that maturity unless a default occurs with respect to
that Eligible Investment and Servicer directs Trustee in writing to dispose
of it.
(c) 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
(excluding all income thereon) and all such funds, investments and proceeds
shall be part of the Trust Property. The Accounts shall be under the sole
dominion and the exclusive custody and control of Trustee, and Trustee
shall have sole signature authority with respect thereto. If, at any time,
any of the Accounts ceases to be an Eligible Deposit Account, Trustee (or
Servicer on its behalf) shall within ___ Business Days (or such longer
period, not to exceed __ calendar days, 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 that are in the existing Account
which is no longer an Eligible Deposit Account to such new Account.
SECTION 4.2. Collections. (a) Subject to the provisions of the
succeeding sentence and of subsections (b) and (c), Servicer shall remit to
the Collection Account all payments by or on behalf of the Obligors on the
Receivables, including all Liquidation Proceeds received by Servicer during
any Collection Period, as soon as practicable, but in no event after the
close of business on the second Business Day, after receipt thereof.
Subject to the provisions of subsections (b) and (c), on the Closing Date,
Servicer shall deposit in the Collection Account all payments by or on
behalf of the Obligors on the Receivables received by Servicer after the
Cutoff Date and on or prior to the second Business Day immediately
preceding the Closing Date.
(b) Notwithstanding the provisions of subsection (a), if Norwest Bank
is the Servicer and (i) Servicer shall have the Required Rating or (ii)
Trustee otherwise shall have received written notice from each of the
Rating Agencies that the then outstanding rating on the Class A
Certificates and the Class B Certificates would not be lowered or withdrawn
as a result, Servicer may deposit all amounts referred to in subsection (a)
for any Collection Period into the Collection Account not later than the
close of business on the Deposit Date with respect to such Collection
Period; provided that if (x) a Servicer Termination Event has occurred and
is continuing, (y) Servicer has been terminated as such pursuant to Section
8.1 or (z) Servicer ceases to have the Required Rating, Servicer shall
deposit such amounts (including any amounts then being held by Servicer)
into the Collection Account as provided in Section 4.2(a). Notwithstanding
the foregoing, the provisions of the proviso to the preceding sentence
shall not be applicable to a successor Servicer solely by reason of the
occurrence of an event specified in clauses (x), (y) and (z) of such
proviso with respect to the outgoing Servicer. Pending the deposit of the
amounts referred to in subsection (a) into the Collection Account, such
amounts may be employed by Servicer at its own risk and for its own benefit
and need not be segregated from Servicer's own funds. Any losses resulting
from Servicer's actions shall be borne exclusively by the Servicer.
Servicer shall promptly notify Trustee in writing if it shall obtain or
lose the Required Rating.
(c) Notwithstanding the provisions of subsections (a) and (b),
Servicer may retain, or will be entitled to be reimbursed, from amounts
otherwise payable into, or on deposit in, the Collection Account with
respect to a Collection Period any amounts previously deposited in the
Collection Account but later determined to have resulted from mistaken
deposits or postings or checks returned for insufficient funds, in each
case, with respect to which Servicer has not been previously reimbursed
hereunder. The amount to be retained or reimbursed hereunder shall not be
included in Collections with respect to the related Distribution Date.
(d) To the extent that collections on a Precomputed Receivable during
a Collection Period exceed the outstanding Precomputed Advances and the
scheduled payment on such Precomputed Receivable, the collections shall be
applied to prepay the Precomputed Receivable in full. Collections
insufficient to prepay the Precomputed Receivable in full shall be treated
as Payaheads until such later Collection Period as such Payaheads may be
transferred to the Collection Account and applied either to the scheduled
payment or to prepay the Precomputed Receivable in full.
SECTION 4.3. Advances. (a) On or prior to each Deposit Date,
Servicer shall advance any Interest Shortfall with respect to the related
Distribution Date by depositing the amount of such Interest Shortfall into
the Collection Account. To the extent that collections on a Precomputed
Receivable for a Collection Period are less than the scheduled payment, the
amount of Payaheads made on such Precomputed Receivable not previously
applied, if any, with respect to such Precomputed Receivable shall be
applied by the Servicer to the extent of the shortfall. Servicer shall be
obligated to make an Advance except to the extent that Servicer shall
reasonably determine that the Advance is unlikely to be recoverable
pursuant to subsection (b).
(b) On each Distribution Date, prior to making any of the
distributions set forth in Section 4.5, Servicer shall be reimbursed for
all Outstanding Advances with respect to prior Distribution Dates, to the
extent of the Interest Collections for such Distribution Date and, to the
extent such Interest Collections are insufficient, to the extent of the
funds in the Reserve Account. If it is acceptable to each Rating Agency
without a reduction in the rating of the Certificates, the Outstanding
Advances at the option of Servicer may be paid at or as soon as possible
after the beginning of the related Collection Period out of the first
collections of interest received on the Receivables for such Collection
Period.
SECTION 4.4. Additional Deposits; Net Deposits. (a) On or prior to
each Deposit Date, Seller or Servicer, as the case may be, shall remit to
the Collection Account, in next-day or immediately available funds, the
aggregate Purchase Amount of the Receivables to be purchased by it under an
obligation that arose during the preceding Collection Period pursuant to
Section 2.4, 3.7 or 10.2, respectively.
(b) Servicer may make the remittances to be made by it pursuant to
this Article IV net of amounts to be distributed to it pursuant to Section
4.5 (but subject to the priorities set forth therein), for so long as (i)
no Servicer Termination Event has occurred and is continuing and (ii)
Servicer has not been terminated as such pursuant to Section 8.1; provided
that Servicer shall account for all of such amounts in the related
Servicer's Report as if such amounts were deposited and distributed
separately; and provided that, if an error is made by Servicer in
calculating the amount to be deposited or retained by it and a shortfall in
the amount deposited in the Collection Account results, Servicer shall make
a payment of the deficiency to the Collection Account, immediately upon
becoming aware, or receiving notice from Trustee, of such error.
SECTION 4.5. Distributions. (a) On or before each Determination
Date, Servicer shall calculate all amounts to be deposited in the Class A
Distribution Account and the Class B Distribution Account, which
calculations shall be set forth in the Servicer's Report delivered to
Trustee on or before such Determination Date.
(b) On each Distribution Date, after making the reimbursements to
Servicer of Outstanding Advances pursuant to Section 4.3(b), based on the
related Servicer's Report Trustee will make the following deposits and
distributions from the Collection Account by 11:00 a.m. (Minneapolis,
Minnesota time), to the extent of the sum of Available Interest and any
Available Reserve Amount remaining after such reimbursements (and, in the
case of shortfalls occurring under clause (ii) in the Class A Interest
Distributable Amount, the Class B Percentage of Available Principal to the
extent of such shortfalls), in the following priority:
(i) to Servicer, any unpaid Servicing Fee for the related
Collection Period and all unpaid Servicing Fees from prior Collection
Periods;
(ii) to the Class A Distribution Account, the Class A Interest
Distributable Amount for such Distribution Date; and
(iii) to the Class B Distribution Account, the Class B Interest
Distributable Amount for such Distribution Date.
On each Distribution Date, based on the related Servicer's Report Trustee
will make the following deposits and distributions, to the extent of the
portion of Available Principal, Available Interest and Available Reserve
Amount remaining after the application of clauses (i), (ii) and (iii), in
the following priority:
(iv) to the Class A Distribution Account, the Class A Principal
Distributable Amount for such Distribution Date;
(v) to the Class B Distribution Account, the Class B Principal
Distributable Amount for such Distribution Date;
(vi) to the Reserve Account, any amounts remaining, until the
amount on deposit in the Reserve Account equals the Specified Reserve
Account Balance; and
(vii) to Seller, any amounts remaining.
(c) On each Distribution Date, all amounts on deposit in the Class A
Distribution Account will be distributed to the Class A Holders (determined
as of the related Record Date) by Trustee and all amounts on deposit in the
Class B Distribution Account will be distributed to the Class B Holders
(determined as of the related Record Date) by Trustee. Except as provided
in Section 10.1, payments under this paragraph shall be made to the Holders
by check mailed by 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 Trustee is required to wire funds to the Holders from
the Class A Distribution Account or the Class B Distribution Account, as
applicable, it shall request the bank 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 bank maintaining the Class
A Distribution Account or the Class B Distribution Account, as applicable,
shall promptly deliver to Trustee a confirmation of such wire transfer. To
the extent that Trustee is required to make payments to Holders by check
hereunder, it shall request the bank 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 bank shall, if a request
is made by Trustee for a wire transfer by 9:00 A.M. (Minneapolis, Minnesota
time) on any Distribution Date, wire such funds in accordance with such
instructions by 10:00 A.M. (Minneapolis, Minnesota 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 bank maintaining the Class A Distribution Account
or the Class B Distribution Account, as applicable. Servicer shall take all
necessary action (including requiring an agreement to such effect) to
ensure that any bank 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 bank maintaining the Class A
Distribution Account or the Class B Distribution Account, as applicable.
SECTION 4.6. Reserve Account. (a) Seller shall establish and
maintain in the name of Trustee an Eligible Deposit Account (the "Reserve
Account"). The Reserve Account and any amounts therein shall not be
property of the Trust, but shall be pledged to and held for the benefit of
Trustee, as secured party. The Reserve Account shall be initially
established and maintained with the trust department of Trustee.
(b) In order to provide for the prompt payment to the Holders and
Servicer in accordance with Section 4.5, to assure availability of the
amounts maintained in the Reserve Account and as security for the
performance by Seller of its obligations hereunder:
(i) Seller, on behalf of itself and its successors and assigns,
and solely for the purpose of providing for payment of the
distributions provided for in Section 4.5, hereby grants a security
interest in and pledges to Trustee and its successors and assigns, all
its right, title and interest in and to the Reserve Account, subject,
however, to the limitations set forth in this Agreement, and all
proceeds of the foregoing, including all securities, investments,
general intangibles, financial assets and investment property from
time to time credited to and any security entitlement to the Reserve
Account; and
(ii) Seller hereby grants a security interest and pledges to
Trustee and its successors and assigns the Reserve Account Initial
Deposit and all proceeds thereof, subject, however, to the limitations
set forth below, and solely for the purpose of providing for payment
of the distributions provided for in Section 4.5 (all of the
foregoing, subject to the limitations set forth in this Section, the
"Reserve Account Property"),
to have and to hold all the aforesaid property, rights and privileges unto
Trustee, its successors and assigns, in trust for the uses and purposes,
and subject to the terms and provisions, set forth in this Section. Trustee
hereby acknowledges such transfer and accepts the trust hereunder and shall
hold and distribute the Reserve Account Property in accordance with the
terms and provisions of this Section.
(c) Trustee shall direct the Securities Intermediary to invest funds
on deposit in the Reserve Account in Eligible Investments selected by
Seller and confirmed in writing by Seller to Trustee; provided that it is
understood and agreed that Trustee shall not be liable for any loss arising
from such investment in Eligible Investments. Funds on deposit in the
Reserve Account shall be invested in Eligible Investments that will mature
so that all such funds will be available at the close of business on each
Deposit Date; provided that to the extent permitted by the Rating Agencies,
funds on deposit in the Reserve Account may be invested in Eligible
Investments that mature later than the next Deposit Date. Funds deposited
in the Reserve Account on a Deposit Date upon the maturity of any Eligible
Investments are not required to be (but may be) invested overnight. Seller
will treat the funds, Eligible Investments and other assets in the Reserve
Account 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 Account.
<PAGE>
(d) On each Distribution Date, any amounts on deposit in the
Collection Account with respect to the preceding Collection Period after
payments to Servicer, the Class A Distribution Account and the Class B
Distribution Account have been made will be deposited into the Reserve
Account until the amount of the Reserve Account is equal to the Specified
Reserve Account Balance.
(e) The Reserve Account shall be under the sole custody and control
of Trustee. If, at any time, the Reserve Account ceases to be an Eligible
Deposit Account, Trustee shall within 10 Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency may
consent) establish a new Reserve Account as an Eligible Deposit Account and
shall transfer any cash and/or any investments that are in the existing
Account which is no longer an Eligible Deposit Account to such new Reserve
Account.
(f) On each Distribution Date, the amount available in the Reserve
Account (the "Available Reserve Amount") will equal the lesser of (i) the
amount on deposit in the Reserve Account (exclusive of investment earnings)
and (ii) the Specified Reserve Account Balance. On each Deposit Date,
Trustee will withdraw funds from the Reserve Account (i) to the extent
required pursuant to Section 4.3(b) and (ii) to the extent that (A) the sum
of the amounts required to be distributed to Holders and the accrued and
unpaid Servicing Fees payable to Servicer on such Distribution Date exceeds
(B) the amount on deposit in the Collection Account with respect to the
preceding Collection Period (net of net investment income). The aggregate
amount to be withdrawn from the Reserve Account on any Deposit Date shall
not exceed the Available Reserve Amount with respect to the related
Distribution Date. Trustee will deposit the proceeds of such withdrawal
into the Collection Account on or before such Distribution Date with
respect to which such withdrawal was made.
(g) Amounts on deposit in the Reserve Account will be released to
Seller on each Distribution Date to the extent that the amount credited to
the Reserve Account would exceed the Specified Reserve Account Balance.
Upon any distribution to Seller of amounts from the Reserve Account, the
Holders will not have any rights in, or claims to, such amounts. Amounts
properly distributed to Seller from the Reserve Account or otherwise shall
not be available under any circumstances to the Trust, Trustee or the
Holders and Seller shall in no event thereafter be required to refund any
such distributed amounts.
(h) With respect to the Reserve Account Property, Seller and Trustee
agree that the Reserve Account Initial Deposit and all other funds and
Account Property shall be delivered to Securities Intermediary for credit
to the Reserve Account. In addition, any Reserve Account Property that is a
book-entry security held through a Federal Reserve Bank pursuant to federal
book-entry regulations shall be delivered in accordance with the definition
of "Delivery" and shall be maintained by Trustee, pending maturity or
disposition, through continued book-entry registration of such Reserve
Account Property as described in such paragraph. Effective upon the
crediting of any Reserve Account Property to the Reserve Account, Trustee
shall be deemed to have represented that it has purchased such Reserve
Account Property for value, in good faith and without notice of any adverse
claim thereto.
(i) Seller (and any successor to Seller in accordance with Section
6.3) and Servicer agree to take or cause to be taken such further actions,
to execute, deliver and file or cause to be executed, delivered and filed
such further documents and instruments (including any UCC financing
statements or this Agreement) as may be determined to be necessary, in an
Opinion of Counsel to Seller delivered to Trustee, in order to perfect the
interests created by this Section 4.6 and otherwise fully to effectuate the
purposes, terms and conditions of this Section 4.6. Seller (and any
successor to Seller in accordance with Section 6.3) and Servicer shall:
(A) promptly execute, deliver and file any financing
statements, amendments, continuation statements, assignments,
certificates and other documents with respect to such interests and
perform all such other acts as may be necessary in order to perfect or
to maintain the perfection of Trustee's security interest; and
(B) make the necessary filings of financing statements or
amendments thereto within five days after the occurrence of any of the
following: (1) any change in their respective names or any trade
names, (2) any change in the location of their respective chief
executive offices or principal places of business and (3) any merger
or consolidation or other change in their respective identities or
corporate structures; and shall promptly notify Trustee of any such
filings.
(j) Investment earnings attributable to the Reserve Account Property
and proceeds therefrom shall be held by Trustee for the benefit of Seller.
Investment earnings attributable to the Reserve Account Property shall not
be available to pay the distributions provided for in Section 4.5 and shall
not otherwise be subject to any claims or rights of the Holders or
Servicer. Trustee shall cause all investment earnings attributable to the
Reserve Account to be distributed on each Distribution Date to Seller.
(k) The Seller may at any time, without consent of Holders, sell,
transfer, convey or assign in any manner its rights to and interests in
distributions from the Reserve Account provided that (i) the Rating
Agencies confirm in writing that such action will not result in a reduction
or withdrawal of the rating of any class of Certificates, (ii) the Seller
provides to the Trustee an opinion of counsel from independent counsel that
such action will not cause the related Trust to be classified as an
association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes and (iii) such transferee or assignee agrees in
writing to take positions for federal income tax purposes consistent with
the federal income tax positions agreed to be taken by the Seller.
SECTION 4.7. Statements to Holders. (a) On each Distribution Date,
Servicer shall provide Trustee (with a copy to each Rating Agency)
for Trustee to forward to each Holder of record a statement setting forth
at least the following information as to the Certificates to the extent
applicable:
(i) the amount of the distribution allocable to principal on
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 amount of the Servicing Fee paid to Servicer with
respect to the related Collection Period;
(iv) the Class A Certificate Balance, the Class A Pool Factor,
the Class B Certificate Balance and the Class B Pool Factor as of such
Distribution Date, after giving effect to payments allocated to
principal reported under clause (i);
(v) the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
(vi) the amount of the Aggregate Net Losses, Defaulted
Receivables and Liquidation Proceeds, if any, for such Collection
Period;
(vii) the aggregate Purchase Amount of Receivables repurchased
by Seller or purchased by Servicer;
(viii) the Class A Interest Carryover Shortfall, the Class B
Interest Carryover Shortfall, the Class A Principal Carryover
Shortfall and the Class B Principal Carryover Shortfall;
(ix) the balance of the Reserve Account on such Distribution
Date, after giving effect to changes therein on such Distribution
Date; and
(x) the Specified Reserve Account Balance as of the close of
business on such Distribution Date.
Each amount set forth pursuant to clauses (i), (ii) and (iii) shall be
expressed in the aggregate and as a dollar amount per $1,000 of original
denomination of a Certificate.
Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, Servicer shall
furnish a report to the Trust and Trustee shall furnish, or cause to be
furnished, to each Person who at any time during such calendar year shall
have been a Holder, a statement based upon such report as to the sum of the
amounts determined in clauses (i) and (ii) above for such calendar year,
or, in the event such Person shall have been a Holder during a portion of
such calendar year, for the applicable portion of such year, and such other
information as is available to Servicer as Servicer deems necessary or
desirable to enable the Holders to prepare their federal income tax
returns. The obligation of the Trustee set forth in this paragraph shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided pursuant to any requirement of the Code.
<PAGE>
ARTICLE V. THE CERTIFICATES.
SECTION 5.1. The Certificates. Trustee shall, upon written order or
request signed in the name of Seller by one of its officers authorized to
do so and delivered to an Authorized Officer of Trustee, execute on behalf
of the Trust, authenticate and deliver the Certificates to or upon the
order of Seller in the aggregate principal amount and denominations as set
forth in such written order or request. The Certificates shall be issuable
in denominations of $1,000 and integral multiples thereof; provided that
one Class A Certificate and one Class B Certificate may be issued in a
denomination that represents the residual amount of the Original Class A
Certificate Balance and the Original Class B Certificate Balance,
respectively. Upon initial issuance, the Class A Certificates and the Class
B Certificates shall be in the form of Exhibit A and Exhibit B,
respectively, which are incorporated by reference herein, and shall be
issued as provided in Section 5.8, in an aggregate amount equal to the
Original Class A Certificate Balance and the Original Class B Certificate
Balance, respectively. The Certificates shall be executed by Trustee on
behalf of the Trust by manual or facsimile signature of an Authorized
Officer of Trustee under Trustee's seal imprinted thereon and attested by
the manual or facsimile signature of an Authorized Officer of 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 Trust, 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 5.2. Authentication of Certificates. 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, executed
by 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 shall be dated
the date of their authentication.
SECTION 5.3. Registration of Transfer and Exchange of Certificates.
Trustee shall maintain, or cause to be maintained, at the office or agency
to be maintained by it in accordance with Section 5.7, a Certificate
Register in which, subject to such reasonable regulations as it may
prescribe, 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, 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 Holder, 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 Trustee in accordance with Section 5.7. 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 Trustee. No service
charge shall be made for any registration of transfer or exchange of
Certificates, but 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 cancelled and disposed of in
accordance with the customary procedures of Trustee.
The Class B Certificates and any beneficial interest in such Class B
Certificates may not be acquired (a) with the assets of an employee benefit
plan (as defined in Section 3(3) of ERISA) that is subject to the
provisions of Title I of ERISA, (b) by a plan described in Section
4975(e)(1) of the Code or (c) by any entity whose underlying assets include
plan assets by reason of a plan's investment in the entity. By accepting
and holding a Class B Certificate or interest therein, the Holder thereof
or Class B Certificate Owner thereof shall be deemed to have represented
and warranted that it is not subject to the foregoing limitation.
SECTION 5.4. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Class A Certificate or Class B Certificate shall be
surrendered to Trustee, or if 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 Trustee such
security or indemnity as may be required to save 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, 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
5.4, Trustee may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection herewith.
Any replacement Certificate issued pursuant to this Section 5.4 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 5.5. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, 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 Trustee shall not be bound by any
notice to the contrary.
SECTION 5.6. Access to List of Holders' Names and Addresses. Trustee
shall furnish or cause to be furnished to Servicer, within fifteen days
after receipt by Trustee of a request therefor from Servicer in writing, in
such form as Servicer may reasonably require, a list of the names and
addresses of the Holders as of the most recent Record Date. If Definitive
Certificates have been issued, Trustee, upon written request of (a) three
or more Holders or (b) one or more Holders evidencing not less than 25% of
the aggregate outstanding principal balance of the Certificates, will,
within five Business Days after the receipt of such request, afford such
Holders access during normal business hours to the most current list of
Holders for purposes of communicating with other Holders with respect to
their rights under the Agreement. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold Seller, Servicer or
Trustee accountable by reason of the disclosure of such Holder's name and
address, regardless of the source from which such information was derived.
SECTION 5.7. Maintenance of Office or Agency. Trustee shall maintain,
or cause to be maintained, at its expense, in _______________, an office or
agency where Certificates may be surrendered for registration of transfer
or exchange and where notices and demands to or upon Trustee in respect of
the Certificates and this Agreement may be served. Trustee initially
designates its office located at _______________________ for such purposes.
Trustee shall give prompt written notice to Servicer and to Holders of any
change in the location of any such office or agency.
SECTION 5.8. Book Entry Certificates. Upon original issuance, the
Class A Certificates and the Class B Certificates, other than the Class A
Certificate representing the residual amount of the Original Class A
Certificate Balance and the Class B Certificate representing the residual
amount of the Original Class B Certificate Balance, which shall be issued
upon the written order of Seller, shall be issued in the form of one or
more typewritten Certificates representing the Book Entry Certificates, to
be delivered to the initial Clearing Agency, by, or on behalf of, Seller.
Such Certificates shall initially be registered on the Certificate Register
in the name of CEDE & Co., the nominee of the initial Clearing Agency, and
no Certificate Owner will receive a definitive certificate representing
such Certificate Owner's interest in the Class A Certificates or the Class
B Certificates, as the case may be, except as provided in Section 5.10.
Unless and until definitive, fully registered Certificates ("Definitive
Certificates") have been issued to the Holders pursuant to Section 5.10:
(a) the provisions of this Section 5.8 shall be in full force
and effect;
(b) Seller, Servicer and 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 Holders) as the
authorized representative of the Certificate Owners;
(c) to the extent that the provisions of this Section 5.8
conflict with any other provisions of this Agreement, the provisions
of this Section 5.8 shall control;
(d) 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 Holders 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 Holders 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; and
(e) pursuant to the Depository Agreement, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal and
interest on the Certificates to the Clearing Agency Participants, for
distribution by such Clearing Agency Participants to the Certificate
Owners or their nominees.
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 5.9. Notices to Clearing Agency. Whenever notice or other
communication to the Holders is required under this Agreement unless and
until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 5.10, Trustee shall give all such notices and
communications specified herein to be given to Holders to the Clearing
Agency.
SECTION 5.10. Definitive Certificates. If (a) (i) Seller advises
Trustee in writing that the Clearing Agency is no longer willing or able
properly to discharge its responsibilities under the Depository Agreement
and (ii) Trustee or Seller is unable to locate a qualified successor, (b)
Seller, at its option, advises Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (c) after
the occurrence of a Servicer Termination Event, Certificate Owners
representing in the aggregate not less than a majority of the aggregate
outstanding principal balance of the Certificates, advise Trustee and the
Clearing Agency through the Clearing Agency Participants in writing that
the continuation of a book-entry system through the Clearing Agency is no
longer in the Certificate Owners' best interests, 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
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, Trustee shall
execute, on behalf of the Trust, authenticate and deliver Definitive
Certificates in accordance with such instructions. Seller shall arrange
for, and will bear all costs of, the printing and issuance of such
Definitive Certificates. Neither Seller, Servicer nor 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, Trustee shall recognize the Holders of
the Definitive Certificates as Holders hereunder.
ARTICLE VI. SELLER.
SECTION 6.1. Representations and Warranties of Seller. Seller makes
the following representations and warranties, on which Trustee relies in
accepting the Receivables and the other Trust Property in trust and
executing and authenticating the Certificates. Such representations are
made as of the execution and delivery of this Agreement, but shall survive
the sale, transfer and assignment of the Receivables and the other Trust
Property to the Trust.
(a) Organization and Good Standing. Seller has been duly
organized and is validly existing as a Delaware corporation in good
standing under the laws of the State of Delaware, with the power and
authority to own its properties and to conduct its business as such
properties are presently owned and such business is presently
conducted and had at all relevant times, and has, full power,
authority and legal right to acquire, own and sell the Receivables and
the other Trust Property.
(b) Power and Authority. Seller has the power, authority and
legal right to execute and deliver this Agreement and the Related
Agreements and to carry out their respective terms and to sell and
assign the property to be sold and assigned to and deposited with
Trustee as Trust Property; and the execution, delivery and performance
of this Agreement and the Related Agreements have been duly authorized
by Seller by all necessary corporate action.
(c) No Consent Required. No approval, authorization, consent,
license or other order or action of, or filing or registration with,
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement or the
Related Agreements or the consummation of the transactions
contemplated hereby or thereby, other than (i) as may be required
under the blue sky or securities laws of any State or the Securities
Act of 1933, and (ii) the filing of UCC financing statements.
(d) Valid Sale; Binding Obligation. Seller intends this
Agreement to effect a valid sale, transfer, and assignment of the
Receivables and the other Trust Property conveyed by Seller to the
Trust hereunder, enforceable against creditors of and purchasers from
Seller; and each of this Agreement and the Related Agreements
constitutes a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its respective terms,
subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation and other
similar laws affecting enforcement of the rights of creditors of banks
generally and to equitable limitations on the availability of specific
remedies.
(e) No Violation. The execution, delivery and performance by
Seller of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby will
not conflict with, result in any material breach of any of the terms
and provisions of, constitute (with or without notice or lapse of
time) a material default under or result in the creation or imposition
of any Lien upon any of its material properties pursuant to the terms
of, (i) the articles of incorporation or bylaws of Seller, (ii) any
material indenture, contract, lease, mortgage, deed of trust or other
instrument or agreement to which Seller is a party or by which Seller
is bound, or (iii) any law, order, rule or regulation applicable to
Seller of any federal or state regulatory body, any court,
administrative agency, or other governmental instrumentality having
jurisdiction over Seller.
(f) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of Seller, threatened, before any court,
regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over 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 might
materially and adversely affect the performance by Seller of its
obligations under, or the validity or enforceability of, this
Agreement or the Certificates, or (iv) that may materially and
adversely affect the federal or state income, excise franchise or
similar tax attributes of the Certificates.
(g) Chief Executive Office. The chief executive office of
Seller is at 100 West Commons Boulevard, Suite 212, New Castle,
Delaware, 19720.
SECTION 6.2. Liability of Seller; Indemnities. (a) Seller shall be
liable in accordance herewith only to the extent of the obligations
specifically undertaken by Seller under this Agreement and shall have no
other obligations or liabilities hereunder.
(b) Subject to Section 11.4, Seller shall indemnify, defend and hold
harmless Trustee, the Trust and the Holders from and against any taxes that
may at any time be asserted against Trustee, its directors, officers,
employees and agents, the Trust or a Holder with respect to, and as of the
date of, the sale, transfer and assignment of the Trust Property to the
Trust or the issuance and original sale of the Certificates, including any
sales, gross receipts, general corporation, tangible or intangible,
personal property, privilege, or license taxes (but not including any taxes
asserted with respect to distributions made hereunder to Holders, ownership
of the Trust Property or federal or other income taxes, including franchise
taxes measured by net income, arising out of the transactions contemplated
by this Agreement or transfer taxes arising in connection with the transfer
of the Certificates), and reasonable costs and expenses in defending
against the same. The exclusion of any tax from this indemnity is not
intended to obligate Trustee to pay such tax if Trustee would not otherwise
be required to do so.
(c) Subject to Section 11.4, Seller shall indemnify, defend and hold
harmless Trustee, its directors, officers, employees and agents, the Trust
and the Holders from and against any loss, liability or expense incurred by
reason of the willful misfeasance, bad faith or negligence of Seller in the
performance of its duties hereunder.
(d) Subject to Section 11.4, Seller shall indemnify, defend and hold
harmless Trustee, its directors, officers, employees and agents, the Trust
and the Holders from and against any loss, liability or expense incurred by
reason of the violation by Seller of federal or state securities laws in
connection with the registration or the sale of the Certificates.
(e) Subject to Section 11.4, Seller shall indemnify, defend and hold
harmless Trustee, its directors, officers, employees and agents, the Trust
and the Holders from and against any loss, liability or expense imposed
upon, or incurred by, Trustee, the Trust or the Holders as the result of
the failure of any Receivable conveyed by it to the Trust hereunder, or the
sale of the related Financed Vehicle, to comply with all requirements of
applicable law.
(f) Indemnification under this Section 6.2 shall include reasonable
fees and expenses of counsel and expenses of litigation and shall survive
termination of this Agreement and the resignation or removal of Trustee. If
Seller shall have made any indemnity payments to Trustee pursuant to this
Section and Trustee thereafter shall collect any of such amounts from
Persons other than Seller, Trustee shall immediately upon receipt thereof
repay such amounts to Seller, without interest.
(g) Notwithstanding the foregoing provisions of this Section, Seller
shall have no obligation to indemnify, defend or hold harmless Trustee (in
its individual capacity) or its directors, officers, employees or agents
with respect to any matter, to the extent such matter (i) is due to the
willful misfeasance, bad faith or negligence of Trustee or reckless
disregard of Trustee's obligations and duties hereunder, or (ii) arises
from Trustee's breach of any of its representations or warranties set forth
in Section 9.14, or (iii) shall arise out of or be incurred in connection
with the performance by Trustee of the duties of successor Servicer
hereunder (and, in the case of this clause (iii), was not caused by any act
or omission of Seller).
SECTION 6.3. Merger or Consolidation of Seller. Any corporation or
other entity (a) into which Seller may be merged or consolidated, (b) that
may result from any merger, conversion or consolidation to which Seller is
a party, or (c) that may succeed by purchase and assumption to all or
substantially all of the business of Seller, where Seller in any of the
foregoing cases is not the surviving entity, which corporation or other
entity shall execute an agreement of assumption to perform every obligation
of Seller under this Agreement, shall be the successor to Seller hereunder
without the execution or filing of any document or any further act by any
of the parties to this Agreement; provided that (x) Servicer shall have
delivered to Trustee an Officer's Certificate and an Opinion of Counsel
each stating that such merger, conversion, consolidation or succession and
such agreement of assumption comply with this Section, and (y) Servicer
shall have delivered to 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 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
fully preserve and protect such interest. Seller shall promptly inform
Trustee and each Rating Agency of any such merger, conversion,
consolidation or purchase and assumption, where Seller is not the surviving
entity.
SECTION 6.4. Limitation on Liability of Seller and Others. Neither
Seller 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 by Seller or any subservicer pursuant to this
Agreement or for errors in judgment; provided that this provision shall not
protect Seller 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. Seller, and any of its
directors, officers, employees or agents may rely in good faith on any
document of any kind, believed by it to be genuine and properly executed
and submitted by any Person respecting any matters arising hereunder.
Seller shall be under no obligation under this Agreement to appear in,
prosecute or defend any legal action that shall be unrelated to its
obligations under this Agreement and that in its opinion may involve it in
any expense or liability.
SECTION 6.5. Seller May Own Certificates. Seller, and any Affiliate
of Seller, 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 Seller or an Affiliate thereof, except as otherwise provided in the
definition of "Holder", "Class A Holder" and "Class B Holder" in Section
1.1. Certificates so owned by or pledged to Seller or such controlling,
controlled or commonly controlled Person shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority or distinction as among all of the Certificates,
except as otherwise provided in the definitions of "Class A Holder" and
"Class B Holder".
ARTICLE VII. SERVICER.
SECTION 7.1. Representations and Warranties of Servicer. Servicer
makes the following representations and warranties on which Trustee relies
in accepting the Receivables and the other Trust Property in trust and in
authenticating the Certificates. These representations are made as of the
Closing Date, but shall survive the sale of the Receivables and the other
Trust Property to the Trust.
(a) Organization and Good Standing. Servicer has been duly
organized and is validly existing as a national banking association in
good standing under the laws of the United States, with the power and
authority to own its properties and to conduct its business as such
properties are presently owned and such business is presently
conducted, and had at all relevant times, and shall have, the power,
authority and legal right to service the Receivables and the other
Trust Property.
<PAGE>
(b) Power and Authority. Servicer has the power, authority and
legal right to execute and deliver this Agreement and the Related
Agreements and to carry out their respective terms; and the execution,
delivery and performance of this Agreement and the Related Agreements
has been duly authorized by Servicer by all necessary corporate
action.
(c) No Consent Required. No approval, authorization, consent,
license or other order or action of, or filing or registration with,
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement, the
Related Agreements or the consummation of the transactions
contemplated hereby or thereby.
(d) Binding Obligation. Each of this Agreement and the Related
Agreements constitutes a legal, valid and binding obligation of
Servicer, enforceable against Servicer in accordance with its
respective terms, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation and other similar laws affecting enforcement of the rights
of creditors of banks generally and to equitable limitations on the
availability of specific remedies.
(e) No Violation. The execution, delivery and performance by
Servicer of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby will
not conflict with, result in any material breach of any of the terms
and provisions of, constitute (with or without notice or lapse of
time) a material default under, or result in the creation or
disposition of any Lien upon any of its material properties pursuant
to the terms of, (i) the articles of association or bylaws of
Servicer, (ii) any material indenture, contract, lease, mortgage, deed
of trust or other instrument or agreement to which Servicer is a party
or by which Servicer is bound, or (iii) any law, order, rule or
regulation applicable to Servicer of any federal or state regulatory
body, any court, administrative agency, or other governmental
instrumentality having jurisdiction over Servicer.
(f) No Proceedings. There are no proceedings or investigations
pending, or, to Servicer's knowledge, threatened, before any court,
regulatory body, administrative agency, or tribunal or other
governmental instrumentality having jurisdiction over 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 might
materially and adversely affect the performance by Servicer of its
obligations under, or the validity or enforceability of, this
Agreement or the Certificates, or (iv) that may materially and
adversely affect the federal or state income, excise, franchise or
similar tax attributes of the Certificates.
<PAGE>
SECTION 7.2. Liability of Servicer; Indemnities. (a) Servicer shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by Servicer under this Agreement and shall have no
other obligations or liabilities hereunder.
(b) Subject to Section 11.4, Servicer shall indemnify, defend and
hold harmless Trustee, its directors, officers, employees and agents, the
Trust, and the Holders from and against any and all costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel and expenses of litigation, arising out of or resulting
from the use, ownership, or operation by Servicer or any Affiliate thereof
of any Financed Vehicle.
(c) Subject to Section 11.4, Servicer shall indemnify, defend and
hold harmless Trustee, Seller, their respective directors, officers,
employees and agents, the Trust and the Holders from and against any taxes
that may at any time be asserted against Trustee, Seller, the Trust or the
Holders with respect to the transactions contemplated hereby, including any
sales, gross receipts, general corporation, tangible or intangible personal
property, privilege, or license taxes (but not including any taxes asserted
with respect to, and as of the date of, the sale, transfer and assignment
of the Trust Property to the Trust or the issuance and original sale of the
Certificates, or asserted with respect to distributions made hereunder to
Holders, ownership of the Receivables or other Trust Property, federal or
other income taxes, including franchise taxes measured by net income,
arising out of distributions on the Certificates or any other transactions
contemplated by this Agreement or transfer taxes arising in connection with
transfers of the Certificates) and reasonable costs and expenses in
defending against the same. The exclusion of any tax from this indemnity is
not intended to obligate Trustee to pay such tax if Trustee would not
otherwise be required to do so.
(d) Subject to Section 11.4, Servicer shall indemnify, defend and
hold harmless the Trust, Seller, their respective directors, officers,
employees and agents, Trustee and the Holders from and against any and all
costs, expenses, losses, claims, damages, and liabilities, to the extent
that such cost, expense, loss, claim, damage, or liability arose out of, or
was imposed upon, or incurred by, the Trust, Seller, Trustee or the Holders
as a result of the willful misfeasance, negligence or bad faith of Servicer
(or a Person to whom any duties were delegated pursuant to Section 3.1) in
the performance of its duties under this Agreement.
(e) Indemnification under this Section shall include reasonable fees
and expenses of counsel and expenses of litigation. The indemnity
obligations of Servicer hereunder shall survive any termination of Servicer
pursuant to Section 8.1, but only with respect to obligations arising prior
thereto, and any payment of the amount owing under, or the Purchase Amount
with respect to, any Receivable. If Servicer shall have made any indemnity
payments pursuant to this Section 7.2 and Trustee thereafter collects any
of such amounts from others, Trustee shall immediately upon receipt thereof
repay such amounts to Servicer, without interest.
<PAGE>
(f) Notwithstanding the foregoing provisions of this Section,
Servicer shall have no obligation to indemnify, defend or hold harmless
Trustee (in its individual capacity) or its directors, officers, employees
or agents with respect to any matter, to the extent that such matter (i) is
due to the willful misfeasance, negligence or bad faith of Trustee or
reckless disregard of Trustee's obligations and duties hereunder; (ii)
arises from Trustee's breach of any of its representations or warranties
set forth in Section 9.14; or (iii) shall arise out of, or be incurred in
connection with, the acceptance or performance by Trustee of its duties as
successor Servicer hereunder (and, in the case of this clause (iii), was
not caused by any act or omission of Servicer).
SECTION 7.3. Merger or Consolidation of Servicer. Any corporation or
other entity (a) into which Servicer may be merged or consolidated, (b)
that may result from any merger, conversion, or consolidation to which
Servicer is a party, (c)that may succeed by purchase and assumption to all
or substantially all of the business of Servicer or (d) 50% of the voting
stock of which is owned directly or indirectly by Norwest Corporation,
where, in the case of clauses (a), (b) and (c), Servicer is not the
surviving entity, which corporation or other entity in any of the foregoing
cases shall execute an agreement of assumption to perform every obligation
of Servicer under this Agreement, shall be the successor to Servicer under
this Agreement without any further act on the part of any of the parties to
this Agreement; provided that (x) Servicer shall have delivered to Trustee
an Officer's Certificate and an Opinion of Counsel each stating that such
merger, conversion, consolidation or succession and such agreement of
assumption comply with this Section, and (y) Servicer shall have delivered
to 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 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 fully preserve and
protect such interest. Servicer shall promptly inform Trustee and each
Rating Agency of any such merger, conversion, consolidation or purchase and
assumption where Servicer is not the surviving entity.
SECTION 7.4. Limitation on Liability of Servicer and Others. (a)
Neither 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 by Servicer or any subservicer pursuant to
this Agreement or for errors in judgment; provided that this provision
shall not protect 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. Except as provided in this
Agreement, Servicer shall be under no obligation to appear in, prosecute or
defend any legal action that shall not be incidental to its duties to
service the Receivables in accordance with this Agreement and that in its
opinion may cause it to incur any expense or liability; provided that
Servicer may undertake, at its expense, any reasonable action that it may
deem necessary or desirable in respect of this Agreement and the rights and
duties of the parties to this Agreement and the interests of the Holders
under this Agreement.
(b) Servicer and any director or officer or employee or agent of
Servicer may rely in good faith on any document of any kind, believed by it
to be genuine and properly executed and submitted by any Person respecting
any matters arising hereunder.
SECTION 7.5. Servicer Not to Resign. Servicer shall not resign from
its obligations and duties under this Agreement except upon a determination
that the performance of its duties is no longer permissible under
applicable law. Any such determination permitting the resignation of
Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered to Trustee. No such resignation shall become effective until
Trustee or a successor Servicer shall have assumed the responsibilities and
obligations of Servicer in accordance with Section 8.2.
SECTION 7.6. Servicer May Own Certificates. Servicer, and any
Affiliate of Servicer, 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 Servicer or an Affiliate thereof, except as otherwise
provided in the definition of "Holder", "Class A Holder" and "Class B
Holder" in Section 1.1. Certificates so owned by or pledged to Servicer or
such Affiliate shall have an equal and proportionate benefit under the
provisions of this Agreement, without preference, priority or distinction
as among all of the Certificates, except as otherwise provided in the
definitions of "Class A Holder" and "Class B Holder".
ARTICLE VIII. SERVICING TERMINATION.
SECTION 8.1. Servicer Termination Events. (a) Any one of the
following events shall constitute a "Servicer Termination Event":
(i) any failure by Servicer to deliver to Trustee a Servicer's
Report for any Collection Period, which failure shall continue beyond
the related Deposit Date;
(ii) any failure by Servicer (or, for so long as Servicer is an
Affiliate of Seller, Seller) to deliver to any Account or the Reserve
Account any payment or deposit required to be so delivered or paid
under the terms of the Certificates and this Agreement, or to direct
Trustee to make any required distribution from any Account or the
Reserve Account, which failure shall continue unremedied for a period
of five Business Days after written notice is received from the
Trustee by Servicer or after discovery of such failure by Servicer
(or, in the case of a payment or deposit to be made no later than a
Deposit Date immediately preceding a Distribution Date, the failure to
make such payment or deposit by such Distribution Date);
(iii) any failure on the part of Servicer (or, for so long as
Servicer is an Affiliate of Seller, Seller) duly to observe or to
perform in any material respect any other covenants or agreements set
forth in the Certificates or in this Agreement, which failure shall
(A) materially and adversely affect the rights of Holders (which
determination shall be made without regard to whether funds are
available to the Holders pursuant to the Reserve Account) and (B)
continue unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied,
shall have been given (1) to Servicer (or, for so long as Servicer is
an affiliate of Seller, Seller) by Trustee, or (2) to Trustee and
Servicer by the Holders of Certificates representing not less than 25%
of the outstanding principal amount of the Certificates (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 Servicer delivers an Officers'
Certificate to Trustee to such effect and to the effect that Servicer
has commenced or will promptly commence, and will diligently pursue,
all reasonable efforts to remedy such default);
(iv) the entry of a decree or order by a court or agency or
supervisory authority of competent jurisdiction for the appointment of
a conservator, receiver, liquidator or trustee for Servicer in any
bankruptcy, receivership, conservatorship, insolvency or similar
proceedings, or for the winding up or liquidation of its affairs, and
any such decree or order continues unstayed and in effect for a period
of 60 consecutive days; or
(v) the consent by Servicer to the appointment of a
conservator, receiver, liquidator or trustee in any bankruptcy,
receivership, conservatorship, insolvency or similar proceedings of or
relating to Servicer or relating to substantially all of its property,
the admission in writing by Servicer of its inability to pay its debts
generally as they become due, the filing by Servicer of a petition to
take advantage of any applicable bankruptcy, receivership,
conservatorship, insolvency or similar statute, the making by Servicer
of an assignment for the benefit of its creditors or the voluntary
suspension by Servicer of payment of its obligations.
Upon the occurrence of any Servicer Termination Event, and so long as a
Servicer Termination Event shall not have been remedied, either Trustee, or
the Majority Holders, by notice then given in writing to Servicer, may
terminate all of the rights and obligations of Servicer under this
Agreement. On or after the receipt by Servicer of such written notice, all
authority and power of Servicer under this Agreement, whether with respect
to the Certificates or the Trust Property or otherwise, shall pass to and
be vested in Trustee pursuant to this Section 8.1; and thereupon Trustee
shall be authorized and empowered to execute and deliver, on behalf of
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 Receivable Files or the
Physical Damage Insurance Policies, the certificates of title to the
Financed Vehicles, or otherwise. Servicer shall cooperate with Trustee or
any successor Servicer in effecting the termination of its responsibilities
and rights as Servicer under this Agreement, including the transfer to
Trustee or any successor Servicer for administration of all cash amounts
that are at the time held by Servicer for deposit, shall have been
deposited by Servicer in the Collection Account, or thereafter shall be
received with respect to a Receivable, all Receivable Files and all
information or documents that Trustee or such successor Servicer may
require. In addition, Servicer shall transfer its electronic records
relating to the Receivables to the successor Servicer in such electronic
form as the successor Servicer may reasonably request. All reasonable
out-of-pocket costs and expenses incurred by the successor Servicer in
connection with the transfer of servicing shall be paid by the outgoing
Servicer upon presentation of reasonable documentation of such costs and
expenses.
(b) If any of the foregoing Servicer Termination Events occur,
Trustee shall have no obligation to notify Holders or any other Person of
such occurrence prior to the continuance of such event through the end of
any cure period specified in Section 8.1(a).
SECTION 8.2. Trustee to Act; Appointment of Successor Servicer. Upon
Servicer's resignation pursuant to Section 7.5 or upon Servicer's receipt
of notice of termination as Servicer pursuant to Section 8.1, Trustee shall
be the successor in all respects to Servicer in its capacity as Servicer
under this Agreement, and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on Servicer by the terms and
provisions of this Agreement, except that Trustee, when acting as successor
Servicer, shall not be obligated to purchase Receivables pursuant to
Section 3.7 unless the obligation to repurchase arose after the date of the
notice of termination given to Servicer pursuant to Section 8.1, and
Trustee shall not be liable for any acts or omissions of the terminated
Servicer or for any breach by such Servicer of any of its representations
or warranties contained herein or in any related documents or agreements.
As compensation therefor, Trustee shall be entitled to the same Servicing
Fees (whether payable out of the Collection Account or otherwise) and
Supplemental Servicing Fees as Servicer would have been entitled to under
this Agreement if no such notice of termination or resignation had been
given. Notwithstanding the above, Trustee may appoint, or petition a court
of competent jurisdiction to appoint, an Eligible Servicer as the successor
to the terminated Servicer under this Agreement; provided that Trustee
shall continue to be the successor to Servicer until another successor
Servicer shall have assumed the responsibilities and obligations of
Servicer. In connection with such appointment, Trustee may make such
arrangements for the compensation of such successor Servicer out of
payments on Receivables as it and such successor shall agree, which shall
in no event be greater than the Servicing Fees and Supplemental Servicing
Fees payable to Norwest Bank as Servicer hereunder. Trustee and such
successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. No Servicer shall resign or
be relieved of its duties under this Agreement until a newly appointed
Servicer shall have assumed the responsibilities and obligations of the
terminated Servicer under this Agreement.
SECTION 8.3. Effect of Servicing Transfer. (a) After the transfer of
servicing hereunder, Trustee or successor Servicer shall notify Obligors to
make directly to the successor Servicer payments that are due under the
Receivables after the effective date of such transfer.
(b) Except as provided in Sections 7.2 and 9.8 after the transfer of
servicing hereunder, the outgoing Servicer shall have no further
obligations with respect to the management, administration, servicing,
custody or collection of the Receivables and the successor Servicer shall
have all of such obligations, except that the outgoing Servicer will
transmit or cause to be transmitted directly to the successor Servicer for
its own account, promptly on receipt and in the same form in which
received, any amounts held by the outgoing Servicer (properly endorsed
where required for the successor Servicer to collect any such items)
received as payments upon or otherwise in connection with the Receivables
and the outgoing Servicer shall continue to cooperate with the successor
Servicer by providing information and in the enforcement of the Dealer
Agreements and the Physical Damage Insurance Policies.
(c) A transfer of servicing hereunder shall not affect the rights and
duties of the parties hereunder (including the obligations and indemnities
of Seller pursuant to Sections 2.4, 3.3, 6.1 and 6.2 or, with respect to
obligations and indemnities arising prior to, or concurrently with, a
transfer of servicing hereunder, the outgoing Servicer pursuant to Section
3.8, 7.1 or 7.2) other than those relating to the management,
administration, servicing, custody or collection of the Receivables and the
other Trust Property. The successor Servicer shall, upon its appointment
pursuant to Section 8.2 and as part of its duties and responsibilities
under this Agreement, promptly take all action it deems necessary or
appropriate so that the outgoing Servicer (in whatever capacity) is paid or
reimbursed all amounts it is entitled to receive under this Agreement on
each Distribution Date subsequent to the date on which it is terminated as
Servicer hereunder. Without limiting the generality of the foregoing, the
outgoing Servicer will be entitled to receive all accrued and unpaid
Servicing Fees and Supplemental Servicing Fees through and including, and
to be reimbursed for all Outstanding Advances as of, the effective date of
the termination of the outgoing Servicer.
(d) Any successor Servicer shall provide Seller with access to the
Receivable Files and to the successor Servicer's records (whether written
or automated) with respect to the Receivable Files. Such access shall be
afforded without charge, but only upon reasonable request and during normal
business hours at the offices of the successor Servicer. Nothing in this
Section shall affect the obligation of the successor Servicer to observe
any applicable law prohibiting disclosure of information regarding the
Obligors, and the failure of Servicer to provide access to information as a
result of such obligation shall not constitute a breach of this Section.
SECTION 8.4. Notification to Holders. Upon any notice of a Servicer
Termination Event or upon any termination of, or appointment of a successor
to, Servicer pursuant to this Article VIII, Trustee shall give prompt
written notice thereof to Holders at their respective addresses of record,
and to each Rating Agency.
SECTION 8.5. Waiver of Past Servicer Termination Events. The Majority
Holders may, on behalf of all Holders of Certificates, waive any Servicer
Termination Event hereunder and its consequences, except an event resulting
from the failure to make any required deposits or payments to the
Collection Account in accordance with this Agreement. Upon any such waiver
of a past Servicer Termination Event, such event shall cease to exist and
shall be deemed to have been remedied for every purpose of this Agreement.
No such waiver shall extend to any subsequent or other event or impair any
right arising therefrom, except to the extent expressly so waived.
SECTION 8.6. Transfer of Accounts. Notwithstanding the provisions of
Section 8.1, if any of the Accounts or the Reserve Account is maintained
with Servicer or an Affiliate of Servicer and a Servicer Termination Event
shall occur and be continuing, Servicer shall promptly, and in any event
within five Business Days, give notice to Trustee of such Servicer
Termination Event, and Trustee, within ____ days after the receipt of such
notice, shall establish new Eligible Deposit Accounts conforming with the
requirements of this Agreement and promptly shall transfer all funds in any
such Accounts or the Reserve Account to such new Eligible Deposit Accounts.
ARTICLE IX. TRUSTEE.
SECTION 9.1. Acceptance by Trustee. Trustee hereby acknowledges its
acceptance of all right, title and interest in and to the Receivables and
the other Trust Property conveyed by Seller pursuant to this Agreement and
hereby declares that Trustee holds and shall hold such right, title and
interest, upon the trust set forth in this Agreement.
SECTION 9.2. Duties of Trustee. (a) Trustee, both prior to and after
the curing of a Servicer Termination Event, 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 Trustee.
If a Servicer Termination Event, of which an Authorized Officer of Trustee
has actual knowledge, shall have occurred and shall not have been cured
(the appointment of a successor Servicer (including Trustee) to constitute
a cure for the purposes of this Article), 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 that if Trustee assumes the duties of Servicer pursuant to Section
8.2, Trustee in performing such duties shall use the degree of skill and
attention required by Section 3.1.
(b) Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders, or other instruments
furnished to 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
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own bad faith; provided that:
(i) Prior to the occurrence of a Servicer Termination Event,
and after the curing of all such Servicer Termination Events that may
have occurred, the duties and obligations of Trustee shall be
determined solely by the express provisions of this Agreement, 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 Trustee, the permissible right of 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
Trustee, or manifest error, 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 Trustee and conforming to the requirements of
this Agreement;
(ii) Trustee shall not be personally liable for an error of
judgment made in good faith by an officer of Trustee, unless it shall
be proved that Trustee shall have been negligent in performing its
duties in accordance with the terms of this Agreement; and
(iii) Trustee shall not be personally liable with respect to
any action taken, suffered, or omitted to be taken in good faith in
accordance with the direction of the Majority Holders, as set forth in
Section 8.1, relating to the time, method and place of conducting any
proceeding or any remedy available to Trustee, or exercising any trust
or power conferred upon Trustee, under this Agreement.
(d) Except for the willful misfeasance, bad faith or negligence of
Trustee, Trustee 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 indemnity 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 Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of
Servicer under this Agreement except during such time, if any, as Trustee
shall be the successor to, and be vested with the rights, duties, powers
and privileges of, Servicer in accordance with the terms of this Agreement.
(e) Except for actions expressly authorized by this Agreement,
Trustee shall take no action reasonably likely to impair the security
interests created or existing under any Receivable or Financed Vehicle or
to impair the value of any Receivable or Financed Vehicle.
(f) Trustee shall have no power to vary the corpus of the Trust
including (i) accepting any substitute obligation for a Receivable
initially assigned to Trustee under this Agreement, (ii) adding any other
investment, obligation or security, or (iii) withdrawing any Receivable,
except for a withdrawal permitted under this Agreement.
SECTION 9.3. Trustee's Certificate. As soon as practicable after each
Deposit Date on which Receivables shall be assigned to Seller pursuant to
Section 2.4 or 10.2 or to Servicer pursuant to Section 3.7, as applicable,
Trustee shall execute a certificate, prepared by Servicer, including its
date and the date of the Agreement, and accompanied by a copy of Servicer's
Report for the related Collection Period. Trustee's certificate shall
operate, as of such Deposit Date, as an assignment pursuant to Section 9.4.
SECTION 9.4. Trustee's Assignment of Purchased Receivables. With
respect to all Receivables repurchased by Seller pursuant to Section 2.4 or
by Seller or Servicer pursuant to Section 10.2, or purchased by Servicer
pursuant to Section 3.7, Trustee shall assign, without recourse,
representation or warranty, to Seller or Servicer, as the case may be, all
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 Seller or 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,
Trustee shall, at the expense of Seller or Servicer, as the case may be,
take such steps as Seller or Servicer, as the case may be, deems necessary
to enforce the Receivable, including bringing suit in Trustee's name or the
names of the Holders.
SECTION 9.5. Certain Matters Affecting Trustee. Except as otherwise
provided in Section 9.2:
(a) Trustee may conclusively 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 have been signed or presented by the proper party
or parties.
(b) Trustee may consult with counsel knowledgeable in the area
and any Opinion of 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
written Opinion of Counsel a copy of which shall be provided to Seller
and Servicer.
(c) 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
Holders pursuant to the provisions of this Agreement, unless such
Holders shall have offered to Trustee security or indemnity
satisfactory to Trustee against the costs, expenses, and liabilities
that may be incurred therein or thereby. Nothing contained in this
Agreement, however, shall relieve Trustee of the obligations, upon the
occurrence of a Servicer Termination Event that is not timely cured or
waived pursuant to Section 8.5, to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of
care and skill in their exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(d) Trustee shall not be personally 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.
(e) Prior to the occurrence of a Servicer Termination Event and
after the curing of all Servicer Termination Events that may have
occurred, 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 the Majority Holders; provided
that if the payment within a reasonable time to Trustee of the costs,
expenses, or liabilities likely to be incurred by it in the making of
an investigation requested by the Holders is, in the opinion of
Trustee, not reasonably assured to Trustee by the security afforded to
it by the terms of this Agreement, Trustee may require 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 Servicer, or, if paid by Trustee, shall
be reimbursed by Servicer upon demand. Nothing in this clause (e)
shall affect the obligation of Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors; provided
further, that Trustee shall be entitled to make such further inquiry
or investigation into such facts or matter as it may reasonably see
fit, and if Trustee shall determine to make such further inquiry or
investigation it shall be entitled to examine the books and records of
Servicer or Seller, personally or by agent or attorney, at the sole
cost and expense of Servicer or Seller, as the case may be.
(f) 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, attorney, nominees or custodians
except for (i) acts of ____________ or any successor agent carrying
out Trustee's obligations with respect to the preparation of Servicer
Reports and (ii) acts of any other agent, attorney, nominee or
custodian if (A) Trustee has not acted with due care in their
appointment or (B) Seller has not consented to their appointment.
(g) 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 Seller with its
representations and warranties or for any other purpose.
(h) Trustee shall not be construed to be a guarantor of the
performance of Servicer, nor shall Trustee have any duty to monitor
the performance of Servicer other than as expressly stated in this
Agreement.
(i) Trustee shall not be required to take notice or be deemed
to have notice of any Servicer Termination Event hereunder, except a
Servicer Termination Event under Section 8.1(a)(i) or (ii), unless
Trustee shall be specifically notified in writing of such Servicer
Termination Event by Servicer, Seller or any Certificateholder. All
notices or other instruments required by this Agreement to be
delivered to Trustee shall be delivered at the Corporate Trust Office
and, in the absence of such notice so delivered, Trustee may
conclusively assume there is no Servicer Termination Event except as
aforesaid.
SECTION 9.6. Trustee Not Liable for Certificates or Receivables.
Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates (other than the certificate of
authentication on the Certificates). Except as expressly provided herein,
Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than 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
Seller and Servicer of this Agreement or of any supplements hereto or
instruments of further assurance, or for the sufficiency of the Trust
Property hereunder, and 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 Seller or Servicer under this Agreement except as
herein set forth; but Trustee may require Seller or Servicer to provide
full information and advice as to the performance of the aforesaid
covenants, condition and agreements. Trustee (solely in its capacity as
such) shall have no obligation to perform any of the duties of Seller or
Servicer, except as explicitly set forth in this Agreement. Trustee shall
have no liability in connection with compliance of Servicer or Seller with
statutory or regulatory requirements to the Receivables. 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 any assignment
of the Receivables to the Trust or Trustee. 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
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 Holders under this Agreement, the existence, condition, location, and
ownership of any Financed Vehicle, the existence and enforceability of the
Insurance Policies, 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 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 Trustee's receipt of notice or other discovery
of any noncompliance therewith or any breach thereof, any investment of
monies by Servicer or any loss resulting therefrom (it being understood
that Trustee shall remain responsible for any Trust Property that it may
hold), the acts or omissions of Seller, Servicer, or any Obligor, any
action of Servicer taken in the name of Trustee, or any action by Trustee
taken at the instruction, of Servicer (provided that such instruction is
not in express violation of the terms and provisions of this Agreement);
provided that the foregoing shall not relieve Trustee of its obligation to
perform its duties under this Agreement. Except with respect to a claim
based on the failure of Trustee to perform its duties under this Agreement
(whether in its capacity as Trustee or as successor Servicer) or based on
Trustee's willful misconduct, negligence, or bad faith, or based on
Trustee's breach of a representation and warranty contained in Section
9.14, no recourse shall be had to 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 Trustee in its individual capacity; Trustee shall not have any
personal obligation, liability, or duty whatsoever to any Holder or any
other Person with respect to any such claim. Trustee shall not be
accountable for the use or application by Seller of the proceeds of such
Certificates, or for the use or application of any funds paid to 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 Trustee). Trustee shall have no liability for any losses
from the investment or reinvestment in Eligible Investments made in
accordance with Section 4.1.
SECTION 9.7. Trustee May Own Certificates. 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 9.8. Trustee's Fees and Expenses. Servicer agrees to pay to
Trustee, and Trustee shall be entitled to, reasonable compensation (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 Servicer shall pay or reimburse Trustee upon its request for
all reasonable expenses (including expenses incurred in connection with
notices or other communications to Holders), 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 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. Servicer's covenant to pay the expenses,
disbursements and advances provided for in the preceding sentence shall
survive the termination of this Agreement.
Servicer shall indemnify and hold harmless Trustee and its directors,
officers, employees, and agents from and against any loss, liability,
expense, damage or injury suffered or sustained by reason of any acts,
omissions or alleged acts or omissions arising out of the activities of
Trustee pursuant to this Agreement, including any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred
in connection with the defense of any actual or threatened action,
proceeding or claim; provided, that Servicer shall not indemnify Trustee or
its directors, officers, employees or agents for any loss, liability,
expense, damage or injury arising from Trustee's negligence, willful
misconduct, or bad faith. The indemnity provided herein shall survive the
termination of this Agreement and the resignation and removal of the
Trustee. If Servicer shall have made any indemnity payments pursuant to
this Section 9.8 and Trustee thereafter collects any of such amounts from
others, Trustee shall immediately upon receipt thereof repay such amounts
to Servicer, without interest.
SECTION 9.9. Eligibility Requirements for Trustee. Trustee shall at
all times be organized and doing business under the banking laws of the
United States or of any state thereof, shall be authorized under such laws
to exercise corporate trust powers, shall have a consolidated net worth of
at least $50,000,000 and shall be subject to supervision or examination by
federal or state banking authorities. If Trustee 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 9.9, the consolidated net worth of such Trustee 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 Trustee
shall cease to be eligible in accordance with the provisions of this
Section 9.9, Trustee shall resign immediately in the manner and with the
effect specified in Section 9.10.
SECTION 9.10. Resignation or Removal of Trustee. (a) Trustee may at
any time resign and be discharged from the trusts hereby created by giving
30 days' prior written notice thereof to Servicer. Upon receiving such
notice of resignation, 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 Trustee shall cease to be eligible in accordance
with the provisions of Section 9.9 and shall fail to resign after written
request therefor by Servicer, or if at any time Trustee shall be legally
unable to act, or shall be adjudged bankrupt or insolvent, or a receiver,
conservator or liquidator of Trustee or of its property shall be appointed,
or any public officer shall take charge or control of Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then Servicer may remove Trustee. If Trustee is removed under
the authority of the immediately preceding sentence, Servicer shall
promptly appoint a successor trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to Trustee so removed, the
successor Trustee, the Holders at their respective addresses of record and
the Rating Agency.
(c) Any resignation or removal of Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.10
shall not become effective until acceptance of appointment by the successor
Trustee pursuant to Section 9.11.
(d) The respective obligations of Seller and Servicer described in
this Agreement shall survive the removal or resignation of Trustee as
provided in this Agreement.
SECTION 9.11. Successor Trustee. (a) Any successor Trustee appointed
pursuant to Section 9.10 shall execute, acknowledge, and deliver to
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 Servicer and
the predecessor Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Trustee all such rights, powers,
duties, and obligations.
(b) No successor Trustee shall accept appointment as provided in this
Section 9.11 unless at the time of such acceptance such successor Trustee
shall be eligible pursuant to Section 9.9.
(c) Upon acceptance of appointment by a successor Trustee pursuant to
this Section 9.11, Servicer shall mail notice of such acceptance by the
successor Trustee under this Agreement to all Holders at their respective
addresses of record and to the Rating Agency. If Servicer shall fail to
mail such notice within 10 days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be
mailed at the expense of Servicer.
(d) No predecessor Trustee shall be liable for the acts or omissions
of any successor Trustee.
SECTION 9.12. Merger or Consolidation of Trustee. Any corporation or
banking association which is eligible to be a successor Trustee under
Section 9.9 (a)into which Trustee may be merged or consolidated, (b) that
may result from any merger, conversion or consolidation to which Trustee
shall be a party, or (c) that may succeed by purchase and assumption to the
business of Trustee, where Trustee is not the surviving entity, which
corporation or banking association executes an agreement of assumption to
perform every obligation of Trustee under this Agreement, shall be the
successor of 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. Trustee shall promptly
notify Servicer and each Rating Agency of any such merger, conversion,
consolidation or purchase and assumption where Trustee is not the surviving
entity.
SECTION 9.13. 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, Servicer and Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved
by Trustee to act as co-trustee, jointly with 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 Holders, such title to
the Trust, or any part thereof, and, subject to the other provisions of
this Section 9.13, such powers, duties, obligations, rights, and trusts as
Servicer and Trustee may consider necessary or desirable. If 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 a Servicer Termination Event shall have
occurred and be continuing, 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 9.9 and no notice to Holders of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 9.11.
Notwithstanding the appointment of a co-trustee or separate trustee
hereunder, 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 Trustee shall be conferred upon and exercised or
performed by 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 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 Servicer under this
Agreement), 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 Trustee.
(ii) No trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement.
(iii) Servicer and 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 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 Trustee or separately, as may be provided
therein, subject to all the provisions of this Agreement, specifically
including every provision of this Agreement relating to the conduct of,
affecting the liability of, or affording protection to, Trustee. Each such
instrument shall be filed with Trustee and a copy thereof given to
Servicer.
(d) Any separate trustee or co-trustee may, at any time, appoint
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 Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee. Trustee shall promptly notify
Servicer and each Rating Agency of any appointment made pursuant to this
Section 9.13.
SECTION 9.14. Representations and Warranties of Trustee. Trustee makes
the following representations and warranties on which Seller, Servicer, and
Holders may rely:
(a) Organization and Good Standing. Trustee is a banking
corporation duly organized, validly existing, and in good standing
under the laws of ______________.
(b) Power and Authority. Trustee has full power, authority and
legal right to execute, deliver, and perform this Agreement and the
Related Agreements and has taken all necessary action to authorize the
execution, delivery, and performance by it of this Agreement and the
Related Agreements to which it is a party.
(c) Enforceability. This Agreement and the Related Agreements to
which it is a party have been duly executed and delivered by Trustee
and this Agreement and such Related Agreements constitute legal, valid
and binding obligations of Trustee enforceable against Trustee in
accordance with their respective 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 generally and except as such
enforceability may be limited by equitable limitations on the
availability of specific remedies.
(d) No Consent Required. No approval, authorization, consent,
license or other order or action of, or filing or registration with,
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance by Trustee of this
Agreement, the Related Agreements or the consummation of the
transactions contemplated hereby or thereby.
(e) No Violation. The execution, delivery and performance by
Trustee of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby will
not conflict with, result in any breach of the terms and provisions
of, constitute (with or without notice or lapse of time) a default
under, or result in the creation or disposition of any Lien upon any
of its properties pursuant to the terms of, (i) the articles of
association or by-laws of Trustee, (ii) any indenture, contract,
lease, mortgage, deed of trust or other instrument or agreement to
which Trustee is a party or by which Trustee is bound or to which any
of its properties are subject, or (iii) any law, order, rule or
regulation applicable to Trustee or its properties of any federal or
state regulatory body, any court, administrative agency or other
governmental instrumentality having jurisdiction over Trustee or any
of its properties.
SECTION 9.15. Reports by Trustee. Trustee shall provide to any Holder
or Certificate Owner who so requests in writing (addressed to the Corporate
Trust Office) a copy of any Servicer's Report, the annual statement
described in Section 3.10, and the annual accountant's examination
described in Section 3.11. Trustee may require any Holder or Certificate
Owner requesting such report to pay a reasonable sum to cover the cost of
Trustee's complying with such request.
SECTION 9.16. Tax Returns. Servicer shall prepare or shall cause to be
prepared any tax returns on Form 1041 (or other applicable form) required
to be filed by the Trust and shall remit such returns to Trustee for
signature at least five days before such returns are due to be filed.
Trustee, upon request, will furnish Servicer with all such information
actually known to an Authorized Officer of Trustee as may be reasonably
required in connection with the preparation of all tax returns of the
Trust, and shall, upon request, execute such returns. Servicer shall
prepare the tax returns of the Trust in accordance with the Code and any
regulations (including, to the extent applicable by their terms, proposed
regulations) thereunder. Notwithstanding the foregoing, it is understood
and agreed that Trustee has agreed to act as Servicer's agent for the
purpose of preparing and filing any tax returns required to be filed by the
Trust, and so long as Trustee timely prepares and files any such tax
returns, Servicer shall not be required to do so. Any failure by Trustee
to prepare and file any such tax returns, or inaccuracy in any tax return
so prepared and filed, shall (so long as Servicer shall also not timely
prepare and file such tax return or correct any such inaccuracy) have the
same consequences with respect to the Servicer as would such a failure by
Servicer or inaccuracy in a tax return prepared and filed by Servicer.
SECTION 9.17. 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 Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by 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 Trustee, its agents and counsel, be
for the ratable benefit of the Holders in respect of which such judgment
has been obtained.
ARTICLE X. TERMINATION.
SECTION 10.1. Termination of the Trust. (a) The Trust, and the
respective obligations and responsibilities of Seller, Servicer and Trustee
hereunder, shall terminate (except as otherwise expressly provided herein)
upon the earliest of: (i) the Distribution Date next succeeding the
purchase by either Seller or Servicer at its respective option, pursuant to
Section 10.2, of the Receivables (other than Defaulted Receivables)
remaining in the Trust, (ii) the payment to Holders of all amounts required
to be paid to them pursuant to this Agreement or (iii) the Distribution
Date next succeeding the month which is six 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 that in no event shall the Trust created
by this Agreement continue beyond the expiration of 21 years from the death
of the last survivor of the descendants living on the date of this
Agreement of Rose Kennedy of the Commonwealth of Massachusetts. Servicer
shall promptly notify Trustee of any prospective termination pursuant to
this Section 10.1.
(b) Notice of any termination, specifying the Distribution Date upon
which the Holders may surrender the Certificates to Trustee for payment of
the final distribution and cancellation, shall be given promptly by Trustee
by letter to Holders of record 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 Trustee
therein specified. Upon presentation and surrender of the Certificates,
Trustee shall cause to be distributed to Holders amounts distributable on
such Distribution Date pursuant to Section 4.5. Amounts remaining in the
Trust after distribution, or after setting aside all funds required for
distribution, to the Holders shall be distributed to Seller.
(c) In the event that all of the Holders shall not surrender their
Certificates for cancellation within six months after the date specified in
the above-mentioned written notice, Trustee shall give a second written
notice to the remaining Holders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto.
Trustee shall after giving such notice to deliver or cause to be delivered
to Servicer the Certificate Register. If within one year after the second
notice all the Certificates shall not have been surrendered for
cancellation, Servicer may take appropriate steps, or may appoint an agent
to take appropriate steps, to contact the remaining Holders concerning
surrender of their Certificates, and the cost thereof shall be paid out of
the funds and other assets that shall remain subject to this Agreement. Any
funds remaining in the Trust after exhaustion of such remedies shall be
distributed by Trustee to Seller.
SECTION 10.2. Optional Purchase of All Receivables. If the Pool
Factor shall be .0500000 or less as of the last day of any Collection
Period, Seller and Servicer shall each have the option to purchase the
remaining Trust Property on any Distribution Date occurring in a subsequent
Collection Period. To exercise such option, Seller or Servicer, as
applicable, shall deposit the aggregate Purchase Amount for the remaining
Receivables (other than Defaulted Receivables) into the Collection Account
on the Deposit Date occurring in the month in which such repurchase is to
be effected. The payment shall be made in the manner specified in Section
4.4, and shall be distributed pursuant to Section 4.5. Upon such payment
Seller or Servicer, as applicable, shall succeed to and own all interests
in and to the Trust Property (subject to the rights of the Holders to
receive a final distribution on the related Distribution Date).
<PAGE>
ARTICLE XI. MISCELLANEOUS PROVISIONS.
SECTION 11.1. Amendment. (a) This Agreement may be amended by
Seller, Servicer and Trustee, without the consent of any of the Holders,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or modifying in any
manner the rights of the Holders; provided that such action shall not, as
evidenced by an Opinion of Counsel to Seller delivered to Trustee,
materially and adversely affect the interests of any Holder.
(b) This Agreement may be amended by Seller, Servicer and Trustee
without the consent of any of the Holders (i) to add, modify or eliminate
such provisions as may be necessary or advisable in order to enable all or
a portion of the Trust to qualify as, and to permit an election to be made
to cause all or a portion of the Trust to be treated as, a "financial asset
securitization investment trust" as described in the provisions of the
"Seven Year Balanced Budget Act of 1995," H.R. 2491, 104th Cong., 1st Sess.
(1995), or to enable all or a portion of the Trust to qualify and an
election to be made for similar treatment under such comparable subsequent
federal income tax provisions as may ultimately be enacted into law, and
(ii) in connection with any such election, to modify or eliminate existing
provisions set forth in this Agreement relating to the intended federal
income tax treatment of the Certificates and the Trust in the absence of
the election. It is a condition to any such amendment that each Rating
Agency will have notified the Seller, the Servicer and the Trustee in
writing that the amendment will not result in a reduction or withdrawal of
the rating of any outstanding Certificates with respect to which it is a
Rating Agency.
(c) This Agreement may be amended by Seller, Servicer and Trustee
without the consent of any of the Holders (i) to add, modify or eliminate
such provisions as may be necessary or advisable in order to enable (a) the
transfer to the Trust of all or any portion of the Receivables to be
derecognized under generally accepted accounting principles ("GAAP") by
Seller to the Trust or (b) the Trust to avoid becoming a member of Seller's
consolidated group under GAAP, and (ii) in connection with any such
addition, modification or elimination, without limiting the generality of
the foregoing clause (i), to cause the Receivables to be transferred by
Seller first to a bankruptcy remote affiliate and from such affiliate to
the Trust; provided, however, that it is a condition to any such amendment
that (i) Seller delivers an officer's certificate to Trustee to the effect
that such amendment meets the requirements set forth in this paragraph and
(ii) such amendment will not result in a withdrawal or reduction of the
rating of any outstanding Certificates.
(d) This Agreement may also be amended from time to time by Seller,
Servicer and Trustee, with the consent of the Majority Holders, 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 Holders; provided 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 Holders, (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 Holders, (iii) materially and
adversely affect the interests of either the Class A Holders or the Class B
Holders without the consent of the Holders of Class A Certificates or Class
B Certificates, as the case may be, evidencing not less than a majority of
the aggregate outstanding principal balance of the Class A Certificates or
the Class B Certificates, as the case may be, or (iv) cause either Rating
Agency to downgrade or withdraw its rating of the Class A Certificates or
the Class B Certificates without the consent of holders of Class A
Certificates or Class B Certificates, as the case may be, evidencing more
than 66 2/3% of the aggregate outstanding principal balance of the Class A
Certificates or the Class B Certificates, as the case may be. Promptly
after the execution of any such amendment or consent, Trustee shall furnish
written notification of the substance of such amendment or consent to each
Holder.
(e) It shall not be necessary for the consent of Holders pursuant to
this Section 11.1 to approve the particular form of any proposed amendment
or consent, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Holders shall be subject to
such reasonable requirements as Trustee may prescribe.
(f) Notice of any amendment of this Agreement shall be sent by
Servicer to each Rating Agency, at such address as such Rating Agency may
from time to time specify in writing.
(g) In connection with any amendment pursuant to this Section 11.1
Trustee shall be entitled to receive an Opinion of Counsel to the effect
that such amendment is authorized or permitted by the Agreement.
SECTION 11.2. Protection of Title to Trust. (a) Servicer shall
execute and file such financing statements and cause to be executed and
filed such continuation statements, all in such manner and in such places
as may be required by law fully to preserve, maintain and protect the
interest of the Holders and Trustee under this Agreement in the Trust
Property and in the proceeds thereof. Servicer shall deliver (or cause to
be delivered) to Trustee file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing. If Servicer fails to perform its obligations under this subsection,
Trustee may (but shall not be obligated to) do so, at the expense of
Servicer.
(b) Neither Seller nor Servicer shall change its name, identity or
corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed by Servicer in
accordance with subsection (a) misleading within the meaning of the UCC,
unless it shall have given Trustee at least 60 days' prior written notice
thereof.
(c) Seller and Servicer shall give 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. Seller and
Servicer shall at all times maintain each office from which it shall
service Receivables, and its principal executive office, within the United
States of America, other than in the States of Louisiana, Maryland or
Tennessee.
(d) 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) Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to Trustee,
Servicer's master computer records (including archives) that shall refer to
a Receivable 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 Servicer's computer systems when, and only when, the
Receivable shall be paid or shall become a Purchased Receivable.
(f) If at any time Seller, any Seller Affiliate or Servicer shall
propose to sell, grant a security interest in or otherwise transfer any
interest in motor vehicle loans and/or retail installment sales contracts
to any prospective purchaser, lender or other transferee, Seller or
Servicer, as the case may be, shall give to such prospective purchaser,
lender or other transferee computer tapes, records or print-outs (including
any restored from 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) Upon request, Servicer, at its expense, shall furnish to Trustee,
within thirty days, a list of all Receivables then held as part of the
Trust, together with a reconciliation of such list to each Schedule of
Receivables and to each of Servicer's Reports furnished pursuant to Section
3.9 indicating removal of Receivables from the Trust.
(h) Servicer shall deliver to Trustee upon the Closing Date, and upon
the execution and delivery of each amendment, if any, of this Agreement an
Opinion of Counsel to Servicer either (i) stating that, in the opinion of
such counsel, no filings or other action, other than the filings required
in the appropriate filing offices as described in such opinion, are
necessary to perfect and maintain (A) the security interest of Trustee in
the Financed Vehicles, subject to the exceptions stated therein, and (B)
the interest of Trustee in the Receivables and the proceeds thereof against
third parties, subject to the exceptions stated therein, and reciting the
details of such filings or referring to prior Opinions of Counsel in which
such details are given, or (ii) stating that, in the opinion of such
counsel, no such action shall be necessary to perfect or complete the
perfected status of such interest.
(i) Servicer shall permit Trustee and its agents, at the expense of
Trustee (except after a Servicer Termination Event, in which case such cost
will be at the expense of Servicer), at any time to inspect, audit and make
copies of and abstracts from Servicer's records regarding any Receivables
then or previously included in the Trust.
SECTION 11.3. Limitation on Rights of Holders. (a) The death or
incapacity of any Holder shall not operate to terminate this Agreement or
the Trust, or entitle the Holder'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 Holder 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 Holder be under any
liability to any third party by reason of any action taken pursuant to any
provision of this Agreement.
(c) No Holder 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 Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless, with respect to the Class A Certificates, Class A
Holders 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, Class B Holders evidencing not less than a majority of the
aggregate outstanding principal balance of the Class B Certificates, shall
have made written request upon Trustee to institute such action, suit or
proceeding in its own name as Trustee under the Agreement and shall have
offered to Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and
Trustee, for __ days after its receipt of such notice, request and offer of
indemnity satisfactory to it, 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 Holders or Class B Holders, as the case may be. For the
protection and enforcement of the provisions of this Section 11.3, each
Holder and Trustee shall be entitled to such relief as can be given either
at law or in equity.
SECTION 11.4. Litigation and Indemnities. If any suit, action,
proceeding (including any governmental or regulatory investigation), claim
or demand shall be brought or asserted against any Person in respect of
which indemnity may be sought pursuant to Sections 6.2 or 7.2, such Person
(the "Indemnified Person") shall promptly notify the person against whom
such indemnity may be sought (the "Indemnifying Person") in writing, and
the Indemnifying Person, upon request of the Indemnified Person, shall
retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others the Indemnifying Person may
designate in such proceeding and shall pay the reasonable fees and expenses
of such counsel related to such proceeding. The Indemnifying Person shall
not be liable for any settlement of any claim or proceeding effected
without its written consent, but if settled with such consent or if there
be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall,
without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Person, unless such settlement
includes an unconditional release of such Indemnified Person from all
liability on claims that are the subject matter of such proceeding.
SECTION 11.5. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations,
rights and remedies of the parties under this Agreement shall be determined
in accordance with such laws; provided that the grant of the security
interest in the Reserve Account and other property contained in Section
4.6, and the perfection, effect of perfection or non-perfection, and
priority of such security interest shall be governed by the laws of the
State of ________.
SECTION 11.6. Notices. All demands, notices, and communications under
this Agreement shall be in writing, personally delivered, or sent by
telecopier, overnight mail or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in
the case of a Seller or Servicer, to the agent for service at the address
specified in Section 11.12, or at such other address as shall be designated
by Seller or Servicer in a written notice to Trustee, (b) in the case of
Trustee, at the Corporate Trust Office, facsimile number: _____________,
(c) in the case of Moody's Investors Service, Inc., at the following
address: Moody's Investors Service, Inc., ABS Monitoring Department, 99
Church Street, New York, New York 10007, facsimile number: (212) 553-3850
and (d) in the case of Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., at the following address: Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., 25
Broadway, 20th Floor, New York, New York 10004, Attention: Asset Backed
Surveillance Department, facsimile number: (212) 208-0030. Any notice
required or permitted to be mailed to a Holder shall be given by first
class mail, postage prepaid, at the address of record of such Holder. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the Holder
shall receive such notice.
SECTION 11.7. 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.
SECTION 11.8. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 6.3 and Section 7.3, this
Agreement may not be assigned by Seller or Servicer. This Agreement may not
be assigned by Trustee except as provided by Sections 9.10 through 9.13.
SECTION 11.9. 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 Trustee pursuant to Section 5.1, each Certificate
shall be deemed fully paid.
SECTION 11.10. Intention of Parties. (a) The execution and delivery
of this Agreement shall constitute an acknowledgment by Seller and Trustee,
on behalf of the Holders, 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 Seller to
the Trust, and that the Receivables and the other Trust Property shall not
be a part of Seller's estate in the event of the insolvency, receivership,
conservatorship or the occurrence of another similar event, of, or with
respect to, Seller. In the event that such conveyance is determined to be
made as security for a loan made by the Trust or the Holders to a Seller,
the parties intend that Seller shall have granted to Trustee a security
interest in all of Seller's right, title and interest in and to the Trust
Property conveyed to the Trust pursuant to Section 2.1, 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 Seller and Trustee on behalf of the Holders 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 Internal Revenue Code
of which the Holders 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 11.11. Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.
<PAGE>
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.
NORWEST AUTO RECEIVABLES
CORPORATION, Seller and Servicer
By:________________________________________
Name:
Title:
________________ BANK,
Trustee
By:_______________________________________
Name:
Title:
In consideration of the Reserve Account being placed with it, the
undersigned Securities Intermediary acknowledges and agrees as follows, all
as of the day and year first above written (capitalized terms having the
meanings assigned thereto in the foregoing Pooling and Servicing
Agreement):
1. The Reserve Account has been established in ________ as a
"securities account" (as defined in Section ________ of the Uniform
Commercial Code in effect in the State of ________ (the "__UCC")) in the
name of the Trustee, and the Securities Intermediary shall comply solely
with entitlement orders originated by the Trustee.
2. All cash and investments of the types described in clauses (a)-(f)
of the definition of Eligible Investments shall be treated as "Financial
Assets" under Article 8 of the __UCC for purposes of the Reserve Account
(clause (g) investments, if any, being subject to our future approval).
3. The Trustee shall be the only person identified in the Securities
Intermediary's records as having a security entitlement against the
Securities Intermediary in respect of the Reserve Account, and the Trustee
shall be the only person authorized to originate entitlement orders in
respect of such security entitlement. The Securities Intermediary further
acknowledges that it has not been granted any security interest in such
security entitlement.
4. The Securities Intermediary waives and agrees not to assert, claim
or endeavor to exercise any right of set-off, banker's lien or other form
of claim with respect to the Reserve Account.
5. The foregoing acknowledgements and agreements (a) are governed by
the laws of the State of ________ and (b) may not be terminated or amended
without the Trustee's prior written consent.
________________ BANK,
in its individual capacity
By:________________________________________
Title:_____________________________________
<PAGE>
SCHEDULE A
LOCATION OF RECEIVABLE FILES
Norwest Bank
FORM OF CLASS A CERTIFICATE
---------------------------
EXHIBIT A
NORWEST AUTO TRUST 199_-_
____% ASSET BACKED CERTIFICATE, CLASS A
Evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of fixed rate simple interest retail
motor vehicle loans and/or retail installment sales contracts (the
"Receivables") secured by the new and used automobiles and light duty
trucks financed thereby (the "Financed Vehicles") and sold to the Trust by
Norwest Auto Receivables Corporation.
THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED INTEREST IN THE TRUST
AND DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF NORWEST AUTO
RECEIVABLES CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER NORWEST
BANK, NORWEST CORPORATION OR ANY OF THEIR AFFILIATES. THIS CERTIFICATE AND
THE RECEIVABLES ARE NOT DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NUMBER CUSIP _______________________
_________________
$____________________________
Original Certificate Amount
THIS CERTIFIES THAT ____________________ is the registered owner of a
______________ dollars, nonassessable, fully paid, fractional undivided
interest in Norwest Auto Trust 199_-_ (the "Trust") formed pursuant to a
Pooling and Servicing Agreement dated as of ______ __, 1996 (the
"Agreement") among Norwest Auto Receivables Corporation (the "Seller"),
Norwest Bank Minnesota, N.A. (the "Servicer") and ___________ Bank, a
____________ corporation, as trustee (the "Trustee").
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 "____%
Asset Backed Certificates, Class A" (herein called the "Class A
Certificates"). Also issued under the Agreement are Certificates designated
as "____% Asset Backed Certificates, Class B (the "Class B Certificates").
The Class A Certificates and the Class B Certificates are hereinafter
collectively called the "Certificates." This Certificate is issued under
and is subject to the terms, provisions, and conditions of the Agreement,
to which the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound. The Trust Property includes (as
more fully described in the Agreement) a pool of Receivables, certain
monies received under the Receivables after _______ __, 1996 (the "Cutoff
Date"), security interests in the Financed Vehicles, and proceeds of the
foregoing.
Subject to the terms and conditions of the Agreement (including the
availability of funds for distributions) and until the obligations created
by the Agreement shall have terminated in accordance therewith, there will
be distributed, but only from funds on deposit in the Class A Distribution
Account, on the __th day of each month or, if such __th day is not a
Business Day, the next succeeding Business Day (each such date, a
"Distribution Date"), commencing _______ __, 1996, to the Person in whose
name this Certificate is registered at the close of business on the last
day of the preceding Collection Period (the "Record Date"), such Holder's
fractional undivided interest in the amounts to be distributed to Class A
Holders pursuant to the Agreement on such Distribution Date.
Distributions on this Certificate will be made by Trustee by check
mailed to the Holder of record at its address as it appears in the
Certificate Register without the presentation or surrender of this
Certificate or the making of any notation hereon, except that with respect
to a Certificate registered in the name of a Clearing Agency or its
nominee, distributions will be made by wire transfer of immediately
available funds. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Certificate will
be made after due notice by 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 Trustee.
This Certificate does not purport to summarize the Agreement and
reference is hereby made to the Agreement for information with respect to
the rights, benefits, obligations and duties evidenced thereby.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of Trustee, by manual signature, this
Certificate shall not entitle the holder hereof to any benefit under the
Agreement or be valid for any purpose.
Each Holder, by its acceptance of a Certificate or a beneficial
interest in a Certificate, acknowledges and agrees 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 Internal Revenue Code of which the
Holders are owners, rather than as an association taxable as a corporation.
IN WITNESS WHEREOF, Trustee, on behalf of the Trust, and not in its
individual capacity, has caused this Certificate to be duly executed.
NORWEST AUTO TRUST 199_-_
By: __________________ BANK,
as Trustee
By: ________________________________
Authorized Officer
DATED:
[SEAL]
ATTEST:
_____________________________________
Authorized Officer
Trustee's Certificate of
Authentication:
This is one of the Class A Certificates referred
to in the within-mentioned Agreement.
____________________ BANK,
as Trustee
By:____________________________________
Authorized Officer
<PAGE>
FORM OF CLASS B CERTIFICATE
---------------------------
EXHIBIT B
NORWEST AUTO TRUST 1996-_
____% ASSET BACKED CERTIFICATE, CLASS B
Evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of fixed rate simple interest retail
motor vehicle loans and/or retail installment sales contracts (the
"Receivables") secured by the new and used automobiles and light duty
trucks financed thereby (the "Financed Vehicles") and sold to the Trust by
Norwest Auto Receivables Corporation.
THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED INTEREST IN THE TRUST
AND DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF NORWEST AUTO
RECEIVABLES CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER NORWEST
BANK, NORWEST CORPORATION OR ANY OF THEIR AFFILIATES. THIS CERTIFICATE AND
THE RECEIVABLES ARE NOT DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NUMBER CUSIP _____________________
_________________
$__________________________
Original Certificate Amount
THIS CERTIFIES THAT ____________________ is the registered owner of a
______________ dollars, nonassessable, fully paid, fractional undivided
interest in the Norwest Auto Trust 199_-_ (the "Trust") formed pursuant to
a Pooling and Servicing Agreement dated as of ______ __, 1996 (the
"Agreement") among Norwest Auto Receivables Corporation, a Delaware
corporation (the "Seller"), Norwest Bank Minnesota, N.A. (the "Servicer")
and ____________ Bank, a ___________ corporation, as trustee (the
"Trustee").
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 "____%
Asset Backed Certificates, Class B" (herein called the "Class B
Certificates"). Also issued under the Agreement are Certificates designated
as ____% Asset Backed Certificates, Class A (the "Class A Certificates").
The Class A Certificates and the Class B Certificates are hereinafter
collectively called the "Certificates." This Certificate is issued under
and is subject to the terms, provisions, and conditions of the Agreement,
to which the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound. The Trust Property includes (as
more fully described in the Agreement) a pool of Receivables, certain
monies received under the Receivables after _______ __, 1996 (the "Cutoff
Date"), security interests in the Financed Vehicles, and proceeds of the
foregoing. The rights of the Holder of the Class B Certificates are
subordinated to the rights of the Holders of the Class A Certificates to
the extent set forth in the Agreement.
Subject to the terms and conditions of the Agreement (including the
availability of funds for distributions and the subordination of the Class
B Certificates) and until the obligations created by the Agreement shall
have terminated in accordance therewith, there will be distributed, but
only from funds on deposit in the Class B Distribution Account, on the __th
day of each month or, if such __th day is not a Business Day, the next
succeeding Business Day (each such date, a "Distribution Date"), commencing
______ __, 1996, to the Person in whose name this Certificate is registered
at the close of business on the last day of the preceding Collection Period
(the "Record Date"), such Holder's fractional undivided interest in the
amounts to be distributed to Class B Holders pursuant to the Agreement on
such Distribution Date.
Distributions on this Certificate will be made by Trustee by check
mailed to the Holder of record at its address as it appears in the
Certificate Register without the presentation or surrender of this
Certificate or the making of any notation hereon, except that with respect
to a Certificate registered in the name of a Clearing Agency or its
nominee, distributions will be made by wire transfer of immediately
available funds. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Certificate will
be made after due notice by 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 Trustee.
This Certificate does not purport to summarize the Agreement and
reference is hereby made to the Agreement for information with respect to
the rights, benefits, obligations and duties evidenced thereby.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of Trustee, by manual signature, this
Certificate shall not entitle the holder hereof to any benefit under the
Agreement or be valid for any purpose.
Each Holder, by its acceptance of a Certificate or a beneficial
interest in a Certificate, acknowledges and agrees 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 Internal Revenue Code of which the
Holders are owners, rather than as an association taxable as a corporation.
IN WITNESS WHEREOF, Trustee, on behalf of the Trust, and not in its
individual capacity, has caused this Certificate to be duly executed.
NORWEST AUTO TRUST 199_-_
By: _________________ BANK,
as Trustee
By: ______________________________
Authorized Officer
DATED:
[SEAL]
ATTEST:
___________________________________
Authorized Officer
Trustee's Certificate of
Authentication:
This is one of the Class B Certificates referred
to in the within-mentioned Agreement.
__________________ BANK,
as Trustee
By:________________________________
Authorized Officer
EXHIBIT C
[TO COME]
Exhibit 5.1
[MAYER, BROWN & PLATT LETTERHEAD]
September 11, 1996
Norwest Auto Receivables Corporation
100 West Commons Boulevard
Suite 212
New Castle, Delaware 19720
Re: Norwest Auto Receivables Corporation Registration
Statement on Form S-3 (No. 333-7961)
-------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Norwest Auto Receivables
Corporation, a Delaware corporation (the "Company"), in connection with the
above-referenced Registration Statement (together with the exhibits and any
amendments thereto, the "Registration Statement") filed by the Company with
the Securities and Exchange Commission in connection with the registration
by the Company of Asset Backed Notes and Asset Backed Certificates (the
"Notes" and "Certificates" and each, "Securities")) to be sold from time to
time in one or more series in amounts to be determined at the time of sale
and to be set forth in one or more Supplements (each, a "Prospectus
Supplement") to the Prospectus (the "Prospectus") included in the
Registration Statement.
We are familiar with the proceedings to date in connection with the
proposed issuance and sale of the Notes and Certificates, and in order to
express our opinion hereinafter stated we have examined and relied upon the
Registration Statement and, in each case as filed with the Registration
Statement, the forms of Pooling and Servicing Agreement, Trust Agreement,
Sale and Servicing Agreement, Indenture, Notes, Certificates and
Certificate of Trust to be filed pursuant to the Delaware Business Trust
Act (the "Operative Agreements"). Terms used herein without definition have
the meanings given to such terms in the Registration Statement. We have
also examined such statutes, corporate records and other instruments as we
have deemed necessary for the purposes of this opinion.
Based on and subject to the foregoing, we are of the opinion that,
with respect to the Certificates and/or Notes of any series, when: (a) the
Registration Statement becomes effective pursuant to the provisions of the
Securities Act of 1933, as amended, (b) the amount, price, interest rate
and other principal terms of such Securities have been fixed by or pursuant
to authorization of the Board of Directors of the Seller, (c) the Operative
Documents relating to such series have each been duly completed,
authorized, executed and delivered by the parties thereto substantially in
the form filed as an exhibit to the Registration Statement reflecting the
terms established as described above, (d) in the case of any Trust that
issued Notes (i) the Certificate of Trust for the related Trust has been
duly executed by the Trustee and timely filed with the Secretary of State
of Delaware and (ii) the related Indenture has been duly qualified under
the Trust Indenture Act of 1939, as amended, (e) such Securities have been
duly executed and issued by the related Trust and authenticated by the
Owner Trustee or the Trustee, as applicable, and sold by the Seller or by
the Trust, at the direction of the Seller, as applicable, and (f) payment
of the agreed consideration for such Securities shall have been received by
the Trust, all in accordance with the terms and conditions of the related
Operative Documents and a definitive purchase, underwriting or similar
agreement with respect to such Securities and in the manner described in
the Registration Statement: (i) such Certificates will have been duly
authorized by all necessary action of the Trust and will be legally issued,
fully paid and nonassessable (except to the extent a Certificate retained
by the Seller is assessable pursuant to the Trust Agreement) and (ii) such
Notes will have been duly authorized by all necessary action of the Trust
and will be legally issued and binding obligations of the Trust and
entitled to the benefits afforded by the related Indenture.
Our opinions expressed herein are limited to the federal laws of the
United States, the laws of the State of New York and the business trust
laws of the State of Delaware.
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement and to
the use of our name therein.
Very truly yours,
/s/ Mayer, Brown & Platt
MAYER, BROWN & PLATT
PAJ:SML
EXHIBIT 8.1
[MAYER, BROWN & PLATT LETTERHEAD]
September 11, 1996
Norwest Auto Receivables Corporation
100 West Commons Boulevard
Suite 212
New Castle, Delaware 19720
RE: NORWEST AUTO TRUSTS
NORWEST AUTO RECEIVABLES CORPORATION
REGISTRATION STATEMENT ON FORM S-3 (No. 333-7961)
Ladies and Gentlemen:
We have acted as special tax counsel for Norwest Bank Minnesota,
N.A., a national banking association and Norwest Auto Receivables
Corporation (the "Seller"), in connection with the above-referenced
Registration Statement (together with the exhibits and any amendments
thereto, the "Registration Statement"), filed by the Seller with the
Securities and Exchange Commission in connection with the registration by
the Seller of Asset Backed Notes (the "Notes") and Asset Backed
Certificates (the "Certificates") to be sold from time to time in one or
more series in amounts to be determined at the time of sale and to be set
forth in one or more Supplements (each, a "Prospectus Supplement") to the
Prospectus (the "Prospectus") included in the Registration Statement.
We are familiar with the proceedings to date in connection with the
proposed issuance and sale of the Notes and Certificates and in order to
express our opinion hereinafter stated, (a) we have examined copies of the
forms of the Pooling and Servicing Agreement, Trust Agreement, Sale and
Servicing Agreement, Indenture, Notes, Certificates and Certificate of
Trust to be filed pursuant to the Delaware Business Trust Act filed as
exhibits to the Registration Statement (collectively the "Operative
Documents") and (b) we have examined such other records and documents and
such matters of law, and we have satisfied ourselves as to such matters of
fact, as we have considered relevant for purposes of this opinion.
The opinion set forth in this letter is based upon the applicable
provisions of the Internal Revenue Code of 1986, as amended, Treasury
regulations promulgated and proposed thereunder, current positions of the
Internal Revenue Service (the "IRS") contained in published Revenue Rulings
and Revenue Procedures, current administrative positions of the IRS and
existing judicial decisions. No tax rulings will be sought from the IRS
with respect to any of the matters discussed herein.
Based on the foregoing and assuming that the Operative Documents are
executed and delivered in substantially the form we have examined, we are
of the opinion that the statements set forth in the Prospectus under the
headings "Prospectus Summary -- Tax Status," "Prospectus Summary -- ERISA
Considerations," "Federal Income Tax Consequences" and "ERISA
Considerations" and in the Prospectus Supplements under the headings
"Summary of Terms -- Tax Status," "Summary of Terms -- ERISA Considerations
and "ERISA Considerations" are a fair and accurate summary of the material
federal tax consequences of the issuance and holding of the Notes and the
Certificates. There can be no assurance, however, that the tax conclusions
presented therein will not be successfully challenged by the IRS, or
significantly altered by new legislation, changes in IRS positions or
judicial decisions, any of which challenges or alterations may be applied
retroactively with respect to completed transactions.
We note that the Prospectus does not relate to a specific
transaction. Accordingly, the above-referenced description of federal
income tax consequences may, under certain circumstances, require
modification in the context of an actual transaction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the Prospectus
and Prospectus Supplement under the caption "Federal Income Tax
Consequences" and "Legal Opinions". In giving such consent, we do not
admit that we are "experts" within the meaning of the term used in the Act
or the rules and regulations of the Securities and Exchange Commission
issued thereunder, with respect to any part of the Registration Statement,
including this opinion as an exhibit or otherwise.
Very truly yours,
/s/ Mayer, Brown & Platt
MAYER, BROWN & PLATT
Exhibit 99.1
===========================================================================
SALE AND SERVICING
AGREEMENT
between
NORWEST AUTO TRUST 199_-_
as
Issuer
NORWEST AUTO RECEIVABLES CORPORATION,
as
Seller
NORWEST BANK MINNESOTA, N.A.,
as Servicer
Dated as of __________, 199__
===========================================================================
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I. DEFINITIONS.............................................. 1
SECTION 1.1. Definitions............................................ 1
SECTION 1.2. Other Interpretive Provisions.......................... 1
ARTICLE II. CONVEYANCE OF RECEIVABLES............................... 2
SECTION 2.1. Conveyance of Receivables.............................. 2
ARTICLE III. THE RECEIVABLES........................................ 3
SECTION 3.1. Representations and Warranties as to Each Receivable... 3
SECTION 3.2. Representations and Warranties as to the Receivables
in the Aggregate and Actions of Seller............ 5
SECTION 3.3. Repurchase upon Breach................................. 6
SECTION 3.4. Custodian of Receivable Files.......................... 7
ARTICLE IV. ADMINISTRATION AND SERVICING OF RECEIVABLES............. 10
SECTION 4.1. Duties of Servicer..................................... 10
SECTION 4.2. Collection of Receivable Payments...................... 11
SECTION 4.3. Realization upon Receivables........................... 12
SECTION 4.4. Physical Damage Insurance.............................. 12
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles. 13
SECTION 4.6. Covenants of Servicer.................................. 14
SECTION 4.7. Purchase by Servicer upon Breach....................... 14
SECTION 4.8. Servicing Fee.......................................... 14
SECTION 4.9. Servicer's Report...................................... 15
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.. 15
SECTION 4.11. Annual Independent Certified Public Accountants'
Report........................................... 16
SECTION 4.12. Access to Certain Documentation and Information
Regarding Receivables............................ 17
SECTION 4.13. Servicer Expenses..................................... 17
ARTICLE V. DISTRIBUTION; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND
NOTEHOLDERS........................................... 17
SECTION 5.1. Establishment of Trust Accounts........................ 17
SECTION 5.2. Collections............................................ 20
SECTION 5.3. Advances............................................... 21
SECTION 5.4. Additional Deposits.................................... 21
SECTION 5.5. Distributions.......................................... 22
SECTION 5.6. Statements to Certificateholders and Noteholders....... 23
SECTION 5.7. Net Deposits........................................... 24
ARTICLE VI. SELLER.................................................. 24
SECTION 6.1. Representations of Seller.............................. 24
SECTION 6.2. Continued Existence.................................... 26
SECTION 6.3. Liability of Seller; Indemnities....................... 26
SECTION 6.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller............................ 28
SECTION 6.5. Limitation on Liability of Seller and Others........... 28
ARTICLE VII. SERVICER............................................... 29
SECTION 7.1. Representations of Servicer............................ 29
SECTION 7.2. Indemnities of Servicer................................ 30
SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer.......................... 32
SECTION 7.4. Limitation on Liability of Servicer and Others......... 32
SECTION 7.5. Norwest Bank Not To Resign as Servicer................. 33
SECTION 7.6. Existence.............................................. 33
ARTICLE VIII. DEFAULT............................................... 33
SECTION 8.1. Servicer Termination Event............................. 33
SECTION 8.2. Appointment of Successor............................... 35
SECTION 8.3. Payment of Servicing Fee............................... 36
SECTION 8.4. Notification to Noteholders and Certificateholders..... 36
SECTION 8.5. Waiver of Past Defaults................................ 36
ARTICLE IX. TERMINATION............................................. 37
SECTION 9.1. Optional Purchase of All Receivables................... 37
ARTICLE X. ADMINISTRATIVE DUTIES OF SERVICER........................ 38
SECTION 10.1. Administrative Duties................................. 38
SECTION 10.2. Records............................................... 40
SECTION 10.3. Additional Information To Be Furnished to Issuer...... 41
ARTICLE XI. MISCELLANEOUS PROVISIONS................................ 41
SECTION 11.1. Amendment............................................. 41
SECTION 11.2. Protection of Title to Issuer......................... 43
SECTION 11.3. Litigation and Indemnities............................ 45
SECTION 11.4. Notices............................................... 45
SECTION 11.5. Assignment............................................ 46
SECTION 11.6. Limitations on Rights of Others....................... 46
SECTION 11.7. Severability.......................................... 46
SECTION 11.8. Separate Counterparts................................. 46
SECTION 11.9. Headings.............................................. 46
SECTION 11.10. Governing Law........................................ 46
SECTION 11.11. Assignment to Trustee................................ 47
SECTION 11.12. Nonpetition Covenant................................. 47
SECTION 11.13. Limitation of Liability of Owner Trustee and Trustee. 47
SECTION 11.14. Independence of Servicer............................. 48
SECTION 11.15. No Joint Venture..................................... 48
SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location of Receivables
EXHIBITS
Exhibit A - Form of Monthly Certificateholder Statement
Exhibit B - Form of Monthly Noteholder Statement
Exhibit C - Form of Servicer's Report
<PAGE>
APPENDIX
Appendix X - Definitions
SALE AND SERVICING AGREEMENT dated as of ________, 199__ (this
"Agreement") among NORWEST AUTO TRUST 199__-__, a Delaware business trust
("Issuer"), NORWEST AUTO RECEIVABLES CORPORATION, a Delaware corporation
(in its capacity as seller, "Seller"), and NORWEST BANK MINNESOTA, N.A.,
in its capacity as servicer, "Servicer").
WHEREAS Issuer desires to purchase from Seller a portfolio of
receivables arising in connection with Motor Vehicle Loans purchased or
originated by the Seller Affiliates and sold to Seller under the Purchase
Agreements;
WHEREAS Seller is willing to sell such receivables to Issuer; and
WHEREAS Servicer is willing to service such receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS.
SECTION 1.1. Definitions. Capitalized terms are used in this
Agreement as defined in Appendix X.
SECTION 1.2. Other Interpretive Provisions. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or
other document delivered pursuant hereto unless otherwise defined therein.
For purposes of this Agreement and all such certificates and other
documents, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly defined in
this Agreement to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles; (b)
terms defined in Article 9 of the UCC as in effect in the State of New York
and not otherwise defined in this Agreement are used as defined in that
Article; (c) references to any amount as on deposit or outstanding on any
particular date means such amount at the close of business on such day; (d)
the words "hereof," "herein" and "hereunder" and words of similar import
refer to this Agreement (or the certificate or other document in which they
are used) as a whole and not to any particular provision of this Agreement
(or such certificate or document); (e) references to any Section, Schedule
or Exhibit are references to Sections, Schedules and Exhibits in or to this
Agreement (or the certificate or other document in which the reference is
made), and references to any paragraph, subsection, clause or other
subdivision within any Section or definition refer to such paragraph,
subsection, clause or other subdivision of such Section or definition; (f)
the term "including" means "including without limitation"; (g) references
to any law or regulation refer to that law or regulation as amended from
time to time and include any successor law or regulation; (h) references to
any Person include that Person's successors and assigns; and (i) headings
are for purposes of reference only and shall not otherwise affect the
meaning or interpretation of any provision hereof.
ARTICLE II. CONVEYANCE OF RECEIVABLES.
SECTION 2.1. Conveyance of Receivables. In consideration of Issuer's
delivery to Seller or its designee on the Closing Date of the net proceeds
from the sale of the Notes and the Certificates and the other amounts to be
distributed from time to time to Seller in accordance with the terms of
this Agreement, Seller does hereby sell, transfer, assign, set over and
otherwise convey to Issuer, without recourse (subject to the obligations
herein):
(a) all right, title and interest of Seller in and to the
Receivables, and all moneys received thereon on or after the Cutoff
Date;
(b) all right, title and interest of Seller in the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of Seller in the Financed Vehicles;
(c) the interest of Seller in any proceeds with respect to the
Receivables from claims on any Insurance Policies covering Financed
Vehicles or the Obligors or from claims under any lender's single
interest insurance policy naming the Seller or Servicer as an insured;
(d) the interest of Seller in any proceeds from (i) 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 (ii) a default by an Obligor resulting in the
repossession of the Financed Vehicle under the applicable Motor
Vehicle Loan;
(e) all right, title and interest in all funds on deposit from
time to time in the Certificate Distribution Account and the Trust
Accounts, and in all investments and proceeds thereof (but excluding
all investment income thereon); and
(f) the proceeds of any and all of the foregoing.
ARTICLE III. THE RECEIVABLES.
SECTION 3.1. Representations and Warranties as to Each Receivable.
Seller hereby makes the following representations and warranties as to each
Receivable conveyed by it to Issuer hereunder on which Issuer shall rely in
acquiring the Receivables. Unless otherwise indicated, such representations
and warranties shall speak as of the Closing Date, but shall survive the
sale, transfer and assignment of the Receivables to Issuer and the pledge
thereof to Trustee pursuant to the Indenture.
(a) Characteristics of Receivables. The Receivable has been
fully and properly executed by the parties thereto and (i) is a Direct
Loan or has been originated by an Originator through Dealers in the
ordinary course of its business and in accordance with such
Originator's underwriting standards to finance the retail sale by a
Dealer of the Financed Vehicle or acquired by a Seller Affiliate
through the acquisition of a financial institution that owned such
Receivable, (ii) was originated by an Originator, the underwriting
standards of which require physical damage insurance to be maintained
on each Financed Vehicle, (iii) is secured by a valid, subsisting,
binding and enforceable first priority security interest in favor of
Seller or a Seller Affiliate in the Financed Vehicle (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), which security interest is assignable
together with such Receivable, and has been so assigned to Seller, and
subsequently assigned by Seller to Trustee, (iv) contains customary
and enforceable provisions such that the rights and remedies of the
holder thereof are adequate for realization against the collateral of
the benefits of the security, (v) provided, at origination, for level
monthly payments (provided that the amount of the last payment may be
different), which fully amortize the Initial Principal Balance over
the original term, (vi) provides for interest at the Contract Rate
specified in the Schedule of Receivables and (vii) was originated in
the United States.
(b) Schedule of Receivables. The information set forth in the
Schedule of Receivables was true and correct as of the close of
business on the Cutoff Date.
(c) Compliance with Law. The Receivable complied at the time it
was originated or made, and will comply as of the Closing Date, in all
material respects with all requirements of applicable federal, state
and local laws, and regulations thereunder, including, to the extent
applicable, usury laws, the Federal Truth in Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, Federal Reserve
Board Regulations B and Z and any other consumer credit, consumer
protection, equal opportunity and disclosure laws.
(d) Binding Obligation. The Receivable constitutes the genuine,
legal, valid and binding payment obligation in writing of the Obligor,
enforceable in all material respects by the holder thereof in
accordance with its terms, and the Receivable is not subject to any
right of rescission, setoff, counterclaim or defense, including the
defense of usury.
(e) Lien in Force. Neither Seller nor any Seller Affiliate has
taken any action which would have the effect of releasing the related
Financed Vehicle from the Lien granted by the Receivable in whole or
in part.
(f) No Amendment or Waiver. No material provision of the
Receivable has been amended, waived, altered or modified in any
respect, except such waivers as would be permitted under this
Agreement, and no amendment, waiver, alteration or modification causes
such Receivable not to conform to the other representations or
warranties contained in this Section.
(g) No Liens. Neither Seller nor any Seller Affiliate has
received notice of any Liens or claims, including Liens for work,
labor, materials or unpaid state or federal taxes, relating to the
Financed Vehicle securing the Receivable, that are or may be prior to
or equal to the Lien granted by the Receivable.
(h) No Default. Except for payment delinquencies continuing for
a period of not more than 30 days as of the Cutoff Date, to the
knowledge of Seller, no default, breach, violation or event permitting
acceleration under the terms of the Receivable exists and no
continuing condition that with notice or lapse of time, or both, would
constitute a default, breach, violation or event permitting
acceleration under the terms of the Receivable has arisen.
(i) Insurance. The Receivable requires the Obligor to insure
the Financed Vehicle under a Physical Damage Insurance Policy, pay the
premiums for such insurance and keep such insurance in full force and
effect.
(j) Good Title. Immediately prior to the transfer and
assignment herein contemplated, Seller had good and marketable title
to the Receivable free and clear of any Lien and had full right and
power to transfer and assign the Receivable to Issuer and immediately
upon the transfer and assignment of the Receivable to Issuer, Issuer
shall have good and marketable title to the Receivable, free and clear
of any Lien; and Issuer's interest in the Receivable resulting from
the transfer has been perfected under the UCC.
(k) Obligations. Each Seller Affiliate has duly fulfilled all
obligations on its part to be fulfilled under, or in connection with,
the Receivable.
(l) Possession. There is only one original executed Receivable,
and immediately prior to the Closing Date, the applicable Seller
Affiliate will have possession of such original executed Receivable.
SECTION 3.2. Representations and Warranties as to the Receivables in
the Aggregate and Actions of Seller. Seller hereby makes the following
representations and warranties as to the Receivables conveyed by it to
Issuer hereunder on which Issuer shall rely in acquiring the Receivables.
Unless otherwise indicated, such representations and warranties shall speak
as of the Closing Date, but shall survive the sale, transfer and assignment
of the Receivables to Issuer and the pledge thereof to Trustee pursuant to
the Indenture.
(a) Amounts. The Original Pool Balance was $_____________.
(b) Individual Characteristics. The Receivables have the
following individual characteristics as of the Cutoff Date: (i) each
Receivable is secured by either a new or used automobile or light duty
truck; (ii) each Receivable has a Contract Rate of at least ____% and
not more than ____%; (iii) each Receivable had a remaining maturity,
as of the Cutoff Date, of not less than __ months and not more than __
months; (iv) each Receivable had an Initial Principal Balance of not
more than $_____________ and a Cutoff Date Principal Balance of not
less than $_______ nor more than $_____________; (v) no Receivable was
more than 30 days past due as of the Cutoff Date; (vi) no Financed
Vehicle had been repossessed as of the Cutoff Date; (vii) no
Receivable was subject to a force-placed physical damage insurance
policy on the related Financed Vehicle; (h) each Receivable is a
Precomputed Receivable or a Simple Interest Receivable; (viii) a
Seller Affiliate has received at least one payment on each Receivable;
and (ix) the Dealer of the Financed Vehicle has no participation in,
or other right to receive, any proceeds of the Receivable. The
Receivables were selected using selection procedures that were not
intended by Seller to be adverse to the Holders.
(c) Aggregate Characteristics. The Receivables had the
following characteristics in the aggregate as of the Cutoff Date: (i)
approximately _____% of the Original Pool Balance was attributable to
loans for purchases of new Financed Vehicles, and approximately
______% of the Original Pool Balance was attributable to loans for
purchases of used Financed Vehicles; (ii) approximately _____% of the
Original Pool Balance was attributable to Receivables the mailing
addresses of the Obligors with respect to which are located in the
State of Minnesota and ___% of the Original Pool Balance was
attributable to Receivables the mailing addresses of the Obligors with
respect to which are located in the State of Minnesota, _____% in the
State of ________, _____% in the State of __________, _____% in the
State of ____________ and _____% in the State of __________, and no
other state accounts for more than 1% of the Original Pool Balance;
(iii) the weighted average Contract Rate of the Receivables was
_____%; (iv) there are __________ Receivables being conveyed by
Seller to Issuer; (v) the average Cutoff Date Principal Balance of the
Receivables was $____________; (vi) the weighted average original term
and weighted average remaining term of the Receivables were __________
months and ______ months, respectively; and (vii) not more than ____%
of the Original Principal Balance is attributable to Acquired
Receivables.
(d) Marking Records. By the Closing Date, Seller shall have
caused the portions of Seller's and each Seller Affiliate's electronic
master record of Motor Vehicle Loans relating to the Receivables to be
clearly and unambiguously marked to show that such Receivables are
owned by Issuer in accordance with the terms of this Agreement.
(e) No Assignment. As of the Closing Date, Seller shall not
have taken any action to convey any right to any Person that would
result in such Person having a right to payments received under the
Insurance Policies or Dealer Agreements, or payments due under the
Receivables that is senior to, or equal with, that of Issuer.
SECTION 3.3. Repurchase upon Breach. Seller, Servicer or Owner
Trustee, as the case may be, shall inform the other parties to this
Agreement and Trustee promptly, in writing, upon the discovery of any
breach or failure to be true of the warranties made by Seller in Section
3.1 or 3.2, provided that the failure to give such notice shall not affect
any obligation of Seller. If the breach or failure shall not have been
cured by the last day of the Collection Period which includes the 60th day
after the date on which Seller becomes aware of, or receives written notice
from Owner Trustee or Servicer of, such breach or failure, and such breach
or failure materially and adversely affects the interests of Issuer and the
Holders in any Receivable, Seller shall repurchase each such Receivable
from Issuer as of such last day of such Collection Period. Notwithstanding
the foregoing, any such breach or failure with respect to the
representations and warranties contained in subsections (a) (clauses (ii)
and (iii) only), (c), (d), (e), (g), (i), (j), (k) or (l) of Section 3.1
will not be deemed to have such a material and adverse effect with respect
to a Receivable if the facts resulting in such breach or failure do not
affect the ability of Issuer to receive and retain payment in full on such
Receivable. In consideration of the purchase of a Receivable hereunder,
Seller shall remit the Purchase Amount of such Receivable, no later than
the close of business on the next Deposit Date, in the manner specified in
Section 5.4. The sole remedy of Issuer, Trustee or the Holders with respect
to a breach or failure to be true of the warranties made by Seller pursuant
to Section 3.1 or 3.2 shall be to require Seller to repurchase Receivables
pursuant to this Section.
SECTION 3.4. Custodian of Receivable Files. (a) Custody. To assure
uniform quality in servicing the Receivables and to reduce administrative
costs, Issuer, upon the execution and delivery of this Agreement, revocably
appoints Custodian, as agent, and Custodian accepts such appointment, to
act as agent on behalf of Issuer to maintain custody of the following
documents or instruments, which are hereby constructively delivered to
Issuer with respect to each Receivable (collectively, a "Receivable File"):
(i) the fully executed original of the Receivable;
(ii) any documents customarily delivered to or held by Seller
or Servicer evidencing the existence of any Physical Damage Insurance
Policies;
(iii) the original credit application, fully executed by the
Obligor;
(iv) the original certificate of title, or such other documents
as the applicable Seller Affiliate, as appropriate, keeps on file, in
accordance with its customary procedures, evidencing the security
interest of such Seller Affiliate in the Financed Vehicle;
(v) electronic entries and originals or true copies of all
documents, instruments or writings relating to extensions, amendments
or waivers of the Receivable; and
(vi) any and all other documents or electronic records that
Seller or Servicer, as the case may be, keeps on file, in accordance
with its customary procedures, relating to the Receivable, the Obligor
or the Financed Vehicle.
(b) Safekeeping. Servicer, in its capacity as Custodian, shall hold
the Receivable Files as agent on behalf of Issuer and maintain such
accurate and complete accounts, records and computer systems pertaining to
each Receivable as shall enable Servicer and Issuer to comply with the
terms and provisions of this Agreement applicable to them. In performing
its duties as Custodian hereunder, Custodian shall act with reasonable
care, exercising the degree of skill, attention and care that Servicer
exercises with respect to receivable files relating to other similar motor
vehicle loans owned and/or serviced by Custodian and that is consistent
with industry standards. Custodian shall maintain the Receivable Files in
such a manner as shall enable Owner Trustee to verify, if Owner Trustee so
elects, the accuracy of the record keeping of Servicer. Servicer shall
promptly report to Owner Trustee 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. Custodian hereby acknowledges receipt of the Receivable File for
each Receivable listed on the Schedule of Receivables.
(c) Maintenance of and Access to Records. Custodian shall maintain
each Receivable File at the location specified in Schedule B to this
Agreement, or at such other office of Custodian within the United States
(or, in the case of any successor Custodian, within the State in which its
principal place of business is located) as shall be specified to Issuer by
30 days' prior written notice. At the reasonable direction of the Owner
Trustee, Custodian shall make available to Owner Trustee, Trustee and their
respective agents (or, when requested in writing by Owner Trustee or
Trustee, their respective attorneys or auditors) the Receivable Files and
the related accounts, records and computer systems maintained by Custodian
at such times during the normal business hours of Custodian for purposes of
inspecting, auditing or making copies of abstracts of the same.
(d) Release of Documents. Upon written instructions from Issuer,
Custodian shall release any document in the Receivable Files to Issuer,
Issuer's agent or Issuer's designee, as the case may be, at such place or
places as Issuer may designate, as soon thereafter as is practicable. Any
document so released shall be handled by Issuer with due care and returned
to Custodian for safekeeping as soon as Issuer or its agent or designee, as
the case may be, shall have no further need therefor.
(e) Title to Receivables. Custodian agrees that, in respect of any
Receivable File held by Custodian hereunder, Custodian will not at any time
have or in any way attempt to assert any interest in such Receivable File
or the related Receivable, other than solely for the purpose of collecting
or enforcing the Receivable for the benefit of Issuer and that the entire
equitable interest in such Receivable and the related Receivable File shall
at all times be vested in Issuer.
(f) Instructions; Authority to Act. Custodian 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 Owner
Trustee. A certified copy of excerpts of certain resolutions of the Board
of Directors of Owner Trustee shall constitute conclusive evidence of the
authority of any such Authorized Officer to act and shall be considered in
full force and effect until receipt by Custodian of written notice to the
contrary given by Owner Trustee.
(g) Custodian's Indemnification. Subject to Section 11.3, Custodian
shall indemnify and hold harmless Issuer, Owner Trustee and Trustee, and
each of their officers, directors, employees and agents and the Holders
from and against any and all liabilities, obligations, losses, compensatory
damages, payments, costs or expenses (including legal fees if any) of any
kind whatsoever that may be imposed on, incurred or asserted against
Issuer, Owner Trustee, Trustee or the Holders as the result of the gross
negligence or willful misconduct of Custodian relating to the maintenance
and custody of the Receivable Files; provided that Custodian shall not be
liable hereunder to the extent that such liabilities, obligations, losses,
compensatory damages, payments, costs or expenses result from the willful
misfeasance, bad faith or negligence of Owner Trustee or Trustee.
(h) Effective Period and Termination. 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 subsection (h).
If Servicer shall resign as Servicer in accordance with Section 7.5 or if
all of the rights and obligations of Servicer shall have been terminated
under Section 8.1, the appointment of Servicer as Custodian hereunder may
be terminated by Trustee or by the Holders of Notes evidencing not less
than 25% of the aggregate Outstanding Amount of the Notes, in the same
manner as Trustee or such Holders may terminate the rights and obligations
of Servicer under Section 8.1. Issuer may terminate Servicer's appointment
as Custodian hereunder at any time with cause, or with 30 days' prior
notice without cause, upon written notification to Servicer. As soon as
practicable after any termination of such appointment Servicer shall
deliver, or cause to be delivered, the Receivable Files to Owner Trustee,
Owner Trustee's agent or Owner Trustee's designee at such place or places
as Owner Trustee may reasonably designate. Notwithstanding any termination
of Servicer as Custodian hereunder (other than in connection with a
termination resulting from the termination of Servicer, as such, pursuant
to Section 8.1), from and after the date of such termination, and for so
long as Servicer is acting as such pursuant to this Agreement, Owner
Trustee shall provide, or cause the successor Custodian to provide, access
to the Receivable Files to Servicer, at such times as Servicer shall
reasonably request, for the purpose of carrying out its duties and
responsibilities with respect to the servicing of the Receivables
hereunder.
ARTICLE IV. ADMINISTRATION AND SERVICING OF RECEIVABLES.
SECTION 4.1. Duties of Servicer. (a) Servicer is hereby authorized
to act as agent for Issuer and in such capacity shall manage, service,
administer and make collections on the Receivables, and perform the other
actions required by Servicer under this Agreement, with reasonable care.
Without limiting the standard set forth in the preceding sentence, Servicer
shall use a degree of skill, attention and care that is not less than
Servicer exercises with respect to comparable motor vehicle loans that it
services for itself or others and that is consistent with prudent industry
standards. Servicer's duties shall include the collection and posting of
all payments, responding to inquiries by Obligors on the Receivables, or by
federal, state or local governmental authorities, investigating
delinquencies, sending payment coupons to Obligors, reporting required tax
information to Obligors, accounting for Collections, monitoring the status
of Physical Damage Insurance Policies with respect to the Financed Vehicles
as provided in Section 4.4(a), furnishing monthly and annual statements to
Owner Trustee with respect to distributions, providing collection and
repossession services in the event of Obligor default and performing the
other duties specified herein. Servicer shall also administer and enforce
all rights and responsibilities of the holder of the Receivables provided
for in the Physical Damage Insurance Policies and the Dealer Agreements.
Without limiting the generality of the foregoing, Servicer is hereby
authorized and empowered by Issuer to execute and deliver, on behalf of
itself, Issuer, Owner Trustee and the Holders, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge,
and all other comparable instruments, with respect to the Receivables or to
the Financed Vehicles, all in accordance with this Agreement; provided that
notwithstanding the foregoing, Servicer shall not, except pursuant to an
order from a court of competent jurisdiction, release an Obligor from
payment of any unpaid amount under any Receivable or waive the right to
collect the unpaid balance of any Receivable from the Obligor, except in
connection with a de minimis deficiency which Servicer would not attempt to
collect in accordance with its customary procedures. If Servicer shall
commence a legal proceeding to enforce a Receivable, Issuer shall thereupon
be deemed to have automatically assigned such Receivable to Servicer, which
assignment shall be solely for purposes of collection. Owner Trustee shall
furnish Servicer with any powers of attorney and other documents or
instruments necessary or appropriate to enable Servicer to carry out its
servicing and administrative duties hereunder.
(b) Servicer may, at any time without notice or consent, delegate (i)
any or all duties under this Agreement to any Person more than 50% of the
voting securities of which are owned, directly or indirectly, by Norwest
Corporation, a Delaware corporation, so long as Norwest Bank acts as
Servicer, or (ii) specific duties to sub-contractors who are in the
business of performing such duties; provided that no such delegation shall
relieve Servicer of its responsibility with respect to such duties and
Servicer shall remain obligated and liable to Issuer and the Holders for
servicing and administering the Receivables in accordance with this
Agreement as if Servicer alone were performing such duties.
SECTION 4.2. Collection of Receivable Payments. (a) Servicer shall
make reasonable efforts to collect all payments called for under the terms
and provisions of the Receivables as and when the same shall become due,
and otherwise act with respect to the Receivables, the Physical Damage
Insurance Policies, the Dealer Agreements and related property in such
manner as will, in the reasonable judgment of Servicer, maximize the amount
to be received by Issuer with respect thereto, in accordance with the
standard of care required by Section 4.1. Servicer shall be entitled to
amend or modify any Receivable in accordance with its customary procedures
if Servicer believes in good faith that such amendment or modification is
in Issuer's best interests; provided that Servicer may not, unless ordered
by a court of competent jurisdiction or otherwise required by applicable
law, (i) extend a Receivable beyond the Final Scheduled Maturity Date or
(ii) amend or modify the Principal Balance or Contract Rate of any
Receivable. If Servicer fails to comply with the provisions of the
preceding sentence, Servicer shall be required to purchase the Receivable
or Receivables affected thereby, for the Purchase Amount, in the manner
specified in Section 3.7 as of the close of the Collection Period in which
such failure occurs. Servicer may, in its discretion (in accordance with
its customary standards, policies and procedures), waive any prepayment
charge, late payment charge or any other fee that may be collected in the
ordinary course of servicing a Receivable.
(b) If in the course of collecting payments under the Receivables,
Servicer determines to set off any obligation of Servicer to an Obligor
against an amount payable by the Obligor with respect to such Receivable,
Servicer shall deposit the amount so set off in the Collection Account, no
later than the close of business on the Deposit Date for the Collection
Period in which the set-off occurs. All references herein to payments or
Liquidation Proceeds collected by Servicer shall include amounts set-off by
Servicer.
SECTION 4.3. Realization upon Receivables. On behalf of Issuer,
Servicer shall charge off a Receivable as a Defaulted Receivable in
accordance with its customary standards (and, in no event later than ___
days after a Receivable shall have become delinquent) and shall use its
best efforts to repossess and liquidate the Financed Vehicle securing any
Defaulted Receivable as soon as feasible after default, in accordance with
the standard of care required by Section 4.1. In taking such action,
Servicer shall follow such customary and usual practices and procedures as
it shall deem necessary or advisable in its servicing of motor vehicle
loans, and as are otherwise consistent with the standard of care required
under Section 4.1, which shall include exercising any rights under the
Dealer Agreements and selling the Financed Vehicle at public or private
sale. Servicer shall be entitled to recover all reasonable expenses
incurred by it in the course of repossessing and liquidating a Financed
Vehicle into cash proceeds or pursuing any deficiency claim against the
related Obligor, but only out of the cash proceeds of such Financed Vehicle
or any deficiency obtained from the Obligor (except that the expenses of
pursuing deficiency claims may be deducted on a ratable basis from amounts
obtained from deficiency claims on an aggregate basis), which amounts may
be retained by Servicer (and shall not be required to be deposited in the
Collection Account) to the extent of such expenses. The foregoing shall be
subject to the provision that, in any case in which a Financed Vehicle
shall have suffered damage, Servicer shall not expend funds in connection
with the repair or the repossession of such Financed Vehicle unless it
shall determine in its discretion that such repair and/or repossession will
increase the Liquidation Proceeds of the related Receivable by an amount
equal to or greater than the amount of such expenses.
If Servicer elects to commence a legal proceeding to enforce a Dealer
Agreement, the act of commencement shall be deemed to be an automatic
assignment from Issuer to Servicer of the rights under such Dealer
Agreement. If, however, in any enforcement suit or legal proceeding, it is
held that Servicer may not enforce a Dealer Agreement on the grounds that
it is not a real party in interest or a Person entitled to enforce the
Dealer Agreement, Owner Trustee, on behalf of Issuer, at Servicer's
expense, or Seller, at Servicer's expense, shall take such steps as
Servicer deems necessary to enforce the Dealer Agreement, including
bringing suit in Issuer's name or the name of Owner Trustee for the benefit
of Certificateholders.
SECTION 4.4. Physical Damage Insurance. (a) The Receivables require
that each Financed Vehicle be insured under a Physical Damage Insurance
Policy. Servicer shall monitor the status of such physical damage insurance
coverage to the extent consistent with its customary servicing procedures.
If Servicer shall determine that an Obligor has failed to obtain or
maintain a Physical Damage Insurance Policy covering the related Financed
Vehicle, Servicer shall use its best efforts to enforce the rights of the
holder of the Receivable under the Receivable to require the Obligor to
obtain such physical damage insurance, provided that Servicer shall not be
required to take such actions if there is in place a lender's single
interest policy with respect to the related Financed Vehicle that complies
with Servicer's customary requirements. It is understood that Servicer will
not "force-place" any Physical Damage Insurance Policy on any Financed
Vehicle.
(b) Servicer may sue to enforce or collect upon the Physical Damage
Insurance Policies, in its own name, if possible, or as agent for Issuer.
If Servicer elects to commence a legal proceeding to enforce a Physical
Damage Insurance Policy, the act of commencement shall be deemed to be an
automatic assignment of the rights of Issuer under such Physical Damage
Insurance Policy to Servicer for purposes of collection only. If, however,
in any enforcement suit or legal proceeding it is held that Servicer may
not enforce a Physical Damage Insurance Policy on the grounds that it is
not a real party in interest or a holder entitled to enforce the Physical
Damage Insurance Policy, Owner Trustee, on behalf of Issuer, at Servicer's
expense, or Seller, at Servicer's expense, shall take such steps as
Servicer deems necessary to enforce such Physical Damage Insurance Policy,
including bringing suit in Issuer's name or the name of Owner Trustee for
the benefit of the Certificateholders. Servicer shall make all claims and
enforce its rights under any lender's single interest insurance policy (to
the extent such claims or rights relate to Receivables) for the benefit of
the Issuer and shall treat as Collections all related proceeds of such
policies.
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles.
Servicer, in accordance with the standard of care required under Section
4.1, shall take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed
Vehicle for the benefit of Issuer. Owner Trustee, on behalf of Issuer,
hereby authorizes Servicer, and Servicer hereby agrees, to take such steps
as are necessary to re-perfect such security interest on behalf of Issuer
in the event Servicer receives notice of the relocation of a Financed
Vehicle. If there has been a Servicer Termination Event, upon the request
of Owner Trustee, Seller and Servicer, at their expense, shall promptly and
duly execute and deliver such documents and instruments, and take such
other actions as may be necessary, as evidenced by an Opinion of Counsel
delivered to Issuer, to perfect Issuer's interest in the Trust Property
against all other Persons, including the delivery of the Receivables and
the Receivable Files to Owner Trustee, its agent, or its designee, the
endorsement and delivery of the Physical Damage Insurance Policies or the
notification of the insurers thereunder, the execution of transfer
instruments, and the endorsement to Owner Trustee and the delivery of the
certificates of title to the Financed Vehicles to the appropriate
department or departments of motor vehicles (or other appropriate
governmental agency).
SECTION 4.6. Covenants of Servicer. Servicer makes the following
covenants on which Issuer relies in acquiring the Receivables:
(a) Security Interest to Remain in Force. Servicer shall not
release any Financed Vehicle from the security interest granted by the
related Receivable in whole or in part, except upon payment in full of
the Receivable or as otherwise contemplated herein.
(b) No Impairment. Servicer shall not impair in any material
respect the rights of the Holders in the Receivables, the Dealer
Agreements or the Physical Damage Insurance Policies or, subject to
clause (c), otherwise amend or alter the terms thereof if, as a result
of such amendment or alteration, the interests of Issuer and the
Holders hereunder would be materially adversely affected.
(c) Amendments. Servicer shall not amend or otherwise modify
any Receivable (including the grant of any extension thereunder),
except in accordance with Section 3.2.
SECTION 4.7. Purchase by Servicer upon Breach. Seller, Servicer or
Owner Trustee, as the case may be, shall inform the other parties promptly,
in writing, upon the discovery of any breach by Servicer of its covenants
under Section 4.5 or 4.6; provided that the failure to give such notice
shall not affect any obligation of Servicer. Unless the breach shall have
been cured by the last day of the Collection Period which includes the 60th
day after the date on which Servicer becomes aware of, or receives written
notice of, such breach, Servicer shall purchase the Receivable or
Receivables materially and adversely affected thereby on the immediately
succeeding Deposit Date; provided that in the case of a breach of the
covenant contained in Section 4.6(c), Servicer shall be obligated to
purchase the affected Receivable or Receivables on the Deposit Date
immediately succeeding the Collection Period during which Servicer becomes
aware of, or receives written notice of, such breach. In consideration of
the purchase of a Receivable hereunder, Servicer shall remit the Purchase
Amount of such Receivable in the manner specified in Section 5.4. The sole
remedy of Issuer, Owner Trustee, or the Holders against Servicer with
respect to a breach pursuant to Section 4.5 or 4.6 shall be to require
Servicer to repurchase Receivables pursuant to this Section.
SECTION 4.8. Servicing Fee. The servicing fee for (a) the ________
199__ Distribution Date shall equal $__________ and (b) for each
Distribution Date thereafter 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"). Servicer shall also
be entitled to retain any late fees, extension fees, prepayment charges and
certain non-sufficient funds charges and other administrative fees or
similar charges allowed by applicable law with respect to Receivables
collected (from whatever source) on the Receivables and shall be paid any
interest earned on deposits in the Trust Accounts and the Certificate
Distribution Account (the "Supplemental Servicing Fee"). It is understood
and agreed that Interest Collections or Available Principal shall not
include any amounts retained by Servicer in accordance with the immediately
preceding sentence.
SECTION 4.9. Servicer's Report. (a) On each Determination Date,
Servicer shall deliver to Owner Trustee, Trustee and Seller, with a copy to
the Rating Agencies, a Servicer's Report containing all information
necessary to make the distributions pursuant to Sections 5.5 and 5.6 for
the Collection Period preceding the date of such Servicer's Report.
Receivables to be purchased by Servicer or to be repurchased by Seller
shall be identified by Servicer by account number with respect to such
Receivable (as specified in Schedule A). Notwithstanding the foregoing, it
is understood and agreed that, as evidenced by its execution of this
Agreement, Trustee has agreed to act as Servicer's agent for the purpose of
preparing and delivering Servicer's Reports, and so long as Trustee timely
prepares and delivers Servicer's Reports, Servicer shall not be required to
do so. Any failure by Trustee to prepare and deliver a Servicer's Report,
or inaccuracy in any Servicer's Report so prepared and delivered, shall (so
long as Servicer shall also not timely prepare and deliver such Servicer's
Report or correct any such inaccuracy) have the same consequences as would
such a failure by Servicer or inaccuracy in a Servicer's Report prepared by
Servicer.
(b) Servicer shall provide Trustee with a magnetic tape containing
the database file for each Receivable (i) at or prior to closing (but with
information as of the Cutoff Date) and (ii) thereafter, as of the last day
of the preceding Monthly Period on each Determination Date prior to a
Servicer Termination Event. Servicer hereby represents, as of the date of
each such delivery, that such information is accurate and complete in all
material respects.
(c) Trustee shall not be responsible for delays attributable to
Servicer's failure to deliver information, defects in the information
supplied by Servicer or other circumstances beyond Trustee's control.
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.
(a)Servicer shall deliver to Owner Trustee and Trustee, on or before March
31 of each year beginning March 31, 199__, an Officers' Certificate, dated
as of December 31 of the preceding year, stating that (i) a review of the
activities of 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, 199__) 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, 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. Trustee
shall send a copy of such certificate and the report referred to in Section
4.11 to the Rating Agencies. A copy of such certificate and the report
referred to in Section 4.11 may be obtained by any Certificateholder by a
request in writing to Owner Trustee addressed to the Corporate Trust Office
or by any Noteholder by a request in writing to Trustee addressed to the
Corporate Trust Office. Upon the telephone request of Owner Trustee,
Trustee will promptly furnish Owner Trustee a list of Noteholders as of the
date specified by Owner Trustee.
(b) Servicer shall deliver to Owner Trustee, 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 a Servicer Termination Event under Section
8.1(a) or (b).
SECTION 4.11. Annual Independent Certified Public Accountants'
Report. Servicer shall cause a firm of independent certified public
accountants, which may also render other services to Servicer or Seller, to
deliver to Seller, Owner Trustee and Trustee on or before March 31 of each
year beginning March 31, 199__, an agreed-upon procedures report addressed
to Servicer, Seller, Owner Trustee and Trustee and each Rating Agency,
expressing a summary of findings, (based on certain procedures performed on
the documents, records and accounting records that such accountants
considered appropriate under the circumstances) relating to the servicing
of the Receivables, or the administration of the Receivables and of Issuer,
as the case may be, during the preceding calendar year (or, in the case of
the first such report, during the period from the Closing Date to December
31, 199__) and that, on the basis of the accounting and auditing procedures
considered appropriate under the circumstances, such firm is of the opinion
that such servicing or administration was conducted in compliance with the
terms of this Agreement, except for (a) such exceptions as such firm shall
believe to be immaterial and (b) such other exceptions as shall be set
forth in such report.
Such report will also indicate that the firm is independent of
Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
SECTION 4.12. Access to Certain Documentation and Information
Regarding Receivables. Servicer shall provide to the Certificateholders,
Noteholders, Bank Regulatory Authorities, and the supervisory agents and
examiners of Bank Regulatory Authorities access to the Receivable Files in
such cases where the Certificateholders, Noteholders or Bank Regulatory
Authorities shall be required by applicable statutes or regulations to
review such documentation as demonstrated by evidence satisfactory to
Servicer in its reasonable judgment. Access shall be afforded without
charge, but only upon reasonable request and during the normal business
hours at the respective offices of Servicer. Nothing in this Section shall
affect the obligation of Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors and the failure of
Servicer to provide access to information as a result of such obligation
shall not constitute a breach of this Section. Any Holder, by its
acceptance of a Certificate or Note, as applicable, shall be deemed to have
agreed to keep any information obtained by it pursuant to this Section
confidential and not to use such information for any other purpose, except
as required by applicable law.
SECTION 4.13. Servicer Expenses. Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed
on Servicer and expenses incurred in connection with distributions and
reports to Certificateholders and Noteholders.
ARTICLE V. DISTRIBUTION; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND
NOTEHOLDERS.
SECTION 5.1. Establishment of Trust Accounts. (a) Servicer shall
establish and maintain:
(i) For the benefit of the Noteholders and the
Certificateholders, in the name of Trustee, an Eligible Deposit
Account (the "Collection Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit
of the Noteholders and the Certificateholders.
(ii) For the benefit of the Noteholders, in the name of
Trustee, an Eligible Deposit Account (the "Note Distribution
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Noteholders.
(iii) For the benefit of the Noteholders and the
Certificateholders, in the name of Trustee, an Eligible Deposit
Account (the "Reserve Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit
of the Noteholders and the Certificateholders.
(b) Funds on deposit in the Collection Account, the Note Distribution
Account and the Reserve Account (collectively the "Trust Accounts") and the
Certificate Distribution Account shall be invested by Trustee with respect
to the Trust Accounts and by Owner Trustee with respect to the Certificate
Distribution Account (or any custodian with respect to funds on deposit in
any such account) in Eligible Investments selected in writing by Servicer
(pursuant to standing instructions or otherwise); provided that it is
understood and agreed that neither Trustee nor Owner Trustee shall be
liable for any loss arising from such investment in Eligible Investments.
All such Eligible Investments shall be held by or on behalf of Trustee or
Owner Trustee, as applicable, for the benefit of the Noteholders and the
Certificateholders or the Noteholders or the Certificateholders, as
applicable; provided that on each Distribution Date all interest and other
investment income (net of losses and investment expenses) on funds on
deposit in the Trust Accounts or Certificate Distribution Account shall be
distributed to Servicer and shall not be available to pay the distributions
provided for in Section 5.5 and shall not otherwise be subject to any
claims or rights of Holders. Other than as permitted by the Rating
Agencies, funds on deposit in the Trust Accounts and the Certificate
Distribution Account shall be invested in Eligible Investments that will
mature so that such funds will be available at the close of business on the
Deposit Date preceding the following Distribution Date. Funds deposited in
a Trust Account or the Certificate Distribution Account on a Deposit Date
which immediately precedes a Distribution Date upon the maturity of any
Eligible Investments are not required to be invested overnight.
(c) Trustee shall possess all right, title and interest in all funds
on deposit from time to time in the Trust Accounts and in all proceeds
thereof (excluding investment income thereon) and all such funds,
investments, proceeds and income shall be part of the Owner Trust Estate.
Except as otherwise provided herein, the Trust Accounts shall be under the
sole dominion and control of Trustee for the benefit of the Noteholders and
the Certificateholders, or the Noteholders or the Certificateholders, as
the case may be. If, at any time, any of the Trust Accounts or the
Certificate Distribution Account ceases to be an Eligible Deposit Account,
Trustee (or Servicer on its behalf) or Owner Trustee, as applicable, shall
within 10 Business Days (or such longer period as to which each Rating
Agency may consent) establish a new Trust Account or Certificate
Distribution Account, as applicable, as an Eligible Deposit Account and
shall transfer any cash and/or any investments to such new Trust Account or
new Certificate Distribution Account, as applicable. In connection with the
foregoing, Servicer agrees that, in the event that any of the Trust
Accounts are not accounts with Trustee, Servicer shall notify Trustee in
writing promptly upon any of such Trust Accounts ceasing to be an Eligible
Deposit Account.
(d) Amounts on deposit in the Reserve Account will be released and
distributed to Seller on each Distribution Date to the extent that the
amount on deposit in the Reserve Account would exceed the Specified Reserve
Account Balance. Upon any distribution to Seller of amounts from the
Reserve Account, Holders will not have any rights in, or claims to, such
amounts. Amounts properly distributed to Seller from the Reserve Account or
otherwise shall not be available under any circumstances to Issuer, Trustee
or Holders and Seller shall in no event thereafter be required to refund
any such distributed amounts.
(e) With respect to the Trust Account Property and the Certificate
Distribution Account, Trustee agrees, by its respective acceptance hereof,
that:
(i) any Trust Account Property or any property in Certificate
Distribution Account that is held in deposit accounts shall be held
solely in the Eligible Deposit Accounts subject to the penultimate
sentence of Section 5.1(c)(i); and, except as otherwise provided
herein, each such Eligible Deposit Account shall be subject to the
exclusive custody and control of Trustee with respect to the Trust
Accounts and the Owner Trustee with respect to the Certificate
Distribution Account, and Trustee or Owner Trustee, as applicable,
shall have sole signature authority with respect thereto;
(ii) any Trust Account Property that constitutes Physical
Property shall be delivered to Trustee in accordance with paragraph
(a) of the definition of "Delivery" and shall be held, pending
maturity or disposition, solely by Trustee or a financial intermediary
(as such term is defined in Section 8-313(4) of the UCC) acting solely
for Trustee;
(iii) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to Federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by Trustee, pending
maturity or disposition, through continued book-entry registration of
such Trust Account Property as described in such paragraph; and
(iv) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by
clause (iii) above shall be delivered to Trustee in accordance with
paragraph (c) of the definition of "Delivery" and shall be maintained
by Trustee, pending maturity or disposition, through continued
registration of Trustee's (or its nominee's) ownership of such
security.
Effective upon Delivery of any Trust Account Property, Trustee shall be
deemed to have represented that it has purchased such Trust Account
Property for value, in good faith and without notice of any adverse claim
thereto.
(f) Servicer shall have the power, revocable by Trustee or by Owner
Trustee with the consent of Trustee, to instruct Trustee to make
withdrawals and payments from the Trust Accounts for the purpose of
permitting Servicer or Owner Trustee to carry out its respective duties
hereunder or permitting Trustee to carry out its duties under the
Indenture.
SECTION 5.2. Collections. (a) Servicer shall remit within two
Business Days of receipt thereof to the Collection Account all payments by
or on behalf of the Obligors with respect to the Receivables (other than
any late fees, prepayment charges and certain nonsufficient funds charges
and other administrative fees or similar charges that may be retained by
Servicer as part of its servicing compensation in accordance with Section
4.8), and all Liquidation Proceeds, both as collected during the Collection
Period. Notwithstanding the foregoing, if Norwest Bank is the Servicer and
(i) shall have the Required Rating or (ii) Trustee otherwise shall have
received written notice from each of the Rating Agencies that the then
outstanding rating on the Notes or the Certificates would not be lowered or
withdrawn as a result, Servicer may deposit all amounts referred to above
for any Collection Period into the Collection Account not later than the
close of business on the Deposit Date with respect to such Collection
Period; provided that (i) if a Servicer Termination Event has occurred and
is continuing, (ii) Servicer has been terminated as such pursuant to
Section 8.1 or (iii) Servicer ceases to have the Required Rating, Servicer
shall deposit such amounts (including any amounts then being held by
Servicer) into the Collection Account as provided above. For purposes of
this Article V the phrase "payments by or on behalf of Obligors" shall mean
payments made with respect to the Receivables by Persons other than
Servicer or Seller.
(b) With respect to each Receivable (other than a Purchased
Receivable or a Precomputed Receivable), collections and payments by or on
behalf of the Obligor for each Collection Period shall be applied to
interest and principal in accordance with the Simple Interest Method, as
applied by Servicer. Any excess shall be applied to prepay the Receivable.
All Liquidation Proceeds shall be treated as Interest Collections.
(c) To the extent that collections on a Precomputed Receivable during
a Collection Period exceed the outstanding Precomputed Advances and the
scheduled payment on such Precomputed Receivable, the collections shall be
applied to prepay the Precomputed Receivable in full. Collections
insufficient to prepay the Precomputed Receivable in full shall be treated
as Payaheads until such later Collection Period as such Payaheads may be
transferred to the Collection Account and applied either to the scheduled
payment or to prepay the Precomputed Receivable in full.
SECTION 5.3. Advances. (a) On or prior to each Deposit Date,
Servicer shall advance any Interest Shortfall with respect to the related
Distribution Date by depositing the amount of such Interest Shortfall into
the Collection Account. To the extent that collections on a Precomputed
Receivable for a Collection Period are less than the scheduled payment, the
amount of Payaheads made on such Precomputed Receivable not previously applied,
if any, with respect to such Precomputed Receivable shall be applied by the
Servicer to the extent of the shortfall. Servicer shall be obligated to make
such an Advance except to the extent that Servicer shall reasonably determine
that the Advance is unlikely to be recoverable pursuant to subsection (b).
(b) On each Distribution Date, prior to making any of the
distributions set forth in Section 5.5, Servicer shall be reimbursed for
all Outstanding Advances with respect to prior Distribution Dates, to the
extent of the Interest Collections for such Distribution Date and, to the
extent such Interest Collections are insufficient, to the extent of the
funds in the Reserve Account. If it is acceptable to each Rating Agency
without a reduction in the rating of the Certificates, the Outstanding
Advances at the option of Servicer may be paid at or as soon as possible
after the beginning of the related Collection Period out of the first
collections of interest received on the Receivables for such Collection
Period.
SECTION 5.4. Additional Deposits. Servicer and Seller shall deposit
or cause to be deposited in the Collection Account the aggregate Purchase
Amount with respect to Purchased Receivables and Seller shall deposit
therein all amounts to be paid under Section 9.1. Servicer will deposit the
aggregate Purchase Amount with respect to Purchased Receivables within two
Business Days after such obligations become due, unless Servicer shall not
be required to make deposits within two Business Days of receipt pursuant
to Section 5.2 (in which case such deposit will be made by the related
Deposit Date). All such other deposits shall be made on the Deposit Date
following the end of the related Collection Period.
SECTION 5.5. Distributions. (a) On each Determination Date, Servicer
shall calculate all amounts required to determine the amounts to be
deposited from the Reserve Account into the Collection Account and from the
Collection Account into the Note Distribution Account and the Certificate
Distribution Account.
(b) On or before each Distribution Date, Servicer shall instruct
Trustee in writing (based on the information contained in Servicer's Report
delivered on the related Determination Date pursuant to Section 4.9) to
withdraw from the Reserve Account and deposit in the Collection Account and
Trustee shall so withdraw and deposit the Reserve Account Transfer Amount
for such Distribution Date.
(c) Subject to the last paragraph of this Section 5.5(c), on each
Distribution Date, after making the reimbursements to Servicer of
Outstanding Advances pursuant to Section 5.3(b), Servicer shall instruct
Trustee in writing based on the information contained in Servicer's Report
delivered on the related Determination Date pursuant to Section 4.9) to
make, and Trustee shall make, the following deposits and distributions from
the Collection Account for deposit in the applicable Account by 11:00 a.m.
(New York time), to the extent of the Total Distribution Amount, in the
following order of priority:
(i) to Servicer, from the Total Distribution Amount, the
Servicing Fee for the related Collection Period and all accrued and
unpaid Servicing Fees for prior Collection Periods;
(ii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (i), the
Noteholders' Interest Distributable Amount;
(iii) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clause (i) and clause (ii), the
Certificateholders' Interest Distributable Amount;
(iv) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
through (iii), the Noteholders' Principal Distributable Amount;
(v) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (i) through (iv), the
Certificateholders' Principal Distributable Amount; and
(vi) to the Reserve Account until the amount on deposit in the
Reserve Account equals the Specified Reserve Account Balance; and
(vii) to Seller, any amounts remaining.
In the event that the Collection Account is maintained with an
institution other than Trustee, Servicer shall instruct and cause such
institution to make all deposits and distributions pursuant to this Section
5.5(c) on the related Deposit Date.
SECTION 5.6. Statements to Certificateholders and Noteholders. On
each Determination Date, Servicer shall provide to Trustee (with a copy to
each Rating Agency) with written instructions for Trustee to forward to
each Noteholder of record, to each Paying Agent, if any, and to Owner
Trustee for Owner Trustee to forward to each Certificateholder of record, a
statement substantially in the form of Exhibit A and Exhibit B,
respectively, setting forth at least the following information as to the
Notes and the Certificates to the extent applicable:
(a) the amount of such distribution allocable to principal of
each class of Notes and to the Certificate Balance of the
Certificates;
(b) the amount of such distribution allocable to interest on or
with respect to each class of Notes and to the Certificates;
(c) the Pool Balance as of the close of business on the last
day of the preceding Collection Period, after giving effect to
payments allocated to principal reported under clause (a) above;
(d) the aggregate outstanding principal balance of each class
of the Notes, the Note Pool Factor for each such class, the
Certificate Balance and the Certificate Pool Factor after giving
effect to payments allocated to principal reported under clause (a)
above;
(e) the amount of the Servicing Fee paid to Servicer with
respect to the related Collection Period and with respect to
previously accrued and unpaid Servicing Fees;
(f) the amount of the aggregate Realized Losses, if any, for
such Collection Period;
(g) the Reserve Account Transfer Amount, if any, for such
Distribution Date, Average Net Loss Ratio and the Average Delinquency
Ratio, the Specified Reserve Account Balance for such Distribution
Date, the amount distributed to Seller from the Reserve Account on
such Distribution Date, and the balance of the Reserve Account (if
any) on such Distribution Date, after giving effect to changes therein
on such Distribution Date;
(h) the Noteholders' Interest Carryover Shortfall, the
Certificateholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, and the Certificateholders' Principal
Carryover Shortfall; and
(i) the aggregate Purchase Amount paid by Seller or Servicer
with respect to the related Collection Period.
Each amount set forth pursuant to paragraph (a), (b), (e) or (h) above
shall be expressed as a dollar amount per $1,000 of the initial principal
balance of the Notes (or class thereof) or the initial Certificate Balance,
as applicable.
SECTION 5.7. Net Deposits. As an administrative convenience, unless
Servicer is required to remit collections within two Business Days of
receipt thereof, 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 Servicer with respect to the
Collection Period. Servicer, however, will account to Owner Trustee,
Trustee, the Noteholders and the Certificateholders as if all deposits,
distributions and transfers were made individually.
ARTICLE VI. SELLER.
SECTION 6.1. Representations of Seller. Seller makes the following
representations on which Issuer is deemed to have relied in acquiring the
Receivables. The representations speak as of the execution and delivery of
this Agreement and shall survive the sale of the Receivables to Issuer and
the pledge thereof to Trustee pursuant to the Indenture.
(a) Organization and Good Standing. Seller has been duly
organized and is validly existing as a Delaware corporation in good
standing under the laws of the State of Delaware, with the power and
authority to own its properties and to conduct its business as such
properties are presently owned and such business is presently
conducted and had at all relevant times, and has, full power,
authority and legal right to acquire, own and sell the Receivables and
the other properties and rights included in the Owner Trust Estate
assigned to Issuer pursuant to Article II.
(b) Power and Authority. Seller has the power, authority and
legal right to execute and deliver this Agreement and the Basic
Documents and to carry out their respective terms and to sell and
assign the property to be sold and assigned to and deposited with
Issuer as the Owner Trust Estate; and the execution, delivery and
performance of this Agreement and the Basic Documents have been duly
authorized by Seller by all necessary corporate action.
(c) No Consent Required. No approval, authorization, consent,
license or other order or action of, or filing or registration with,
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement or the
Basic Documents or the consummation of the transactions contemplated
hereby or thereby, other than (i) as may be required under the blue
sky or securities laws of any State or the Securities Act of 1933, and
(ii) the filing of UCC financing statements.
(d) Valid Sale; Binding Obligation. Seller intends this
Agreement to effect a valid sale, transfer, and assignment of the
Receivables and the other properties and rights included in the Owner
Trust Estate conveyed by Seller to Issuer hereunder, enforceable
against creditors of and purchasers from Seller; and each of this
Agreement and the Basic Documents constitutes a legal, valid and
binding obligation of Seller, enforceable against Seller in accordance
with its respective terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation and other similar laws affecting enforcement
of the rights of creditors of banks generally and to equitable
limitations on the availability of specific remedies.
(e) No Violation. The execution, delivery and performance by
Seller of this Agreement and the Basic Documents and the consummation
of the transactions contemplated hereby and thereby will not conflict
with, result in any material breach of any of the terms and provisions
of, constitute (with or without notice or lapse of time) a material
default under or result in the creation or imposition of any Lien upon
any of its material properties pursuant to the terms of, (i) the
articles of incorporation or bylaws of Seller, (ii) any material
indenture, contract, lease, mortgage, deed of trust or other
instrument or agreement to which Seller is a party or by which Seller
is bound, or (iii) any law, order, rule or regulation applicable to
Seller of any federal or state regulatory body, any court,
administrative agency, or other governmental instrumentality having
jurisdiction over Seller.
(f) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of Seller, threatened, before any court,
regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over Seller or its
properties: (i) asserting the invalidity of this Agreement, the Notes
or the Certificates, (ii) seeking to prevent the issuance of the Notes
or Certificates or the consummation of any of the transactions
contemplated by this Agreement, (iii) seeking any determination or
ruling that might materially and adversely affect the performance by
Seller of its obligations under, or the validity or enforceability of,
this Agreement, the Notes or the Certificates, to the extent
applicable, or (d) that may materially and adversely affect the
federal or state income, excise franchise or similar tax attributes of
the Certificates.
(g) Chief Executive Office. The chief executive office of
Seller is at 100 West Commons Boulevard, Suite 212, New Castle,
Delaware, 19720.
SECTION 6.2. Continued Existence. During the term of this Agreement,
subject to Section 6.4, Seller will keep in full force and effect its
existence, rights and franchises as a corporation organized under the laws
of the State of Delaware and will obtain and preserve its qualification to
do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, the
Basic Documents and each other instrument or agreement necessary or
appropriate to the proper administration of this Agreement and the
transactions contemplated hereby.
SECTION 6.3. Liability of Seller; Indemnities. Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by Seller under this Agreement.
(a) Subject to Section 11.3, Seller shall indemnify, defend and
hold harmless Issuer, Owner Trustee and Trustee and their respective
officers, directors, employees and agents from and against any taxes
that may at any time be asserted against any such Person with respect
to the transactions contemplated in this Agreement and any of the
Basic Documents (except any income taxes arising out of fees paid to
Owner Trustee or Trustee and except any taxes to which Owner Trustee
or Trustee may otherwise be subject to), including any sales, gross
receipts, general corporation, tangible personal property, privilege
or license taxes (but, in the case of Issuer, not including any taxes
asserted with respect to the sale of the Receivables to Owner Trustee
on behalf of Issuer or the issuance and original sale of the
Certificates and the Notes, or asserted with respect to ownership of
the Receivables or Federal or other income taxes arising out of
transactions contemplated by this Agreement) and costs and expenses in
defending against the same or in connection with any application
relating to the Notes or Certificates under any state securities laws.
(b) Subject to Section 11.3, Seller shall indemnify, defend and
hold harmless Issuer, Owner Trustee, Trustee, the Certificateholders
and the Noteholders and the officers, directors, employees and agents
of Issuer, Owner Trustee and 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 or as a result of
(i) 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,
(ii) Seller's or Issuer's violation of Federal or state securities
laws in connection with the offering and sale of the Notes and the
Certificates or in connection with any application relating to the
Notes or Certificates under any state securities laws and (iii) the
failure of any Receivable conveyed by it to the Trust hereunder, or
the sale of the related Financed Vehicle, to comply with all
requirements of applicable law.
(c) Subject to Section 11.3, Seller shall be liable as primary
obligor for, and shall indemnify, defend and hold harmless Owner
Trustee and its officers, directors, employees and agents from and
against any and all costs, expenses, losses, claims, damages and
liabilities arising out of, or incurred in connection with, this
Agreement or any of the Basic Documents, the Owner Trust Estate, the
acceptance or performance of the trusts and duties set forth herein
and in the Trust Agreement or the action or the inaction of Owner
Trustee hereunder and under the Trust Agreement, 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 Owner
Trustee, (ii) shall arise from any breach by Owner Trustee of its
covenants under this Agreement or any of the Basic Documents; or (iii)
shall arise from the breach by Owner Trustee of any of its
representations or warranties set forth in Section 7.3 of the Trust
Agreement. Such liability shall survive the termination of Issuer.
(d) Subject to Section 11.3, Seller shall pay any and all taxes
levied or assessed upon all or any part of the Owner Trust Estate
(other than those taxes expressly excluded from Seller's
responsibilities pursuant to the parentheticals in paragraph (a)
above).
Indemnification under this Section shall survive the resignation or removal
of Owner Trustee or Trustee and the termination of this Agreement or the
Indenture or the Trust Agreement, as applicable, and shall include
reasonable fees and expenses of counsel and other expenses of litigation.
If 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 Seller, without interest.
SECTION 6.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to
which Seller shall be a party or (c) which may succeed to the properties
and assets of Seller substantially as a whole, shall be the successor to
Seller without the execution or filing of any document or any further act
by any of the parties to this Agreement; provided that 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 Norwest Auto Receivables Corporation, executes an agreement of
assumption to perform every obligation of Seller under this Agreement, (ii)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.1 or 6.1 shall have been breached,
(iii) Seller shall have delivered to Owner Trustee and Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this
Section and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, and that
the Rating Agency Condition shall have been satisfied with respect to such
transaction, (iv) the surviving Seller shall have a consolidated net worth
at least equal to that of the predecessor Seller, (v) such transaction will
not result in a material adverse federal or state tax consequence to
Issuer, the Noteholders or the Certificateholders and (vi) unless Norwest
Auto Receivables Corporation is the surviving entity, Seller shall have
delivered to Owner Trustee and 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 Owner
Trustee and Trustee, respectively, 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 6.5. Limitation on Liability of Seller and Others. Seller and
any director or officer or employee or agent of 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 any Basic Document (provided that such reliance shall not
limit in any way Seller's obligations under Section 3.2). 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.
SECTION 6.6. Seller May Own Certificates or Notes. Seller and any
Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of Certificates or Notes with the same rights as it would
have if it were not Seller or an Affiliate thereof, except as expressly
provided herein or in any Basic Document.
ARTICLE VII. SERVICER.
SECTION 7.1. Representations of Servicer. Servicer makes the
following representations on which Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution
and delivery of the Agreement and shall survive the sale of the Receivables
to Issuer and the pledge thereof to Trustee pursuant to the Indenture.
(a) Organization and Good Standing. Servicer has been duly
organized and is validly existing as a national banking association in
good standing under the laws of the United States, with the power and
authority to own its properties and to conduct its business as such
properties are presently owned and such business is presently
conducted, and had at all relevant times, and shall have, the power,
authority and legal right to service the Receivables and the other
properties and rights included in the Owner Trust Estate.
(b) Power and Authority. Servicer has the power, authority and
legal right to execute and deliver this Agreement and the Basic
Documents and to carry out their respective terms; and the execution,
delivery and performance of this Agreement and the Basic Documents has
been duly authorized by Servicer by all necessary corporate action.
(c) No Consent Required. No approval, authorization, consent,
license or other order or action of, or filing or registration with,
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement, the
Basic Documents or the consummation of the transactions contemplated
hereby or thereby.
(d) Binding Obligation. Each of this Agreement and the Basic
Documents constitutes a legal, valid and binding obligation of
Servicer, enforceable against Servicer in accordance with its
respective terms, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation and other similar laws affecting enforcement of the rights
of creditors of banks generally and to equitable limitations on the
availability of specific remedies.
(e) No Violation. The execution, delivery and performance by
Servicer of this Agreement and the Basic Documents and the
consummation of the transactions contemplated hereby and thereby will
not conflict with, result in any material breach of any of the terms
and provisions of, constitute (with or without notice or lapse of
time) a material default under, or result in the creation or
disposition of any Lien upon any of its material properties pursuant
to the terms of, (i) the articles of association or bylaws of
Servicer, (ii) any material indenture, contract, lease, mortgage, deed
of trust or other instrument or agreement to which Servicer is a party
or by which Servicer is bound, or (iii) any law, order, rule or
regulation applicable to Servicer of any federal or state regulatory
body, any court, administrative agency, or other governmental
instrumentality having jurisdiction over Servicer.
(f) No Proceedings. There are no proceedings or investigations
pending, or, to Servicer's knowledge, threatened, before any court,
regulatory body, administrative agency, or tribunal or other
governmental instrumentality having jurisdiction over Servicer or its
properties: (i) asserting the invalidity of this Agreement, the Notes
or the Certificates, (ii) seeking to prevent the issuance of the
Certificates or the Notes or the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by Servicer of its obligations under, or the validity or
enforceability of, this Agreement, the Notes or the Certificates, to
the extent applicable, or (iv) that may materially and adversely
affect the federal or state income, excise, franchise or similar tax
attributes of the Certificates.
SECTION 7.2. Indemnities of Servicer. (a) Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by Servicer under this Agreement.
(b) Subject to Section 11.3, Servicer shall indemnify, defend and hold
harmless Issuer, Owner Trustee, Trustee, Seller, the Certificateholders and
the Noteholders and any of the officers, directors, employees and agents of
Issuer, Owner Trustee, Trustee or 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
Servicer in the performance of its obligations and duties under this
Agreement or in the performance of the obligations and duties of any
subservicer under any 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 any subservicer under any
subservicing agreement, where the final 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 Servicer or any subservicer, is
established by a court of law, by an arbitrator or by way of settlement
agreed to by Servicer. Notwithstanding the foregoing, if 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, 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 Servicer remains unable
to perform such obligation as a result of such event. This provision shall
not be construed to limit 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.
(c) Subject to Section 11.3, Servicer shall indemnify, defend and hold
harmless Issuer, Owner Trustee, Trustee, Seller, Certificateholders and the
Noteholders or any of the officers, directors, employees and agents of
Issuer, Owner Trustee, Trustee or 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.
(d) Subject to Section 11.3, Servicer shall indemnify, defend and
hold harmless Issuer, Owner Trustee, Trustee, Seller, the
Certificateholders and the Noteholders or any of the directors, officers,
employees and agents of Issuer, Owner Trustee, Trustee and Seller from and
against any and all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel and expenses
of litigation, arising out of or resulting from the use, ownership, or
operation by Servicer or any Affiliate thereof of any Financed Vehicle.
Indemnification under this Section shall survive the resignation or removal
of Owner Trustee or Trustee and the termination of this Agreement or the
Indenture or the Trust Agreement, as applicable, and shall include
reasonable fees and expenses of counsel and other expenses of litigation.
If Servicer shall have made any indemnity payments pursuant to this Section
and the Person to or on behalf of whom such payments are made thereafter
shall collect any of such amounts from others, such Person shall promptly
repay such amounts to Servicer, without interest.
SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person (a) into which Servicer may be merged
or consolidated, (b) which may result from any merger or consolidation to
which Servicer shall be a party, (c) which may succeed to the properties
and assets of Servicer, substantially as a whole, or (d) 50% of the voting
stock of which is owned directly or indirectly by Norwest Corporation,
shall be the successor to Servicer without the execution or filing of any
document or any further act by any of the parties to this Agreement;
provided that Servicer hereby covenants that it will not consummate any of
the foregoing transactions except upon satisfaction of the following: (i)
the surviving Servicer if other than Norwest Bank, executes an agreement of
assumption to perform every obligation of Servicer under this Agreement,
(ii) immediately after giving effect to such transaction, no representation
or warranty made pursuant to Section 7.1 shall have been breached and no
Servicer Termination Event, and no event that, after notice or lapse of
time, or both, would become a Servicer Termination Event shall have
occurred and be continuing, (iii) Servicer shall have delivered to Owner
Trustee and Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if
any, provided for in this Agreement relating to such transaction have been
complied with, and that the Rating Agency Condition shall have been
satisfied with respect to such transaction, (iv) the surviving Servicer
shall have a consolidated net worth at least equal to that of the
predecessor Servicer, and (v) such transaction will not result in a
material adverse Federal or state tax consequence to Issuer, the
Noteholders or the Certificateholders.
SECTION 7.4. Limitation on Liability of Servicer and Others. Neither
Servicer nor any of its directors, officers, employees or agents shall be
under any liability to Issuer, the Noteholders or the Certificateholders,
except as provided under this Agreement, for any action taken or for
refraining from the taking of any action by Servicer or any subservicer
pursuant to this Agreement or for errors in judgment; provided that this
provision shall not protect 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. Servicer
or any 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 provided in this Agreement, 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 that Servicer may (but shall not be required to)
undertake any reasonable action that it may deem necessary or desirable in
respect of the Basic Documents to protect the interests of the
Certificateholders under this Agreement and the Noteholders under the
Indenture.
SECTION 7.5. Norwest Bank Not To Resign as Servicer. Subject to the
provisions of Section 7.3, Norwest Bank 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 Norwest Bank, as Servicer shall
be communicated to Owner Trustee and 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 Owner
Trustee and Trustee concurrently with or promptly after such notice. No
such resignation shall become effective until the earlier of Trustee or a
Successor Servicer having assumed the responsibilities and obligations of
the resigning Servicer in accordance with Section 8.2 or the date upon
which any regulatory authority requires such resignation.
SECTION 7.6. Existence. Subject to the provisions of Section 7.3,
during the term of this Agreement, Norwest Bank will keep in full force
and effect its existence, rights and franchises as a national banking
association under the laws of the jurisdiction of its organization.
ARTICLE VIII. DEFAULT.
SECTION 8.1. Servicer Termination Event. If any one of the following
events (a "Servicer Termination Event") shall occur and be continuing:
(a) any failure by Servicer to deliver to Trustee for deposit
in any of the Trust Accounts or the Certificate Distribution Account
any required payment or to direct Trustee or Owner Trustee 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 Servicer from Owner Trustee or Trustee or after discovery
of such failure by an Authorized Officer of Servicer; or
(b) failure on the part of Servicer duly to observe or to
perform in any material respect any other covenants or agreements of
Servicer set forth in this Agreement or any other Basic Document,
which failure shall (i) materially and adversely affect the rights of
either the Certificateholders or Noteholders and (ii) continue
unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given (A) to Servicer by Owner Trustee or Trustee or (B) to
Servicer and to Owner Trustee and Trustee by the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes or
Holders of Certificates evidencing not less than 25% of the
outstanding Certificate Balance, as applicable (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 Servicer delivers an Officers' Certificate to
Owner Trustee and Trustee to such effect and to the effect that
Servicer has 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 Servicer or any
successor;
then, and in each and every case, so long as Servicer Termination Event
shall not have been remedied, either Trustee, or the Holders of Notes
evidencing greater than 50% of the Outstanding Amount of the Notes, by
notice then given in writing to Servicer and Owner Trustee (and to Trustee
if given by the Noteholders) may terminate all the rights and obligations
(other than the obligations set forth in Section 7.2) of Servicer under
this Agreement. On or after the receipt by Servicer of such written notice,
all authority and power of Servicer under this Agreement, whether with
respect to the Notes, the Certificates or the Receivables or otherwise,
shall, without further action, pass to and be vested in Trustee or such
successor Servicer as may be appointed under Section 8.2; and, without
limitation, Trustee and Owner Trustee are 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, Trustee and Owner 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 a Servicer
Termination Event, Owner Trustee shall give notice thereof to the Rating
Agencies.
SECTION 8.2. Appointment of Successor. (a) Upon Servicer's receipt of
notice of termination, pursuant to Section 8.1 or Servicer's resignation in
accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, in the
case of termination, only until the date specified in such termination
notice or, if no such date is specified in a notice of termination, until
receipt of such notice and, in the case of resignation, until the earlier
of (i) the date 45 days from the delivery to Owner Trustee and Trustee of
written notice of such resignation (or written confirmation of such notice)
in accordance with the terms of this Agreement and (ii) the date upon which
the predecessor Servicer shall become unable to act as Servicer, as
specified in the notice of resignation and accompanying Opinion of Counsel.
In the event of Servicer's termination hereunder, Trustee shall appoint a
successor Servicer, and the successor Servicer shall accept its appointment
by a written assumption in form acceptable to Owner Trustee and 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, Trustee without further action shall automatically be
appointed the successor Servicer and Trustee shall be entitled to the
Servicing Fee. Notwithstanding the above, 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 Servicer under
this Agreement.
(b) Upon appointment, the successor Servicer (including Trustee
acting as successor servicer) shall be the successor in all respects to the
predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities arising thereafter relating thereto placed on the
predecessor Servicer and shall be entitled to the Servicing Fee and all the
rights granted to the predecessor Servicer by the terms and provisions of
this Agreement. No successor Servicer shall be liable for any acts or
omissions of any predecessor Servicer.
(c) Servicer may not resign unless it is prohibited from serving as
such by law or by requirement of any regulatory authority.
(d) A transfer of servicing hereunder shall not affect the rights and
duties of the parties hereunder (including the obligations and indemnities
of Seller pursuant to Sections 3.3, 4.3, 6.1 and 6.3 or, with respect to
obligations and indemnities arising prior to, or concurrently with, a
transfer of servicing hereunder, the outgoing Servicer pursuant to Section
4.8, 7.1 or 7.2) other than those relating to the management,
administration, servicing, custody or collection of the Receivables and the
other rights and properties included in the Owner Trust Estate. The
successor Servicer shall, upon its appointment pursuant to Section 8.2 and
as part of its duties and responsibilities under this Agreement, promptly
take all action it deems necessary or appropriate so that the outgoing
Servicer (in whatever capacity) is paid or reimbursed all amounts it is
entitled to receive under this Agreement on each Distribution Date
subsequent to the date on which it is terminated as Servicer hereunder.
Without limiting the generality of the foregoing, the outgoing Servicer
will be entitled to receive all accrued and unpaid Servicing Fees through
and including, and to be reimbursed for all Outstanding Advances as of, the
effective date of the termination of the outgoing Servicer.
SECTION 8.3. Payment of Servicing Fee. If Servicer shall be replaced,
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 4.8.
SECTION 8.4. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, Servicer pursuant to
this Article VIII, Owner Trustee shall give prompt written notice thereof
to Certificateholders and Trustee shall give prompt written notice thereof
to Noteholders subject to the Rating Agency Condition.
SECTION 8.5. Waiver of Past Defaults. The Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes (or the
Holders of Certificates evidencing not less than a majority of the
outstanding Certificate Balance, as applicable, in the case of any default
which does not adversely affect Trustee or the Noteholders) may, on behalf
of all Noteholders and Certificateholders, waive in writing any default by
Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or
payments from any of the Trust Accounts in accordance with this Agreement.
Upon any such waiver of a past default, such default shall cease to exist,
and any Servicer Termination Event 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 IX. TERMINATION.
SECTION 9.1. Optional Purchase of All Receivables. (a) On the last
day of any Collection Period immediately preceding a Determination Date as
of which the then outstanding Pool Balance is 5% or less of the Original
Pool Balance, Seller and Servicer shall each have the option to purchase
the Owner Trust Estate, other than the Trust Accounts and the Certificate
Distribution Account. To exercise such option, Seller or Servicer, as
applicable, shall deposit pursuant to Section 5.4 in the Collection Account
an amount which, when added to the amounts on deposit in the Collection
Account for such Distribution Date, equals the sum of (a) the unpaid
principal amount of the then outstanding Class A-2 Notes, plus accrued and
unpaid interest thereon, plus (b) the Certificate Balance plus accrued and
unpaid interest thereon. The Class A-2 Notes and the Certificates will be
redeemed concurrently therewith.
(b) Upon any sale of the assets of Issuer pursuant to Section 9.2 of
the Trust Agreement, Servicer shall instruct Trustee in writing to deposit
the proceeds from such sale after all payments and reserves therefrom
(including the expenses of such sale) have been made (the "Insolvency
Proceeds") in the Collection Account. On the Distribution Date on which the
Insolvency Proceeds are deposited in the Collection Account (or, if such
proceeds are not so deposited on a Distribution Date, on the Distribution
Date immediately following such deposit), Servicer shall instruct Trustee
in writing to make, and Trustee shall make, the following deposits and
distributions (after the application on such Distribution Date of the Total
Distribution Amount pursuant to Section 5.5) from the Insolvency Proceeds
and any funds remaining on deposit in the Reserve Account (including the
proceeds of any sale of investments therein):
(i) to the Note Distribution Account, any portion of the
Noteholders' Interest Distributable Amount not otherwise deposited
into the Note Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the outstanding principal
balance of the Notes (after giving effect to the reduction in the
outstanding principal balance of the Notes to result from the deposits
made in the Note Distribution Account on such Distribution Date);
(iii) to Owner Trustee for deposit in the Certificate
Distribution Account, any portion of the Certificateholders' Interest
Distributable Amount not otherwise deposited into the Certificate
Distribution Account on such Distribution Date; and
(iv) to Owner Trustee for deposit in the Certificate
Distribution Account, the Certificate Balance and any
Certificateholders' Principal Carryover Shortfall (after giving effect
to the reduction in the Certificate Balance to result from the
deposits made in the Certificate Distribution Account on such
Distribution Date).
Any Insolvency Proceeds remaining after the deposits described above shall
be paid to Seller.
(c) Notice of any termination of Issuer shall be given by Servicer to
Owner Trustee, Trustee and the Rating Agencies as soon as practicable after
Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder
and Owner Trustee will succeed to the rights of, and assume the obligations
of, Trustee pursuant to this Agreement.
ARTICLE X. ADMINISTRATIVE DUTIES OF SERVICER.
SECTION 10.1. Administrative Duties. (a) Duties with Respect to the
Indenture and Depository Agreements. Servicer shall perform all its duties
and the duties of Issuer under the Depository Agreements. In addition,
Servicer shall consult with Owner Trustee as Servicer deems appropriate
regarding the duties of Issuer under the Indenture and the Depository
Agreements. Servicer shall monitor the performance of Issuer and shall
advise Owner Trustee when action is necessary to comply with Issuer's
duties under the Indenture and the Depository Agreements. Servicer shall
prepare for execution by Issuer or shall cause the preparation by other
appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of Issuer to prepare,
file or deliver pursuant to the Indenture and the Depository Agreements. In
furtherance of the foregoing, Servicer shall take all appropriate action
that is the duty of Issuer to take pursuant to the Indenture.
(b) Duties with Respect to Issuer. (i) In addition to the duties of
Servicer set forth in this Agreement or any of the Basic Documents,
Servicer shall perform such calculations and shall prepare for execution by
Issuer or Owner Trustee or shall cause the preparation by other appropriate
Persons of all such documents, reports, filings, instruments, certificates
and opinions as it shall be the duty of Issuer or Owner Trustee to prepare,
file or deliver pursuant to this Agreement or any of the Basic Documents,
and at the request of Owner Trustee shall take all appropriate action that
it is the duty of Issuer to take pursuant to this Agreement or any of the
Basic Documents. In accordance with the directions of Owner Trustee,
Servicer shall administer, perform or supervise the performance of such
other activities in connection with the Collateral (including the Basic
Documents) as are not covered by any of the foregoing provisions and as are
expressly requested by Owner Trustee and are reasonably within the
capability of Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Basic Documents to the contrary, Servicer shall be responsible for
promptly notifying Owner Trustee in the event that any withholding tax
is imposed on Issuer's payments (or allocations of income) to an Owner
as contemplated in Section 5.2(c) of the Trust Agreement. Any such
notice shall specify the amount of any withholding tax required to be
withheld by Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, Servicer shall be responsible for
performance of the duties of Owner Trustee and Seller set forth in
Section 5.6(a) and (b) of the Trust Agreement with respect to, among
other things, accounting and reports to Owners; provided that Owner
Trustee shall retain responsibility for the distribution of the
Schedule K-1s necessary to enable each Certificateholder to prepare
its federal and state income tax returns.
(iv) Servicer shall perform the duties of Servicer specified
in Section 10.2 of the Trust Agreement required to be performed in
connection with the resignation or removal of Owner Trustee, and any
other duties expressly required to be performed by Servicer under this
Agreement or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, Servicer may enter into transactions
with or otherwise deal with any of its Affiliates; provided that the
terms of any such transactions or dealings shall be in accordance with
any directions received from Issuer and shall be, in Servicer's
opinion, no less favorable to Issuer in any material respect.
(c) Tax Matters. As agent of Servicer, it is understood and agreed
that Trustee shall prepare and file, on behalf of Seller, all tax returns,
tax elections, financial statements and such annual or other reports of
Issuer as are necessary for preparation of tax reports as provided in
Article V of the Trust Agreement, including forms 1065 and Schedules K-1.
All tax returns will be signed by Seller.
(d) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of Servicer are non-ministerial, Servicer shall not
take any action pursuant to this Article X unless within a reasonable time
before the taking of such action, Servicer shall have notified Owner
Trustee and Trustee in writing of the proposed action and Owner Trustee
and, with respect to items (A), (B), (C) and (D) below, Trustee shall not
have withheld consent or provided an alternative direction. For the purpose
of the preceding sentence, "non-ministerial matters" shall include:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by Issuer and the
compromise of any action, claim or lawsuit brought by or against
Issuer (other than in connection with the collection of the
Receivables);
(C) the amendment, change or modification of this Agreement or
any of the Basic Documents;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Trustees pursuant to the Indenture or the
appointment of Successor Servicers or the consent to the assignment by
the Note Registrar, Paying Agent or Trustee of its obligations under
the Indenture; and
(E) the removal of Trustee.
(e) Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic
Documents, Servicer, in its capacity hereunder, shall not be obligated to,
and shall not, (1) make any payments to the Noteholders or
Certificateholders under the Basic Documents, (2) sell the Trust Estate
pursuant to Section 5.4 of the Indenture, (3) take any other action that
Issuer directs Servicer not to take on its behalf or (4) in connection with
its duties hereunder assume any indemnification obligation of any other
Person.
SECTION 10.2. Records. Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement,
which books of account and records shall be accessible for inspection by
Issuer at any time during normal business hours.
SECTION 10.3. Additional Information To Be Furnished to Issuer.
Servicer shall furnish to Issuer from time to time such additional
information regarding the Collateral as Issuer shall reasonably request.
ARTICLE XI. MISCELLANEOUS PROVISIONS.
SECTION 11.1. Amendment. (a) This Agreement may be amended by
Seller, Servicer and Owner Trustee, with the consent of Trustee (which
consent may not be unreasonably withheld), but without the consent of any
of the Noteholders or the Certificateholders:
(i) to cure any ambiguity or defect, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this
Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided that such action shall not, as evidenced
by an Opinion of Counsel delivered to Owner Trustee and Trustee, adversely
affect in any material respect the interests of any Noteholder or
Certificateholder;
(ii) upon (A) the adoption of final regulations by the Internal
Revenue Service as to entity classification, and (B) the receipt by the
Owner Trustee of an Opinion of Counsel that the deletion of such provisions
will not adversely affect the ability of the Trust to be characterized as a
partnership for federal income tax purposes;
(iii) (A) to add, modify or eliminate such provisions as may be
necessary or advisable in order to enable all or a portion of the Trust to
qualify as, and to permit an election to be made to cause all or a portion
of the Trust to be treated as, a "financial asset securitization investment
trust" as described in the provisions of the "Seven Year Balanced Budget
Act of 1995," H.R. 2491, 104th Cong., 1st Sess. (1995), or to enable all or
a portion of the Trust to qualify and an election to be made for similar
treatment under such comparable subsequent federal income tax provisions as
may ultimately be enacted into law, and (B) in connection with any such
election, to modify or eliminate existing provisions set forth in this
Agreement relating to the intended federal income tax treatment of the
Notes or Certificates and the Trust in the absence of the election. It is a
condition to any such amendment that each Rating Agency will have notified
the Seller, the Servicer and the Owner Trustee in writing that the
amendment will not result in a reduction or withdrawal of the rating of any
outstanding Notes or Certificates with respect to which it is a Rating
Agency; and
(iv) to add, modify or eliminate such provisions as may be necessary
or advisable in order to enable (a) the transfer to the Trust of all or any
portion of the Receivables to be derecognized under generally accepted
accounting principles ("GAAP") by Seller to the Trust or (b) the Trust to
avoid becoming a member of Seller's consolidated group under GAAP, and (ii)
in connection with any such addition, modification or elimination, without
limiting the generality of the foregoing clause (i), to cause the
Receivables to be transferred by Seller first to a bankruptcy remote
affiliate and from such affiliate to the Trust; provided, however, that it
is a condition to any such amendment that (i) Seller delivers an officer's
certificate to Trustee to the effect that such amendment meets the
requirements set forth in this paragraph and (ii) such amendment will not
result in a withdrawal or reduction of the rating of any outstanding Notes
or Certificates.
(b) This Agreement may also be amended from time to time by Seller,
Servicer and Owner Trustee, with the consent of Trustee, the consent of the
Holders of Notes evidencing not less than a majority of the Outstanding
Amount of the Notes and the consent of the Holders of Certificates
evidencing not less than a majority of the Certificate Balance for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided
that no such amendment shall (c) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Receivables or distributions that shall be required to be made for the
benefit of the Noteholders or the Certificateholders or (d) reduce the
aforesaid percentage of the Outstanding Amount of the Notes and the
Certificate Balance, the Holders of which are required to consent to any
such amendment, without the consent of the Holders of all the outstanding
Notes and the Holders of all the outstanding Certificates of each class
affected thereby.
(e) Prior to the execution of any such amendment or consent, Owner
Trustee shall furnish written notification of the substance of such
amendment or consent to each Rating Agency. Promptly after the execution of
any such amendment or consent, Owner Trustee shall furnish written
notification the substance of such amendment or consent to each
Certificateholder and Trustee.
(f) It shall not be necessary for the consent of Certificateholders
or Noteholders pursuant to this Section to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof.
(g) Prior to the execution of any amendment to this Agreement, Owner
Trustee and Trustee shall be entitled to receive and rely upon an Opinion
of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and that all conditions precedent to the
execution and delivery of such amendment have been satisfied and the
Opinion of Counsel referred to in Section 11.2(i)(1) has been delivered.
Owner Trustee and Trustee may, but shall not be obligated to, enter into
any such amendment which affects Owner Trustee's or Trustee's, as
applicable, own rights, duties or immunities under this Agreement or
otherwise.
SECTION 11.2. Protection of Title to Issuer. (a) Seller shall
execute and file such financing statements and cause to be executed and
filed such continuation statements, all in such manner and in such places
as may be required by law fully to preserve, maintain and protect the
interest of Issuer and the interests of Trustee in the Receivables and the
proceeds thereof. Seller shall deliver (or cause to be delivered) to Owner
Trustee and Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such
filing.
(b) Neither Seller nor Servicer shall change its name, identity or
corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section
9-402(7) of the UCC, unless it shall have given Owner Trustee and 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 Seller and Servicer shall have an obligation to give
Owner Trustee and 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. Servicer shall at all times maintain each office from which
it shall service Receivables, and its principal executive office, within
the United States of America.
(d) 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) Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, Servicer's
master computer records (including any backup archives) that refer to a
Receivable shall indicate clearly the interest of Issuer and Trustee in
such Receivable and that such Receivable is owned by Issuer and has been
pledged to Trustee. Indication of Issuer's and Trustee's interest in a
Receivable shall be deleted from or modified on Servicer's computer systems
when, and only when, the related Receivable shall have been paid in full or
repurchased by Seller or purchased by Servicer.
(f) If at any time Seller or Servicer shall propose to sell, grant a
security interest in or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee,
Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored
from backup archives) that, if they shall refer in any manner whatsoever to
any Receivable, shall indicate clearly that such Receivable has been sold
and is owned by Issuer and has been pledged to Trustee.
(g) Servicer shall permit Trustee and its agents at any time during
normal business hours to inspect, audit and make copies of and abstracts
from Servicer's records regarding any Receivable.
(h) Upon request at any time Owner Trustee or Trustee shall have
reasonable grounds to believe that such request is necessary in connection
with the performance of its duties under this Agreement or any of the Basic
Documents, Servicer shall furnish to Owner Trustee or to Trustee, within
five Business Days, a list of all Receivables (by contract number and name
of Obligor) then owned by Issuer, together with a reconciliation of such
list to the Schedule of Receivables and to each of Servicer's Reports
furnished before such request indicating removal of Receivables from
Issuer.
(i) Servicer shall deliver to Owner Trustee and Trustee:
(1) promptly after the execution and delivery of this Agreement
and of each 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 Owner Trustee
and 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; and
(2) within 120 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three
months after the Cutoff Date, an Opinion of Counsel, dated as of a
date during such 120-day period, 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 Owner Trustee and 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.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
(j) Seller shall, to the extent required by applicable law, cause the
Certificates and the Notes 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 11.3. Litigation and Indemnities. If any suit, action,
proceeding (including any governmental or regulatory investigation), claim
or demand shall be brought or asserted against any Person in respect of
which indemnity may be sought pursuant to Sections 6.3 or 7.2, such Person
(the "Indemnified Person") shall promptly notify the person against whom
such indemnity may be sought (the "Indemnifying Person") in writing, and
the Indemnifying Person, upon request of the Indemnified Person, shall
retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others the Indemnifying Person may
designate in such proceeding and shall pay the reasonable fees and expenses
of such counsel related to such proceeding. The Indemnifying Person shall
not be liable for any settlement of any claim or proceeding effected
without its written consent, but if settled with such consent or if there
be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall,
without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Person, unless such settlement
includes an unconditional release of such Indemnified Person from all
liability on claims that are the subject matter of such proceeding.
SECTION 11.4. Notices. All demands, notices and communications upon
or to Seller, Servicer, Owner Trustee, 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, and shall be
deemed to have been duly given upon receipt (a) in the case of Seller, to
Norwest Auto Receivables Corporation, Norwest Center, Sixth and Marquette,
Minneapolis, Minnesota, 55479-1026, Attention: ______________ (b) in the
case of Servicer, to Norwest Bank Minnesota, N.A., Norwest Center, Sixth
and Marquette, Minneapolis, Minnesota, 55479-1026, Attention:
_______________, (c) in the case of Issuer or Owner Trustee, at the
Corporate Trust Office, (d) in the case of Trustee, at the Corporate Trust
Office, (e) 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, and (f) in the case of Standard & Poor's, to Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., 26
Broadway (15th Floor), New York, New York 10004, Attention of Asset Backed
Surveillance Department.
SECTION 11.5. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.4 and 7.3 and as
provided in the provisions of this Agreement concerning the resignation of
Servicer, this Agreement may not be assigned by Seller or Servicer.
SECTION 11.6. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of Seller, Servicer, Issuer, Owner
Trustee and for the benefit of the Certificateholders (including Seller),
Trustee and the Noteholders, as third-party beneficiaries, and nothing in
this Agreement, whether express or implied, shall be construed to give to
any other Person any legal or equitable right, remedy or claim in the Owner
Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 11.7. 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
create or render unenforceable such provision in any other jurisdiction.
SECTION 11.8. Separate Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 11.9. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 11.10. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.11. Assignment to Trustee. Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security
interest by Issuer to Trustee pursuant to the Indenture for the benefit of
the Noteholders of all right, title and interest of Issuer in, to and under
the Receivables and/or the assignment of any or all of Issuer's rights and
obligations hereunder to Trustee.
SECTION 11.12. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, Servicer and Seller shall not, prior to the
date which is one year and one day after the termination of this Agreement
with respect to Issuer, acquiesce, petition or otherwise invoke or cause
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against Issuer under any Federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of Issuer or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of Issuer.
SECTION 11.13. Limitation of Liability of Owner Trustee and Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by _______________ not in its individual
capacity but solely in its capacity as Owner Trustee of Issuer and in no
event shall ________________ in its individual capacity or, except as
expressly provided in the Trust Agreement, as Owner Trustee have any
liability for the representations, warranties, covenants, agreements or
other obligations of Issuer hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto, as to all of which
recourse shall be had solely to the assets of Issuer. For all purposes of
this Agreement, in the performance of its duties or obligations hereunder
or in the performance of any duties or obligations of Issuer hereunder,
Owner Trustee shall be subject to, and entitled to the benefits of, the
terms and provisions of Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by _________________ not in its individual
capacity but solely as Trustee and in no event shall __________________
have any liability for the representations, warranties, covenants,
agreements or other obligations of Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of Issuer.
SECTION 11.14. Independence of Servicer. For all purposes of this
Agreement, Servicer shall be an independent contractor and shall not be
subject to the supervision of Issuer or Owner Trustee with respect to the
manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by Issuer, Servicer shall have no
authority to act for or represent Issuer or Owner Trustee in any way and
shall not otherwise be deemed an agent of Issuer or Owner Trustee.
SECTION 11.15. No Joint Venture. Nothing contained in this Agreement
(i)shall constitute Servicer and either of Issuer or Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed
to impose any liability as such on any of them or (iii) shall be deemed to
confer on any of them any express, implied or apparent authority to incur
any obligation or liability on behalf of the others.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers
as of the day and year first above written.
NORWEST AUTO TRUST 199_-_
By:
By:______________________________________
Name:
Title:
NORWEST AUTO RECEIVABLES CORPORATION,
Seller,
By:_______________________________________
Name:
Title:
NORWEST BANK MINNESOTA, N.A.,
Servicer,
By:_______________________________________
Name:
Title:
Acknowledged and Accepted:
___________________________,
not in its individual capacity
but solely as Trustee,
By:_____________________________
Name:
Title:
Acknowledged and Accepted:
____________________________,
not in its individual capacity
but solely as Owner Trustee,
By:_____________________________
Name:
Title:
SCHEDULE A
Delivered on Disk to Trustee and Owner Trustee
<PAGE>
SCHEDULE B
The Receivables are located at the offices of Servicer
<PAGE>
APPENDIX X
DEFINITIONS
"Acquired Receivable" means a Receivable acquired by a Seller
Affiliate through the acquisition of a financial institution that owned
such Receivable.
"Act" is defined in Section 11.3(a) of the Indenture.
"Actuarial Receivable" means a Receivable that provides for
amortization of the loan over a series of fixed level payment monthly
installments and each monthly installment, including the monthly
installment representing the final payment on the Receivable, consists of
an amount of interest equal to 1/12 of the annual percentage rate of the
loan multiplied by the unpaid principal balance of the loan, and an amount
of principal equal to the remainder of the monthly installment.
"Advances" means, with respect to any Distribution Date, the amount
required to be advanced by Servicer on the related Deposit Date pursuant to
Section 5.3.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing. A Person shall not be deemed to be an Affiliate of any person
solely because such other Person has the contractual right or obligation to
manage such Person unless such other Person controls such Person through
equity ownership or otherwise.
"Aggregate Net Losses" means, for any Collection Period, the aggregate
amount allocable to principal of all Receivables newly designated during
such Collection Period as Defaulted Receivables minus all Liquidation
Proceeds collected during such Collection Period with respect to all
Defaulted Receivables (whether or not newly designated as such).
"Authorized Officer" means, with respect to Issuer and Servicer, any
officer of Owner Trustee or Servicer, as applicable, who is authorized to
act for Owner Trustee or Servicer, as applicable, in matters relating to
Issuer and who is identified on the list of Authorized Officers delivered
by each of Owner Trustee and Servicer to Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter).
"Available Interest" means, with respect to any Distribution Date, the
excess of (a) the sum of (i) Interest Collections for such Distribution
Date and (ii) all Advances made by Servicer with respect to such
Distribution Date, over (b) the amount of Outstanding Advances to be
reimbursed on or with respect to such Distribution Date.
"Available Principal" for a Distribution Date means the sum of the
following amounts with respect to the preceding Collection Period: (a) that
portion of all Collections received during such Collection Period and
allocable to principal in accordance with Servicer's customary servicing
procedures; and (b) to the extent attributable to principal, the Purchase
Amount received with respect to each Receivable repurchased by Seller or
purchased by Servicer under an obligation which arose during the related
Collection Period. "Available Principal" on any Distribution Date shall
exclude all payments and proceeds of any Receivables the Purchase Amount of
which has been distributed on a prior Distribution Date.
"Average Delinquency Ratio" means, as of any Distribution Date, the
average of the Delinquency Ratios for the preceding three Collection
Periods.
"Average Net Loss Ratio" means, as of any Distribution Date, the
average of the Net Loss Ratios for the preceding three Collection Periods.
"Bank Regulatory Authorities" means the Federal Reserve Board and
___________________.
"Basic Documents" means the Certificate of Trust, the Indenture, the
Depository Agreements, the Sale and Servicing Agreement, the Trust
Agreement, and other documents and certificates delivered in connection
therewith.
"Benefit Plan" is defined in Section 11.12 of the Trust Agreement.
"Book Entry Certificate" means a beneficial interest in the
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.14 of the Trust
Agreement.
"Book Entry Note" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing
Agency as described in Section 2.10 of the Indenture.
"Business Day" means a day that is not a Saturday or a Sunday and that
in New York City and in the city in which the Corporate Trust Office is
located is neither a legal holiday nor a day on which banking institutions
are authorized by law, regulation or executive order to be closed.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq.
"Certificate" means a certificate evidencing the beneficial interest
of a Certificateholder in the Trust, substantially in the form of Exhibit A
to the Trust Agreement.
"Certificate Balance" equals, initially, $__________ and, thereafter,
equals the initial Certificate Balance, reduced by all amounts allocable to
principal previously distributed to Certificateholders.
"Certificate Depository Agreement" means the agreement among the
Trust, Owner Trustee, Servicer and The Depository Trust Company, as the
initial Clearing Agency, dated as of the Closing Date, relating to the
Certificates, substantially in the form attached as Exhibit C to the Trust
Agreement, as the same may be amended and supplemented from time to time.
"Certificate Distribution Account" is defined in Section 5.1 of the
Trust Agreement.
"Certificate of Trust" means the Certificate of Trust in the form of
Exhibit B to the Trust Agreement to be filed for Issuer pursuant to Section
3810(a) of the Business Trust Statute.
"Certificate Pool Factor" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the
Certificate Balance (after giving effect to distributions made on such
date) divided by the initial Certificate Balance. The Certificate Pool
Factor will be 1.0000000 as of the Cutoff Date; thereafter, the Certificate
Pool Factor will decline to reflect reductions in the Certificate Balance.
"Certificate Rate" means ____% per annum.
"Certificate Register" and "Certificate Registrar" means the register
mentioned and the registrar appointed pursuant to Section 3.4 of the Trust
Agreement.
"Certificateholder" means the Person in whose name a Certificate is
registered on the Certificate Register.
"Certificateholders' Interest Carryover Shortfall" means, for any
Distribution Date, the excess of the Certificateholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any
outstanding Certificateholders' Interest Carryover Shortfall on such
preceding Distribution Date, over the amount in respect of interest at the
Certificate Rate that is actually deposited in the Certificate Distribution
Account on such preceding Distribution Date, plus interest on such excess,
to the extent permitted by law, at the Certificate Rate from and including
such preceding Distribution Date to but excluding the current Distribution
Date.
"Certificateholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount" means, for
any Distribution Date, one month's interest (or, in the case of the first
Distribution Date, interest accrued from and including the Closing Date to
but excluding such Distribution Date) at the Certificate Rate on the
Certificate Balance on the immediately preceding Distribution Date, after
giving effect to all payments of principal to the Certificateholders on or
prior to such Distribution Date (or, the case of the first Distribution
Date, the Certificate Balance on the Closing Date). Interest shall be
computed on the basis of a 360-day year of twelve 30-day months for
purposes of this definition.
"Certificateholders' Monthly Principal Distributable Amount" means,
for any Distribution Date, the Certificateholders' Percentage of the
Principal Distribution Amount or, for any Distribution Date on or after the
Distribution Date on which the outstanding principal balance of the Class
A-2 Notes is reduced to zero, 100% of the Principal Distribution Amount
(less any amount required on the first such Distribution Date to reduce the
outstanding principal balance of the Class A-2 Notes to zero, which shall
be deposited into the Note Distribution Account).
"Certificateholders' Percentage" means 100% minus the Noteholders'
Percentage.
"Certificateholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Certificateholders'
Monthly Principal Distributable Amount and any outstanding
Certificateholders' Principal Carryover Shortfall from the preceding
Distribution Date, over the amount in respect of principal that is actually
deposited in the Certificate Distribution Account on such current
Distribution Date.
"Certificateholders' Principal Distributable Amount" means, for any
Distribution Date, the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and the Certificateholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; provided that the Certificateholders' Principal Distributable Amount
shall not exceed the Certificate Balance. In addition, on the Certificate
Final Scheduled Distribution Date, the principal required to be distributed
to Certificateholders will include the lesser of (a) any payments of
principal due and remaining unpaid on each Receivable owned by Issuer as of
___________ or (b) the portion of the amount that is necessary (after
giving effect to the other amounts to be deposited in the Certificate
Distribution Account on such Distribution Date and allocable to principal)
to reduce the Certificate Balance to zero, in either case after giving
effect to any required distribution of the Noteholders' Principal
Distributable Amount to the Note Distribution Account. In addition, on any
Distribution Date on which, after giving effect to all distributions to
Servicer, the Noteholders and the Certificateholders on such Distribution
Date, (i) the outstanding principal balance of the Notes is zero and (ii)
the amount on deposit in the Reserve Account is equal to or greater than
the Certificate Balance, Certificateholders' Principal Distributable Amount
shall include an amount equal to such Certificate Balance.
"Class A-1 Interest Rate" means ______% per annum (computed on the
basis of the actual number of days elapsed in a 360-day year).
"Class A-1 Notes" means the Class A-1 ______% Asset Backed Notes,
substantially in the form of Exhibit D to the Indenture.
"Class A-2 Interest Rate" means ____% per annum (computed on the basis
of a 360-day year of twelve 30-day months).
"Class A-2 Notes" means the Class A-2 ____% Asset Backed Notes,
substantially in the form of Exhibit E to the Indenture.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Date" means _____ __, 199_.
"Code" means the Internal Revenue Code of 1986 and Treasury
Regulations promulgated thereunder.
"Collateral" is defined in the Granting Clause of the Indenture.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.1 of the Sale and Servicing Agreement.
"Collection Period" means, (a) in the case of the initial Collection
Period, the period from (but not including) the Cutoff Date to and
including ___________ __, 199_ and (b) thereafter, each calendar month
during the term of the Sale and Servicing Agreement. With respect to any
Determination Date, Deposit Date or Distribution Date, the "related
Collection Period" means the Collection Period preceding the month in which
such Determination Date, Deposit Date or Distribution Date occurs.
"Collections" means all collections on the Receivables and any
proceeds from Insurance Policies and lender's single interest insurance
policies to the extent not included in Liquidation Proceeds.
"Commission" means the Securities and Exchange Commission.
"Contract Rate" means, with respect to a Receivable, the rate per
annum of interest charged on the outstanding principal balance of such
Receivable.
"Corporate Trust Office" means:
(a) as used in the Indenture, or otherwise with respect to
Trustee, the principal office of Trustee at which at any particular
time its corporate trust business shall be administered which office
at date of the execution of the Indenture is located at
____________________________, Attention: ________________ Telephone:
_____________; Facsimile: _______________ or at such other address as
Trustee may designate from time to time by notice to the Noteholders,
Servicer and Issuer, or the principal corporate trust office of any
successor Trustee (the address of which the successor Trustee will
notify the Noteholders and Issuer); and
(b) as used in the Trust Agreement, or otherwise with respect to
Owner Trustee, the principal corporate trust office of Owner Trustee
located at _____________; or at such other address as Owner Trustee
may designate by notice to the Certificateholders and Depositor, or
the principal corporate trust office of any successor Owner Trustee
(the address of which the successor owner trustee will notify the
Certificateholders and Depositor).
"Custodian" means Servicer in its capacity as agent of Issuer, as
custodian of the Receivable Files.
"Cutoff Date" means __________, 199_.
"Cutoff Date Principal Balance" means, with respect to any Receivable,
the Initial Principal Balance of such Receivable minus the sum of the
portion of all payments received under such Receivable from or on behalf of
the related Obligor on or prior to the Cutoff Date and allocable to
principal in accordance with the terms of the Receivable.
"Dealer" means, with respect to any Receivable, the seller of the
related Financed Vehicle.
"Dealer Agreement" means an agreement between an Originator and a
Dealer pursuant to which such Originator acquires Motor Vehicle Loans from
a Dealer or gives such Dealer the right to induce persons to apply to such
Originator for loans in connection with the retail sale of Motor Vehicles
by such Dealer.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Defaulted Receivable" means, with respect to any Collection Period, a
Receivable (other than a Purchased Receivable) which Servicer has
determined to charge off during such Collection Period in accordance with
its customary servicing practices; provided that any Receivable which
Seller or Servicer is obligated to repurchase or purchase shall be deemed
to have become a Defaulted Receivable during a Collection Period if Seller
or Servicer fails to deposit the Purchase Amount on the related Deposit
Date when due.
"Definitive Notes" is defined in Section 2.10 of the Indenture.
"Definitive Certificates" means either or both (as the context
requires) of (a) Certificates issued in certificated, fully registered form
as provided in Section 3.11 of the Trust Agreement and (b) Certificates
issued in certificated, fully registered form as provided in Section 3.13
of the Trust Agreement.
"Delinquency Ratio" means, for any Collection Period, the ratio,
expressed as a percentage, of (a) the principal amount of all outstanding
Receivables (other than Purchased Receivables and Defaulted Receivables)
which are ___ or more days delinquent as of the end of such Collection
Period, determined in accordance with Servicer's customary practices,
divided by (b) the Pool Balance as of the last day of such Collection
Period.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(l)(i) of
the UCC and are susceptible of physical delivery, transfer thereof to
Trustee or its nominee or custodian by physical delivery to Trustee or
its nominee or custodian endorsed to, or registered in the name of,
Trustee or its nominee or custodian or endorsed in blank, and, with
respect to a certificated security (as defined in Section 8-102 of the
UCC) transfer thereof (i) by delivery of such certificated security
endorsed to, or registered in the name of, Trustee or its nominee or
custodian or endorsed in blank to a financial intermediary (as defined
in Section 8-313 of the UCC) and the making by such financial
intermediary of entries on its books and records identifying such
certificated securities as belonging to Trustee or its nominee or
custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by Trustee
or its nominee or custodian, or (ii) by delivery thereof to a
"clearing corporation" (as defined in Section 8-102(3) of the UCC) and
the making by such clearing corporation of appropriate entries on its
books reducing the appropriate securities account of the transferor
and increasing the appropriate securities account of a financial
intermediary by the amount of such certificated security, the
identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by Trustee or its nominee or
custodian of such securities and the making by such financial
intermediary of entries on its books and records identifying such
certificated securities as belonging to Trustee or its nominee or
custodian (all of the foregoing, "Physical Property"), and, in any
event, any such Physical Property in registered form shall be in the
name of Trustee or its nominee or custodian; and such additional or
alternative procedures as may hereafter become appropriate to effect
the complete transfer of ownership of any such Trust Account Property
to Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any securities issued by the U.S. Treasury,
the Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a bookentry security held through the
Federal Reserve System pursuant to Federal book-entry regulations, the
following procedures, all in accordance with applicable law, including
applicable Federal regulations and Articles 8 and 9 of the UCC:
book-entry registration of such Trust Account Property to an
appropriate book-entry account maintained with a Federal Reserve Bank
by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial
intermediary of a deposit advice or other written confirmation of such
bookentry registration to Trustee or its nominee or custodian of the
purchase by Trustee or its nominee or custodian of such book-entry
securities; the making by such financial intermediary of entries in
its books and records identifying such book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations as belonging to Trustee or its nominee or custodian and
indicating that such custodian holds such Trust Account Property
solely as agent for Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust
Account Property to Trustee or its nominee or custodian, consistent
with changes in applicable law or regulations or the interpretation
thereof; and
(c) with respect to any item of Trust Account Property that is
an uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the
sending of a confirmation by the financial intermediary of the
purchase by Trustee or its nominee or custodian of such uncertificated
security, the making by such financial intermediary of entries on its
books and records identifying such uncertificated certificates as
belonging to Trustee or its nominee or custodian.
"Delaware Trustee" is defined in Section 10.1 of the Trust Agreement.
"Demand Note" is defined in Section 2.11(e) of the Trust Agreement.
"Deposit Date" means, with respect to any Collection Period, the
Business Day preceding the related Distribution Date.
"Depositor" means Seller in its capacity as Depositor under the Trust
Agreement.
"Depository Agreements" mean the Certificate Depository Agreement and
the Note Depository Agreement.
"Determination Date" with respect to any Collection Period, means the
eighth day of the calendar month following such Collection Period (or, if
the eighth day is not a Business Day, the immediately preceding Business
Day).
"Direct Loan" means motor vehicle promissory notes and security
agreements executed by an Obligor in favor of an Originator.
"Distribution Date" means the 15th day of each month (or, if the 15th
day is not a Business Day, the next succeeding Business Day), commencing
___________ __, 199_.
"Eligible Deposit Account" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the
laws of the United States of America or any one of the states thereof or
the District of Columbia (or any domestic branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in such
account, so long as the long-term unsecured debt of such depository
institution shall have a credit rating from each Rating Agency in one of
its generic rating categories which signifies investment grade. Any such
accounts may be maintained with __________________, or any of its
Affiliates, if such accounts meet the requirements described in the
preceding sentence.
"Eligible Institution" means a depository institution (other than
Seller or any affiliate of 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), which (a) has (i)
either a long-term senior unsecured debt rating of AA or a short-term
senior unsecured debt or certificate of deposit rating of A-1+ or better by
Standard & Poor's and (ii)(A) a long-term senior unsecured debt rating of
A-l or better and (B) 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 (b) whose deposits are
insured by the Federal Deposit Insurance Corporation. If so qualified,
Owner Trustee or Trustee 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 any Affiliate of 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 of 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 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 Standard & Poor's of A-1+ and from Moody's of P-1;
(c) commercial paper (including commercial paper of any
Affiliate of Seller) having, at the time of the investment or
contractual commitment to invest therein, a rating from Standard &
Poor's of A-1+ and from Moody's of P-1;
(d) investments in money market funds (including funds for
Trustee or Owner Trustee or any of their respective Affiliates or any
of Seller's Affiliates is investment manager or advisor) having a
rating from Standard & Poor's 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 any class
of Notes or the Certificates.
"ERISA" is defined in Section 11.13 of the Trust Agreement.
"Event of Default" is defined in Section 5.1 of the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or
the Treasurer of such corporation; and with respect to any partnership, any
general partner thereof.
"Expected Interest" means, with respect to any Distribution Date, an
amount equal to the sum of (a) with respect to all Simple Interest
Receivables, the product of (i) one-twelfth of the Weighted Average
Contract Rate for such Receivables for the related Collection Period
multiplied by (ii) an amount equal to the aggregate Principal Balance of
such Receivables as of the beginning of the first day of the related
Collection Period minus the sum of the Principal Balances of the
Non-Advance Receivables that are Simple Interest Receivables for such
Distribution Date plus (b) with respect to all Precomputed Receivables,
that portion of the collections on such Receivables received during the
related Collection Period that is allocable to interest in accordance with
the Servicer's customary procedures.
"Expenses" is defined in Section 8.2 of the Trust Agreement.
"Final Scheduled Distribution Date" means for (a) the Class A-1 Notes,
the ______________ Distribution Date, (b) the Class A-2 Notes, the
_____________ Distribution Date and (c) the Certificates, the
______________ Distribution Date.
"Final Scheduled Maturity Date" means the last day of the Collection
Period immediately preceding the Final Scheduled Distribution Date for the
Certificates.
"Financed Vehicle" means a new or used automobile or light duty truck,
together with all accessions thereto, securing an Obligor's indebtedness
under the respective Receivable.
"GAAP" is defined in Section 11.1.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and
confirm pursuant to the Indenture. A Grant of the Collateral or of any
other agreement or instrument shall include all rights, powers and options
(but none of the obligations) of the Granting party thereunder, including
the immediate and continuing right to claim for, collect, receive and give
receipt for principal and interest payments in respect of the Collateral
and all other moneys payable thereunder, to give and receive notices and
other communications, to make waivers or other agreements, to exercise all
rights and options, to bring proceedings in the name of the Granting party
or otherwise and generally to do and receive anything that the Granting
party is or may be entitled to do or receive thereunder or with respect
thereto. Other forms of the verb "to Grant" shall have correlative
meanings.
"Holder" means, as the context may require, a Certificateholder or a
Noteholder or both.
"Indemnified Parties" is defined in Section 8.2 of the Trust
Agreement.
"Indemnified Person" is defined in Section 10.3 of the Sale and
Servicing Agreement.
"Indemnifying Person" is defined in Section 10.3 of the Sale and
Servicing Agreement.
"Indenture" means the Indenture dated as of _________ __, 199__,
between Issuer and Trustee, as the same may be amended and supplemented
from time to time.
"Independent" means, when used with respect to any specified Person,
that the person (a) is in fact independent of Issuer, any other obligor
upon the Notes, Seller and any Affiliate of any of the foregoing persons,
(b) does not have any direct financial interest or any material indirect
financial interest in Issuer, any such other obligor, Seller or any
Affiliate of any of the foregoing Persons and (c) is not connected with
Issuer, any such other obligor, Seller or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 of the
Indenture, made by an Independent appraiser or other expert appointed by an
Issuer Order and approved by Trustee in the exercise of reasonable care,
and such opinion or certificate shall state that the signer has read the
definition of "Independent" in the Indenture and that the signer is
Independent within the meaning thereof.
"Initial Principal Balance" means, in respect of a Receivable, the
amount advanced under the Receivable toward the purchase price of the
Financed Vehicle and related costs, including accessories, service and
warranty contracts, insurance premiums, other items customarily financed as
part of retail motor vehicle loans and/or retail installment sales
contracts and other fees charged by a Seller Affiliate or the applicable
Dealer and included in the amount to be financed, the total of which is
shown as the initial principal balance in the note and security agreement
evidencing and securing such Receivable.
"Insolvency Event" means, for 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.
"Insolvency Proceeds" is defined in Section 9.1(b) of the Sale and
Servicing Agreement.
"Insurance Policies" means, all credit life and disability insurance
policies maintained by the Obligors and all Physical Damage Insurance
Policies.
"Interest Collections" means, for any Distribution Date, the sum of
the following amounts for the related Collection Period: (a) that portion
of the Collections on the Receivables received during the related
Collection Period that is allocable to interest in accordance with
Servicer's customary procedures, (b) all Liquidation Proceeds received
during the related Collection Period and (c) all Purchase Amounts, to the
extent allocable to accrued interest, of all Receivables that are purchased
by Seller or Servicer under an obligation which arose during the related
Collection Period. "Interest Collections" for any Distribution Date shall
exclude all payments and proceeds of any Receivables the Purchase Amount of
which has been distributed on a prior Distribution Date.
"Interest Rate" means, with respect to the (a) Class A-1 Notes, the
Class A-1 Interest Rate and (b) Class A-2 Notes, the Class A-2 Interest
Rate.
"Interest Shortfall" means, with respect to any Distribution Date, the
lesser of (a) the excess (if any) of (i) the amount by which the Expected
Interest for such Distribution Date exceeds the Net Interest Collections
for such Distribution Date and (b) the amount (if any) by which the sum of
the Servicing Fee for the related Collection Period and all accrued and
unpaid Servicing Fees for prior Collection Periods, the Noteholders'
Interest Distributable Amount and the Certificateholders' Interest
Distributable Amount for such Distribution Date exceeds the Net Interest
Collections for such Distribution Date.
"Issuer" means Norwest Auto Trust 199_-_ until a successor replaces it
and, thereafter, means the successor and, for purposes of any provision
contained in the Indenture and required by the TIA, each other obligor on
the Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of Issuer by any one of its Authorized Officers and
delivered to Trustee.
"Lien" means a security interest, lien, charge, pledge, preference,
participation interest or encumbrance of any kind, other than tax liens,
mechanics' or materialmen's liens and other liens for work, labor or
materials, judicial liens and any liens that may attach by operation of
law.
"Liquidation Proceeds" means, with respect to any Receivable that has
become a Defaulted Receivable, (a) insurance proceeds received by Servicer
with respect to the Insurance Policies, (b) amounts received by Servicer in
connection with such Defaulted Receivable pursuant to the exercise of
rights under the related note and security agreement, and (c) the monies
collected by Servicer (from whatever source, including proceeds of a sale
of a Financed Vehicle, a deficiency balance recovered after the charge-off
of the related Receivable or as a result of the exercise of any rights
against the related Dealer) on such Defaulted Receivable net of any
expenses incurred by Servicer in connection therewith (or, in the case of
proceeds of deficiency claims, net of expenses incurred by Servicer in
connection with deficiency claims on an aggregate basis) and any payments
required by law to be remitted to the Obligor.
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Motor Vehicle" means a new or used automobile or light duty truck
which is financed by a Direct Loan and/or retail installment sales contract
originated by an Originator or another financial institution.
"Motor Vehicle Loan" means a Direct Loan and/or retail installment
sales contract secured by a Motor Vehicle originated by Seller or a Seller
Affiliate or another financial institution.
"Net Interest Collections" means, with respect to any Distribution
Date, the greater of (a) zero and (b) Interest Collections for such
Distribution Date minus the Outstanding Advances as of such Distribution
Date.
"Net Loss Ratio" means, for any Collection Period, an amount,
expressed as a percentage, equal to (a) the Aggregate Net Losses for such
Collection Period, divided by (b) the average of the Pool Balances on each
of the first day of such Collection Period and the last day of such
Collection Period.
"Non-Advance Receivables" means, with respect to any Distribution
Date, any Receivables which became Defaulted Receivables during the related
Collection Period or which Servicer, in its sole discretion, believes are
likely to become Defaulted Receivables.
"Norwest Bank" means, Norwest Bank Minnesota, N.A., a national banking
association.
"Note" means a Class A-1 Note or Class A-2 Note.
"Note Depository Agreement" means the agreement among Issuer, Servicer
and The Depository Trust Company, as the initial Clearing Agency, dated as
of the Closing Date, relating to the Notes, as the same may be amended or
supplemented from time to time.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1 of the Sale and
Servicing Agreement.
"Noteholder" means the Person in whose name a Note is registered on
the Note Register.
"Note Owner" means, with respect to a Book-Entry Note, the person who
is the owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Note Pool Factor" for each class of Notes as of the close of business
on a Distribution Date means a seven-digit decimal figure equal to the
outstanding principal balance of such class of Notes divided by the
original outstanding principal balance of such class of Notes. The Note
Pool Factor for each class of Notes will be 1.0000000 as of the Cutoff
Date; thereafter, the Note Pool Factor for each class of Notes will decline
to reflect reductions in the outstanding principal balance of such class of
Notes.
"Noteholders' Distributable Amount" means, for any Distribution Date,
the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
"Noteholders' Interest Carryover Shortfall" means, for any
Distribution Date, the excess of the Noteholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any
outstanding Noteholders' Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that is actually
deposited in the Note Distribution Account on such preceding Distribution
Date, plus interest on the amount of interest due but not paid to
Noteholders on the preceding Distribution Date, to the extent permitted by
law, at the respective Interest Rate borne by each class of Notes from such
preceding Distribution Date through the current Distribution Date.
"Noteholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders'
Interest Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, for any
Distribution Date, in the case of each class of Notes, one month's interest
(or, in the case of the first Distribution Date, interest accrued from and
including the Closing Date to but excluding such Distribution Date) at the
applicable Interest Rate on the outstanding principal balance of the Notes
of such class on the immediately preceding Distribution Date, after giving
effect to all distributions of principal to Noteholders of such class on
such Distribution Date (or, in the case of the first Distribution Date, on
the Closing Date). Interest shall be computed on the basis of a 360 day
year of twelve 30-day months.
"Noteholders' Monthly Principal Distributable Amount" means, for any
Distribution Date, the Noteholders' Percentage of the Principal
Distribution Amount.
"Noteholders' Percentage" means 100% until the point in time at which
Class A-1 Notes and Class A-2 Notes have been paid in full and zero
thereafter.
"Noteholders' Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect
of principal that is actually deposited in the Note Distribution Account.
"Noteholders' Principal Distributable Amount" means, for any
Distribution Date, the sum of the Noteholder's Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; provided that the Noteholders' Principal Distributable Amount shall
not exceed the outstanding principal balance of the Notes. In addition, on
the Final Scheduled Distribution Date of each class of Notes, the principal
required to be deposited in the Note Distribution Account will include the
amount necessary (after giving effect to the other amounts to be deposited
in the Note Distribution Account on such Distribution Date and allocable to
principal) to reduce the Outstanding Amount of such class of Notes to zero.
"Note Register" and "Note Registrar" are defined in Section 2.4 of the
Indenture.
"Obligor" means the borrower or co-borrowers under the related
Receivable and any co-signer of the Receivable or other Person who owes or
may be primarily or secondarily liable for payments under such Receivable.
"Officer's Certificate" means: (a) for purposes of the Indenture, a
certificate signed by any Authorized Officer of Issuer, under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.1 and TIA Section 314, and delivered to Trustee;
and (b) otherwise, a certificate signed by the chairman, the president, any
vice president or the treasurer of Seller or Servicer, as the case may be,
and delivered to Trustee. Unless otherwise specified, any reference in the
Indenture to an Officer's Certificate shall be to an Officer's Certificate
of any Authorized Officer of Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in the Indenture, be employees
of or counsel to Issuer and who shall be satisfactory to Trustee, and which
opinion or opinions shall be addressed to Trustee as Trustee, shall comply
with any applicable requirements of Section 11.1 of the Indenture, and
shall be in form and substance satisfactory to Trustee.
"Original Pool Balance" means the Pool Balance as of the Cutoff Date,
which is $_____________.
"Originator" means, with respect to any Direct Loan or retail
installment sales contract, the Seller Affiliate that was the lender with
respect to such Direct Loan or that acquired such retail installment sales
contract from a Dealer.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under the Indenture except:
(a) Notes theretofore canceled by Note Registrar or delivered
to Note Registrar for cancellation;
(b) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with Trustee or
any Paying Agent in trust for the Holders of such Notes (provided that
if such Notes are to be redeemed, notice of such redemption has been
duly given pursuant to the Indenture or provision therefor,
satisfactory to Trustee); and
(c) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to the Indenture unless
proof satisfactory to Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided that in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or under any
Basic Document, Notes owned by Issuer, any other obligor upon the Notes,
Seller or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Notes
that a Responsible Officer of Trustee either actually knows to be so owned
or has received written notice thereof shall be so disregarded. Notes so
owned that have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not
Issuer, any other obligor upon the Notes, Seller or any Affiliate of any of
the foregoing Persons.
"Outstanding Advances" means, as of any date, all Advances made by
Servicer with respect to prior Distribution Dates which have not been
reimbursed pursuant to Section 5.3.
"Outstanding Amount" means the aggregate principal amount of all
Notes, or class of Notes, as applicable, Outstanding at the date of
determination.
"Owner" means each Person who is the beneficial owner of a Book Entry
Certificate as reflected in the records of the Clearing Agency or if a
Clearing Agency Participant is not the Owner, then as reflected in records
of a Person maintaining an account with such Clearing Agency (directly or
indirectly, in accordance with the rules of such Clearing Agency).
"Owner Trust Estate" means all right, title and interest of Issuer in
and to the property and rights assigned to Issuer to Article II of the Sale
and Servicing Agreement, all funds on deposit from time to time in the
Trust Accounts and the Certificate Distribution Account and all other
property of Issuer from time to time, including any rights of Owner Trustee
and Issuer pursuant to the Sale and Servicing Agreement.
"Owner Trustee" means ___________________, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee
under the Trust Agreement, and any successor Owner Trustee hereunder.
"Payaheads" means early payments by or on behalf of Obligors on
Precomputed Receivables which do not constitute scheduled payments, full
prepayments, nor certain partial prepayments that result in a reduction of
the Obligor's periodic payment below the scheduled payment as of the
applicable Cutoff Date.
"Paying Agent" means: (a) when used in the Indenture or otherwise with
respect to the Notes, Trustee or any other Person that meets the
eligibility standards for Trustee specified in Section 6.11 of the
Indenture and is authorized by Issuer to make the payments to and
distributions from the Collection Account and the Note Distribution
Account, including payment of principal of or interest on the Notes on
behalf of Issuer; and (b) when used in the Trust Agreement or otherwise
with respect to the Certificates, Owner Trustee or any other paying agent
or co-paying agent appointed pursuant to Section 3.9 of the Trust
Agreement.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company,
trust, unincorporated organization, or government or any agency or
political subdivision thereof, or any other entity of whatever nature.
"Physical Damage Insurance Policy" means a theft and physical damage
insurance policy maintained by the Obligor under a Receivable, providing
coverage against loss or damage to or theft of the related Financed
Vehicle.
"Physical Property" is defined in the definition of "Delivery" above.
"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 Defaulted Receivables).
"Precomputed Receivable" means either (i) an Actuarial Receivable or
(ii) a Rule of 78's Receivable.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition,
any Note authenticated and delivered under Section 2.5 of the Indenture in
lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
"Principal Balance" means, as of any time, for any Receivable, the
Cutoff Date Principal Balance minus the sum of the portions of all payments
received from or on behalf of the related Obligor after the Cutoff Date and
prior to such time that are allocable to principal in accordance with the
terms of the Receivable.
"Principal Distribution Amount" means, for any Distribution Date, the
sum of (a) the Available Principal for such Distribution Date, and (b) the
amount of Realized Losses for the related Collection Period.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Purchase Agreement" means each agreement dated as of _________ __,
199__ between an Affiliate Seller and Seller under which such Affiliate
Seller sells Receivables to Seller.
"Purchase Amount" means the amount, as of the close of business on the
last day of a Collection Period, required to prepay in full the respective
Receivable under the terms thereof including interest at the Contract Rate
to the end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by Servicer pursuant to
Section 4.7 of the Sale and Servicing Agreement or repurchased by Seller
pursuant to Section 3.2 of the Sale and Servicing Agreement.
"Rating Agency" means Moody's and/or Standard & Poor'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 Seller, notice of which designation shall
be given to Trustee, Owner Trustee and 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 Seller, Servicer, Owner
Trustee or Trustee in writing that such action will, in and of itself,
result in a reduction or withdrawal of the then current rating of any class
of Notes, or the Certificates.
"Realized Losses" means, for any Collection Period, the aggregate
Principal Balances of any Receivables that became Defaulted Receivables
during such Collection Period.
"Receivable" means each Motor Vehicle Loan described in the Schedule
of Receivables, but excluding Defaulted Receivables to the extent the
Principal Balances thereof have been deposited in the Collection Account
and any Purchased Receivables.
"Receivable Files" is defined in Section 3.4 of the Sale and Servicing
Agreement.
"Record Date" means, with respect to any Distribution Date or
Redemption Date, the close of business on the day immediately preceding
such Distribution Date or Redemption Date; or, if Definitive Notes or
Definitive Certificates have been issued, the last day of the month
preceding such Distribution Date.
"Redemption Date" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) of the Indenture or a payment to Noteholders
pursuant to Section 10.1(b) of the Indenture, the Distribution Date
specified by Servicer or Issuer pursuant to such Section 10.1(a) or (b) as
applicable.
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) of the Indenture, an amount equal to the unpaid
principal amount of the then outstanding Class A-2 Notes plus accrued and
unpaid interest thereon to but excluding the Redemption Date, or (b) in the
case of a payment made to Noteholders pursuant to Section 10.1(b) of the
Indenture, the amount on deposit in the Note Distribution Account, but not
in excess of the amount specified in clause (a).
"Required Rating" means a rating with respect to short term deposit
obligations of at least P-1 by Moody's and at least A-1 by S&P.
"Reserve Account" means the account designated as such, established
and maintained pursuant to Section 5.1 of the Sale and Servicing Agreement.
"Reserve Account Deposit" means an amount equal to $__________.
"Reserve Account Transfer Amount" means an amount equal to the lesser
of (a) the amount of cash or other immediately available funds on deposit
in the Reserve Account on such Distribution Date (before giving effect to
any withdrawals therefrom relating to such Distribution Date) or (b) the
amount, if any, by which (i) the sum of the Servicing Fee for the related
Collection Period and all accrued and unpaid Servicing Fees for prior
Collection Periods, the Noteholders' Interest Distributable Amount, the
Certificateholders' Interest Distributable Amount, the Noteholders'
Principal Distributable Amount and the Certificateholders' Principal
Distributable Amount for such Distribution Date exceeds (ii) the sum of the
Available Interest and the Available Principal for such Distribution Date.
"Responsible Officer" means, with respect to Trustee, any officer
within the Corporate Trust Office of Trustee, including any Vice President,
Assistant Vice President, Assistant Treasurer, Assistant Secretary, or any
other officer of 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.
"Rule of 78's Receivable" means a Receivable that provides for the
payment by the Obligor of a specified total amount of payments, payable in
equal monthly installments on each due date, which total represents the
principal amount financed and add-on interest in an amount calculated at
the stated annual percentage rate for the term of the receivable.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
among Issuer, Norwest Bank Minnesota, N.A., as Servicer, and Norwest Auto
Receivables Corporation, as Seller, dated as of ________, 199_, as the same
may be amended and supplemented from time to time.
"Schedule of Receivables" means, with respect to the Motor Vehicle
Loans to be conveyed to Issuer by Seller, the list identifying such retail
motor vehicle loans delivered to Trustee set forth as Exhibit A to the
Indenture.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Seller" means Norwest Auto Receivables Corporation.
"Seller Affiliate" means each Affiliate of the Seller that has sold
Receivables to the Seller.
"Servicer" means Norwest Bank and each Successor Servicer.
"Servicer Termination Event" means an event specified in Section 8.1
of the Sale and Servicing Agreement.
"Servicer's Report" means a report of Servicer delivered pursuant to
Section 4.9 of the Sale and Servicing Agreement, substantially in the form
of Exhibit C to that agreement.
"Servicing Fee" is defined in Section 4.8 of the Sale and Servicing
Agreement.
"Servicing Fee Rate" means [1.00]% per annum.
"Simple Interest Method" means the method of allocating a fixed level
payment monthly installments between principal and interest, pursuant to
which such payment is allocated first to accrued and unpaid interest at the
Contract Rate on the unpaid principal balance and the remainder of such
payment is allocable to principal.
"Simple Interest Receivable" means any Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Specified Reserve Account Balance" means, for (a) any Distribution
Date prior to the Distribution Date on which the Outstanding Amount of the
Class A-1 Notes has been paid in full, $__________ and (b) any Distribution
Date on or after the Distribution Date on which the Outstanding Amount of
the class A-1 Notes has been paid in full the greater of (i) ____% of the
sum of the aggregate outstanding principal amount of each class of Notes
plus the outstanding Certificate Balance on such Distribution Date (after
giving effect to all payments on the Notes and distributions with respect
to the Certificates to be made on such Distribution Date); or (ii) ___% of
the sum of the aggregate initial principal of the Notes plus the initial
Certificate Balance except that, if on any Distribution Date (x) the
Average Net Loss Ratio exceeds ___% or (y) the Average Delinquency Ratio
for the three preceding Collection Periods exceeds ___%, then the Specified
Reserve Account Balance shall be an amount equal to ___% of the sum of the
aggregate outstanding principal amount of each class of Notes and the
aggregate outstanding Certificate Balance on such Distribution Date (after
giving effect to all payments on the Notes and distributions with respect
to the Certificates to be made on such Distribution Date).
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., or its successor.
"State" means any one of the 50 states of the United States of America
or the District of Columbia.
"Successor Servicer" is defined in Section 3.7(e) of the Indenture.
"Supplemental Servicing Fee" is defined in Section 4.8 of the Sale and
Servicing Agreement.
"Total Distribution Amount" means, for each Distribution Date, the sum
of (a) the Available Interest, (b) the Available Principal and (c) the
Reserve Account Transfer Amount, in each case in respect of such
Distribution Date.
"Treasury Regulations" means regulations, including proposed or
temporary regulations, promulgated under the Code.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the
form of deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" is defined in Section 5.1 of the Sale and Servicing
Agreement.
"Trust Agreement" means the Trust Agreement dated as of _______ __,
199__, between Seller and Owner Trustee, as the same may be amended and
supplemented from time to time.
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security
interest of the Indenture for the benefit of the Noteholders (including all
property and interests Granted to Trustee), including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force on the date hereof, unless otherwise specifically provided.
"Trustee" means ___________________________, not in its individual
capacity but as trustee under the Indenture, or any successor trustee under
the Indenture.
"UCC" means the Uniform Commercial Code, as in effect in the relevant
jurisdiction.
"Weighted Average Contract Rate" means, with respect to any Collection
Period, the weighted average of the Contract Rates of the Receivables (but
excluding any Non-Advance Receivable, as determined on the related Deposit
Date), weighted based on the Principal Balance of each such Receivable as
of the first day of such Collection Period.
Exhibit 99.2
ADMINISTRATION AGREEMENT
This ADMINISTRATION AGREEMENT, dated as of __________ ___, 199_ (as
from time to time amended, supplemented or otherwise modified and in
effect, this "Agreement"), is by and among Norwest Auto Trust 199_-_, a
Delaware business trust (the "Issuer"), NORWEST BANK MINNESOTA, N.A., a
national banking association, as administrator (the "Administrator"), and
____________, a ___________ banking corporation, not in its individual
capacity but solely as Indenture Trustee (the "Indenture Trustee").
WHEREAS, the Issuer is issuing the Notes pursuant to the Indenture
and the Certificates pursuant to the Trust Agreement and has entered into
certain agreements in connection therewith, including (i) the Sale and
Servicing Agreement, (ii) the Depository Agreements, and (iii) the
Indenture (the Sale and Servicing Agreement, the Depository Agreements and
the Indenture being referred to hereinafter collectively as the "Related
Agreements");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain duties of the Issuer and the Owner Trustee
under the Related Agreements and to provide such additional services
consistent with the terms of this Agreement and the Related Agreements as
the Issuer and the Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and
the Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending
to be legally bound, agree as follows:
1. Definitions and Usage. Except as otherwise specified herein or
as the context may otherwise require, capitalized terms used but not
otherwise defined herein are defined in Appendix A hereto, which also
contains rules as to usage that shall be applicable herein.
2. Duties of the Administrator. (a) Duties with Respect to the
Indenture and the Depository Agreements. (i) The Administrator agrees to
perform all its duties as Administrator and the duties of the Issuer under
the Depository Agreements. In addition, the Administrator shall consult
with the Owner Trustee regarding the duties of the Issuer under the
Indenture and the Depository Agreements. The Administrator shall monitor
the performance of the Issuer and shall advise the Owner Trustee when
action is necessary to comply with the Issuer's duties under the Indenture
and the Depository Agreements. The Administrator shall prepare for
execution by the Issuer, or shall cause the preparation by appropriate
persons of, all such documents, reports, filings, instruments, certificates
and opinions that it shall be the duty of the Issuer to prepare, file or
deliver pursuant to the Indenture and the Depository Agreements. In
furtherance of the foregoing, the Administrator shall take all appropriate
action that is the duty of the Issuer to take pursuant to the Indenture
including, without limitation, such of the foregoing as are required with
respect to the following matters under the Indenture (references are to
sections of the Indenture):
(A) the duty to cause the Note Register to be kept
and to give the Indenture Trustee notice of any
appointment of a new Note Registrar and the location, or
change in location, of the Note Register (Section 2.4);
(B) the notification of Noteholders of the final
principal payment on their Notes (Section 2.7(b));
(C) the preparation of or obtaining of the documents
and instruments required for authentication of the Notes
and delivery of the same to the Indenture Trustee (Section
2.2);
(D) the preparation, obtaining or filing of the
instruments, opinions and certificates and other documents
required for the release of property from the lien of the
Indenture (Section 2.9);
(E) the preparation of Definitive Notes in
accordance with the instructions of the Clearing Agency
(Section 2.12);
(F) the maintenance of an office in the Borough of
Manhattan, City of New York, for registration of transfer
or exchange of Notes (Section 3.2);
(G) the duty to cause newly appointed Note Paying
Agents, if any, to deliver to the Indenture Trustee the
instrument specified in the Indenture regarding funds held
in trust (Section 3.3);
(H) the direction to the Indenture Trustee to
deposit monies with Note Paying Agents, if any, other than
the Indenture Trustee (Section 3.3);
(I) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which
such qualification is or shall be necessary to protect the
validity and enforceability of the Indenture, the Notes,
the Collateral and each other instrument or agreement
included in the Indenture Trust Estate (Section 3.4);
(J) the preparation of all supplements and
amendments to the Indenture and all financing statements,
continuation statements, instruments of further assurance
and other instruments and the taking of such other action
as is necessary or advisable to protect the Indenture
Trust Estate (Section 3.5);
(K) the delivery of the Opinion of Counsel on the
Closing Date and the annual delivery of Opinions of
Counsel as to the Indenture Trust Estate, and the annual
delivery of the Officer's Certificate and certain other
statements as to compliance with the Indenture (Sections
3.6 and 3.9);
(L) the identification to the Indenture Trustee in
an Officer's Certificate of any Person with whom the
Issuer has contracted to perform its duties under the
Indenture (Section 3.7(b));
(M) the notification of the Indenture Trustee and
the Rating Agencies of an Event of Servicing Termination
under the Sale and Servicing Agreement and, if such Event
of Servicing Termination arises from the failure of the
Servicer to perform any of its duties under the Sale and
Servicing Agreement with respect to the Receivables, the
taking of all reasonable steps available to remedy such
failure (Section 3.7(d));
(N) the preparation and obtaining of documents and
instruments required for the transfer by the Issuer of its
properties or assets (Section 3.10(b));
(O) the duty to cause the Servicer to comply with
Sections 4.9, 4.10, 4.11 and 5.8 of the Sale and Servicing
Agreement (Section 3.14);
(P) the delivery of written notice to the Indenture
Trustee and the Rating Agencies of each Event of Default
under the Indenture and each default by the Servicer or
the Seller under the Sale and Servicing Agreement and by
_________ or the Seller under the Purchase Agreement
(Section 3.18);
(Q) the monitoring of the Issuer's obligations as to
the satisfaction and discharge of the Indenture and the
preparation of an Officer's Certificate and the obtaining
of the Opinions of Counsel and the Independent Certificate
relating thereto (Section 4.1);
(R) the monitoring of the Issuer's obligations as to
the satisfaction, discharge and defeasance of the Notes
and the preparation of an Officer's Certificate and the
obtaining of an opinion of a nationally recognized firm of
independent certified public accountants, a written
confirmation thereof and the Opinions of Counsel relating
thereto (Section 4.1);
(S) the preparation and delivery of an Officer's
Certificate to the Indenture Trustee after the occurrence
of any event which with the giving of notice and the lapse
of time would become an Event of Default under Section
5.1(c) of the Indenture, its status and what action the
Issuer is taking or proposes to take with respect thereto
(Section 5.1);
(T) the compliance with any written directive of the
Indenture Trustee with respect to the sale of the
Indenture Trust Estate at one or more public or private
sales called and conducted in any manner permitted by law
if an Event of Default shall have occurred and be
continuing (Section 5.4);
(U) the preparation and delivery of notice to
Noteholders of the removal of the Indenture Trustee and
the appointment of a successor Indenture Trustee (Section
6.8);
(V) the preparation of any written instruments
required to confirm more fully the authority of any
co-trustee or separate trustee and any written instruments
necessary in connection with the resignation or removal of
any co-trustee or separate trustee (Sections 6.8 and
6.10);
(W) the furnishing of the Indenture Trustee with the
names and addresses of Noteholders during any period when
the Indenture Trustee is not the Note Registrar (Section
7.1);
(X) the preparation and, after execution by the
Issuer, the filing with the Commission, any applicable
state agencies and the Indenture Trustee of documents
required to be filed on a periodic basis with, and
summaries thereof as may be required by rules and
regulations prescribed by, the Commission and any
applicable state agencies and the transmission of such
summaries, as necessary, to the Noteholders (Section 7.3);
(Y) the opening of one or more accounts in the
Issuer's name, the preparation and delivery of Issuer
Orders, Officer's Certificates and Opinions of Counsel and
all other actions necessary with respect to investment and
reinvestment, to the extent permitted, of funds in such
accounts (Sections 8.2 and 8.3);
(Z) the preparation of an Issuer Request and
Officer's Certificate and the obtaining of an Opinion of
Counsel and Independent Certificates, if necessary, for
the release of the Indenture Trust Estate (Sections 8.4
and 8.5);
(AA) the preparation of Issuer Orders and the
obtaining of Opinions of Counsel with respect to the
execution of supplemental indentures and the mailing to
the Noteholders of notices with respect to such
supplemental indentures (Sections 9.1, 9.2 and 9.3);
(BB) the execution and delivery of new Notes
conforming to any supplemental indenture (Section 9.6);
(CC) the notification of Noteholders of redemption
of the Notes or duty to cause the Indenture Trustee to
provide such notification (Section 10.2);
(DD) the preparation and delivery of all Officer's
Certificates and the obtaining of Opinions of Counsel and
Independent Certificates with respect to any requests by
the Issuer to the Indenture Trustee to take any action
under the Indenture (Section 11.1(a));
(EE) the preparation and delivery of Officer's
Certificates and the obtaining of Independent
Certificates, if necessary, for the release of property
from the lien of the Indenture (Section 11.1(b));
(FF) the notification of the Rating Agencies, upon
the failure of the Indenture Trustee to give such
notification, of the information required pursuant to
Section 11.4 of the Indenture (Section 11.4);
(GG) the preparation and delivery to Noteholders and
the Indenture Trustee of any agreements with respect to
alternate payment and notice provisions (Section 11.6);
and
(HH) the recording of the Indenture, if applicable
(Section 11.15).
(ii) The Administrator will:
(A) pay the Indenture Trustee from time to time
reasonable compensation for all services rendered by the
Indenture Trustee under the Indenture (which compensation
shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(B) except as otherwise expressly provided in the
Indenture, reimburse the Indenture Trustee upon its
request for all reasonable expenses, disbursements and
advances incurred or made by the Indenture Trustee in
accordance with any provision of the Indenture (including
the reasonable compensation, expenses and disbursements of
its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its
negligence or bad faith;
(C) indemnify the Indenture Trustee and its agents
for, and hold them harmless against, any losses, liability
or expense incurred without negligence or bad faith on
their part, arising out of or in connection with the
acceptance or administration of the transactions
contemplated by the Indenture, including the reasonable
costs and expenses of defending themselves against any
claim or liability in connection with the exercise or
performance of any of their powers or duties under the
Indenture; and
(D) indemnify the Owner Trustee and its agents for,
and hold them harmless against, any losses, liability or
expense incurred without negligence or bad faith on their
part, arising out of or in connection with the acceptance
or administration of the transactions contemplated by the
Trust Agreement, including the reasonable costs and
expenses of defending themselves against any claim or
liability in connection with the exercise or performance
of any of their powers or duties under the Trust
Agreement.
(b) Additional Duties. (i) In addition to the duties of the
Administrator set forth above, the Administrator shall perform such
calculations and shall prepare or shall cause the preparation by
other appropriate persons of, and shall execute on behalf of the
Issuer or the Owner Trustee, all such documents, reports, filings,
instruments, certificates and opinions that it shall be the duty of
the Issuer or the Owner Trustee to prepare, file or deliver pursuant
to the Related Agreements, and at the request of the Owner Trustee
shall take all appropriate action that it is the duty of the Issuer
or the Owner Trustee to take pursuant to the Related Agreements.
Subject to Section 5 of this Agreement, and in accordance with the
directions of the Owner Trustee, the Administrator shall administer,
perform or supervise the performance of such other activities in
connection with the Collateral (including the Related Agreements) as
are not covered by any of the foregoing provisions and as are
expressly requested by the Owner Trustee and are reasonably within
the capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the
Related Agreements to the contrary, the Administrator shall be
responsible for promptly notifying the Owner Trustee in the
event that any withholding tax is imposed on the Trust's
payments (or allocations of income) to a Certificateholder as
contemplated in Section 5.2(c) of the Trust Agreement. Any such
notice shall specify the amount of any withholding tax required
to be withheld by the Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Related Agreements to the contrary, the Administrator shall be
responsible for performance of the duties of the Trust or the
Owner Trustee set forth in Section 5.5(a), (b), (c) and (d), the
penultimate sentence of Section 5.5 and Section 5.6(a) of the
Trust Agreement with respect to, among other things, accounting
and reports to Certificateholders.
(iv) The Administrator will provide prior to __________
___, 199_, a certificate of an Authorized Officer in form and
substance satisfactory to the Owner Trustee as to whether any
tax withholding is then required and, if required, the
procedures to be followed with respect thereto to comply with
the requirements of the Code. The Administrator shall be
required to update the letter in each instance that any
additional tax withholding is subsequently required or any
previously required tax withholding shall no longer be required.
(v) The Administrator shall perform the duties of the
Administrator specified in Section 10.2 of the Trust Agreement
required to be performed in connection with the resignation or
removal of the Owner Trustee, and any other duties expressly
required to be performed by the Administrator pursuant to the
Trust Agreement.
(vi) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Administrator may
enter into transactions or otherwise deal with any of its
Affiliates; provided, however, that the terms of any such
transactions or dealings shall be in accordance with any
directions received from the Issuer and shall be, in the
Administrator's opinion, no less favorable to the Issuer than
would be available from unaffiliated parties.
(c) Non-Ministerial Matters. (i) With respect to matters
that in the reasonable judgment of the Administrator are
non-ministerial, the Administrator shall not take any action unless
within a reasonable time before the taking of such action, the
Administrator shall have notified the Owner Trustee of the proposed
action and the Owner Trustee shall not have withheld consent or
provided an alternative direction. For the purpose of the preceding
sentence, "non-ministerial matters" shall include, without
limitation:
(A) the amendment of or any supplement to the
Indenture;
(B) the initiation of any claim or lawsuit by the
Issuer and the compromise of any action, claim or lawsuit
brought by or against the Issuer (other than in connection
with the collection of the Receivables or Permitted
Investments);
(C) the amendment, change or modification of the
Related Agreements;
(D) the appointment of successor Note Registrars,
successor Note Paying Agents and successor Indenture
Trustees pursuant to the Indenture or the appointment of
successor Administrators or Successor Servicers, or the
consent to the assignment by the Note Registrar, Note
Paying Agent or Indenture Trustee of its obligations under
the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and
shall not, (x) make any payments to the Noteholders under the
Related Agreements, (y) sell the Indenture Trust Estate pursuant
to Section 5.4 of the Indenture or (z) take any other action
that the Issuer directs the Administrator not to take on its
behalf.
3. Records. The Administrator shall maintain appropriate books of
account and records relating to services performed hereunder, which books
of account and records shall be accessible for inspection by the Issuer and
the Seller at any time during normal business hours.
4. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and, as reimbursement for
its expenses related thereto, the Administrator shall be entitled to $_____
annually which shall be solely an obligation of the Seller.
5. Additional Information To Be Furnished to the Issuer. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably
request.
6. Independence of the Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall
not be subject to the supervision of the Issuer or the Owner Trustee with
respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the Issuer, the
Administrator shall have no authority to act for or represent the Issuer or
the Owner Trustee in any way and shall not otherwise be deemed an agent of
the Issuer or the Owner Trustee.
7. No Joint Venture. Nothing contained in this Agreement (i) shall
constitute the Administrator and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed
to impose any liability as such on any of them or (iii) shall be deemed to
confer on any of them any express, implied or apparent authority to incur
any obligation or liability on behalf of the others.
8. Other Activities of Administrator. Nothing herein shall prevent
the Administrator or its Affiliates from engaging in other businesses or,
in its sole discretion, from acting in a similar capacity as an
administrator for any other person or entity even though such person or
entity may engage in business activities similar to those of the Issuer,
the Owner Trustee or the Indenture Trustee.
9. Term of Agreement; Resignation and Removal of Administrator.
(a) This Agreement shall continue in force until the dissolution of the
Issuer, upon which event this Agreement shall automatically terminate.
(b) Subject to Sections 9(e) and 9(f), the Administrator may
resign its duties hereunder by providing the Issuer with at least
sixty (60) days' prior written notice.
(c) Subject to Sections 9(e) and 9(f), the Issuer may remove
the Administrator without cause by providing the Administrator with
at least sixty (60) days' prior written notice.
(d) Subject to Sections 9(e) and 9(f), at the sole option of
the Issuer, the Administrator may be removed immediately upon written
notice of termination from the Issuer to the Administrator if any of
the following events shall occur:
(i) the Administrator shall default in the performance of
any of its duties under this Agreement and, after notice of such
default, shall not cure such default within ten (10) days (or,
if such default cannot be cured in such time, shall not give
within ten (10) days such assurance of cure as shall be
reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall
enter a decree or order for relief, and such decree or order
shall not have been vacated within sixty (60) days, in respect
of the Administrator in any involuntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect or appoint a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for the
Administrator or any substantial part of its property or order
the winding-up or liquidation of its affairs; or
(iii) the Administrator shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, shall consent to the entry of an
liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Seller or the General Partner or any
substantial part of their respective property, or ordering the
winding up or liquidation of the affairs of the Seller or the General
Partner.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
Norwest Auto Trust 199_-_
By: _____________, not in its individual
capacity but solely as Owner Trustee
By: ____________________________________
Name:
Title:
_________________, not in its individual
capacity but solely as Indenture Trustee
By: ____________________________________
Name:
Title:
Norwest Bank Minnesota, N.A., as Administrator
By: ______________________________________
Name:
Title:
<PAGE>
APPENDIX A
Definitions and Usage
