<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 16, 1996
REGISTRATION NO. 333-11449
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WORLD OMNI 1996-B AUTOMOBILE LEASE
SECURITIZATION TRUST
(Issuer with respect to the Certificates)
WORLD OMNI LEASE SECURITIZATION L.P.
(Originator of the Trust described herein)
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7515 63-1120743
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
---------------------
6150 OMNI PARK DRIVE
MOBILE, ALABAMA 36609
(334) 639-7500
(Address, including zip code, and telephone number, including area code, of
Originator's principal executive offices)
---------------------
A. TUCKER ALLEN
120 NORTHWEST 12TH AVENUE
DEERFIELD BEACH, FLORIDA 33442
(954) 429-2200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
<TABLE>
<S> <C>
JERRY L. SHULMAN, ESQ. DALE W. LUM, ESQ.
WILLIAMS & CONNOLLY BROWN & WOOD LLP
725 TWELFTH STREET, N.W. 555 CALIFORNIA STREET
WASHINGTON, D.C. 20005 SAN FRANCISCO, CALIFORNIA 94104
</TABLE>
---------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
---------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
TITLE OF EACH AMOUNT MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Automobile Lease Asset Backed Certificates, Class
A-1................................................. $260,000,000 100% $260,000,000 $78,809(4)
Automobile Lease Asset Backed Certificates, Class
A-2................................................. $280,000,000 100% $280,000,000 $84,870(4)
Automobile Lease Asset Backed Certificates, Class
A-3................................................. $210,057,988 100% $210,057,988 $63,654(4)
99.8% 1996-B Special Unit of Beneficial Interest
Certificate(2)...................................... (3) (3) (3) (3)
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) The 99.8% 1996-B Special Unit of Beneficial Interest Certificate (the "99.8%
SUBI Certificate") issued by World Omni LT will represent a beneficial
interest in a specified portion of the assets of World Omni LT, including
certain lease contracts and the automobile and light duty trucks relating to
such lease contracts. The 99.8% SUBI Certificate is not being offered to
investors hereunder but will be transferred to the Trustee for the World
Omni 1996-B Automobile Lease Securitization Trust issuing the Automobile
Lease Asset Backed Certificates, Class A-1, Class A-2 and Class A-3.
(3) Not applicable.
(4) Of such amounts, $172.42 has been previously paid in respect of the Class
A-1 and Class A-2 Certificates for a total of $344.84.
---------------------
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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
WORLD OMNI LEASE SECURITIZATION L.P.
WORLD OMNI 1996-B AUTOMOBILE LEASE SECURITIZATION TRUST
---------------------
CROSS REFERENCE SHEET FURNISHED
PURSUANT TO RULE 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM AND CAPTION IN FORM S-1 CAPTION OR LOCATION IN PROSPECTUS
------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Cover Page of Prospectus......... Forepart of Registration Statement; Outside
Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............. Summary; Risk Factors
4. Use of Proceeds............................ Use of Proceeds
5. Determination of Offering Price............ *
6. Dilution................................... *
7. Selling Security Holders................... *
8. Plan of Distribution....................... Underwriting
9. Description of Securities to be
Registered............................... Summary; The Trust and the SUBI; The
Contracts; Maturity, Prepayment and Yield
Considerations; Description of the
Certificates; Security for the
Certificates
10. Interests of Named Experts and Counsel..... *
11. Information With Respect to the
Registrant............................... The Seller
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. *
</TABLE>
- ---------------
* Answer negative or item inapplicable.
<PAGE> 3
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 OCTOBER 16, 1996
$750,057,988 (APPROXIMATE)
WORLD OMNI 1996-B AUTOMOBILE LEASE SECURITIZATION TRUST
$260,000,000 (APPROXIMATE)
% AUTOMOBILE LEASE ASSET BACKED CERTIFICATES, CLASS A-1
$280,000,000 (APPROXIMATE)
% AUTOMOBILE LEASE ASSET BACKED CERTIFICATES, CLASS A-2
$210,057,988 (APPROXIMATE)
% AUTOMOBILE LEASE ASSET BACKED CERTIFICATES, CLASS A-3
WORLD OMNI LEASE SECURITIZATION L.P.
(SELLER)
WORLD OMNI FINANCIAL CORP.
(SERVICER)
------------------
The Automobile Lease Asset Backed Certificates (the "Certificates") will
represent undivided interests in the World Omni 1996-B Automobile Lease
Securitization Trust (the "Trust") formed pursuant to a Securitization Trust
Agreement between World Omni Lease Securitization L.P. (the "Seller") and
First Bank National Association, as trustee (the "Trustee"). The property
of the Trust will consist of an undivided 99.8% interest in a Special
Unit of Beneficial Interest (the "SUBI"), which, in turn, will evidence
a beneficial interest in certain specified assets of World Omni LT,
an Alabama trust (the "Origination Trust"), monies on deposit in the
Reserve Fund, the Residual Value Surplus Account and in certain
other accounts and certain other assets, as described more fully
under "The Trust and the SUBI". The assets of the Origination
Trust (the "Origination Trust Assets") will consist of retail
closed-end lease contracts assigned to the Origination Trust by
dealers in the World Omni Financial Corp. ("World Omni") network
of dealers, the automobiles and light duty trucks relating
thereto and payments made under certain insurance policies
relating to such lease contracts, the related lessees and
such leased vehicles and certain other assets, as more
fully described under "The Origination Trust -- Property
of the Origination Trust". World Omni will service the
lease contracts included in the Origination Trust
Assets.
(Cover continued on next page)
------------------
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH
AN INVESTMENT IN THE CLASS A CERTIFICATES, SEE "RISK FACTORS" ON PAGE 21 HEREIN.
------------------
THE CLASS A CERTIFICATES WILL REPRESENT BENEFICIAL INTERESTS IN THE TRUST AND
WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF WORLD OMNI LEASE
SECURITIZATION L.P., WORLD OMNI LT, WORLD OMNI FINANCIAL CORP. OR ANY OF
THEIR RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions(2) the Seller(1)(3)
---------------------------------------------------------------------
<S> <C> <C> <C>
Per Class A-1 Certificate......................... % % %
Per Class A-2 Certificate......................... % % %
Per Class A-3 Certificate......................... % % %
Total............................................. $ $ $
</TABLE>
(1) Plus accrued interest, if any, calculated at the related Certificate Rate
from the date of initial issuance.
(2) The Seller and World Omni have agreed to indemnify the Underwriters against
certain liabilities under the Securities Act of 1933. See "Underwriting".
(3) Before deducting expenses payable by the Seller estimated to be $750,000.
------------------
The Class A Certificates are offered by the Underwriters when, as and if
issued by the Seller, delivered to 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 Class A Certificates in book-entry form, will be made through
the facilities of The Depository Trust Company, Cedel Bank, societe anonyme and
the Euroclear System, on or about October , 1996, against payment in
immediately available funds.
CS First Boston
Merrill Lynch & Co.
BA Securities, Inc.
Salomon Brothers Inc
The date of this Prospectus is October , 1996.
<PAGE> 4
(Cover continued from previous page)
The SUBI initially will evidence a beneficial interest in a specified
portion of the Origination Trust Assets, including certain lease contracts, the
automobiles and light duty trucks relating to such lease contracts, certain
monies due under or payable in respect of such lease contracts and leased
vehicles on or after September 1, 1996, payments made under certain insurance
policies relating to such lease contracts, the related lessees and such leased
vehicles and certain other Origination Trust Assets, as more fully described
under "The Trust and the SUBI -- The SUBI" (collectively, the "SUBI Assets").
From time to time until principal is first distributed to the
Certificateholders, as described below, principal collections on or in respect
of the SUBI Assets will be reinvested in additional lease contracts assigned to
the Origination Trust by dealers in the World Omni network of dealers, together
with the automobiles and light duty trucks relating thereto, which at the time
of reinvestment will become SUBI Assets. The SUBI will not evidence a direct
interest in the SUBI Assets, nor will it represent a beneficial interest in all
of the Origination Trust Assets. Payments made on or in respect of the
Origination Trust Assets not represented by the SUBI will not be available to
make payments on the Certificates. For further information regarding the Trust,
the SUBI and the Origination Trust, see "The Trust and the SUBI" and "The
Origination Trust".
The Certificates will consist of three classes of senior certificates
(respectively, the "Class A-1 Certificates", the "Class A-2 Certificates" and
the "Class A-3 Certificates", and collectively, the "Class A Certificates") and
one class of subordinated certificates (the "Class B Certificates"). The Class A
Certificates are the only Certificates offered hereby. The initial principal
amount of the Class B Certificates will be approximately $44,598,043, and the
Class B Certificates will be subordinated to the Class A Certificates to the
extent described herein. The Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates and Class B Certificates initially will respectively
evidence in the aggregate 32.06%, 34.53%, 25.91% and 5.5% undivided interests in
the 99.8% interest in the SUBI to the extent described herein. The Seller will
own the undivided interest in the Trust not represented by the Certificates (the
"Seller Interest"). The initial principal amount of the Seller Interest will be
approximately $16,217,470, and the Seller Interest will be subordinated to the
Certificates as described herein. For further information regarding the
Certificates, see "Description of the Certificates".
Interest on the Class A-1 Certificates, the Class A-2 Certificates and the
Class A-3 Certificates will accrue at the respective fixed per annum interest
rates specified above (the "Class A-1 Certificate Rate", the "Class A-2
Certificate Rate" and the "Class A-3 Certificate Rate", respectively) and will
be distributed to holders of the Class A Certificates on the fifteenth day of
each month (or, if such day is not a Business Day, on the next succeeding
Business Day), beginning November 15, 1996 (each, a "Distribution Date").
Principal will be distributed to holders of the Certificates to the extent
described herein on each Distribution Date beginning in November 1997, or, in
certain limited circumstances, earlier, as more fully described herein. In
general, no principal payments will be made on the Class A-2 Certificates until
the Class A-1 Certificates have been paid in full and no principal payments will
be made on the Class A-3 Certificates until the Class A-1 Certificates and the
Class A-2 Certificates have been paid in full. The Final Scheduled Distribution
Date will occur in November 2002.
There currently is no secondary market for the Class A Certificates and
there is no assurance that one will develop. The Underwriters expect, but will
not be obligated, to make a market in each Class of Class A Certificates. There
is no assurance that any such market will develop, or if one does develop, that
it will continue.
As more fully described under "Ratings of the Class A Certificates", it is a
condition of issuance that each of Moody's Investors Service, Inc. and Standard
& Poor's Ratings Services rates each Class of Class A Certificates in its
highest rating category.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF EACH CLASS OF CLASS
A CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
AVAILABLE INFORMATION
The Seller, as originator of the Trust, has filed with the Securities and
Exchange Commission (the "Commission") on behalf of the Trust a Registration
Statement on Form S-1 (together with all amendments and exhibits thereto, the
"Registration Statement"), of which this Prospectus is a part, under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Class A Certificates being offered hereby. This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which have been omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, which is available for inspection without charge at the public
reference facilities of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and the regional offices of the Commission at
Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661-2511 and Suite 1300, Seven World Trade Center, New York, New York 10048.
Copies of such information can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission at http://www.sec.gov. The Servicer, on
behalf of the Trust, will also file or cause to be filed with the Commission
such periodic reports as are required under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations of the Commission
thereunder.
2
<PAGE> 5
INDEX
<TABLE>
<CAPTION>
SECTION PAGE
- -------------------------------------------------------- ----
<S> <C>
Available Information................................... 2
Index................................................... 3
Overview of Transaction................................. 4
Summary................................................. 5
Risk Factors............................................ 21
Limited Liquidity; Absence of Secondary Market......... 21
Maturity and Prepayment Considerations................. 21
Possible Early Termination of Revolving Period....... 21
Reimbursement of Certain Losses...................... 21
Sequential Payment of Principal on the
Certificates....................................... 22
Payment Rate in Respect of Contracts and
Leased Vehicles.................................... 23
Structural Considerations.............................. 23
Two-Tiered Structure................................. 23
Allocation of Origination Trust Liabilities.......... 24
Third-Party Liens on SUBI Assets..................... 24
Back-up Security Interest in Certain SUBI Assets..... 25
Consumer Protection Laws............................... 26
ERISA Liabilities...................................... 26
Vicarious Tort Liability............................... 27
Insolvency of World Omni; Substantive Consolidation
with World Omni...................................... 28
Legal Proceedings...................................... 29
The Trust and the SUBI.................................. 29
General................................................ 29
The Trust.............................................. 29
The SUBI............................................... 30
The Origination Trust................................... 31
General................................................ 31
ALFI and ALFI L.P...................................... 31
The Origination Trustee................................ 31
Property of the Origination Trust...................... 32
Contract Origination; Titling of Leased Vehicles....... 32
Use of Proceeds......................................... 33
The Seller.............................................. 33
World Omni.............................................. 33
General................................................ 33
Lease Contract Underwriting Procedures................. 34
Insurance.............................................. 36
Collection, Repossession and Disposition Procedures.... 36
Delinquency, Repossession and Loss Data................ 36
The Contracts........................................... 39
General................................................ 39
Characteristics of the Contracts....................... 42
General.............................................. 42
Distribution of the Initial Leased Vehicles by
Make............................................... 42
Distribution of the Initial Contracts by Lease
Rate............................................... 43
Distribution of the Initial Contracts by Maturity.... 43
Distribution of the Initial Contracts by State....... 43
Representations, Warranties and Covenants.............. 43
Maturity, Prepayment and Yield Considerations........... 45
Class A Certificate Factors and Trading Information;
Reports to Class A Certificateholders.................. 49
Description of the Certificates......................... 50
General................................................ 50
Transfer of the SUBI Interest.......................... 51
Reallocation Payments and Reallocation Deposit
Amounts.............................................. 51
Calculation of Investor Percentage and Seller
Percentage........................................... 51
Certain Payments to the Seller......................... 52
Distributions on the Certificates...................... 53
General.............................................. 53
Distributions of Interest............................ 53
Application and Distributions of Principal........... 56
Early Amortization Events.............................. 58
Statements to Certificateholders....................... 59
Termination of the Trust; Retirement of the
Certificates......................................... 61
Book-Entry Registration................................ 61
Definitive Certificates................................ 64
Security for the Certificates........................... 65
General................................................ 65
The Accounts........................................... 65
The Distribution Account............................. 65
The SUBI Collection Account.......................... 65
The Residual Value Surplus Account................... 67
Maintenance of the Accounts.......................... 67
<CAPTION>
SECTION PAGE
- -------------------------------------------------------- ----
<S> <C>
Permitted Investments................................ 67
The Reserve Fund..................................... 68
The Contingent and Excess Liability Insurance
Policies............................................. 71
Additional Document Provisions.......................... 72
Additional Agreement Provisions........................ 72
No Petition.......................................... 72
Amendment............................................ 72
List of Certificateholders........................... 72
The Trustee.......................................... 73
Governing Law........................................ 73
The SUBI Trust Agreement............................... 73
The SUBI, the Other SUBIs and the UTI................ 73
Special Obligations of ALFI L.P. as Beneficiary and
Grantor............................................ 74
Origination Trustee Duties and Powers; Fees and
Expenses........................................... 75
Indemnity of Trustee and Trust Agents................ 76
Termination.......................................... 76
No Petition.......................................... 76
Amendment............................................ 76
Governing Law........................................ 77
Trustee as Third-Party Beneficiary................... 77
The Servicing Agreement................................ 77
General.............................................. 77
Custody of Contract Documents and Certificates of
Title.............................................. 77
Collections.......................................... 77
Notification of Liens and Claims..................... 78
Advances............................................. 78
Security Deposits.................................... 78
Insurance on Leased Vehicles......................... 79
Realization Upon Charged-off Contracts............... 79
Matured Leased Vehicle Inventory..................... 80
Records, Servicer Determinations and Reports......... 80
Evidence as to Compliance............................ 80
Compliance with ERISA................................ 81
Servicing Compensation............................... 81
Servicer Resignation and Termination................. 82
Indemnification by the Servicer...................... 82
Events of Servicing Termination...................... 82
Rights Upon Event of Servicing Termination........... 83
No Petition.......................................... 83
Amendment............................................ 83
Termination.......................................... 83
Governing Law........................................ 84
Certain Legal Aspects of the Origination Trust and the
SUBI................................................... 84
The Origination Trust.................................. 84
The SUBI............................................... 84
Insolvency Related Matters............................. 84
Certain Legal Aspects of the Contracts and the Leased
Vehicles............................................... 85
Back-up Security Interests............................. 85
Vicarious Tort Liability............................... 85
Repossession of Leased Vehicles........................ 86
Deficiency Judgments................................... 86
Consumer Protection Laws............................... 87
Other Limitations...................................... 88
Certain Income Tax Considerations....................... 88
Federal Taxation....................................... 88
General.............................................. 88
Characterization of the Class A Certificates as
Indebtedness....................................... 88
Taxation of Interest and Discount Income............. 89
Sales of Class A Certificates........................ 90
Federal Income Tax Consequences to Foreign
Investors.......................................... 91
Backup Withholding................................... 91
Florida Income Taxation................................ 91
ERISA Considerations.................................... 92
Underwriting............................................ 94
Notice to Canadian Residents............................ 95
Ratings of the Class A Certificates..................... 96
Legal Matters........................................... 97
Index of Capitalized Terms.............................. 98
Global Clearance, Settlement and Tax Documentation
Procedures............................................. 100
</TABLE>
3
<PAGE> 6
[CHART]
4
<PAGE> 7
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. See the Index of
Capitalized Terms for the location herein of certain capitalized terms.
Overview................... Certain motor vehicle dealers ("Dealers") in the
World Omni Financial Corp. ("World Omni") network
of dealers have assigned, and will assign,
closed-end retail automobile and light duty truck
leases to World Omni LT, an Alabama trust (the
"Origination Trust"). The Origination Trust was
created in 1993 to avoid the administrative
difficulty and expense associated with retitling
leased vehicles in the securitization of automobile
and light duty truck leases. The Origination Trust
has issued to Auto Lease Finance L.P. ("ALFI L.P.")
an Undivided Trust Interest (the "UTI")
representing the entire beneficial interest in the
unallocated assets of the Origination Trust. ALFI
L.P. will instruct the trustee of the Origination
Trust to allocate a separate portfolio of leases
and leased vehicles within the Origination Trust
and create a special unit of beneficial interest
(the "SUBI") which will represent the entire
beneficial interest in such portfolio. Upon its
creation, such portfolio will no longer be a part
of the Origination Trust Assets represented by the
UTI. ALFI L.P. will sell its interest in the SUBI
to World Omni Lease Securitization L.P. (the
"Seller") and the Seller will in turn contribute a
99.8% interest in the SUBI to the World Omni 1996-B
Automobile Lease Securitization Trust (the
"Trust"). In return, the Trust will issue four
classes of Certificates, including the Class A-1
Certificates, Class A-2 Certificates and Class A-3
Certificates being offered hereby. The undivided
interest in the Trust not evidenced by the
Certificates will be permanently retained by the
Seller. ALFI L.P. has caused and from time to time
in the future may cause additional special units of
beneficial interest similar to the SUBI ("Other
SUBIs") to be created out of the UTI and sold to
the Seller or one or more other entities. The Trust
and the Certificateholders will have no interest in
the UTI, any Other SUBI or any assets of the
Origination Trust evidenced by the UTI or any Other
SUBI.
The Trust.................. The Trust will be formed pursuant to a
securitization trust agreement to be dated as of
October 1, 1996 (the "Agreement"), between the
Seller and First Bank National Association ("First
Bank"), as trustee (in such capacity, the
"Trustee"). The property of the Trust will consist
primarily of an undivided 99.8% interest (the "SUBI
Interest") in the SUBI, which will evidence a
beneficial interest in certain specified assets of
the Origination Trust, and monies on deposit in the
Reserve Fund, the Residual Value Surplus Account
and in certain other accounts established as
described herein.
The Origination Trust was formed by ALFI L.P., as
grantor and initial beneficiary, and VT Inc., as
trustee (the "Origination Trustee"). The sole
general partner of ALFI L.P. is Auto Lease Finance,
Inc., a Delaware corporation which is a wholly
owned, special purpose subsidiary of World Omni
("ALFI"). ALFI may not transfer its general
partnership interest in ALFI L.P. so long as any
financings involving interests in the Origination
Trust (including the transaction described herein)
are outstanding. The sole limited partner of ALFI
L.P. is World Omni. VT Inc. is an Alabama
corporation and a wholly owned, special
5
<PAGE> 8
purpose subsidiary of First Bank that was organized
solely for the purpose of acting as Origination
Trustee. VT Inc. is not affiliated with World Omni
or any affiliate thereof. For further information
regarding the Origination Trustee, see "The
Origination Trust -- The Origination Trustee".
The Origination Trust Assets consist of retail
closed-end lease contracts assigned to the
Origination Trust by Dealers, the automobiles and
light duty trucks relating thereto and all proceeds
thereof and payments made under certain insurance
policies relating to such contracts, the related
lessees or such leased vehicles. The SUBI initially
will evidence a beneficial interest in a specified
portion of the Origination Trust Assets, including
certain lease contracts (the "Initial Contracts")
originated by Dealers located throughout the United
States, the automobiles and light duty trucks
relating thereto (the "Initial Leased Vehicles"),
certain monies due under or payable in respect of
the Initial Contracts and the Initial Leased
Vehicles on or after September 1, 1996 (the
"Initial Cutoff Date"), payments made under certain
insurance policies relating to the Initial
Contracts, the related lessees and the Initial
Leased Vehicles and certain related assets and
rights (collectively, the "SUBI Assets"). For
further information regarding the SUBI Assets, see
"The Trust and the SUBI -- The SUBI".
Prior to the time when principal is first
distributed to Certificateholders as described
herein, payments made on or in respect of the SUBI
Assets allocable to principal will be reinvested in
additional retail closed-end lease contracts (the
"Subsequent Contracts" and, together with the
Initial Contracts, the "Contracts") originated and
assigned to the Origination Trust by Dealers
located throughout the United States and the
automobiles and light duty trucks relating thereto
(the "Subsequent Leased Vehicles" and, together
with the Initial Leased Vehicles, the "Leased
Vehicles"). At the time of such reinvestment, the
related Subsequent Contracts and Subsequent Leased
Vehicles will become SUBI Assets. For further
information regarding the Subsequent Contracts and
Subsequent Leased Vehicles, see "Summary -- The
Revolving Period; Subsequent Contracts and
Subsequent Leased Vehicles" and "The Trust and the
SUBI -- The SUBI".
The Dealers comprising the sources for Contracts
and Leased Vehicles are members of World Omni's
network of dealers. Predominantly Toyota
dealerships, these Dealers offer automobiles and
light duty trucks for lease pursuant to World
Omni-approved terms and documentation. For further
information regarding World Omni's lease business,
see "World Omni".
The SUBI will not evidence a direct interest in the
SUBI Assets, nor will it represent a beneficial
interest in any Origination Trust Assets other than
the SUBI Assets. Payments made on or in respect of
the Origination Trust Assets other than the SUBI
Assets will not be available to make payments on
the Certificates.
The 0.2% interest in the SUBI not transferred to
the Trustee will be permanently retained by the
Seller (the "Retained SUBI Interest"). Accordingly,
the Seller will be entitled to receive 0.2% of all
payments made on or in respect of the SUBI Assets
and will share in 0.2% of all
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<PAGE> 9
losses and liabilities incurred by the SUBI Assets.
Any payments made in respect of the Retained SUBI
Interest will not be available to make payments on
the Certificates. For further information regarding
the SUBI, see "Summary -- Security for the
Certificates -- The SUBI", "The Trust and the
SUBI -- The SUBI" and "The Origination Trust".
The Seller................. The Seller is a Delaware limited partnership, the
sole general partner of which is World Omni Lease
Securitization, Inc., a Delaware corporation
("WOLSI"), which is a wholly owned, special purpose
subsidiary of World Omni. WOLSI may not transfer
its general partnership interest in
the Seller so long as any financings involving
interests formerly or partially held by it in the
Origination Trust (including the transaction
described herein) are outstanding. The sole limited
partner of the Seller is World Omni.
World Omni................. World Omni is a Florida corporation that is a
wholly owned subsidiary of JM Family Enterprises,
Inc., a Delaware corporation ("JMFE"). JMFE also
wholly owns Southeast Toyota Distributors, Inc.
("SET"), which is the exclusive distributor of
Toyota automobiles and light duty trucks in
Florida, Alabama, Georgia, North Carolina and South
Carolina (the "Five State Area"). As more fully
described under "World Omni", World Omni provides
consumer lease and installment contract financing
to retail customers of, and floorplan and other
dealer financing to, Dealers that are located
throughout the United States. World Omni wholly
owns both ALFI and WOLSI.
Pursuant to an amended and restated servicing
agreement dated as of July 1, 1994, as amended, to
be supplemented by a servicing supplement dated as
of October 1, 1996 (collectively, the "Servicing
Agreement"), each between World Omni and the
Origination Trustee, World Omni will act as the
initial servicer of the Origination Trust Assets,
including the SUBI Assets (in such capacity, the
"Servicer"). The Trustee will be a third party
beneficiary of the Servicing Agreement.
Securities Offered......... The Automobile Lease Asset Backed Certificates (the
"Certificates") will represent fractional undivided
interests in the Trust. The Certificates will
consist of three classes of senior certificates
(the "Class A-1 Certificates", the "Class A-2
Certificates" and the "Class A-3 Certificates",
respectively, and collectively, the "Class A
Certificates") and one class of subordinated
certificates (the "Class B Certificates").
Principal payments generally will not be made in
respect of the Class A-2 Certificates until the
Class A-1 Certificates have been paid in full and
no principal payments will be made on the Class A-3
Certificates until the Class A-1 Certificates and
the Class A-2 Certificates have been paid in full,
in each case as more fully described under
"Description of the Certificates -- Distributions
on the Certificates -- Application and
Distributions of Principal -- Amortization Period".
The Class B Certificates will be subordinated to
the Class A Certificates so that (i) interest
payments generally will not be made in respect of
the Class B Certificates until interest in respect
of the Class A Certificates has been paid, (ii)
principal payments generally will not be made in
respect of the Class B Certificates until the Class
A-1 and Class A-2 Certificates have been paid in
full and (iii) if other sources available to make
payments of principal and interest on the Class A-3
Certificates are insufficient, amounts that
otherwise would be paid in respect of the Class B
7
<PAGE> 10
Certificates generally will be available for that
purpose, as more fully described under "Description
of the Certificates -- Distributions on the
Certificates". The undivided interest in the Trust
not represented by the Certificates will be
permanently retained by the Seller (the "Seller
Interest"). The Seller Interest will be
subordinated to the Certificates as described under
"Summary -- Security for the
Certificates -- Subordination of the Seller
Interest". Only the Class A Certificates are being
offered hereby. The Class A Certificates will be
issued in book-entry form in minimum denominations
of $1,000 and integral multiples thereof. The Class
B Certificates will be sold in one or more private
placements. Additional information regarding the
Class A Certificates is set forth under
"Description of the Certificates -- Book-Entry
Registration" and "-- Definitive Certificates".
Each Certificate will represent the right to
receive monthly payments of interest at the related
Certificate Rate and, to the extent described
herein, monthly payments of principal during the
Amortization Period. These payments will be funded
from a portion of the payments received by the
Trust on or in respect of the SUBI Interest (i.e.,
from a portion of 99.8% of the payments received on
or in respect of the Contracts and the Leased
Vehicles) and, in certain circumstances, from
Excess Collections, monies on deposit in the
Reserve Fund, monies on deposit in the Residual
Value Surplus Account, the Servicing Fee (so long
as World Omni is the Servicer) and monies that
otherwise would be distributable in respect of the
Seller Interest. Interests in the assets of the
Trust will be allocated among the Class A-1
Certificateholders (the "Class A-1 Interest"), the
Class A-2 Certificateholders (the "Class A-2
Interest"), the Class A-3 Certificateholders (the
"Class A-3 Interest" and, together with the Class
A-1 Interest and the Class A-2 Interest, the "Class
A Interest"), the Class B Certificateholders (the
"Class B Interest" and, together with the Class A
Interest, the "Investor Interest") and the Seller
Interest.
On the date of initial issuance of the Certificates
(the "Closing Date"), the Trust will issue
approximately $260,000,000 aggregate principal
amount of Class A-1 Certificates (the "Initial
Class A-1 Certificate Balance"), approximately
$280,000,000 aggregate principal amount of Class
A-2 Certificates (the "Initial Class A-2
Certificate Balance"), approximately $210,057,988
aggregate principal amount of Class A-3
Certificates (the "Initial Class A-3 Certificate
Balance" and, together with the Initial Class A-1
Certificate Balance and the Initial Class A-2
Certificate Balance, the "Initial Class A
Certificate Balance") and approximately $44,598,043
aggregate principal amount of Class B Certificates
(the "Initial Class B Certificate Balance" and,
together with the Initial Class A Certificate
Balance, the "Initial Certificate Balance"). The
aggregate principal amount of the Class A-1, Class
A-2 and Class A-3 Certificates and the Class B
Certificates will, except in certain circumstances
described under "Summary -- The Revolving Period;
Subsequent Contracts and Subsequent Leased
Vehicles", remain fixed at their respective Initial
Certificate Balances during the Revolving Period
and, to the extent described herein, will decline
thereafter during the Amortization Period as
principal is paid on the Certificates. The "Class
Certificate Balance" of any Class of Certificates
on any day will equal the Initial Class Certificate
Balance, reduced by the sum of all distribu-
8
<PAGE> 11
tions made in respect of principal (including any
reimbursements of Loss Amounts allocable to such
Class and Certificate Principal Loss Amounts in
respect of such Class) on or prior to such day on
the related Class of Certificates and those
Certificate Principal Loss Amounts in respect of
such Class, if any, which have not been reimbursed
as described herein. The "Class A Certificate
Balance" will mean the sum of the Class A-1, Class
A-2 and Class A-3 Certificate Balances. The
"Certificate Balance" with respect to the
Certificates will mean the sum of the Class A
Certificate Balance and the Class B Certificate
Balance.
The amount of the Seller Interest will initially
equal approximately $16,217,470 (which amount will
equal 2% of 99.8% of the Aggregate Net Investment
Value as of the Initial Cutoff Date) and on any day
will equal the difference between 99.8% of the
Aggregate Net Investment Value, calculated as
described under "Summary -- Security for the
Certificates -- The SUBI -- The Contracts", and the
Certificate Balance. As more fully described under
"Description of the Certificates -- General", the
Aggregate Net Investment Value can change daily.
Because the Seller Interest will represent the
interest in the Trust not represented by the
Certificates, the amount of the Seller Interest can
decrease daily as the Aggregate Net Investment
Value decreases and can increase on a Distribution
Date to reflect reductions in the Certificate
Balance, but will never exceed the initial amount
of the Seller Interest.
Registration of the
Certificates............... Each Class of Class A Certificates initially will
be represented by one or more certificates
registered in the name of Cede & Co. ("Cede"), as
the nominee of The Depository Trust Company
("DTC"). A person acquiring an interest in the
Class A Certificates (each, a "Certificate Owner")
may elect to hold his or her interest through DTC,
in the United States of America, or Cedel Bank,
societe anonyme ("Cedel") or the Euroclear System
("Euroclear"), in Europe. Transfers within DTC,
Cedel or Euroclear, as the case may be, will be in
accordance with the usual rules and operating
procedures of the relevant system. Cross-market
transfers between persons holding directly or
indirectly through DTC, on the one hand, and
counterparties holding directly or indirectly
through Cedel or Euroclear, on the other, will be
effected in DTC through Citibank, N.A. or Morgan
Guaranty Trust Company of New York, the relevant
depositories (collectively, the "Depositaries") of
Cedel or Euroclear, respectively, and each a
participating member of DTC. No Certificate Owner
will be able to receive a definitive certificate
representing such person's interest, except in the
limited circumstances described under "Description
of the Certificates -- Definitive Certificates".
Unless and until definitive certificates are
issued, Certificate Owners will not be recognized
as holders of record of Class A Certificates and
will be permitted to exercise the rights of such
holders only indirectly through DTC. For further
information regarding book-entry registration of
the Class A Certificates, see "Description of the
Certificates -- General" and "-- Book-Entry
Registration".
Interest................... On the fifteenth day of each month or, if such day
is not a Business Day, on the next succeeding
Business Day, beginning November 15, 1996 (each, a
"Distribution Date"), distributions in respect of
the Class A Certificates will be made to the
holders of record of the Class A-1, Class A-2 and
Class A-3 Certificates (respectively, the "Class
A-1
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<PAGE> 12
Certificateholders", the "Class A-2
Certificateholders" and the "Class A-3
Certificateholders", and collectively, the "Class A
Certificateholders") as of the day immediately
preceding such Distribution Date or, if Definitive
Certificates are issued, the last day of the
immediately preceding calendar month (each such
date, a "Record Date"). On each Distribution Date,
the Trustee will distribute interest for the
related Interest Period to the Class A
Certificateholders, based on the related Class
Certificate Balance as of the immediately preceding
Distribution Date (after giving effect to
reductions in such Class Certificate Balance as of
such immediately preceding Distribution Date) or,
in the case of the first Distribution Date, on the
Initial Class Certificate Balance, in the case of
(i) the Class A-1 Certificates, at an annual
percentage rate equal to % (the "Class
A-1 Certificate Rate"), (ii) the Class A-2
Certificates, at an annual percentage rate equal to
% (the "Class A-2 Certificate Rate") and
(iii) the Class A-3 Certificates, at an annual
percentage rate equal to % (the "Class A-3
Certificate Rate"). Interest in respect of the
Class A Certificates will accrue for the period
from and including the Distribution Date in each
month to but excluding the Distribution Date in the
immediately succeeding month (or, in the case of
the first Distribution Date, from and including
October , 1996) (each, an "Interest Period"). All
such payments will be calculated on the basis of a
360-day year consisting of twelve 30-day months.
The final scheduled Distribution Date for the
Certificates (the "Final Scheduled Distribution
Date") will be the November 2002 Distribution Date.
A "Business Day" will be a day other than a
Saturday or Sunday or a day on which banking
institutions in the States of Alabama, Florida,
Illinois or New York are authorized or obligated by
law, or executive order or government decree to be
closed. As described under "Description of the
Certificates -- Distributions on the
Certificates -- Distributions of Interest",
distributions in respect of interest on the Class B
Certificates will be subordinated to distributions
in respect of interest on the Class A Certificates
under certain circumstances.
The Revolving Period;
Subsequent Contracts and
Subsequent Leased
Vehicles................. No principal will be payable on the Certificates
until the November 1997 Distribution Date or, upon
the occurrence of an Early Amortization Event,
until the Distribution Date in the month
immediately succeeding the month in which such
Early Amortization Event occurs. From the Closing
Date and ending on the day immediately preceding
the commencement of the Amortization Period (the
"Revolving Period"), all Principal Collections and
reimbursements of Loss Amounts will be reinvested
in Subsequent Contracts and Subsequent Leased
Vehicles so as to maintain the Class A-1, Class
A-2, Class A-3 and Class B Certificate Balances at
constant levels during the Revolving Period, except
to the extent there are unreimbursed Certificate
Principal Loss Amounts in respect of any such
Class, in which case the Certificate Balance of the
related Class of Certificates will decrease until
such time, if any, as such Certificate Principal
Loss Amounts are reimbursed as described under
"Description of the Certificates -- Distributions
on the Certificates -- Distributions of Interest".
The events that might lead to the termination of
the Revolving Period prior to its scheduled
termina-
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<PAGE> 13
tion date are described under "Description of the
Certificates -- Early Amortization Events".
Prior to the twenty-fifth calendar day (i) in each
month (beginning November 1996) during the
Revolving Period and (ii) if no Early Amortization
Event has occurred, in the month in which the
Amortization Date occurs, on one or more days
selected by the Servicer (each, a "Transfer Date"),
the Servicer will direct the Origination Trustee to
reinvest Principal Collections in certain lease
contracts and the related leased vehicles of the
Origination Trust that are not evidenced by the
SUBI or any Other SUBI. Upon such reinvestment, the
related Subsequent Contracts and Subsequent Leased
Vehicles will become SUBI Assets. If on the
twenty-fifth calendar day of any month (beginning
November 1996) during the Revolving Period the
amount of Principal Collections as of the last day
of the immediately preceding month that have not
been reinvested in Subsequent Contracts and
Subsequent Leased Vehicles exceeds $1,000,000, an
Early Amortization Event will occur, the Revolving
Period will terminate as of such day and all
unreinvested Principal Collections will be
distributed as principal to the Trust and then to
Certificateholders on the immediately succeeding
Distribution Date. For further details concerning
the application of Principal Collections, see
"Summary -- Amortization Period; Principal
Payments", "The Trust and the SUBI -- The SUBI" and
"Description of the Certificates -- Distributions
on the Certificates -- Application and
Distributions of Principal -- Revolving Period".
The Subsequent Contracts and Subsequent Leased
Vehicles will be selected from the Origination
Trust's portfolio of lease contracts and related
vehicles that are not allocated to (or reserved for
allocation to) any Other SUBI, based on the same
criteria as are applicable to the Initial Contracts
and the other criteria described under the "The
Contracts -- Representations, Warranties and
Covenants". The reinvestment of Principal
Collections (and reimbursement of Loss Amounts)
will be made in the available lease contracts with
the earliest origination dates, except that lease
contracts booked from September 1, 1996 through
September 27, 1996 shall be reserved for allocation
to the SUBI and will be used first, and if
allocations are being made in respect of any one or
more previous Other SUBIs at the same time out of
the Origination Trust's general pool of unreserved
lease contracts, reinvestment will be made first in
respect of such previous Other SUBI(s). For further
information regarding the Subsequent Contracts and
Subsequent Leased Vehicles, see "The Contracts".
"Principal Collections" will mean, with respect to
any Collection Period, all Collections allocable to
the principal component of any Contract (including
any payment in respect of the related Leased
Vehicle, but other than any payment as to which a
Loss Amount has been realized and allocated during
any prior Collection Period), discounted to the
extent required below. A "Collection Period" will
be each calendar month (or, with respect to the
first Collection Period, the months of September
and October 1996). For purposes of determining
Principal Collections, the principal component of
all payments made on or in respect of a Contract
(or the related Leased Vehicle) with a Lease Rate
less than approximately 8.7% (each, a "Discounted
Contract") will be
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<PAGE> 14
discounted at a rate of approximately 8.7%, thereby
effectively reallocating a portion of the payments
received in respect of the principal component of
the Contracts to Interest Collections and providing
additional credit enhancement for the benefit of
the Certificateholders. "Collections" with respect
to any Collection Period will include all net
collections collected or received in respect of the
Contracts and Leased Vehicles during such
Collection Period, such as Monthly Payments
(including amounts in the SUBI Collection Account
that previously constituted Payments Ahead but
which represent Monthly Payments due during such
Collection Period), Prepayments, Advances, Net
Matured Leased Vehicle Proceeds (including amounts
withdrawn from the Residual Value Surplus Account
to offset certain Residual Value Losses in respect
of Leased Vehicles relating to Matured Contracts
and certain Matured Leased Vehicle Expenses, but
not including any Residual Value Surplus deposited
into the Residual Value Surplus Account in respect
of such Collection Period), Net Repossessed Vehicle
Proceeds and other Net Liquidation Proceeds, less
an amount equal to the sum of (i) Payments Ahead
with respect to one or more future Collection
Periods, (ii) amounts paid to the Servicer in
respect of outstanding Advances and (iii)
Additional Loss Amounts in respect of such
Collection Period. In addition, if such Collection
Period occurs during the Revolving Period, amounts
otherwise payable to the Certificateholders on the
related Distribution Date as reimbursement of Loss
Amounts allocable to the Investor Interest (as
described under "Description of the
Certificates -- Distributions on the
Certificates -- Distributions of Interest") will be
treated as Principal Collections and reinvested in
Subsequent Contracts and Subsequent Leased Vehicles
as described above. "Interest Collections" with
respect to any Collection Period generally will
equal the amount by which Collections exceed
Principal Collections. "Net Repossessed Vehicle
Proceeds" will equal Repossessed Vehicle Proceeds
net of Repossessed Vehicle Expenses, and "Net
Liquidation Proceeds" will equal Liquidation
Proceeds net of Liquidation Expenses.
Amortization Period;
Principal Payments....... The "Amortization Period" shall commence on the
earlier of October 1, 1997 (the "Amortization
Date") or the day on which an Early Amortization
Event occurs, and will end when each Class of
Certificates has been paid in full and all
Certificate Principal Loss Amounts and Class B
Certificate Principal Carryover Shortfalls, if any,
have been repaid in full, together with accrued
interest thereon, or when the Trust otherwise
terminates. During the Amortization Period,
Principal Collections will no longer be reinvested
in Subsequent Contracts and Subsequent Leased
Vehicles as described above. Instead, on each
Distribution Date beginning with the Distribution
Date in the month following the month in which the
Amortization Period commences and ending on the
Distribution Date on which the Class A-2
Certificates have been paid in full, all Principal
Collections for the related Collection Period that
are allocable to the Investor Interest will be
distributed as principal payments first to the
Class A-1 Certificateholders until the Class A-1
Certificates have been paid in full, second, to the
Class A-2 Certificateholders until the Class A-2
Certificates have been paid in full and thereafter
the Class A Percentage and the Class B Percentage
of any remaining such Principal Collections will be
distributed as principal payments to the Class A-3
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<PAGE> 15
Certificateholders and to the holders of record of
the Class B Certificates (the "Class B
Certificateholders"), respectively. On each
Distribution Date after the Class A-2 Certificates
have been paid in full, the Class A Percentage and
the Class B Percentage of Principal Collections for
the related Collection Period allocable to the
Investor Interest will be distributed to the Class
A-3 Certificateholders and the Class B
Certificateholders, respectively, until the related
Class of Certificates has been paid in full. The
"Class A Percentage" will mean the Class A
Certificate Balance immediately after the Class A-2
Certificates have been paid in full, as a
percentage of the Certificate Balance at such time,
and the "Class B Percentage" will mean the Class B
Certificate Balance immediately after the Class A-2
Certificates have been paid in full, as a
percentage of the Certificate Balance at such time.
The Class A Percentage and the Class B Percentage
will not change after they are set.
In no event will the principal distributed in
respect of any Class of Certificates exceed its
Certificate Balance. In addition, under certain
circumstances, (i) Class A Certificateholders will
be entitled to receive reimbursement of an
allocable percentage of Loss Amounts as a
distribution of principal from sources other than
Principal Collections and (ii) principal allocable
to the Class B Certificates may instead be
distributed in respect of Loss Amounts allocable to
the Class A-3 Certificates, Class A-3 Certificate
Principal Loss Amounts and accrued and unpaid
interest thereon, as described under "Description
of the Certificates -- Distributions on the
Certificates -- Distributions of Interest",
"-- Application and Distributions of Principal" and
"Risk Factors -- Maturity and Prepayment
Considerations -- Reimbursement of Certain Losses".
See "Description of the Certificates -- Early
Amortization Events" for a description of the
events that might lead to the commencement of the
Amortization Period prior to the Amortization Date.
During the Amortization Period, the amount of
Principal Collections allocable to the Investor
Interest in respect of a Collection Period (the
"Principal Allocation") generally will mean the
Principal Collections in respect of such Collection
Period allocable to the SUBI Interest multiplied by
the Investor Percentage for such Principal
Collections. The "Investor Percentage" for purposes
of the Principal Allocation will equal the
percentage equivalent of a fraction (not to exceed
100%), the numerator of which is the Certificate
Balance and the denominator of which is 99.8% of
the Aggregate Net Investment Value, calculated as
described under "Summary -- Security for the
Certificates -- The SUBI -- The Contracts", as of
the last day of the last Collection Period (i)
preceding the Amortization Date or (ii) preceding
the month, if any, during which an Early
Amortization Event occurs. See "Description of the
Certificates -- Calculation of Investor Percentage
and Seller Percentage" for a description of
calculation of the Investor Percentage relating to
Interest Collections and Loss Amounts.
Allocations based upon the Principal Allocation for
Principal Collections during the Amortization
Period may result in distributions of principal
with respect to a Collection Period during the
Amortization Period to Certificateholders in
amounts that are greater relative to the declining
balance of the Certificate Balance than would be
the case if no fixed
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<PAGE> 16
Investor Percentage were used to determine the
percentage of Principal Collections distributed in
respect of the Certificates. Additionally, to the
extent that on any Distribution Date during the
Amortization Period any portion of the Investor
Percentage of Interest Collections in respect of
the related Collection Period allocable to the SUBI
Interest remains after required distributions have
been made, such excess interest will be deposited
into the Reserve Fund until the amount on deposit
therein equals the Reserve Fund Cash Requirement.
Any remaining excess interest, up to but not
exceeding the product of (i) one-twelfth of 0.25%,
(ii) 99.8% and (iii) the Aggregate Net Investment
Value as of the last day of such Collection Period
(the "Accelerated Principal Distribution Amount"),
will be distributed as an additional payment of
principal to the Certificateholders in the same
manner and priority as principal is distributed in
respect of the Certificates as described in the
preceding paragraphs. See "Description of the
Certificates -- Distributions on the
Certificates -- Distributions of Interest" and
"Security for the Certificates -- The
Accounts -- The SUBI Collection
Account -- Withdrawals from the SUBI Collection
Account" for further information regarding the
foregoing matters.
Optional Purchase.......... The Certificates will be subject to purchase at the
option of the Seller on any Distribution Date if,
either before or after giving effect to any payment
of principal required to be made on such
Distribution Date, the Certificate Balance has been
reduced to an amount less than or equal to 10% of
the Initial Certificate Balance at a purchase price
determined as described under "Description of the
Certificates -- Termination of the Trust;
Retirement of the Certificates".
Security for the
Certificates............... The security for the Certificates will consist
primarily of the following:
A. The SUBI.............. The SUBI will evidence a beneficial interest in the
SUBI Assets. The Origination Trust was created
pursuant to a trust agreement (the "Origination
Trust Agreement"), among ALFI L.P., as grantor and
initial beneficiary, the Origination Trustee and
First Bank, as trust agent (in such capacity, the
"Trust Agent"). The SUBI Interest will be evidenced
by a certificate (the "SUBI Certificate")
evidencing a 99.8% beneficial interest in the SUBI
Assets that will be issued by the Origination Trust
pursuant to a supplement to the Origination Trust
Agreement to be dated as of October 1, 1996 (the
"SUBI Supplement" and, together with the
Origination Trust Agreement, the "SUBI Trust
Agreement"). The Trustee will be a third party
beneficiary of the SUBI Trust Agreement. The Seller
will permanently hold the Retained SUBI Interest,
representing the 0.2% beneficial interest in the
SUBI Assets not evidenced by the SUBI Certificate.
The Origination Trust Assets evidenced by the SUBI
will primarily include the Contracts and the Leased
Vehicles. The SUBI will not evidence an interest in
any Origination Trust Assets other than the SUBI
Assets, and payments made on or in respect of all
other Origination Trust Assets will not be
available to make payments on the Certificates. For
more information regarding the SUBI, see "The Trust
and the SUBI" and "The Origination Trust".
1. The Contracts......... The Contracts will consist of a pool of retail
closed-end lease contracts originated by Dealers
located throughout the United States, each of
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<PAGE> 17
which will have an original term of not more than
60 months. Each Contract will be a finance lease
for accounting purposes and will have been written
for a "capitalized cost" (which may exceed the
manufacturer's suggested retail price), plus an
implicit rate in each Lease calculated as an annual
percentage rate (the "Lease Rate") on a constant
yield basis. The Contracts will provide for equal
monthly payments (the "Monthly Payments") such that
at the end of the related Contract term such
capitalized cost will have been amortized to an
amount equal to the residual value of the related
Leased Vehicle established at the time of
origination of such Contract (the "Residual
Value"). The amount to which the capitalized cost
of a Contract has been amortized at any point in
time is referred to herein as its "Outstanding
Principal Balance".
The Initial Contracts consist of 35,016 lease
contracts. As of the Initial Cutoff Date, the Lease
Rate of the Initial Contracts ranged from 2.01% to
12.87%, with a weighted average Lease Rate of
7.74%. The aggregate of the original principal
balances of the Initial Contracts as of their
respective dates of origination was $858,054,687.
As of the Initial Cutoff Date, the aggregate
Outstanding Principal Balance of the Initial
Contracts was $831,416,020, the aggregate Residual
Value of the Initial Leased Vehicles was
$523,477,146 and the Initial Contracts had a
weighted average original term of 40.38 months and
a weighted average remaining term to scheduled
maturity of 36.79 months. See "The Contracts" for
further information regarding the Initial
Contracts.
The Initial Contracts were, and the Subsequent
Contracts will be, identified by the Servicer from
the Origination Trust's portfolio of lease
contracts originated by Dealers located throughout
the United States that are not evidenced by (or
reserved for allocation to) any Other SUBI, based
upon the criteria specified in the SUBI Trust
Agreement and described under "The
Contracts -- Characteristics of the Contracts" and
"-- Representations, Warranties and Covenants".
The "Aggregate Net Investment Value" as of any day
will equal the sum of (i) the Discounted Principal
Balance of all Contracts other than Charged-off,
Liquidated, Matured and Additional Loss Contracts,
(ii) the aggregate Residual Value of all Leased
Vehicles to the extent that the related Contracts
have reached their scheduled maturities (each, a
"Matured Contract") within the three immediately
preceding Collection Periods but which Leased
Vehicles as of the last day of the most recent
Collection Period have remained unsold and not
otherwise disposed of by the Servicer for no more
than two full Collection Periods (the "Matured
Leased Vehicle Inventory") and (iii) during the
Revolving Period, the amount of Principal
Collections, if any, that have not been reinvested
in Subsequent Contracts and Subsequent Leased
Vehicles. The "Discounted Principal Balance" of (i)
a Discounted Contract will equal its Outstanding
Principal Balance, discounted by approximately
8.70%, and (ii) all Contracts other than Discounted
Contracts will equal their Outstanding Principal
Balance. As of the Initial Cutoff Date, the
aggregate Discounted Principal Balance of the
Initial Contracts and the Aggregate Net Investment
Value was approximately $812,498,498.
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2. The Leased Vehicles... The Leased Vehicles will be comprised of
automobiles and light duty trucks. As of the times
of origination of the Contracts, the related Leased
Vehicles will be either new vehicles, dealer
demonstrator vehicles or manufacturers' program
vehicles, as described under "The Contracts --
General".
The certificates of title to the Initial Leased
Vehicles have been, and the certificates of title
to the Subsequent Leased Vehicles will be,
registered at all times in the name of the
Origination Trustee (in its capacity as trustee of
the Origination Trust). Such certificates of title
will not reflect the indirect interest of the
Trustee in the Leased Vehicles by virtue of its
beneficial interest in the SUBI. Therefore, if the
Class A Certificates were recharacterized as
secured loans, the Trustee would not have a
perfected lien in the Leased Vehicles, although it
would be deemed to have a perfected security
interest in the SUBI Certificate and the Contracts
and Contract Rights. For further information
regarding the titling of the Leased Vehicles and
the interest of the Trustee therein, see "Risk
Factors -- Structural Considerations" and "Certain
Legal Aspects of the Contracts and the Leased
Vehicles -- Back-up Security Interests".
B. The Accounts.......... The Origination Trustee will maintain the SUBI
Collection Account and the Residual Value Surplus
Account for the benefit of the holders of interests
in the SUBI. Within two Business Days of receipt,
payments made on or in respect of the Contracts or
the Leased Vehicles generally will be deposited by
the Servicer into the SUBI Collection Account. Such
payments will include, but will not be limited to,
Monthly Payments made by lessees, Monthly Payments
determined by the Servicer to be due in one or more
future Collection Periods (each, a "Payment
Ahead"), Prepayments, proceeds from the sale or
other disposition of Leased Vehicles relating to
Matured Contracts, including payments for excess
mileage and excess wear and use ("Matured Leased
Vehicle Proceeds"), proceeds received in connection
with the sale or other disposition of Leased
Vehicles that have been repossessed ("Repossessed
Vehicle Proceeds") and other amounts received in
connection with the realization of the amounts due
under any Contract (together with Matured Leased
Vehicle Proceeds and Repossessed Vehicle Proceeds,
"Liquidation Proceeds"). The Servicer will be
entitled to reimbursement for expenses incurred in
connection with the realization of Matured Leased
Vehicle Proceeds ("Matured Leased Vehicle
Expenses"), Repossessed Vehicle Proceeds
("Repossessed Vehicle Expenses") and other
Liquidation Proceeds (such expenses, together with
Matured Leased Vehicle Expenses and Repossessed
Vehicle Expenses, "Liquidation Expenses"), either
from amounts on deposit in the SUBI Collection
Account or, to the extent described herein, the
Residual Value Surplus Account, or as a deduction
from Matured Leased Vehicle Proceeds, Repossessed
Vehicle Proceeds or other Liquidation Proceeds, as
appropriate, deposited into the SUBI Collection
Account. For further details regarding these
deposits and reimbursements, see "Security for the
Certificates -- The Accounts -- The SUBI Collection
Account" and "-- The Residual Value Surplus
Account".
On the Business Day immediately preceding each
Distribution Date (each, a "Deposit Date"), the
following amounts will be deposited into
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<PAGE> 19
the SUBI Collection Account: (i) Advances by the
Servicer, (ii) Reallocation Payments by World Omni
(together with, under certain circumstances during
the Amortization Period, Reallocation Deposit
Amounts) in respect of certain Contracts as to
which an uncured breach of certain representations
and warranties or certain servicing covenants has
occurred and (iii) certain amounts in respect of
the Residual Value of Leased Vehicles relating to
Matured Contracts withdrawn from the Residual Value
Surplus Account. Thereafter, 99.8% of Interest
Collections (and, with respect to the Deposit Date
in any month following the month during which the
Amortization Period commences, 99.8% of Principal
Collections) on deposit in the SUBI Collection
Account in respect of the related Collection Period
will be allocable to the SUBI Interest and
deposited into the Distribution Account maintained
with the Trustee for the benefit of the
Certificateholders and the Seller. The Required
Amount will be withdrawn from the Reserve Fund and
deposited into the Distribution Account on each
Deposit Date. All payments to Certificateholders
will be made from the Distribution Account. The
remaining 0.2% of Collections will be distributed
on such Distribution Date to the Seller in respect
of the Retained SUBI Interest, which amounts in no
event will be available to make payments on the
Certificates. Any funds remaining in the
Distribution Account on a Distribution Date in
respect of the related Collection Period following
the payment of amounts required to be paid
therefrom will be deposited into the Reserve Fund
until the amount on deposit therein equals the
Reserve Fund Cash Requirement, and thereafter
generally will be paid to the Seller. For further
information regarding these deposits and payments,
see "Security for the Certificates -- The
Accounts -- The Distribution Account" and "-- The
SUBI Collection Account".
On each Deposit Date, if Matured Leased Vehicle
Proceeds received during the related Collection
Period with respect to Leased Vehicles relating to
Matured Contracts that were sold or otherwise
disposed of during such Collection Period, net of
related Matured Leased Vehicle Expenses incurred
during such Collection Period ("Net Matured Leased
Vehicle Proceeds"), exceed the aggregate Residual
Value of the related Leased Vehicles (the "Residual
Value Surplus"), then such excess will be deposited
into the Residual Value Surplus Account maintained
with the Origination Trustee for the benefit of
holders of interests in the SUBI. On each Deposit
Date, funds on deposit in the Residual Value
Surplus Account, if any, will be withdrawn and
deposited into the SUBI Collection Account up to an
amount equal to the sum of (a) the aggregate of the
Residual Values of those Leased Vehicles that were
a part of Matured Leased Vehicle Inventory but that
had remained unsold and not otherwise disposed of
for at least two full Collection Periods as of the
last day of the most recent Collection Period and
(b) the amount by which Net Matured Leased Vehicle
Proceeds (after application of amounts withdrawn
pursuant to the next sentence) for the related
Collection Period are less than the aggregate of
the Residual Values of all Leased Vehicles included
in Matured Leased Vehicle Inventory that were sold
or otherwise disposed of during such Collection
Period. Also on each Deposit Date, funds will be
withdrawn and paid to the Servicer in reimbursement
for any Matured Leased Vehicle Expenses incurred
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<PAGE> 20
during such Collection Period, but only to the
extent that, after such reimbursement (but
exclusive of any other reimbursement from any other
source), Net Matured Leased Vehicle Proceeds would
be no more than the aggregate of the Residual
Values of Leased Vehicles sold or otherwise
disposed of during such Collection Period. For
further information regarding the Residual Value
Surplus Account, see "Security for the
Certificates -- The Accounts -- The Residual Value
Surplus Account".
C. The Reserve Fund...... The Trust will have the benefit of the Reserve Fund
maintained with the Trustee for the benefit of the
Certificateholders and the Seller. The Reserve Fund
is designed to provide additional funds for the
benefit of the Certificateholders in the event that
on any Distribution Date Interest Collections
allocable to the Investor Interest for the related
Collection Period are insufficient to pay, among
other things, the sum of (i) accrued interest and
any overdue interest (with interest thereon) at the
applicable Certificate Rate on the Certificates on
such Distribution Date, (ii) any Loss Amount for
such Collection Period allocable to the Investor
Interest, calculated as described under
"Description of the Certificates -- Calculation of
Investor Percentage and Seller Percentage", and
(iii) any unreimbursed Certificate Principal Loss
Amounts, together with interest thereon at the
applicable Certificate Rate (any such deficiency,
the "Required Amount"). Monies on deposit in the
Reserve Fund also will be available to
Certificateholders should Collections ultimately be
insufficient to pay in full any Class of
Certificates. For further information regarding the
Reserve Fund, see "Security for the
Certificates -- The Accounts -- The Reserve Fund".
The Reserve Fund will be created with an initial
deposit by the Seller of approximately $28,380,573
(the "Initial Deposit") (which amount will equal
3.5% of 99.8% of the Aggregate Net Investment Value
as of the Initial Cutoff Date). On each
Distribution Date, the funds in the Reserve Fund
will be supplemented by (i) certain excess Interest
Collections, as more fully described under
"Description of the Certificates -- Distributions
on the Certificates -- Distributions of Interest",
(ii) income realized on the investment of amounts
on deposit in the Reserve Fund and (iii) the
deposit of monies in respect of the related
Collection Period remaining in the Distribution
Account after making all payments required to be
made therefrom on such Distribution Date prior to
such deposit, including monies that would otherwise
be distributed or applied in respect of the Seller
Interest, until the amount on deposit in the
Reserve Fund equals the Reserve Fund Cash
Requirement then in effect, calculated as described
under "Security for the Certificates -- The
Accounts -- The Reserve Fund -- The Reserve Fund
Cash Requirement".
On each Deposit Date relating to a Distribution
Date on which withdrawals must be made from the
Reserve Fund, the Seller may be required under
certain circumstances to deposit funds into the
Reserve Fund in an amount equal to the Reserve Fund
Supplemental Requirement to the extent of any
Reserve Fund Deficiency. For a description of the
circumstances under which the Seller will be
required to make such deposits, see "Security for
the Certificates -- The Accounts -- The Reserve
Fund". For further information regarding deposits
into the
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<PAGE> 21
Reserve Fund, see "Description of the
Certificates -- Distributions on the
Certificates -- Distributions of Interest".
After giving effect to all payments from the
Reserve Fund on a Distribution Date, monies on
deposit therein that are in excess of the Reserve
Fund Cash Requirement will be paid to the Seller,
free and clear of any lien of the Trust. However,
the Seller will remain responsible to fund the
Reserve Fund under certain circumstances described
under "Security for the Certificates -- The
Accounts -- The Reserve Fund -- Reserve Fund
Supplemental Requirement".
D. Subordination of the
Seller Interest....... The Seller Interest will initially equal
approximately $16,217,470, and will represent the
interest in the Trust not represented by the
Investor Interest. However, to provide additional
credit enhancement for the Certificates, on each
Distribution Date, no payments will be made to the
Seller in respect of the Seller Interest until all
payments required to be made on such Distribution
Date that are described under "Description of the
Certificates -- Distributions on the
Certificates -- Distributions of Interest" have
been made and the amount on deposit in the Reserve
Fund equals the Reserve Fund Cash Requirement. For
a description of certain payments made to the
Seller, see "Description of the
Certificates -- Certain Payments to the Seller".
Advances................... On each Deposit Date the Servicer will be obligated
to make, by deposit into the SUBI Collection
Account, an advance equal to the aggregate Monthly
Payments due but not received during the related
Collection Period with respect to Contracts that
are 31 days or more past due as of the end of such
Collection Period, and the Servicer may (but shall
not be required to) make such an advance with
respect to Contracts that are one or more days, but
less than 31 days, past due as of the end of such
Collection Period (each, an "Advance"). The
Servicer will not be required to make an Advance to
the extent that it determines that such Advance may
not be ultimately recoverable by the Servicer from
Net Liquidation Proceeds or otherwise. For further
information regarding Advances, see "Additional
Document Provisions -- The Servicing
Agreement -- Advances".
Servicing Compensation..... The Servicer will be entitled to receive a monthly
fee with respect to the SUBI Assets allocable to
the SUBI Interest (the "Servicing Fee"), payable on
each Distribution Date, equal to one-twelfth of 1%
of 99.8% of the Aggregate Net Investment Value as
of the first day of the related Collection Period
(or, in the case of the first Distribution Date,
one-twelfth of 1% of 99.8% of the Aggregate Net
Investment Value as of the Initial Cutoff Date).
The Servicer also will be entitled to additional
servicing compensation in the form of, among other
things, late fees and other administrative fees or
similar charges under the Contracts. For further
information regarding Servicer compensation, see
"Additional Document Provisions -- The Servicing
Agreement -- Servicing Compensation".
Tax Status................. Brown & Wood LLP, special federal income tax
counsel to the Seller and counsel for the
Underwriters, will deliver an opinion to the effect
that the Class A Certificates will be characterized
as indebtedness for federal income tax purposes.
Each Class A Certificateholder, by its
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<PAGE> 22
acceptance of a Class A Certificate, and each
Certificate Owner by its acquisition of an interest
in the Class A Certificates, will agree to treat
the Class A Certificates as indebtedness for
federal, state and local income tax purposes.
Prospective investors are advised to consult their
own tax advisors regarding the federal income tax
consequences of the purchase, ownership and
disposition of Class A Certificates, and the tax
consequences arising under the laws of any state or
other taxing jurisdiction. For further information
regarding material federal income tax
considerations with respect to the Class A
Certificates, see "Certain Income Tax
Considerations -- Federal Taxation".
ERISA Considerations....... As more fully described under "ERISA
Considerations", an employee benefit plan subject
to the requirements of the fiduciary responsibility
provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the
provisions of Section 4975 of the Internal Revenue
Code of 1986, as amended, contemplating the
purchase of Class A Certificates should consult its
counsel before making a purchase and the fiduciary,
and such legal advisors should consider the
application of the ERISA prohibited transaction
exemption described herein.
Ratings.................... It is a condition of issuance that each of Moody's
Investors Service, Inc. ("Moody's") and Standard &
Poor's Ratings Services ("Standard & Poor's" and,
together with Moody's, the "Rating Agencies") rates
each Class of Class A Certificates in its highest
rating category. The ratings of the Class A
Certificates address the likelihood of the payment
of principal of and interest on the Class A
Certificates pursuant to their terms. For further
information concerning the ratings assigned to the
Class A Certificates, see "Ratings of the Class A
Certificates".
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<PAGE> 23
RISK FACTORS
LIMITED LIQUIDITY; ABSENCE OF SECONDARY MARKET
There is currently no market for the Class A Certificates. The Underwriters
expect, but will not be obligated, to make a market in each Class of Class A
Certificates. There can be no assurance that a secondary market for the Class A
Certificates will develop or, if one does develop, that it will provide the
related Certificateholders with liquidity of investment or will continue for the
life of the related Class A Certificates.
MATURITY AND PREPAYMENT CONSIDERATIONS
Possible Early Termination of Revolving Period
No principal will be paid to the Class A Certificateholders until the
November 1997 Distribution Date or, upon the occurrence of an Early Amortization
Event, until the Distribution Date in the month immediately succeeding the month
in which such Early Amortization Event occurs. During the Revolving Period,
Principal Collections will be reinvested in Subsequent Contracts and Subsequent
Leased Vehicles. Accordingly, the continuation of the Revolving Period will be
dependent, in part, upon the continued origination and assignment to the
Origination Trust of lease contracts and leased vehicles meeting the eligibility
criteria described herein. An unexpectedly high rate of Principal Collections
(including Prepayments) received during the Revolving Period or a significant
decline in the number of qualifying lease contracts available to be assigned to
the Origination Trust could result in the occurrence of an Early Amortization
Event and the commencement of the Amortization Period prior to the Amortization
Date. The retail automobile and light duty truck leasing business in the United
States may be affected by a variety of social, economic and geographic factors.
Economic factors include interest rates, unemployment levels, the rate of
inflation and consumer perception of economic conditions. However, it is not
possible to determine or predict whether or to what extent economic, geographic
or social factors will affect retail automobile and light duty truck leasing in
general, or that of the Dealers in particular. As a result, there can be no
assurance that the Revolving Period will not terminate prior to the Amortization
Date due to the occurrence of an Early Amortization Event. Since an Early
Amortization Event would result in the commencement of distributions of
principal to Class A-1 Certificateholders on the Distribution Date in the
succeeding month, it could shorten the final maturity of and affect the yield on
each Class of Class A Certificates. See "Description of the
Certificates -- Early Amortization Events" for a description of the events that
might lead to the early commencement of the Amortization Period and a
description of the results of an Early Amortization Event.
Reimbursement of Certain Losses
In the event that Loss Amounts are incurred in respect of the Contracts and
the Leased Vehicles during a Collection Period, if the related Distribution Date
occurs during the Revolving Period, an amount equal to the Investor Percentage
of such Loss Amounts will be treated as Principal Collections received during
the Collection Period in which such Distribution Date occurs and accordingly, to
the extent reimbursed out of Excess Collections or otherwise, as described
herein, will be available for reinvestment in Subsequent Contracts and
Subsequent Leased Vehicles. If the related Distribution Date occurs during the
Amortization Period, the Class A-1 Certificateholders will be entitled to
receive the Class A-1 Allocation Percentage of the Investor Percentage of such
Loss Amounts, the Class A-2 Certificateholders will be entitled to receive the
Class A-2 Allocation Percentage of the Investor Percentage of such Loss Amounts
and the Class A-3 Certificateholders will be entitled to receive the Class A-3
Allocation Percentage of the Investor Percentage of such Loss Amounts, in each
case as a distribution of principal from, to the extent available, Excess
Collections, amounts on deposit in the Reserve Fund and the Residual Value
Surplus Account, the Servicing Fee (so long as World Omni is the Servicer),
amounts otherwise payable to the Seller in respect of the Seller Interest and,
in the case of the Class A-3 Certificates, amounts otherwise payable as
principal to the Class B Certificateholders. With respect to any Distribution
Date, the "Class A-1 Allocation Percentage" will mean the Class A-1 Certificate
Balance as a percentage of the Certificate Balance, calculated as of the last
day of the related Collection Period. The "Class A-2 Allocation Percentage" and
the "Class A-3 Allocation Percentage" will be calculated in the same manner as
the Class A-1 Allocation Percentage, appropriately
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<PAGE> 24
modified to relate to the Class A-2 or Class A-3 Certificates, as the case may
be. Higher Loss Amounts that occur during the Amortization Period may therefore
accelerate the rate of return of principal on the Certificates. To the extent
that Principal Collections and reimbursements of Loss Amounts are reinvested in
Subsequent Contracts during the Revolving Period, the aggregate Residual Value
of the Leased Vehicles as a percentage of the Aggregate Net Investment Value may
increase. Furthermore, to the extent that Loss Amounts (including Residual Value
Loss Amounts) ultimately exceed the sources available for repayment thereof,
investors in the Class A Certificates could incur a loss on their investment.
"Loss Amounts" will include Charged-off Amounts, Residual Value Loss
Amounts and Additional Loss Amounts. The "Residual Value Loss Amount" for any
Collection Period generally will represent the aggregate net losses on
dispositions of Matured Leased Vehicle Inventory, and will be equal to the sum
of (a) the aggregate of the Residual Values of all those Leased Vehicles that
were included in Matured Leased Vehicle Inventory but that had remained unsold
and not otherwise disposed of by the Servicer for at least two full Collection
Periods as of the last day of such Collection Period and (b) the excess, if any,
of (i) the aggregate of the Residual Values of all Leased Vehicles previously
included in Matured Leased Vehicle Inventory but that were sold or otherwise
disposed of during such Collection Period over (ii) Net Matured Vehicle Proceeds
for such Collection Period, but only to the extent that such sum exceeds the
amount on deposit in the Residual Value Surplus Account on the last day of such
Collection Period. For a discussion of the recent leased vehicle residual value
loss experience of World Omni, see "World Omni -- Delinquency, Repossession and
Loss Data". The amount of Residual Value losses will vary based on a variety of
factors, including the effect of World Omni's pro-active lease termination
program, more fully described under "Maturity, Prepayment and Yield
Considerations", and the supply of, and demand for, vehicles similar to the
Leased Vehicles in the used car market. Uncollected payments for excess mileage
or excess wear and use also could affect the amount of Residual Value losses. No
assurance can be given as to the likely levels of Residual Value losses over the
life of the Certificates.
Sequential Payment of Principal on the Certificates
In general, no principal payments will be made on the Class A-2, Class A-3
or Class B Certificates until the Class A-1 Certificates have been paid in full
or on the Class A-3 or Class B Certificates until the Class A-1 and Class A-2
Certificates have been paid in full. On each Distribution Date during the
Amortization Period, all Principal Collections for the related Collection Period
that are allocable to the Investor Interest will be distributed first to the
Class A-1 Certificateholders until the Class A-1 Certificates have been paid in
full, second to the Class A-2 Certificateholders until the Class A-2
Certificates have been paid in full and thereafter the Class A Percentage and
the Class B Percentage of any such remaining Principal Collections will then be
distributed as principal payments to the Class A-3 Certificateholders and the
Class B Certificateholders, respectively.
Principal payments in respect of the Class A-3 and Class B Certificates
will be based on the fixed Class A Percentage and Class B Percentage, which will
be calculated when the Class A-1 and Class A-2 Certificates have been paid in
full. The Investor Percentage of Loss Amounts will be allocated among the
Certificateholders on a pro rata basis, based on the Class A-1, Class A-2, Class
A-3 and Class B Allocation Percentages, as the case may be, and then reimbursed
out of available funds in the amounts and order of priority described in
"Description of the Certificates -- Distributions on the
Certificates -- Distributions of Interest". As a result, Class A-2 Certificates
may be allocated more Loss Amounts than the Class A-1 Certificates as a relative
percentage of their respective Initial Certificate Balances, and Class A-3
Certificates may be allocated more Loss Amounts than the Class A-1 or Class A-2
Certificates as a relative percentage of their respective Initial Certificate
Balances, primarily because Loss Amounts will be allocated on each Distribution
Date based on the then-current Class A-2 and Class A-3 Allocation Percentages,
both of which will increase as the Certificate Balance of each Class of Class A
Certificates senior in priority of payment decreases during the Amortization
Period.
In addition, the Investor Percentage of the net proceeds of any sale or
other disposition of the SUBI Interest, the SUBI Certificate or other property
of the Trust, which may occur under certain circumstances involving an
Insolvency Event with respect to the Seller (as described under "Description of
the Certificates -- Early Amortization Events"), to the extent such net proceeds
constitute Principal Collections, will be
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<PAGE> 25
distributed first, on a pro rata basis, to the Class A Certificateholders based
on their respective Class Certificate Balances until the Class A Certificates
have been paid in full, and second, to the Class B Certificateholders.
Payment Rate in Respect of Contracts and Leased Vehicles
The rate of payment of principal on the Certificates during the
Amortization Period will depend on the rate of payments on or in respect of the
Contracts and the Leased Vehicles (including scheduled payments on and
prepayments and liquidations of the Contracts) and losses with respect thereto,
which cannot be predicted with certainty. In addition, because payments made on
or in respect of the Contracts and the Leased Vehicles that are allocable to the
SUBI Interest will ordinarily be distributed to Certificateholders during the
Amortization Period according to the timing of their receipt, the rate of
principal payments on the Class A Certificates and the yield to maturity of the
Class A Certificates generally will be directly related to the rate at which
payments on or in respect of the Contracts and the Leased Vehicles are made.
Moreover, if on any Distribution Date relating to the Amortization Period any
Excess Collections exist at a time when the amount on deposit in the Reserve
Fund is at least equal to the Reserve Fund Cash Requirement, the related
Accelerated Principal Distribution Amount will be distributed as principal to
Certificateholders as more fully described under "Description of the
Certificates -- Distributions on the Certificates -- Distributions of Interest".
The rate of payment of principal of the Class A Certificates may also be
affected by payment by World Omni of Reallocation Payments (together with, under
certain circumstances during the Amortization Period, Reallocation Deposit
Amounts) in respect of certain Contracts as to which an uncured breach of
certain representations and warranties or certain servicing covenants has
occurred and the exercise by the Seller of its right to purchase the SUBI
Interest represented by the SUBI Certificate at its option under certain
circumstances pursuant to the Agreement, thereby retiring the Certificates. A
substantial increase in the rate of payments on or in respect of the Contracts
and Leased Vehicles (including prepayments and liquidations of the Contracts)
during the Amortization Period may shorten the final maturity of and may
significantly affect the yields on each Class of Class A Certificates. See
"Description of the Certificates -- Termination of the Trust; Retirement of the
Certificates", "The Contracts -- Representations, Warranties and Covenants" and
"Additional Document Provisions -- The Servicing Agreement -- Collections" for
further information regarding these matters.
Each of the Contracts may be prepaid by the related lessee without penalty
in full or in part at any time upon payment of a $250 processing fee. As more
fully described under "Maturity, Prepayment and Yield Considerations", World
Omni actively encourages lessees under lease contracts with remaining terms of
less than one year to either buy, trade in or refinance the related leased
vehicles prior to the scheduled maturities of such lease contracts. As also more
fully described under "Maturity, Prepayment and Yield Considerations", World
Omni estimates that over calendar years 1993, 1994 and 1995 and the first six
months of 1996, an average of approximately 86% of the number of retail
automobile and light duty truck lease contracts in its portfolio (including
lease contracts owned by certain special purpose finance subsidiaries of World
Omni) with scheduled maturities during this period terminated prior to maturity.
Such early terminations primarily were due either to voluntary prepayments or to
repossession of the leased vehicles due to default by the lessees under the
related lease contracts. No assurance can be given that the Contracts will
experience the same rate of prepayment or default or any greater or lesser rate
than World Omni's historical rate for the retail automobile and light duty truck
lease contracts in its portfolio (including lease contracts owned by certain
special purpose finance subsidiaries of World Omni).
For further information regarding these topics and related yield
information, see "Maturity, Prepayment and Yield Considerations".
STRUCTURAL CONSIDERATIONS
Two-Tiered Structure
Unlike many structured financings in which the holders of the related
securities have a direct ownership interest or a perfected security interest in
the underlying assets being securitized, the Trust will not own
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<PAGE> 26
directly the SUBI Assets. Instead, the Origination Trustee, acting on behalf of
the beneficiaries from time to time of the Origination Trust, will own the
Origination Trust Assets, including the SUBI Assets. The Trustee, acting on
behalf of the beneficiaries from time to time of the Trust (i.e., the
Certificateholders and the Seller), will own the assets of the Trust, the
primary asset of which will be the SUBI Certificate evidencing a 99.8%
beneficial interest in the SUBI Assets. The SUBI Assets will be segregated from
the Origination Trust Assets on the books and records of the Origination Trustee
but will remain at all times owned by the Origination Trustee. Except under the
limited circumstances described under "Risk Factors -- Structural
Considerations -- Allocation of Origination Trust Liabilities", neither the
Servicer nor any holders of other beneficial interests in the Origination Trust
will have rights in the SUBI Assets, and payments made on or in respect of any
Origination Trust Assets other than the SUBI Assets will not be available to
make payments on the Certificates or to cover expenses of the Origination Trust
allocable to the SUBI Assets. As more fully described under "Risk
Factors -- Structural Considerations -- Back-up Security Interest in Certain
SUBI Assets" and "The Trust and the SUBI -- The SUBI", the SUBI will not
evidence a direct interest in the SUBI Assets, nor will it represent a
beneficial interest in all of the Origination Trust Assets. Beneficial interests
in the Contracts and Leased Vehicles, rather than direct legal ownership
thereof, will be transferred in order to avoid the administrative difficulty and
expense of retitling the Leased Vehicles in the name of the transferee.
Allocation of Origination Trust Liabilities
Pursuant to the Origination Trust Agreement, the liabilities of the
Origination Trust, as among the holders of beneficial interests in the
Origination Trust, will be allocated to and charged against the SUBI Assets,
certain Origination Trust Assets ("Other SUBI Assets") allocated among Other
SUBIs or all other Origination Trust Assets other than the SUBI Assets and the
Other SUBI Assets (the "UTI Assets"), respectively, if specifically incurred
with respect thereto, or pro rata among the Origination Trust Assets if incurred
with respect to the Origination Trust Assets generally. The Origination Trustee
and the beneficiaries of the Origination Trust and their assignees and pledgees
will be bound by the foregoing allocation.
In particular, ALFI L.P. has pledged (and may in the future pledge) the UTI
as security for obligations to third-party lenders, and has created and sold and
may in the future create and sell or pledge Other SUBIs in connection with
financings similar to the transaction described herein. Each holder or pledgee
of the UTI and any Other SUBI will be required to expressly disclaim any
interest in the SUBI Assets, and to fully subordinate any claims to the SUBI
Assets in the event that this disclaimer is not given effect. Although no
assurance can be given, in the unlikely event of a bankruptcy of ALFI L.P., the
Seller believes that the SUBI Assets would not be treated as part of ALFI L.P.'s
bankruptcy estate and that, even if they were so treated, the subordination by
holders and pledgees of the UTI and Other SUBIs should be enforceable. In
addition, the pledge of the UTI will not impair the Origination Trustee's
ability to reallocate leases and leased vehicles out of the UTI Assets as
Subsequent Contracts and Subsequent Leased Vehicles during the Revolving Period.
Under the foregoing allocation, any liability to third parties arising from
or in respect of a Contract or Leased Vehicle will be borne by the holders of
interests in the SUBI (including the Trust). If any such liability arises from a
contract or leased vehicle that is an Other SUBI Asset or a UTI Asset, the
Origination Trust Assets (including the SUBI Assets) will not be subject to such
liability unless such Other SUBI Assets or UTI Assets are insufficient to pay
the liability. In such event, because there will be no other assets from which
to satisfy any such liability, to the extent that it is owed to entities other
than the Origination Trustee and the beneficiaries of the Origination Trust, the
other Origination Trust Assets, including the SUBI Assets, will be available to
satisfy such liabilities. Under such circumstances, investors in the Class A
Certificates could incur a loss on their investment.
Third-Party Liens on SUBI Assets
Because the Trustee will not own directly the SUBI Assets, and since its
interest therein generally will be an indirect beneficial ownership interest,
perfected liens of third-party creditors of the Origination Trust in one or more
SUBI Assets will take priority over the interest of the Trustee in such SUBI
Assets. With respect to claims relating to the SUBI Assets, this result is no
different than would be the case if a claim were made
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against the Trust and the Trust directly owned the SUBI Assets. However, because
the Origination Trust also will hold Other SUBI Assets and UTI Assets, and
third-party creditors of the Origination Trust will not be bound by the
allocation of liabilities described above, a general creditor of the Origination
Trust may obtain a lien on one or more SUBI Assets regardless of whether its
claim would be allocated to such SUBI Assets under the terms of the Origination
Trust Agreement. Such liens could include tax liens arising against the Seller
or the Trust, liens arising under various federal and state criminal statutes,
certain liens in favor of the Pension Benefit Guaranty Corporation (the "PBGC"),
judgment liens arising from successful claims under federal and state consumer
protection laws and Lemon Laws with respect to leases and leased vehicles
included in the Origination Trust Assets and judgment liens arising from
successful claims against the Origination Trust arising from the operation of
the leased vehicles constituting Origination Trust Assets. See "Risk
Factors -- Consumer Protection Laws", "-- ERISA Liabilities" and "-- Vicarious
Tort Liability" for a further discussion of these risks.
The Origination Trust Agreement will provide that, to the extent that such
a third-party claim is satisfied out of one or more SUBI Assets rather than
Other SUBI Assets or UTI Assets, as the case may be, the Origination Trustee
will reallocate the remaining Origination Trust Assets (i.e., the Other SUBI
Assets and the UTI Assets) so that each portfolio will bear the expense of the
claim as nearly as possible as if the claim had been allocated as provided in
the Origination Trust Agreement as set forth under "Additional Document
Provisions -- The SUBI Trust Agreement -- The SUBI, the Other SUBIs and the
UTI". However, if the third-party claim exceeds the value of the portfolio or
portfolios of Origination Trust Assets to which it should be allocated,
investors in the Class A Certificates could incur a loss on their investment.
Back-up Security Interest in Certain SUBI Assets
The Certificates will represent beneficial interests in the assets of the
Trust. Since the primary asset of the Trust will be the SUBI Interest, the
holders of the Certificates will have an indirect beneficial ownership interest,
rather than a security interest, in the SUBI Assets. Except as otherwise
described below, the Trustee generally will not have a perfected security
interest in the property of the Trust or the SUBI Assets and in no circumstances
will the Trustee have a perfected security interest in any Leased Vehicle.
As described under "Risk Factors -- Insolvency of World Omni; Substantive
Consolidation with World Omni", the transfer of the SUBI Certificate by the
Seller to the Trust is intended to constitute a sale of the SUBI Certificate and
of the beneficial interest in the SUBI Assets evidenced thereby, subject in each
case to the rights of the Seller as the holder of the Seller Interest and the
Retained SUBI Interest. Although deemed highly unlikely by the Seller,
theoretically it is possible that a court could recharacterize (for accounting
and general state law purposes) the transactions contemplated by the SUBI Trust
Agreement as a financing secured by a pledge of the SUBI Certificate, or even
the underlying SUBI Assets, to the Trustee on behalf of the Certificateholders,
rather than as a sale. In such an event, absent prior perfection of the
Trustee's security interest in the SUBI Assets, the holder of a perfected lien
in one or more SUBI Assets would have priority over the interest of the Trustee
in such SUBI Assets. Therefore, certain actions have been taken to ensure that,
were the Certificates to be so recharacterized as secured loans, the Trustee
would be deemed to have a perfected security interest in the SUBI Certificate
(and the SUBI Interest evidenced thereby) and in the Contracts and the Contract
Rights susceptible of perfection under the Uniform Commercial Code (the "UCC")
in effect in the States of Alabama, Illinois and Florida. The "Contract Rights"
will be comprised of all rights relating to the Contracts and the proceeds
thereof, including but not limited to the documents evidencing such Contracts,
Monthly Payments received or due on or after the related Cutoff Date, Security
Deposits to the extent provided for in the Contracts and partial prepayments,
Prepayments, Liquidation Proceeds and Insurance Proceeds (to the extent
constituting proceeds of the related Contract rather than proceeds of the
related Leased Vehicle) received on or after the related Cutoff Date.
As described above, if the Certificates were to be recharacterized as loans
secured by the SUBI Certificate (and the SUBI Interest evidenced thereby) or the
SUBI Assets, the Trustee would be deemed to have a perfected security interest
in the SUBI Certificate (and the SUBI Interest evidenced thereby) and certain of
the SUBI Assets. The SUBI Certificate will constitute an "instrument" under the
UCC and, by virtue of its possession thereof, the Trustee would be deemed to
have a perfected security interest therein (and
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the SUBI Interest evidenced thereby). Therefore, no UCC-1 financing statements
will be filed in favor of the Trustee with respect to its interest in the SUBI
Certificate (or the SUBI Interest evidenced thereby). The Contracts will not be
stamped to reflect the Trustee's indirect interest therein. On or prior to the
Closing Date, however, "protective" UCC-1 financing statements will be filed in
Alabama, Illinois and Florida with respect to the Contracts and the Contract
Rights to reflect the perfection of any security interest that the Trustee would
be deemed to have therein. However, no action will be taken to perfect the lien
that the Trustee would be deemed to have in the Leased Vehicles in the event of
such a recharacterization. Therefore, to the extent that a valid lien is imposed
by a third party against a Leased Vehicle, the interest of the lienholder will
be superior to the unperfected beneficial interest of the Trustee in such Leased
Vehicle. Although the Servicing Agreement will require the Servicer to contest
all such liens and cause the removal of any liens that may be imposed, if any
such liens are imposed against the Leased Vehicles, investors in the Class A
Certificates could incur a loss on their investment. For further information
relating to potential liens on the SUBI Assets, see "Additional Document
Provisions -- The Servicing Agreement -- Notification of Liens and Claims" and
"Certain Legal Aspects of the Origination Trust and the SUBI -- The SUBI".
As previously noted, various liens could be imposed upon all or part of the
SUBI Assets that, by operation of law, would take priority over the Trustee's
interest therein. Such liens would include tax liens arising against the Seller
or the Trust, mechanic's, repairmen's, garagemen's and motor vehicle accident
liens and certain liens for personal property taxes, in each case arising with
respect to a particular Leased Vehicle, liens arising under various state and
federal criminal statutes and certain liens, more fully described under "Risk
Factors -- ERISA Liabilities", in favor of the PBGC. Additionally, any perfected
security interest of the Trustee in all or part of the property of the Trust
could also be subordinate to claims of any trustee in bankruptcy or debtor-in-
possession in the event of a bankruptcy of the Seller prior to any perfection of
the transfer of the assets transferred by the Seller to the Trust pursuant to
the Agreement, as more fully described under "Risk Factors -- Insolvency of
World Omni; Substantive Consolidation with World Omni".
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws, including the federal
Consumer Leasing Act of 1976 and Regulation M promulgated by the Board of
Governors of the Federal Reserve System, impose requirements on retail lease
contracts such as the Contracts. These laws apply to the Origination Trust as
the assignee and co-lessor of the Contracts and may also apply to the Trust as
owner of the SUBI Certificate which represents a beneficial interest in, among
other things, the Contracts. The failure by the Origination Trust to comply with
such requirements may give rise to liabilities on the part of the Origination
Trust, and claims by such parties may be subject to set-off as a result of such
noncompliance. Many States, including each of the States in the Five State Area,
have adopted Lemon Laws that provide vehicle users certain rights in respect of
substandard vehicles which may apply to one or more of the Leased Vehicles. A
successful claim under a Lemon Law could result in, among other things, the
termination of the related Contract and/or require the refunding of a portion of
payments that previously have been paid. For further information regarding
consumer protection laws, see "Certain Legal Aspects of the Contracts and the
Leased Vehicles -- Consumer Protection Laws".
ERISA LIABILITIES
It is possible that the Origination Trust Assets, including the SUBI
Assets, could become subject to liens in favor of the PBGC to satisfy unpaid
ERISA obligations of any member of an "affiliated group" that includes World
Omni, SET, JMFE and their respective affiliates. The ratings of the Class A
Certificates may be downgraded in the event of any unfunded ERISA liability of
any member of such affiliated group, as described under "Additional Document
Provisions -- The Servicing Agreement -- Compliance with ERISA". The ratings of
the Class A Certificates address the likelihood of the payment of principal of
and interest on the Class A Certificates pursuant to their terms, as described
under "Ratings of the Class A Certificates". However, the Seller believes that
the likelihood of any such liability being asserted against the Origination
Trust Assets or, if so asserted, being successfully pursued, is remote. In
particular, the Seller believes that the Origination Trust should, as a legal
matter, be treated as a distinct entity separate and apart from such
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affiliated group, and not considered part of such affiliated group under ERISA's
"common control" provisions. Additionally, such affiliated group maintains only
one plan (which is neither a multi-employer or multiple employer plan) that
would subject it to a lien if the plan were to terminate with assets
insufficient to cover its liabilities. That plan historically has had assets
that significantly exceeded its liabilities. However, no assurance can be given
that any of these conditions will continue in the future.
VICARIOUS TORT LIABILITY
Although the Origination Trust will own the Leased Vehicles and the Trust
will have an interest therein evidenced by the SUBI, they will be operated by
the related lessees and their respective invitees. State laws differ as to
whether anyone suffering injury to person or property involving a leased vehicle
may bring an action against the owner of the vehicle merely by virtue of that
ownership. To the extent that applicable State law permits such an action, the
Origination Trust and the Origination Trust Assets may be subject to liability
to such an injured party. However, the laws of many States, including each of
the States in the Five State Area, either do not permit such suits, or the
lessor's liability is capped at the amount of any liability insurance that the
leasee was required to, but failed to, maintain. For further information in this
regard, see "Certain Legal Aspects of the Contracts and the Leased
Vehicles -- Vicarious Tort Liability". Notwithstanding the foregoing, in the
event that vicarious liability on the Origination Trust as owner of a Leased
Vehicle were imposed and the coverage provided by the Contingent and Excess
Liability Insurance Policies were insufficient to cover such a loss with respect
to a Leased Vehicle or, in certain circumstances, a leased vehicle that is an
Other SUBI Asset or a UTI Asset, investors in the Class A Certificates could
incur a loss on their investment. See "Risk Factors -- Structural
Considerations -- Allocation of Origination Trust Liabilities", "-- Third-Party
Liens on SUBI Assets" and "Security for the Certificates -- The Contingent and
Excess Liability Insurance Policies".
All of the Contracts will contain provisions requiring the lessees to
maintain levels of insurance satisfying applicable state law, and the Servicing
Agreement will require the Servicer to police compliance by the lessees
therewith. In addition, in the event that any such insurance has lapsed, has not
been maintained in full force and effect or the Servicer has failed to maintain
the right to receive the proceeds of such insurance, the Servicing Agreement
will require World Omni to pay all such amounts as would otherwise have been
recoverable as Insurance Proceeds. For further information regarding insurance
matters, see "World Omni -- Insurance" and "Additional Document
Provisions -- The Servicing Agreement -- Insurance on Leased Vehicles".
Under Florida law, the owner of a motor vehicle that is subject to a lease
having an initial term of at least one year is exempt from liability arising out
of an accident in which the leased vehicle is involved if the lessee is required
by the lease to maintain certain specific levels of insurance, and such
insurance is maintained either by the lessee or the lessor, as further described
under "Certain Legal Aspects of the Contracts and the Leased
Vehicles -- Vicarious Tort Liability". However, a court applying the law of
another jurisdiction might reach another result. Moreover, actions by third
parties might arise against the owner of a leased vehicle based on legal
theories other than negligence, such as a product defect or improper vehicle
preparation prior to the origination of the related lease contract. Even if the
Origination Trust were to be the subject of an action for damages as a result of
its ownership of a Leased Vehicle, however, it will be the beneficiary of the
Contingent and Excess Liability Insurance Policies with respect thereto, as more
fully described under "Security for the Certificates -- The Contingent and
Excess Liability Insurance Policies". Although the Origination Trust's insurance
coverage exceeds $10 million per claim, with an allowance for multiple claims in
any policy period, in the event that all such insurance coverage were exhausted
and damages were assessed against the Origination Trust, claims could be imposed
against the assets of the Origination Trust, including the Leased Vehicles. If
any such claims are imposed against any SUBI Assets or, in certain limited
circumstances, any Other SUBI Assets or UTI Assets, investors in the Class A
Certificates could incur a loss on their investment. For further information
regarding the potential for third-party claims against the Origination Trust
Assets, see "Risk Factors -- Structural Considerations -- Allocation of
Origination Trust Liabilities", "-- Third-Party Liens on SUBI Assets" and
"Certain Legal Aspects of the Contracts and the Leased Vehicles -- Vicarious
Tort Liability".
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INSOLVENCY OF WORLD OMNI; SUBSTANTIVE CONSOLIDATION WITH WORLD OMNI
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief under the United States Bankruptcy Code or similar applicable state
laws ("Insolvency Laws") by World Omni will not result in the consolidation of
the assets and liabilities of ALFI, ALFI L.P., WOLSI, the Seller, the
Origination Trust or the Trust with those of World Omni. With respect to WOLSI
and ALFI, these steps include their creation as separate, special purpose
finance subsidiaries of World Omni pursuant to articles of incorporation
containing certain limitations (including the requirement that each must have at
all times at least two "independent directors" and restrictions on the nature of
their respective businesses and on their ability to commence a voluntary case or
proceeding under any Insolvency Law without the affirmative vote of a majority
of their respective directors, including each independent director). With
respect to the Seller and ALFI L.P., these steps include their creation as
separate, special purpose limited partnerships of which WOLSI and ALFI,
respectively, are the sole general partners, pursuant to limited partnership
agreements containing certain limitations (including restrictions on the nature
of their respective businesses and on their ability to commence a voluntary case
or proceeding under any Insolvency Law without the affirmative vote of all of
the directors of their respective general partners, including each independent
director).
Reallocation Payments made by World Omni in respect of certain Contracts as
to which an uncured breach of certain representations and warranties or certain
servicing covenants has occurred (and, if during the Amortization Period such
payment would cause the Seller Interest to be less than zero, payment of the
related Reallocation Deposit Amount), payments made by World Omni in respect of
certain insurance policies required to be obtained and maintained by lessees
pursuant to the Contracts and unreimbursed Advances made by World Omni, as
Servicer, pursuant to the Servicing Agreement, may be recoverable by World Omni
as debtor-in-possession or by a creditor or a trustee in bankruptcy of World
Omni as a preferential transfer from World Omni if such payments were made
within one year prior to the filing of a bankruptcy case in respect of World
Omni. In addition, the insolvency of World Omni could result in the replacement
of World Omni as Servicer, which could result in a temporary interruption of
payments on the Certificates and an Event of Servicing Termination under the
Servicing Agreement.
Additionally, if prior to the Amortization Date a conservator, receiver or
bankruptcy trustee were appointed by the Seller, or if certain other events
relating to the bankruptcy or insolvency of the Seller were to occur (each, an
"Insolvency Event"), the Amortization Period would commence and the Trustee may,
and upon receipt of written instructions from holders of Certificates evidencing
Voting Interests of not less than 51% of the Class A Certificates (voting
together as a single class) or 51% of the Class A Certificates and the Class B
Certificates (voting together as a single class) will, attempt to sell the SUBI
Interest, the SUBI Certificate and the other property of the Trust. The
consummation of such sale would result in an early termination of the Trust and
a pro rata loss to the Class A-1, Class A-2 and Class A-3 Certificateholders if
the Investor Percentage of the net proceeds of such sale were insufficient to
pay in full the Class A-1, Class A-2 and Class A-3 Certificate Balances,
together with any unreimbursed Class A-1, Class A-2 and Class A-3 Certificate
Principal Loss Amounts, with accrued and unpaid interest thereon at the Class
A-1, Class A-2 and Class A-3 Certificate Rates, respectively.
On the Closing Date, Williams & Connolly, counsel to ALFI, ALFI L.P., the
Seller, WOLSI and World Omni, will render an opinion based on a reasoned
analysis of analogous case law (although there is no precedent based on directly
similar facts) that, subject to certain facts, assumptions and qualifications
specified therein, under present reported decisional authority and statutes
applicable to federal bankruptcy cases, if World Omni were to become a debtor in
a case under the Bankruptcy Code, it would not be a proper exercise by a federal
bankruptcy court of its equitable discretion to disregard the independent forms
so as to substantively consolidate the assets and liabilities of ALFI, ALFI
L.P., the Seller, WOLSI, the Origination Trust or the Trust with those of World
Omni. In addition, on the Closing Date, counsel to the Seller will render an
opinion to the effect that (i) the transfer of the SUBI Certificate by the
Seller to the Trust constitutes a sale of the SUBI Certificate and the SUBI
Assets evidenced thereby, subject in each case to the rights of the Seller as
the holder of the Seller Interest and the Retained SUBI Interest, or (ii) if
such transfer does not constitute a sale, then the Agreement creates a valid
perfected security interest, for the benefit of
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Certificateholders, in the Seller's right, title and interest in the SUBI
Certificate. For further information regarding the risk of insolvency, see
"Certain Legal Aspects of the Origination Trust and the SUBI -- Insolvency
Related Matters".
The Origination Trust has been registered under the business trust
provisions of certain state laws, including those of Alabama and Florida. As
such, the Origination Trust may be subject to the Insolvency Laws, and claims
against the Origination Trust Assets could have priority over the beneficial
interest therein represented by the SUBI. In addition, claims of a third party
against the Origination Trust Assets, including the SUBI Assets, to the extent
such claims are not covered by insurance, would take priority over the holders
of beneficial interests in the Origination Trust, such as the Trustee, as more
fully described under "Security for the Certificates -- The Contingent and
Excess Liability Insurance Policies" and "Certain Legal Aspects of the Contracts
and Leased Vehicles -- Vicarious Tort Liability".
LEGAL PROCEEDINGS
None of ALFI, ALFI L.P., the Seller or WOLSI is a party to any legal
proceeding. World Omni is a party to, and is vigorously defending, numerous
legal proceedings, all of which (except as described below) it believes
constitute ordinary routine litigation incidental to the business and activities
conducted by World Omni. The Origination Trustee, on behalf of the Origination
Trust, has been named as a defendant in various cases which it believes
constitute ordinary routine litigation incidental to the business and activities
conducted by the Origination Trustee as an assignee of lease contracts and
leased vehicles. As of the date of this Prospectus, World Omni, SET, various
other JMFE-related entities and various officers and employees thereof also are
defendants in a lawsuit brought by former Dealers located in the Five State
Area. In a second such case, World Omni and its affiliated defendants obtained
summary judgment in their favor dismissing all of plaintiffs' claims and
awarding attorneys' fees to World Omni. Plaintiffs have appealed this summary
judgment. These cases focus generally on or arise from alleged vehicle
allocation, sales reporting, marketing and freight charge practices, principally
by SET. While there are uncertainties as to the final disposition of these
cases, management of World Omni believes that, although an adverse final
judgment in these cases could have a material adverse effect on its operations
and financial condition, such a result will not cause any material impairment of
the ability of World Omni to perform its obligations and its duties under the
Servicing Agreement. However, there can be no assurance of this result.
THE TRUST AND THE SUBI
GENERAL
The Trust and the Certificateholders will have no interest in the UTI, any
Other SUBI or any assets of the Origination Trust evidenced by the UTI or any
Other SUBI. Payments made on or in respect of the Origination Trust Assets not
represented by the SUBI will not be available to make payments on the
Certificates. For further information regarding the Origination Trust, see "The
Origination Trust".
THE TRUST
Pursuant to the Agreement, the Seller will establish the Trust by
transferring and assigning the SUBI Interest, represented by the SUBI
Certificate, to the Trustee in exchange for the Certificates and a certificate
evidencing the Seller Interest. (Agreement, Section 2.02). The property of the
Trust will primarily include (i) the SUBI Interest which evidences a beneficial
interest in certain specified Origination Trust Assets (i.e., the SUBI Assets),
(ii) such amounts as from time to time may be held in the Distribution Account
and the Reserve Fund, and investments of such amounts and (iii) the Trustee's
rights as a third-party beneficiary to the Servicing Agreement and the SUBI
Trust Agreement. The Trust also will have a beneficial interest in such amounts
as from time to time may be held in the SUBI Collection Account and the Residual
Value Surplus Account and investments of such amounts.
If the protection provided to the Class A Certificateholders by (i) the
Investor Percentage of certain excess Interest Collections; (ii) available
monies on deposit in the Reserve Fund and the Residual Value
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Surplus Account; (iii) amounts otherwise payable to the Seller in respect of the
Seller Interest; (iv) so long as World Omni is the Servicer, amounts otherwise
payable in respect of the Servicing Fee; (v) the subordination of interest
payments otherwise payable to the Class B Certificateholders; and (vi) in the
case of the Class A-3 Certificates, the subordination of principal payments
otherwise payable to the Class B Certificateholders is insufficient, the Class A
Certificateholders ultimately will have to look to (a) payments made on or in
respect of the Contracts and the Leased Vehicles (including under certain
related insurance policies) and (b) the proceeds of Dealer repurchase
obligations, if any, to make distributions on or in respect of the SUBI Assets
allocable to the SUBI Interest to the Trustee which in turn will be distributed
to the Certificateholders. In such event, certain factors, such as the fact that
the Trust will not have a direct ownership interest in the Contracts or the
Leased Vehicles or a perfected security interest in the Leased Vehicles (which
will be titled in the name of the Origination Trustee, in its capacity as
trustee of the Origination Trust) may limit the amount realized to less than the
amount due from the related lessees. Investors in the Class A Certificates may
thus be subject to delays in payment and may incur losses on their investment in
the Class A Certificates as a result of defaults or delinquencies by lessees and
because of depreciation in the value of the related Leased Vehicles. See "Risk
Factors -- Structural Considerations", "Security for the Certificates -- The
Accounts -- The Reserve Fund", "Additional Document Provisions -- The Servicing
Agreement -- Insurance on Leased Vehicles" and "Certain Legal Aspects of the
Contracts and the Leased Vehicles" for a discussion of these matters.
THE SUBI
The SUBI will be issued pursuant to the SUBI Trust Agreement and will
evidence a beneficial interest in certain specified Origination Trust Assets
consisting of (i) the Contracts, the Leased Vehicles and all proceeds or
payments received or due on or after the related Cutoff Date; and (ii) all other
related Origination Trust Assets, including (A) the SUBI Collection Account and
Residual Value Surplus Account, (B) the right to receive payments made to World
Omni, the Origination Trust or the Origination Trustee under any insurance
policy relating to the Contracts, the related lessees or the Leased Vehicles,
(C) the right to receive the proceeds of any Dealer repurchase obligations in
respect of the Contracts or Leased Vehicles, and (D) all proceeds of the
foregoing (collectively, the "SUBI Assets"). (SUBI Trust Agreement, Sections
4.02, 11.01 and 11.02).
As described under "Summary -- The Revolving Period; Subsequent Contracts
and Subsequent Leased Vehicles" and "Description of the
Certificates -- Distributions on the Certificates -- Application and
Distributions of Principal", during the Revolving Period, Principal Collections
and reimbursement of Loss Amounts will be reinvested in Subsequent Contracts and
Subsequent Leased Vehicles which will become SUBI Assets at the time of such
reinvestment. The SUBI will not represent a direct interest in the SUBI Assets,
nor will it represent an interest in any Origination Trust Assets other than the
SUBI Assets. Payments made on or in respect of such other Origination Trust
Assets will not be available to make payments on the Certificates or to cover
expenses of the Origination Trust allocable to the SUBI Assets.
Pursuant to the SUBI Trust Agreement, on the Closing Date the Origination
Trustee will issue the SUBI Certificate, which will evidence the SUBI Interest,
to the Seller. Simultaneously therewith, the Origination Trustee will issue to
the Seller a certificate evidencing the Retained SUBI Interest, which will
represent the 0.2% interest in the SUBI not evidenced by the SUBI Certificate,
and the Seller will transfer and assign the SUBI Certificate to the Trustee
pursuant to the Agreement. The certificate evidencing the Retained SUBI Interest
will be permanently retained by the Seller and payments made in respect thereof
will not be available to make payments on the Certificates.
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THE ORIGINATION TRUST
GENERAL
The Origination Trust is an Alabama trust formed pursuant to the
Origination Trust Agreement. The primary business purpose of the Origination
Trust is to take assignments of, and serve as record holder of title to,
substantially all of the fixed rate retail closed-end lease contracts and the
related leased vehicles originated through Dealers in the World Omni network of
dealers since November 1993. Pursuant to the Servicing Agreement, World Omni
will service the lease contracts included in the Origination Trust Assets,
including the Contracts. For further information regarding the Origination Trust
and the servicing of the Origination Trust Assets, see "Additional Document
Provisions -- The SUBI Trust Agreement" and "-- The Servicing Agreement" and
"Certain Legal Aspects of the Origination Trust and the SUBI -- The Origination
Trust".
Except as otherwise described under "Additional Document Provisions -- The
SUBI Trust Agreement", pursuant to the Origination Trust Agreement the
Origination Trust has not and will not (i) issue interests therein or securities
thereof other than the SUBI Interest, the Retained SUBI Interest, the SUBI
Certificate, the certificate representing the Retained SUBI Interest, Other
SUBIs representing divided interests in Other SUBI Assets and certificates (the
"Other SUBI Certificates") representing Other SUBIs or portions thereof, and one
or more certificates (the "UTI Certificates") representing the UTI or portions
thereof; (ii) borrow money (except from World Omni) in connection with funds
used to acquire lease contracts and the related leased vehicles; (iii) make
loans; (iv) invest in or underwrite securities, other than Permitted Investments
or as otherwise permitted by the Origination Trust Agreement or the SUBI Trust
Agreement; (v) offer securities in exchange for property (other than the SUBI
Certificate, the Other SUBI Certificates and the UTI Certificates); or (vi)
repurchase or otherwise reacquire its securities except in connection with
financing or refinancing the acquisition of lease contracts and the related
leased vehicles or as otherwise permitted by each such financing or refinancing.
(SUBI Trust Agreement, Section 5.01). The Origination Trust will not be
permitted to acquire lease contracts otherwise than through dealers in the World
Omni network of Dealers, unless such lease contracts are (in World Omni's
reasonable judgment) originated generally in accordance with World Omni's
then-current lease contract underwriting standards. (SUBI Trust Agreement,
Section 2.01). The Origination Trust Agreement will permit the Origination
Trust, in the course of its activities, to incur certain liabilities relating to
its assets other than the SUBI Assets, or relating to its assets generally, and
to which, in certain circumstances, the SUBI Assets may be subject, as more
fully described under "Risk Factors -- Structural Considerations -- Allocation
of Origination Trust Liabilities" and "-- Third-Party Liens on SUBI Assets".
However, the Origination Trust Agreement will require the holders from time to
time of Other SUBI Certificates and any UTI Certificates to waive any claim that
they might otherwise have with respect to the SUBI Assets and to fully
subordinate any claims to the SUBI Assets in the event that this waiver is not
given effect. Similarly, by virtue of holding Certificates or a beneficial
interest in the Certificates, Certificateholders and Certificate Owners will be
deemed to have waived any claim that they might otherwise have with respect to
Other SUBI Assets and the UTI Assets.
ALFI AND ALFI L.P.
ALFI is a wholly owned, special purpose finance subsidiary of World Omni
and was organized solely for the purpose of acting as general partner of ALFI
L.P. ALFI L.P. was organized solely for the purpose of being grantor and initial
beneficiary of the Origination Trust, holding the UTI and the UTI Certificate,
acquiring interests in the SUBI and the Other SUBIs and engaging in related
transactions. ALFI's articles of incorporation and ALFI L.P.'s limited
partnership agreement limit their respective activities to the foregoing
purposes and to any activities incidental to and necessary for such purposes.
ALFI may not transfer its general partnership interest in ALFI L.P. so long as
any financings involving interests in the Origination Trust (including the
transaction described herein) are outstanding.
THE ORIGINATION TRUSTEE
The Origination Trustee is a wholly owned, special purpose subsidiary of
First Bank that was organized in 1993 solely for the purpose of acting as
Origination Trustee. First Bank, as Trust Agent, serves as agent for the
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<PAGE> 34
Origination Trustee to perform certain functions of the Origination Trustee
pursuant to the Origination Trust Agreement. (Origination Trust Agreement,
Section 5.03). The Origination Trust Agreement provides that in the event that
First Bank no longer can be the Trust Agent, the designee of ALFI L.P. (who may
not be ALFI L.P. or any affiliate thereof) will have the option to purchase the
stock of the Origination Trustee for a nominal amount. If ALFI L.P.'s designee
does not timely exercise this option, then the Origination Trustee will appoint
a new trust agent, and that new trust agent (or its designee) will next have the
option to purchase the stock of the Origination Trustee. If none of these
options is timely exercised, First Bank may sell the stock of the Origination
Trustee to another party. (Origination Trust Agreement, Section 6.10).
PROPERTY OF THE ORIGINATION TRUST
The property of the Origination Trust consists of (i) fixed rate retail
closed-end lease contracts originated primarily in the Five State Area and
assigned to the Origination Trust by World Omni or Dealers since November 1993
and all monies due from lessees thereunder; (ii) the automobiles and light duty
trucks leased pursuant thereto and all proceeds thereof; (iii) all of World
Omni's rights (but not its obligations) with respect to such lease contracts and
leased vehicles, including the right to receive proceeds of Dealer repurchase
obligations, if any; (iv) the rights to proceeds from residual value, physical
damage, credit life, disability and all other insurance policies, if any,
covering the lease contracts, the related lessees or the leased vehicles,
including, but not limited to, the Contingent and Excess Liability Insurance
Policies; (v) all security deposits with respect to such lease contracts to the
extent due to the lessor thereunder; and (vi) all proceeds of the foregoing
(collectively, the "Origination Trust Assets"). From time to time after the date
of this Prospectus, World Omni will cause Dealers to originate additional retail
closed-end lease contracts and to assign such lease contracts to the Origination
Trustee on behalf of the Origination Trust and, as described below, title the
related leased vehicles in the name of the Origination Trustee on behalf of the
Origination Trust. (Origination Trust Agreement, Section 2.01).
CONTRACT ORIGINATION; TITLING OF LEASED VEHICLES
All lease contracts originated by the Origination Trust have been, or will
be, underwritten using the underwriting criteria described under "World
Omni -- Lease Contract Underwriting Procedures". In connection with the
origination of each lease contract, the Origination Trustee, on behalf of the
Origination Trust, will be listed as the owner of the related leased vehicle on
the related certificate of title. Liens will not be placed on such certificates
of title, and new certificates of title will not be issued, to reflect the
interest of the Trustee, as holder of the SUBI Certificate, in the Leased
Vehicles. The certificates of title to the Leased Vehicles will, however,
reflect a first lien recorded in favor of Bank of America Trust Company of
Florida, N.A. or AL Holding Corp. (collectively, the "Administrative
Lienholders"). Such lien (the "Administrative Lien") will exist solely to assure
delivery of the certificates of title to the Leased Vehicles to the Servicer.
Neither of the Administrative Lienholders will have any interest in any of the
Leased Vehicles.
Pursuant to agreements between World Omni and the Dealers, each Dealer is
obligated, after origination of lease contracts and assignment thereof to the
Origination Trustee on behalf of the Origination Trust, to repurchase such lease
contracts which do not meet certain representations and warranties made by such
Dealer. These representations and warranties relate primarily to the origination
of the lease contracts and the titling of the related leased vehicles, and do
not typically relate to the creditworthiness of the related lessees or the
collectibility of such lease contracts. The Dealer agreements do not generally
provide for recourse to the Dealer for unpaid amounts in respect of a defaulted
lease contract, other than in connection with the breach of the foregoing
representations and warranties. The rights of World Omni to receive proceeds of
such Dealer repurchase obligations will constitute Origination Trust Assets (and
accordingly will constitute SUBI Assets to the extent they relate to the
Contracts and Leased Vehicles), although the related Dealer agreements will not
constitute Origination Trust Assets.
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<PAGE> 35
USE OF PROCEEDS
The net proceeds from the sale of the Class A Certificates (i.e., the
proceeds of the public offering of the Class A Certificates minus expenses
relating thereto) will be applied by the Seller to purchase the SUBI Certificate
from ALFI L.P.
THE SELLER
The Seller is a limited partnership formed under the laws of Delaware in
June 1994. The sole general partner of the Seller, WOLSI, is a wholly owned,
special purpose finance subsidiary of World Omni and was incorporated under the
laws of Delaware in March 1994. WOLSI may not transfer its general partnership
interest in the Seller so long as any financings involving interests formerly or
partially held by it in the Origination Trust (including the transaction
described herein) are outstanding. World Omni is the sole limited partner of the
Seller. The principal office of the Seller is located at 6150 Omni Park, Mobile,
Alabama 36609 and its telephone number is (334) 639-7500.
The Seller and WOLSI were organized solely for the purpose of acquiring
interests in the SUBI and the Other SUBIs, issuing certificates similar to the
Certificates and engaging in related transactions. The limited partnership
agreement of the Seller and the certificate of incorporation of WOLSI limit
their respective activities to the foregoing purposes and to any activities
incidental to and necessary for such purposes.
A support agreement dated as of October 1, 1995, as amended (the "Support
Agreement"), between the Seller and World Omni provides that World Omni will
retain 100% ownership of the Seller and that under certain circumstances World
Omni will make contributions or loans or provide or arrange for financial
assistance to the Seller in order to ensure that the Seller maintains positive
partners' capital. The Support Agreement currently provides that World Omni's
total obligations thereunder will not exceed $30 million. The Support Agreement
does not constitute a guarantee by World Omni of the Certificates or any other
obligations of the Seller. The Support Agreement provides that no person other
than the Seller and WOLSI may take any action to enforce the Support Agreement.
Although World Omni intends to comply with all of its obligations under the
Support Agreement, because (as described above) it can only be enforced by the
Seller and WOLSI, there can be no assurance that the Trustee or the
Certificateholders would be able to enforce the Support Agreement directly
against World Omni.
WORLD OMNI
GENERAL
The Initial Contracts were, and the Subsequent Contracts will be, assigned
to the Origination Trust by Dealers. World Omni is a Florida corporation and a
wholly owned subsidiary of JM Family Enterprises, Inc. ("JMFE"), a Delaware
corporation. JMFE is primarily engaged, through its subsidiaries, in providing
Toyota dealerships in the Five State Area, as well as other automotive
dealerships within and outside the Five State Area, with a full range of
distribution and financial services. In January 1993, a predecessor corporation
to World Omni merged with its sister automobile leasing company, World Omni
Leasing, Inc., in connection with which the name World Omni Financial Corp. was
retained. WOLSI and ALFI are wholly owned, special purpose finance subsidiaries
of World Omni.
In addition to the lease contract financing described below, World Omni
provides retail installment contract financing to retail customers of certain
automotive dealers and wholesale floorplan financing and capital and mortgage
loans to dealers and customers of Southeast Toyota Distributors, Inc. ("SET"),
World Omni's sister corporation, as well as to other automotive dealers within
and outside the Five State Area.
SET is the exclusive distributor of Toyota cars and light duty trucks,
parts and accessories in the Five State Area. As such, SET is the sole provider
of Toyotas to Dealers in the Five State Area. SET distributes Toyota vehicles
pursuant to a Distributor Agreement, which first was entered into in 1968 and
has been renewed through October 1999, with Toyota Motor Sales, USA, Inc.
("TMS"), a California corporation that
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<PAGE> 36
is wholly owned by Toyota Motor Corporation, the largest automotive company in
Japan. Lexus cars, parts and accessories are distributed in the Five State Area
directly by TMS and not by SET. SET's consolidated revenues for the years ended
December 31, 1995, December 31, 1994 and December 31, 1993 were approximately
$3.8 billion, approximately $3.5 billion and approximately $3.0 billion,
respectively. Since March 1996, substantially all financial services provided by
World Omni to, by and through SET's Toyota Dealers in the Five State Area have
been provided under the name "Southeast Toyota Finance".
World Omni (either directly or through the Origination Trust and certain
special purpose finance subsidiaries of World Omni) owns and leases vehicles
primarily through more than 1000 Dealers located throughout the United States.
The Dealers that are the sources for the Contracts and the Leased Vehicles are
predominantly Toyota dealerships. Pursuant to written agreements with World
Omni, each Dealer offers automobiles and light duty trucks for set lease periods
pursuant to World Omni-approved terms and a World Omni-supplied form of
closed-end retail motor vehicle lease and disclosure statement. Each Dealer is
responsible for obtaining certain credit-related information about a prospective
lessee and for forwarding such information to World Omni's central operations
center in Mobile, Alabama (the "Mobile Center") or to Southeast Toyota Finance's
offices in Deerfield Beach, Florida, (the "Deerfield Office"), as applicable. At
the Mobile Center or the Deerfield Office, each application is reviewed,
evaluated and "scored" as described under "World Omni -- Lease Contract
Underwriting Procedures". The results of this computer-based evaluation are then
sent to one of World Omni's purchase offices for final review and credit
evaluation. The related purchase office then advises the Dealer if such
applicant is acceptable to World Omni. If a prospective lessee is accepted, the
Dealer will prepare all necessary paperwork to sell the vehicle from its
inventory to World Omni or its designee, and to enter into a lease contract with
its customer and assign the lease contract to World Omni or, at World Omni's
direction, a different assignee. Substantially all retail lease contracts
originated by World Omni Dealers are assigned to, and the related leased
vehicles are titled in the name of, the Origination Trustee on behalf of the
Origination Trust. For further information regarding the underwriting of lease
contracts, see "World Omni -- Lease Contract Underwriting Procedures".
World Omni's lease contracts are serviced primarily through the Mobile
Center, which handles collection activities, operational accounting, insurance
verification and dealer and customer inquiries for World Omni. In addition, the
Mobile Center and the Deerfield Office verify that all documents supplied by a
Dealer with respect to a lease contract conform with World Omni's requirements.
World Omni initiated operations in 1982, and as of December 31, 1995,
December 31, 1994 and December 31, 1993, World Omni and its affiliates had
approximately 156,900, 115,900 and 75,200 retail lease contracts outstanding,
respectively. Aggregate net outstanding principal balances of retail lease
contracts at such dates (including retail lease contracts that were sold but are
still being serviced by World Omni), were $2.8 billion, $1.8 billion and $1.1
billion, respectively. Of these amounts, the related leased vehicles had an
estimated aggregate residual value as of the end of their lease terms of
approximately $2.0 billion, $1.2 billion and $605 million, respectively. For the
years ended December 31, 1995, December 31, 1994 and December 31, 1993, World
Omni's consolidated gross revenues were approximately $228 million,
approximately $199 million and approximately $171 million, respectively.
The principal executive offices of World Omni are located at 120 Northwest
12th Avenue, Deerfield Beach, Florida 33442 and its telephone number is (954)
429-2200.
LEASE CONTRACT UNDERWRITING PROCEDURES
World Omni has underwritten retail motor vehicle lease contracts since
February 1983. The Initial Contracts were, and the Subsequent Contracts will be,
underwritten by the Origination Trust, in each case through World Omni's
purchase offices.
The World Omni underwriting standards are intended to evaluate a
prospective lessee's credit standing and repayment ability. Generally, a
prospective lessee is required by the Dealer to complete a credit application on
a form prepared or approved by World Omni. As part of the description of the
applicant's financial condition, the applicant is required to provide current
information enumerating, among other things, employment history, residential
status, bank account information, annual income and credit references. The
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<PAGE> 37
Dealer then transmits the completed application to the Mobile Center or the
Deerfield Office, as applicable. Upon receipt, all application data is entered
into a centralized computer network (owned and maintained by a division of JMFE)
that automatically obtains an independent credit bureau report and then "scores"
the application with the use of a scorecard. The scorecard enables World Omni to
review an application and establish the probability that the proposed lease
contract will be paid in accordance with its terms. The credit scores rank-order
applications according to credit risk, which is the likelihood that the account
will be delinquent or repossessed. The application also is evaluated against a
"cutoff score" established by World Omni as the minimum acceptable score to
purchase a lease contract, which is revised from time to time as changes occur
in economic conditions and World Omni's lease contract portfolio.
This numerical credit scoring system was developed by Fair, Isaac & Company
("Fair, Isaac"), a lending and leasing consulting firm, specifically for World
Omni based upon an analysis of the historical performance of the retail
automobile and light duty truck lease and installment sale contract portfolios
of World Omni. To determine the appropriate characteristics for credit scoring,
Fair, Isaac reviewed a random sample of 10,000 retail lease contracts and 10,000
retail installment sale contracts from World Omni's portfolio. Fair, Isaac then
compiled a list of ten to twelve characteristics that cumulatively carried the
most weight in predicting historical performance and assigned point values and
weighting to each of these characteristics. The weighting system is particularly
significant because the weightings are beyond the control of a dealer and cannot
be manipulated. Fair, Isaac determined that the most accurate determinative of
the performance of a lease or installment sale contract was the credit bureau
report. Based on such historical performance, Fair, Isaac prepared two retail
credit and two lease scorecards (which differ according to the geographical
location of the dealer). Each scorecard assigns at least a 50% weighting to the
credit bureau report.
The Fair, Isaac scorecard system was implemented in the fourth quarter of
1990 and has been used for substantially all lease contracts originated
subsequent thereto. Prior to that time, World Omni used a scoring model which,
while not developed specifically for it, was used in the automobile lending
industry. The numerical scoring model is intended to provide a means of analysis
to assist in decision making, but the final decision rests with World Omni's
credit specialists. In general, however, a credit specialist currently may not
override the scorecard analysis by more than 10% of all applications above the
cutoff score and 15% of applications below the cutoff score. Both the number of
overrides granted by each credit specialist and the aggregate number of
overrides granted by all credit specialists are tracked by World Omni daily in
order to insure the statistical validity of the scoring models. Detailed
reporting on all aspects of the numerical scoring model is utilized to track
performance of World Omni's retail automobile and light duty truck lease
contract portfolio and to enable World Omni, with the assistance of Fair, Isaac,
to fine tune the scoring model according to statistical indications in order to
continually assure the statistical validity of the scoring models.
For the years ended December 31, 1995, December 31, 1994 and December 31,
1993, World Omni, either directly or through the Origination Trust and certain
special purpose finance subsidiaries of World Omni, on average, booked
approximately 71%, approximately 75% and approximately 68%, respectively, of all
credit applications relating to leased vehicles. These averages generally
reflect adjustments in underwriting criteria in connection with the use of the
Fair, Isaac scorecard system. Substantially all of the Initial Contracts were,
and substantially all Subsequent Contracts will be, underwritten using the Fair,
Isaac numerical scorecard. See "The Contracts -- Characteristics of the
Contracts" for further information on the identity and characteristics of the
Contracts.
After an application has been approved by a World Omni purchase office and
the prospective lessee has agreed to the terms of the related lease contract,
including an assignment of the lease contract from the Dealer to World Omni (or,
at the direction of World Omni, an assignee thereof), the Mobile Center or the
Deerfield Office, as applicable, receives from the Dealer a lease contract
package containing, among other things, the standard form lease contract between
the Dealer and the lessee, the customer's application, applicable insurance
information (company, agent and additional insured(s), with the lessor named as
loss payee) and
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<PAGE> 38
the customer's first payment and security deposit. The Mobile Center or the
Deerfield Office, as applicable, determines whether such package complies with
its requirements. The specifics of the lease contract are compared to the
application approved by the purchasing department, and the rate,
truth-in-leasing disclosures and purchase price from the Dealer are verified.
INSURANCE
Each lease contract requires the lessee to maintain automobile bodily
injury and property damage liability insurance which must name the dealer's
assignee (with respect to the Contracts, the Origination Trustee on behalf of
the Origination Trust) as additional insured. Each lease contract further
requires the lessee to maintain (all risks) comprehensive and collision
insurance covering damage to the leased vehicle and naming the dealer's assignee
(with respect to the Contracts, the Origination Trustee on behalf of the
Origination Trust) as loss payee. The insurance coverage is verified
independently and tracked by World Omni throughout the term of the lease
contract. If at any point during the term of the lease contract World Omni
cannot verify within 60 days that the required insurance is in place, such lease
contract would, by its terms, be in default and World Omni generally would
repossess the related leased vehicle.
COLLECTION, REPOSSESSION AND DISPOSITION PROCEDURES
Collection efforts are primarily performed through the Mobile Center. These
efforts are enhanced by the use of an automated dialing system. Notwithstanding
the centralization of collection efforts, repossessions continue to be handled
locally, as independent contractors are employed in connection with
repossessions. General guidelines for collection of lease contracts and
repossession of leased vehicles include the following:
<TABLE>
<CAPTION>
NUMBER OF
DAYS DELINQUENT ACTION
- --------------- -----------------------------------------------
<S> <C>
22-45............................... Telephone contact with the lessee is initiated
46-89............................... Telephone and/or field collections continue
60-90............................... The leased vehicle is normally repossessed
</TABLE>
Occasionally, situations occur in the collection process when a lessee has
become delinquent and is willing but unable to bring the related account current
(i.e., a skipped payment). In this situation, at the discretion of collection
department management, but subject to extensive guidelines, the lease contract
may be extended, provided that the lessee pays an extension fee (each, an
"Extension Fee") equal to the lesser of (i) the product of 1.15% multiplied by
the outstanding principal balance of such lease contract, and (ii) one-half of
the related monthly contract payment. In circumstances deemed appropriate by
collection department management, World Omni may reduce or waive the payment by
the lessee of an Extension Fee. However, the Servicing Agreement will require
that all Extension Fees relating to the Contracts be deposited into the SUBI
Collection Account and that a Contract may not be extended more than five times.
Moreover, no extensions of a Contract may be made for more than five months in
the aggregate or to a date later than the last day of the month immediately
preceding the month in which the Final Scheduled Distribution Date occurs, as
described under "Additional Document Provisions -- The Servicing
Agreement -- Collections".
World Omni disposes of off-lease vehicles through several outlets,
including a Toyota "certified" program, in which vehicles are inspected and
given body work, repairs and maintenance as needed, certified as meeting the
program standards, and then sold to automobile dealers primarily in World Omni's
dealer network for retail sale; large regional automobile auctions which are
utilized for off-lease vehicle sales in addition to liquidation of repossessed
vehicles; and negotiated sales of groups of vehicles to rental companies and
fleet lessors.
DELINQUENCY, REPOSSESSION AND LOSS DATA
The following tables set forth certain delinquency, repossession and loss
data with respect to World Omni's retail automobile and light duty truck lease
contract portfolio similar to the Contracts and originated by Dealers located
throughout the United States, including (unless otherwise indicated in such
table) lease contracts assigned to the Origination Trust and lease contracts
owned by World Omni and special purpose
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<PAGE> 39
finance subsidiaries of World Omni, as of and for the years ended December 31,
1991 through December 31, 1995 and as of and for the six months ended June 30,
1996.
As shown on these tables, World Omni's delinquency rates during 1993 and
1994 were generally consistent, decreasing from 1991 and 1992 largely due to
improved credit quality resulting from stricter underwriting standards
(including the implementation of a new computerized credit evaluation system and
the effects of the implementation of the Fair, Issac credit scoring system in
the fourth quarter of 1990), an improved collection system and the
implementation of centralized collection efforts through the Mobile Center.
Delinquency rates increased in 1995 as compared with 1994 due primarily to
somewhat weaker economic conditions. Delinquencies continued to trend up in
1996, consistent with recent trends in overall consumer credit and, to a lesser
extent, due to some disruption in collection activity caused by the
implementation of a new collection system at the Mobile Center in 1996.
Average Net Repossession Losses per Liquidated Lease Contract were high in
1991 mainly due to a weakened used car market, which increased loss severity.
The lower total Net Repossession Loss figures from that time through 1994 were
attributed to both lower frequency (fewer repossessions as a result of improved
credit quality and a stronger economy) and decreased severity (as the used car
market improved during this period).
Total Net Repossession Losses increased in 1995 and through June 1996 (on
an annualized basis) compared to 1994 primarily as a result of the increasing
number of lease contracts outstanding and the higher Average Net Repossession
Loss per Liquidated Lease Contract. The higher Average Net Repossession Loss per
Liquidated Lease Contract in 1995 and through June 1996 is generally due to
higher average amounts being financed, generally higher residual values and a
shortening of lease terms. In general, as lease terms shorten, the average time
until repossession declines and a higher loss per repossession generally occurs.
World Omni's total losses and average loss per vehicle realized on the
disposition of vehicles in connection with leases that reached scheduled
termination substantially decreased from 1991 to 1994. Management attributes
this decrease primarily to an improved used car market during the same period
and World Omni's pro-active lease termination programs implemented in 1990.
During the year ended December 31, 1995, the ratio of leased vehicles
"returned to and sold" by World Omni to leased vehicles "scheduled to terminate"
(the "Full Termination Ratio" in the table below), as well as total losses on
vehicles that reached scheduled termination and were sold (and related average
losses per vehicle sold), increased primarily as a result of special 18-month
lease programs introduced in the summer of 1993 on certain Toyota light-duty
trucks and vehicles. Vehicles leased under these special programs had higher
than normal returns at lease expiration due to a number of factors relating
particularly to these special programs. This, in turn, increased losses with
respect to these special programs for the year ending December 31, 1995.
Excluding these special programs, for the year ended December 31, 1995, World
Omni would have experienced a Full Termination Ratio of 7%. World Omni does not
believe that any prior period included in the tables below was materially
affected by any similar nonrecurring event.
There are no special 18 month program leases included in the Initial
Contracts, nor will any be included among the Subsequent Contracts. Therefore,
losses in respect of the 18 month special program vehicles have not, and any
additional losses will not, adversely affect Class A Certificateholders.
During the first six months of 1996, World Omni experienced higher returns
and losses on a greater portion of two year leases than in previous years. In
general, management believes that these higher returns and losses on two year
leases resulted from higher residual values that were established with respect
to the vehicles returned. Additionally, the 18 month special program discussed
above had a continued impact on losses through June 1996. These two factors were
the primary reasons for the higher Full Termination Ratio for the first six
months of 1996.
In April 1996, World Omni changed certain characteristics of its two year
lease programs such that the volume of two year leases thereafter was
significantly curtailed. There are no two year lease contracts in the Initial
Contracts, and the amount of two year leases in the Subsequent Contracts, if
any, is expected to be immaterial and not to adversely affect the Class A
Certificateholders. However, World Omni management
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<PAGE> 40
expects that vehicles leased under two year leases will continue to experience
returns and losses for the foreseeable future at rates higher than the total
World Omni lease portfolio.
The new and used car market has experienced growth over the last five
years, showing some weakness towards the end of 1995. This overall growth in the
new and used car market may not continue, which could negatively affect World
Omni's returns and losses in the future. As a result, losses on returned and
sold vehicles may increase and the Full Termination Ratio may increase. Based
upon prior experience however, World Omni does not believe that the effect of
these recent negative trends will materially adversely affect Class A
Certificateholders or World Omni's business. However, no assurances can be given
in this regard.
The data presented in the following tables are for illustrative purposes
only. Delinquency, repossession and loss experience may be influenced by a
variety of economic, social, geographic and other factors. There is no assurance
that World Omni's delinquency, repossession and loss experience with respect to
its retail automobile and light duty truck lease contracts and the related
leased vehicles in the future, or the experience with respect to the Contracts
and the Leased Vehicles, will be similar to that set forth below.
RETAIL VEHICLE LEASE CONTRACT DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
AT AT DECEMBER 31,
JUNE 30, --------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
-------------- -------------- -------------- -------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dollar Amount of Lease
Contracts(1).......... $3,697,003 $2,798,830 $1,823,823 $1,039,888 $624,017 $510,518
Ending Number of Lease
Contracts............. 193,600 156,471 114,298 71,198 48,646 45,202
Number and Percentage of
Lease Contracts
Delinquent (2)(3)(4)
31-60 Days............ 2,548 1.32% 1,745 1.12% 1,114 0.97% 625 0.88% 756 1.55% 1,104 2.44%
61-90 Days............ 138 0.07 118 0.08 38 0.03 27 0.04 16 0.03 92 0.20
91 Days or More....... 23 0.01 18 0.01 7 0.01 3 0.00 2 0.00 11 0.02
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total........... 2,709 1.40% 1,881 1.21% 1,159 1.01% 655 0.92% 774 1.58% 1,207 2.66%
</TABLE>
- ---------------
(1) Based on the sum of all principal amounts outstanding under lease contracts
originated by World Omni in the United States (inclusive of the residual
values of the related leased vehicles).
(2) Excludes lease contracts the related lessees of which are bankrupt or have
commenced bankruptcy proceedings. As of June 30, 1996, approximately 83
lease contracts involving bankrupt lessees were delinquent for at least 61
days.
(3) The period of delinquency is based on the number of days payments are
contractually past due.
(4) As a percentage of the total number of lease contracts at period end.
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<PAGE> 41
RETAIL VEHICLE LEASE CONTRACT REPOSSESSION AND LOSS EXPERIENCE
<TABLE>
<CAPTION>
AT AT DECEMBER 31,
JUNE 30, ----------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Dollar Amount of Lease Contracts(1)............ $3,697,003 $2,798,830 $1,823,823 $1,039,888 $624,017 $510,518
Ending Number of Lease Contracts............... 193,600 156,471 114,298 71,198 48,646 45,202
Average Lease Contracts Outstanding............ 176,307 133,069 93,023 58,605 46,013 46,571
Repossessions:
Number of Repossessions...................... 1,741 2,519 1,776 1,287 1,916 2,205
Number of Repossessions as a
Percentage of:
Lease Contracts Outstanding.................. 1.80%(4) 1.61% 1.55% 1.81% 3.94% 4.88%
Average Lease Contracts Outstanding.......... 1.97%(4) 1.89% 1.91% 2.20% 4.16% 4.73%
Losses:
Average Net Receivables
Outstanding................................ $3,278,227 $2,243,790 $1,426,382 $ 817,452 $548,852 $526,197
Net Repossession Losses(2)................... $ 9,247 $ 11,347 $ 6,283 $ 3,811 $ 5,759 $ 10,878
Average Net Repossession Loss per Liquidated
Lease Contract(1)(3)....................... $ 5,311 $ 4,505 $ 3,538 $ 2,961 $ 3,006 $ 4,933
Net Repossession Losses as a Percentage of
Average Net Receivables.................... 0.56%(4) 0.51% 0.44% 0.47% 1.05% 2.07%
</TABLE>
- ---------------
(1) Based on the sum of all principal amounts outstanding under lease contracts
originated by World Omni in the United States (inclusive of the residual
values of the related leased vehicles).
(2) Includes losses on charged-off accounts, but does not include expenses
incurred to dispose of vehicles.
(3) Dollars not in thousands.
(4) Annualized.
RESIDUAL VALUE LOSS EXPERIENCE(1)
<TABLE>
<CAPTION>
AT AT DECEMBER 31,
JUNE 30, -----------------------------------------------
1996 1995 1994 1993 1992 1991
-------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Total Number of Leased Vehicles Scheduled to Terminate......... 13,714 25,677 14,775 17,218 15,155 13,541
Number of Leased Vehicles Returned to and Sold by World Omni... 2,282 4,611 779 2,050 2,142 2,031
Full Termination Ratio(2)...................................... 16.6 % 18.0% 5.3% 11.9% 14.1% 15.0%
Total Losses/(Gains) on Vehicles that Reached Scheduled
Term(3)...................................................... $ 1,063 $ 1,893 $ (168) $ 503 $ 894 $ 2,389
Average Loss/(Gain)(4)......................................... $ 466 $ 411 $ (216) $ 245 $ 417 $ 1,176
</TABLE>
- ---------------
(1) Because the terms of the retail closed-end lease contracts originated by
World Omni have gradually shifted from five years to three years since 1991,
the residual value loss experience for the periods in the table may not be
fully comparable.
(2) The ratio of line 2 over line 1 expressed as a percentage.
(3) Includes expenses incurred in disposal of vehicles returned to World Omni in
1991. Due to system changes, figures for periods after 1991 do not include
expenses as such information was not readily available.
(4) Dollars not in thousands.
(5) The ratio for the year ended December 31, 1995 includes special program
vehicles referenced under "Delinquency, Repossession and Loss Data" above.
Excluding those vehicles, the ratio would have been 7.1%.
THE CONTRACTS
GENERAL
The Initial Contracts will consist of a pool of 35,016 closed-end retail
lease contracts, having an aggregate Outstanding Principal Balance as of the
Initial Cutoff Date of $831,416,020, selected from the Origination Trust's
portfolio of retail closed-end automobile and light duty truck lease contracts
that are not evidenced by or reserved for allocation to an Other SUBI. During
the Revolving Period, Principal Collections (and reimbursement of Loss Amounts)
will be reinvested in Subsequent Contracts and Subsequent Leased Vehicles, which
at the time of such reinvestment will become SUBI Assets. See "Description of
the Certificates -- Distributions on the Certificates -- Application and
Distributions of Principal -- Revolving Period". The Initial Contracts were
originated by Dealers located throughout the United States and assigned to the
Origination Trust, and the Subsequent Contracts will be originated by Dealers
located in the United
39
<PAGE> 42
States and assigned to the Origination Trust, in accordance with the
underwriting procedures described under "World Omni -- Lease Contract
Underwriting Procedures". The Initial Contracts have been selected based upon
the criteria specified in the SUBI Trust Agreement and described under "The
Contracts -- Characteristics of the Contracts -- General" and
"-- Representations, Warranties and Covenants". The Subsequent Contracts will be
selected from the other lease contracts of the Origination Trust that were
originated after the Initial Cutoff Date that also meet the foregoing criteria.
Principal Collections (and reimbursements of Loss Amounts) will first be
reinvested in the eligible lease contract with the earliest origination date,
then with the eligible lease contract with the next earliest origination date
and so forth, except that (i) leases booked from September 1, 1996 through
September 27, 1996 have been reserved for allocation to the SUBI, so that
reinvestment of Principal Collections and reimbursement of Loss Amounts will
first be made in such leases to the extent available, (ii) certain leases have
been, and may in the future be, allocated to (or reserved for allocation to)
Other SUBIs and therefore not be available for reinvestment of such amounts from
the SUBI, and (iii) to the extent that reinvestment of such amounts from the
SUBI and any one or more previous Other SUBIs are at any time being made out of
the Origination Trust's general pool of available lease contracts that have not
been so reserved, such reinvestment will first be made with respect to such
previous Other SUBI(s). World Omni will represent and warrant that, except as
otherwise described in the immediately preceding sentence, no adverse selection
procedures were employed or will be employed in selecting the Initial Contracts
or the Subsequent Contracts for inclusion in the SUBI Assets and that it is not
aware of any bias in the selection of such Contracts that would cause the
delinquencies or losses on such Contracts to be worse than other retail
closed-end automobile and light duty truck lease contracts held in the
Origination Trust's portfolio; however, there can be no assurance that the
delinquencies or losses on the Contracts will not be worse. Subsequent Contracts
may be originated by World Omni using different underwriting criteria than those
which were applied to the Initial Contracts. For this reason, the
characteristics of the Subsequent Contracts may vary from those of the Initial
Contracts.
Each Contract will have been written for an original term of not more than
60 months, for a "capitalized cost" (which may exceed the manufacturer's
suggested retail price), plus an implicit Lease Rate. The Initial Contracts
were, and the Subsequent Contracts will be, written on a constant yield basis
and provide for equal Monthly Payments such that at the end of the lease term
the capitalized cost has been amortized to an amount equal to the Residual Value
of the related Leased Vehicle.
At the times of origination of the related Contracts, the related Leased
Vehicles were, in the case of the Initial Contracts, or will be, in the case of
the Subsequent Contracts, new vehicles, dealer demonstrator vehicles driven
fewer than 6,000 miles or manufacturers' program vehicles. Manufacturers'
program vehicles are vehicles which have been sold directly by manufacturers to
rental car companies and returned to the manufacturer for resale, generally
after a period of eight to twelve months. Such vehicles generally are then
resold to dealers through an automobile auction.
All of the Contracts will be closed-end leases. Under a "closed-end lease",
at the end of its term, if the lessee does not elect to purchase the related
leased vehicle by exercise of the purchase option contained in such lease
contract, the lessee is required to return the leased vehicle to or upon the
order of the lessor, at which time the lessee will then owe only incidental
charges for excess mileage, excessive wear and use and other items as may be due
under such lease. In contrast, under an "open-end lease", the lessee is also
obligated to pay at the end of the lease term any deficit between the fair
market value of the leased vehicle at that time and the residual value
established at the time of origination of such lease.
Each lessee will be permitted to purchase the Leased Vehicle at the end of
the term of the related Contract. The purchase price will be a fixed dollar
amount equal to the Residual Value plus any applicable taxes and all other
incidental charges which may be due under the Contract. In addition, each
Contract will allow the related lessee voluntarily to terminate such Contract by
paying certain miscellaneous charges and a termination amount more fully
described below. In most instances, the Contracts are not expected to run to
their full terms, as more fully described under "Risk Factors -- Maturity and
Prepayment Considerations" and "Maturity, Prepayment and Yield Considerations".
40
<PAGE> 43
Each Contract will provide that the lessor may terminate such Contract and
repossess the Leased Vehicle in the event of a default by the lessee. Events of
default under the Contracts will include, but will not be limited to, failure to
make payment when due, certain events of bankruptcy or insolvency, failure to
maintain the insurance required by the Contract, failure to maintain or repair
the Leased Vehicle as required or to comply with any other term or condition of
the Contract and the making of a material misrepresentation by the lessee in the
lease application. World Omni regularly tracks lessees' compliance with their
payment and insurance obligations and monitors the related leases for
noncompliance as more fully described under "World Omni -- Insurance" and
"-- Collection, Repossession and Disposition Procedures".
In the forms of contract used by the Dealers to evidence the Contracts,
upon early termination where the lessee is not in default and does not exercise
its option to purchase the Leased Vehicle, the amount owed by the lessee (the
"Early Termination Charge") will be determined by adding (i) the future Monthly
Payments and any incidental charges owing under the Contract, less unearned
lease charges, (ii) the Residual Value and (iii) a $250 processing fee,
subtracting the "Realized Value" (as described below), from the sale or other
disposition of the related Leased Vehicle and applying the Security Deposit to
reduce any deficiency. In calculating the amount of unearned lease charges under
clause (i) above, the Contracts will provide that the constant yield method will
be used, in which lease charges are earned on a daily basis through the payment
date immediately following the date of early termination. If, instead, there is
an early termination and the lessee is in default, the amount owed by a lessee
in default will be determined by adding (i) the Early Termination Charge, (ii)
payments accrued under the Contract through the date of termination, (iii)
collection, repossession, storage, preparation and sale expenses, (iv)
attorneys' fees and disbursements incurred after default (not exceeding 15% of
the amount owed by the lessee) and (v) simple interest at a 15% annual rate.
The "Realized Value" of a Leased Vehicle is the actual wholesale price or
the wholesale price otherwise determined by World Omni in a commercially
reasonable manner. However, each Contract provides that the lessee has the right
to obtain from an independent third party acceptable to the lessor a
professional appraisal of the wholesale value of the Leased Vehicle that could
be realized at sale. This appraised value then would be used as the wholesale
value for purposes of calculating sums due from the lessee. Although World Omni
cannot predict whether any lessee will challenge the wholesale sale price
determined by World Omni, management of World Omni is unaware of any successful
such challenge by any lessee under its retail closed-end automobile and light
duty truck lease contracts. See "Maturity, Prepayment and Yield Considerations"
for further information relating to the relationship between payments on the
Contracts and the effective yield on the Certificates.
In the event of early termination of a Contract where the lessee is in
default, the amounts collected with respect to such Contract and the related
Leased Vehicle (after deducting the costs and other sums retained by the
Servicer in connection therewith) may be less than the Outstanding Principal
Balance of such Contract, which shortfall can be due to, among other things, the
use of wholesale appraisal of a Leased Vehicle as described above. In the event
that a Contract reaches the date on which the last Monthly Payment is due, as
such date may have been extended (the "Maturity Date"), but the related Leased
Vehicle cannot be sold or otherwise disposed of for a net amount at least equal
to its Residual Value, there may be an additional shortfall in amounts otherwise
expected to be received in respect of the SUBI Interest. In the event that any
of the foregoing shortfalls are not covered from the Investor Percentage of
certain excess Interest Collections, available monies on deposit in the Reserve
Fund and the Residual Value Surplus Account, Net Insurance Proceeds or Net
Liquidation Proceeds, amounts otherwise payable to the Seller in respect of the
Seller Interest, the Servicing Fee otherwise payable to the Servicer (so long as
World Omni is the Servicer), the subordination of interest payments otherwise
payable to the Class B Certificateholders and, in the case of the Class A-3
Certificates, the subordination of principal payments otherwise payable to the
Class B Certificateholders, in each case to the extent described herein,
investors in the Class A Certificates could suffer a loss on their investment.
41
<PAGE> 44
CHARACTERISTICS OF THE CONTRACTS
General
The Initial Contracts were, and the Subsequent Contracts will be, selected
by reference to several criteria, including, as of the related Cutoff Date, that
each Contract (i) is written with respect to a Leased Vehicle that was at the
time of the origination of the related lease contract a new vehicle, a limited
mileage dealer demonstrator vehicle or a manufacturers' program vehicle; (ii)
was originated in the United States after November 1, 1993 in the case of the
Initial Contracts, and on or before September 30, 1997 in the case of the
Subsequent Contracts; (iii) has a Maturity Date on or after June 19, 1998 and no
later than August 12, 2001 in the case of the Initial Contracts, and no later
than September 30, 2002 in the case of the Subsequent Contracts; (iv) fully
amortizes to an amount equal to the Residual Value of the related Leased Vehicle
based on a fixed Lease Rate calculated on a constant yield basis and provides
for level payments over its term (except for payment of the Residual Value); (v)
was not more than 60 days past due as of the Initial Cutoff Date or the related
Subsequent Cutoff Date, as the case may be; and (vi) has never been extended for
more than five months in the aggregate. (SUBI Trust Agreement, Section 10.01).
Appearing below is some additional information regarding the characteristics of
the Initial Contracts:
INITIAL CONTRACTS
<TABLE>
<CAPTION>
AVERAGE MINIMUM MAXIMUM
---------- --------- ----------
<S> <C> <C> <C>
Original Principal Balance........................... $24,504.65 $8,545.00 $98,679.28
Outstanding Principal Balance(1)..................... $23,743.89 $8,389.15 $90,497.55
Residual Value....................................... $14,949.66 $2,951.26 $60,183.50
Lease Rate(1)........................................ 7.74%(2) 2.01% 12.87%
Seasoning (months)(1)................................ 3.60(2) 1 11
Remaining Term (months)(1)........................... 36.79(2) 21 59
</TABLE>
- ---------------
(1) As of the Initial Cutoff Date.
(2) Weighted by Outstanding Principal Balance as of the Initial Cutoff Date.
Distribution of the Initial Leased Vehicles by Make
As of the Initial Cutoff Date, the composition of the Initial Leased
Vehicles by make of vehicle was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF NUMBER OF
VEHICLE MAKE INITIAL CONTRACTS INITIAL CONTRACTS
--------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Toyotas.................................................. 23,294 66.52%
United States manufacturers.............................. 7,977 22.78
Other Japanese manufacturers............................. 142 0.41
Other foreign manufacturers.............................. 3,603 10.29
------- -------
Total.......................................... 35,016 100.00%
============ ============
</TABLE>
42
<PAGE> 45
Distribution of the Initial Contracts by Lease Rate
The distribution of the Initial Contracts as of the Initial Cutoff Date by
Lease Rate was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE
PERCENTAGE OF INITIAL CUTOFF DATE INITIAL CUTOFF DATE
NUMBER OF NUMBER OF OUTSTANDING PRINCIPAL OUTSTANDING PRINCIPAL
LEASE RATE RANGE INITIAL CONTRACTS INITIAL CONTRACTS BALANCE BALANCE
--------------------- ----------------- ----------------- --------------------- -----------------------
<S> <C> <C> <C> <C>
2.00% to 2.99%..... 68 0.19% $ 1,385,809.58 0.17%
3.00% to 3.99%..... 224 0.64 3,778,014.86 0.45
4.00% to 4.99%..... 1,059 3.02 16,879,138.05 2.03
5.00% to 5.99%..... 3,338 9.53 60,771,179.36 7.31
6.00% to 6.99%..... 6,841 19.54 130,222,430.00 15.66
7.00% to 7.99%..... 8,270 23.62 227,700,218.94 27.39
8.00% to 8.99%..... 10,984 31.37 290,622,063.18 34.96
9.00% to 9.99%..... 3,382 9.66 79,491,508.44 9.56
10.00% to 10.99%..... 640 1.83 16,168,563.63 1.94
11.00% to 11.99%..... 199 0.57 4,210,495.92 0.51
12.00% to 12.99%..... 11 0.03 186,598.26 0.02
------- ------- --------------------- -------
Total...... 35,016 100.00% $831,416,020.22 100.00%
============ ============ =============== =================
</TABLE>
Distribution of the Initial Contracts by Maturity
The distribution of the Initial Contracts as of the Initial Cutoff Date by
year of maturity was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE
PERCENTAGE OF INITIAL CUTOFF DATE INITIAL CUTOFF DATE
NUMBER OF NUMBER OF OUTSTANDING PRINCIPAL OUTSTANDING PRINCIPAL
YEAR OF MATURITY INITIAL CONTRACTS INITIAL CONTRACTS BALANCE BALANCE
--------------------- ----------------- ----------------- --------------------- -----------------------
<S> <C> <C> <C> <C>
1998................. 138 0.40% $ 4,459,743.28 0.53%
1999................. 29,267 83.58 660,220,276.03 79.41
2000................. 4,854 13.86 137,572,474.20 16.55
2001................. 757 2.16 29,163,526.71 3.51
------- ------- --------------------- -------
Total...... 35,016 100.00% $831,416,020.22 100.00%
============ ============ =============== =================
</TABLE>
Distribution of the Initial Contracts by State
The distribution of the Initial Contracts as of the Initial Cutoff Date by
State of origination, broken out for States representing 5% or more of the
number of Initial Contracts, was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE
PERCENTAGE OF INITIAL CUTOFF DATE INITIAL CUTOFF DATE
NUMBER OF NUMBER OF OUTSTANDING PRINCIPAL OUTSTANDING PRINCIPAL
STATE INITIAL CONTRACTS INITIAL CONTRACTS BALANCE BALANCE
--------------------- ----------------- ----------------- --------------------- -----------------------
<S> <C> <C> <C> <C>
Alabama.............. 2,678 7.65% $ 57,965,541.29 6.97%
Florida.............. 13,140 37.53 283,643,591.21 34.12
Georgia.............. 6,325 18.06 138,763,615.57 16.69
North Carolina....... 6,919 19.76 147,218,588.50 17.71
South Carolina....... 2,050 5.85 45,331,758.17 5.45
All other states..... 3,904 11.15 158,492,925.48 19.06
------- ------- --------------------- -------
Total...... 35,016 100.00% $831,416,020.22 100.00%
============ ============ =============== =================
</TABLE>
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Initial Contracts and Initial Leased Vehicles will be described in a
schedule appearing as an exhibit to the SUBI Trust Agreement, which schedule
will be amended from time to time as Subsequent Contracts
43
<PAGE> 46
and Subsequent Leased Vehicles become SUBI Assets during the Revolving Period
(collectively, the "Schedule of Contracts and Leased Vehicles").
The Schedule of Contracts and Leased Vehicles will identify each Contract
by identification number, will identify each Leased Vehicle by its vehicle
identification number and will set forth as to each such Contract, among other
things, its: (i) date of origination; (ii) Maturity Date; (iii) Monthly Payment;
(iv) original Outstanding Principal Balance; (v) Outstanding Principal Balance
and Discounted Principal Balance as of the related Cutoff Date; and (vi)
Residual Value. (Servicing Agreement, Sections 1.01 and 10.01). In the Servicing
Agreement, representations and warranties will be made with respect to each
Contract and Leased Vehicle to the effect described in the text of the first
paragraph under "The Contracts -- Characteristics of the Contracts -- General",
and certain other representations and warranties will be made, including, among
other things, that each such Contract and, to the extent applicable, the related
Leased Vehicle or lessee: (a) was originated by a Dealer located in the United
States in the ordinary course of its business and in compliance with World
Omni's normal credit and collection policies and practices; (b) is owned by the
Origination Trustee, on behalf of the Origination Trust, free of all liens,
encumbrances or rights of others (other than the Administrative Lien); (c) was
originated in compliance with, and complies with, all material applicable legal
requirements; (d) all material consents, licenses, approvals or authorizations
of, or registrations or declarations with, any governmental authority required
to be obtained, effected or given by the originator of such Contract and the
Origination Trustee in connection with (i) the origination of such Contract,
(ii) the execution, delivery and performance by such originator of the Contract
and (iii) the acquisition by the Origination Trust of such Contract and Leased
Vehicle, have been duly obtained, effected or given and are in full force and
effect as of such date of creation or acquisition; (e) is the legal, valid and
binding obligation of the lessee; (f) to the knowledge of the Servicer, is not
subject to any right of rescission, setoff, counterclaim or any other defense of
the related lessee to pay the Outstanding Principal Balance due under such
Contract and no such right of rescission, offset, defense or counterclaim has
been asserted or threatened; (g) the related Dealer, the Servicer and the
Origination Trustee have each satisfied all obligations required to be fulfilled
on its part with respect thereto; (h) is payable solely in United States dollars
in the United States; (i) the lessee thereunder is located in the United States
and is not (i) ALFI, ALFI L.P., WOLSI, the Seller or any of their respective
affiliates or (ii) the United States or any state or local government thereof,
or any agency, department or instrumentality of the United States or any state
or local government thereof; (j) requires the lessee to maintain insurance
against loss or damage to the related Leased Vehicle under an insurance policy
that names the Origination Trustee as loss payee; (k) the related certificate of
title therefor is registered in the name of the Origination Trustee (or a
properly completed application for such title has been submitted to the
appropriate titling authority); (l) is a closed-end lease that (i) requires
equal monthly payments to be made within 60 months of the date of origination of
such Contract and (ii) requires such payments to be made by the lessee thereof
within 30 days after the billing date for such payment; (m) is fully assignable
and does not require the consent of the lessee as a condition to any transfer,
sale or assignment of the rights of the originator; (n) has a Residual Value
that does not exceed an amount reasonably established by the Servicer consistent
with its policies and practices regarding the setting of residual values as
applied with respect to closed-end retail automobile and light duty truck
leases; (o) has never been extended by more than five months in the aggregate or
otherwise modified except in accordance with World Omni's normal credit and
collection policies and practices; (p) the lessee thereunder has not made a
claim under the Soldiers' and Sailors' Civil Relief Act of 1940; (q) is not an
Other SUBI Asset; (r) the lessee thereunder is not bankrupt or currently the
subject of a bankruptcy proceeding; (s) is not more than 60 days past due; (t)
is a finance lease for accounting purposes; and (u) is a "true lease" for
applicable state law purposes. (SUBI Trust Agreement, Section 10.01; Servicing
Agreement, Sections 8.01 and 9.01).
The Servicing Agreement will provide that the reinvestment of Principal
Collections (and reimbursement of Loss Amounts) in Subsequent Contracts and
Subsequent Leased Vehicles during the Revolving Period will be subject to the
satisfaction of certain conditions precedent, including, among other things,
that, unless the Trustee receives a letter from each Rating Agency to the effect
that the use of a different criteria will not result in the qualification,
reduction or withdrawal of its then-current rating on any Class of Class A
Certificates or the Class B Certificates, after giving effect to such
reinvestment, (i) each Subsequent Contract will be allocated as a SUBI Asset
based upon its Discounted Principal Balance as of the relevant Cutoff Date
44
<PAGE> 47
(i.e., for a Discounted Contract, its Outstanding Principal Balance discounted
by approximately 8.70%, and for each other Contract, its Outstanding Principal
Balance), (ii) the weighted average remaining term of the Contracts (including
the Subsequent Contracts) is not greater than 38 months and (iii) the weighted
average Residual Value of the Leased Vehicles relating to the Contracts
(including the Subsequent Contracts), as a percentage of the aggregate
Outstanding Principal Balance of the Contracts (including the Subsequent
Contracts), in each case as of the related dates of origination, is not greater
than 65%. (Servicing Agreement, Section 8.02).
The Servicing Agreement will provide that upon the discovery by the
Origination Trustee, World Omni, the Trustee or the Seller of a breach of any
representation, warranty or covenant referred to in the second preceding
paragraph that materially and adversely affects the owners of interests in the
SUBI or the Certificateholders in the related Contract or Leased Vehicle, which
breach is not cured in all material respects within 60 days after World Omni
discovers such breach or is given notice thereof, World Omni will be required to
deposit (or cause to be deposited) into the SUBI Collection Account an amount
(the "Reallocation Payment") equal to the Discounted Principal Balance of such
Contract as of the last day of the Collection Period during which the related
cure period ended, plus an amount equal to any imputed lease charge on such
Contract at the related Lease Rate that was delinquent as of the end of such
Collection Period. The foregoing payment obligation will survive any termination
of World Omni as Servicer under the Servicing Agreement. (Servicing Agreement,
Sections 8.03 and 11.01).
MATURITY, PREPAYMENT AND YIELD CONSIDERATIONS
All of the Contracts will be prepayable, in whole or in part, at any time
without penalty. The prepayment experience with respect to the Contracts will
affect the life of the Class A Certificates.
In general, the rate of prepayments on the Contracts may be influenced by a
variety of economic, social, geographic and other factors. The Origination Trust
was formed and began to accept assignments of lease contracts in November 1993.
All of the lease contracts assigned to the Origination Trust for allocation as
SUBI Assets since that time have been, and all of the lease contracts to be
assigned to the Origination Trust subsequent to the date of this Prospectus will
be, assigned by Dealers using World Omni's underwriting standards. Under its
pro-active lease termination program, World Omni actively encourages lessees
under lease contracts with remaining terms of less than one year to either buy,
trade in or refinance the related leased vehicles prior to the related scheduled
maturities of such lease contracts. World Omni estimates that on average over
calendar years 1993, 1994 and 1995, and for the first six months of 1996, an
average of approximately 86% of the number of retail automobile and light duty
truck lease contracts in its portfolio (including those owned by the Origination
Trustee on behalf of the Origination Trust and by certain special purpose
finance subsidiaries of World Omni) that were scheduled to mature during such
period were terminated prior to maturity, either because of voluntary
prepayments or repossession of the leased vehicles due to default by the lessees
under the related lease contracts. World Omni is not aware of any publicly
available industry statistics that set forth termination rates for retail
closed-end automobile and light duty truck lease contracts similar to the
Contracts. The distribution of the Initial Contracts by year of maturity is set
forth under "The Contracts -- Characteristics of the Contracts -- Distribution
of the Initial Contracts by Maturity", and historical levels of lease contract
defaults, leased vehicle repossessions and losses and residual value losses are
discussed under "World Omni -- Delinquency, Repossession and Loss Data". No
assurance can be given that the Contracts will experience the same rate of
prepayment or default or any greater or lesser rate than World Omni's historical
rate, or that the Residual Value experience of Leased Vehicles related to
Contracts that have reached their Maturity Dates will differ from World Omni's
historical residual value loss experience, for all of the retail automobile and
light duty truck lease contracts in its portfolio (including those owned by the
Origination Trustee on behalf of the Origination Trust and by certain special
purpose finance subsidiaries of World Omni).
The effective yield on, and average life of, each Class of Class A
Certificates will depend upon, among other things, the amount of scheduled and
unscheduled payments on or in respect of the Contracts and the Leased Vehicles
and the rate at which such payments are paid to the Class A Certificateholders.
In the event
45
<PAGE> 48
of prepayments of the Contracts (and payment of the Residual Value of the
related Leased Vehicles) or payment of any Accelerated Principal Distribution
Amounts during the Amortization Period, Class A Certificateholders who receive
such amounts may not be able to reinvest the related payments of principal
received on the Class A Certificates at yields as high as the related
Certificate Rate. The timing of changes in the rate of prepayments on the
Contracts and payments in respect of the Leased Vehicles may also affect
significantly an investor's actual yield to maturity and the average life of the
related Class of Class A Certificates. A substantial increase in the rate of
payments on or in respect of the Contracts and Leased Vehicles (including
prepayments and liquidations of the Contracts) during the Amortization Period
may shorten the final maturity of and may significantly affect the yield on the
Class A Certificates.
Additionally, although monies on deposit in the Accounts and Principal
Collections (and reimbursement of Loss Amounts) that have not been reinvested in
Subsequent Contracts and Subsequent Leased Vehicles during the Revolving Period
will be invested in Permitted Investments, and all gain on other income from
such investments will be available for making the distributions described under
"Description of the Certificates -- Distributions on the
Certificates -- Distributions of Interest", no assurance can be made as to the
rate of return that will be realized on such Permitted Investments. Any
reinvestment risk resulting from the rate of prepayment of the Contracts (and
payment of the Residual Value of the related Leased Vehicles), the making of the
foregoing investments or payment of any Accelerated Principal Distribution
Amounts and the distribution of any such amounts to Class A Certificateholders
will be borne entirely by the Class A Certificateholders.
The yield to an investor who purchases Class A Certificates in the
secondary market at a price other than par will vary from the anticipated yield
if the rate of prepayment on the Contracts is actually different than the rate
anticipated by such investor at the time such Class A Certificates were
purchased.
In sum, an investor's expected yield will be affected by the following
factors: (i) the price the investor paid for the Class A Certificates, (ii) the
rate of prepayments in respect of the Contracts and Leased Vehicles and (iii)
the investor's assumed reinvestment rate. These factors do not operate
independently, but are interrelated. For example, if the rate of prepayments on
or in respect of the Contracts and Leased Vehicles is slower than anticipated,
the investor's yield will be lower if interest rates are higher than the
investor anticipated and higher if interest rates are lower than the investor
anticipated. Conversely, if the rate of prepayments on or in respect of the
Contracts and Leased Vehicles is faster than anticipated, the investor's yield
will be higher if interest rates are higher than the investor anticipated and
lower if interest rates are lower than the investor anticipated.
In general, during the Amortization Period, no principal payments will be
received by Class A-2 Certificateholders until the Class A-1 Certificates have
been paid in full or by Class A-3 and Class B Certificateholders until the Class
A-1 and Class A-2 Certificates have been paid in full. In addition, the Class A
Percentage and the Class B Percentage of Principal Collections allocable to the
Investor Interest will be calculated when the Class A-1 and Class A-2
Certificates have been paid in full, and then used to determine the distribution
of principal payments on the Class A-3 Certificates and the Class B
Certificates, as described under "Risk Factors -- Maturity and Prepayment
Considerations -- Sequential Payment of Principal on the Certificates", which
may affect the maturity and yield on the Class A-3 Certificates. The Investor
Percentage of Loss Amounts will be allocated among the Certificateholders on a
pro rata basis, based on the Class A-1, Class A-2, Class A-3 and Class B
Allocation Percentages, as the case may be, and then reimbursed out of available
funds in the amounts and order of priority described in "Description of the
Certificates -- Distributions on the Certificates -- Distributions of Interest".
In addition, the Investor Percentage of the net proceeds of any sale or other
disposition of the SUBI Interest, the SUBI Certificate and other property of the
Trust, which may occur under certain circumstances involving an Insolvency Event
with respect to the Seller (as described under "Description of the
Certificates -- Early Amortization Events"), to the extent such net proceeds
constitute Principal Collections, will be distributed first, on a pro rata
basis, to the Class A Certificateholders based on their respective Class
Certificate Balances until the Class A Certificates have been paid in full, and
second, to the Class B Certificateholders.
The following information is provided solely to illustrate the effect of
prepayments of the Contracts on the Class A-1 Certificate Balance, the Class A-2
Certificate Balance and the Class A-3 Certificate Balance and
46
<PAGE> 49
the weighted average life of each Class of Class A Certificates under the
assumptions stated below and is not a prediction of the prepayment rates that
might actually be experienced with respect to the Contracts.
Prepayments on automobile lease contracts may be measured by a prepayment
standard or model. The prepayment model used with respect to the Contracts is
based on a prepayment assumption (the "Prepayment Assumption") expressed in
terms of percentages of ABS. "ABS" refers to a prepayment model which assumes a
constant percentage of the original number of Contracts in a pool prepay each
month. However, as used herein, a 100% Prepayment Assumption assumes that, based
on the assumptions in the next paragraph, the original Outstanding Principal
Balance of a Contract will prepay as follows: (i) 0.55% ABS for the first six
months of the life of the Contract, (ii) 0.70% ABS for the seventh through
twelfth month of the life of the Contract, (iii) 0.85% ABS for the thirteenth
through eighteenth month of the life of the Contract, (iv) 1.15% ABS for the
nineteenth through twenty-fourth month of the life of the Contract and (v) 1.70%
ABS following the twenty-fourth month of the life of the Contract until the
original Outstanding Principal Balance of the Contract has been paid in full.
Neither ABS nor the Prepayment Assumption purports to be a historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of lease contracts, including the Contracts. There can be no
assurance that the Contracts will prepay at the indicated levels of the
Prepayment Assumption or at any other rate.
The tables below were prepared on the basis of certain assumptions,
including that: (i) all Collections (including Monthly Payments and net sale
proceeds in respect of the Leased Vehicles relating to Matured Contracts) are
timely received, and that no Contracts are ever delinquent; (ii) no Reallocation
Payment or Reallocation Deposit Amount is made in respect of any Contract; (iii)
there are no Loss Amounts; (iv) the Seller does not exercise its optional
purchase option of the Certificates as described herein; (v) all distributions
of principal (including any Accelerated Principal Distribution Amount) and
interest on the Class A Certificates are made on the dates specified herein;
(vi) the Servicing Fee is 1% per annum of 99.8% of the Aggregate Net Investment
Value; (vii) all prepayments are full Prepayments; (viii) the Revolving Period
ends on September 30, 1997; (ix) the Initial Contracts have assumed lease rates
of 9.00% and were originated four months prior to the Initial Cutoff Date; and
(x) all Principal Collections in respect of each Collection Period during the
Revolving Period are reinvested, on a Transfer Date that is the fifteenth day of
the following calendar month, in Subsequent Contracts that have stated terms of
three years, Lease Rates of 8.70% and Residual Values equal to 65% of the
original Outstanding Principal Balances thereof, were originated two months
prior to the Closing Date and that otherwise have terms that are substantially
similar to those of the Initial Contracts.
No representation is made as to what the actual levels of losses and
delinquencies on the Contracts will be. Since the tables below were prepared on
the basis of the foregoing assumptions, there will be discrepancies between the
characteristics of the Contracts that actually will be allocated as SUBI Assets
in respect of Principal Collections made during the Revolving Period and the
characteristics of the Contracts assumed in preparing the tables to be allocated
as SUBI Assets in respect of Principal Collections made during the Revolving
Period, as well as other discrepancies between the foregoing assumptions and the
actual experience in respect of the Contracts. Any such discrepancy may increase
or decrease the percentage of the outstanding Class A-1 Certificate Balance, the
Class A-2 Certificate Balance or the Class A-3 Certificate Balance, as the case
may be, and the weighted average lives of each Class of Class A Certificates set
forth in the tables. In addition, since the Contracts will have characteristics
which differ from those assumed in preparing the tables, distributions of
principal on the Class A Certificates may be made earlier or later than set
forth in the tables. Investors are urged to make their investment decisions on a
basis that includes their determination as to anticipated prepayment rates under
a variety of the assumptions discussed herein.
The following tables set forth the percentages of the Initial Certificate
Balance of each Class of Class A Certificates that would be outstanding after
each of the dates shown, based on a rate equal to 0%, 50%, 100%, 150% and 200%
of the Prepayment Assumption. As used in the table, "0% Prepayment Assumption"
assumes
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<PAGE> 50
no prepayments on a Contract, "50% Prepayment Assumption" assumes that a
Contract will prepay at 50% of the Prepayment Assumption, and so forth.
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-1 CERTIFICATES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
-----------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ----------------------------------------------------------- --- --- --- --- ---
<S> <C> <C> <C> <C> <C>
November 1996.............................................. 100% 100% 100% 100% 100%
May 1997................................................... 100 100 100 100 100
November 1997.............................................. 97 95 94 92 89
May 1998................................................... 76 64 49 31 8
November 1998.............................................. 54 27 0 0 0
May 1999................................................... 9 0 0 0 0
November 1999.............................................. 0 0 0 0 0
May 2000................................................... 0 0 0 0 0
November 2000.............................................. 0 0 0 0 0
May 2001................................................... 0 0 0 0 0
Weighted Average Life (Years)(1)........................... 2.1 1.8 1.6 1.4 1.3
=== === === === ===
</TABLE>
- ---------------
(1) The weighted average life of the Class A-1 Certificates is determined by (i)
multiplying the amount of each principal payment by the number of years
from the Closing Date to the related Distribution Date, (ii) adding the
results, and (iii) dividing the sum by the Initial Class A-1 Certificate
Balance.
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-2 CERTIFICATES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
-----------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ----------------------------------------------------------- --- --- --- --- ---
<S> <C> <C> <C> <C> <C>
November 1996.............................................. 100% 100% 100% 100% 100%
May 1997................................................... 100 100 100 100 100
November 1997.............................................. 100 100 100 100 100
May 1998................................................... 100 100 100 100 100
November 1998.............................................. 100 100 91 39 0
May 1999................................................... 100 77 31 0 0
November 1999.............................................. 0 0 0 0 0
May 2000................................................... 0 0 0 0 0
November 2000.............................................. 0 0 0 0 0
May 2001................................................... 0 0 0 0 0
Weighted Average Life (Years)(1)........................... 2.8 2.7 2.5 2.0 1.8
=== === === === ===
</TABLE>
- ---------------
(1) The weighted average life of the Class A-2 Certificates is determined by (i)
multiplying the amount of each principal payment by the number of years
from the Closing Date to the related Distribution Date, (ii) adding the
results, and (iii) dividing the sum by the Initial Class A-2 Certificate
Balance.
48
<PAGE> 51
PERCENTAGE OF INITIAL CLASS A PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF CLASS A-3 CERTIFICATES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
-----------------------------------
DISTRIBUTION DATE 0% 50% 100% 150% 200%
- ----------------------------------------------------------- --- --- --- --- ---
<S> <C> <C> <C> <C> <C>
November 1996.............................................. 100% 100% 100% 100% 100%
May 1997................................................... 100 100 100 100 100
November 1997.............................................. 100 100 100 100 100
May 1998................................................... 100 100 100 100 100
November 1998.............................................. 100 100 100 100 33
May 1999................................................... 100 100 100 50 0
November 1999.............................................. 44 32 17 0 0
May 2000................................................... 25 17 6 0 0
November 2000.............................................. 5 3 0 0 0
May 2001................................................... 0 0 0 0 0
Weighted Average Life (Years)(1)........................... 3.3 3.2 3.0 2.6 2.1
=== === === === ===
</TABLE>
- ---------------
(1) The weighted average life of the Class A-3 Certificates is determined by (i)
multiplying the amount of each principal payment by the number of years
from the Closing Date to the related Distribution Date, (ii) adding the
results, and (iii) dividing the sum by the Initial Class A-3 Certificate
Balance.
CLASS A CERTIFICATE FACTORS AND TRADING INFORMATION;
REPORTS TO CLASS A CERTIFICATEHOLDERS
The "Class A-1 Certificate Factor", the "Class A-2 Certificate Factor" and
the "Class A-3 Certificate Factor" will each be a seven-digit decimal that the
Servicer will compute each month indicating the Class A-1, Class A-2 or Class
A-3 Certificate Balance, as the case may be, as of the close of business on the
Distribution Date in such month as a fraction of the Initial Certificate Balance
of the related Class of Class A Certificates. Each Certificate Factor will
initially be 1.0000000 and will remain unchanged during the Revolving Period,
except in certain limited circumstances where there are unreimbursed Class A-1,
Class A-2 or Class A-3 Certificate Principal Loss Amounts. During the
Amortization Period, each Certificate Factor will decline to reflect reductions
in the related Certificate Balance resulting from distributions of principal and
unreimbursed Class A-1, Class A-2 or Class A-3 Certificate Principal Loss
Amounts, if any. The portion of the Class A Certificate Balance for a given
month allocable to a Class A Certificateholder can be determined by multiplying
the original denomination of the holder's Class A Certificate by the related
Certificate Factor for that month.
Pursuant to the Agreement, First Bank, as Trustee, will provide to all
registered holders of the Class A Certificates (which shall be Cede as the
nominee of DTC unless Definitive Certificates are issued under the limited
circumstances described herein) unaudited monthly reports concerning payments
received on or in respect of the Contracts and the Leased Vehicles, the
Aggregate Net Investment Value, the Investor Percentage, the Class A-1, Class
A-2 and Class A-3 Certificate Factors and various other items of information.
Certificate Owners may obtain copies of such reports upon a request in writing
to the Trustee. In addition, Class A Certificateholders during each calendar
year will be furnished information for tax reporting purposes not later than the
latest date permitted by law. For further details concerning information
furnished to Certificateholders and Certificate Owners, see "Description of the
Certificates -- Statements to Certificateholders" and "-- Book-Entry
Registration".
49
<PAGE> 52
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Agreement, a form of which,
together with forms of the SUBI Trust Agreement and the Servicing Agreement, has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. The following summaries of all material provisions of the foregoing
documents and the summaries of all material provisions included under "The Trust
and the SUBI", "The Origination Trust -- Property of the Origination Trust",
"The Contracts -- Characteristics of the Contracts -- General" and
"-- Representations, Warranties and Covenants", "Security for the Certificates"
and "Additional Document Provisions" do not purport to be complete and are
subject to, and qualified in their entirety by reference to, the provisions of
such documents. Where particular provisions of or terms used in the Agreement,
the SUBI Trust Agreement and the Servicing Agreement are referred to, the actual
provisions (including definitions of terms and Section references) are
incorporated by reference as part of such summaries.
GENERAL
The Class A Certificates will be issued in denominations of $1,000 and
integral multiples thereof in book-entry form. (Agreement, Section 4.01). The
Class A Certificates will initially be represented by certificates registered in
the name of Cede, the nominee of DTC. No Certificate Owner will be entitled to
receive a certificate representing such owner's Certificate, except as set forth
below. Unless and until Class A Certificates are issued in fully registered
certificated form ("Definitive Certificates") under the limited circumstances
described below, all references herein to distributions, notices, reports and
statements to record owners of Class A Certificates (the "Class A
Certificateholders") will refer to the same actions made with respect to DTC or
Cede, as the case may be, for the benefit of Certificate Owners in accordance
with DTC procedures. (Agreement, Section 4.09). See "Description of the
Certificates -- Book-Entry Registration" and "-- Definitive Certificates".
The outstanding principal amount of each class of Certificates (each, a
"Class") at any time will be equal to the initial principal amount of such Class
of Certificates, less the sum of (i) all principal payments made on or prior to
such date allocable to principal, (ii) the amount of Certificate Principal Loss
Amounts allocable to such Class of Certificates, if any, which have not been
reimbursed as described herein and (iii) in the case of the Class B
Certificates, any unreimbursed Class B Certificate Principal Carryover
Shortfall. (Agreement, Section 1.01). See "Description of the
Certificates -- Distributions on the Certificates". Each Certificate will
represent the right to receive payments of interest at the related Certificate
Rate and, to the extent described herein, payments of principal during the
Amortization Period funded from the Investor Percentage of distributions to the
Trust of Interest Collections and Principal Collections allocable to the SUBI
Interest and Accelerated Principal Distribution Amounts allocable to
Certificates of the related Class, amounts on deposit in the Reserve Fund,
amounts otherwise payable to the Seller in respect of the Seller Interest and,
so long as World Omni is the Servicer, from amounts otherwise payable to the
Servicer in respect of the Servicing Fee, in each case to the extent described
herein. As described under "Description of the Certificates -- Distributions on
the Certificates", the right of the Class B Certificates to receive payments of
interest and principal also will be subordinated to the right of the Class A
Certificates to receive such payments.
The Seller will permanently retain the Seller Interest, which will
represent the interest in the Trust not represented by the Certificates. The
Seller Interest will represent an undivided interest in the Trust, including the
right to receive the Seller Percentage of Interest Collections and Principal
Collections calculated as described under "Description of the
Certificates -- Calculation of Investor Percentage and Seller Percentage". The
Seller Interest will be subordinated to the Certificates to the extent described
under "Description of the Certificates -- Certain Payments to the Seller" and on
any day will equal the difference between 99.8% of the Aggregate Net Investment
Value and the Certificate Balance.
During the Revolving Period, the Certificate Balance will remain constant
except in certain limited circumstances where there are unreimbursed Certificate
Principal Loss Amounts. During the Amortization Period, the Certificate Balance
will decline as the Investor Percentage of Principal Collections allocable to
the SUBI Interest and Accelerated Principal Distribution Amounts are distributed
to the Certificateholders and
50
<PAGE> 53
as Certificate Principal Loss Amounts are incurred and not reimbursed. The
Aggregate Net Investment Value can change daily as principal is paid on or in
respect of the Contracts and the Leased Vehicles, as Reallocation Payments in
respect of certain Contracts as to which an uncured breach of certain
representations and warranties or certain servicing covenants has occurred are
paid by World Omni during the Amortization Period, together with, under certain
circumstances, Reallocation Deposit Amounts, as liquidation losses and other
losses in respect of the Contracts and Leased Vehicles are incurred and as
Leased Vehicles in Matured Leased Vehicle Inventory are sold or otherwise
disposed of. Consequently, the amount of the Seller Interest can change daily as
the Aggregate Net Investment Value changes and may increase on any Distribution
Date to reflect reductions in the Certificate Balance, but will never exceed the
initial amount of the Seller Interest.
TRANSFER OF THE SUBI INTEREST
On the Closing Date, pursuant to the Agreement, the Seller will deliver the
SUBI Certificate to the Trustee and transfer and assign to the Trustee, without
recourse, all of its right, title and interest in and to the SUBI Interest
represented by the SUBI Certificate. The Trustee will, concurrently with such
delivery, transfer and assignment, execute, authenticate and deliver the
Certificates to or upon the order of the Seller. (Agreement, Sections 2.02 and
4.02).
Pursuant to the Agreement, the Seller will represent and warrant that
immediately prior to the transfer and assignment of the SUBI Certificate to the
Trustee, it had good title to, and was the sole legal and beneficial owner of
the SUBI Certificate, free and clear of liens and claims. (Agreement, Section
5.01).
REALLOCATION PAYMENTS AND REALLOCATION DEPOSIT AMOUNTS
As more fully described under "The Contracts -- Representations, Warranties
and Covenants" and "Additional Document Provisions -- The Servicing
Agreement -- Collections", under certain circumstances World Omni will be
required to make Reallocation Payments in respect of certain Contracts (and the
related Leased Vehicles) discovered not to be in compliance with World Omni's
representations or warranties or Contracts as to which certain servicing
procedures have not been followed, in either case that materially and adversely
affects the interests of the owners of interests in the SUBI or the
Certificateholders in the related Contract or Leased Vehicle. Upon any such
payment during the Amortization Period (but not during the Revolving Period),
the Aggregate Net Investment Value will decline by an amount equal to the
Discounted Principal Balance of such Contract, thereby reducing the amount of
the Seller Interest by the same amount, and such Contract and the related Leased
Vehicle will no longer constitute SUBI Assets as they will be reallocated and
become UTI Assets. If such deduction would cause the Seller Interest to become
less than zero, World Omni will be required to deposit (or cause to be
deposited) in the SUBI Collection Account the amount (the "Reallocation Deposit
Amount") by which the Seller Interest would be reduced to less than zero.
Notwithstanding the foregoing, in the event a Reallocation Deposit Amount is
required to be made, reallocation of the related Contract (and the related
Leased Vehicle) will not be considered to have occurred unless such deposit is
actually made. (Servicing Agreement, Section 8.03).
CALCULATION OF INVESTOR PERCENTAGE AND SELLER PERCENTAGE
Pursuant to the Servicing Agreement, to the extent allocable to the SUBI
Interest, the Servicer will allocate between the Investor Interest and the
Seller Interest, based on the applicable Investor Percentage and the Seller
Percentage for the related Collection Period, all Interest Collections and
(during the Amortization Period) Principal Collections collected or received in
respect of the related Collection Period. In addition, similar allocations will
be made by the Servicer at the end of each Collection Period in respect of (i)
an amount equal to the Discounted Principal Balance of any Contract that became
a Charged-off Contract during such Collection Period (all such amounts in any
Collection Period, the "Charged-off Amount"), (ii) the Residual Value Loss
Amount for such Collection Period and (iii) any Additional Loss Amounts incurred
during such Collection Period. A "Charged-off Contract" will be a Contract (a)
with respect to which the related Leased Vehicle has been repossessed and sold
or otherwise disposed of or (b) which has been written off by the Servicer in
accordance with its normal policies for writing off lease contracts other than
51
<PAGE> 54
with respect to repossession. (SUBI Trust Agreement, Section 10.01; Agreement,
Sections 1.01 and 3.03; Servicing Agreement, Section 9.02).
For convenience, this Prospectus refers to the Investor Percentage with
respect to Interest Collections, Principal Collections, Charged-off Amounts,
Residual Value Loss Amounts and Additional Loss Amounts as if the Investor
Percentage were the same percentage at all times in each case. The Investor
Percentage may be a different percentage for each Collection Period, and will
vary primarily as a result of changes in the Aggregate Net Investment Value.
The Investor Percentage in respect of any Collection Period will mean, with
respect to (i) Charged-off Amounts, Residual Value Loss Amounts and Additional
Loss Amounts (collectively, "Loss Amounts") and Interest Collections, in each
case that are allocable to the SUBI Interest, the percentage equivalent of a
fraction (not to exceed 100%) the numerator of which is the Certificate Balance
on the last day of the immediately preceding Collection Period (or, in the case
of the first Collection Period, the Initial Certificate Balance) and the
denominator of which is 99.8% of the Aggregate Net Investment Value on the last
day of the immediately preceding Collection Period (or, in the case of the first
Collection Period, as of the Initial Cutoff Date) and (ii) Principal Collections
during the Amortization Period, the percentage equivalent of a fraction (not to
exceed 100%) the numerator of which is the Certificate Balance and the
denominator of which is 99.8% of the Aggregate Net Investment Value, in each
case as of the last day of the last Collection Period preceding (a) the
Amortization Date or (b) the date on which an Early Amortization Event occurs.
The "Seller Percentage" will in all cases, be equal to 100% minus the applicable
Investor Percentage. (Agreement, Section 1.01).
As a result of the calculations described above, Interest Collections
allocable to the SUBI Interest in each Collection Period will be allocated to
the Certificateholders based on the relationship of the Certificate Balance to
the Aggregate Net Investment Value (which may change daily and from Collection
Period to Collection Period). As described above, the Investor Percentage
applied when allocating Principal Collections allocable to the SUBI Interest may
vary monthly during the Revolving Period, because the Certificate Balance as a
percentage of the Aggregate Net Investment Value may fluctuate monthly. During
the Amortization Period, however, the Principal Allocation will be determined by
reference to a fixed percentage which will equal the Investor Percentage with
respect to Principal Collections allocable to the SUBI Interest as of the last
day of the Revolving Period.
CERTAIN PAYMENTS TO THE SELLER
On each Distribution Date, the Trustee will pay to the Seller, from amounts
on deposit in the Distribution Account in respect of the related Collection
Period that are allocable to the SUBI Interest, the following amounts (the
"Seller Amounts"): (i) if such Distribution Date is in respect of the Revolving
Period, the Seller Percentage of Interest Collections and (ii) if such
Distribution Date occurs in any month following the month in which the
Amortization Period commences, the Seller Percentage of Interest Collections
and, to the extent that the Seller Interest is equal to or greater than zero,
the Seller Percentage of Principal Collections. The foregoing payments will be
made net of the Seller Percentage of the Servicing Fee, Capped Origination Trust
Administrative Expenses, Capped Trust Administrative Expenses, Capped Contingent
and Excess Liability Premiums and Uncapped Administrative Expenses payable in
respect of the related Collection Period. Any Principal Collections not paid to
the Seller because the Seller Interest is less than or equal to zero
("Unallocated Principal Collections") will be retained in the Distribution
Account for payment to Certificateholders.
Notwithstanding the foregoing, no Seller Amounts will be paid to the Seller
on a Distribution Date unless (i) the amounts described in clauses (i) through
(xv) of the first paragraph under "Description of the
Certificates -- Distributions on the Certificates -- Distributions of Interest"
have been paid in full and (ii) the amount on deposit in the Reserve Fund, after
giving effect to all withdrawals therefrom and other deposits thereto on such
Distribution Date, is at least equal to the Reserve Fund Cash Requirement.
(Agreement, Section 3.03).
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<PAGE> 55
DISTRIBUTIONS ON THE CERTIFICATES
General
On the second Business Day prior to each Distribution Date (each, a
"Determination Date"), the Servicer will inform the Trustee of, among other
things, the amount of Interest Collections and Principal Collections allocable
to the SUBI Interest, the Investor Percentage, the Seller Percentage, the Class
A-1, Class A-2 and Class A-3 Certificate Factors, the Class A-1, Class A-2,
Class A-3 and Class B Allocation Percentages, the amount of Advances to be made
by the Servicer, the Required Amount, if any, to be withdrawn from the Reserve
Fund and the Servicing Fee and other servicing compensation payable to the
Servicer, in each case with respect to the Collection Period immediately
preceding the Collection Period in which such Determination Date occurs. On or
prior to each Determination Date, the Servicer shall also determine the Reserve
Fund Cash Requirement, the amounts to be distributed to the Certificateholders
and to the Seller in respect of the Seller Interest and the Reserve Fund
Supplemental Requirement (if any). (Servicing Agreement, Section 10.01).
Distributions of Interest
On each Distribution Date, the Trustee will make the following payments in
the amounts and order of priority described below. The Trustee will distribute
from amounts on deposit in the Distribution Account the Investor Percentage of
Interest Collections collected during or received in respect of the related
Collection Period allocable to the SUBI Interest, together with the amount
withdrawn from the Reserve Fund in respect of the Required Amount, if any, to
the extent necessary, plus Seller Amounts that would otherwise be payable to the
Seller in respect of the Seller Interest on such Distribution Date and, to the
extent needed to make distributions described in clauses (viii) through (x) to
the Class A-3 Certificateholders during the Amortization Period, amounts that
would otherwise be distributable to the Class B Certificateholders in respect of
the Class B Percentage of the Investor Percentage of Principal Collections in
respect of such Collection Period:
(i) in the event of an Early Amortization Event involving an
Insolvency Event as a result of the Trustee having received written
instructions from holders of Certificates evidencing Voting Interests of
not less than 51% of the Class A Certificates (voting together as a single
class) or 51% of the Class A Certificates and Class B Certificates (voting
together as a single class) to sell or dispose of the SUBI Interest, to the
Trustee, the Investor Percentage of Capped Trust Administrative Expenses;
(ii) to each Class of Class A Certificateholders, interest at the
related Certificate Rate on the Class A-1, Class A-2 or Class A-3
Certificate Balance, as applicable, as of the immediately preceding
Distribution Date (after giving effect to any reduction in such Certificate
Balance on such immediately preceding Distribution Date) or, in the case of
the first Distribution Date, on the Initial Class A-1, Class A-2 or Class
A-3 Certificate Balance, as applicable, for the related Interest Period,
calculated on the basis of a 360-day year consisting of twelve 30-day
months, together with any unpaid Class A-1, Class A-2 or Class A-3 Interest
Carryover Shortfall, as applicable;
(iii) to the Class B Certificateholders, interest at a specified rate
per annum not expected to exceed % (the "Class B Certificate Rate" and,
together with the Class A-1, Class A-2 and Class A-3 Certificate Rates, the
"Certificate Rates"), on the Class B Certificate Balance as of the
immediately preceding Distribution Date (after giving effect to any
reduction in the Class B Certificate Balance on such immediately preceding
Distribution Date) or, in the case of the first Distribution Date, on the
Initial Class B Certificate Balance, for the related Interest Period,
calculated on the basis of a 360-day year consisting of twelve 30-day
months, together with any unpaid Class B Interest Carryover Shortfall;
(iv) to the Servicer, reimbursement of the Investor Percentage of
Capped Contingent and Excess Liability Premiums;
(v) to the Origination Trustee, the Investor Percentage of Capped
Origination Trust Administration Expenses;
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<PAGE> 56
(vi) in circumstances other than as set forth in clause (i) above, to
the Trustee, the Investor Percentage of Capped Trust Administration
Expenses;
(vii) in the event that World Omni is not the Servicer, to such other
Servicer, the Investor Percentage of (a) the Servicing Fee and (b) any
unpaid Servicing Fees payable in respect of compensation to such other
Servicer with respect to one or more prior Collection Periods;
(viii) to each Class of Class A Certificateholders, an amount equal to
the Class A-1, Class A-2 or Class A-3 Allocation Percentage, as applicable,
multiplied by the Investor Percentage of all Loss Amounts incurred during
the related Collection Period and allocable to the SUBI Interest;
(ix) to each Class of Class A Certificateholders, the aggregate of the
amounts allocable to such Class pursuant to clause (viii) above that were
not previously distributed pursuant to such clause or this clause (each
such amount, a "Class A-1 Certificate Principal Loss Amount", "Class A-2
Certificate Principal Loss Amount" or "Class A-3 Certificate Principal Loss
Amount", respectively);
(x) to each Class of Class A Certificateholders, accrued and unpaid
interest at the related Certificate Rate, on any unreimbursed Class A-1,
Class A-2 and Class A-3 Certificate Principal Loss Amount, as applicable;
(xi) to the Class B Certificateholders, an amount equal to the Class B
Allocation Percentage multiplied by the Investor Percentage of all Loss
Amounts incurred during the related Collection Period and allocable to the
SUBI Interest;
(xii) to the Class B Certificateholders, the aggregate of the amounts
allocable pursuant to clause (xi) above that were not previously
distributed pursuant to such clause or this clause (each such amount, a
"Class B Certificate Principal Loss Amount"), together with any Class B
Certificate Principal Carryover Shortfall;
(xiii) to the Class B Certificateholders, accrued and unpaid interest
at the Class B Certificate Rate on any unreimbursed Class B Certificate
Principal Loss Amount and any unreimbursed Class B Certificate Principal
Carryover Shortfall;
(xiv) in the event that World Omni is the Servicer (and it has not
elected to waive the Servicing Fee with respect to the related Collection
Period), to the Servicer, the Investor Percentage of (a) the Servicing Fee
for the related Collection Period and (b) any unpaid Servicing Fee with
respect to one or more prior Collection Periods; and
(xv) to the Trustee and the Origination Trustee, the Investor
Percentage of all specified expenses incurred with respect to the Trust or
the Origination Trust in excess of the Capped Administrative Expenses that
have been paid but have not yet been reimbursed (the "Uncapped
Administrative Expenses").
Notwithstanding the foregoing, as more fully described under "Description
of the Certificates -- Distributions on the Certificates -- Application and
Distributions of Principal", on any Distribution Date relating to a Collection
Period during the Revolving Period, amounts otherwise payable to
Certificateholders pursuant to clauses (viii), (ix), (xi) and (xii) above will
be treated as Principal Collections for the Collection Period in which such
Distribution Date occurs. Accordingly, such amounts will be available to be
reinvested in Subsequent Contracts and Subsequent Leased Vehicles during the
Revolving Period. (Agreement, Section 3.03).
The balance, if any, of the Interest Collections allocated to the Investor
Interest for the related Collection Period, after giving effect to the
distributions in clauses (i) through (xv) above, will constitute "Excess
Collections". On each Distribution Date, Excess Collections will be deposited
into the Reserve Fund until the amount on deposit therein (after giving effect
to all withdrawals therefrom on such Distribution Date) equals the Reserve Fund
Cash Requirement, and then, if such Distribution Date occurs (i) during the
Revolving Period, any remaining Excess Collections will be paid to the Seller
and (ii) during the Amortization Period, an amount equal to the related
Accelerated Principal Distribution Amount will be paid to Certificateholders as
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a payment of principal and any remaining Excess Collections will be paid to the
Seller. To the extent that an Accelerated Principal Distribution Amount is paid
to Certificateholders on a Distribution Date in any month following the month
during which the Amortization Period commences, such amount will be distributed
first to the Class A-1 Certificateholders until the Class A-1 Certificates have
been paid in full, second, to the Class A-2 Certificateholders until the Class
A-2 Certificates have been paid in full, and thereafter the Class A Percentage
and the Class B Percentage of any remaining amount will be distributed to the
Class A-3 Certificateholders and the Class B Certificateholders, respectively.
If any Seller Amounts are required to be applied to make any of the
distributions in clauses (i) through (xv) above, the Interest Collections that
are part of the Seller Amounts will be applied before any Principal Collections
that are part of the Seller Amounts are so applied. (Agreement, Section 3.03).
In the event on any Distribution Date there remains any shortfall in
amounts required to be distributed to the Class A-1 Certificateholders, the
Class A-2 Certificateholders and Class A-3 Certificateholders under clauses
(ii), (viii), (ix) or (x) above, then the amount available will be distributed
pro rata to such Certificateholders based on the Class A-1 Allocation
Percentage, the Class A-2 Allocation Percentage and the Class A-3 Allocation
Percentage, respectively. (Agreement, Section 3.03)
"Interest Collections" with respect to any Collection Period will be
calculated as described under "Summary -- The Revolving Period; Subsequent
Contracts and Subsequent Leased Vehicles". (SUBI Trust Agreement, Section
10.01).
"Capped Origination Trust Administrative Expenses" will equal the amounts
sufficient to pay specified administrative costs and expenses of the Origination
Trust that are allocable to the SUBI Interest up to but not exceeding $100,000
in any calendar year. "Capped Trust Administrative Expenses" will equal the
amounts sufficient to pay specified administrative costs and expenses associated
with the Certificates such as the Trustee's compensation, the reasonable fees
and disbursements of the Seller's accountants and attorneys up to but not
exceeding $50,000 in any calendar year (or $100,000 in a calendar year in which
an Early Amortization Event occurs with respect to which the Trustee sells or
otherwise disposes of the SUBI Interest). (SUBI Trust Agreement, Section 10.01;
Agreement, Section 1.01).
"Capped Contingent and Excess Liability Premiums" will equal the amounts
sufficient to pay the premiums then due on the portion of the Contingent and
Excess Liability Insurance Policies allocable to the SUBI Interest, up to but
not exceeding $475,000 in any calendar year.
A "Certificate Principal Loss Amount" with respect to any Distribution Date
will equal the sum of any Class A-1, Class A-2, Class A-3 and Class B
Certificate Principal Loss Amount and will represent a loss of principal in
respect of Loss Amounts allocable to the Investor Interest and will arise when
the Investor Percentage of Interest Collections allocable to the SUBI Interest,
the Required Amount, the Seller Amounts, the Servicing Fee (so long as World
Omni is the Servicer) and, with respect to any Class A-3 Certificate Principal
Loss Amount, amounts otherwise payable in respect of principal to the Class B
Certificateholders are not sufficient to cover such loss. As described under
"Description of the Certificates -- General", any Certificate Principal Loss
Amounts allocable to a Class of Class A Certificates which are not reimbursed as
provided herein will reduce the Certificate Balance of such Class of Class A
Certificates. (Agreement, Section 1.01).
The "Class A-1 Interest Carryover Shortfall" with respect to any
Distribution Date will equal the excess, if any, of (i) the amount of interest
distributable on the Class A-1 Certificates for such Distribution Date and any
outstanding Class A-1 Interest Carryover Shortfall from the immediately
preceding Distribution Date plus interest at the Class A-1 Certificate Rate on
such outstanding Class A-1 Interest Carryover Shortfall from such immediately
preceding Distribution Date through the current Distribution Date, over (ii) the
amount of interest distributed to the Class A-1 Certificateholders on such
Distribution Date. The "Class A-2 Interest Carryover Shortfall", the "Class A-3
Interest Carryover Shortfall" and the "Class B Interest Carryover Shortfall"
will be calculated in the same manner as the Class A-1 Interest Carryover
Shortfall, appropriately modified to relate to the Class A-2 Certificates, the
Class A-3 Certificates and the Class B Certificates, respectively. (Agreement,
Section 1.01).
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The "Class B Certificate Principal Carryover Shortfall", with respect to
any Distribution Date relating to the Amortization Period from and after the
Distribution Date on which the Class A-2 Certificates are paid in full, will
equal the amount, if any, of the Class B Percentage of the Investor Percentage
of Principal Collections allocable to the SUBI Interest for such Distribution
Date that is instead applied to the distribution of principal to the Class A
Certificateholders, pursuant to clauses (viii) through (x) above. The Class B
Percentage of the Investor Percentage of Principal Collections allocable to the
SUBI Interest will be applied for such purposes only to the extent that the
other amounts available therefor are insufficient.
The "Class B Allocation Percentage" with respect to any Distribution Date
will mean the Class B Certificate Balance as a percentage of the Certificate
Balance, calculated as of the last day of the related Collection Period.
The amount of funds to be withdrawn from the Reserve Fund on a Distribution
Date and applied to payments to be made as described above will equal the lesser
of (i) the amount on deposit in the Reserve Fund on the related Deposit Date and
(ii) the amount, if any, by which (a) the full amount distributable on such
Distribution Date pursuant to clauses (i) through (xv) above exceeds (b) the
Investor Percentage of Interest Collections allocable to the SUBI Interest for
the related Collection Period. (Agreement, Sections 1.01, 3.03 and 3.04). For
further details regarding the Reserve Fund, see "Summary -- Security for the
Certificates -- The Reserve Fund" and "Security for the Certificates -- The
Accounts -- The Reserve Fund".
Application and Distributions of Principal
Revolving Period. No principal will be payable to the Class A
Certificateholders until the November 1997 Distribution Date or, upon the
occurrence of an Early Amortization Event, until the Distribution Date in the
month immediately succeeding the month in which such Early Amortization Event
occurs.
On a Transfer Date related to any Collection Period during the Revolving
Period, the Servicer will identify lease contracts and the related leased
vehicles of the Origination Trust that meet the eligibility criteria described
under "The Contracts" and are not evidenced by the SUBI or any Other SUBI. On
each Transfer Date, the Servicer, acting on behalf of the Origination Trustee,
will allocate as SUBI Assets additional lease contracts and related leased
vehicles so identified having aggregate Discounted Principal Balances as of the
last day of the preceding Collection Period (or, in the case of the first
Transfer Date, October 31, 1996) (each, a "Subsequent Cutoff Date" and, together
with the Initial Cutoff Date, the "Cutoff Dates") approximately equal to, but
not greater than, all Principal Collections collected or received since the
Initial Cutoff Date that have not yet been reinvested in Subsequent Contracts
and Subsequent Leased Vehicles as described herein. Upon such allocation, the
related lease contracts and leased vehicles will become Subsequent Contracts and
Subsequent Leased Vehicles and accordingly will become SUBI Assets. No partial
interest in lease contracts (and the related leased vehicles) will be so
allocated as SUBI Assets. Coincident with such allocation, the Servicer, acting
on behalf of the Origination Trustee, will transfer from the SUBI Collection
Account an amount of unreinvested Principal Collections equal to the aggregate
Discounted Principal Balances of the related Subsequent Contracts as of the
related Subsequent Cutoff Date to an account maintained by the Origination
Trustee to hold collections with respect to the Origination Trust Assets that
are not SUBI Assets.
Any Principal Collections that are not so reinvested may be reinvested in
additional Subsequent Contracts and Subsequent Leased Vehicles on one or more
subsequent Transfer Dates prior to the end of the Revolving Period. In the event
that on the twenty-fifth day of any month (beginning November 1996) during the
Revolving Period the amount of Principal Collections as of the last day of the
immediately preceding month that have not been reinvested in Subsequent
Contracts and Subsequent Leased Vehicles exceeds $1,000,000, an Early
Amortization Event will occur, the Revolving Period will terminate prior to the
Amortization Date and any unreinvested Principal Collections at the end of the
Revolving Period will be distributed as principal to the Trust and then to
Certificateholders on the immediately succeeding Distribution Date. (Servicing
Agreement, Section 8.02; SUBI Trust Agreement, Section 11.02; Agreement, Section
8.01).
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"Collections" and "Principal Collections" with respect to any Collection
Period will be calculated as described under "Summary -- The Revolving Period;
Subsequent Contracts and Subsequent Leased Vehicles". (SUBI Trust Agreement,
Section 10.01).
Amortization Period. On each Distribution Date beginning with the
Distribution Date in the month following the month in which the Amortization
Period commences and ending on the Distribution Date on which the Class A-1
Certificates have been paid in full, the Trustee will distribute an amount equal
to the Investor Percentage of all Principal Collections collected or received in
respect of the related Collection Period allocable to the Investor Interest as
principal first to the Class A-1 Certificateholders until the Class A-1
Certificates have been paid in full, second, to the Class A-2 Certificateholders
until the Class A-2 Certificates have been paid in full, and thereafter the
Class A Percentage and the Class B Percentage of any such remaining Principal
Collections will be distributed as principal to the Class A-3 Certificateholders
and the Class B Certificateholders, respectively. The Trustee will also
distribute to Class A-1 Certificateholders on the Distribution Date in the month
following the month in which the Amortization Period commences the Class A
Percentage of the Investor Percentage of the sum of (i) any Principal
Collections allocable to the SUBI Interest that were not reinvested in
Subsequent Contracts and Subsequent Leased Vehicles as of the end of the
Revolving Period and (ii) any Unallocated Principal Collections on deposit in
the Distribution Account at the time the Amortization Period commences. The
aggregate distributions of principal to the Certificateholders of each Class of
Class A Certificates will not exceed the Initial Certificate Balances of such
Class of Certificates. (SUBI Trust Agreement, Section 11.02; Agreement, Section
3.03).
In general, no principal payments will be made on the Class A-2
Certificates until the Class A-1 Certificates have been paid in full, or on the
Class A-3 or Class B Certificates until the Class A-1 and Class A-2 Certificates
have been paid in full. The Investor Percentage of Loss Amounts will be
allocated among Certificateholders on a pro rata basis, based on the Class A-1
Allocation Percentage, the Class A-2 Allocation Percentage, the Class A-3
Allocation Percentage and the Class B Allocation Percentage, as the case may be,
and then reimbursed out of available funds in the amounts and order of priority
described in "Description of the Certificates -- Distributions on the
Certificates -- Distributions of Interest". Loss Amounts will not be allocated
or reimbursed to any Certificateholder once the related Certificates have been
paid in full. In addition, the Investor Percentage of the net proceeds of any
sale or other disposition of the SUBI Interest, the SUBI Certificate or other
property of the Trust, which may occur under certain circumstances involving an
Insolvency Event with respect to the Seller (as described under "Description of
the Certificates -- Early Amortization Events"), to the extent such net proceeds
constitute Principal Collections, will be distributed on a pro rata basis,
first, to the Class A-1, Class A-2 and Class A-3 Certificateholders based on
their respective Class Certificate Balances until the Class A Certificates have
been paid in full, and second, to the Class B Certificateholders.
In addition, on any Distribution Date relating to the Amortization Period
from and after the Distribution Date on which the Class A-2 Certificates are
paid in full, but only to the extent that other amounts available therefor are
insufficient, amounts that would otherwise be distributable to the Class B
Certificateholders in respect of the Class B Percentage of the Investor
Percentage of Principal Collections collected or received in respect of the
related Collection Period and allocable to the SUBI Interest will instead be
distributed as principal payments to the Class A-3 Certificateholders up to an
amount equal to the sum of (i) the Class A-3 Allocation Percentage of the
Investor Percentage of Loss Amounts incurred during the related Collection
Period and allocable to the SUBI Interest, (ii) any Class A-3 Certificate
Principal Loss Amounts and (iii) accrued and unpaid interest on any Class A-3
Certificate Principal Loss Amounts, as set forth under "Description of the
Certificates -- Distributions on the Certificates -- Distributions of Interest."
Principal payments made during the Amortization Period in respect of the
Class A-1 Certificates or the Class A-2 Certificates, as applicable, will
consist primarily of the Investor Percentage of all Principal Collections during
the related Collection Period allocable to the SUBI Interest. However, principal
payments made in respect of the Class A-3 Certificates and the Class B
Certificates (once the Class A-1 Certificates and the Class A-2 Certificates
have been paid in full) will be based upon a calculation of the Class A
Percentage and the Class B Percentage of the Investor Percentage of such
Principal Collections.
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EARLY AMORTIZATION EVENTS
As described above, the Revolving Period will continue until the close of
business on the last day of September 1997 and the Amortization Period will
begin on October 1, 1997 and continue to the earlier of the payment in full of
the Certificates and the termination of the Trust, unless an Early Amortization
Event occurs prior to any of such dates, thereby commencing the Amortization
Period. An "Early Amortization Event" will mean any of the following events:
(i) failure by the Servicer (a) to make any payment or deposit
required with respect to the SUBI, the SUBI Interest or the Certificates
under the Agreement, the SUBI Trust Agreement or the Servicing Agreement,
within five Business Days after the date the payment or deposit is required
to be made, or (b) to deliver a Servicer's Certificate within ten Business
Days after any Determination Date;
(ii) failure by the Seller or the Servicer duly to observe or perform
in any material respect any other of its covenants or agreements in the
Agreement (other than those described in clause (i) above), the SUBI Trust
Agreement or the Servicing Agreement, which failure materially and
adversely affects the rights of holders of the SUBI Interest or
Certificateholders and which continues unremedied for 60 days after the
giving of written notice of such failure (a) to the Seller or the Servicer,
as the case may be, by the Trustee or the Origination Trustee or (b) to the
Seller or the Servicer, as the case may be, and to the Trustee by holders
of Certificates evidencing not less than 25% of the Voting Interests of the
Class A Certificates and the Class B Certificates, voting together as a
single class;
(iii) failure to cure the inaccuracy of certain representations,
warranties and certificates of the Seller or the Servicer in the Agreement,
the SUBI Trust Agreement or the Servicing Agreement, which failure
materially and adversely affects the rights of holders of the SUBI Interest
or Certificateholders and which continues uncured for 60 days after notice
is given as described in clause (ii) above; provided that an Early
Amortization Event pursuant to this subparagraph (iii) will not be deemed
to occur if a related Reallocation Payment is due in connection with such
breach and has been paid by the Servicer in accordance with the Servicing
Agreement;
(iv) the occurrence of certain Insolvency Events relating to the
Seller;
(v) creation of any lien or encumbrance not otherwise permitted by the
Agreement, the SUBI Trust Agreement or the Servicing Agreement on the SUBI
Assets, which lien or encumbrance is not released within 60 days of its
creation;
(vi) transfer of, or imposition of a lien or encumbrance on, the
Retained SUBI Interest held by the Seller except as permitted by the
Agreement, which, in the case of the imposition of a lien or encumbrance,
is not released within 30 days of its creation;
(vii) the Seller, the Trust or the Origination Trust becomes subject
to registration as an "investment company" for purposes of the Investment
Company Act of 1940, as amended;
(viii) if on the twenty-fifth day of any month (beginning November
1996) the amount of Principal Collections as of the last day of the
immediately preceding month that have not been reinvested in Subsequent
Contracts and Subsequent Leased Vehicles exceeds $1,000,000;
(ix) an Event of Servicing Termination occurs; or
(x) if on any Distribution Date the aggregate amount withdrawn from
the Reserve Fund and deposited into the Distribution Account on or prior to
such Distribution Date (without giving effect to any deposits into the
Reserve Fund) exceeds $2,027,184 (i.e., 0.25% multiplied by 99.8% of the
Aggregate Net Investment Value as of the Initial Cutoff Date).
The Amortization Period will commence on the day as of which an Early
Amortization Event is deemed to have occurred. (Agreement, Section 8.01). In
such event, distributions of principal to the Certificateholders will begin on
the Distribution Date in the month following the month in which the Early
Amortization Event occurs. If, because of the occurrence of an Early
Amortization Event, the Amortization Period begins earlier than the Amortization
Date, Class A-1 Certificateholders will begin receiving distributions of
principal earlier than they would otherwise have under the Agreement, and Class
A-2 and Class A-3 Certificateholders may
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begin receiving distributions of principal earlier than they would otherwise
have under the Agreement, which may shorten the final maturity of the related
Class of Class A Certificates.
In addition to the consequences of an Early Amortization Event discussed
above, if an Insolvency Event with respect to the Seller were to occur during
the Revolving Period, the Agreement will require the Seller to promptly give
notice of such Insolvency Event to the Trustee. Pursuant to the Agreement,
within 15 days of such notice, the Trustee may, and upon receipt of written
instructions from holders of Certificates evidencing Voting Interests of not
less than 51% of the Class A Certificates (voting together as a single class) or
51% of the Class A Certificates and Class B Certificates (voting together as a
single class) shall, publish a notice of the Insolvency Event stating that the
Trustee intends to sell or dispose of the SUBI Interest and the SUBI Certificate
and the other property of the Trust in a commercially reasonable manner.
Following such publication, unless otherwise prohibited by applicable law, the
Trustee will sell or otherwise dispose of the SUBI Interest, the SUBI
Certificate and such other property in a commercially reasonable manner and on
commercially reasonable terms; provided that such sale shall not be made without
the consent of all the Certificateholders if a net loss would be realized as a
result of such sale. The net sale or disposition proceeds of the SUBI Interest,
the SUBI Certificate and such other property will be deposited into the SUBI
Collection Account and treated as Collections on or in respect of the SUBI
Assets. The interest portion of the Investor Percentage of such proceeds will be
distributed to the Certificateholders in the priority provided for herein, and
the principal portion of the Investor Percentage of such proceeds will be
distributed first, on a pro rata basis, to the Class A-1, Class A-2 and Class
A-3 Certificateholders based on their respective Class Certificate Balances
until the Class A-1, Class A-2 and Class A-3 Certificates have been paid in
full, and second, to the Class B Certificateholders. (Agreement, Section 8.02).
If such proceeds, together with all amounts on deposit in the Accounts, the
Reserve Fund and the Residual Value Surplus Account, amounts otherwise payable
to the Seller in respect of the Seller Interest, the Servicing Fee (if World
Omni is the Servicer) and, in the case of the Class A-3 Certificates, certain
amounts otherwise distributable in respect of the Class B Certificates, are
insufficient to pay the Certificate Balance of a Class of Class A Certificates,
any unreimbursed Certificate Principal Loss Amount in respect of such Class of
Class A Certificates and any accrued and unpaid interest thereon in full, the
related Class A Certificateholders will suffer a corresponding loss.
The "Voting Interests" of the (i) Class A Certificates will be allocated
among the Class A-1, Class A-2, and Class A-3 Certificateholders or Certificate
Owners, as the case may be, in accordance with their respective Class
Certificate Balances, as the context may require, and (ii) Class B Certificates
will be allocated among the Class B Certificateholders in accordance with the
Class B Certificate Balance represented thereby. Notwithstanding the foregoing,
in certain circumstances, any Class A Certificates or Class B Certificates, as
the case may be, held or beneficially owned by ALFI, ALFI L.P., the Seller,
WOLSI, World Omni or any of their respective affiliates shall be excluded from
such determination. (Agreement, Section 1.01).
STATEMENTS TO CERTIFICATEHOLDERS
On each Distribution Date, the Trustee will include with each distribution
to each Certificateholder as of the close of business on the related Record Date
(which, in the case of the Class A Certificates, shall be Cede as the nominee of
DTC unless Definitive Certificates are issued under the limited circumstances
described herein) a statement, setting forth with respect to such Distribution
Date or the related Collection Period, among other things, the following:
(i) the Investor Percentages for Interest Collections and Principal
Collections allocable to the SUBI Interest for such Collection Period;
(ii) the amount being distributed to Certificateholders (the
"Certificate Distribution Amount");
(iii) the amount of the Certificate Distribution Amount allocable to
interest and to principal on each Class of Certificates;
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(iv) the amount of the Certificate Distribution Amount allocable to
any Class A-1 Interest Carryover Shortfall, any Class A-2 Interest
Carryover Shortfall, any Class A-3 Interest Carryover Shortfall and any
Class B Interest Carryover Shortfall;
(v) the amount, if any, of any unpaid Class A-1 Interest Carryover
Shortfall, unpaid Class A-2 Interest Carryover Shortfall, unpaid Class A-3
Interest Carryover Shortfall and unpaid Class B Interest Carryover
Shortfall, after giving effect to distribution of the Certificate
Distribution Amount;
(vi) the Certificate Balance, the Class A-1 Certificate Balance, the
Class A-2 Certificate Balance, the Class A-3 Certificate Balance, the Class
A-1 Certificate Factor, the Class A-2 Certificate Factor, the Class A-3
Certificate Factor, the Class A-1 Allocation Percentage, the Class A-2
Allocation Percentage, the Class A-3 Allocation Percentage and the Class B
Allocation Percentage as of such Distribution Date, in each case after
giving effect to distribution of the Certificate Distribution Amount;
(vii) the aggregate amount, if any, of the reimbursement of Loss
Amounts included in distribution of the Certificate Distribution Amount and
the amount thereof allocated to each Class of Certificateholders;
(viii) the amount of the Certificate Distribution Amount allocable to
reimbursement of previous Class A-1 Certificate Principal Loss Amounts,
Class A-2 Certificate Principal Loss Amounts, Class A-3 Certificate
Principal Loss Amounts and Class B Certificate Principal Loss Amounts, in
each case together with the amount of accrued interest thereon included in
such distribution;
(ix) the amount, if any, of the aggregate unreimbursed Class A-1
Certificate Principal Loss Amounts, Class A-2 Certificate Principal Loss
Amounts, Class A-3 Certificate Principal Loss Amounts and Class B
Certificate Principal Loss Amounts, after giving effect to distribution of
the Certificate Distribution Amount;
(x) the amount of any unreimbursed Class B Certificate Principal
Carryover Shortfall;
(xi) the Investor Percentage of the Servicing Fee;
(xii) the amount of any Required Amount included in the Certificate
Distribution Amount, the balance on deposit in the Reserve Fund on such
Distribution Date, after giving effect to withdrawals therefrom and
deposits thereto on such Distribution Date, the change in such balance from
the immediately preceding Distribution Date, the Reserve Fund Cash
Requirement and the Reserve Fund Supplemental Requirement, if any;
(xiii) the amount of Seller Amounts, if any, included in the
Certificate Distribution Amount;
(xiv) the Aggregate Net Investment Value as of the end of such
Collection Period;
(xv) the aggregate amount of Payments Ahead on deposit in the SUBI
Collection Account and the change in such amount from the immediately
preceding Distribution Date;
(xvi) the amount of Advances made in respect of such Collection Period
and the amount of unreimbursed Advances on such Distribution Date;
(xvii) the balance on deposit in the Residual Value Surplus Account on
the related Deposit Date, after giving effect to the change in such balance
from the immediately preceding Deposit Date, and the aggregate amount of
Residual Value Surplus deposited into or withdrawn from the Residual Value
Surplus Account on the related Deposit Date; and
(xviii) certain information used in determining compliance with the
Reserve Fund Tests, including the Charge-off Rate and the Delinquency Rate.
Each amount set forth pursuant to clauses (ii) through (v) and (vii)
through (x) above will be expressed in the aggregate and as a dollar amount per
$1,000 of original principal balance of a Class A Certificate or Class B
Certificate, as applicable. Copies of such statements may be obtained by
Certificateholders or Certificate Owners by a request in writing addressed to
the Trustee. In addition, within the prescribed period
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of time for tax reporting purposes after the end of each calendar year during
the term of the Agreement, the Trustee will mail to each person who at any time
during such calendar year shall have been a Class A or Class B Certificateholder
or a Certificate Owner, a statement containing the sum of the amounts described
in clauses (ii) through (vi) and (viii) through (xi) above for the purpose of
preparing such person's federal income tax return. (Agreement, Section 3.06).
TERMINATION OF THE TRUST; RETIREMENT OF THE CERTIFICATES
The respective obligations and responsibilities of the Seller and the
Trustee created by the Agreement will terminate upon the earliest to occur of
(i) the maturity, sale or other liquidation, as the case may be, of the last
outstanding Contract and Leased Vehicle evidenced by the SUBI and the
distribution of all proceeds thereof, together with all amounts on deposit in
the Accounts and the Reserve Fund, in the manner to be prescribed in the
Agreement, (ii) the day following the Distribution Date on which the
Certificates have been paid in full and after which there is no unreimbursed
Certificate Principal Loss Amount or Class B Certificate Principal Carryover
Shortfall (together with accrued interest thereon) and (iii) the occurrence of
the event described below. In order to avoid excessive administrative expenses,
the Seller will be permitted at its option to purchase the SUBI Interest
evidenced by the SUBI Certificate from the Trust on any Distribution Date if,
either before or after giving effect to any payment of principal required to be
made on such Distribution Date, the Certificate Balance is less than or equal to
10% of the Initial Certificate Balance. The purchase price will be equal to the
greater of (i) the sum of the Class A Certificate Balance and the Class B
Certificate Balance, in each case plus accrued and unpaid interest thereon at
the related Certificate Rate, plus certain other accrued and unpaid amounts, if
any, due to the Investor Certificateholders or the Servicer, and (ii) 99.8% of
the Aggregate Net Investment Value as of the last day of the preceding
Collection Period. The Trustee will give written notice of termination of the
Trust to each Certificateholder of record. In connection with any such
termination, except as otherwise provided in the Agreement, the Seller will be
deemed to relinquish all claims it may have against the assets of the Trust in
respect of Seller Amounts that were not paid to the Seller. (Agreement, Section
7.01).
The final distribution to any Certificateholder will be made only upon
surrender and cancellation of such Certificateholder's Certificate at an office
or agency of the Trustee specified in the notice of termination. Any funds
remaining that are payable in such final distribution to a Certificateholder,
after the Trustee has taken certain measures to locate such Certificateholder
and such measures have failed, will be distributed to the United Way.
(Agreement, Section 7.01).
BOOK-ENTRY REGISTRATION
Certificate Owners may hold through DTC (in the United States), or Cedel or
Euroclear (in Europe), which in turn hold through DTC, if they are participants
in such systems, or indirectly through organizations that are participants in
such systems ("Participants").
Cede, as nominee for DTC, will hold the Class A Certificates. Cedel and
Euroclear will hold omnibus positions on behalf of their Participants through
customers' securities accounts in the Depositaries which in turn will hold such
positions in customers' securities accounts in the Depositaries' names on the
books of DTC. Unless and until Definitive Certificates are issued, it is
anticipated that the only Class A Certificateholder will be Cede, as the nominee
of DTC. Certificate Owners will only be permitted to exercise their rights
indirectly through DTC.
Transfers between Participants in DTC ("DTC Participants") will occur in
accordance with DTC rules. Transfers between Participants in Cedel ("Cedel
Participants") and Participants in Euroclear ("Euroclear Participants") will
occur in accordance with their respective 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 Cedel or Euroclear by its Depositary.
However, each such cross-market transaction will require delivery of
instructions to Cedel or Euroclear by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time).
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Cedel or Euroclear 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 related Depositaries.
Because of time-zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a DTC Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Participants or Euroclear Participants on such business day. Cash received in
Cedel or Euroclear as a result of sales of Class A Certificates by or through a
Cedel Participant or Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
Cedel or Euroclear cash account only as of the business day following settlement
in DTC.
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 UCC in effect in the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that DTC Participants deposit with DTC. DTC also facilitates
the clearance and settlement of securities transactions among DTC Participants
through electronic computerized book-entry changes in accounts of DTC
Participants, thereby eliminating the need for physical movement of securities
certificates. DTC Participants include securities brokers and dealers (including
the Underwriters), banks, trust companies, clearing corporations and certain
other organizations. Indirect access to the DTC system also is available to
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a DTC Participant, either directly or indirectly
(the "Indirect DTC Participants"). The rules applicable to DTC and DTC
Participants are on file with the Commission.
Certificate Owners that are not DTC Participants or Indirect DTC
Participants but that desire to purchase, sell or otherwise transfer ownership
of, or an interest in, Class A Certificates under the DTC System may do so only
through DTC Participants or Indirect DTC Participants. DTC Participants will
receive a credit for the Class A Certificates in DTC's records. The ownership
interest of each Certificate Owner in turn will be recorded on the DTC
Participants' and Indirect DTC Participants' respective records. Certificate
Owners will not receive written confirmation from DTC of their purchase, but
Certificate 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 DTC Participant through which the
Certificate Owner entered into the transaction. Transfers of ownership interests
in the Class A Certificates will be accomplished by entries made on the books of
DTC Participants acting on behalf of Certificate Owners.
To facilitate subsequent transfers, all Class A Certificates deposited by
DTC Participants with DTC will be registered in the name of Cede, as nominee of
DTC. The deposit of Class A Certificates with DTC and their registration in the
name of Cede will effect no change in beneficial ownership. DTC will have no
knowledge of the actual Certificate Owners and its records will reflect only the
identity of the DTC Participants to whose accounts such Class A Certificates are
credited, which may or may not be the Certificate Owners. DTC Participants and
Indirect 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 DTC Participants and by DTC Participants and
Indirect DTC Participants to Certificate Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Principal and interest payments with respect to the Class A Certificates
will be made to DTC. DTC's practice is to credit DTC Participants' accounts on
each 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 and Indirect DTC
Participants to Certificate Owners will
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be governed by standing instructions and customary practices, as in 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
Indirect DTC Participant and not of DTC, the Trustee, the Origination Trustee,
the Servicer or the Seller, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of principal of and interest on
the Class A Certificates to DTC will be the responsibility of the Trustee,
disbursement of such payments to DTC Participants will be the responsibility of
DTC and disbursement of such payments to Certificate Owners will be the
responsibility of DTC Participants and Indirect DTC Participants. As a result,
under the book-entry format, Certificate Owners may experience some delay in
their receipt of payments.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect DTC Participants and certain banks, the ability of a
Certificate Owner to pledge Class A Certificates to persons or entities that do
not participate in the DTC system, or otherwise take actions with respect to
such Class A Certificates, may be limited due to the lack of a physical
certificate for such Class A Certificates.
Neither DTC nor Cede will consent or vote with respect to the Class A
Certificates. Under its usual procedures, DTC mails an "Omnibus Proxy" to the
Trustee as soon as possible after any applicable record date for such a consent
or vote. The Omnibus Proxy assigns Cede's consenting or voting rights to those
DTC Participants to whose accounts the Class A Certificates are credited on that
record date (identified in a listing attached to the Omnibus Proxy).
None of the Seller, the Servicer, the Origination Trustee nor the Trustee
will have any liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests of the Class A Certificates
held by Cede, as nominee of DTC, or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for Cedel Participants and facilitates the
clearance and settlement of securities transactions between Cedel Participants
through electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedel in any of 28 currencies, including United States dollars. Cedel
provides to 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 depositary, Cedel is subject to regulation
by the Luxembourg Monetary Institute. Cedel Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. Indirect access to Cedel is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for 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 several countries generally similar to the
arrangements for cross-market transfers with DTC described above. Euroclear is
operated by the Brussels, Belgium office of Morgan Guaranty Trust Company of New
York (the "Euroclear Operator"), under contract with Euroclear Clearance System
S.C., a Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for the Euroclear System
on behalf of Euroclear Participants. Euroclear Participants include banks
(including central banks), securities brokers and dealers and other professional
financial intermediaries. Indirect access to the Euroclear System is also
available to other firms that clear through or maintain a custodial relationship
with a Euroclear Participant, either directly or indirectly.
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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 and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Class A Certificates held through Cedel or
Euroclear will be credited to the cash accounts of Cedel Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will be
subject to tax reporting and withholding in accordance with relevant United
States tax laws and regulations. For further information in this regard, see
"Certain Income Tax Considerations -- Federal Taxation -- Federal Income Tax
Consequences to Foreign Investors" herein and "Global Clearance, Settlement and
Tax Documentation Procedures -- Certain U.S. Federal Income Tax Documentation
Requirements" in Annex I hereto. Cedel or the Euroclear Operator, as the case
may be, will take any other action permitted to be taken by a Class A
Certificateholder on behalf of a Cedel Participant or Euroclear Participant only
in accordance with its relevant rules and procedures and subject to the related
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 Class A Certificates 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.
DEFINITIVE CERTIFICATES
Definitive Certificates will be issued to Certificate Owners rather than to
DTC only if (i) DTC is no longer willing or able to discharge its
responsibilities with respect to the Class A Certificates, and neither the
Trustee nor the Seller is able to locate a qualified successor, (ii) the Seller,
at its option, elects to terminate the book-entry system through DTC or (iii)
after an Early Amortization Event, Certificate Owners representing in the
aggregate not less than 51% of the Voting Interests of the Class A Certificates
(voting together as a single class) advise the Trustee through DTC or its
successor in writing that the continuation of a book-entry system through DTC or
its successor is no longer in the best interest of Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will be required to notify all Certificate
Owners, through Participants, of the availability through DTC of Definitive
Certificates. Upon surrender by DTC of the certificates representing the related
Class A Certificates and the receipt of instructions for re-registration, the
Trustee will issue Definitive Certificates to Certificate Owners, who thereupon
will become Certificateholders for all purposes of the Agreement. (Agreement,
Section 4.11).
Payments on the related Class A Certificates will thereafter be made by the
Trustee directly to holders of such Class A Certificates in accordance with the
procedures set forth herein and to be set forth in the Agreement. Interest
payments and any principal payments on the Definitive Certificates on each
Distribution Date will be made to holders in whose names the Definitive
Certificates were registered at the close of business on the Record Date with
respect to such Distribution Date. Payments will be made by check mailed to the
address of such holders as they appear on the Certificate Register or, under the
circumstances to be provided by the Agreement, by wire transfer to a bank or
depository institution located in the United States and having appropriate
facilities therefor. (Agreement, Section 3.03). The final payment on any Class A
Certificates (whether Definitive Certificates or global certificates registered
in the name of Cede representing
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the Class A Certificates), however, will be made only upon presentation and
surrender of such Definitive Certificates or global certificates at the office
or agency specified in the notice of final distribution to Class A
Certificateholders. (Agreement, Section 7.01).
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee or the Certificate Registrar to be set forth in the
Agreement. No service charge will be imposed for any registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge imposed in connection therewith. (Agreement,
Section 4.07).
SECURITY FOR THE CERTIFICATES
GENERAL
The property of the Trust will primarily consist of the SUBI Interest
evidenced by the SUBI Certificate, which is more fully described under "The
Trust and the SUBI -- The SUBI". The property of the Trust will also include
such amounts as from time to time are held in the Reserve Fund and the
Distribution Account. The Trust will also have the collateral benefit of monies
on deposit in the SUBI Collection Account and the Residual Value Surplus
Account, the Contingent and Excess Liability Insurance Policies described below
and the Trustee's rights as a third-party beneficiary of the SUBI Trust
Agreement and the Servicing Agreement.
As described under "Risk Factors -- Structural Considerations", the Trustee
generally will be deemed to have ownership of the SUBI Certificate and, through
such ownership, an indirect beneficial ownership interest in the Contracts and
Leased Vehicles. If a court of competent jurisdiction recharacterizes the
transfer of the SUBI Interest to the Trust, the Trustee may instead be deemed to
have a perfected security interest in the SUBI Certificate, the Contracts and
Contract Rights susceptible of perfection under the UCC, but in no event will
the Trustee be deemed to have a perfected security interest in the Leased
Vehicles.
THE ACCOUNTS
The Distribution Account
On or prior to the Closing Date, the Seller will establish a trust account
with the Trustee for the exclusive benefit of the Certificateholders and the
Seller, in its capacity as holder of the Seller Interest, from which all
payments with respect to the Certificates will be made (the "Distribution
Account"). (Agreement, Section 3.01). On each Deposit Date, all Principal
Collections and Interest Collections with respect to the related Collection
Period allocable to the SUBI Interest will be remitted to the Distribution
Account. Such deposits will be made from, among other sources, (i) monies on
deposit in the SUBI Collection Account or the Reserve Fund and (ii) the Seller
in the case of exercise of its right to purchase the SUBI Interest represented
by the SUBI Certificate when the Certificate Balance is less than or equal to
10% of the Initial Certificate Balance.
The SUBI Collection Account
On or prior to the Closing Date, the Origination Trustee will establish a
trust account for the exclusive benefit of the holders of interests in the SUBI
into which collections on or in respect of the Contracts and the Leased Vehicles
generally will be deposited (the "SUBI Collection Account"). (SUBI Trust
Agreement, Section 12.01).
Deposits into the SUBI Collection Account. Deposits into the SUBI
Collection Account will include, but will not be limited to, the following
payments made in respect of the SUBI Assets: (i) Monthly Payments; (ii) early
payments of the Outstanding Principal Balance of a Contract, including an amount
equal to the Residual Value of the related Leased Vehicle (each, a
"Prepayment"); (iii) Matured Leased Vehicle Proceeds, Repossessed Vehicle
Proceeds and other Liquidation Proceeds; (iv) Extension Fees; (v) Payments
Ahead; (vi) Advances made by the Servicer; (vii) Reallocation Payments by World
Omni (together with, under certain circumstances during the Amortization Period,
Reallocation Deposit Amounts) in respect of certain Contracts as to which an
uncured breach of certain representations and warranties or certain servicing
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covenants has occurred; and (viii) certain amounts in respect of certain
shortfalls in the Residual Values of Leased Vehicles relating to Matured
Contracts, as described under "Security for the Certificates -- The
Accounts -- The Residual Value Surplus Account". (Servicing Agreement, Sections
2.02, 8.02, 9.02 and 9.04; SUBI Trust Agreement, Section 12.01).
"Net Insurance Proceeds" will include recoveries pursuant to the Contingent
and Excess Liability Insurance Policies and the comprehensive, collision, public
liability and property damage insurance policy required to be obtained and
maintained by the lessee pursuant to each Contract (or payment by the Servicer
under the Servicing Agreement of such amounts under the circumstances described
in "Additional Document Provisions -- The Servicing Agreement -- Insurance on
Leased Vehicles"), and amounts paid by any insurer under any other insurance
policy relating to the Contracts, the related lessees or the Leased Vehicles, in
each case net of certain sums, if any, applied to the repair of the related
Leased Vehicles. (SUBI Trust Agreement, Section 10.01).
Monthly Payments made by the lessees under the Contracts normally will be
paid by mail and deposited into a lock box maintained by the Servicer, and then
deposited in the SUBI Collection Account within two Business Days after receipt.
Within two Business Days after receipt by the Servicer of all other payments on
or in respect of the Contracts or the Leased Vehicles other than Security
Deposits, including without limitation any Monthly Payments delivered directly
to the Servicer or World Omni (in the event that World Omni is no longer the
Servicer), Matured Leased Vehicle Proceeds, Repossessed Vehicle Proceeds and
other Liquidation Proceeds, Extension Fees, Payments Ahead and Prepayments
(regardless of whether made by lessees or other persons), such payments shall be
remitted to the SUBI Collection Account. (Servicing Agreement, Sections 2.02 and
9.02).
Notwithstanding the foregoing, the Servicer may remit all payments
collected or received by it on or in respect of the Contracts and the Leased
Vehicles to the SUBI Collection Account on a less frequent basis if (i) it
obtains a letter of credit, surety bond or insurance policy (collectively, the
"Servicer Letter of Credit") under which demands for payment may be made to
secure timely remittance of monthly collections to the SUBI Collection Account
and (ii) the Trustee is provided with a letter from each Rating Agency to the
effect that the use of such alternative remittance schedule will not result in
the qualification, reduction or withdrawal of its then-current rating of any
Class of Certificates. (Servicing Agreement, Section 9.02).
Net Deposits. So long as World Omni is the Servicer, the Servicer will be
permitted to deposit in the Distribution Account only the net amount
distributable to the Trustee, as holder of the SUBI Interest, and the Seller on
the related Deposit Date. The Servicer, however, will account to the Trustee,
the Origination Trustee, the Certificateholders and the Seller as if all of the
deposits and distributions described herein were made individually. (Agreement,
Section 3.05; Servicing Agreement, Section 9.02). This "net deposit" provision
will be for the administrative convenience of the parties involved and will not
affect amounts required to be deposited into the Accounts.
Withdrawals from the SUBI Collection Account. On each Deposit Date, all
Principal Collections and Interest Collections in respect of the SUBI Interest
on deposit in the SUBI Collection Account in respect of the related Collection
Period (including that portion of Payments Ahead representing Monthly Payments
due in such Collection Period) will be deposited into the Distribution Account.
During the Revolving Period, however, Principal Collections will be retained in
the SUBI Collection Account for reinvestment in Subsequent Contracts and
Subsequent Leased Vehicles as described under "Description of the
Certificates -- Distributions on the Certificates -- Application and
Distributions of Principal -- Revolving Period". (Agreement, Section 3.02; SUBI
Trust Agreement, Section 12.01; Servicing Agreement, Sections 2.02 and 4.01).
In the event that on any date the Servicer supplies the Origination Trustee
and the Trustee with an officer's certificate setting forth the basis for such
withdrawal, the Origination Trustee shall remit to the Servicer, without
interest and prior to any other distribution from the SUBI Collection Account on
such date, monies from the SUBI Collection Account representing (i) unreimbursed
Matured Leased Vehicle Expenses (after reimbursements thereof from the Residual
Value Surplus Account, if any), Repossessed Vehicle Expenses and other
Liquidation Expenses; (ii) delinquent Monthly Payments with respect to which the
Servicer has made an unreimbursed Advance; and (iii) an amount equal to any
unreimbursed Advances that
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the Servicer has concluded are Nonrecoverable Advances. (Servicing Agreement,
Section 9.02). For further information regarding Nonrecoverable Advances, see
"Additional Document Provisions -- The Servicing Agreement -- Advances".
The Residual Value Surplus Account
On or prior to the Closing Date, the Origination Trustee will establish a
trust account for the exclusive benefit of the holders of interests in the SUBI
into which all Residual Value Surplus with respect to a Collection Period will
be deposited on the related Deposit Date (the "Residual Value Surplus Account"
and, together with the Distribution Account, the SUBI Collection Account and the
Reserve Fund, the "Accounts"). (SUBI Trust Agreement, Section 12.03).
On each Deposit Date funds on deposit in the Residual Value Surplus Account
shall be withdrawn by the Origination Trustee and deposited into the SUBI
Collection Account up to an amount equal to the sum of (a) the aggregate of the
Residual Values of Leased Vehicles that were a part of Matured Leased Vehicle
Inventory but had not been sold or otherwise disposed of for at least two full
Collection Periods as of the end of the related Collection Period, and (b) the
amount by which Net Matured Leased Vehicle Proceeds (after application of
amounts withdrawn pursuant to the next sentence) for the related Collection
Period are less than the aggregate of the Residual Values of Leased Vehicles
that were a part of Matured Leased Vehicle Inventory but were sold or otherwise
disposed of during such Collection Period. In the event that the Servicer
supplies the Origination Trustee and the Trustee with an officer's certificate
setting forth the basis for such withdrawal, such funds will be withdrawn and
paid to the Servicer in reimbursement for any Matured Leased Vehicle Expenses
incurred during such Collection Period, but only to the extent that, after
reimbursement of such Matured Leased Vehicle Expenses (exclusive of any other
reimbursement thereof), Net Matured Leased Vehicle Proceeds would be no more
than the aggregate of the Residual Values of Leased Vehicles sold or otherwise
disposed of from Matured Leased Vehicle Inventory during such Collection Period.
Maintenance of the Accounts
The Distribution Account and the Reserve Fund will be maintained with the
Trustee and the SUBI Collection Account and the Residual Value Surplus Account
will be maintained with the Trust Agent so long as either (i) the short-term
unsecured debt obligations of the Trustee or the Trust Agent, as the case may
be, are rated at least P-1 by Moody's and A-1+ by Standard & Poor's (the
"Required Deposit Ratings") or (ii) the Trustee or the Trust Agent, as the case
may be, is a depository institution or trust company having a long-term
unsecured debt rating from Moody's of at least Baa3 and corporate trust powers
and the related Account is maintained in a segregated trust account in the
corporate trust department of the Trustee or the Trust Agent, as the case may
be. If the Trustee or the Trust Agent at any time does not qualify under either
of these criteria, the Servicer shall, with the assistance of the Trustee or the
Trust Agent, as the case may be, as necessary, cause the related Account to be
moved to a depository institution organized under the laws of the United States
or any state thereof whose short-term unsecured debt obligations are rated at
least equal to the Required Deposit Ratings or moved to a segregated trust
account located in a corporate trust department of a depository institution or
trust company as described above. (Agreement, Sections 3.01 and 3.04; SUBI Trust
Agreement, Sections 12.01 and 12.03; Servicing Agreement, Section 9.02).
Permitted Investments
Upon receipt of directions from the Servicer, the Trustee or the
Origination Trustee, as the case may be, shall invest funds on deposit in the
Accounts in one or more Permitted Investments maturing (i) no later than the
Business Day immediately preceding the Deposit Date immediately succeeding the
date of such investment, in the case of amounts on deposit in the SUBI
Collection Account, the Reserve Fund or the Residual Value Surplus Account or
(ii) on the Business Day immediately preceding the Distribution Date immediately
succeeding the date of such investment in the case of amounts on deposit in the
Distribution Account. Notwithstanding the foregoing, (a) investments on which
the entity at which the related Account is located is the obligor may mature on
the related Deposit Date or Distribution Date, as the case may be, and (b)
investments during the Revolving Period of Principal Collections on deposit in
the SUBI Collection
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Account may mature on such dates as in the Servicer's discretion will maintain
sufficient cash to acquire Subsequent Contracts and Subsequent Leased Vehicles
on the related Transfer Dates.
All income or other gain from the foregoing investments generally shall be
retained in the related Account with such gain in respect of funds in the SUBI
Collection Account and the Distribution Account generally being treated as
Interest Collections received in respect of the related Collection Period. Any
loss resulting from such investments shall be charged to the related Account.
(SUBI Trust Agreement, Sections 11.01 and 12.01; Agreement, Section 3.01;
Servicing Agreement, Section 9.02). "Permitted Investments" will be specified in
the SUBI Trust Agreement and will be limited to investments that meet the
criteria of each Rating Agency from time to time as being consistent with its
then-current rating of each Class of Certificates. (Agreement, Section 1.01).
The Reserve Fund
On or prior to the Closing Date, the Servicer will establish a trust
account with the Trustee for the exclusive benefit of the Certificateholders and
the Seller, as holder of the Seller Interest (the "Reserve Fund"). The monies on
deposit in the Reserve Fund will, as described below, be applied on each
Distribution Date to pay certain shortfalls in respect of amounts collected with
respect to the related Collection Period to be paid from the Distribution
Account and certain other shortfalls in respect of the Residual Values of the
Leased Vehicles. In addition, to the extent not otherwise required to make any
of the payments described under "Description of the
Certificates -- Distributions on the Certificates -- Distributions of Interest",
monies on deposit in the Reserve Fund will be available to make payments to the
Certificateholders should Collections ultimately be insufficient to reduce the
Class A-1 Certificate Balance, the Class A-2 Certificate Balance, the Class A-3
Certificate Balance or the Class B Certificate Balance to zero. (Agreement,
Sections 3.03 and 3.04).
The Reserve Fund Cash Requirement. The Reserve Fund will be created on or
prior to the Closing Date with the deposit by the Seller of the Initial Deposit.
On each Distribution Date, the funds in the Reserve Fund will be supplemented by
(i) all Excess Collections, (ii) all income realized on the investment of
amounts on deposit in the Reserve Fund in Permitted Investments, net of losses
resulting from such investments, and (iii) the deposit of monies in respect of
the related Collection Period remaining in the Distribution Account after making
all payments required to be made therefrom on such Distribution Date prior to
such deposit, including monies that otherwise would be distributed as Seller
Amounts, until the amount on deposit therein equals the Reserve Fund Cash
Requirement then in effect. Except as otherwise described below, the "Reserve
Fund Cash Requirement" with respect to any Distribution Date will equal the
lesser of (i) approximately $28,380,573 (i.e., 3.5% of 99.8% of the Aggregate
Net Investment Value as of the Initial Cutoff Date) and (ii) 5.25% of 99.8% of
the Aggregate Net Investment Value as of the last day of the related Collection
Period. Notwithstanding the foregoing, in no event will the Reserve Fund Cash
Requirement be less than approximately $24,326,205 (i.e., 3.0% of 99.8% of the
Aggregate Net Investment Value as of the Initial Cutoff Date) until such time as
the Certificate Balance as of the related Distribution Date (after giving effect
to reductions in the Certificate Balance on such Distribution Date) is less than
such amount, at which time the Reserve Fund Cash Requirement will equal such
Certificate Balance.
So long as all of the Reserve Fund Tests (as described under "Security for
the Certificates -- The Accounts -- The Reserve Fund -- Reserve Fund Tests") are
satisfied, the Reserve Fund Cash Requirement is expected to be approximately
$28,380,573 for each Distribution Date relating to the Revolving Period.
Reserve Fund Supplemental Requirement. On each Deposit Date on which
withdrawals are to be made from the Reserve Fund in order (a) to deposit into
the Distribution Account an amount equal to the Required Amount, or (b) to make
any other payments to Certificateholders or otherwise from the Reserve Fund, as
described under "Description of the Certificates -- Distributions on the
Certificates -- Distributions of Interest", to the extent that the cash balance
in the Reserve Fund is insufficient to make such deposits or payments (a
"Reserve Fund Deficiency"), the Seller shall be required to deposit into the
Reserve Fund an additional cash amount which is limited to the lesser of (i)
such Reserve Fund Deficiency, and (ii) the sum of approximately (A) $4,054,368
(i.e., 0.5% of 99.8% of the Aggregate Net Investment Value as of the Initial
Cutoff Date), plus (B) the aggregate of all sums previously released to the
Seller from the Reserve Fund as a
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result of a reduction for any reason (other than by reason of the Certificate
Balance being less than approximately $24,326,205) of the Reserve Fund Cash
Requirement below the amount of the Initial Deposit, less (C) all amounts
previously deposited by or on behalf of the Seller into the Reserve Fund to
satisfy a Reserve Fund Deficiency (the "Reserve Fund Supplemental Requirement").
Payment of the Reserve Fund Supplemental Requirement will be an obligation
of the Seller with respect to the Reserve Fund. In the event that there is a
Reserve Fund Deficiency, the Reserve Fund Supplemental Requirement will
supplement the cash available in the Reserve Fund to the limited extent
described above. There can be no assurance that the Seller will have sufficient
cash to fund all or a part of any Reserve Fund Deficiency or to meet its
obligation to pay the Reserve Fund Supplemental Requirement. However, pursuant
to the Support Agreement, World Omni has agreed under certain circumstances to
provide or arrange for financial assistance in order to ensure that the Seller
maintains positive partners' capital. The Support Agreement will not constitute
a guarantee by World Omni of any obligations of the Seller, including payment of
any Reserve Fund Supplemental Requirement. See "The Seller" for further
information in this regard.
Reserve Fund Tests. Notwithstanding the foregoing calculations of the
Reserve Fund Cash Requirement and the Reserve Fund Supplemental Requirement, in
the event that any Residual Value Test, the Charge-off Rate Test or the
Delinquency Test (collectively, the "Reserve Fund Tests") is not satisfied as of
any Determination Date or if the related cure period is in effect, the Reserve
Fund Cash Requirement for the related Distribution Date will be an amount
calculated pursuant to a formula (the "Alternate Reserve Fund Formula") that
will be equal to the lesser of (i) two times the Reserve Fund Cash Requirement
and (ii) the Certificate Balance as of such Distribution Date (after giving
effect to any reduction in the Certificate Balance on such Distribution Date).
The Alternate Reserve Fund Formula will be utilized to determine the Reserve
Fund Cash Requirement on all future Distribution Dates until the Distribution
Date as of which the related Reserve Fund Test is "cured" and all other Reserve
Fund Tests are satisfied or cured, as described below. Notwithstanding the
foregoing, as described under "Additional Document Provisions -- The Servicing
Agreement -- Compliance with ERISA", in the event that the ERISA Compliance Test
is not satisfied on any Determination Date, the Reserve Fund Cash Requirement
shall be unlimited as of the related Distribution Date, and all Excess
Collections and other amounts described above in respect of each Distribution
Date will be deposited in the Reserve Fund until the Distribution Date following
the Determination Date on which the ERISA Compliance Test has been satisfied.
(Agreement, Section 1.01).
The "Residual Value Tests" will be comprised of a Turned-In Vehicle Test, a
Realization Test and an Appraisal Test. The "Turned-In Vehicle Test" will not be
satisfied as of a Determination Date if with respect to the related Collection
Period, the number of Leased Vehicles returned to the Servicer during such
Collection Period relating to Contracts that became Matured Contracts during
such Collection Period is greater than 50% of all Contracts that were Current
Contracts as of the beginning of such Collection Period and had been scheduled
to become Matured Contracts during such Collection Period (provided that at
least __ such Contracts that were Current Contracts at the beginning of such
Collection Period were scheduled to become Matured Contracts during such
Collection Period). The "Realization Test" will not be satisfied on a
Determination Date if (i) with respect to the related Collection Period the
number of Leased Vehicles returned to the Servicer during such period relating
to Contracts that became Matured Contracts during such period is greater than
25% of all Contracts that were Current Contracts as of the beginning of such
Collection Period and had been scheduled to become Matured Contracts during such
period, and (ii) the average Net Matured Leased Vehicle Proceeds during the
three immediately preceding calendar months (or the months of September and
October 1996 in the case of the November 1996 Determination Date) is less than
75% of the average Residual Values of such Leased Vehicles. The "Appraisal Test"
will not be satisfied if, as of the most recent annual appraisal to be conducted
by an independent forecaster of vehicle wholesale values in October of each
year, beginning October 1997 (the "Annual Appraisal"), the aggregate appraised
residual values of a randomly selected sample of Leased Vehicles relating to
Current Contracts (as determined by such independent forecaster) is less than
75% of the aggregate Residual Values of such Leased Vehicles; provided that any
portion of the appraised value in excess of the related Residual Value will not
be included in the foregoing calculation. (Agreement, Section 1.01).
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The "Charge-off Rate Test" will not be satisfied if, with respect to any
Determination Date the average of the Charge-off Rates for the three immediately
preceding calendar months (or the months of September and October 1996 in the
case of the November 1996 Determination Date) is greater than 2.75%. The
"Delinquency Test" will not be satisfied if, with respect to any Determination
Date the average of the Delinquency Rates for the three immediately preceding
calendar months (or the months of September and October 1996 in the case of the
November 1996 Determination Date) is greater than 1.75%. The "Charge-off Rate"
with respect to any calendar month will be the Discounted Principal Balance of
all Contracts that became Charged-off Contracts during such month, less all Net
Repossessed Vehicle Proceeds and other Net Liquidation Proceeds collected during
such month with respect to Charged-off Contracts, all divided by the average of
the Aggregate Net Investment Value as of the last day of such month and the
preceding month. Such result will then be multiplied by twelve to produce an
annualized rate. The "Delinquency Rate" for any calendar month will be the
number of Current Contracts that are 61 days or more delinquent, whether or not
the related Leased Vehicles have been repossessed (or repossession proceedings
in respect thereof have been initiated), but which have not yet been sold or
otherwise disposed of, divided by the aggregate number of Current Contracts, in
each case as of the last day of such month. (Agreement, Section 1.01).
"Current Contracts" will be all Contracts other than Charged-off,
Liquidated, Matured and Additional Loss Contracts. A "Liquidated Contract" will
be a Contract that has been the subject of a Prepayment in full or otherwise has
been paid in full. An "Additional Loss Contract" will be a Contract that has
been sold or otherwise disposed of by the Servicer, acting on behalf of the
Origination Trust, to pay an Additional Loss Amount.
The Reserve Fund Cash Requirement for a Distribution Date will no longer be
required to be calculated pursuant to the Alternate Reserve Fund Formula if the
related Reserve Fund Test has been cured and all other Reserve Fund Tests have
been satisfied or cured. Any previously failed Turned-In Vehicle Test or
Realization Test will be cured if such Reserve Fund Test has been satisfied on
average for a period of 12 consecutive calendar months as of the Distribution
Date falling on the annual anniversary of the occurrence of such failure or, if
not then satisfied, as of each Distribution Date falling semiannually
thereafter, and has met or exceeded the minimum percentage requirements for each
of the three immediately preceding calendar months. Notwithstanding the
foregoing, only the second clause of the Realization Test need be satisfied to
cure a previously failed Realization Test. Any previously failed Appraisal Test,
Charge-off Rate Test or Delinquency Test will be cured on any subsequent
Distribution Date as of which such test is satisfied. (Agreement, Section 1.01).
The Seller may, from time to time after the date of this Prospectus,
request each Rating Agency to approve (a) a formula for determining the Reserve
Fund Cash Requirement and/or the Reserve Fund Supplemental Requirement that is
different from the one described above (including using different Reserve Fund
Tests or different cures for failures thereof) that would result in a decrease
in the amount of the Reserve Fund Cash Requirement and/or the Reserve Fund
Supplemental Requirement or (b) a change in the manner by which the Reserve Fund
is funded, which change could include borrowings by the Seller to fund all or a
portion of the Initial Deposit (which borrowings would be payable from assets or
cash flow otherwise payable to the Seller) or to meet the Reserve Fund Cash
Requirement and/or the Reserve Fund Supplemental Requirement. If each Rating
Agency delivers a letter to the Trustee to the effect that the use of any such
new formula or change will not result in a qualification, reduction or
withdrawal of its then-current rating of any Class of Certificates, then such
new formula or change will be implemented and, to the extent necessary, the
Agreement will be amended, without the consent of any Certificateholder or
Certificate Owner. (Agreement, Section 9.01).
Withdrawals from the Reserve Fund. On each Deposit Date the Trustee shall
withdraw from the Reserve Fund, to the extent available, and deposit in the
Distribution Account an amount equal to the Required Amount. Amounts on deposit
in the Reserve Fund will also be available to make certain other payments to
Certificateholders and the Seller as described under "Security for the
Certificates -- The Accounts -- The Reserve Fund". Monies on deposit in the
Reserve Fund on a Distribution Date in excess of the Reserve Fund Cash
Requirement will be released to the Seller. Any such amounts received by the
Seller shall be free of any claim of the Trust, the Trustee or the Investor
Certificateholders and shall not be available
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to the Trustee or the Trust for the purpose of making deposits to the Reserve
Fund or making payments to the Investor Certificateholders, nor shall the Seller
be required to refund any amount properly received by it. (Agreement, Sections
3.03 and 3.04).
THE CONTINGENT AND EXCESS LIABILITY INSURANCE POLICIES
In addition to the physical damage and liability insurance coverage
required to be obtained and maintained by the lessees pursuant to the Contracts,
and as additional protection in the event that any lessee fails to maintain all
such required insurance, World Omni maintains contingent liability insurance
with Gulf Insurance Company which provides coverage of up to $2.0 million per
occurrence (with no annual or aggregate cap on the number of claims thereunder)
for bodily injury and property damage suffered by third persons caused by any
vehicle owned by any insured. World Omni also maintains substantial amounts of
excess insurance coverage for which the Origination Trustee is an additional
named insured (together with the aforementioned primary contingent liability
insurance policy, the "Contingent and Excess Liability Insurance Policies").
These insurance policies collectively provide insurance coverage in excess of
$10 million per accident, and permit multiple claims in any policy period. To
the extent that such coverage were exhausted and damages were assessed against
the Origination Trust, claims could be imposed against the assets of the
Origination Trust. In such event, investors in the Class A Certificates could
incur a loss on their investment. However, the Origination Trustee will be an
additional named insured under the Contingent and Excess Liability Insurance
Policies and payments made thereunder will constitute SUBI Assets. To the extent
that payments under the Contingent and Excess Liability Insurance Policies are
made to third party claimants, they will reduce the Additional Loss Amounts that
otherwise would be required to be paid out of the SUBI Assets. See "Risk
Factors -- Vicarious Tort Liability", "-- Structural
Considerations -- Allocation of Origination Trust Liabilities" and
"-- Third-Party Liens on SUBI Assets" and "Certain Legal Aspects of the
Contracts and the Leased Vehicles -- Vicarious Tort Liability" for a discussion
of related risks.
With respect to damage to the Leased Vehicles, each lessee is required by
the related Contract to maintain comprehensive and collision insurance. As more
fully described under "Additional Document Provisions -- The Servicing
Agreement -- Insurance on Leased Vehicles", World Omni will be required to
police the maintenance of lessee-required insurance and, under certain
circumstances, will be required to make payments in respect thereof. In the
event that all of the foregoing insurance coverage were exhausted and no
third-party reimbursement for such damage to a Leased Vehicle were available,
investors in the Class A Certificates could incur a loss on their investment.
The Servicing Agreement will provide that so long as any Certificates are
outstanding, neither the Origination Trustee nor World Omni may terminate or
cause the termination of any Contingent and Excess Liability Insurance Policy
unless a replacement insurance policy providing at least the same amount of
coverage and which does not provide for any annual or aggregate cap on payments
thereunder is obtained and each Rating Agency has delivered a letter to the
Trustee to the effect that the obtaining of any such replacement insurance will
not cause its then-current rating of any Class of Certificates to be qualified,
reduced or withdrawn. The foregoing obligations of World Omni will survive any
termination of World Omni as Servicer under the Servicing Agreement. (Servicing
Agreement, Section 9.10).
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ADDITIONAL DOCUMENT PROVISIONS
ADDITIONAL AGREEMENT PROVISIONS
Certain provisions of the Agreement are described under "Description of the
Certificates". The following summarizes certain additional provisions of the
Agreement.
No Petition
The Trustee will agree not to institute, or join in, any bankruptcy or
similar proceeding against the Seller, WOLSI, ALFI L.P., ALFI, the Origination
Trust or the Origination Trustee until one year and one day after the later of
(i) payment of the Certificates in full and (ii) final payment of all other
financings involving interests in the Origination Trust (including the
transaction described herein and all other transactions involving the UTI and
each Other SUBI). (Agreement, Section 6.16).
Amendment
The Agreement may be amended by the Seller and the Trustee, without the
consent of the Certificateholders, to cure any ambiguity, to correct or
supplement any provision therein which may be inconsistent with any other
provision therein, to add any other provisions with respect to matters or
questions arising under the Agreement which are not inconsistent with the
provisions of the Agreement or to add or amend any provision therein in
connection with permitting transfers of the Class B Certificates; provided that
any such action will not, in the good faith judgment of the parties, materially
and adversely affect the interest of any Certificateholder and the Trustee shall
have been furnished with an opinion of counsel to the effect that such amendment
will not adversely and materially affect the interest of any Certificateholder.
(Agreement, Section 9.01). See "Security for the Certificates -- The
Accounts -- The Reserve Fund -- The Reserve Fund Cash Requirement".
The Agreement may also be amended from time to time by the Seller and the
Trustee (including with respect to changing the formula for determining the
Reserve Fund Cash Requirement and/or the Reserve Fund Supplemental Requirement,
the manner in which the Reserve Fund or Residual Value Surplus Account is
funded, the need for the Residual Value Surplus Account, changing the remittance
schedule for collection deposits in the Distribution Account or changing the
definition of "Permitted Investments") if (a) the Trustee has been furnished
with a letter from each Rating Agency to the effect that such amendment would
not cause its then-current rating on any Class of Certificates to be qualified,
reduced or withdrawn or (b) the Trustee has received the consent of the holders
of Certificates evidencing not less than 51% of the Voting Interests of the
Class A Certificates and the Class B Certificates, voting together as a single
class, for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Agreement or of modifying in any manner
the rights of each Class of Certificateholders; provided, however, that (y) no
such amendment shall increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on the SUBI or the
SUBI Certificate or distributions that shall be required to be made on any Class
of Certificates or the applicable Certificate Rate and (z) no amendment of any
type shall reduce the percentage of the aggregate Voting Interests of the
Certificates of any Class required to consent to any such amendment, in each
case without the consent of all Certificateholders and Certificate Owners.
List of Certificateholders
Upon a written request of the Servicer, the Trustee, as Certificate
Registrar, will provide to the Servicer within 15 days after receipt of such
request a list of the names and addresses of all Certificateholders. In
addition, three or more Certificateholders or holders of Certificates evidencing
not less than 25% of the Voting Interests of any Class of Certificates, upon
compliance by such Certificateholders with certain provisions of the Agreement,
may request that the Trustee, as Certificate Registrar, afford such
Certificateholders access during business hours to the current list of
Certificateholders for purposes of communicating with other Certificateholders
with respect to their rights under the Agreement. (Agreement, Section 4.06). See
"Description of the Certificates -- Book-Entry Registration" and "-- Definitive
Certificates".
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The Agreement will not provide for the holding of any annual or other
meetings of Certificateholders.
The Trustee
First Bank will be the Trustee under the Agreement. The Corporate Trust
Office of the Trustee is located at 400 North Michigan Avenue, Chicago, Illinois
60611. First Bank is not affiliated with World Omni, although it does act as a
service provider to World Omni.
The Trustee may resign at any time, in which event the Seller will be
obligated to appoint a successor Trustee. The Seller may also remove the Trustee
if the Trustee ceases to be eligible to continue as such under the Agreement,
becomes legally unable to act or becomes insolvent. In such circumstances, the
Seller will be obligated to appoint a successor Trustee. Any resignation or
removal of the Trustee and appointment of a successor Trustee will not become
effective until acceptance of the appointment by such successor Trustee.
(Agreement, Section 6.07).
The Trustee must be a corporation organized under the laws of a state of
the United States, the District of Columbia or the Commonwealth of Puerto Rico,
authorized to exercise corporate trust powers under those laws, and subject to
supervision or examination by federal or state laws, with a combined capital and
surplus of at least $50,000,000 and a long-term deposit rating no lower than
Baa3 by Moody's, or must be otherwise acceptable to each Rating Agency. A
co-trustee or separate trustee appointed as described above need not meet these
eligibility requirements. (Agreement, Sections 6.06 and 6.10).
Holders of Certificates evidencing not less than 25% of the Voting
Interests of the Class A Certificates and the Class B Certificates, voting
together as a single class, generally will have the power to direct any
proceeding for any remedy available to the Trustee under the Agreement, and the
exercise of any trust or power conferred on the Trustee by the Agreement
(including actions by the Trustee in its capacity as a party to, or a
third-party beneficiary of, the SUBI Trust Agreement or the Servicing
Agreement). However, the Trustee will not be required to follow such a direction
if, after being advised by counsel, it concludes that the action is unlawful, or
if it in good faith determines that the proceedings directed would be illegal,
would subject it to personal liability or would be unduly prejudicial to the
rights of other Certificateholders. (Agreement, Section 6.15).
A Certificateholder may institute proceedings under the Agreement, but only
if such holder previously has given to the Trustee written notice of default and
unless the holders of Certificates evidencing not less than 25% of the Voting
Interests of the Class A Certificates and the Class B Certificates, voting
together as a single class, have made written request upon the Trustee to
institute such proceeding in its own name as Trustee and have offered to the
Trustee reasonable indemnity and the Trustee for 30 days has neglected or
refused to institute any such proceeding. (Agreement, Section 9.03). The Trustee
will be under no obligation to exercise any of the trusts or powers vested in it
by the Agreement or to make any investigation of matters arising thereunder or
to institute, conduct or defend any litigation thereunder or in relation thereto
at the request, order or direction of any of the Certificateholders, unless such
holders have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby.
(Agreement, Section 6.02). Certificateholders will have no express right to
institute a proceeding directly under the SUBI Trust Agreement or the Servicing
Agreement.
Governing Law
The Agreement will be governed by the laws of the State of Illinois.
THE SUBI TRUST AGREEMENT
The SUBI, the Other SUBIs and the UTI
ALFI L.P. is the grantor and (as holder of the UTI) a beneficiary of the
Origination Trust. In its capacity as grantor, ALFI L.P. will from time to time
assign, transfer, grant and convey (or cause to be assigned, transferred,
granted and conveyed) to the Origination Trustee in trust the Origination Trust
Assets. (SUBI Trust Agreement, Section 2.01). ALFI L.P. will hold the UTI, which
represents a beneficial interest in all
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Origination Trust Assets other than the SUBI Assets and the Other SUBI Assets.
(SUBI Trust Agreement, Section 4.01). ALFI L.P. has pledged (and may in the
future pledge) the UTI as security for obligations to third-party lenders, and
has created and sold (and may in the future create and sell or pledge) Other
SUBIs in connection with financings similar to the transaction described herein.
Each holder or pledgee of the UTI and any Other SUBI will be required to
expressly disclaim any interest in the Origination Trust Assets other than the
UTI Assets or the Other SUBI Assets, respectively, and to fully subordinate any
claims to such other Origination Trust Assets in the event that this disclaimer
is not given effect. Except under the limited circumstances described under
"Risk Factors -- Structural Considerations -- Allocation of Origination Trust
Liabilities", the SUBI Assets will not be available to make payments in respect
of, or pay expenses relating to, the UTI or any Other SUBIs, and the Other SUBI
Assets evidenced by any Other SUBIs will not be available to make payments on,
or pay expenses relating to, the SUBI, the UTI or any other Other SUBI.
Each Other SUBI will be created pursuant to a supplement to the Origination
Trust Agreement (each, an "Other SUBI Supplement") which will amend the
Origination Trust Agreement only with respect to the Other SUBI to which it
relates. The SUBI Supplement will amend the Origination Trust Agreement only as
it relates to the SUBI and no Other SUBI Supplement will amend the Origination
Trust Agreement as it relates to the SUBI. (SUBI Trust Agreement, Section 4.02).
All Origination Trust Assets, including the SUBI Assets, will be owned by
the Origination Trustee on behalf of the beneficiaries of the Origination Trust.
The SUBI Assets will be segregated from the rest of the Origination Trust Assets
on the books and records of the Origination Trustee and the Servicer and the
holders of other beneficial interests in the Origination Trust (including the
UTI and any Other SUBIs) will have no rights to the SUBI Assets. Liabilities of
the Origination Trust shall be allocated to the SUBI Assets, the UTI Assets or
Other SUBI Assets, respectively, if incurred with respect thereto, or will be
allocated pro rata among all Origination Trust Assets if incurred with respect
to the Trust Assets generally. (SUBI Trust Agreement, Section 7.01; Servicing
Agreement, Section 2.02).
Additional Loss Amounts will be incurred in the event of any uninsured
liability to third parties (i.e., litigation risk) on the part of the
Origination Trust as ultimately is borne by the SUBI Assets, whether such
liability is incurred (i) with respect to the SUBI Assets and is therefore
allocated to the SUBI Assets pursuant to the SUBI Trust Agreement, (ii) with
respect to the Origination Trust Assets generally and therefore a pro rata
portion of such liability is allocated to the SUBI Assets pursuant to the SUBI
Trust Agreement or (iii) with respect to UTI Assets or Other SUBI Assets if such
UTI Assets or Other SUBI Assets are insufficient to pay such liability. See
"Risk Factors -- Structural Considerations -- Allocation of Origination Trust
Liabilities" and " -- Third-Party Liens on SUBI Assets" for a discussion of
related risks. For purposes of making calculations with respect to distributions
on the Certificates, "Additional Loss Amounts" will include both losses incurred
with respect to the foregoing uninsured liabilities and monies reserved within
the SUBI Collection Account against future losses in respect of such liabilities
by the Servicer on behalf of the Trustee. (SUBI Trust Agreement, Sections 7.01
and 10.01).
Special Obligations of ALFI L.P. as Beneficiary and Grantor
ALFI L.P., as grantor, will be liable for all debts and obligations arising
with respect to the Origination Trust Assets or the operation of the Origination
Trust; provided, however, that its liability with respect to any pledge of the
UTI and any assignee or pledgee of a SUBI or SUBI Certificate or Other SUBI or
Other SUBI Certificate shall be as set forth in the financing documents relating
thereto. ALFI, as the general partner of ALFI L.P., the grantor, is required at
all times to maintain a minimum net worth of $10 million. To the extent that
ALFI L.P. shall have paid or suffered any liability or expense with respect to
the Origination Trust Assets or the operation of the Origination Trust, ALFI
L.P. shall be indemnified, defended and held harmless out of the assets of the
Origination Trust against any such liability or expense (including reasonable
attorneys' fees and expenses). (SUBI Trust Agreement, Section 4.03).
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Origination Trustee Duties and Powers; Fees and Expenses
Pursuant to the SUBI Trust Agreement, the Origination Trustee will be
required to, among other things, (i) apply for and maintain (or cause to be
applied for and maintained) all licenses, permits and authorizations necessary
and appropriate to accept assignments of the Contracts and the Leased Vehicles
and to carry out its duties as Origination Trustee, including motor vehicle
dealer licenses, and (ii) file (or cause to be filed) applications for
certificates of title as are necessary and appropriate so as to cause the
Origination Trustee to be recorded as the holder of legal title of record to the
Leased Vehicles. (SUBI Trust Agreement, Section 5.01). In carrying out the
foregoing duties, the Origination Trustee will be required to exercise the same
degree of care and skill as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs. (SUBI Trust
Agreement, Section 5.02).
The Origination Trustee may be replaced by ALFI L.P. only if it ceases to
be qualified in accordance with the terms of the SUBI Trust Agreement and shall
be removed if certain representations and warranties made by the Origination
Trustee therein prove to have been materially incorrect when made, or in certain
events of bankruptcy or insolvency. (SUBI Trust Agreement, Section 6.03). The
Securitization Trustee, as holder of the SUBI Certificate, on behalf of the
Certificateholders may, or at the direction of holders of Certificates
evidencing not less than 51% of the Voting Interests of the Class A Certificates
and the Class B Certificates, voting together as a single class, will, exercise
its powers under the Origination Trust Agreement to cause the Trust Agent to be
removed or replaced for a material breach of its obligations. (SUBI Trust
Agreement, Sections 5.03 and 10.02).
The Origination Trustee will make no representations as to the validity or
sufficiency of the SUBI, the SUBI Certificate or the Retained SUBI Interest
(other than the execution and authentication of the SUBI Certificate and the
certificate evidencing the Retained SUBI Interest), or of any Contract, Leased
Vehicle or related document, will not be responsible for performing any of the
duties of ALFI L.P. or the Servicer and will not be accountable for the use or
application by any owners of beneficial interests in the Origination Trust
Assets of any funds paid in respect of the Origination Trust Assets, or the
investment of any of such monies before such monies are deposited into the
accounts relating to the SUBI, the Other SUBIs and the UTI. The Origination
Trustee will not independently verify the Contracts or the Leased Vehicles.
(SUBI Trust Agreement, Section 5.04). The duties of the Origination Trustee will
generally be limited to the acceptance of assignments of lease contracts, the
titling of the related leased vehicles in the name of the Origination Trustee,
the creation of the SUBI, the Other SUBIs and the UTI, the maintenance of the
SUBI Collection Account, the Residual Value Surplus Account and accounts
relating to the Other SUBIs and the UTI and the receipt of the various
certificates, reports or other instruments required to be furnished to the
Origination Trustee under the SUBI Trust Agreement, in which case it will only
be required to examine them to determine whether they conform to the
requirements of the SUBI Trust Agreement. (SUBI Trust Agreement, Section 5.01).
The Origination Trustee will be under no obligation to exercise any of the
rights or powers vested in it by the SUBI Trust Agreement or to make any
investigation of matters arising thereunder or to institute, conduct or defend
any litigation thereunder or in relation thereto at the request, order or
direction of ALFI L.P., the Servicer or by the holders of a majority in interest
in the SUBI, unless such party or parties have offered to the Origination
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby. The reasonable expenses of
every such exercise of rights or powers or examination shall be paid by the
party or parties requesting such exercise or examination or, if paid by the
Origination Trustee, shall be a reimbursable expense of the Origination Trustee.
(SUBI Trust Agreement, Sections 5.03 and 6.08).
The Origination Trustee may enter from time to time into one or more agency
agreements (each, an "Agency Agreement") with such person or persons, including
without limitation any affiliate of the Origination Trustee (each, a "Trust
Agent"), as are by experience and expertise qualified to act in a trustee
capacity and otherwise acceptable to ALFI. The Origination Trustee has engaged
First Bank as the Trust Agent. Pursuant to the Agency Agreement, the Trust Agent
shall perform each and every obligation of the Origination Trustee under the
SUBI Trust Agreement. (SUBI Trust Agreement, Section 5.03).
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The Origination Trustee shall be paid out of Origination Trust Assets
reasonable compensation and reimbursement of all reasonable expenses (including
reasonable attorneys' fees). (SUBI Trust Agreement, Section 6.08). However, with
regard to the SUBI Assets allocable to the SUBI Interest, this requirement is
subject to the provisions regarding Capped Origination Trust Administrative
Expenses described under "Description of the Certificates -- Distributions on
the Certificates -- Distributions of Interest".
Indemnity of Trustee and Trust Agents
The Origination Trustee and each Trust Agent will be indemnified and held
harmless out of and to the extent of the Origination Trust Assets with respect
to any loss, liability or expense, including reasonable attorneys' fees and
expenses (collectively "Claims"), arising out of or incurred in connection with
(i) any of the Origination Trust Assets (including without limitation any Claims
relating to lease contracts or leased vehicles of the Origination Trust, any
personal injury or property damage claims arising with respect to any such
leased vehicle or any claim with respect to any tax arising with respect to any
Origination Trust Asset) or (ii) the Origination Trustee's or the Trust Agent's
acceptance or performance of the trusts and duties contained in the Agreement or
any Agency Agreement. Notwithstanding the foregoing, neither the Origination
Trustee nor any Trust Agent will be indemnified or held harmless out of the
Origination Trust Assets as to any Claim (i) for which World Omni shall be
liable pursuant to the Servicing Agreement, (ii) incurred by reason of the
Origination Trustee's or such Trust Agent's willful misfeasance, bad faith or
negligence or (iii) incurred by reason of the Origination Trustee's or Trust
Agent's breach of its respective representations and warranties pursuant to the
SUBI Trust Agreement or the Servicing Agreement. Such indemnities may result in
Additional Loss Amounts to the extent payable in respect of the SUBI Assets or
allocated to the SUBI. (SUBI Trust Agreement, Section 5.05).
Termination
The Origination Trust and the respective obligations and responsibilities
of ALFI L.P. and the Origination Trustee shall terminate upon the last to occur
of (i) the payment to ALFI L.P. and each permitted purchaser, assignee and
pledgee of any of ALFI L.P.'s interests in the Origination Trust (including the
Trustee, with respect to the SUBI Interest) of all amounts and obligations
required to be paid to them, and the expiration or termination of all financings
secured by the Origination Trust Assets by their respective terms and (ii) the
maturity or liquidation and the disposition of all Origination Trust Assets and
the disposition to or upon the order of ALFI L.P. or any permitted purchaser,
assignee or pledgee of all net proceeds thereof. (SUBI Trust Agreement, Section
8.01).
No Petition
The Origination Trustee and the Trust Agent will agree not to institute, or
join in, any bankruptcy or similar proceeding against the Seller, WOLSI, ALFI
L.P. or ALFI until one year and one day after final payment of all financings
involving interests in the Origination Trust. (SUBI Trust Agreement, Section
6.09). Each pledgee or assignee of any UTI or other SUBI must give a similar
non-petition covenant. (SUBI Trust Agreement, Sections 4.01 and 4.02).
Amendment
The SUBI Trust Agreement may be amended by written agreement between ALFI
L.P. and the Origination Trustee, with the approval of the Trustee (which may be
given in the circumstances described under "Additional Document
Provisions -- Additional Agreement Provisions -- Amendment"). To the extent that
any such amendment relates to or affects the UTI or any Other SUBI in addition
to the SUBI, the SUBI Certificate or the SUBI Assets, such amendment may require
certain other approvals. (SUBI Trust Agreement, Sections 9.01 and 13.01).
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Governing Law
The SUBI Trust Agreement will be governed by the laws of the State of
Alabama. (SUBI Trust Agreement, Sections 9.02 and 13.02).
Trustee as Third-Party Beneficiary
As the holder of the SUBI Interest, the Trustee will be a third-party
beneficiary of the SUBI Trust Agreement. Therefore, the Trustee may, and, upon
the direction of Certificateholders representing at least 51% of the Voting
Interests of the Class A Certificates and the Class B Certificates (voting
together as a single class) will, exercise any right conferred by the SUBI Trust
Agreement upon a holder of any interest in the SUBI. (SUBI Trust Agreement,
Section 10.02).
THE SERVICING AGREEMENT
General
Pursuant to the Servicing Agreement, the Servicer will perform on behalf of
the Origination Trustee all of the obligations of the lessor under the
Contracts, including, but not limited to, collecting and posting payments,
responding to inquiries of the lessees, investigating delinquencies, sending
payment statements and reporting tax information to the lessees, paying costs of
disposition of Leased Vehicles related to Charged-off Contracts, Matured
Contracts and Additional Loss Contracts and policing the Contracts, commencing
legal proceedings to enforce a Contract on behalf of the Origination Trust,
administering the Contracts, including accounting for collections and furnishing
monthly and annual statements to the Origination Trustee with respect to
distributions and generating federal income tax information. The Origination
Trustee will furnish the Servicer with all powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out such
servicing and administrative duties under the Servicing Agreement. The Trustee
will be a third-party beneficiary of the Servicing Agreement. (Servicing
Agreement, Sections 2.01 and 12.12).
Custody of Contract Documents and Certificates of Title
To assure uniform quality in servicing the Contracts and World Omni's own
portfolio of automobile and light duty truck lease contracts and to reduce
administrative costs, the Origination Trustee will appoint World Omni, as
Servicer, to be its agent, bailee and custodian of the Contracts, the
certificates of title relating to the Leased Vehicles and insurance policies and
other documents relating to the Contracts, the related lessees and the Leased
Vehicles. Such documents will not be physically segregated from other automobile
and light duty truck lease contracts, certificates of title and insurance
policies and other documents relating to such lease contracts and leased
vehicles of World Omni, or those which World Omni services for others, including
those leased vehicles constituting Origination Trust Assets that are not
evidenced by the SUBI. The accounting records and computer systems of World Omni
will reflect the interests of the holders of interest in the SUBI in the Initial
Contracts, the Subsequent Contracts, the Initial Leased Vehicles, the Subsequent
Leased Vehicles and all related Contract Rights, and "protective" UCC financing
statements reflecting certain interests in the Contracts and the Contract Rights
will be filed, as more fully described under "Risk Factors -- Structural
Considerations -- Back-up Security Interest in Certain SUBI Assets" and under
"Certain Legal Aspects of the Contracts and Leased Vehicles -- Back-up Security
Interests". The Servicer will be responsible for filing all periodic sales and
use tax or property (real or personal) tax reports, periodic renewals of
licenses and permits, periodic renewals of qualification to act as a trust and a
business trust and other periodic governmental filings, registration or
approvals arising with respect to or required of the Origination Trustee or the
Origination Trust. (Servicing Agreement, Section 2.01).
Collections
The Servicer will service, administer and collect all amounts due on or in
respect of the Contracts. The Servicer will make reasonable efforts to collect
all such amounts and, in a manner consistent with the Servicing Agreement, will
be obligated to service the Contracts generally in accordance with customary and
usual procedures of institutions which service closed-end automobile and light
duty truck lease contracts and,
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to the extent more exacting, the procedures used by the Servicer in respect of
lease contracts serviced by it for its own account. (Servicing Agreement,
Sections 2.01 and 2.02).
Consistent with its usual procedures, the Servicer may, in its discretion,
extend the Maturity Date of any Contract by up to five months in the aggregate,
provided that no Contract may be extended more than five times and that the new
Maturity Date of any Contract so extended must not be later than the last day of
the month immediately preceding the month in which the Final Scheduled
Distribution Date occurs. The amount of any Extension Fee received by the
Servicer in connection with the extension of a Contract will be deposited into
the SUBI Collection Account. In the event that the Servicer extends a Contract
in contravention of the foregoing, the Servicing Agreement will require the
Servicer to deposit into the SUBI Collection Account an amount equal to the
Reallocation Payment in respect of such Contract on the Deposit Date relating to
the Collection Period in which such extension was granted, at which time such
Contracts and the related Leased Vehicles will no longer constitute SUBI Assets
as they will be reallocated as UTI Assets. (Servicing Agreement, Sections 2.02
and 9.02). See "World Omni -- Collection, Repossession and Disposition
Procedures" for further details regarding collection procedures.
As more fully described under "Security for the Certificates -- The
Accounts -- The SUBI Collection Account", unless the Servicer obtains a Servicer
Letter of Credit, the Servicer will deposit or cause to be deposited all
payments received on or in respect of the Contracts and the Leased Vehicles
(other than Security Deposits) into the SUBI Collection Account within two
Business Days after receipt.
Notification of Liens and Claims
The Servicer will be required to notify the Seller (in the event that World
Omni is not acting as the Servicer), the Trustee and the Origination Trustee as
soon as practicable of all liens or claims of whatever kind made by a third
party that would materially adversely affect the interests of, among others, the
Seller, the Origination Trust or any SUBI Asset (with respect to, among other
things, any Contract or Leased Vehicle). Following its learning of any such lien
or claim with respect to any Leased Vehicle, the Servicer will take whatever
actions it deems reasonably necessary to cause such lien or claim to be removed.
(Servicing Agreement, Sections 2.08 and 9.09). See "Risk Factors -- Structural
Considerations" for a discussion of the risk of liens on SUBI Assets and other
Origination Trust Assets.
Advances
On each Deposit Date, the Servicer will be obligated to make, by deposit
into the SUBI Collection Account, an advance in an amount equal to the aggregate
Monthly Payments due but not received during the related Collection Period with
respect to Contracts that are 31 days or more past due as of the end of the
related Collection Period, and the Servicer may (but shall not be required to)
make such an advance with respect to Contracts that are one or more days, but
less than 31 days, past due as of the end of the related Collection Period
(collectively, an "Advance"). (Servicing Agreement, Section 9.04).
Notwithstanding the foregoing, the Servicer will not be required to make an
Advance to the extent that such Advance would constitute a Nonrecoverable
Advance. (Servicing Agreement, Section 9.04). A "Nonrecoverable Advance" will be
any Advance that, in the reasonable judgment of the Servicer, may not be
ultimately recoverable by the Servicer from Net Liquidation Proceeds or
otherwise. (Servicing Agreement, Section 6.01). In making Advances, the Servicer
will assist in maintaining a regular flow of scheduled principal and interest
payments on the Contracts, rather than to guarantee or insure against losses.
Accordingly, all Advances shall be reimbursable to the Servicer, without
interest, if and when a payment relating to a Contract with respect to which an
Advance has previously been made is subsequently received. In addition, the
Servicer will be reimbursed for all Nonrecoverable Advances from collections on
or in respect of the Contracts and Leased Vehicles in general. (Servicing
Agreement, Section 9.02).
Security Deposits
The Contract Rights will include all rights under the Contracts to the
security deposits paid by the lessees at the time of origination of the
Contracts (the "Security Deposits"). As part of its general servicing
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obligations, the Servicer will retain possession of each Security Deposit
remitted by the lessees as an agent for the Origination Trust and will apply the
proceeds of such Security Deposits in accordance with the terms of the
Contracts, its customary and usual servicing procedures and applicable law.
However, in the event that any Contract becomes a Charged-off Contract or the
related Leased Vehicle is repossessed, the related Security Deposit will, to the
extent provided by applicable law and such Contract, constitute Liquidation
Proceeds. (Servicing Agreement, Section 2.04). The Origination Trustee may not
have an interest in the Security Deposits that is enforceable against third
parties until such time as they are deposited into the SUBI Collection Account.
The Servicer will not be required to segregate Security Deposits from its own
funds, and any income earned from any investment thereof by the Servicer shall
be for the account of the Servicer as additional servicing compensation.
Insurance on Leased Vehicles
Each lessee is required to maintain in full force and effect during the
term of a Contract a comprehensive collision and physical damage insurance
policy covering the actual cash value of the related Leased Vehicle and naming
the Origination Trustee, on behalf of the Origination Trust, as loss payee. Each
lessee also is required to maintain bodily injury and property damage liability
insurance in amounts equal to the greater of the amount prescribed by applicable
state law or industry standards as set forth in the Contract and naming the
Origination Trustee, on behalf of the Origination Trust, as an additional
insured. (Servicing Agreement, Section 2.11). Since lessees may choose their own
insurers to provide the required coverage, the specific terms and conditions of
their policies vary. If a lessee fails to obtain or maintain the required
insurance, the related Contract will be in default. It is the practice of World
Omni not to obtain insurance on behalf of and at the expense of the related
lessee but rather to repossess the related Leased Vehicle. In the event that a
required insurance policy has lapsed, has not been maintained in full force and
effect or the Servicer has failed to maintain the right to receive the proceeds
thereof for damage to or destruction of the related Leased Vehicle, the
Servicing Agreement will require World Omni to pay promptly into the SUBI
Collection Account all such amounts as would otherwise have been recoverable as
Insurance Proceeds. This obligation will survive any termination of World Omni
as Servicer under the Servicing Agreement. (Servicing Agreement, Section 2.11).
World Omni does not require lessees to carry credit disability, credit life
or credit health insurance or other similar insurance coverage which provides
for payments to be made on the Contracts on behalf of such lessees in the event
of disability or death. To the extent that such insurance coverage is obtained
on behalf of a lessee, payments received in respect of such coverage may be
applied to payments on the related Contract to the extent that the lessee's
beneficiary chooses to do so.
Realization Upon Charged-off Contracts
The Servicer will use commercially reasonable efforts to repossess and
liquidate the Leased Vehicle relating to a Contract that comes into and
continues in default and for which no satisfactory arrangements can be made for
collection of delinquent payments. Such liquidation may be through repossession
of such Leased Vehicle and disposition at a public or private sale, or the
Servicer may take any other action permitted by applicable law. The Servicer may
enforce all rights under any such Contract, sell the Leased Vehicle in
accordance with the Contract and commence and prosecute any proceedings in
connection with the Contract. In connection with any such repossession, the
Servicer will follow such practices and procedures as it deems necessary or
advisable and as are normal and usual for responsible holders of closed-end
automobile and light duty truck lease contracts and, to the extent more
exacting, the practices and procedures used by the Servicer in respect of any
such lease contracts serviced by it for its own account, and in any event in
compliance with all applicable laws. The Servicer will be required to repair the
Leased Vehicle if it reasonably determines that such repairs will increase the
related Net Repossessed Vehicle Proceeds. The Servicer will be responsible for
all costs and expenses incurred in connection with the sale or other disposition
of Leased Vehicles related to Charged-off Contracts and other Contracts as to
which a lessee has defaulted and the related Leased Vehicles, but will be
entitled to reimbursement to the extent that such costs constitute Repossessed
Vehicle Expenses or other Liquidation Expenses or expenses recoverable under an
applicable insurance policy. Proceeds from the sale or other disposition of
repossessed Leased Vehicles will constitute Repossessed Vehicle Proceeds and
will
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be deposited into the SUBI Collection Account. The Servicer will be entitled to
reimbursement of all related Repossessed Vehicle Expenses from amounts on
deposit in the SUBI Collection Account upon presentation to the Trustee of an
officer's certificate of the Servicer and Principal Collections in respect of a
Collection Period will include all Net Repossessed Vehicle Proceeds collected
during such Collection Period. (Servicing Agreement, Sections 2.06 and 9.02).
Matured Leased Vehicle Inventory
Upon the scheduled maturity of a Contract, the related lessee has the
option to acquire the related Leased Vehicle for an amount equal to its Residual
Value plus any applicable taxes and all other incidental charges which may be
due under such Contract. If the lessee chooses not to exercise this option but
instead returns the Leased Vehicle to the Servicer, such Leased Vehicle will be
placed in Matured Leased Vehicle Inventory, and the Servicer, acting on behalf
of the Origination Trust, will sell or otherwise dispose of the Leased Vehicle
in a manner similar to that for a repossessed Leased Vehicle. (Servicing
Agreement, Section 2.06).
Principal Collections in respect of a Collection Period will include all
Net Matured Leased Vehicle Proceeds collected during such Collection Period. All
related Matured Leased Vehicle Proceeds will be deposited into the SUBI
Collection Account. Related Matured Leased Vehicle Expenses may be released from
amounts on deposit in the SUBI Collection Account or the Residual Value Surplus
Account upon presentation of an officer's certificate by the Servicer. Any
Residual Value Surplus for a Collection Period will be deposited into the
Residual Value Surplus Account. (SUBI Trust Agreement, Section 10.01; Servicing
Agreement, Section 9.02).
Records, Servicer Determinations and Reports
The Servicer will retain or cause to be retained all data (including,
without limitation, computerized records, operating software and related
documentation) relating directly to or maintained in connection with the
servicing of the Contracts. Upon the occurrence and continuance of an Event of
Servicing Termination and termination of the Servicer's obligations under the
Servicing Agreement, the Servicer will use commercially reasonable efforts to
effect the orderly and efficient transfer of the servicing of the Contracts to a
successor servicer. (Servicing Agreement, Sections 2.03 and 9.03).
The Servicer will perform certain monitoring and reporting functions on
behalf of the Seller, the Trustee, the Origination Trustee and
Certificateholders, including the preparation and delivery to the Trustee, the
Origination Trustee and each Rating Agency of a monthly certificate, on or
before each Determination Date, setting forth all information necessary to make
all distributions required in respect of the related Collection Period (the
"Servicer's Certificate"), and the preparation and delivery of monthly
statements setting forth information described under "Description of the
Certificates -- Statements to Certificateholders", and an annual officer's
certificate specifying the occurrence and status of any Event of Servicing
Termination. (Servicing Agreement, Section 10.01).
Evidence as to Compliance
The Servicing Agreement will provide that a firm of nationally recognized
independent accountants will furnish to the Trustee on or before April 30 of
each year, beginning April 30, 1997, a statement as to compliance by the
Servicer during the preceding twelve months ended December 31 (or since the
Closing Date in the case of the first such statement) with certain standards
relating to the servicing of the Contracts, the Servicer's accounting records
and computer files with respect thereto and certain other matters. (Servicing
Agreement, Sections 3.02 and 10.02).
The Servicing Agreement will also provide for delivery to the Trustee, on
or before April 30 of such year, beginning April 30, 1997, of a certificate
signed by an officer of the Servicer stating that the Servicer has fulfilled its
obligations under the Agreement throughout the preceding twelve months ended
December 31 (or since the Closing Date in the case of the first such
certificate) or, if there has been a default in the fulfillment of any such
obligation, describing each such default. (Servicing Agreement, Sections 3.03
and 10.03).
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Copies of such statements and certificates may be obtained by Certificate
Owners or Class A Certificateholders by a request in writing addressed to the
Trustee at its Corporate Trust Office. (Agreement, Section 3.06).
Compliance with ERISA
On or before each Determination Date, the Servicer shall provide the
Trustee and each Rating Agency with an officer's certificate stating that none
of SET, JMFE, World Omni nor any of their respective affiliates for purposes of
ERISA (i) maintains an ERISA plan which, as of its last valuation date, had
unfunded current liability, (ii) anticipates that the value of the assets of any
ERISA plan it maintains would not be sufficient to cover any current liability
and (iii) is contemplating benefit improvements with respect to any plans then
maintained or the establishment of any new ERISA plans, either of which would
cause it to maintain an ERISA plan with unfunded current liability (the "ERISA
Compliance Test"). In the event that the Servicer does not timely make the
foregoing certifications, or any such certification is incorrect, the Reserve
Fund Cash Requirement shall be unlimited and all Excess Collections in respect
of the Distribution Date, after giving effect to all payments required to be
made therefrom on such Distribution Date, will be deposited into the Reserve
Fund until the ERISA Compliance Test is satisfied. On the Distribution Date
following the date on which such failure is cured, monies on deposit in the
Reserve Fund in excess of the Reserve Fund Cash Requirement shall be distributed
to the Seller (or to the Certificateholders to the extent allocable to the
Accelerated Principal Distribution Amount). See "Security for the
Certificates -- The Accounts -- The Reserve Fund -- The Reserve Fund Cash
Requirement" for a more complete description of the Reserve Fund Cash
Requirement. (Servicing Agreement, Section 10.03; Agreement, Sections 1.01, 3.03
and 3.04).
Servicing Compensation
The Servicer will be entitled to compensation for the performance of its
servicing obligations under the Servicing Agreement. The Servicer will be
entitled to receive on each Distribution Date, the Servicing Fee in respect of
the related Collection Period equal to one-twelfth of the product of 1.00% and
the Aggregate Net Investment Value as of the first day of the month preceding
the month in which such Distribution Date occurs (or, in the case of the first
Distribution Date, as of the Initial Cutoff Date); the portion of the Servicing
Fee allocable to the SUBI Interest will be 99.8% thereof. The Servicing Fee will
be calculated and paid based upon a 360-day year consisting of twelve 30-day
months. So long as World Omni is the Servicer, it may, by notice to the Trustee
and the Origination Trustee, on or before a Determination Date, elect to waive
the Servicing Fee with respect to the related Collection Period, so long as
World Omni believes that sufficient collections will be available from Interest
Collections on one or more future Distribution Dates to pay such waived
Servicing Fee, without interest. In such event, the Servicing Fee for such
Collection Period shall be deemed to equal zero for all purposes of the
Agreement and the Servicing Agreement.
The Servicer will also be entitled to additional servicing compensation in
the form of late fees and other administrative fees or similar charges paid with
respect to the Contracts, and earnings from the investment of Security Deposits
as described above under "Additional Document Provisions -- The Servicing
Agreement -- Security Deposits". The Servicer will not be entitled to retain any
Extension Fees paid in connection with extended Contracts as such amounts will
be required to be deposited into the SUBI Collection Account. The Servicer will
pay all expenses incurred by it in connection with its servicing activities
under the Servicing Agreement, including the payment of Uncapped Administrative
Expenses allocable to the SUBI Interest, and will not be entitled to
reimbursement of such expenses except to the extent any such expenses constitute
Liquidation Expenses in respect of a Contract or Leased Vehicle or reasonable
issuance expenses under an applicable insurance policy, or to the extent that
Uncapped Administrative Expenses are reimbursed out of Interest Collections.
(Servicing Agreement, Sections 2.05 and 9.06).
The Servicing Fee will compensate the Servicer for performing the functions
of a third party servicer of the Contracts as an agent for the Trustee under the
Servicing Agreement, including collecting and posting payments, responding to
inquiries of lessees on the Contracts, investigating delinquencies, sending
payment statements and reporting tax information to lessees, paying costs of
sale or other disposition of Leased Vehicles
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relating to defaulted Contracts and Leased Vehicles included in Matured Leased
Vehicle Inventory, policing the SUBI Assets, administering the Contracts,
including making Advances, accounting for collections, furnishing monthly and
annual statements to the Trustee with respect to distributions and generating
federal income tax information. (Servicing Agreement, Section 2.05).
Servicer Resignation and Termination
The Servicer may not resign from its obligations and duties under the
Servicing Agreement unless it determines that its duties thereunder are no
longer permissible by reason of a change in applicable law or regulations. No
such resignation will become effective until a successor servicer has assumed
the Servicer's obligations under the Servicing Agreement. The Servicer may not
assign the Servicing Agreement or any of its rights, powers, duties or
obligations thereunder except as otherwise provided therein or except in
connection with a consolidation, merger, conveyance, transfer or lease made in
compliance with the Servicing Agreement. (Servicing Agreement, Sections 2.10 and
9.11).
The rights and obligations of the Servicer under the Servicing Agreement
may be terminated following the occurrence and continuance of an Event of
Servicing Termination, as described under "Additional Document Provisions -- The
Servicing Agreement -- Rights Upon Event of Servicing Termination". (Servicing
Agreement, Sections 4.01 and 11.01).
Indemnification by the Servicer
The Servicer will indemnify the Trustee and its agents for any and all
liabilities, losses, damages and expenses that may be incurred by them as a
result of any act or omission by the Servicer in connection with the performance
of its duties under the Servicing Agreement. (Servicing Agreement, Section
9.08).
Events of Servicing Termination
"Events of Servicing Termination" under the Servicing Agreement with
respect to the SUBI Assets will consist of, among other things: (i) any failure
by the Servicer to deliver to the Origination Trustee for distribution to
holders of interests in the SUBI or to the Trustee for distribution to the
Certificateholders any required payment, which failure continues unremedied for
five Business Days after discovery of such failure by an officer of the Servicer
or receipt by the Servicer of notice thereof from the Trustee, the Origination
Trustee or holders of Certificates evidencing not less than 25% of the Voting
Interests of the Class A Certificates and the Class B Certificates, voting
together as a single class; (ii) any failure by the Servicer duly to observe or
perform in any material respect any other of its covenants or agreements in the
Servicing Agreement which failure materially and adversely affects the rights of
holders of interests in the SUBI or the Certificateholders and which continues
unremedied for 60 days after written notice of such failure is given as
described in clause (i) above; (iii) failure by the Servicer to deliver to the
Origination Trustee or the Trustee any report required to be delivered to the
Origination Trustee or the Trustee pursuant to the Servicing Agreement within
ten Business Days after the date such report is due; (iv) any representation,
warranty or statement of the Servicer made in the Servicing Agreement or any
other document relating to the Origination Trust to which the Servicer is a
party or by which it is bound or any certificate, report or other writing
delivered pursuant to the Servicing Agreement shall prove to be incorrect in any
material respect as of the time when the same shall be made which continues
unremedied for 30 days after written notice of such failure is given as
described in clause (i) above; (v) failure by the Servicer to pay when due the
premium in respect of any Contingent and Excess Liability Insurance Policy; and
(vi) the occurrence of certain Insolvency Events relating to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance referred to
under clause (i) above for a period of ten Business Days, referred to under
clause (ii) for a period of 90 days, referred to under clause (iii) for a period
of 20 Business Days, or referred to under clause (iv) for a period of 60 days,
shall not constitute an Event of Servicing Termination if such failure or delay
was caused by act of God or other similar occurrence. Upon the occurrence of any
such event, the Servicer shall not be relieved from using all commercially
reasonable efforts to perform its obligations in a timely manner in accordance
with the terms of the Servicing Agreement and the Servicer shall provide to the
Trustee, the Origination Trustee, the Seller and
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the Certificateholders prompt notice of such failure or delay by it, together
with a description of its efforts to so perform its obligations. (Servicing
Agreement, Sections 4.01 and 11.01).
Rights Upon Event of Servicing Termination
As long as an Event of Servicing Termination remains unremedied, the
Origination Trustee, upon the direction of the Trustee or holders of
Certificates evidencing not less than 51% of the Voting Interests of the Class A
Certificates and the Class B Certificates, voting together as a single class,
may terminate all of the rights and obligations of the Servicer under the
Servicing Agreement with respect to the SUBI Assets. In the event of such a
termination affecting the SUBI Assets, the Trust Agent generally will succeed to
the rights, powers, responsibilities, duties and liabilities of the Servicer
under the Servicing Agreement with respect to the SUBI Assets (excluding certain
specific obligations listed in the Servicing Agreement) or provide for a new
Servicer to be approved by each Rating Agency. The Trust Agent or other new
Servicer, will receive substantially the same servicing compensation to which
the Servicer otherwise would have been entitled. If, however, a bankruptcy
trustee or similar official has been appointed for the Servicer, and no Event of
Servicing Termination other than such appointment has occurred, such trustee or
official may have the power to prevent the Origination Trustee, the Trustee or
such Certificateholders from effecting a transfer of servicing. Notwithstanding
the termination of the Servicer's rights and powers in such event, the Servicer
will remain obligated to perform certain specific obligations listed in the
Servicing Agreement and to reimburse the Trust Agent for any losses incurred in
performing certain such obligations, and will be entitled to payment of certain
amounts payable to it for services rendered prior to such termination.
(Servicing Agreement, Sections 4.01 and 11.01).
The holders of Certificates evidencing not less than 51% of the Voting
Interests of the Class A Certificates and the Class B Certificates, voting
together as a single class, with the consent of the Origination Trustee and the
Trustee (which consents shall not be unreasonably withheld) may waive any
default by the Servicer in the performance of its obligations under the
Servicing Agreement and its consequences with respect to the SUBI Assets, other
than a default in making any required deposits to or payments from an Account in
accordance with the Servicing Agreement or in respect of a covenant or provision
of the Servicing Agreement that cannot be modified or amended without the
consent of each Certificateholder (in which event the related waiver will
require the approval of holders of all of the Certificates). No such waiver will
impair the rights of the Certificateholders with respect to subsequent defaults.
(Servicing Agreement, Section 4.01; Agreement, Sections 8.02 and 9.03).
No Petition
The Servicer will agree not to institute, or join in, any bankruptcy or
similar proceeding against the Seller, WOLSI, ALFI L.P., the Origination Trustee
or the Origination Trust until one year and one day after final payment of all
financings involving interests in the Origination Trust. (Servicing Agreement,
Section 5.14).
Amendment
The Servicing Agreement may be amended from time to time in a writing
signed by the Origination Trustee and the Servicer, with the approval of the
Trustee (which approval may be given in the circumstances described under
"Additional Document Provisions -- Additional Agreement
Provisions -- Amendment"). Any such amendment relating to the UTI or any Other
SUBI may require certain other approvals. (Servicing Agreement, Sections 5.02
and 12.02).
Termination
The Servicing Agreement shall terminate upon the earlier to occur of (i)
the termination of the Origination Trust, (ii) the discharge of the Servicer in
accordance with its terms or (iii) the termination of the Agreement. (Servicing
Agreement, Section 5.01).
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Governing Law
The Servicing Agreement will be governed by the laws of the State of
Alabama.
CERTAIN LEGAL ASPECTS OF THE ORIGINATION TRUST AND THE SUBI
THE ORIGINATION TRUST
The Origination Trust may be deemed to be a business trust under Alabama
law. In an Alabama business trust, the trust property is managed for the profit
of the beneficiaries, as opposed to a common "asset preservation" trust, in
which the trustee is charged with the mere maintenance of trust property. The
principal requirement for the formation of a business trust in Alabama is the
filing of the trust instrument with the appropriate state authority. The
Origination Trust Agreement has been, and the SUBI Trust Agreement will be, so
filed. The Origination Trust also has been qualified as a business trust
authorized to transact business in certain other states where it is required to
be qualified.
Because the Origination Trust has been registered as a business trust for
Alabama and other state law purposes, like a corporation, it may be eligible to
be a debtor in its own right under the United States Bankruptcy Code, as further
described under "Risk Factors -- Insolvency of World Omni; Substantive
Consolidation with World Omni".
THE SUBI
The SUBI will be issued pursuant to the SUBI Trust Agreement and will
evidence a beneficial interest in the SUBI Assets. The SUBI will not represent a
direct interest in the SUBI Assets, nor will it represent an interest in any
Origination Trust Assets other than the SUBI Assets. Except under the limited
circumstances described under "Risk Factors -- Structural
Considerations -- Allocation of Origination Trust Liabilities", payments made on
or in respect of such other Origination Trust Assets will not be available to
make payments on the Certificates or to cover expenses of the Origination Trust
allocable to the SUBI Assets, as further described under "The Trust and the
SUBI -- The SUBI".
INSOLVENCY RELATED MATTERS
As described under "Risk Factors -- Structural Considerations -- Allocation
of Origination Trust Liabilities", each holder or pledgee of the UTI and any
Other SUBI will be required to expressly disclaim any interest in the SUBI
Assets, and to fully subordinate any claims to the SUBI Assets in the event that
this disclaimer is not given effect. Although no assurance can be given, in the
unlikely event of a bankruptcy of ALFI L.P., the Seller believes that the SUBI
Assets would not be treated as part of ALFI L.P.'s bankruptcy estate and that,
even if they were so treated, the subordination by holders and pledgees of the
UTI and Other SUBIs should be enforceable. In addition, as described under "Risk
Factors -- Insolvency of World Omni; Substantive Consolidation with World Omni",
the Seller has taken steps in structuring the transactions contemplated hereby
that are intended to make it unlikely that the voluntary or involuntary
application for relief by World Omni under any Insolvency Laws will result in
consolidation of the assets and liabilities of ALFI, ALFI L.P., WOLSI, the
Seller, the Origination Trust or the Trust with those of World Omni. If,
however, (i) a court concluded that the assets and liabilities of ALFI, ALFI
L.P., the Seller, WOLSI, the Origination Trust or the Trust should be
consolidated with those of World Omni in the event of the application of
applicable Insolvency Laws to World Omni, (ii) a filing were made under any
Insolvency Law by or against ALFI, ALFI L.P., the Seller, WOLSI, the Origination
Trust or the Trust or (iii) an attempt were made to litigate any of the
foregoing issues, delays in payments on the Certificates and possible reductions
in the amount of such payments could occur.
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CERTAIN LEGAL ASPECTS OF THE
CONTRACTS AND THE LEASED VEHICLES
BACK-UP SECURITY INTERESTS
The Contracts are "chattel paper" as defined in the UCC. Pursuant to the
Alabama UCC, when a debtor's chief executive office is in Alabama, a
non-possessory security interest in or transfer of chattel paper may be
perfected by filing a UCC-1 financing statement with the Alabama Department of
State. The chief executive offices of each of the Seller and the Origination
Trust are located in Alabama.
As described under "Risk Factors -- Structural Considerations -- Back-up
Security Interest in Certain SUBI Assets", if the Certificates were to be
recharacterized as loans secured by the SUBI Assets, the Trustee will be deemed
to have a perfected security interest in certain SUBI Assets, including the
Contracts. On or prior to the Closing Date, "protective" UCC-1 financing
statements will be filed in the States of Alabama, Florida and Illinois to
effect this perfection. The Trustee's security interest in that circumstance
could be subordinate to the interest of certain other parties who take
possession of the Contracts before the filing described above has been
completed. Specifically, the Trustee's security interest in a Contract could be
subordinate to the rights of a purchaser of such Contract who takes possession
thereof without knowledge or actual notice of the Trustee's security interest.
The Contracts will not be stamped to reflect the foregoing back-up security
arrangements.
Any perfected security interest of the Trustee in the Contracts will be
unaffected by any change of location of any lessee, since, under the UCC, this
back-up security interest will be perfected by the filing of a UCC-1 financing
statement in the jurisdiction in which the chief executive office of the
"debtor" (in this case, the Origination Trust) is located, not the location of
any lessee.
VICARIOUS TORT LIABILITY
Although the Origination Trust will own the leased vehicles, they will be
operated by the lessees and their respective invitees. State laws, including the
laws in the Five State Area, differ as to whether anyone suffering injury to
person or property involving a leased vehicle may bring an action against the
owner of the vehicle merely by virtue of that ownership.
In Alabama and Georgia, a victim of such an accident has no such cause of
action against the owner of a leased vehicle arising from the negligent
operation of such leased vehicle unless the owner has negligently entrusted or
negligently continues to entrust the vehicle to an inappropriate lessee.
In Florida, under Section 324.021(9)(b), Florida Statutes, the owner of a
motor vehicle that is subject to a lease having an initial term of at least one
year is exempt from liability arising out of an accident in which the leased
vehicle is involved if the lessee is required under the lease to maintain
certain specified levels of insurance and such insurance is in effect. In 1991,
in a case involving finance leases, the Florida Supreme Court ruled that this
statute is constitutional and that a Florida owner/lessor that complies with the
statute will not be deemed the owner of the leased vehicle for purposes of
financial responsibility for liability or tort claims arising out of the
negligent operation of the leased vehicle or the negligent acts of the operator.
In 1992, the Florida Supreme Court held that this statute is applicable to true
leases as well as finance leases. In March 1996, the Florida Supreme Court
strictly interpreted the requirements of Section 324.021(9)(b), ruling that the
existence of a lessor's blanket contingent liability insurance policy did not
satisfy the statutory requirement that the lessee have insurance in effect at
the time of the accident and denying the lessor the liability exemption provided
in the statute. However, effective with respect to actions brought on or after
June 1, 1996, the statute was amended to provide that a lessor's blanket
contingent liability insurance policy with certain required policy limits will
be deemed to satisfy the statute's requirements for the liability exemption. The
Origination Trust's insurance coverage meets these requirements.
In North Carolina, a lessor of a motor vehicle generally is not responsible
to injured parties for a lessee's negligent use of the leased vehicle when all
control has been relinquished to the lessee, unless the lessor knew or in the
exercise of reasonable care should have known that the leased vehicle was
defective or unsafe at the
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time of delivery to the lessee and the defect or unsafe condition caused injury,
or if the lessor negligently entrusted the vehicle to an incompetent lessee.
As more fully described under "Risk Factors -- Vicarious Tort Liability",
following an accident involving a Leased Vehicle, under certain circumstances
the Origination Trust may be the subject of an action for damages as a result of
its ownership of such Leased Vehicle. To the extent that applicable state law
permits such an action, the Origination Trust and the Origination Trust Assets
may be subject to liability. However, the laws of many States, including each of
the States in the Five State Area, either do not permit such suits, or the
lessor's liability is capped at the amount of any liability insurance that the
lessee was required to, but failed to, maintain. Although the Origination
Trust's insurance coverage is substantial, in the event that all applicable
insurance coverage were exhausted and damages were assessed against the
Origination Trust, claims could be imposed against the assets of the Origination
Trust, including the Leased Vehicles. However, such claims would not take
priority over any SUBI Assets to the extent that the Trustee has a prior
perfected security interest therein (such as would be the case, in certain
limited circumstances, with respect to the Contracts) as further described under
"Risk Factors -- Structural Considerations -- Back-up Security Interest in
Certain SUBI Assets". If any such claims were imposed against the assets of the
Origination Trust, investors in the Class A Certificates could incur a loss on
their investment.
REPOSSESSION OF LEASED VEHICLES
In the event that a default by a lessee has not been cured within a certain
period of time after notice, the Servicer will ordinarily retake possession of
the related leased vehicle. Some jurisdictions require that the lessee be
notified of the default and be given a time period within which to cure the
default prior to repossession. Generally, this right to cure may be exercised on
a limited number of occasions in any one-year period. In these jurisdictions, if
the lessee objects or raises a defense to repossession, an order must be
obtained from the appropriate state court, and the vehicle must then be
repossessed in accordance with that order. Other jurisdictions permit
repossession without notice (although in Florida, Georgia and North Carolina a
course of conduct in which the lessor has accepted late payments has been held
to create a right of the lessee to receive prior notice), but only if the
repossession can be accomplished peacefully. If a breach of the peace cannot be
avoided, judicial action is required.
In Georgia, a leased vehicle may be repossessed without notice, but only if
the repossession can be accomplished without a breach of the peace. If a breach
of the peace cannot be avoided, the lessor must seek a writ of possession in a
state court action or pursue other judicial action to repossess such leased
vehicle.
After the Servicer has repossessed a Leased Vehicle, it may provide the
lessee with a period of time within which to cure the default under the related
Contract. If by the end of such period the default has not been cured, the
Servicer will attempt to sell the Leased Vehicle. The Net Repossessed Vehicle
Proceeds therefrom may be less than the remaining amounts due under the Contract
at the time of default by the lessee.
DEFICIENCY JUDGMENTS
The proceeds of sale of a leased vehicle generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
amounts due under the related lease contract. While some states impose
prohibitions or limitations on deficiency judgments if the net proceeds from
resale of a leased vehicle do not cover the full amounts due under the related
lease contract, a deficiency judgment can be sought in those states (including
each of the States in the Five State Area) that do not prohibit directly or
limit such judgments. However, in some states (including Florida), a lessee may
be allowed an offsetting recovery for any amount not recovered at resale because
the terms of the resale were not commercially reasonable. In any event, a
deficiency judgment would be a personal judgment against the lessee for the
shortfall, and a defaulting lessee would be expected to have little capital or
sources of income available following repossession. Therefore, in many cases, it
may not be useful to seek a deficiency judgment. Even if a deficiency judgment
is obtained, it may be settled at a significant discount.
In Georgia, amounts recoverable by the lessor of a leased vehicle from a
lessee upon default or early termination are not considered to be "deficiency
judgments", but damages for breach or early termination of
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the related lease contract. In the case of liquidated damages provided for in
the Contracts, the only limitation or prohibition on such damages is that they
are reasonable in light of the anticipated harm caused by the default. Georgia
law does not require that any excess proceeds from disposition of a leased
vehicle be paid to a lessee. Under the Georgia Motor Vehicle Warranty Rights
Act, however, where a lessor or lessee has exercised its rights against the
manufacturer and obtained a replacement vehicle and the lessor realizes a gain
from disposition of the replacement vehicle, the lessor must refund to the
lessee the lesser of any offset for use paid by the lessee to the manufacturer
or the gain realized by the lessor.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws impose requirements
upon lessors and servicers involved in consumer leasing. The federal Consumer
Leasing Act of 1976 and Regulation M, issued by the Board of Governors of the
Federal Reserve System, for example, require that a number of disclosures be
made at the time a vehicle is leased, including the amount of any down payment,
a description of the lessee's liability at the end of the lease term, the amount
of any periodic payments and the circumstances under which the lessee may
terminate the lease prior to the end of the lease term. The various consumer
protection laws would apply to the Origination Trustee as a "co-lessor" of the
Contracts and may also apply to the Trust as holder of a beneficial interest in
the Contracts. The failure to comply with such consumer protection laws may give
rise to liabilities on the part of the Servicer, the Origination Trust and the
Origination Trustee, including liabilities for statutory damages and attorneys'
fees. In addition, claims by the Servicer, the Origination Trust and the
Origination Trustee may be subject to set-off as a result of such noncompliance.
Courts have applied general equitable principles in litigation relating to
repossession and deficiency balances. These equitable principles may have the
effect of relieving a lessee from some or all of the legal consequences of a
default.
In several cases, consumers have asserted that the self-help remedies of
lessors violate the due process protection provided under the Fourteenth
Amendment to the Constitution of the United States. Courts have generally found
that repossession and resale by a lessor do not involve sufficient state action
to afford constitutional protection to consumers.
Many states, including each State in the Five State Area, have adopted laws
(each, a "Lemon Law") providing redress to consumers who purchase or lease a
vehicle that remains out of conformance with its manufacturer's warranty after a
specified number of attempts to correct a problem or after a specific time
period. Should any Leased Vehicle become subject to a Lemon Law, a lessee could
compel the Origination Trust to terminate the related Contract and refund all or
a portion of payments that previously have been paid. Although the Origination
Trust may be able to assert a claim against the manufacturer of any such
defective Leased Vehicle, there can be no assurance any such claim would be
successful.
Historically, less than one-half of one percent of all automobiles and
light duty trucks leased by World Omni (including lease contracts owned by the
Origination Trustee on behalf of the Origination Trust or by certain special
purpose subsidiaries of World Omni) have become the subject of an action under
any of the Lemon Laws of any jurisdiction. As noted below, World Omni will
represent and warrant to the Trustee as of the Initial Cutoff Date and as of
each Subsequent Cutoff Date that none of the Initial Leased Vehicles or the
related Subsequent Leased Vehicles, as the case may be, is out of compliance
with any law, including a Lemon Law. Nevertheless, there can be no assurance
that one or more Leased Vehicles will not become subject to return (and the
related Contract terminated) in the future under a Lemon Law.
Representations and warranties will be made in the SUBI Trust Agreement
that each Contract complies with all requirements of law in all material
respects. If any such representation and warranty proves to be incorrect with
respect to any Contract, and is not timely cured, World Omni will be required
under the Servicing Agreement to deposit an amount equal to the Reallocation
Payment (together with, in certain circumstances during the Amortization Period,
an amount equal to the Reallocation Deposit Amount) in respect of such Contract
into the SUBI Collection Account unless the breach is cured. See "Additional
Document Provisions -- The SUBI Trust Agreement -- The SUBI, the Other SUBIs and
the UTI" and
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"The Contracts -- Representations, Warranties and Covenants" for further
information regarding the foregoing representations and warranties.
OTHER LIMITATIONS
In addition to laws limiting or prohibiting deficiency judgments, numerous
other statutory provisions, including applicable Insolvency Laws, may interfere
with or affect the ability of a lessor to enforce its rights under an automobile
or light duty truck lease contract. For example, if a lessee commences
bankruptcy proceedings, the lessor's receipt of rental payments due under the
lease contract is likely to be delayed. In addition, a lessee who commences
bankruptcy proceedings might be able to assign the lease contract to another
party even though the lease prohibits assignment.
CERTAIN INCOME TAX CONSIDERATIONS
FEDERAL TAXATION
General
Set forth below is a discussion representing the opinion of Brown & Wood
LLP, special federal income tax counsel to the Seller and counsel for the
Underwriters, as to material federal income tax consequences to holders of the
Class A Certificates who are original owners and who hold the Class A
Certificates as capital assets under the Internal Revenue Code of 1986, as
amended (the "Code"). This discussion does not purport to be complete or to deal
with all aspects of federal income taxation or any aspects of state or local
taxation that may be relevant to Class A Certificateholders or Certificate
Owners in light of their particular circumstances, nor to certain types of Class
A Certificateholders or Certificate Owners subject to special treatment under
the federal income tax laws (for example, banks and life insurance companies).
This discussion is based upon present provisions of the Code, the regulations
promulgated thereunder and judicial and ruling authorities, all of which are
subject to change, which change may be retroactive. The parties do not intend to
seek a ruling from the Internal Revenue Service ("IRS") on any of the issues
discussed below. Moreover, there can be no assurance that if such a ruling were
sought, the IRS would rule favorably. Prospective investors should consult their
own tax advisors with regard to the federal income tax consequences of the
purchase, ownership or disposition of the Class A Certificates, as well as the
tax consequences arising under the laws of any state, foreign country or other
taxing jurisdiction.
Characterization of the Class A Certificates as Indebtedness
The Seller, the Trustee, each Certificateholder, and each Certificate Owner
(by acquiring a beneficial interest in a Class A Certificate) will express in
the Agreement their intent that, for federal, state and local income and
franchise tax purposes, the Class A Certificates will be indebtedness, secured
by the assets of the Trust. The Seller and the Trustee, by entering into the
Agreement, and each Certificateholder and each Certificate Owner, by acquiring a
beneficial interest in a Class A Certificate, will agree to treat the Class A
Certificates as indebtedness for federal, state and local income and franchise
tax purposes. However, because different criteria are used to determine the
non-tax accounting characterization of the transaction, the Seller will treat
the transaction, for financial accounting purposes, as a sale of an ownership
interest in the Origination Trust Assets and not as the issuance of a debt
obligation.
In general, the characterization of a transaction for federal income tax
purposes is based upon economic substance, and the substance of the transaction
in which the Class A Certificates are issued is consistent with the treatment of
the Class A Certificates as debt for federal income tax purposes. Although there
are certain judicial precedents holding that under appropriate circumstances a
taxpayer should be required to treat a transaction in accordance with the form
chosen by the taxpayer regardless of the transaction's substance, the operative
provisions of the transaction and the Agreement will not be inconsistent with
treating the Class A Certificates as debt and, accordingly, these authorities
should not be applied to require sale characterization for federal income tax
purposes. The determination of whether the economic substance of a property
transfer is a sale or a loan secured by the transferred property depends upon
numerous factors designed to determine
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whether the transferor has relinquished (and the transferee has obtained)
substantial incidents of ownership in the property. The primary factors examined
are whether the transferee has the opportunity to gain if the property increases
in value, and has the risk of loss if the property decreases in value. Based
upon its analysis of such factors, Brown & Wood LLP is of the opinion that, for
federal income tax purposes the characterization of the Class A Certificates
should be governed by the substance of the transaction and accordingly, (i) the
Trust will not be treated as an association taxable as a corporation and (ii)
the Class A Certificates will properly be characterized as indebtedness that is
secured by the Trust assets.
Taxation of Interest and Discount Income
Assuming that the Certificate Owners are owners of debt obligations for
federal income tax purposes, interest generally will be taxable as ordinary
income for federal income tax purposes when received by the Certificate Owners
utilizing the cash method of accounting and when accrued by Certificate Owners
utilizing the accrual method of accounting. Interest received on the Class A
Certificates may also constitute "investment income" for purposes of certain
limitations of the Code concerning the deductibility of investment interest
expense.
Original Issue Discount. Under regulations issued with respect to the
original issue discount ("OID") provisions of the Code, the Class A Certificates
will be deemed to have been issued with OID in an amount equal to the excess of
the "stated redemption price at maturity" of the Class A-1, Class A-2 or Class
A-3 Certificates, as the case may be (generally equal to their principal amount
as of the date of original issuance plus all interest other than "qualified
stated interest" payable prior to or at maturity), over their original issue
price (in this case, the initial offering price at which a substantial amount of
the related Class of Class A Certificates is sold to the public). Qualified
stated interest generally means interest payable at a single fixed rate or
qualified variable rate provided that such interest payments are unconditionally
payable at intervals of one year or less during the entire term of the Class
A-1, Class A-2 or Class A-3 Certificates, as the case may be. Under the OID
provisions of the Code, interest will only be treated as qualified stated
interest if it is "unconditionally payable". Interest will be treated as
"unconditionally payable" only if Certificateholders have reasonable remedies to
compel payment of interest deficiencies (e.g., default and acceleration rights).
Because Class A Certificateholders will not be entitled to penalty payments of
interest on interest deficiencies, and Class A Certificateholders will have no
default and acceleration rights in the event of interest shortfalls, interest
paid on the Class A Certificates may not be treated by the IRS as qualified
stated interest, and, in such event, would be treated as OID. A Class A
Certificateholder must include OID income over the term of the related Class A
Certificate under a constant yield method. In general, OID must be included in
income in advance of the receipt of cash representing that income, regardless of
the Certificateholder's method of accounting.
In general, OID, if any, will equal the difference between the stated
redemption price at maturity of a Class A Certificate and its issue price. A
holder of a Class A Certificate must include such OID in gross income as
ordinary interest income as it accrues under a method taking into account an
economic accrual of the discount. In general, OID must be included in income in
advance of the receipt of the cash representing that income. The amount of OID
on a Class A Certificate will be considered to be zero if it is less than a de
minimis amount determined under the Code.
The issue price of a Class A Certificate is the first price at which a
substantial amount of Class A Certificates are sold to the public (excluding
bond, bonuses, brokers, underwriters or wholesalers). If less than a substantial
amount of a particular Class of Class A Certificates is sold for cash on or
prior to the Closing Date, the issue price of such Class will be treated as the
fair market value of such Class on the Closing Date. The issue price of a Class
A Certificate also includes the amount paid by a Class A Certificateholder for
accrued interest that relates to a period prior to the issue date of the Class A
Certificate. The stated redemption price at maturity of a Class A Certificate
includes the original principal amount of the Class A Certificate, but generally
will not include distributions of interest if such distributions constitute
"qualified stated interest."
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Under the de minimis rule, OID on a Class A Certificate will be considered
to be zero if such OID is less than 0.25% of the stated redemption price at
maturity of the Class A Certificate multiplied by the weighted average maturity
of the Class A Certificate. Certificateholders generally must report de minimis
OID pro rata as principal payments are received, and such income will be capital
gain if the Class A Certificate is held as a capital asset. However, accrual
method holders may elect to accrue all de minimis OID as well as market discount
under a constant interest method.
The holder of a Class A Certificate issued with OID must include in gross
income, for all days during its taxable year on which it holds such Class A
Certificate, the sum of the "daily portions" of such original issue discount.
The amount of OID includible in income by a Certificateholder will be computed
by allocating to each day during a taxable year a pro rata portion of the
original issue discount that accrued during the relevant accrual period.
If a Certificateholder purchases a Class A Certificate issued with OID at
an "acquisition premium" (i.e., at a price in excess of the adjusted issue price
of the Class A Certificate, but less than or equal to the "stated redemption
price at maturity"), the amount includible by such Certificateholder in income
in each taxable year as OID will be reduced by that portion of the premium
properly allocable to such year.
Although the matter is not entirely clear, the Seller currently intends to
report all stated interest on the Class A Certificates as qualified stated
interest and not as OID.
Market Discount. Certificate Owners should be aware that the resale of a
Class A Certificate may be affected by the market discount rules of the Code.
These rules generally provide that, subject to a de minimis exception, if a
holder acquires a Class A Certificate at a market discount (i.e., at a price
below its "adjusted issue price") and thereafter recognizes gain upon a
disposition of the Class A Certificate, the lesser of such gain or the portion
of the market discount that accrued while the Class A Certificate was held by
such holder will be treated as ordinary interest income realized at the time of
the disposition. A taxpayer may elect to include market discount currently in
gross income in taxable years to which it is attributable, computed using either
a ratable accrual or a yield to maturity method.
Premium. A Certificate Owner who purchases a Class A Certificate for more
than its stated redemption price at maturity will be subject to the premium
amortization rules of the Code. Under those rules, the Certificate Owner may
elect to amortize such premium on a constant yield method. Amortizable premium
reduces interest income on the related Class A Certificate. If the Certificate
Owner does not make such an election, the premium paid for the Class A
Certificate generally will be included in the tax basis of the Class A
Certificate in determining the gain or loss on its disposition.
Each Certificate Owner should consult his own tax advisor regarding the
impact of the original issue discount, market discount, and premium amortization
rules.
Sales of Class A Certificates
In general, a Certificate Owner will recognize gain or loss upon the sale,
exchange, redemption or other taxable disposition of a Class A Certificate
measured by the difference between (i) the amount of cash and the fair market
value of any property received (other than amounts attributable to, and taxable
as, accrued stated interest) and (ii) the Certificate Owner's tax basis in the
Class A Certificate (as increased by any OID or market discount previously
included in income by the holder and decreased by any deductions previously
allowed for amortizable bond premium and by any payments, other than qualified
stated interest payments, received with respect to such Class A Certificate).
Subject to the market discount rules discussed above and to the more than
one-year holding period requirement for long-term capital gain treatment, any
such gain or loss generally will be long-term capital gain or loss, provided
that the Class A Certificate was held as a capital asset. The federal income tax
rates applicable to capital gains for taxpayers other than individuals, estates
and trusts are currently the same as those applicable to ordinary income;
however, the maximum ordinary income rate for individuals, estates and trusts is
generally 39.6%, whereas the maximum long-term capital gains rate for such
taxpayers is 28%. Moreover, capital losses generally may be used only to offset
capital gains.
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Federal Income Tax Consequences to Foreign Investors
The following information describes the United States federal income tax
treatment of investors that are not United States persons ("Foreign Investors")
if the Class A Certificates are treated as debt. The term "Foreign Investor"
means any person other than (i) a citizen or resident of the United States, (ii)
a corporation, partnership or other entity organized in or under the laws of the
United States or any state or political subdivision thereof or (iii) an estate
or trust the income of which is includible in gross income for United States
federal income tax purposes, regardless of its source.
The Code and Treasury regulations generally subject interest paid to a
Foreign Investor to a withholding tax at a rate of 30% (unless such rate were
changed by an applicable treaty). The withholding tax, however, is eliminated
with respect to certain "portfolio debt investments" issued to Foreign
Investors. Portfolio debt investments include debt instruments issued in
registered form for which the United States payor receives a statement that the
beneficial owner of the instrument is a Foreign Investor. The Class A
Certificates will be issued in registered form; therefore, if the information
required by the Code is furnished (as described below) and no other exceptions
to the withholding tax exemption are applicable, no withholding tax will apply
to the Class A Certificates.
For the Class A Certificates to constitute portfolio debt investments
exempt from United States withholding tax, the withholding agent must receive
from the Certificate Owner an executed IRS Form W-8 signed under penalty of
perjury by the Certificate Owner stating that the Certificate Owner is a Foreign
Investor and providing such Certificate Owner's name and address. The statement
must be received by the withholding agent in the calendar year in which the
interest payment is made, or in either of the two preceding calendar years.
A Certificate Owner that is a nonresident alien or foreign corporation will
not be subject to United States federal income tax on gain realized on the sale,
exchange or redemption of such Class A Certificate, provided that (i) such gain
is not effectively connected with a trade or business carried on by the
Certificate Owner in the United States, (ii) in the case of a Certificate Owner
that is an individual, such Certificate Owner is not present in the United
States for 183 days or more during the taxable year in which such sale, exchange
or redemption occurs and (iii) in the case of gain representing accrued
interest, the conditions described in the immediately preceding paragraph are
satisfied.
Backup Withholding
A Certificate Owner may be subject to a backup withholding at the rate of
31% with respect to interest paid on the Class A Certificates if the Certificate
Owner, upon issuance, fails to supply the Trustee or his broker with such
Certificate Owner's taxpayer identification number, fails to report interest,
dividends or other "reportable payments" (as defined in the Code) properly, or
under certain circumstances, fails to provide the Trustee or his broker with a
certified statement, under penalty of perjury, that such Certificate Owner is
not subject to backup withholding. Information returns will be sent annually to
the IRS and to each Certificate Owner setting forth the amount of interest paid
on the Class A Certificates and the amount of tax withheld thereon.
FLORIDA INCOME TAXATION
The Florida Administrative Code includes a rule (the "Loan Rule"),
promulgated under the Florida Income Tax Code, which provides that a financial
organization earning or receiving interest from loans secured by tangible
property located in Florida will be deemed to be conducting business or earning
or receiving income in Florida, and will be subject to Florida corporate income
tax irrespective of the place of receipt of such interest. A "financial
organization" is defined to include any bank, trust company, savings bank,
industrial bank, land bank, safe deposit company, private banker, savings and
loan association, credit union, cooperative bank, small loan company, sales
finance company or investment company. If the Loan Rule were to apply to an
investment in the Class A Certificates, then a financial organization investing
in the Class A Certificates would be subject to Florida corporate income tax on
a portion of its income at a maximum rate of 5.5%, and would be required to file
an income tax return in Florida, even if it has no other
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Florida contacts. English, McCaughan & O'Bryan, P.A., special Florida counsel to
the Seller, is of the opinion that if the matter were properly presented to a
court having jurisdiction, and assuming interpretation of relevant law on a
basis consistent with existing authority, such court would hold that the Loan
Rule should not apply to an investment in the Class A Certificates or the
receipt of interest thereon by a financial organization with no other Florida
contacts. Consequently, prospective investors are urged to consult their own tax
advisers as to the applicability of Florida taxation to their investments in the
Certificates and to their ability to offset any such Florida tax against any
other state tax liabilities that such investors might have.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit pension, profit sharing
or other employee benefit plans ("Benefit Plans") 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 Plans. ERISA
also imposes certain duties on persons who are fiduciaries of Benefit Plans
subject to ERISA. Under ERISA, any person who exercises any authority or control
with respect to the management or disposition of the assets of a Benefit Plan is
considered to be a fiduciary of such Benefit Plan (subject to certain exceptions
not here relevant). A violation of these "prohibited transaction" rules may
result in liability under ERISA and the Code for such persons.
Neither ERISA nor the Code defines the terms "plan assets". Under Section
2510.3-101 of the United States Department of Labor ("DOL") regulations (the
"Regulation"), a Plan's assets may include an interest in the underlying assets
of an entity (such as a trust) for certain purposes, including the prohibited
transaction provisions of ERISA and the Code, if the Plan acquires an "equity
interest" in such entity. The Seller believes that the Certificates will give
Certificateholders an equity interest in the Trust for purposes of the
Regulation. Under the Regulation, when a Plan acquires an equity interest that
is neither a "publicly offered security" nor a security issued by an investment
company registered under the Investment Company Act of 1940, the underlying
assets of the entity will be considered "plan assets" unless the entity is an
"operating company" or equity participation in the entity by benefit plan
investors is not "significant". For this purpose, such participation is
significant if immediately after the most recent acquisition of any equity
interest in the entity, whether or not from an issuer or an underwriter, 25% or
more of the value of any class of equity interest is held by "benefit plan
investors", which are defined as Benefit Plans and employee benefit plans not
subject to ERISA (e.g., governmental plans).
The Trust will not be an "operating company" as defined in the Regulation,
and it will not be an investment company registered under the Investment Company
Act of 1940. A "publicly-offered security" is defined under the Regulation as a
security that is "freely transferable" (which is presumed if the face amount of
each Certificate is $10,000 or less), "widely held" (with at least 100 holders
of each of the Class A-1 Certificates, the Class A-2 Certificates and the Class
A-3 Certificates independent of the Trust and of one another as of the initial
offering) and part of a class of securities registered under Sections 12(b) or
12(g) of the Exchange Act or sold to the public pursuant to an effective
registration statement under the Securities Act, and the class of which the
Class A Certificates are a part is required to be registered under the Exchange
Act within 120 days after the end of the Trust's fiscal year. The Seller
anticipates that the Class A Certificates will be freely transferable, but does
not expect that the registration requirements under the Exchange Act will be
met. The Underwriters can give no assurances that there will be at least 100
holders of each of the Class A-1 Certificates, the Class A-2 Certificates and
the Class A-3 Certificates (independent of the Trustee and each other) who will
purchase the Class A Certificates as of the initial offering in order to satisfy
the "widely held" requirement.
If at any time immediately after the most recent acquisition of any Class A
Certificates, 25% or more of the value of any Class of Certificates is held by
benefit plan investors, then all or some portion of the assets of the Trust
would constitute plan assets. There can be no assurance that less than 25% of
the value of any Class of Certificates will be held by benefit plan investors.
Accordingly, the assets of the Trust may be deemed to include the assets of
Benefit Plans that are Class A Certificateholders, and transactions between the
Trust and "parties in interest" or "disqualified persons" with respect to such
Benefit Plans might be prohibited
92
<PAGE> 95
transactions under Section 406 of ERISA and Section 4975 of the Code. Thus, for
example, if a participant in a Benefit Plan that is a Class A Certificateholder
is a lessee in respect of a Contract, a prohibited transaction could occur.
The DOL has granted to World Omni and its affiliates, including the Seller,
an administrative exemption (Prohibited Transaction Exemption 96-12; Exemption
Application No. D-09840, et al., 61 Fed. Reg. 10025-31 (March 12, 1996)
("Exemption")) from certain of the prohibited transaction rules of ERISA. The
Exemption applies to the initial purchase, the holding and the subsequent resale
by Benefit Plans of certificates similar to the Class A Certificates, provided
that certain specified conditions (certain of which are specified below) are
met. The Seller believes all conditions of the Exemption other than those within
the control of the investors have been or will be met.
For the Exemption to apply to the acquisition by a Benefit Plan of Class A
Certificates, the Class A Certificates would be required to be offered and sold
initially to the public (including Benefit Plans) pursuant to an underwriting
arrangement with one or more underwriters which have received one of a group of
administrative exemptions from certain of the prohibited transaction rules of
ERISA. Such exemptions apply 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 such exemption. The DOL has granted such an administrative
exemption to the managing Underwriter (Prohibited Transaction Exemption 89-90;
Exemption Application No. D-6555, 54 Fed. Reg. 42597 (1989), as amended;
Exemption Application No. D-8342, 55 Fed. Reg. 48939 (1990), as amended).
Among the other conditions that are required to be satisfied for the
Exemption to apply to the acquisition by a Benefit Plan of the Class A
Certificates are the following (each of which the Seller believes has been or
will be met in connection with the Class A Certificates):
(i) The acquisition of the Class A Certificates by a Benefit Plan is
on terms (including the price for the Class A 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.
(ii) The rights and interests evidenced by the Class A Certificates
acquired by the Benefit Plan are not subordinated to the rights and
interests evidenced by any other Class of Certificates, and the rights and
interests evidenced by the SUBI Interest are not subordinated to the rights
and interests evidenced by Other SUBI Certificates or UTI Certificates.
(iii) The Class A 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 Standard & Poor's, Moody's,
Duff & Phelps Credit Rating Co. ("Duff & Phelps") or Fitch Investors
Service, Inc. ("Fitch").
(iv) The sum of all payments made to the Underwriters in connection
with the distribution of the Class A Certificates represents not more than
reasonable compensation for underwriting the Class A Certificates. The sum
of all payments made to and retained by the Seller pursuant to the sale of
the SUBI Interest to the Trust represents not more than the fair market
value of the interest in the Contracts and Leased Vehicles represented
thereby. The sum of all payments made to and retained by the Servicer with
regard to the SUBI Assets represents not more than reasonable compensation
for the Servicer's services under the Servicing Agreement and reimbursement
of the Servicer's reasonable expenses in connection therewith.
(v) The Revolving Period ends no more than 15 consecutive months from
the Closing Date and (A) all Subsequent Contracts meet the same terms and
conditions for eligibility as the Initial Contracts, and (B) the addition
of Subsequent Contracts does not result in the reduction of the ratings on
the Class A Certificates received from any of Moody's, Standard & Poor's,
Duff & Phelps or Fitch.
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<PAGE> 96
(vi) After the Revolving Period ends, the average Lease Rate for the
Contracts included in the SUBI Assets shall not be more than 200 basis
points greater than the average Lease Rate for the Initial Contracts.
(vii) Principal Collections that are reinvested in Subsequent
Contracts during the Revolving Period are first invested in an eligible
lease contract with the earliest origination date, then in an eligible
lease contract with the next earliest origination date and so forth,
beginning with the lease contracts that have been reserved specifically for
such purpose at the time of the initial allocation of lease contracts to
the SUBI, but excluding those specific lease contracts reserved for
allocation to or allocated to Other SUBIs.
In addition, it is a condition that the Benefit Plan investing in the Class
A Certificates be an "accredited investor" as defined in Rule 501(a)(1) of
Regulation D of the Commission under the Securities Act.
The Exemption does not apply to Benefit Plans sponsored by the Seller, the
Underwriters, the Trustee, the Servicer, any lessee with respect to Contracts
allocated to the SUBI Assets constituting more than 5% of the aggregate
unamortized principal balance of the SUBI Assets, or any affiliate of such
parties (the "Restricted Group"). As of the date hereof, no lessee with respect
to the Contracts allocated to the SUBI Assets constitutes more than 5% of the
aggregate unamortized principal balance of the Trust (i.e., more than 5% of
99.8% of the Aggregate Net Investment Value as of the Initial Cutoff Date).
Moreover, the Exemption provides relief for sales, exchanges or transfers
between a Benefit Plan and the underwriter or sponsor with discretionary
investment authority over such Benefit Plan's assets, from certain
self-dealing/conflict of interest prohibited transactions, only if, among other
requirements, (i) a Benefit Plan's investment in the Class A Certificates does
not exceed 25% of all of the Class A Certificates outstanding at the time of the
acquisition, and (ii) immediately after the acquisition, no more than 25% of the
assets of a Benefit Plan with respect to which the person who has discretionary
authority or renders investment advice are invested in Class A Certificates
representing an interest in a trust containing assets sold or serviced by the
same entity.
Due to the complexities of these rules and the penalties imposed upon
persons involved in prohibited transactions, it is important that the fiduciary
of a Benefit Plan considering the purchase of Class A Certificates consult with
its counsel regarding the applicability of Exemption and the prohibited
transaction provisions of ERISA and the Code to such investment. Moreover, each
Benefit Plan fiduciary should determine whether, under the general fiduciary
standards of investment prudence and diversification, an investment in the Class
A Certificates is appropriate for the Benefit Plan, taking into account the
overall investment policy of the Benefit Plan and the composition of the Benefit
Plan's investment portfolio.
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated October , 1996 (the "Underwriting Agreement"), the
Underwriters named below (the "Underwriters"), for whom CS First Boston
Corporation is acting as representative (the "Representative"), have severally
but not jointly agreed to purchase from the Seller the following respective
principal amounts of Class A-1 Certificates, Class A-2 Certificates and Class
A-3 Certificates:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF
CLASS A-1 CLASS A-2 CLASS A-3
UNDERWRITER CERTIFICATES CERTIFICATES CERTIFICATES
- ------------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
CS First Boston Corporation...................... $ $ $
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................
BA Securities, Inc...............................
Salomon Brothers Inc ............................
------------ ------------ ------------
Total.................................. $260,000,000 $280,000,000 $210,057,988
============ ============ ============
</TABLE>
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<PAGE> 97
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent that the Underwriters
will be obligated to purchase all the Class A Certificates if any are purchased.
The Underwriting Agreement provides that, in the event of a default by an
Underwriter, in certain circumstances the purchase commitments of the
non-defaulting Underwriter may be increased or the Underwriter Agreement may be
terminated.
The Seller has been advised by the Representative that the Underwriters
propose to offer the Class A-1 Certificates, the Class A-2 Certificates and the
Class A-3 Certificates to the public initially at the public offering prices set
forth on the cover page of this Prospectus and, through the Representative, to
certain dealers at such prices less a concession of %, % and % of the
principal amount per Class A-1 Certificate, Class A-2 Certificate and Class A-3
Certificate, respectively, and the Underwriters and such dealers may allow a
discount of %, % and % of such principal amount per Class A-1 Certificate,
Class A-2 Certificate and Class A-3 Certificate, respectively, on sales to
certain other dealers. After the initial public offering, the public offering
price and concessions and discounts to dealers may be changed by the
Underwriters.
The Seller and World Omni have jointly and severally agreed to indemnify
the Underwriters against certain liabilities, including civil liabilities under
the Securities Act, or contribute to payments which the Underwriters may be
required to make in respect thereof.
It is expected that delivery of the Class A Certificates will be made
against payment therefor on or about the date specified in the last paragraph of
the cover page of this Prospectus, which will be the fourth business day
following the date of pricing of the Class A Certificates. Under Rule 15c6-1 of
the Commission under the Exchange Act, trades in the secondary market generally
are required to settle in three business days, unless the parties to any such
trade expressly agree otherwise. Accordingly, purchasers who wish to trade Class
A Certificates on the date of pricing will be required, by virtue of the fact
that the Class A Certificates initially will settle four business days after the
date of pricing, to specify an alternate settlement cycle at the time of any
such trade to prevent a failed settlement. Purchasers of Class A Certificates
who wish to trade Class A Certificates on the date of pricing should consult
their own advisor.
Upon receipt of a request by an investor who has received an electronic
Prospectus from an Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
the Seller or the Underwriters will promptly deliver, or cause to be delivered,
without charge, a paper copy of the Prospectus.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Class A Certificates in Canada is being made only
on a private placement basis exempt from the requirement that the Seller prepare
and file a prospectus with the securities regulatory authorities in each
province where trades of the Class A Certificates are effected. Accordingly, any
resale of the Class A Certificates in Canada must be made in accordance with
applicable securities laws which will vary depending on the relevant
jurisdiction, and which may require resales to be made in accordance with
available statutory exemptions or pursuant to a discretionary exemption granted
by the applicable Canadian securities regulatory authority. Purchasers are
advised to seek legal advice prior to any resale of the Class A Certificates.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Class A Certificates in Canada who receives a purchase
confirmation will be deemed to represent to the Seller and the dealer from whom
such purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Class A Certificates
without the benefit of a prospectus qualified under such securities laws, (ii)
where required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions".
95
<PAGE> 98
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of foreign issuers 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 liabilities provisions of the U.S. federal securities laws.
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada. Following a recent decision of the U.S. Supreme
Court, it is possible that Ontario purchasers will not be able to rely upon the
remedies set out in Section 12(2) of the Securities Act if the securities are
being offered under a U.S. private placement memorandum.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Class A Certificates to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any Class A Certificates acquired by such purchaser pursuant to this offering.
Such report must be in the form attached to British Columbia Securities
Commission Blanket Order BOR #95/17, a copy of which may be obtained from the
Seller. Only one such report must be filed in respect of Class A Certificates
acquired on the same date and under the same prospectus exemption.
RATINGS OF THE CLASS A CERTIFICATES
It is a condition of issuance that each of Moody's and Standard & Poor's
rates each Class of Class A Certificates in its highest rating category. The
ratings of the Class A Certificates will be based primarily upon the value of
the Initial Contracts, the Reserve Fund and the terms of the Seller Interest and
the Class B Certificates. There is no assurance that any such rating will not be
lowered or withdrawn by the assigning Rating Agency if, in its judgment,
circumstances so warrant. In the event that a rating with respect to any Class
of Class A Certificates is qualified, reduced or withdrawn, no person or entity
will be obligated to provide any additional credit enhancement with respect to
such Class of Class A Certificates.
The ratings of the Class A Certificates should be evaluated independently
from similar ratings on other types of securities. A rating is not a
recommendation to buy, sell or hold the related Class A Certificates, inasmuch
as such rating does not comment as to market price or suitability for a
particular investor. The ratings of each Class of Class A Certificates addresses
the likelihood of the payment of principal of and interest on such Certificates
pursuant to their terms.
There can be no assurance as to whether any rating agency other than
Moody's and Standard & Poor's will rate the Class A Certificates, or, if one
does, what rating will be assigned by such other rating agency. A rating on any
Class of Class A Certificates by another rating agency, if assigned at all, may
be lower than the ratings assigned to such Class A Certificates by each of
Moody's and Standard & Poor's.
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<PAGE> 99
LEGAL MATTERS
Certain legal matters with respect to the Class A Certificates will be
passed upon for the Seller by Williams & Connolly, Washington, D.C. Certain
other legal matters will be passed upon for the Seller with respect to New York
and Illinois law, by McDermott, Will & Emery, New York, New York and Chicago,
Illinois, with respect to Alabama law, by Hand Arendall, L.L.C., Birmingham,
Alabama, and with respect to Florida law, by English, McCaughan & O'Bryan, P.A.,
Fort Lauderdale, Florida. Brown & Wood LLP, San Francisco, California will act
as special federal income tax counsel to the Seller and as counsel for the
Underwriters.
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<PAGE> 100
INDEX OF CAPITALIZED TERMS
Set forth below is a list of the capitalized terms used in this Prospectus
and the pages on which the definitions of such terms may be found.
<TABLE>
<CAPTION>
TERM PAGE
- ------------------------------------------------ -----
<S> <C>
ABS............................................. 47
Accelerated Principal Distribution Amount....... 14
Accounts........................................ 67
Additional Loss Amounts......................... 74
Additional Loss Contract........................ 70
Administrative Lien............................. 32
Administrative Lienholders...................... 32
Advance......................................... 19,78
Agency Agreement................................ 75
Aggregate Net Investment Value.................. 12
Agreement....................................... 5
ALFI............................................ 5
ALFI L.P........................................ 5
Alternate Reserve Fund Formula.................. 69
Amortization Date............................... 12
Amortization Period............................. 12
Annual Appraisal................................ 69
Appraisal Test.................................. 69
Benefit Plans................................... 92
Business Day.................................... 10
Capped Contingent and Excess Liability
Premiums...................................... 55
Capped Origination Trust Administrative
Expenses...................................... 55
Capped Trust Administrative Expenses............ 55
Cede............................................ 9
Cedel........................................... 9
Cedel Participants.............................. 61
Certificate Balance............................. 9
Certificate Distribution Amount................. 59
Certificate Owner............................... 9
Certificate Principal Loss Amount............... 55
Certificate Rates............................... 53
Certificates.................................... 7
Charge-off Rate................................. 70
Charge-off Rate Test............................ 70
Charged-off Amount.............................. 51
Charged-off Contract............................ 51
Claims.......................................... 76
Class........................................... 50
Class A Certificate Balance..................... 9
Class A Certificateholders...................... 50
Class A Certificates............................ 2,7
Class A Interest................................ 8
Class A Percentage.............................. 13
Class A-1 Allocation Percentage................. 21
Class A-1 Certificate Balance................... 8
Class A-1 Certificate Factor.................... 49
Class A-1 Certificate Principal Loss Amount..... 54
Class A-1 Certificate Rate...................... 2,10
Class A-1 Certificateholders.................... 9
Class A-1 Certificates.......................... 2,7
Class A-1 Interest.............................. 8
Class A-1 Interest Carryover Shortfall.......... 55
Class A-2 Allocation Percentage................. 21
Class A-2 Certificate Balance................... 8
Class A-2 Certificate Factor.................... 49
Class A-2 Certificate Principal Loss Amount..... 54
Class A-2 Certificate Rate...................... 2,10
Class A-2 Certificateholders.................... 10
Class A-2 Certificates.......................... 2,7
Class A-2 Interest.............................. 8
Class A-2 Interest Carryover Shortfall.......... 55
Class A-3 Allocation Percentage................. 21
Class A-3 Certificate Balance................... 8
<CAPTION>
TERM PAGE
- ------------------------------------------------ -----
<S> <C>
Class A-3 Certificate Factor.................... 49
Class A-3 Certificate Principal Loss Amount..... 54
Class A-3 Certificate Rate...................... 2,10
Class A-3 Certificateholders.................... 10
Class A-3 Certificates.......................... 2,7
Class A-3 Interest.............................. 8
Class A-3 Interest Carryover Shortfall.......... 55
Class B Allocation Percentage................... 56
Class B Certificate Balance..................... 9
Class B Certificate Principal Carryover
Shortfall..................................... 56
Class B Certificate Principal Loss Amount....... 54
Class B Certificate Rate........................ 53
Class B Certificateholders...................... 13
Class B Certificates............................ 2,7
Class B Interest................................ 8
Class B Interest Carryover Shortfall............ 55
Class B Percentage.............................. 13
Class Certificate Balance....................... 8
Closing Date.................................... 8
Code............................................ 88
Collection Period............................... 11
Collections..................................... 12,57
Commission...................................... 2
Contingent and Excess Liability Insurance
Policies...................................... 71
Contract Rights................................. 25
Contracts....................................... 6
Cooperative..................................... 63
Current Contracts............................... 70
Cutoff Dates.................................... 56
Deerfield Office................................ 34
Dealers......................................... 5
Definitive Certificates......................... 50
Delinquency Rate................................ 70
Delinquency Test................................ 70
Deposit Date.................................... 16
Depositaries.................................... 9
Determination Date.............................. 53
Discounted Contract............................. 11
Discounted Principal Balance.................... 15
Distribution Account............................ 65
Distribution Date............................... 2,9
DOL............................................. 92
DTC............................................. 9
DTC Participants................................ 61
Duff & Phelps................................... 93
Early Amortization Event........................ 58
Early Termination Charge........................ 41
ERISA........................................... 20,92
ERISA Compliance Test........................... 81
Euroclear....................................... 9
Euroclear Operator.............................. 63
Euroclear Participants.......................... 61
Events of Servicing Termination................. 82
Excess Collections.............................. 54
Exchange Act.................................... 2
Exemption....................................... 93
Extension Fee................................... 36
Fair, Isaac..................................... 35
Final Scheduled Distribution Date............... 10
First Bank...................................... 5
Fitch........................................... 93
Five State Area................................. 7
Foreign Investors............................... 91
</TABLE>
98
<PAGE> 101
<TABLE>
<CAPTION>
TERM PAGE
- ------------------------------------------------ -----
<S> <C>
Full Termination Ratio.......................... 37
Global Securities............................... 100
Indirect DTC Participants....................... 62
Initial Certificate Balance..................... 8
Initial Class A Certificate Balance............. 8
Initial Class A-1 Certificate Balance........... 8
Initial Class A-2 Certificate Balance........... 8
Initial Class A-3 Certificate Balance........... 8
Initial Class B Certificate Balance............. 8
Initial Contracts............................... 6
Initial Cutoff Date............................. 6
Initial Deposit................................. 18
Initial Leased Vehicles......................... 6
Insolvency Event................................ 28
Insolvency Laws................................. 28
Interest Collections............................ 12
Interest Period................................. 10
Investor Interest............................... 8
Investor Percentage............................. 13
IRS............................................. 88
JMFE............................................ 7,33
Lease Rate...................................... 15
Leased Vehicles................................. 6
Lemon Law....................................... 87
Liquidated Contract............................. 70
Liquidation Expenses............................ 16
Liquidation Proceeds............................ 16
Loan Rule....................................... 91
Loss Amounts.................................... 22
Matured Contract................................ 15
Matured Leased Vehicle Expenses................. 16
Matured Leased Vehicle Inventory................ 15
Matured Leased Vehicle Proceeds................. 16
Maturity Date................................... 41
Mobile Center................................... 34
Monthly Payments................................ 15
Moody's......................................... 20
Net Insurance Proceeds.......................... 66
Net Liquidation Proceeds........................ 12
Net Matured Leased Vehicle Proceeds............. 17
Net Repossessed Vehicle Proceeds................ 12
Nonrecoverable Advance.......................... 78
OID............................................. 89
Omnibus Proxy................................... 63
Origination Trust............................... 1,5
Origination Trust Agreement..................... 14
Origination Trust Assets........................ 1,32
Origination Trustee............................. 5
Other SUBI Assets............................... 24
Other SUBI Certificates......................... 31
Other SUBI Supplement........................... 74
Other SUBIs..................................... 5
Outstanding Principal Balance................... 15
Participants.................................... 61
Payment Ahead................................... 16
PBGC............................................ 25
Permitted Investments........................... 68
Prepayment...................................... 65
Prepayment Assumption........................... 47
Principal Allocation............................ 13
Principal Collections........................... 11
Rating Agencies................................. 20
Realized Value.................................. 41
Realization Test................................ 69
Reallocation Deposit Amount..................... 51
Reallocation Payment............................ 45
<CAPTION>
TERM PAGE
- ------------------------------------------------ -----
<S> <C>
Record Date..................................... 10
Registration Statement.......................... 2
Regulation...................................... 92
Repossessed Vehicle Expenses.................... 16
Repossessed Vehicle Proceeds.................... 16
Representative.................................. 94
Required Amount................................. 18
Required Deposit Ratings........................ 67
Reserve Fund.................................... 68
Reserve Fund Cash Requirement................... 68
Reserve Fund Deficiency......................... 68
Reserve Fund Supplemental Requirement........... 69
Reserve Fund Tests.............................. 69
Residual Value.................................. 15
Residual Value Loss Amount...................... 22
Residual Value Surplus.......................... 17
Residual Value Surplus Account.................. 67
Residual Value Tests............................ 69
Restricted Group................................ 94
Retained SUBI Interest.......................... 6
Revolving Period................................ 10
Schedule of Contracts and Leased Vehicles....... 44
Securities Act.................................. 2
Security Deposits............................... 78
Seller.......................................... 1,5
Seller Amounts.................................. 52
Seller Interest................................. 2,8
Seller Percentage............................... 52
Servicer........................................ 7
Servicer Letter of Credit....................... 66
Servicer's Certificate.......................... 80
Servicing Agreement............................. 7
Servicing Fee................................... 19
SET............................................. 7,33
Standard & Poor's............................... 20
SUBI............................................ 1,5
SUBI Assets..................................... 2,6
SUBI Certificate................................ 14
SUBI Collection Account......................... 65
SUBI Interest................................... 5
SUBI Supplement................................. 14
SUBI Trust Agreement............................ 14
Subsequent Contracts............................ 6
Subsequent Cutoff Date.......................... 56
Subsequent Leased Vehicles...................... 6
Support Agreement............................... 33
Terms and Conditions............................ 64
TMS............................................. 33
Transfer Date................................... 11
Trust........................................... 1,5
Trust Agent..................................... 14,75
Trustee......................................... 1,5
Turned-In Vehicle Test.......................... 69
UCC............................................. 25
Unallocated Principal Collections............... 52
Uncapped Administrative Expenses................ 54
Underwriters.................................... 94
Underwriting Agreement.......................... 94
U.S. Person..................................... 102
UTI............................................. 5
UTI Assets...................................... 24
UTI Certificates................................ 31
Voting Interests................................ 59
WOLSI........................................... 7
World Omni...................................... 1,5
</TABLE>
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<PAGE> 102
ANNEX 1
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Class A
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 DTC, Cedel or Euroclear. The Global Securities will be tradeable as home
market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective 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, 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 conventional eurobonds, except that there
will be no temporary global security and no "lock-up" or restricted period.
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 the
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 book-entry
securities 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
accounts of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or
100
<PAGE> 103
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, on the basis of actual days elapsed and a
360 day year. Payment will then be made by the respective Depositary to the DTC
Participant 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 to 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 Participants a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing systems, through the
respective Depositaries, 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 Depositaries, as appropriate, to deliver the bonds
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 on the basis of actual days elapsed and a
360 day year. 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 value 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
101
<PAGE> 104
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 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 Global
Securities that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 or the Tax Certificate changes, a new Form W-8
or Tax Certificate, as the case may be, must be filed within 30 days of such
change.
Exemption for non-U.S. Person with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are beneficial owners of Global Securities
residing in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
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 Certificate
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 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial 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
advisors for specific tax advice concerning their holding and disposing of the
Global Securities.
102
<PAGE> 105
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE SELLER OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS 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 THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE SELLER SINCE SUCH DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Index................................. 3
Overview of Transaction............... 4
Summary............................... 5
Risk Factors.......................... 21
The Trust and the SUBI................ 29
The Origination Trust................. 31
Use of Proceeds....................... 33
The Seller............................ 33
World Omni............................ 33
The Contracts......................... 39
Maturity, Prepayment and Yield
Considerations...................... 45
Class A Certificate Factors and
Trading Information; Reports to
Class A Certificateholders.......... 49
Description of the Certificates....... 50
Security for the Certificates......... 65
Additional Document Provisions........ 72
Certain Legal Aspects of the
Origination Trust and the SUBI...... 84
Certain Legal Aspects of the Contracts
and the Leased Vehicles............. 85
Certain Income Tax Considerations..... 88
ERISA Considerations.................. 92
Underwriting.......................... 94
Notice to Canadian Residents.......... 95
Ratings of the Class A Certificates... 96
Legal Matters......................... 97
Index of Capitalized Terms............ 98
Global Clearance, Settlement and Tax
Documentation Procedures............ 100
</TABLE>
------------------
UNTIL JANUARY , 1997 (90 DAYS AFTER THE COMMENCEMENT OF THE OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS. UPON RECEIPT OF A REQUEST BY AN INVESTOR WHO HAS RECEIVED AN
ELECTRONIC PROSPECTUS OR A REQUEST BY SUCH INVESTOR'S REPRESENTATIVE WITHIN THE
PERIOD DURING WHICH THERE IS A PROSPECTUS DELIVERY OBLIGATION, THE SELLER OR THE
UNDERWRITERS WILL PROMPTLY DELIVER, OR CAUSE TO BE DELIVERED, WITHOUT CHARGE, A
PAPER COPY OF THE PROSPECTUS.
- ------------------------------------------------------
- ------------------------------------------------------
[LOGO] WORLD OMNI
World Omni
1996-B Automobile Lease
Securitization Trust
$750,057,988 (Approximate)
$260,000,000 (Approximate)
% Automobile Lease
Asset Backed Certificates,
Class A-1
$280,000,000 (Approximate)
% Automobile Lease
Asset Backed Certificates,
Class A-2
$210,057,988 (Approximate)
% Automobile Lease
Asset Backed Certificates,
Class A-3
World Omni Lease
Securitization L.P.
Seller
World Omni Financial Corp.
Servicer
PROSPECTUS
CS First Boston
Merrill Lynch & Co.
BA Securities, Inc.
Salomon Brothers Inc
------------------------------------------------------
<PAGE> 106
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND PAYMENT.
Expenses in connection with the offering of the Class A Certificates being
registered herein are estimated as follows:
<TABLE>
<S> <C>
SEC registration fee...................................................... $227,333
Legal fees and expenses................................................... 200,000
Accounting fees and expenses.............................................. 50,000
Blue sky fees and expenses................................................ 25,000
Rating agency fees........................................................ 175,000
Trustee fees and expenses................................................. 25,000
Printing.................................................................. 45,000
Miscellaneous............................................................. 2,667
--------
Total........................................................... $750,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 17-108 of the Delaware Revised Uniform Limited Partnership Act
provides that, subject to such standards and restrictions, if any, as are set
forth in its partnership agreement, a limited partnership may, and shall have
the power to, indemnify and hold harmless any partner or other person from and
against any and all claims and demands whatsoever.
Pursuant to Section 4.08 of the Agreement of Limited Partnership of World
Omni Lease Securitization L.P. (the "Registrant"), the Registrant will, to the
fullest extent permitted by law, indemnify World Omni Lease Securitization,
Inc., the general partner of the Registrant, and its directors, officers,
shareholders, agents, affiliates and employees acting within the scope of their
authority against their losses and expenses sustained by reason of their acts on
behalf of the Registrant or in furtherance of the interests of the Registrant,
if the acts were not fraudulent or in bad faith and did not constitute willful
or wanton misconduct or gross negligence.
Reference is also made to Section 7 of the Underwriting Agreement (see
Exhibit 1.1), which provides for indemnification of the Registrant under certain
circumstances.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
a. Exhibits:
<TABLE>
<C> <C> <S>
1.1 -- Form of Underwriting Agreement
3.1 -- Articles of Incorporation of World Omni Lease Securitization, Inc. (incorporated by
reference from Exhibit 3.1 to Registration Statement on Form S-1, File No. 33-85036
(the "1994-B Registration Statement"))
3.2 -- Bylaws of World Omni Lease Securitization, Inc. (incorporated by reference from
Exhibit 3.2 to the 1994-B Registration Statement)
3.3 -- Amended and Restated Agreement of Limited Partnership of World Omni Lease
Securitization L.P. between World Omni Lease Securitization, Inc. and World Omni
Financial Corp., dated as of July 1, 1994 (incorporated by reference from Exhibit
3.3 to the 1994-B Registration Statement)
</TABLE>
II-1
<PAGE> 107
<TABLE>
<C> <C> <S>
4.1 -- Form of Securitization Trust Agreement between World Omni Lease Securitization L.P.
and First Bank National Association, as Trustee (including forms of Class A
Certificates)
5.1 -- Opinion of McDermott, Will & Emery with respect to legality
8.1 -- Opinion of Brown & Wood LLP with respect to federal income tax matters
8.2 -- Opinion of English, McCaughan & O'Bryan, P.A. with respect to certain Florida tax
matters
10.1 -- Second Amended and Restated Trust Agreement among Auto Lease Finance L.P., VT Inc.
and First Bank National Association (as successor to Bank of America Illinois),
dated as of July 1, 1994 (incorporated by reference from Exhibit 10.1 to the 1994-B
Registration Statement)
10.2 -- Form of Supplement 1996-B to Trust Agreement among Auto Lease Finance L.P., VT Inc.
and First Bank National Association (as successor to Bank of America Illinois)
(including form of the SUBI Certificate)
10.3 -- Second Amended and Restated Servicing Agreement between VT Inc. and World Omni
Financial Corp., dated as of July 1, 1994 (incorporated by reference from Exhibit
10.3 to the 1994-B Registration Statement)
10.4 -- Form of Supplement 1996-B to Servicing Agreement between VT Inc. and World Omni
Financial Corp.
10.5 -- Articles of Incorporation of Auto Lease Finance, Inc. (incorporated by reference
from Exhibit 10.5 to the 1994-B Registration Statement)
10.6 -- Bylaws of Auto Lease Finance, Inc. (incorporated by reference from Exhibit 10.6 to
the 1994-B Registration Statement)
10.7 -- Amended and Restated Agreement of Limited Partnership between Auto Lease Finance,
Inc. and World Omni Financial Corp., dated as of July 1, 1994 (incorporated by
reference from Exhibit 10.7 to the 1994-B Registration Statement)
10.8 -- Amendment No. 1 to Second Amended and Restated Trust Agreement among Auto Lease
Finance L.P., VT Inc. and First Bank National Association (as successor to Bank of
America Illinois), dated as of November 1, 1994 (incorporated by reference from
Exhibit 10.8 to the 1994-B Registration Statement)
10.9 -- Second Amended and Restated Assignment Agreement among World Omni Financial Corp.,
Auto Lease Finance L.P. and VT Inc., dated as of July 1, 1994 (incorporated by
reference from Exhibit 10.9 to Registration Statement on Form S-1, File No.
33-95404)
10.10 -- Amendment No. 1 to Second Amended and Restated Assignment Agreement among World Omni
Financial Corp., Auto Lease Finance L.P. and VT Inc., dated as of October 1, 1995
(incorporated by reference from Exhibit 10.10 to Registration Statement on Form S-1,
File No. 333-00794 (the "1996-A Registration Statement"))
10.11 -- Support Agreement, dated as of October 1, 1995 between World Omni Financial Corp.
and World Omni Lease Securitization L.P. (incorporated by reference from Exhibit
10.11 to the 1996-A Registration Statement)
10.12 -- Amendment No. 1 to Support Agreement between World Omni Financial Corp. and World
Omni Lease Securitization L.P., dated as of May 1, 1996*
10.13 -- Form of Amendment No. 2 to Support Agreement, between World Omni Financial Corp.,
and World Omni Lease Securitization L.P.
23.1 -- Consent of McDermott, Will & Emery (included as part of Exhibit 5.1)
23.2 -- Consent of Brown & Wood LLP (included as part of Exhibit 8.1)
23.3 -- Consent of English, McCaughan & O'Bryan, P.A. (included as part of Exhibit 8.2)
23.4 -- Consent of Williams & Connolly
23.5 -- Consent of Hand Arendall, L.L.C.
24.1 -- Power of Attorney*
</TABLE>
- ---------------
* Previously filed.
II-2
<PAGE> 108
b. Financial Statement Schedules:
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
(a) To provide to the Underwriters at the closing date specified in the
Underwriting Agreement certificates in such denominations and registered in such
names as required by the Underwriters to provide prompt delivery to each
purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person of
such Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) For purposes of determining any liability under the 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 Act will be deemed to be part of this registration statement as of the
time it was declared effective.
(d) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus will be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE> 109
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT ON FORM S-1 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF DEERFIELD BEACH AND STATE OF FLORIDA, ON THE 15TH DAY OF OCTOBER, 1996.
WORLD OMNI LEASE SECURITIZATION L.P.
By: WORLD OMNI LEASE SECURITIZATION, INC.,
as General Partner
By: /s/ A. TUCKER ALLEN
---------------------------------------
Name: A. Tucker Allen
Title: Vice President and Corporate
Treasurer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT ON FORM S-1 HAS BEEN SIGNED BELOW
BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------- -----------------
<C> <S> <C>
/s/ A. TUCKER ALLEN Director and Vice President and October 15, 1996
- ------------------------------------------ Corporate Treasurer of the
A. Tucker Allen General Partner of the
Registrant (Principal
Financial and Accounting
Officer)
* Director of the General Partner October 15, 1996
- ------------------------------------------ of the Registrant
Lawrence S. Rich
* Director of the General Partner October 15, 1996
- ------------------------------------------ of the Registrant
Jeffrey B. Shapiro
* Director of the General Partner October 15, 1996
- ----------------------------------------- of the Registrant
Christopher C. Wheeler
* Director and President of the October 15, 1996
- ------------------------------------------ General Partner of the
Daryl P. Smith Registrant (Principal
Executive Officer)
* A. TUCKER ALLEN
- ------------------------------------------
A. Tucker Allen
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 110
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGE
- ------ -------------------------------------------------------------------------------------
<C> <C> <S> <C>
1.1 -- Form of Underwriting Agreement..........................................
3.1 -- Articles of Incorporation of World Omni Lease Securitization, Inc.
(incorporated by reference from Exhibit 3.1 to Registration Statement on
Form S-1, File No. 33-85036 (the "1994-B Registration Statement"))
3.2 -- Bylaws of World Omni Lease Securitization, Inc. (incorporated by
reference from Exhibit 3.2 to the 1994-B Registration Statement)
3.3 -- Amended and Restated Agreement of Limited Partnership of World Omni
Lease Securitization L.P. between World Omni Lease Securitization, Inc.
and World Omni Financial Corp., dated as of July 1, 1994 (incorporated
by reference from Exhibit 3.3 to the 1994-B Registration Statement)
4.1 -- Form of Securitization Trust Agreement between World Omni Lease
Securitization L.P. and First Bank National Association, as Trustee
(including forms of Class A Certificates)...............................
5.1 -- Opinion of McDermott, Will & Emery with respect to legality.............
8.1 -- Opinion of Brown & Wood LLP with respect to federal income tax
matters.................................................................
8.2 -- Opinion of English, McCaughan & O'Bryan, P.A. with respect to certain
Florida tax matters.....................................................
10.1 -- Second Amended and Restated Trust Agreement among Auto Lease Finance
L.P., VT Inc. and First Bank National Association (as successor to Bank
of America Illinois), dated as of July 1, 1994 (incorporated by
reference from Exhibit 10.1 to the 1994-B Registration Statement)
10.2 -- Form of Supplement 1996-B to Trust Agreement among Auto Lease Finance
L.P., VT Inc. and First Bank National Association (as successor to Bank
of America Illinois) (including form of the SUBI Certificate)...........
10.3 -- Second Amended and Restated Servicing Agreement between VT Inc. and
World Omni Financial Corp., dated as of July 1, 1994 (incorporated by
reference from Exhibit 10.3 to the 1994-B Registration Statement)
10.4 -- Form of Supplement 1996-B to Servicing Agreement between VT Inc. and
World Omni Financial Corp...............................................
10.5 -- Articles of Incorporation of Auto Lease Finance, Inc. (incorporated by
reference from Exhibit 10.5 to the 1994-B Registration Statement)
10.6 -- Bylaws of Auto Lease Finance, Inc. (incorporated by reference from
Exhibit 10.6 to the 1994-B Registration Statement)
10.7 -- Amended and Restated Agreement of Limited Partnership between Auto Lease
Finance, Inc. and World Omni Financial Corp., dated as of July 1, 1994
(incorporated by reference from Exhibit 10.7 to the 1994-B Registration
Statement)
10.8 -- Amendment No. 1 to Second Amended and Restated Trust Agreement among
Auto Lease Finance L.P., VT Inc. and First Bank National Association (as
successor to Bank of America Illinois), dated as of November 1, 1994
(incorporated by reference from Exhibit 10.8 to the 1994-B Registration
Statement)
</TABLE>
<PAGE> 111
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGE
- ------ -------------------------------------------------------------------------------------
<C> <C> <S> <C>
10.9 -- Second Amended and Restated Assignment Agreement among World Omni
Financial Corp., Auto Lease Finance L.P. and VT Inc., dated as of July
1, 1994 (incorporated by reference from Exhibit 10.9 to Registration
Statement on Form S-1, File No. 33-95404)
10.10 -- Amendment No. 1 to Second Amended and Restated Assignment Agreement
among World Omni Financial Corp., Auto Lease Finance L.P. and VT Inc.,
dated as of October 1, 1995 (incorporated by reference from Exhibit
10.10 to Registration Statement on Form S-1, File No. 333-00794 (the
"1996-A Registration Statement"))
10.11 -- Support Agreement, dated as of October 1, 1995 between World Omni
Financial Corp. and World Omni Lease Securitization L.P. (incorporated
by reference from Exhibit 10.11 to the 1996-A Registration Statement)
10.12 -- Amendment No. 1 to Support Agreement between World Omni Financial Corp.
and World Omni Lease Securitization L.P., dated as of May 1, 1996*
10.13 -- Form of Amendment No. 2 to Support Agreement between World Omni
Financial Corp. and World Omni Lease Securitization L.P.................
23.1 -- Consent of McDermott, Will & Emery (included as part of Exhibit 5.1)
23.2 -- Consent of Brown & Wood LLP (included as part of Exhibit 8.1)
23.3 -- Consent of English, McCaughan & O'Bryan, P.A. (included as part of
Exhibit 8.2)
23.4 -- Consent of Williams & Connolly..........................................
23.5 -- Consent of Hand Arendall, L.L.C.........................................
24.1 -- Power of Attorney*
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 1.1
FORM OF UNDERWRITING AGREEMENT
WORLD OMNI 1996-B AUTOMOBILE LEASE SECURITIZATION TRUST
$__________
_____% Automobile Lease Asset Backed Certificates, Class A-1
$__________
_____% Automobile Lease Asset Backed Certificates, Class A-2
$__________
_____% Automobile Lease Asset Backed Certificates, Class A-3
UNDERWRITING AGREEMENT
October __, 1996
CS FIRST BOSTON CORPORATION
As Representative of the
Several Underwriters
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Dear Sirs:
1. Introductory. World Omni Lease Securitization L.P., a
Delaware limited partnership (the "Seller"), and World Omni Financial Corp., a
Florida corporation ("World Omni"), hereby confirm their respective agreements
with you and each of the other underwriters named in Schedule I hereto (the
"Underwriters"), for whom you are acting as representative (the
"Representative"), with respect to the sale by the Seller to the Underwriters
of $__________ aggregate principal amount of _____% Automobile Lease Asset
Backed Certificates, Class A-1 (the "Class A-1 Certificates"), $__________
aggregate principal amount of _____% Automobile Lease Asset Backed
Certificates, Class A-2 (the "Class A-2 Certificates") and $__________
aggregate principal amount of _____% Automobile Lease Asset Backed
Certificates, Class A-3 (the "Class A-3 Certificates" and, together with the
Class A-1 Certificates and the Class A-2 Certificates, the "Class A
Certificates") of the World Omni 1996-B Automobile Lease Securitization Trust
(the "Trust") under the terms and conditions herein contained. The sole
general partner of the Seller is World Omni Lease Securitization, Inc. (the
"General Partner" or "WOLSI"), a Delaware corporation and a wholly owned,
special purpose finance subsidiary of World Omni, and the sole limited partner
of the Seller is World Omni (in such capacity, the "Limited Partner").
Simultaneously with the issuance of the Class
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A Certificates, the Seller will cause the Trust to issue $__________ aggregate
principal amount of _____% Automobile Lease Asset Backed Certificates, Class B
(the "Class B Certificates" and, together with the Class A Certificates, the
"Investor Certificates"). The Investor Certificates will be issued pursuant to
a securitization trust agreement, dated as of October 1, 1996 (the
"Securitization Trust Agreement"), between the Seller and First Bank National
Association ("First Bank"), as trustee (in such capacity, the "Trustee"). The
Investor Certificates will represent undivided interests in the Trust. The
Seller will own the undivided interest in the Trust not evidenced by the
Investor Certificates (the "Seller Interest"). The Class B Certificates will
be subordinated to the Class A Certificates, and the certificate evidencing the
Seller Interest (the "Seller Certificate" and, together with the Investor
Certificates, the "Certificates") will be subordinated to the Investor
Certificates, in each case to the extent described in the Securitization Trust
Agreement. Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Securitization Trust Agreement.
The property of the Trust will consist primarily of an undivided 99.8%
interest (the "SUBI Interest") in a special unit of beneficial interest (the
"SUBI"), which, in turn, will evidence a beneficial interest in certain
specified assets of World Omni LT, an Alabama business trust (the "Origination
Trust"), and monies on deposit in the Reserve Fund, the Residual Value Surplus
Account and in certain other accounts (collectively, the "SUBI Assets"). The
assets of the Origination Trust (the "Origination Trust Assets") will consist
primarily of retail closed-end lease contracts assigned to the Origination
Trust by motor vehicle dealers in the World Omni network of dealers, the
automobiles and light duty trucks relating thereto and the proceeds thereof,
and payments made under certain insurance policies relating to such lease
contracts, the related lessees or such leased vehicles. The SUBI will not
evidence a direct interest in the SUBI Assets, nor will it represent a
beneficial interest in any Origination Trust Assets other than the SUBI Assets.
The SUBI Interest will be evidenced by a certificate (the "SUBI
Certificate") issued to Auto Lease Finance L.P., a Delaware limited partnership
("ALFI L.P."), by the Origination Trust pursuant to a trust agreement as
amended and restated as of July 1, 1994, as amended by Amendment No. 1 thereto
dated as of November 1, 1994, and as supplemented by a supplement dated as of
October 1, 1996 (collectively, the "SUBI Trust Agreement"), in each case among
ALFI L.P., as initial grantor and initial beneficiary, VT Inc., as trustee (the
"Origination Trustee"), and (for certain limited purposes only) First Bank, as
trust agent (in such capacity, the "Trust Agent"). The sole general partner of
ALFI L.P. is Auto Lease Finance, Inc. ("ALFI"), a Delaware corporation and a
wholly owned, special purpose finance subsidiary of World Omni, and the sole
limited partner of ALFI is World Omni. The SUBI Certificate will be sold by
ALFI L.P. to the Seller pursuant to the SUBI certificate purchase and sale
agreement, dated as of October 1, 1996 (the "Certificate Purchase and Sale
Agreement"), between the Seller and ALFI L.P. The Origination Trust Assets
(including the SUBI Assets) will be serviced by World Omni pursuant to a second
amended and restated servicing agreement dated as of July 1, 1994, as
supplemented by a servicing supplement dated as of October 1, 1996
(collectively, the "Servicing Agreement"), in each case between the Origination
Trustee and World Omni. The Securitization Trust Agreement, the SUBI Trust
Agreement, the Certificate Purchase and Sale Agreement, the Servicing
Agreement, the
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backup security agreement, dated as of October 1, 1996 (the "Backup Security
Agreement"), among World Omni, ALFI L.P., the Origination Trustee, the Seller
and the Trustee, the support agreement, dated as of October 1, 1995 (the
"Support Agreement"), by World Omni in favor of the Seller, and the
intercreditor agreement, dated as of November 1, 1994, among World Omni, ALFI
L.P., the Seller, the Trustee, the Origination Trustee, the Trust Agent and the
other parties named in Appendix A thereto, together with an accession agreement
thereto (collectively, the "Intercreditor Agreement"), between the Trustee and
the Seller, are referred to herein collectively as the "Basic Documents".
2. Representations and Warranties of the Seller and World Omni.
(a) Each of the Seller and World Omni, jointly and severally,
represents and warrants to, and agrees with, each of the Underwriters that:
(i) A registration statement on Form S-1 (No. 333-11449),
including a form of prospectus, relating to the Class A Certificates
has been filed with the Securities and Exchange Commission (the
"Commission") and either (1) has been declared effective under the
Securities Act of 1933, as amended (the "Act"), and is not proposed to
be amended or (2) is proposed to be amended by amendment or
post-effective amendment. If the Seller does not propose to amend
such registration statement and if any post-effective amendment to
such registration statement has been filed with the Commission prior
to the execution and delivery of this Agreement, the most recent such
post-effective amendment has been declared effective by the
Commission. For purposes of this Agreement, "Effective Time" means
(1) if the Seller has advised the Representative that it does not
propose to amend such registration statement, the date and time as of
which such registration statement, or the most recent post-effective
amendment thereto (if any) filed prior to the execution and delivery
of this Agreement, was declared effective by the Commission or (2) if
the Seller has advised the Representative that it proposes to file an
amendment or post-effective amendment to such registration statement,
the date and time as of which such registration statement, as amended
by such amendment or post- effective amendment, as the case may be, is
declared effective by the Commission. "Effective Date" means the date
of the Effective Time. Such registration statement, as amended at the
Effective Time, including all information, if any, deemed to be a part
of such registration statement as of the Effective Time pursuant to
Rule 430A(b) under the Act, and including the exhibits thereto, is
hereinafter referred to as the "Registration Statement", and the form
of prospectus relating to the Class A Certificates, in the form
transmitted to the Commission for filing pursuant to and in accordance
with Rule 424(b) under the Act ("Rule 424(b)"), or (if no such filing
is required) as included in the Registration Statement, is hereinafter
referred to as the "Prospectus". The Prospectus delivered to you for
use in connection with the offering of the Class A Certificates was
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system, except to the extent permitted by Regulation S-T.
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(ii) If the Effective Time is prior to the execution and
delivery of this Agreement: (A) on the Effective Date, the
Registration Statement conformed, and on the date of this Agreement
the Registration Statement will conform in all material respects with
the requirements of the Act and the rules and regulations of the
Commission promulgated under the Act (the "Rules and Regulations") and
at such times did not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (B) on the
date of this Agreement, at the time of the filing of the Prospectus
pursuant to Rule 424(b) and at the Closing Date (as such term is
defined in Section 3 hereof), the Prospectus will conform in all
material respects to the requirements of the Act and the Rules and
Regulations and does not include, or will not include, any untrue
statement of a material fact, nor does the Prospectus omit, nor will
it omit, any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. If the Effective Time is subsequent to the execution
and delivery of this Agreement: (A) on the Effective Date, the
Registration Statement and the Prospectus will conform in all material
respects to the requirements of the Act and the Rules and Regulations,
and the Registration Statement will not include any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, and (B) on the Effective Date, at the time of the filing
of the Prospectus pursuant to Rule 424(b), if required, and at the
Closing Date, the Prospectus will not include any untrue statement of
a material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The two immediately
preceding sentences do not apply to statements in or omissions from
the Registration Statement or Prospectus based upon written
information furnished to the Seller by any Underwriter through the
Representative specifically for use therein. The Prospectus delivered
to you for use in connection with this offering will be identical to
the electronically transmitted copies thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system, except to the extent permitted by Regulation S-T.
(iii) The Basic Documents, the SUBI Certificate and the
certificate evidencing the remaining 0.2% undivided interest in the
SUBI other than the SUBI Interest (the "Retained SUBI Certificate")
conform in all material respects to the descriptions thereof and the
statements in relation thereto contained in the Prospectus; the SUBI
Certificate and the Retained SUBI Certificate have been duly and
validly authorized and, when executed, issued, authenticated and
delivered in accordance with the SUBI Trust Agreement, will be duly
and validly issued and outstanding and entitled to the benefits of the
SUBI Trust Agreement.
(iv) The Certificates conform in all material respects to
the description thereof and the statements in relation thereto
contained in the Prospectus; the Certificates have been duly and
validly authorized and, when executed, issued, authenticated and
delivered in accordance with the Securitization Trust Agreement and,
in the case of the Class A Certificates, when delivered to the
Underwriters, against
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<PAGE> 5
payment of the consideration specified herein, will be duly and
validly issued and outstanding and entitled to the benefits of the
Securitization Trust Agreement.
(v) None of the Seller, World Omni, WOLSI, ALFI, ALFI
L.P., the Origination Trust or the Trust is now or, as a result of the
transactions contemplated by this Agreement, will become, an
"investment company", nor is any of them "controlled" by an
"investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act").
(vi) Each of the Contracts and Leased Vehicles allocated
as a SUBI Asset on the Closing Date or on the related Transfer Date
will meet the eligibility criteria for selection described in the SUBI
Trust Agreement.
(vii) Each Initial Contract is, and each Subsequent
Contract will be, in substantially one of the forms attached as an
Exhibit to the SUBI Trust Agreement and constitutes or will constitute
on the related Transfer Date the legal, valid, binding and enforceable
agreement of the parties thereto; and each Contract complies or will
comply on the Closing Date or on the related Transfer Date in all
material respects as to content and form with all applicable state and
federal laws, including without limitation, consumer protection laws.
(viii) At or prior to the Closing Date, the Origination
Trustee will have allocated Contracts and Leased Vehicles as SUBI
Assets that have an Aggregate Net Investment Value as of the Initial
Cutoff Date equal to $__________.
(b) The Seller and, to the extent specified below, World Omni, as
Limited Partner and on behalf of WOLSI as General Partner, jointly and
severally represent and warrant to, and agree with, each of the Underwriters
that:
(i) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise set forth therein, (A) there has been no material adverse
change or development resulting in a prospective material adverse
change in the condition, financial or otherwise, of the Seller or the
General Partner, whether or not arising in the ordinary course of
business and (B) there have been no transactions entered into by the
Seller or the General Partner, other than those in the ordinary course
of their respective businesses, that are material with respect to the
Seller or the General Partner.
(ii) The Seller has been duly formed and is validly
existing as a limited partnership under the Delaware Revised Uniform
Limited Partnership Act, 6 Del. C. Section 17-101 et seq. (the
"Delaware Act"), and all filings required at the date hereof under the
Delaware Act with respect to the due formation and valid existence of
the Seller as a limited partnership have been made; the Seller has all
requisite power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus or in the
World Omni Lease Securitization L.P. Amended and Restated Limited
Partnership Agreement, dated as of July 1, 1994 (the "WOLSI
Partnership
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Agreement"), between the General Partner and the Limited Partner, and
to enter into and to perform its obligations under the WOLSI
Partnership Agreement, this Agreement, each Basic Document to which
the Seller is a party or by which it may be bound and the
Certificates; the Seller is duly qualified or registered as a foreign
partnership to transact business and is in good standing in each
jurisdiction in which such qualification or registration is required,
whether by reason of the ownership of property or the conduct of
business, except where the failure to so qualify would not have a
material adverse effect on its condition, financial or otherwise.
(iii) The General Partner is the sole general partner of
the Seller and the Limited Partner is the sole limited partner of the
Seller and, at the Closing Date, each of the General Partner and the
Limited Partner will own its respective partnership interest in the
Seller (each of which is a nontransferable interest to the extent
provided under the WOLSI Partnership Agreement) free and clear of any
lien, mortgage, pledge, charge, encumbrance, adverse claim or other
security interest (collectively, "Liens") except as permitted by the
Basic Documents.
(iv) Neither the Seller nor the General Partner is in
violation of its organizational or charter documents, bylaws or the
WOLSI Partnership Agreement, as the case may be, or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which it is a party
or by which it may be bound, or to which any of its properties or
assets is subject; the execution, delivery and performance by each of
the Seller and the General Partner, as the case may be, of this
Agreement, the WOLSI Partnership Agreement, each Basic Document to
which it is a party and the Certificates, the consummation of the
transactions contemplated herein and therein and compliance by it with
its obligations hereunder and thereunder have been duly and validly
authorized by all necessary action (corporate or otherwise) and will
not conflict with or constitute a breach of or default under, or
result in the creation or imposition of any Lien (except as permitted
by the Basic Documents) upon any of its property or assets pursuant
to, any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which it may be a party, by which it may be bound
or to which any of its properties or assets is subject, nor will such
action result in any violation of the provisions of its charter or
organizational documents, bylaws or the WOLSI Partnership Agreement,
as the case may be, or any applicable law, administrative regulation
or administrative or court decree.
(v) There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now
pending or, to the knowledge of each of the Seller, the General
Partner and the Limited Partner, threatened, against or affecting the
Seller or the General Partner that is required to be disclosed in the
Registration Statement and that is not disclosed or that might result
in any material adverse change in its condition, financial or
otherwise, or in its earnings, business affairs or business prospects
or that might materially and adversely affect its properties or assets
or that might materially and adversely affect the consummation of this
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Agreement, the WOLSI Partnership Agreement or any Basic Document to
which either the Seller or the General Partner is a party or by which
it may be bound; all pending legal or governmental proceedings to
which the Seller or the General Partner is a party or of which any of
their respective properties or assets is the subject that are not
described in the Registration Statement, including ordinary routine
litigation incidental to their respective businesses, are, considered
in the aggregate, not material; and there are no contracts or
documents of the Seller, the General Partner or the Limited Partner
that are required to be filed as exhibits to the Registration
Statement by the Act or by the Rules and Regulations that have not
been so filed.
(vi) Except such as may be required by the Act, the Rules
and Regulations or state securities laws, no authorization, approval
or consent of any court, governmental authority or agency or any other
person is necessary in connection with (A) the issuance of the SUBI
Certificate or the Retained SUBI Certificate, (B) the issuance of the
Certificates or the offering and sale of the Investor Certificates,
(C) the execution, delivery and performance by the Seller of this
Agreement or any Basic Document to which it is a party and the
Certificates or (D) the consummation by the Seller of the transactions
contemplated hereby or thereby, except such authorizations, approvals
or consents as will have been obtained and are in full force and
effect as of the Closing Date.
(vii) Each of the Seller and the General Partner possesses
all material certificates, authorities, licenses and permits issued by
the appropriate state, federal or foreign regulatory agencies or
bodies as are necessary to conduct the business now operated by it,
and neither the Seller nor the General Partner has received notice of
any proceedings relating to the revocation or modification of any such
certificate, authority, license or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially and adversely affect its condition,
financial or otherwise.
(viii) This Agreement has been duly executed and delivered
by the General Partner for the Seller.
(ix) As of the Closing Date, each of the Basic Documents
to which either the Seller or the General Partner is a party and the
WOLSI Partnership Agreement has been duly executed and delivered by
the Seller, the General Partner or the Limited Partner, as the case
may be, and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, will constitute the legal, valid
and binding agreement of the Seller or the General Partner, as the
case may be, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting enforcement
of creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
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(x) The Seller will use the proceeds of the Class A
Certificates as described in the Prospectus under the caption "Use of
Proceeds".
(xi) As of the Closing Date, the representations and
warranties of the Seller and the General Partner in the WOLSI
Partnership Agreement and in each Basic Document to which it is a
party and in Officer's Certificates of the Seller and the General
Partner delivered on the Closing Date or on each Transfer Date, as the
case may be, will be true and correct, and each Underwriter may rely
on such representations and warranties as if they were set forth
herein in full.
(xii) None of the Seller, the General Partner or the
Limited Partner conducts business or has affiliates who conduct
business in Cuba or with the government of Cuba within the meaning of
Section 517.075 of the Florida Securities and Investors Protection Act
or Regulation Section 3E-900.001 promulgated thereunder.
(c) World Omni, on its own behalf and on behalf of ALFI, ALFI
L.P., WOLSI and the Origination Trustee, each to the extent indicated below,
represents and warrants to, and agrees with, each of the Underwriters that:
(i) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse
change or development resulting in a prospective material adverse
change in the condition, financial or otherwise, or in the earnings or
business affairs of ALFI, ALFI L.P., the Origination Trustee (in its
capacity as trustee of the Origination Trust) or World Omni and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, and (B) there have been no
transactions entered into by ALFI, ALFI L.P., the Origination Trustee
(in its capacity as trustee of the Origination Trust), World Omni or
any other subsidiary of World Omni, other than those in the ordinary
course of business, that are material with respect to the condition,
financial or otherwise, or the earnings or business affairs of ALFI,
ALFI L.P., the Origination Trustee (in its capacity as trustee of the
Origination Trust) or World Omni and its subsidiaries considered as
one enterprise.
(ii) World Omni has been duly incorporated, is current in
the payment of taxes to the State of Florida and fees to the Florida
Department of State and its status is "active"; World Omni has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and to
enter into and to perform its obligations under this Agreement, the
WOLSI Partnership Agreement, the Auto Lease Finance L.P. Amended and
Restated Limited Partnership Agreement, dated as of July 1, 1994 (the
"ALFI Partnership Agreement" and, together with the WOLSI Partnership
Agreement, the "Partnership Agreements"), between ALFI as general
partner and World Omni as limited partner, and each Basic Document to
which World Omni is a party or by which it may be bound; and World
Omni is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure
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<PAGE> 9
so to qualify would not have a material adverse effect on its
condition, financial or otherwise, or its earnings, business affairs
or business prospects or its ability to perform its obligations under
each Basic Document to which it is a party or by which it may be
bound.
(iii) Each of WOLSI and ALFI has been duly incorporated and
is validly existing as a corporation in good standing under the laws
of the State of Delaware, in each case with corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and to
perform its obligations under each Basic Document to which it is a
party or by which it may be bound; each of WOLSI and ALFI is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not
have a material adverse effect on its condition, financial or
otherwise, or its earnings or business affairs; all of the issued and
outstanding capital stock of each of WOLSI and ALFI is owned by World
Omni, free and clear of Liens and neither WOLSI nor ALFI has any
subsidiaries.
(iv) ALFI L.P. has been duly formed and is validly
existing as a limited partnership under the Delaware Act and all
filings required at the date hereof under the Delaware Act with
respect to the due formation and valid existence of ALFI L.P. as a
limited partnership thereunder have been made; ALFI L.P. has all
requisite power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus or the ALFI
Partnership Agreement, and to enter into and to perform its
obligations under the ALFI Partnership Agreement and each Basic
Document to which it is a party or by which it may be bound; ALFI L.P.
is duly qualified or registered as a foreign partnership to transact
business and is in good standing in each jurisdiction in which such
qualification or registration is required, whether by reason of the
ownership of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on its
condition, financial or otherwise, or its earnings or business
affairs.
(v) ALFI is the sole general partner of ALFI L.P. and
World Omni is the sole limited partner of ALFI L.P. and, at the
Closing Date, each of ALFI L.P. and World Omni will own its respective
partnership interest in ALFI L.P. (each of which is a nontransferable
interest to the extent provided under the ALFI Partnership Agreement)
free and clear of Liens.
(vi) The Origination Trust has been qualified as a
business trust under applicable Alabama law and all filings required
to be made in respect of the Origination Trust's status as a business
trust under the laws of each state in which such filings are required
have been made and are in full force and effect on the Closing Date,
except where the failure so to file would not have a material adverse
effect on its condition, financial or otherwise, or its earnings,
business affairs or business
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prospects or its ability to perform its obligations under each Basic
Document to which it is a party or by which it may be bound.
(vii) None of World Omni, ALFI or ALFI L.P. is in violation
of its organizational or charter documents, bylaws or each applicable
Partnership Agreement, as the case may be, or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which it is a party
or by which it may be bound, or to which any of its property or assets
is subject; the execution, delivery and performance by each of World
Omni, ALFI or ALFI L.P., as the case may be, of this Agreement, each
applicable Partnership Agreement and each Basic Document to which it
is a party and the consummation of the transactions contemplated
herein and therein and compliance by it with its obligations hereunder
and thereunder have been duly and validly authorized by all necessary
action (corporate or otherwise) and will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any Lien (except as permitted by the Basic Documents)
upon any of its properties or assets pursuant to, any material
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it may be bound, or to
which any of its properties or assets is subject, nor will such action
result in any violation of the provisions of its charter or
organizational documents, bylaws or each applicable Partnership
Agreement, as the case may be, or any applicable law, administrative
regulation or administrative or court decree.
(viii) There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of World Omni, threatened against or
affecting any of World Omni, ALFI, ALFI L.P. or the Origination
Trustee (in its capacity as trustee of the Origination Trust), that is
required to be disclosed in the Registration Statement and that is not
disclosed or that might result in any material adverse change in its
condition, financial or otherwise, or in its earnings, business
affairs or business prospects or that might materially and adversely
affect its properties or assets or that might materially and adversely
affect the consummation of this Agreement, each applicable Partnership
Agreement or any Basic Document to which it is a party or by which it
may be bound; and all pending legal or governmental proceedings to
which World Omni, ALFI, ALFI L.P. or the Origination Trustee (in its
capacity as trustee of the Origination Trust) is a party or of which
any of their respective properties or assets is the subject that are
not described in the Prospectus, including ordinary routine litigation
incidental to their respective businesses, are, considered in the
aggregate, not material.
(ix) No authorization, approval or consent of any court,
governmental authority or agency or any other person is necessary in
connection with the execution, delivery and performance by World Omni,
ALFI, ALFI L.P. or the Origination Trustee (in its capacity as trustee
of the Origination Trust) of this Agreement, each applicable
Partnership Agreement or any Basic Document to which any of them is a
party or the consummation by any of them of the transactions
contemplated hereby or
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thereby, except such authorizations, approvals or consents as will
have been obtained and are in full force and effect as of the Closing
Date.
(x) Each of World Omni, ALFI, ALFI L.P. and the
Origination Trustee (in its capacity as trustee of the Origination
Trust) possesses all material certificates, authorities, licenses or
permits issued by the appropriate state, federal or foreign regulatory
agencies or bodies as are necessary to conduct the business now
operated by it, and none of them has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority, license or permit that, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially and adversely affect its condition,
financial or otherwise, or its earnings, business affairs or business
prospects or its ability to perform its obligations under each Basic
Document to which it is a party or by which it may be bound.
(xi) This Agreement has been duly executed and delivered
by World Omni.
(xii) As of the Closing Date, each Basic Document to which
any of World Omni, ALFI or ALFI L.P. is a party and the ALFI
Partnership Agreement has been duly executed and delivered by World
Omni, ALFI or ALFI L.P., as the case may be, and, assuming the due
authorization, execution and delivery thereof by the other parties
thereto, will constitute the legal, valid and binding agreement of
World Omni, ALFI or ALFI L.P., as the case may be, enforceable in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting enforcement of creditors' rights generally and
by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(xiii) At the time of execution and delivery of the 1996-B
SUBI Supplement on the Closing Date, the Origination Trustee on behalf
of the Origination Trust will have good and marketable title to the
Initial Contracts, the related Contract Rights, the Initial Leased
Vehicles and other rights relating to the Initial Contracts and the
Initial Leased Vehicles being allocated as SUBI Assets pursuant
thereto, free and clear of Liens (except as permitted by the Basic
Documents and other than the administrative lien in favor of Bank of
America Trust Company of Florida, N.A. or AL Holding Corp. (the
"Administrative Lien")) and will not have assigned to any person any
of its right, title or interest in any such Contracts, Contract
Rights, Leased Vehicles or other rights, or shall have obtained the
release of any such prior assignment.
(xiv) On each Transfer Date the Origination Trustee on
behalf of the Origination Trust will have good and marketable title to
the related Subsequent Contracts, the related Contract Rights, the
related Subsequent Leased Vehicles and other rights relating to such
Subsequent Contracts and Subsequent Leased Vehicles being allocated as
SUBI Assets pursuant thereto, free and clear of Liens (other than the
Administrative Lien), and will not have assigned to any person any of
its right, title or interest in any such Subsequent Contracts,
Contract Rights, Subsequent Leased
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<PAGE> 12
Vehicles or other rights, or shall have obtained the release of any
such prior assignment.
(xv) As of the Closing Date, the representations and
warranties of each of World Omni, ALFI and WOLSI in the applicable
Partnership Agreement and in each Basic Document to which it is a
party and in Officer's Certificates of World Omni, ALFI and WOLSI,
delivered on the Closing Date or on each Transfer Date, as the case
may be, will be true and correct, and each Underwriter may rely on
such representations and warranties as if they were set forth herein
in full.
(xvi) At or prior to the Closing Date, World Omni, as
Servicer under the Servicing Agreement, has made the appropriate
allocation of assets within the estate of the Origination Trust as the
SUBI Assets required by the SUBI Trust Agreement.
(xvii) As of the Closing Date, the Origination Trustee has
not assigned to any person any of its right, title or interest in any
of the Contracts, Contract Rights, Leased Vehicles or other related
rights constituting the SUBI Assets, or has obtained the release of
each such prior assignment.
(d) Any Officer's Certificate signed by any officer of the Seller,
World Omni, WOLSI, ALFI or ALFI L.P. and delivered to the Representative or
counsel for the Underwriters shall be deemed a representation and warranty of
the Seller, World Omni, WOLSI, ALFI or ALFI L.P., as the case may be, to each
Underwriter as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Class A Certificates. On
the basis of and in reliance on the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Seller agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Seller the
aggregate principal amount of each Class of Class A Certificates set forth in
Schedule I opposite the name of such Underwriter, at a purchase price equal to
the following percentages of the aggregate initial principal balances thereof,
(i) in the case of the Class A-1 Certificates, __________%, (ii) in the case of
the Class A-2 Certificates, __________% and (ii) in the case of the Class A-3
Certificates, __________%.
Each Class of Class A Certificates will initially be represented by
one or more certificates registered in the name of Cede & Co., as the nominee
of The Depository Trust Company ("DTC"). The interests of beneficial owners of
each Class of Class A Certificates will be represented by book entries on the
records of DTC and participating members thereof. Definitive certificates
evidencing the Class A Certificates will be available only under the limited
circumstances specified in the Securitization Trust Agreement.
The Seller will deliver the Class A Certificates to the Representative
for the respective accounts of the Underwriters, against payment of the
purchase price therefor in immediately available funds payable to the order of
the Seller, at the office of Williams & Connolly, 725 Twelfth Street, N.W.,
Washington, D.C. 20005 (or at such other location as agreed upon
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<PAGE> 14
among the Seller, World Omni and the Representative) at 10:00 A.M., Washington
D.C. time, on October __, 1996, or at such other time not later than five full
business days thereafter, as the Seller, World Omni and the Representative
determine, such time being herein referred to as the "Closing Date". The
certificates evidencing the Class A Certificates will be made available for
inspection at the above offices of Williams & Connolly (or at such other
location agreed upon among the Seller, World Omni and the Representative) at
least 24 hours prior to the Closing Date.
Pursuant to Rule 15c6-1(d) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the Seller, World Omni and the Underwriters
have agreed that the Closing Date will be not less than five business days
following the date hereof. The Seller, World Omni and the Underwriters further
agree that upon receipt by an investor who has received an electronic
Prospectus or a request by such investor's representative (whether such request
is delivered to an Underwriter or the Seller) during the period during which
there is an obligation to deliver a Prospectus, the Underwriters will promptly
deliver or cause to be delivered without charge, a paper copy of the
Prospectus.
4. Offering by the Underwriters. It is understood that the
Underwriters propose to offer the Class A Certificates for sale to the public
as set forth in the Prospectus.
5. Certain Agreements of the Seller and World Omni. Each of the
Seller and World Omni, as the case may be, jointly and severally covenants and
agrees with each of the Underwriters that:
(a) If the Effective Time is prior to the execution and delivery
of this Agreement, the Seller will file the Prospectus with the Commission
pursuant to and in accordance with subparagraph (1) (or, if applicable and if
consented to by the Representative, subparagraph (4)) of Rule 424(b), not later
than the second business day following the execution and delivery of this
Agreement. The Seller will advise the Representative promptly of any such
filing pursuant to Rule 424(b).
(b) The Seller will advise the Representative promptly of any
proposal to amend or supplement the registration statement as filed or the
related prospectus or the Registration Statement or the Prospectus and will not
effect any such amendment or supplement without the consent of the
Representative. The Seller will advise the Representative promptly of the
effectiveness of the Registration Statement (if the Effective Time is
subsequent to the execution and delivery of this Agreement), of any amendment
or supplement of the Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of the
Registration Statement. The Seller will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its lifting,
if issued.
(c) If, at any time when a prospectus relating to the Class A
Certificates is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
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<PAGE> 15
circumstances under which they were made, not misleading, or if it is necessary
at any time to amend or supplement the Prospectus to comply with the Act, the
Seller promptly will prepare and file, or cause to be prepared and filed, with
the Commission an amendment or supplement that will correct such statement or
omission or effect such compliance. Neither the consent of the Representative
to, nor the delivery by any Underwriter of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section 6
hereof.
(d) As soon as practicable, but not later than the Availability
Date (as defined below), the Seller will cause the Trustee to make generally
available to the Class A Certificateholders an earnings statement covering a
period of at least 12 months beginning after the Effective Date that will
satisfy the provisions of Section 11(a) of the Act. For the purpose of the
preceding sentence, "Availability Date" means the 45th day after the end of the
fourth fiscal quarter following the fiscal quarter that includes the Effective
Date, except that, if such fourth fiscal quarter is the last quarter of the
Seller's fiscal year, "Availability Date" means the 90th day after the end of
such fourth fiscal quarter.
(e) The Seller will furnish to the Representative copies of the
registration statement as originally filed with the Commission and each
amendment thereto (in each case at least one of which will be signed and will
include all exhibits), each related preliminary prospectus, the Prospectus and
all amendments and supplements to such documents, in each case as soon as
available and in such quantities as the Representative may reasonably request.
(f) The Seller will arrange for the qualification of the Class A
Certificates for sale under the laws of such jurisdictions in the United States
as the Representative may designate and will continue such qualifications in
effect so long as required for the distribution of the Class A Certificates,
provided that the Seller shall not be obligated to qualify to do business nor
become subject to service of process generally, but only to the extent required
for such qualification, in any jurisdiction in which it is not currently so
qualified.
(g) So long as any Investor Certificates are outstanding, the
Seller or World Omni, as the case may be, will make good faith efforts to
deliver or cause to be delivered to the Representative, as soon as each becomes
available, copies of (i) each report relating to the Investor Certificates
delivered to Certificateholders pursuant to Section 3.06 of the Securitization
Trust Agreement, (ii) the annual statement as to compliance and the annual
statement of a firm of independent public accountants furnished pursuant to
Sections 3.02, 3.03 or 10.02 of the Servicing Agreement, (iii) each certificate
or notice delivered by the Servicer pursuant to Section 10.03 of the Servicing
Agreement, (iv) each periodic report required to be filed by the Seller with
the Commission pursuant to the Exchange Act, or any order of the Commission
thereunder, and (v) such other information concerning the Seller, World Omni,
ALFI, WOLSI, ALFI L.P., the Origination Trustee (in its capacity as trustee of
the Origination Trust), the Origination Trust, the Trust or the Certificates as
the Representative may reasonably request from time to time.
(h) The Seller and World Omni will pay all expenses incident to
the performance of their respective obligations under this Agreement, including
without limitation, (i) expenses incident to the word processing, printing,
reproduction and distribution of the registration
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<PAGE> 16
statement as originally filed with the Commission and each amendment thereto,
preliminary prospectuses and the Prospectus (including any amendments and
supplements thereto), (ii) the fees and disbursements of the Origination
Trustee, the Trustee, the Trust Agent and their respective counsel, (iii) the
fees and disbursements of counsel and the independent public accountants of the
Seller and World Omni, (iv) the fees charged by each of Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's Ratings Services ("Standard &
Poor's" and, together with Moody's, the "Rating Agencies") in connection with
the rating of each Class of Investor Certificates, (v) the fees of DTC in
connection with the book-entry registration of the Class A Certificates, and
(vi) expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto) by the
Underwriters, and will reimburse the Underwriters for any expenses (including
reasonable fees and disbursements of counsel) incurred by the Underwriters
pursuant to Section 5(f) hereof in connection with the qualification of the
Class A Certificates for sale under the laws of such jurisdictions in the
United States as the Representative may designate. If this Agreement is
terminated by the Representative in accordance with the provisions of Section 6
or clause (i) or clause (ii) of Section 10 hereof, the Seller and World Omni
shall reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel to the Underwriters.
(i) For a period of 45 days from the date hereof, none of the
Seller, World Omni or any of their respective affiliates will, without the
prior written consent of the Representative, directly or indirectly, offer,
sell or contract to sell or announce the offering of, in a public or private
transaction, any other collateralized securities similar to the Class A
Certificates.
(j) So long as any Class A Certificates are outstanding, the
Seller and World Omni will cause to be delivered to the Representative a
reliance letter relating to each Opinion of Counsel delivered to the Trustee or
any Rating Agency by counsel to the Seller or counsel to World Omni pursuant to
the Basic Documents.
(k) To the extent, if any, that the rating provided with respect
to any Class of Class A Certificates by any Rating Agency is conditional upon
the furnishing of documents or the taking of any other actions by the Seller or
World Omni, the Seller or World Omni, as the case may be, shall furnish such
documents and take any such other actions.
(l) The Seller will file with the Commission such report on Form
SR as may be required pursuant to Rule 463 under the Act.
6. Conditions of the Obligations of the Underwriters. The
obligation of the several Underwriters to purchase and pay for the Class A
Certificates will be subject to the accuracy of the respective representations
and warranties on the part of the Seller and World Omni herein, to the accuracy
of the statements of the respective officers of the Seller and World Omni made
pursuant to the provisions hereof, to the performance by the Seller and World
Omni of their respective obligations hereunder and to the following additional
conditions precedent:
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<PAGE> 17
(a) On (i) the date of this Agreement, the Representative and the
Seller shall have received a letter or letters, dated the date of delivery
thereof (which, if the Effective Time is prior to the execution and delivery of
this Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time is subsequent to the execution and delivery of this Agreement,
shall be prior to the filing of the amendment or post-effective amendment to
the registration statement to be filed shortly prior to the Effective Time), of
Arthur Andersen LLP ("Arthur Andersen") confirming that they are independent
public accountants within the meaning of the Act and the Rules and Regulations,
substantially in the form of the draft or drafts to which the Representative
has previously agreed and otherwise in form and in substance satisfactory to
the Representative and counsel for the Underwriters, and (ii) on the Closing
Date, the Representative and the Seller shall have received a letter or
letters, dated as of the Closing Date, from Arthur Andersen, updating each
letter delivered pursuant to clause (i) above, in form and substance
satisfactory to the Representative and counsel for the Underwriters.
(b) If the Effective Time has not occurred prior to the date of
this Agreement, the Effective Time shall be the date of execution and delivery
of this Agreement, or the next business day after the date of this Agreement or
such later date as shall have been consented to by the Representative. If the
Effective Time is prior to the execution and delivery of this Agreement, the
Prospectus shall have been filed with the Commission in accordance with the
Rules and Regulations and Section 5(a) hereof. Prior to the Closing Date, no
stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or, to the knowledge of the Seller, World Omni or the Representative, shall be
contemplated by the Commission.
(c) The Representative shall have received a certificate dated the
Closing Date of the President, any Vice President or the Treasurer or any
Assistant Treasurer of the General Partner of the Seller and the President, any
Vice President or the Treasurer or any Assistant Treasurer of World Omni in
which such officer shall state (i) in the case of the Seller, that (A) the
representations and warranties of the Seller in each Basic Document to which
the Seller is a party and in this Agreement are true and correct, (B) to the
best knowledge of such officer after reasonable investigation, the Seller has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are contemplated by the
Commission and (C) subsequent to the date of this Agreement, there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Seller except as set
forth in or contemplated by the Prospectus and (ii) in the case of World Omni,
that (A) the representations and warranties of World Omni in each Basic
Document to which World Omni is a party and in this Agreement are true and
correct, (B) to the best knowledge of such officer after reasonable
investigation, World Omni has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder and (C)
subsequent to the date of this Agreement, there has been no material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of World Omni except as set forth in or
contemplated by the Prospectus.
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<PAGE> 18
(d) The Representative shall have received:
(1) The favorable opinions of (A) Williams & Connolly,
counsel to the Seller and World Omni, (B) Hand Arendall, L.L.C.,
special Alabama counsel to the Seller and World Omni, (C) English,
McCaughan & O'Bryan, P.A., special Florida counsel to the Seller and
World Omni, (D) McDermott, Will & Emery, special Illinois and New York
counsel to the Seller and World Omni, (E) Richards, Layton & Finger,
P.A., special Delaware counsel to the Seller and ALFI L.P, (F) Burbage
& Weddell L.L.C., special Georgia counsel to the Seller and World
Omni, and (G) Roy W. Day, P.A., special North Carolina counsel to the
Seller and World Omni, in each case dated the Closing Date and
satisfactory in form and substance to the Representative and counsel
for the Underwriters, and, in the aggregate substantially to the
effect that:
(i) World Omni has been incorporated
under the Florida General Corporation Act, is current in the
payment of fees due to the Florida Department of State and its
status is active; World Omni has corporate power and authority
to own, lease and operate its properties and to conduct its
business as presently conducted and to enter into and perform
its obligations under this Agreement, each Partnership
Agreement and each Basic Document to which World Omni is a
party; to the best of their knowledge, World Omni is duly
qualified as a foreign corporation to transact business and is
in good standing in Alabama, Georgia, North Carolina and South
Carolina; and, to the best of their knowledge, all of the
issued and outstanding capital stock of WOLSI and ALFI is
owned by World Omni, free and clear of Liens.
(ii) Each of WOLSI and ALFI has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with
corporate power and authority to own, lease and operate its
properties, to conduct its business as described in the
Registration Statement and to enter into and perform its
obligations under the related Partnership Agreement and each
Basic Document to which the Seller or ALFI L.P. is a party; to
the best of such counsel's knowledge and information, each of
WOLSI and ALFI is duly qualified as a foreign corporation to
transact business in Florida and Alabama; and the shares of
issued and outstanding capital stock of each of WOLSI and ALFI
have been duly authorized and validly issued and are fully
paid and non- assessable.
(iii) Each of the Seller and ALFI L.P. is
duly qualified and registered as a foreign partnership to
transact business and is in good standing in Alcabama and
Florida.
(iv) This Agreement has been duly
authorized, executed and delivered by WOLSI, as General
Partner, and World Omni.
(v) The Origination Trust has been
qualified as a business trust under applicable Alabama law and
what is commonly known as a business
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trust under Chapter 609 of the Florida Statutes, and all filings
required to be made in respect of the Origination Trust's status as a
business trust under the laws of the States of Alabama and Florida
have been made and are in full force and effect on the Closing Date.
(vi) The Certificates are in due and
proper form, all conditions precedent provided for in the
Securitization Trust Agreement relating to the issuance,
authentication and delivery of the Certificates have been
complied with and the Certificates have been duly and validly
authorized and, when executed, issued, authenticated and
delivered pursuant to the Securitization Trust Agreement, and,
in the case of the Class A Certificates, when delivered to the
Underwriters against payment of the consideration set forth in
this Agreement, will be duly and validly issued and
outstanding and entitled to the benefits of the Securitization
Trust Agreement.
(vii) Each Partnership Agreement and each
Basic Document to which the Seller, WOLSI, ALFI, ALFI L.P. and
World Omni is a party has been duly authorized, executed and
delivered by the Seller, WOLSI, ALFI, ALFI L.P. and World
Omni, as the case may be, and, assuming the due authorization,
execution and delivery thereof by the other parties thereto,
will constitute the legal, valid and binding agreement of such
entity enforceable against such entity in accordance with its
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting enforcement of creditors' rights
generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law). (In rendering such opinion as to the
enforceability of a Basic Document, counsel shall state that
in the event of a conflict of law arising under such Basic
Document, the governing law of such Basic Document will apply
without regard to any otherwise applicable principles of
conflicts of laws in the related state).
(viii) To the best knowledge and
information of such counsel, (A) there are no legal or
governmental proceedings pending or threatened that are
required to be disclosed in the Registration Statement other
than those disclosed therein and (B) all pending legal or
governmental proceedings to which the Seller, WOLSI, ALFI,
ALFI L.P., the Origination Trustee (in its capacity as trustee
of the Origination Trust) or World Omni is a party or to which
any of their respective properties or assets is subject that
are not described in the Registration Statement, including
ordinary routine litigation incidental to the business of such
entity, are, considered in the aggregate with respect to the
Seller, WOLSI, ALFI, ALFI L.P., the Origination Trustee (in
its capacity as trustee of the Origination Trust) or World
Omni as the case may be, not material.
(ix) The statements in the Prospectus
under the captions "Summary", "Risk Factors", "Description of
the Certificates", "Security for the
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<PAGE> 20
Certificates" and "Additional Document Provisions", insofar as
such statements purport to summarize certain terms
or provisions of the SUBI Interest, the Retained SUBI
Interest, the Certificates, the Basic Documents and the
Contingent and Excess Liability Insurance Policies, provide a
fair summary of such provisions, and the statements in the
Prospectus under "Risk Factors -- Structural Considerations",
"-- Consumer Protection Laws", "-- ERISA Liabilities", "--
Vicarious Tort Liability", "-- Insolvency of World Omni;
Substantive Consolidation with World Omni" and "-- Legal
Proceedings", "Additional Document Provisions", "Certain Legal
Aspects of the Origination Trust and the SUBI", "Certain Legal
Aspects of the Contracts and the Leased Vehicles" and "ERISA
Considerations", to the extent that they constitute matters of
law, summaries of legal matters, documents or proceedings or
legal conclusions relating to U.S. federal law or the laws of
the States of Florida, Georgia or North Carolina have been
prepared or reviewed by such counsel and are correct in all
material respects.
(x) To the best knowledge and
information of such counsel, (A) there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto
other than those described or referred to therein or filed as
exhibits thereto, (B) the descriptions thereof or references
thereto are correct and (C) no default exists in the due
performance or observance of any material obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument so described, referred to or filed.
(xi) No authorization, approval, consent
or order of any court or governmental authority or agency is
required in connection with the issuance of the SUBI
Certificate, the Retained SUBI Certificate or the
Certificates, the offering of the Investor Certificates or the
sale of the Class A Certificates to the Underwriters, except
those authorizations, approvals, consents and orders which
have previously been obtained and are in full force and effect
as of the Closing Date; provided, that such counsel need
express no opinion as to state securities laws.
(xii) None of (A) the execution, delivery
and performance by the Seller or World Omni of this Agreement
or by the Seller, WOLSI, ALFI, ALFI L.P. or World Omni of any
applicable Partnership Agreement or any Basic Document to
which such entity is a party, (B) the consummation of the
transactions contemplated herein or therein by any such entity
or (C) the fulfillment of the terms hereof or thereof by any
such entity will conflict with, result in a breach of, or
constitute a default under, or with the giving of notice or
the passage of time or both, would constitute a default under
or result in the creation or imposition of any Lien (except as
permitted by the Basic Documents) upon any property or assets
of such entity pursuant to the terms of (i) the
organizational, charter or partnership documents or bylaws of
such
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<PAGE> 21
entity, (ii) to the best knowledge and information of
such counsel and except as otherwise provided in the Basic
Documents, any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which such entity is a
party or by which it may be bound, or to which any of the
properties or assets of such entity is subject or (iii) any
applicable law, statute or regulation or, to the best
knowledge and information of such counsel, any judgment, order
or decree applicable to such entity of any court, regulatory
body or other governmental instrumentality having jurisdiction
over such entity except, in the case of clauses (ii) and (iii)
above, for defaults, breaches or violations that do not, in
the aggregate, have a material adverse effect on such entity.
(xiii) None of the Seller, WOLSI, ALFI,
ALFI L.P., World Omni, the Origination Trust or the Trust is
an "investment company" or is "controlled" by an "investment
company" as such terms are defined in the Investment Company
Act.
(xiv) The Registration Statement has
become effective under the Act, and, to the best knowledge and
information of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or
are pending or contemplated under the Act, and the
Registration Statement and the Prospectus, and each amendment
or supplement thereto, as of their respective effective or
issue dates, complied as to form in all material respects with
the requirements of the Act and the Rules and Regulations.
Such counsel has no reason to believe that either the
Registration Statement, at the Effective Time, or any such
amendment or supplement, as of its effective date, contained
any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the
Prospectus, at the date of this Agreement (or any such
amendment or supplement, as of its respective date) or at the
Closing Date included or includes an untrue statement of a
material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; it being understood that such counsel need express
no opinion as to the financial statements or other financial
or statistical data contained in the Registration Statement or
the Prospectus.
(xv) Neither the SUBI Trust Agreement nor
the Securitization Trust Agreement is required to be qualified
under the Trust Indenture Act of 1939, as amended.
(xvi) The Origination Trustee will own or
have a first priority perfected security interest in the SUBI
Collection Account, the Residual Value Surplus Account and the
proceeds thereof (including Permitted Investments) for so long
as they are held in such accounts, and the Trustee will own or
have a first priority perfected security interest in the
Distribution Account and the
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<PAGE> 22
Reserve Fund and the proceeds thereof (including Permitted
Investments) for so long as they are held in such accounts.
(xvii) The transfer of the SUBI Certificate
by ALFI L.P. to the Seller constitutes a sale of the SUBI
Certificate and the SUBI Assets evidenced thereby. The
transfer of the SUBI Certificate by the Seller to the Trust
(A) constitutes a sale of the SUBI Certificate and the SUBI
Assets evidenced thereby or (B) if such transfer does not
constitute a sale, then the Securitization Trust Agreement and
the delivery to and possession by the Securitization Trustee
of the SUBI Certificate creates a valid first priority
perfected security interest, for the benefit of the
Securitization Trustee on behalf of the Certificateholders, in
ALFI L.P.'s and the Seller's right, title and interest in the
SUBI Certificate.
(xviii) Each of the Seller, WOLSI, ALFI,
ALFI L.P., World Omni and the Origination Trustee (in its
capacity as trustee of the Origination Trust) possesses such
certificates, authorities, licenses, permits and other
governmental authorizations issued by Alabama and Florida, in
the case of the Seller, WOLSI, ALFI, ALFI L.P. and World Omni,
and by the States of Alabama, Florida, Georgia and North
Carolina, in the case of the Origination Trustee (on behalf of
the Origination Trust), materially necessary to conduct the
business now operated by it, and none of such entities has
received any notice of proceedings relating to the revocation
or modification of any such certificate, authority, license or
permit that, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and
adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of such
entity.
(xix) The choice of law provisions
contained in each dealer agreement between World Omni and a
dealer that originates lease contracts comprising Origination
Trust Assets are valid and enforceable under the laws of
Alabama, Georgia and North Carolina.
(xx) The assignment provisions contained
in each dealer agreement between World Omni and a dealer that
originates lease contracts comprising Origination Trust Assets
are valid and enforceable under the laws of the State in which
such dealer originates such lease contracts.
(xxi) In the event that the transaction
contemplated by the Basic Documents is deemed to be a secured
loan, assuming the chief executive office of the Origination
Trustee is located in the State of Illinois and the timely
filing of an appropriate UCC Financing Statement with the
Secretary of the State of Illinois, the grant by the
Origination Trustee to the Securitization Trustee of a
security interest in the 1996-B Leases pursuant to the Backup
Security Agreement will create a valid, first priority
perfected security interest in the 1996-B Leases.
21
<PAGE> 23
(2) The favorable opinion of Hand Arendall, L.L.C.,
special Alabama counsel to the Seller and World Omni, dated the
Closing Date and satisfactory in form and substance to the
Representative and counsel to the Underwriters, and substantially to
the effect that:
(i) The SUBI Certificate and the
Retained SUBI Certificate have been duly and validly
authorized and, when executed, issued, authenticated and
delivered pursuant to the SUBI Trust Agreement, will be duly
and validly issued and outstanding and entitled to the
benefits of the SUBI Trust Agreement.
(ii) The lease contracts originated in
Alabama are "true leases" for purposes of Alabama law.
(iii) In the event that the transaction
contemplated by the Basic Documents is deemed to be a secured
loan, assuming the chief executive office of the Origination
Trustee is located in the State of Alabama and the timely
filing of an appropriate UCC Financing Statement with the
Secretary of the State of Alabama, the grant by the
Origination Trustee to the Securitization Trustee of a
security interest in the 1996-B Leases pursuant to the Backup
Security Agreement will create a valid, first priority
perfected security interest in the 1996-B Leases.
(3) The favorable opinion of Richards, Layton & Finger,
P.A., special Delaware counsel to the Seller and World Omni, dated the
Closing Date and satisfactory in form and substance to the
Representative and counsel to the Underwriters, to the effect that:
(i) Each of the Seller and ALFI L.P. has
been duly formed and is validly existing in good standing as a
limited partnership under the Delaware Act with all requisite
power under the Delaware Act and the related Partnership
Agreement to enter into and perform its obligations under this
Agreement, the related Partnership Agreement and each Basic
Document to which it is a party.
(ii) The execution and delivery of and
performance under the related Partnership Agreement and each
Basic Document to which the Seller or ALFI L.P. is a party (A)
have been duly authorized by all requisite partnership action
on the part of the Seller or ALFI L.P., (B) are permitted
under the Delaware Act and the related Partnership Agreement
and (C) will not violate any Delaware statute or regulation;
provided that such counsel need express no opinion regarding
state securities laws.
(iii) No consent, approval, authorization
or order of, or registration or filing or declaration with,
any Delaware court or governmental agency or body is required
in connection with either the Seller's or ALFI
22
<PAGE> 24
L.P.'s execution or delivery of or performance under the related
Partnership Agreement and each Basic Document to which it is a party.
(4) The favorable opinion of English, McCaughan &
O'Bryan, P.A., special Florida counsel to the Seller and World Omni,
dated the Closing Date and satisfactory in form and substance to the
Representative and counsel for the Underwriters, and substantially to
the effect that:
(i) The Class A Certificates will
constitute "indebtedness" for purposes of Florida income tax
law, and the Class B Certificates should constitute
"indebtedness" for purposes of Florida income tax law.
(ii) The loan rule promulgated under the
Florida Corporate Income Tax Code and included in the Florida
Administrative Code relating to interest on loans by
"financial organizations" (as such term is defined therein),
should not apply to an investment in the Investor Certificates
by such a financial organization.
(iii) The statements in the Prospectus
under "Certain Income Tax Considerations -- Florida Income
Taxation", to the extent that they constitute matters of law,
summaries of legal matters, documents or proceedings or legal
conclusions, have been reviewed by such counsel and are
correct in all material respects.
(iv) The lease contracts originated in
Florida are "true leases" for purposes of Florida law.
(v) Assuming that all other elements
necessary to render a lease contract legal, valid, binding and
enforceable were present in connection with the execution,
delivery and performance of each lease contract, and assuming
that no action was taken in connection with the execution,
delivery and performance of each lease contract that would
give rise to a defense to the legality, validity, binding
effect and enforceability of such lease contract, nothing in
the forms of such lease contracts, as attached as an Exhibit
to the Servicing Agreement, would render such lease contract
other than legal, valid, binding and enforceable; assuming the
validity, binding effect and enforceability in all other
respects, such forms of lease contracts are in sufficient
compliance with applicable federal and Florida state consumer
protection laws so as not to be rendered void or voidable at
the election of the related lessee.
(5) The favorable opinion of Brown & Wood LLP, special
federal income tax counsel to the Seller, dated the Closing Date and
satisfactory in form and substance to the Representative and counsel
to the Underwriters, to the effect that (i) the Class A Certificates
will constitute "indebtedness" for federal income tax purposes and the
Class B Certificates should constitute "indebtedness" for federal
income tax purposes
23
<PAGE> 25
and (ii) the statements in the Prospectus under the captions "Summary
-- Tax Status" and "Certain Income Tax Considerations -- Federal
Taxation", to the extent that they constitute matters of law,
summaries of legal matters or legal conclusions, have been reviewed by
such counsel and are correct in all material respects.
(6) Reliance letters relating to each legal opinion
relating to the transactions contemplated by this Agreement and the
Basic Documents rendered by counsel to the Seller or World Omni to the
Trustee, the Origination Trustee or either Rating Agency.
(7) The favorable opinion of Dorsey & Whitney, counsel to
the Trustee, dated the Closing Date and satisfactory in form and
substance to the Representative and counsel to the Underwriters, to
the effect that:
(i) First Bank has been duly
incorporated and is validly existing as an national banking
association, in good standing under the laws of United States
with full power and authority (corporate and other) to own its
properties and conduct its business, as presently conducted by
it, and to enter into and perform its obligations as Trustee
and Trust Agent under each Basic Document to which First Bank
is a party.
(ii) Each Basic Document to which First
Bank is a party has been duly authorized, executed and
delivered by First Bank and, assuming the due authorization,
execution and delivery thereof by the other parties thereto,
will constitute a legal, valid and binding obligation of First
Bank enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws
affecting enforcement of creditors' rights generally and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(iii) The Certificates have been duly
executed, authenticated and delivered by the Trustee.
(iv) Neither the execution nor delivery
by First Bank of each Basic Document to which it is a party
nor the consummation of any of the transactions by First Bank
contemplated thereby require the consent or approval of, the
giving of notice to, the registration with or the taking of
any other action with respect to, any governmental authority
or agency under any existing federal or state law governing
the banking or trust powers of First Bank.
(v) The execution and delivery of each
Basic Document to which First Bank is a party and the
performance by First Bank of its terms do not conflict with or
result in a violation of (A) any federal or state law or
regulation governing the banking or trust powers of First
Bank, (B) the Articles of Association or By-Laws of First
Bank, or (C) to the best knowledge of such
24
<PAGE> 26
counsel, any indenture, lease, or material agreement to
which First Bank is a party or to which its assets are
subject.
(vi) All of the issued and outstanding
capital stock of the Origination Trustee is owned by First
Bank, free and clear of any Liens.
(8) The favorable opinion of Dorsey & Whitney, counsel to
the Origination Trustee, dated the Closing Date and satisfactory in
form and substance to the Representative and counsel for the
Underwriters, to the effect that:
(i) The Origination Trustee has been
duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Alabama with
corporate power and authority to own, lease and operate its
properties, to conduct its business as described in the
Registration Statement and to enter into and perform its
obligations under each Basic Document to which it is a party;
to the best of their knowledge and information, the
Origination Trustee is duly qualified as a foreign corporation
to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify
would not have a material adverse effect on its condition,
financial or otherwise, or its ability to perform its
obligations under each Basic Document to which it is a party
or by which it may be bound; and the shares of issued and
outstanding capital stock of the Origination Trustee have been
duly authorized and validly issued, are fully paid and
non-assessable and are owned by First Bank.
(ii) Each Basic Document to which the
Origination Trustee is a party has been duly authorized,
executed and delivered by the Origination Trustee and,
assuming the due authorization, execution and delivery thereof
by the other parties thereto, will constitute legal, valid and
binding obligations of the Origination Trustee enforceable in
accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws
affecting enforcement of creditors' rights generally and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(iii) The SUBI Certificate and the
Retained SUBI Certificate have been duly executed,
authenticated and delivered by the Origination Trustee.
(iv) Neither the execution nor delivery
by the Origination Trustee of each Basic Document to which it
is a party nor the consummation of any of the transactions by
the Origination Trustee contemplated thereby require the
consent or approval of, the giving of notice to, the
registration with or the taking of any other action with
respect to, any person or entity, including any governmental
authority or agency under any existing federal or state law.
25
<PAGE> 27
(v) The execution and delivery of each
Basic Document to which the Organization Trustee is a party
and the performance by the Origination Trustee of their
respective terms do not conflict with or result in a violation
of its articles of incorporation or bylaws of the Origination
Trustee or, to the best of such counsel's knowledge, any
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which it is a party, by which it may be
bound or to which any of its property or assets is subject.
(9) The favorable opinion of Brown & Wood LLP, counsel
for the Underwriters, dated the Closing Date, with respect to the
existence of the Seller and World Omni, the validity of the
Certificates and such other related matters as the Representative
shall request. In rendering such opinion, Brown & Wood LLP may rely
on the opinions of (i) Hand Arendall, L.L.C., as to all matters of
Alabama law, (ii) Richards, Layton & Finger, P.A., as to all matters
of Delaware law, (iii) English, McCaughan & O'Bryan, P.A., as to all
matters of Florida law and (iv) McDermott, Will & Emery and/or Dorsey
& Whitney, as to all matters of Illinois law, which opinions shall be
satisfactory in form and substance to the Representative and counsel
for the Underwriters.
(e) Each Class of Class A Certificates shall be rated in the
highest rating category by each of Moody's and Standard & Poor's.
(f) One or more residual value insurance policies shall be in
effect such that on the Closing Date the Initial Contracts (as such term is
defined in the Prospectus) will be treated as "finance leases" under generally
accepted accounting principles or the Representative shall have received a
letter from Arthur Andersen, in form and substance satisfactory to the
Representative, that as of the Closing Date the Initial Contracts will be
treated as "finance leases" under generally accepted accounting principles.
(g) On or prior to the Closing Date, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the issuance
of the Certificates and sale of the Class A Certificates as herein contemplated
and related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the parties to the Basic
Documents in connection with the issuance of the Certificates and sale of the
Class A Certificates as herein contemplated shall be satisfactory in form and
substance to the Representative and counsel for the Underwriters.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representative by notice to the Seller and World Omni at any
time at or prior to the Closing Date, and such termination shall be without
liability of any party to any other party except as provided in Section 5(h)
hereof.
26
<PAGE> 28
7. Indemnification and Contribution
(a) The Seller and World Omni will, jointly and severally,
indemnify and hold each Underwriter harmless against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any actual legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action
as such expenses are incurred; provided, however, that neither the Seller nor
World Omni will be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information furnished
to the Seller or World Omni by any Underwriter through the Representative
specifically for use therein.
(b) Each Underwriter, severally and not jointly, will indemnify
and hold harmless the Seller and World Omni against any losses, claims, damages
or liabilities to which the Seller or World Omni may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, the prospectus or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Seller or
World Omni by such Underwriter through the Representative specifically for use
therein, and will reimburse any actual legal or other expenses reasonably
incurred by the Seller or World Omni in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section of written notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) above, notify the indemnifying
party of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party except and to the extent of any prejudice to such
indemnifying party arising from such failure to provide such notice. In case
any such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the
27
<PAGE> 29
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action.
8. Contribution.
(a) If the indemnification provided for in Section 7 is
unavailable or insufficient to hold harmless an indemnified party under Section
7 (a) or (b) above, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the losses, claims,
damages or liabilities referred to in Section 7 (a) or (b) above in such
proportion as is appropriate to reflect the relative benefits received by the
Seller and World Omni on the one hand and the Underwriters on the other from
the offering of the Class A Certificates. If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Seller and World Omni on
the one hand and the Underwriters on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities as
well as any other relevant equitable considerations. The relative benefits
received by the Seller and World Omni on the one hand and the Underwriters on
the other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Seller and World
Omni bear to the total underwriting discounts and commissions received by the
Underwriters. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Seller, World Omni or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to above in this subsection (a) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of
this subsection (a). Notwithstanding the provisions of this subsection (a), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Class A Certificates underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (a) to contribute are several in proportion to their respective
underwriting obligations and not joint.
28
<PAGE> 30
(b) The obligations of Seller and World Omni under this Section
and Section 7 shall be in addition to any liability which the Seller or World
Omni may otherwise have and shall extend, upon the same terms and conditions,
to each person, if any, who controls any Underwriter within the meaning of the
Act; and the obligations of the Underwriters under this Section and Section 7
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Seller or World Omni, to each officer of the Seller who has
signed the Registration Statement and to each person, if any, who controls the
Seller or World Omni within the meaning of the Act.
(c) Nothing in this Agreement will be construed to create, affect
or in any manner modify, the liability associated with any action arising under
this Agreement of an outside director (as defined in Section 21D(g) of the
Exchange Act) of any party hereto in respect of any loss, claim, damage or
expense, with the result that such liability varies or differs in any material
respect from the liability of an outside director as determined under Section
21D(g) of the Exchange Act.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Seller and World Omni or their respective officers and of the
Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, the Seller, World
Omni or any of their respective representatives, officers or directors or any
controlling person, and will survive delivery of and payment for the Class A
Certificates. If for any reason the purchase of the Class A Certificates by
the Underwriters is not consummated, the Seller and World Omni shall remain
responsible for the expenses to be paid or reimbursed by it pursuant to Section
5(h) hereof and the respective obligations of the Seller, World Omni and the
Underwriters pursuant to Section 7 hereof shall remain in effect. If the
purchase of the Class A Certificates by the Underwriters is not consummated for
any reason other than solely because of the occurrence of any event specified
in clause (iii), (iv) or (v) of Section 10 hereof, the Seller and World Omni
will reimburse the Underwriters for all out-of-pocket expenses (included the
reasonable fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the Class A Certificates.
10. Termination of Agreement. The Representative may terminate
this Agreement, by notice to the Seller and World Omni, at any time prior to or
at the Closing Date (i) if there has been, since the date of this Agreement or
since the respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Seller, World Omni or the Origination Trust, whether or not arising in the
ordinary course of business; (ii) if there has occurred any downgrading in the
rating of the debt securities of the Seller or World Omni by any "nationally
recognized statistical rating organization" (as such term is defined for
purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of any debt
securities of the Seller or World Omni (other than an announcement with
positive implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) if there has occurred any material adverse
change in the financial markets in the United States or any outbreak of
hostilities or other calamity or crisis, the effect of which is such as to make
it, in the judgment of the Representative, impracticable to market any Class of
Investor Certificates or to enforce contracts for the sale of any Class of
Investor Certificates; (iv) if trading generally on either the American Stock
Exchange or the New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or
29
<PAGE> 31
maximum ranges for prices for securities have been required, by either of said
Exchanges or by order of the Commission or any other governmental authority; or
(v) if a banking moratorium has been declared by either federal, New York,
Florida, Illinois or Alabama authorities.
11. Default By One or More of the Underwriters. If one or more of
the Underwriters shall fail at the Closing Date to purchase the Class A
Certificates which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representative shall have the right, but not
the obligation, within 24 hours thereafter, to make arrangements for one or more
of the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representative shall not have completed such arrangements within such 24-hour
period, then:
A. if the aggregate principal amount of Defaulted Securities
does not exceed 10% of the total aggregate principal amount of the
Class A Certificates, the non-defaulting Underwriters shall be
obligated to purchase the full amount thereof in such proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
B. if the aggregate principal amount of Defaulted Securities
exceeds 10% of the total aggregate principal amount of the Class A
Certificates, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter.
No action pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representative or the Seller shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangement.
12. Notices. All communications hereunder will be in writing and,
if sent to (i) the Underwriters, shall be directed to the Representative and
will be mailed, delivered or sent by facsimile and confirmed to it at CS First
Boston Corporation, Park Avenue Plaza, 55 East 52nd Street, New York, New York
10055, Attention: Investment Banking Department - Transactions Advisory Group
(facsimile number (212) 355-6721); (ii) the Seller, will be mailed, delivered
or sent by facsimile and confirmed to it at World Omni Lease Securitization
L.P. c/o World Omni Lease Securitization, Inc., 120 N.W. 12th Avenue, Deerfield
Beach, Florida 33442, Attention: A. Tucker Allen, Vice President and Corporate
Treasurer (facsimile number (954) 429-2685); or (iii) World Omni, will be
mailed, delivered or sent by facsimile and confirmed to it at World Omni
Financial Corp., 120 N.W. 12th Avenue, Deerfield Beach, Florida 33442,
Attention: A. Tucker Allen, Vice President and Corporate Treasurer (facsimile
number (954) 429-2685).
13. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Sections 7 and 8
hereof, and no other person will have any right or obligation hereunder.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
15. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to any otherwise applicable principles of conflicts of laws.
30
<PAGE> 32
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts duplicate
hereof, whereupon it will become a binding agreement between the Seller and
World Omni and the Underwriters in accordance with its terms.
Very truly yours,
WORLD OMNI LEASE SECURITIZATION L.P.
By: WORLD OMNI LEASE SECURITIZATION, INC.,
its General Partner
By:
--------------------------------------
Name:
Title:
WORLD OMNI FINANCIAL CORP.
By:
--------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written.
CS FIRST BOSTON CORPORATION
By:
---------------------------------
Name:
Title:
For itself and as Representative of the
other Underwriters named in Schedule I
hereto.
31
<PAGE> 33
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount of Principal Amount of Principal Amount
Class A-1 Class A-2 of Class A-3
Name of Underwriter Certificates Certificates Certificates
------------------- ------------------ ------------------- ----------------
<S> <C> <C> <C>
CS First Boston Corporation . . . . . . $ $ $
------------------ ------------------- ----------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . .
------------------ ------------------- ----------------
BA Securities, Inc. . . . . . . . . . .
Salomon Brothers Inc . . . . . . . . .
------------------ ------------------- ----------------
Total . . . . . . . . . . . . $ $ $
================== =================== ================
</TABLE>
SI-1
<PAGE> 1
EXHIBIT 4.1
-----------------------------------------------------------------
WORLD OMNI LEASE SECURITIZATION L.P.
AND
FIRST BANK NATIONAL ASSOCIATION, AS TRUSTEE
WORLD OMNI 1996-B AUTOMOBILE LEASE SECURITIZATION TRUST
AUTOMOBILE LEASE ASSET-BACKED CERTIFICATES
FORM OF
SECURITIZATION TRUST AGREEMENT
DATED AS OF OCTOBER 1, 1996
-----------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.02. Article and Section References. . . . . . . . . . . . . . . 32
ARTICLE TWO
CREATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.01. Creation of Trust. . . . . . . . . . . . . . . . . . . . . . 32
Section 2.02. Conveyance of 99.8% 1996-B SUBI Interest. . . . . . . . . . 32
Section 2.03. Acceptance by Trustee. . . . . . . . . . . . . . . . . . . . 33
ARTICLE THREE
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO CERTIFICATEHOLDERS . . . . . . . . . . . . . . . . . . . . . 33
Section 3.01. Distribution Account . . . . . . . . . . . . . . . . . . . . 33
Section 3.02. Collections . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.03. Distributions . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.04. Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.05. Net Deposits . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 3.06. Statements to Certificateholders . . . . . . . . . . . . . . 41
ARTICLE FOUR
THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.02. Authentication and Delivery of Certificates . . . . . . . . 45
Section 4.03. Registration of Transfer and Exchange of Certificates. . . . 46
Section 4.04. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . 48
Section 4.05. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . 49
Section 4.06. Access to List of Certificateholders' Names and Addresses . 49
Section 4.07. Maintenance of Office or Agency . . . . . . . . . . . . . . 49
Section 4.08. Temporary Certificates . . . . . . . . . . . . . . . . . . . 50
Section 4.09. Book-Entry Certificates . . . . . . . . . . . . . . . . . . 50
Section 4.10. Notices to Clearing Agency . . . . . . . . . . . . . . . . . 52
Section 4.11. Definitive Certificates . . . . . . . . . . . . . . . . . . 52
Section 4.12. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE FIVE
THE SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 5.01. Representations of Seller . . . . . . . . . . . . . . . . . 54
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Section 5.02. Liability of Seller; Indemnities . . . . . . . . . . . . . . 56
Section 5.03. Merger or Consolidation of, or Assumption of the
Obligations of, Seller; Certain Limitations. . . . . . . . . 56
Section 5.04. Limitation on Liability of Seller and Others . . . . . . . . 58
Section 5.05. Seller May Own Investor Certificates . . . . . . . . . . . . 58
Section 5.06. No Transfer . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 5.07. Tax Matters Partner . . . . . . . . . . . . . . . . . . . . 59
ARTICLE SIX
THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . 59
Section 6.02. Certain Matters Affecting the Trustee . . . . . . . . . . . 60
Section 6.03. Trustee Not Liable for Certificates or Leases . . . . . . . 62
Section 6.04. Trustee May Own Certificates . . . . . . . . . . . . . . . . 63
Section 6.05. Trustee's Fees and Expenses . . . . . . . . . . . . . . . . 63
Section 6.06. Eligibility Requirements for Trustee . . . . . . . . . . . . 63
Section 6.07. Resignation or Removal of Trustee . . . . . . . . . . . . . 64
Section 6.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . . 65
Section 6.09. Merger or Consolidation of Trustee . . . . . . . . . . . . . 65
Section 6.10. Appointment of Co-Trustee or Separate Trustee . . . . . . . 66
Section 6.11. Representations and Warranties of Trustee . . . . . . . . . 67
Section 6.12. Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 6.13. Trustee May Enforce Claims Without Possession of
Certificates . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 6.14. Suit for Enforcement . . . . . . . . . . . . . . . . . . . . 68
Section 6.15. Rights of Certificateholders to Direct Trustee . . . . . . . 69
Section 6.16. No Petition. . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE SEVEN
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.01. Termination of the Trust . . . . . . . . . . . . . . . . . . 69
Section 7.02. Optional Purchase of 99.8% 1996-B SUBI Interest . . . . . . 71
ARTICLE EIGHT
EARLY AMORTIZATION EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 8.01. Early Amortization Events. . . . . . . . . . . . . . . . . . 72
Section 8.02. Additional Rights Upon the Occurrence of
Certain Events . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE NINE
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . 76
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Section 9.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 9.02. Protection of Title to Trust . . . . . . . . . . . . . . . . 77
Section 9.03. Limitation on Rights of Certificateholders . . . . . . . . . 78
Section 9.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 79
Section 9.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 9.06. Severability of Provisions . . . . . . . . . . . . . . . . . 80
Section 9.07. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 9.08. Certificates Nonassessable and Fully Paid . . . . . . . . . 80
ARTICLE TEN
AGENT FOR SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 10.01. Agent for Service of Seller. . . . . . . . . . . . . . . . 81
Section 10.02. Agent of Trustee. . . . . . . . . . . . . . . . . . . . . . 81
EXHIBITS:
Exhibit A-1 - Form of Class A-1 Certificate . . . . . . . . . . . A-1
Exhibit A-2 - Form of Class A-2 Certificate . . . . . . . . . . . A-2
Exhibit A-3 - Form of Class A-3 Certificate . . . . . . . . . . . A-3
Exhibit B - Form of Class B Certificate . . . . . . . . . . . . . B-1
Exhibit C - Form of Seller Certificate . . . . . . . . . . . . . C-1
Exhibit D-1 - Form of Non-Rule 144-A Representation Letter . . . . D-1-1
Exhibit D-2 - Form of Rule 144-A Representation
Letter . . . . . . . . . . . . . . . . . . . . . . . D-2-1
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SECURITIZATION TRUST AGREEMENT
THIS SECURITIZATION TRUST AGREEMENT, dated as of October 1, 1996 is
made with respect to the formation of the WORLD OMNI 1996-B AUTOMOBILE LEASE
SECURITIZATION TRUST (the "Trust"), between WORLD OMNI LEASE SECURITIZATION
L.P., a Delaware limited partnership ("WOLSI LP" or, in its capacity as seller
hereunder, the "Seller"), and, FIRST BANK NATIONAL ASSOCIATION, A NATIONAL
BANKING ASSOCIATION (successor trustee to Bank of America Illinois, an Illinois
banking corporation), as trustee (the "Trustee").
RECITALS
A. Auto Lease Finance L.P., a Delaware limited partnership ("ALFI
LP"), VT Inc., an Alabama corporation (the "Origination Trustee"), and, for
certain limited purposes set forth therein, First Bank National Association, a
national banking association (successor trustee to Bank of America Illinois, an
Illinois banking corporation) (together with its successors, "First Bank") have
entered into that certain Second Amended and Restated Trust Agreement dated as
of July 1, 1994, as amended by that certain Amendment No. 1 to Second Amended
and Restated Trust Agreement dated as of November 1, 1994 (as the same may be
further amended, supplemented or modified, the "Origination Trust Agreement"),
amending and restating that certain original Trust Agreement dated as of
November 1, 1993 among Auto Lease Finance, Inc. ("ALFI"), the Origination
Trustee and First Bank, and that certain Amended and Restated Trust Agreement
dated as of June 1, 1994 among ALFI, ALFI LP, the Origination Trustee and First
Bank, pursuant to which ALFI LP and the Origination Trustee formed World Omni
LT, an Alabama trust (the "Origination Trust") for the purpose of taking
assignments and conveyances of, holding in trust and dealing in various Trust
Assets (as defined in the Origination Trust Agreement) in accordance with the
Origination Trust Agreement. ALFI and World Omni Financial Corp., a Florida
corporation ("WOFCO"), ALFI's parent, have entered into that certain Limited
Partnership Agreement dated as of June 1, 1994, as amended and restated
pursuant to that certain Amended and Restated Limited Partnership Agreement
dated as of July 1, 1994, pursuant to which ALFI LP was formed and ALFI
contributed to ALFI LP all of its right, title and interest in and to the
Origination Trust.
B. The Origination Trustee, on behalf of the Origination Trust,
and WOFCO (in its capacity as servicer, the "Servicer") also have entered into
that certain Second Amended and Restated Servicing Agreement dated as of July
1, 1994 (the "Servicing Agreement"), amending and restating that certain
original Servicing Agreement dated as of November 1, 1993, and that
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certain Amended and Restated Servicing Agreement dated as of June 1, 1994,
which provides for, among other things, the servicing of the Trust Assets by
the Servicer.
C. Concurrently herewith, and as contemplated by the terms of the
Origination Trust Agreement, ALFI LP, the Origination Trustee, First Bank and
WOLSI LP have entered into a Supplement 1996-B to Trust Agreement dated as of
October 1, 1996 (the "1996-B SUBI Supplement") pursuant to which the
Origination Trustee, on behalf of the Origination Trust and at the direction of
ALFI LP, will create and issue to ALFI LP a special unit of beneficial interest
in the Origination Trust, or "SUBI" (as defined in the Origination Trust
Agreement) (such SUBI, the "1996-B SUBI"), whose beneficiaries generally will
be entitled to the net cash flow arising from, but only from, the related SUBI
Portfolio (as defined in the Origination Trust Agreement) (such SUBI Portfolio,
the "1996-B SUBI Portfolio"), which 1996-B SUBI will be evidenced by one SUBI
Certificate (as defined in the Origination Trust Agreement) representing a
99.8% beneficial interest in the 1996-B SUBI (the "99.8% 1996-B SUBI
Certificate") and a second SUBI Certificate representing the remaining 0.2%
beneficial interest in the 1996-B SUBI (the "0.2% 1996-B SUBI Certificate" and,
together with the 99.8% 1996-B SUBI Certificate, the "1996-B SUBI
Certificates"), all as set forth in the Origination Trust Agreement and the
1996-B SUBI Supplement.
D. Also concurrently herewith, and as contemplated by the terms
of the Servicing Agreement, the Origination Trustee, on behalf of the
Origination Trust, and the Servicer also have entered into a Supplement 1996-B
to Servicing Agreement dated as of October 1, 1996 (the "1996-B Servicing
Supplement"), pursuant to which the terms of the Servicing Agreement will be
supplemented insofar as they apply to the 1996-B SUBI Portfolio, providing for
further specific servicing obligations that will benefit the holders of the
1996-B SUBI Certificates and the parties to the Securitized Financing (as
defined in the Origination Trust Agreement) contemplated by this Agreement.
E. Also concurrently herewith, ALFI LP and the Seller have
entered into that certain SUBI Certificate Purchase and Sale Agreement dated as
of October 1, 1996 (the "SUBI Certificate Agreement"), pursuant to which ALFI
LP sold to the Seller, without recourse, all of ALFI LP's right, title and
interest in and to the 1996-B SUBI and the 1996- B SUBI Certificates, all
monies due thereon and paid thereon in respect thereof and the right to realize
on any property that may be deemed to secure the 1996-B SUBI, and all proceeds
thereof, all in consideration of the cash payment to ALFI LP of an amount equal
to the Aggregate Net Investment Value (as defined below) of the 1996-B SUBI
Portfolio as of the Initial Cutoff Date (as defined in the 1996-B SUBI
Supplement).
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F. The parties desire to enter into this Agreement to create the
Trust, to provide for the issuance by the Trustee of certain Certificates and
to provide for the exchange of those Certificates for the 99.8% 1996-B SUBI
Certificate in connection with a Securitized Financing (as defined in the
Origination Trust Agreement) by the Seller.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (a) unless otherwise defined
herein, all capitalized terms used herein shall have the meanings attributed to
them by Section 0.01 of the Origination Trust Agreement, by Section 10.01 of
the 1996-B SUBI Supplement or Section 6.01 of the 1996-B Servicing Supplement,
as applicable, (b) the capitalized terms defined in this Agreement have the
meanings assigned to them in this Agreement and include (i) all genders and
(ii) the plural as well as the singular, (c) all references to words such as
"herein", "hereof" and the like shall refer to this Agreement as a whole and
not to any particular article or section within this Agreement, (d) the term
"include" and all variations thereon shall mean "include without limitation",
and (e) the term "or" shall include "and/or".
"Accelerated Principal Distribution Amount" has the meaning set forth
in Section 3.03(c)(ii).
"Additional Loss Lease" means a 1996-B Lease that has been sold or
otherwise disposed of to pay an Additional Loss Amount.
"Administrative Expense" means any reasonable administrative cost or
expense associated with the Trust or the Origination Trust, including
reasonable fees and expenses of attorneys and accountants.
"Advance" means those advances required or permitted to be made by the
Servicer pursuant to Section 9.04 of the 1996-B Servicing Supplement.
"Aggregate Net Investment Value" means, as of any day, the sum of (i)
the aggregate of the Discounted Principal Balances of all 1996-B Leases at such
date, each such Discounted Principal
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<PAGE> 8
Balance being derived from the Schedule of Leases and Leased Vehicles as in
effect on such date; provided that as of the last day of any Collection Period,
there shall be eliminated from the Schedule of Leases and Leased Vehicles for
the purpose of this definition (including, without limitation, the
determination at any subsequent time of the Aggregate Net Investment Value as
of the last day of any Collection Period) each 1996-B Lease that became a
Charged-off, Liquidated, Matured or Additional Loss Lease before the end of
such Collection Period, (ii) the aggregate of the Booked Residual Values of
those Leased Vehicles that have been added to Matured Leased Vehicle Inventory
within the three immediately preceding Collection Periods but have not been
sold or otherwise disposed of as of the last day of the most recent Collection
Period for no more than two full Collection Periods, each such Booked Residual
Value being derived from the Schedule of Leases and Leased Vehicles as in
effect on such date, and (iii) prior to the last Transfer Date, the aggregate
amount of Principal Collections that have not been reinvested in additional
1996-B Leases and 1996-B Leased Vehicles pursuant to Section 11.02 of the
1996-B SUBI Supplement.
"Aggregate Net Losses" means, with respect to a Collection Period, an
amount equal to the aggregate Discounted Principal Balances of all 1996-B
Leases that became Charged-off Leases during such Collection Period minus all
Net Repossessed Vehicle Proceeds and other Net Liquidation Proceeds collected
during such Collection Period with respect to Charged-off Leases.
"Agreement" means this Trust Agreement and all amendments hereof and
supplements hereto.
"ALFI" means Auto Lease Finance, Inc. and its successors.
"Alternate Reserve Fund Formula" means that formula pursuant to which
the Reserve Fund Cash Requirement is to be calculated if any Reserve Fund Test
is not satisfied as of any Distribution Date or if any Cure Period is in effect
as of such Distribution Date. Pursuant to the Alternate Reserve Fund Formula,
the Reserve Fund Cash Requirement shall equal two times the Base Reserve Fund
Formula, but which amount shall in no event be greater than the Certificate
Balance (after giving effect to reductions in the Certificate Balance) on such
Distribution Date.
"Amortization Date" means October 1, 1997.
"Amortization Period" means the period beginning with the day
immediately succeeding the last day of the Revolving Period and ending on the
day the Certificates have been paid in full and all unpaid Class A-1
Certificate Principal Loss Amounts, Class A-2 Certificate Principal Loss
Amounts, Class A-3 Certificate Principal Loss Amounts, Class B Certificate
Principal Loss Amounts and unpaid Class B Certificate Principal Carryover
4
<PAGE> 9
Shortfalls have been paid in full, in each case with accrued interest thereon,
or the Trust otherwise terminates.
"Applicants" shall have the meaning specified in Section 4.06.
"Appraisal Test" means that determination, made on the Determination
Date occurring each November, beginning in November 1997, of the ratio,
expressed as a percentage, of (a) the aggregate Residual Values of a
statistically valid random sample of 1996-B Leased Vehicles relating to Current
Leases and remaining on the Schedule of Contracts and Leased Vehicles prepared
and delivered by the Servicer as of the last day of the immediately preceding
Collection Period, as selected by an independent third party and then appraised
by an independent forecaster of vehicle wholesale values selected by the
Servicer, and (b) the Booked Residual Values therefor. The Appraisal Test will
be satisfied if such ratio is 75% or more; provided, however, that for purposes
of the Appraisal Test any appraised Residual Value of a 1996-B Leased Vehicle
that is in excess of the Booked Residual Value therefor shall be reduced to
such Booked Residual Value.
"Authorized Newspaper" means a newspaper of general circulation in the
Borough of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
"Base Reserve Fund Formula" means that formula pursuant to which the
Reserve Fund Cash Requirement is to be calculated if all Reserve Fund Tests are
satisfied as of any Distribution Date and no Cure Period is in effect on such
Distribution Date. Pursuant to the Base Reserve Fund Formula the Reserve Fund
Cash Requirement with respect to any Distribution Date will equal the lesser of
(i) ___________ and (ii) ____% of 99.8% of the Aggregate Net Investment Value
as of the last day of the Collection Period relating to such Distribution Date;
provided, however, that in no event will the Reserve Fund Cash Requirement be
less than $__________ until such time as the Certificate Balance as of the
related Distribution Date (after giving effect to reductions in the Certificate
Balance on such Distribution Date) is less than such amount, at which time the
Reserve Fund Cash Requirement will equal such Certificate Balance.
"Book-Entry Certificates" means a beneficial interest in the Class A
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 4.09.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York,
5
<PAGE> 10
Chicago, Illinois, Deerfield Beach, Florida, or Mobile, Alabama are authorized
or obligated by law, executive order or governmental decree to be closed.
"Capped Securitization Trust Administrative Expenses" means the
Trustee's compensation pursuant to Section 6.05 and those other Administrative
Expenses with respect to the Trust, including those due under Section 6.05, as
are due on such Distribution Date that, together with all such Administrative
Expenses paid since the beginning of the calendar year in which such
Distribution Date occurs, do not exceed $_________ (or $__________ in any year
in which an Early Amortization Event set forth in Section 8.01(d) or (e) occurs
and the Trustee sells the property of the Trust pursuant to Section 8.02).
"Certificate Balance" initially means the Initial Certificate Balance
and, as of any date, means the sum of the Class A Certificate Balance and the
Class B Certificate Balance as of the close of business on such date, after
giving effect to any changes therein on such date.
"Certificate Factor" means, with respect to any Distribution Date, a
seven-digit decimal figure equal to the Certificate Balance as of the last day
of the related Collection Period divided by the Initial Certificate Balance.
"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 of such Clearing Agency) and shall mean, with respect
to a Definitive Certificate, the related Certificateholder.
"Certificate Rate" means the Class A-1 Certificate Rate, the Class A-2
Certificate Rate, the Class A-3 Certificate Rate or the Class B Certificate
Rate, as the case may be.
"Certificate Register" means the register maintained pursuant to
Section 4.03.
"Certificate Registrar" means the Trustee unless a successor thereto
is appointed pursuant to Section 4.03.
"Certificateholder" or "Holder" means the Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, the interest evidenced by any Certificate registered in the name of
the Seller, ALFI LP or WOFCO, or any Person controlling, controlled by or under
common control with the Seller, ALFI LP
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<PAGE> 11
or WOFCO, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request or demand
shall have been obtained.
"Certificates" means the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class B Certificates and the
Seller Certificate.
"Charged-off Amount" means, as of any Distribution Date, an amount
equal to the sum of the Discounted Principal Balances, as of the end of the
related Collection Period, of any Charged-off Leases that became Charged-off
Leases during that related Collection Period.
"Charge-off Rate" means, with respect to any Collection Period, a
percentage equivalent to a fraction, the numerator of which is the product of
(a) 12 and (b) the Aggregate Net Losses with respect to such Collection Period,
and the denominator of which is the quotient of (a) the Aggregate Net
Investment Value as of the last day of such Collection Period plus the
Aggregate Net Investment Value as of the last day of the immediately preceding
Collection Period, divided by (b) 2.
"Charge-off Rate Test" means that determination, made on each
Determination Date, of the average of the Charge- off Rates for each of the
immediately preceding three Collection Periods (or the months of September and
October 1996 in the case of the November 1996 Determination Date, the months of
September and October 1996 and the November 1996 Collection Period in the case
of December 1996 Determination Date, and the month of October 1996 and the
November and December 1996 Collection Periods in the case of the January 1996
Determination Date). The Charge-off Rate Test will be satisfied if such
average is 2.75% or less.
"Class" means all Certificates whose form is identical except for
variation in denomination, principal amount or owner.
"Class A Certificates" means the Class A-1 Certificates, the Class A-2
Certificates and the Class A-3 Certificates.
"Class A Certificate Balance" means the sum of the Class A-1
Certificate Balance, the Class A-2 Certificate Balance and the Class A-3
Certificate Balance.
"Class A Certificateholder" means any Holder of a Class A-1
Certificate, Class A-2 Certificate or Class A-3 Certificate.
"Class A Percentage" means the Class A Certificate Balance immediately
after the Class A-2 Certificates have been paid in full as a percentage of the
Certificate Balance at such time.
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<PAGE> 12
"Class A-1 Additional Loss Amount" means, as of any Distribution Date,
an amount equal to the product of (i) the Class A-1 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Additional Loss Amount incurred in respect
of such Collection Period that is allocable to the 99.8% 1996-B SUBI Interest.
"Class A-1 Allocation Percentage" means, as of any Distribution Date,
the Class A-1 Certificate Balance as of the last day of the related Collection
Period as a percentage of the Certificate Balance as of such date.
"Class A-1 Certificate" means one of the Certificates executed and
authenticated by the Trustee in substantially the form set forth in Exhibit A-1
to this Agreement.
"Class A-1 Certificate Balance" shall initially equal the Initial
Class A-1 Certificate Balance and, on any date, shall equal the Initial Class
A-1 Certificate Balance, reduced by the sum of (i) all amounts distributed to
Class A-1 Certificateholders and allocable to principal on or prior to such
date and (ii) the amount, if any, by which (a) the aggregate of all Class A-1
Certificate Principal Loss Amounts on or prior to such date exceeds (b) the
aggregate of all Class A-1 Certificate Principal Loss Amounts reimbursed or
deemed reimbursed on or prior to such date.
"Class A-1 Certificate Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class A-1 Certificate Balance
as of the close of business on such Distribution Date (after giving effect to
all changes in the Class A-1 Certificate Balance made on that date) divided by
the Initial Class A-1 Certificate Balance.
"Class A-1 Certificateholder" means any Holder of a Class A-1
Certificate.
"Class A-1 Certificate Principal Loss Amount" means, with respect to
any Distribution Date, the amount, if any, by which (i) the sum of the Class
A-1 Loss Amount for the related Collection Period and any previously
unreimbursed Class A-1 Certificate Principal Loss Amount exceeds (ii) the
amount available to be distributed in respect of the Class A-1 Certificates
pursuant to Section 3.03(b)(v) or (b)(vi) on such Distribution Date.
"Class A-1 Certificate Principal Loss Interest Amount" means, with
respect to any Distribution Date, the aggregate amount of accrued and unpaid
interest (at the Class A-1 Certificate Rate) on the aggregate amount of
unreimbursed Class A-1 Certificate Principal Loss Amounts.
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<PAGE> 13
"Class A-1 Certificate Rate" means ____% per annum.
"Class A-1 Charged-off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class A-1 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Charged-off Amount incurred in respect of
such Collection Period that is allocable to the 99.8% 1996-B SUBI Interest.
"Class A-1 Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-1 Principal Distributable Amount and
the Class A-1 Interest Distributable Amount.
"Class A-1 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class A-1 Interest
Distributable Amount for such Distribution Date plus any outstanding Class A-1
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-1 Interest Carryover Shortfall, to
the extent permitted by law, at the Class A-1 Certificate Rate from such
immediately preceding Distribution Date to but not including the current
Distribution Date, over (ii) the amount of interest distributed to Class A-1
Certificateholders on such current Distribution Date.
"Class A-1 Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) one-twelfth of the Class A-1 Certificate
Rate or, in the case of the first Distribution Date, two-thirds of such amount,
and (ii) the Class A-1 Certificate Balance as of the immediately preceding
Distribution Date (after giving effect to changes in the Class A-1 Certificate
Balance made on such immediately preceding Distribution Date) or, in the case
of the first Distribution Date, the Initial Class A-1 Certificate Balance.
"Class A-1 Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class A-1 Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period allocable to the 99.8%
1996-B SUBI Interest.
"Class A-1 Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class A-1 Certificateholders
pursuant to Section 3.03(d).
"Class A-1 Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the
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<PAGE> 14
Class A-1 Allocation Percentage, (ii) the Investor Percentage with respect to
Loss Amounts for the related Collection Period and (iii) the portion of the
Residual Value Loss Amount incurred in respect of such Collection Period that
is allocable to the 99.8% 1996-B SUBI Interest.
"Class A-2 Additional Loss Amount" means, as of any Distribution Date,
an amount equal to the product of (i) the Class A-2 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Additional Loss Amount incurred in respect
of such Collection Period that is allocable to the 99.8% 1996-B SUBI Interest.
"Class A-2 Allocation Percentage" means, as of any Distribution Date,
the Class A-2 Certificate Balance as of the last day of the related Collection
Period as a percentage of the then Certificate Balance as of such date.
"Class A-2 Certificate" means one of the Certificates executed and
authenticated by the Trustee in substantially the form set forth in Exhibit A-2
to this Agreement.
"Class A-2 Certificate Balance" shall initially equal the Initial
Class A-2 Certificate Balance and, on any date, shall equal the Initial Class
A-2 Certificate Balance, reduced by the sum of (i) all amounts distributed to
Class A-2 Certificateholders and allocable to principal on or prior to such
date and (ii) the amount, if any, by which (a) the aggregate of all Class A-2
Certificate Principal Loss Amounts on or prior to such date exceeds (b) the
aggregate of all Class A-2 Certificate Principal Loss Amounts reimbursed or
deemed reimbursed on or prior to such date.
"Class A-2 Certificate Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class A-2 Certificate Balance
as of the close of business on such Distribution Date (after giving effect to
all changes in the Class A-2 Certificate Balance made on that date) divided by
the Initial Class A-2 Certificate Balance.
"Class A-2 Certificateholder" means any Holder of a Class
A-2 Certificate.
"Class A-2 Certificate Principal Loss Amount" means, with respect to
any Distribution Date, the amount, if any, by which (i) the sum of the Class
A-2 Loss Amount for the related Collection Period and any previously
unreimbursed Class A-2 Certificate Principal Loss Amount exceeds (ii) the
amount available to be distributed in respect of the Class A-2 Certificates
pursuant to Section 3.03(b)(v) or (b)(vi) on such Distribution Date.
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<PAGE> 15
"Class A-2 Certificate Principal Loss Interest Amount" means, with
respect to any Distribution Date, the aggregate amount of accrued and unpaid
interest (at the Class A-2 Certificate Rate) on the aggregate amount of
unreimbursed Class A-2 Certificate Principal Loss Amounts outstanding from time
to time.
"Class A-2 Certificate Rate" means ____% per annum.
"Class A-2 Charged-off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class A-2 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Charged-off Amount incurred in respect of
such Collection Period that is allocable to the 99.8% 1996-B SUBI Interest.
"Class A-2 Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-2 Principal Distributable Amount and
the Class A-2 Interest Distributable Amount.
"Class A-2 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class A-2 Interest
Distributable Amount for such Distribution Date plus any outstanding Class A-2
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-2 Interest Carryover Shortfall, to
the extent permitted by law, at the Class A-2 Certificate Rate from such
immediately preceding Distribution Date to but not including the current
Distribution Date, over (ii) the amount of interest distributed to Class A-2
Certificateholders on such current Distribution Date.
"Class A-2 Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) one- twelfth of the Class A-2 Certificate
Rate or, in the case of the first Distribution Date, two-thirds of such amount,
and (ii) the Class A-2 Certificate Balance as of the immediately preceding
Distribution Date (after giving effect to changes in the Class A-2 Certificate
Balance made on such immediately preceding Distribution Date) or, in the case
of the first Distribution Date, the Initial Class A-2 Certificate Balance.
"Class A-2 Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class A-2 Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period allocable to the 99.8%
1996-B SUBI Interest.
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<PAGE> 16
"Class A-2 Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class A-2 Certificateholders
pursuant to Section 3.03(d).
"Class A-2 Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-2 Allocation
Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the
related Collection Period and (iii) the portion of the Residual Value Loss
Amount incurred in respect of such Collection Period that is allocable to the
99.8% 1996-B SUBI Interest.
"Class A-3 Additional Loss Amount" means, as of any Distribution Date,
an amount equal to the product of (i) the Class A-3 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Additional Loss Amount incurred in respect
of such Collection Period that is allocable to the 99.8% 1996-B SUBI Interest.
"Class A-3 Allocation Percentage" means, as of any Distribution Date,
the Class A-3 Certificate Balance as of the last day of the related Collection
Period as a percentage of the then Certificate Balance as of such date.
"Class A-3 Certificate" means one of the Certificates executed and
authenticated by the Trustee in substantially the form set forth in Exhibit A-3
to this Agreement.
"Class A-3 Certificate Balance" shall initially equal the Initial
Class A-3 Certificate Balance and, on any date, shall equal the Initial Class
A-3 Certificate Balance, reduced by the sum of (i) all amounts distributed to
Class A-3 Certificateholders and allocable to principal on or prior to such
date and (ii) the amount, if any, by which (a) the aggregate of all Class A-3
Certificate Principal Loss Amounts on or prior to such date exceeds (b) the
aggregate of all Class A-3 Certificate Principal Loss Amounts reimbursed or
deemed reimbursed on or prior to such date.
"Class A-3 Certificate Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class A-3 Certificate Balance
as of the close of business on such Distribution Date (after giving effect to
all changes in the Class A-3 Certificate Balance made on that date) divided by
the Initial Class A-3 Certificate Balance.
"Class A-3 Certificateholder" means any Holder of a Class
A-3 Certificate.
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<PAGE> 17
"Class A-3 Certificate Principal Loss Amount" means, with respect to
any Distribution Date, the amount, if any, by which (i) the sum of the Class
A-3 Loss Amount for the related Collection Period and any previously
unreimbursed Class A-3 Certificate Principal Loss Amount exceeds (ii) the
amount available to be distributed in respect of the Class A-3 Certificates
pursuant to Section 3.03(b)(v) or (b)(vi) on such Distribution Date.
"Class A-3 Certificate Principal Loss Interest Amount" means, with
respect to any Distribution Date, the aggregate amount of accrued and unpaid
interest (at the Class A-3 Certificate Rate) on the aggregate amount of
unreimbursed Class A-3 Certificate Principal Loss Amounts outstanding from time
to time.
"Class A-3 Certificate Rate" means ____% per annum.
"Class A-3 Charged-off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class A-3 Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Charged-off Amount incurred in respect of
such Collection Period that is allocable to the 99.8% 1996-B SUBI Interest.
"Class A-3 Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-3 Principal Distributable Amount and
the Class A-3 Interest Distributable Amount.
"Class A-3 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class A-3 Interest
Distributable Amount for such Distribution Date plus any outstanding Class A-3
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class A-3 Interest Carryover Shortfall, to
the extent permitted by law, at the Class A-3 Certificate Rate from such
immediately preceding Distribution Date to but not including the current
Distribution Date, over (ii) the amount of interest distributed to Class A-3
Certificateholders on such current Distribution Date.
"Class A-3 Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) one- twelfth of the Class A-3 Certificate
Rate or, in the case of the first Distribution Date, two-thirds of such amount,
and (ii) the Class A-3 Certificate Balance as of the immediately preceding
Distribution Date (after giving effect to changes in the Class A-3 Certificate
Balance made on such immediately preceding Distribution Date) or, in the case
of the first Distribution Date, the Initial Class A-3 Certificate Balance.
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<PAGE> 18
"Class A-3 Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class A-3 Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period allocable to the 99.8%
1996-B SUBI Interest.
"Class A-3 Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class A-3 Certificateholders
pursuant to Section 3.03(d).
"Class A-3 Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class A-3 Allocation
Percentage, (ii) the Investor Percentage with respect to Loss Amounts for the
related Collection Period and (iii) the portion of the Residual Value Loss
Amount incurred in respect of such Collection Period that is allocable to the
99.8% 1996-B SUBI Interest.
"Class B Additional Loss Amount" means, as of any Distribution Date,
an amount equal to the product of (i) the Class B Allocation Percentage, (ii)
the Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Additional Loss Amount incurred in respect
of such Collection Period that is allocable to the 99.8% 1996-B SUBI Interest.
"Class B Allocation Percentage" means, as of any Distribution Date,
the Class B Certificate Balance as of the last day of the related Collection
Period as a percentage of the then Certificate Balance as of such date.
"Class B Certificate" means any one of the Certificates executed and
authenticated by the Trustee in substantially the form set forth in Exhibit B
to this Agreement.
"Class B Certificate Balance" shall initially equal the Initial Class
B Certificate Balance and, on any date, shall equal the Initial Class B
Certificate Balance, reduced by the sum of (i) all amounts distributed to Class
B Certificateholders and allocable to principal on or prior to such date, (ii)
the amount, if any, by which (a) the aggregate of all Class B Certificate
Principal Loss Amounts on or prior to such date exceeds (b) the aggregate of
all Class B Certificate Principal Loss Amounts reimbursed on or prior to such
date, and (iii) the amount, if any, by which (a) the aggregate of all Class B
Certificate Principal Carryover Shortfalls on or prior to such Distribution
Date exceeds (b) the aggregate of all Class B Certificate Principal Carryover
Shortfall reimbursed on or prior to such date.
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<PAGE> 19
"Class B Certificate Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure equal to the Class B Certificate Balance as
of the close of business on such Distribution Date (after giving effect to all
changes in the Class B Certificate Balance made on that date) divided by the
Initial Class B Certificate Balance.
"Class B Certificate Principal Carryover Shortfall" means, with
respect to any Distribution Date, the amount that otherwise would have been
made available for reinvestment in additional 1996-B SUBI Assets pursuant to
Section 11.02 of the 1996-B SUBI Supplement (if on a Distribution Date related
to a Collection Period in the Revolving Period) or distributed to the Class B
Certificateholders (if on a Distribution Date related to a Collection Period in
the Amortization Period), in each case in respect of Principal Collections
pursuant to Section 3.03(d), but instead is applied as set forth in clauses
(v), (vi) and (vii) of Section 3.03(b) pursuant to Section 3.03(e).
"Class B Certificate Principal Carryover Shortfall Interest Amount"
means, with respect to any Distribution Date, the aggregate amount of accrued
and compounded interest (at the Class B Certificate Rate) on the aggregate
amount of unreimbursed Class B Certificate Principal Carryover Shortfall as of
the immediately preceding Distribution Date.
"Class B Certificate Principal Loss Amount" means, with respect to any
Distribution Date, the amount, if any, by which (i) the sum of the Class B Loss
Amount for the related Collection Period and any previously unreimbursed Class
B Certificate Principal Loss Amount exceeds (ii) the amount available to be
distributed pursuant to Section 3.03(b)(viii) or (b)(ix) on such Distribution
Date.
"Class B Certificate Principal Loss Interest Amount" means, with
respect to any Distribution Date, the aggregate amount of accrued and unpaid
interest (at the Class B Certificate Rate) on the aggregate amount of
unreimbursed Class B Certificate Principal Loss Amounts.
"Class B Certificate Rate" means ____% per annum.
"Class B Certificateholder" means any Holder of a Class B Certificate.
"Class B Charged-Off Amount" means, as of any Distribution Date, an
amount equal to the product of (i) the Class B Allocation Percentage, (ii) the
Investor Percentage with respect to Loss Amounts for the related Collection
Period and (iii) the portion of the Charged-off Amount incurred in respect of
such Collection Period that is allocable to the 99.8% 1996-B SUBI Interest.
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<PAGE> 20
"Class B Distributable Amount" means, with respect to any Distribution
Date, the sum of the Class B Principal Distributable Amount and the Class B
Interest Distributable Amount.
"Class B Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess, if any, of (i) the Class B Interest
Distributable Amount for such Distribution Date plus any outstanding Class B
Interest Carryover Shortfall from the immediately preceding Distribution Date
plus interest on such outstanding Class B Interest Carryover Shortfall, to the
extent permitted by law, at the Class B Certificate Rate from such immediately
preceding Distribution Date to but not including the current Distribution Date
over (ii) the amount of interest distributed to Class B Certificateholders on
such current Distribution Date.
"Class B Interest Distributable Amount" means, with respect to any
Distribution Date, the product of (i) one-twelfth of the Class B Certificate
Rate or, in the case of the first Distribution Date, two-thirds of such amount,
and (ii) the Class B Certificate Balance as of the immediately preceding
Distribution Date (after giving effect to changes in the Class B Certificate
Balance made on such immediately preceding Distribution Date) or, in the case
of the first Distribution Date, the Initial Class B Certificate Balance.
"Class B Loss Amount" means, with respect to any Distribution Date,
the product of (a) the Class B Allocation Percentage, (b) the Investor
Percentage with regard to Loss Amounts for the related Collection Period, and
(c) the Loss Amount for the related Collection Period allocable to the 99.8%
1996-B SUBI Interest.
"Class B Percentage" means the Class B Certificate Balance immediately
after the Class A-2 Certificates have been paid in full as a percentage of the
Certificate Balance at such time.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount (if any) that is distributable to the Class B Certificateholders
pursuant to Section 3.03(d).
"Class B Residual Value Loss Amount" means, as of any Distribution
Date, an amount equal to the product of (i) the Class B Allocation Percentage,
(ii) the Investor Percentage with respect to Loss Amounts for the related
Collection Period and (iii) the portion of the Residual Value Loss Amount
incurred in respect of such Collection Period that is allocable to the 99.8%
1996-B SUBI Interest.
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"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 October __, 1996.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, and any
successor thereto.
"Corporate Trust Office" means, as of the date hereof, the office of
the Trustee located at 400 North Michigan Avenue, Chicago, Illinois 60611,
Attention: Corporate Trust Office, or hereafter any corporate trust office
designated by the Trustee or any Successor Trustee.
"Cure Period" means that period following the failure to satisfy any
Reserve Fund Test during which the Alternate Reserve Fund Formula will apply
and upon the expiration of which, unless another Reserve Fund Test shall at
such time not be satisfied or another Cure Period shall be continuing, the Base
Reserve Fund Formula will apply. The Cure Period following any failure to
satisfy the Appraisal Test shall continue until the May Distribution Date
immediately following that May Determination Date on which the Appraisal Test
is first again satisfied. The Cure Period following any failure to satisfy the
Maturity Ratio Test shall continue at least until the first anniversary of the
Distribution Date on which such test was not satisfied. If, on such
anniversary Distribution Date, the Maturity Ratio Test, applied on a 12-month
average basis, shall be satisfied and the Maturity Ratio Test for each of the
final three Collection Periods during such 12-month period shall also have been
satisfied, the Cure Period with regard to such test shall terminate as of such
anniversary Distribution Date. If either such condition shall not be met on
such anniversary Distribution Date (i) the Alternate Reserve Fund Formula shall
continue to apply, and (ii) such conditions shall thereafter be re-examined at
semiannual intervals until both such conditions shall be satisfied, at which
time the Cure Period with regard to such test shall terminate. The Cure Period
following the failure to satisfy the Realization Test shall continue at least
until the first anniversary of the Distribution Date on which such test was not
satisfied. If, on such anniversary Distribution Date, either (a) the Maturity
Ratio, applied on a 12-month average basis, shall be equal to or less than 25%
and the Maturity Ratio for each of the final three Collection Periods during
such 12-month period shall also be equal to or less than 25%, or (b) the
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<PAGE> 22
Realization Ratio, applied on a 12-month average basis, shall equal or exceed
75% and the Realization Ratio for each of the final three Collection Periods
during such 12-month period shall also equal or exceed 75%, the Cure Period
with regard to such test shall terminate as of such anniversary Distribution
Date. If neither the two conditions of clause (a) nor the two conditions of
clause (b) of the immediately preceding sentence shall be met on such
anniversary Distribution Date (i) the Alternate Reserve Fund Formula shall
continue to apply, and (ii) such conditions shall thereafter be re-examined at
semiannual intervals, until either both conditions of clause (a) or of clause
(b) of such sentence shall be satisfied as the case may be, at which time the
Cure Period with regard to such test shall terminate. No Cure Period shall
apply to either the Delinquency Test or the Charge-off Rate Test.
The recurrence during any Cure Period of a failure to satisfy the same
Reserve Fund Test the failure of which triggered such Cure Period shall not
cause the commencement of a new Cure Period, but the failure to satisfy a
second Reserve Fund Test during any Cure Period shall trigger a new and
independent Cure Period to the extent applicable to such Reserve Fund Test.
"Current Lease" means each 1996-B Lease that is not a Charged-off
Lease, a Matured Lease, a Liquidated Lease or an Additional Loss Lease.
"Definitive Certificates" shall have the meaning specified in Section
4.09.
"Delinquency Rate" means, with respect to any Collection Period, the
percentage equivalent to a fraction, the numerator of which is the number of
outstanding 1996-B Leases as to which, as of the last day of such Collection
Period, all or any part of a Monthly Lease Payment in excess of $40 is unpaid
(including without limitation because of a check being returned for
insufficient funds) 61 days or more after its Due Date (other than a 1996-B
Lease as to which an extension has been granted with respect to such Due Date
by the Servicer pursuant to clause (ii) of Section 2.02(b) of the Servicing
Agreement and Section 9.02(a) of the 1996-B Servicing Supplement), whether or
not (a) the related 1996-B Leased Vehicle has been repossessed (or the process
of repossession has been commenced) but has not yet sold or otherwise disposed
of during such Collection Period, or (b) the related Obligor is the subject of
bankruptcy or similar proceedings, and the denominator of which is the
aggregate number of Current Leases on the last day of such Collection Period.
"Delinquency Rate Test" means that determination, made on each
Determination Date, of the average of the Delinquency Rates for each of the
three immediately preceding Collection Periods
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<PAGE> 23
(or the months of September and October 1996 in the case of the November 1996
Determination Date, the months of September and October 1996 and the November
1996 Collection Period in the case of the December 1996 Determination Date, and
the month of October 1996 and the November and December 1996 Collection Periods
in the case of the January 1996 Determination Date). The Delinquency Rate Test
will be satisfied if such average is 1.75% or less.
"Determination Date" means, with respect to any Distribution Date, the
second Business Day prior to such Distribution Date.
"Distribution Account" means the account or accounts designated as
such and established and maintained pursuant to Section 3.01.
"Distribution Date" means, with respect to a Collection Period, the
fifteenth day of the following month, or if that day is not a Business Day, the
next Business Day, beginning with November 15, 1996.
"DTC" means The Depository Trust Company and its successors.
"Early Amortization Event" has the meaning set forth in Section 8.01.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Compliance Test" means the timely, true and accurate
certification, on or before each Determination Date, by the Servicer to the
Trustee and each Rating Agency to the effect set forth in Section 10.03(c) of
the 1996-B Servicing Supplement.
"Excess Collections" means, with respect to any Distribution Date, the
remaining amount on deposit in the Distribution Account in respect of such
Distribution Date after all distributions pursuant to Section 3.03(b) have been
made, net of any amount required to maintain the Distribution Account in good
standing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Final Scheduled Distribution Date" means the __________ 200_
Distribution Date.
"Financial Intermediary" means a financial intermediary, as such term
is defined in Section 8-313(4) of the UCC.
"First Bank" has the meaning set forth in Recital A.
"Independent Director" means a director of the general partner of the
Seller who shall at no time be (i) a director,
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<PAGE> 24
officer, employee or former employee of any Affiliate of the Seller, (ii) a
natural person related to any director, officer, employee or former employee of
any Affiliate, (iii) a holder (directly or indirectly) of any voting securities
of any Affiliate, or (iv) a natural person related to a holder (directly or
indirectly) of any voting securities of any Affiliate. For these purposes,
"Affiliate" shall mean any entity other than the Seller or any similarly
organized special purpose finance subsidiary of an Affiliate (i) which owns
beneficially, directly or indirectly, more than 10% of the outstanding shares
of the common stock or partnership interests of the Seller, (ii) which is in
control of the Seller, as currently defined under Section 230.405 of the Rules
and Regulations of the Commission, 17 C.F.R. Section 230.405, (iii) of which
10% or more of the outstanding shares of its common stock or partnership
interests are owned beneficially, directly or indirectly, by any entity
described in clause (i) or (ii) above, or (iv) which is controlled by an entity
described in clause (i) or (ii) above, as currently defined under Section
230.405 of the Rules and Regulations of the Commission, 17 C.F.R. Section
230.405.
"Initial Certificate Balance" means the sum of the Initial Class A
Certificate Balance and the Initial Class B Certificate Balance.
"Initial Class A Certificate Balance" means the sum of the Initial
Class A-1 Certificate Balance, the Initial Class A-2 Certificate Balance and
the Initial Class A-3 Certificate Balance.
"Initial Class A-1 Certificate Balance" means $___________.
"Initial Class A-2 Certificate Balance" means $___________.
"Initial Class A-3 Certificate Balance" means $___________.
"Initial Class B Certificate Balance" means $__________.
"Insolvency Event" has the meaning set forth in Section 8.02.
"Insurance Policy" means, with respect to a 1996-B Lease, 1996-B
Leased Vehicle or Obligor under a 1996-B Lease, any policy of comprehensive,
collision, public liability, physical damage, personal liability, credit health
or accident, credit life or employment insurance, or any other form of
insurance.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Investor Certificateholder" means a Class A Certificate-holder or a
Class B Certificateholder.
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<PAGE> 25
"Investor Certificates" means the Class A Certificates and the Class B
Certificates.
"Investor Percentage" means, with respect to any Collection
Period,
(a) as used with respect to Interest Collections and Loss
Amounts allocable to the 99.8% 1996-B SUBI Interest, the percentage
equivalent of a fraction (not to exceed 100%), the numerator of which
is the Certificate Balance as of the last day of the immediately
preceding Collection Period (or, in the case of the first Collection
Period, the Initial Certificate Balance), and the denominator of which
is 99.8% of the Aggregate Net Investment Value as of the last day of
the immediately preceding Collection Period (or, in the case of the
first Collection Period, the Initial Cutoff Date); and
(b) as used with respect to Principal Collections
allocable to the 99.8% 1996-B SUBI Interest, the percentage equivalent
of a fraction (not to exceed 100%), the numerator of which is the
Certificate Balance and the denominator of which is 99.8% of the
Aggregate Net Investment Value, each as of the last day of the last
full Collection Period preceding the first to occur of the
Amortization Date or any Early Amortization Event.
"Liquidated Lease" means a 1996-B Lease that (a) has been the subject
of a Prepayment in full, or (b) has been paid in full, regardless of whether
all or any part of such payment has been made by the Obligor under the related
1996-B Lease, the Servicer pursuant to the Servicing Agreement or 1996-B
Servicing Supplement, an insurer pursuant to an Insurance Policy or the
Residual Value Insurance Policy or otherwise.
"Liquidation Expenses" means reasonable out-of-pocket expenses
incurred by the Servicer in connection with the realization of the full amounts
due or to become due under any 1996-B Lease, including expenses incurred in
connection with the repossession of any 1996-B Leased Vehicle, the sale or
other disposition of a 1996-B Leased Vehicle, whether upon repossession or upon
return of a 1996-B Leased Vehicle related to a Matured Lease, any collection
effort (whether or not resulting in a lawsuit against the Obligor under such
1996-B Lease) or any application for Insurance Proceeds.
"Loss Amount" means, with respect to any Distribution Date, an amount
equal to the sum of the Charged-off Amount, the Residual Value Loss Amount and
the Additional Loss Amount, in each case for the related Collection Period.
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"Maturity Ratio" means the ratio, measured as a percentage equivalent
of a fraction, of (a) the number of 1996-B Leased Vehicles that first became
Matured Vehicles during a Collection Period, and (b) the number of Current
Leases that were scheduled (after any permitted extensions by the Servicer) to
become Matured Leases during such Collection Period.
["Maturity Ratio Test" means that determination, made on each
Determination Date related to a Collection Period during which at least ___
Current Leases were scheduled (after any permitted extensions by the Servicer)
to become Matured Leases, of the Maturity Ratio for such Collection Period (or
the month of October 1996 in the case of the November 1996 Determination Date).
The Maturity Ratio Test will be satisfied if the Maturity Ratio is 50% or less.]
"Moody's" means Moody's Investors Service, Inc., and its successors.
"1996-B Servicing Supplement" has the meaning set forth in Recital D.
"1996-B SUBI" has the meaning set forth in Recital C.
"1996-B SUBI Portfolio" has the meaning set forth in Recital C.
"1996-B SUBI Supplement" has the meaning set forth in Recital C.
"99.8% 1996-B SUBI Certificate" has the meaning set forth in Recital C.
"99.8% 1996-B SUBI Interest" has the meaning set forth in Section 2.02.
"Officer's Certificate" means a certificate signed by the President,
any Vice President, the Treasurer or any Assistant Treasurer, the Secretary or
any Assistant Secretary of the general partner of the Seller or the Servicer,
as the case may be, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel (who, in the
case of counsel to the Seller or the Servicer, may be an employee of or outside
counsel to the Seller or the Servicer), which counsel shall be reasonably
acceptable to the Trustee.
"Origination Trust" has the meaning set forth in Recital A.
"Origination Trust Agreement" has the meaning set forth in Recital A.
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"Origination Trustee" has the meaning set forth in Recital A.
"Outstanding Advances" means, with respect to a 1996-B Lease and the
last day of a Collection Period, the sum of all Advances made as of or prior to
such date minus all payments or collections as of or prior to such date that
are specified in Section 9.02(g) of the 1996-B Servicing Supplement as applied
to reimburse unreimbursed or nonrecoverable Advances with respect to such
1996-B Lease.
"Percentage Interest" means, as to any Investor Certificate, the
percentage obtained by dividing the outstanding principal balance of such
Investor Certificate by the Certificate Balance or by the Class A Certificate
Balance, the Class A-1 Certificate Balance, the Class A-2 Certificate Balance,
the Class A-3 Certificate Balance or the Class B Certificate Balance, as the
context may require; provided, however, that where the Percentage Interest is
relevant in determining whether the vote of the requisite percentage of
Investor Certificateholders necessary to effect any consent, waiver, request or
demand shall have been obtained, the aggregate Percentage Interest shall be
deemed to be reduced by the amount equal to the Percentage Interest (without
giving effect to this provision) represented by the interests evidenced by any
such Investor Certificate that is registered in the name of the Seller, WOFCO
or any Person controlling, controlled by or under common control with the
Seller or WOFCO.
"Permitted Investments" means any one or more of the following
instruments, obligations or securities, in each case with a remaining term to
maturity of no more than three years:
(a)(i) direct obligations of, and obligations guaranteed as
to full and timely payment of principal and interest by, the United
States or any agency or instrumentality of the United States the
obligations of which are backed by the full faith and credit of the
United States (other than the Government National Mortgage
Association), and (ii) direct obligations of, or obligations fully
guaranteed by, the Federal National Mortgage Association or any State
then rated with the highest available credit rating of each Rating
Agency for such obligations, which obligations are, at the time of
investment, otherwise acceptable to each Rating Agency for securities
having a rating at least equivalent to the rating of the Class A
Certificates at the Closing Date;
(b) certificates of deposit, demand or time deposits of,
bankers' acceptances issued by, or federal funds sold by any
depository institution or trust company (including the Trustee)
incorporated under
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the laws of the United States or any State and subject to supervision
and examination by federal and/or State banking authorities and the
deposits of which are fully insured by the Federal Deposit Insurance
Corporation, so long as at the time of such investment or contractual
commitment providing for such investment either such depository
institution or trust company has the Required Rating or the Trustee
shall have received a letter from each Rating Agency to the effect
that such investment would not result in the qualification,
downgrading or withdrawal of the ratings then assigned to any Rated
Certificates;
(c) repurchase obligations held by the Trustee that are
acceptable to the Trustee with respect to (i) any security described
in clause (a) above or (e) below, or (ii) any other security issued or
guaranteed by any agency or instrumentality of the United States, in
either case entered into with a federal agency or depository
institution or trust company (including the Trustee) acting as
principal, whose obligations having the same maturity as that of the
repurchase agreement would be Permitted Investments under clause (b)
above; provided, however, that repurchase obligations entered into
with any particular depository institution or trust company (including
the Trustee) will not be Permitted Investments to the extent that the
aggregate principal amount of such repurchase obligations with such
depository institution or trust company held by the Trustee on behalf
of the Trust shall exceed 10% of either the Aggregate Net Investment
Value or the aggregate unpaid principal balance or face amount, as the
case may be, of all Permitted Investments held by the Trustee on
behalf of the Trust;
(d) securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United
States or any State so long as at the time of such investment or
contractual commitment providing for such investment either the
long-term, unsecured debt of such corporation has the highest
available rating from each Rating Agency or the Trustee shall have
received a letter from each Rating Agency to the effect that such
investment would not result in the qualification, downgrading or
withdrawal of the ratings then assigned to any Rated Certificates, or
commercial paper or other short-term debt having the Required Rating;
provided, however, that any such commercial paper or other short-term
debt may have a remaining term to maturity of no longer than 90 days
after the date of such investment or contractual commitment providing
for such investment, and that securities issued by any particular
corporation will
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not be Permitted Investments to the extent that investment therein
will cause the then outstanding principal amount or face amount, as
the case may be, of securities issued by such corporation and held by
the Trustee on behalf of the Trust to exceed 10% of either the
Aggregate Net Investment Value or the aggregate unpaid principal
balance or face amount, as the case may be, of all Permitted
Investments held by the Trustee on behalf of the Trust;
(e) interests in any open-end or closed-end management
type investment company or investment trust (i) registered under the
Investment Company Act, the portfolio of which is limited to the
obligations of, or guaranteed by, the United States and to agreements
to repurchase such obligations, which agreements, with respect to
principal and interest, are at least 100% collateralized by such
obligations marked to market on a daily basis and the investment
company or investment trust shall take delivery of such obligations
either directly or through an independent custodian designated in
accordance with the Investment Company Act and (ii) acceptable to each
Rating Agency (as approved in writing by each Rating Agency) as
collateral for securities having ratings equivalent to the ratings of
the Rated Certificates on the Closing Date;
(f) guaranteed reinvestment agreements issued by any
bank, insurance company or other corporation (as approved in writing
by each Rating Agency) as will not result in the qualification,
downgrading or withdrawal of the ratings then assigned to any Rated
Certificates by each Rating Agency;
(g) investments in Permitted Investments maintained in
"sweep accounts," short-term asset management accounts and the like
utilized for the investment, on an overnight basis, of residual
balances in investment accounts maintained at the Trustee, Bank of
America Illinois, an Illinois banking corporation or any other
financial institution, the short-term debt of which has the highest
available credit rating; provided, however, that any such account
must be maintained with an institution meeting the requirements of
Section 3.01 applicable to the Distribution Account;
(h) guaranteed investment contracts entered into with any
financial institution having a final maturity of not more than one
month from the date of acquisition, the short-term debt securities of
which institution have the Required Rating;
(i) funds classified as money market funds or invested in
money market instruments consisting of: U.S. Treasury bills, other
obligations issued or guaranteed by the U.S.
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government, its agencies or instrumentalities; certificates of
deposit; banker's acceptances; and commercial paper (including
variable master demand notes); provided, however, that the fund or the
investment in the fund shall be rated with the highest available
credit rating of each Rating Agency, and redemptions shall be
permitted on a daily or next business day basis; and
(j) such other investments acceptable to each Rating
Agency (as approved in writing by each Rating Agency) as will not
result in the qualification, downgrading or withdrawal of the ratings
then assigned to any Rated Certificates by such Rating Agency.
Notwithstanding anything to the contrary contained in this definition,
(a) no Permitted Investment may be purchased at a premium, (b) any of the
foregoing which constitutes a certificated security shall not be considered a
Permitted Investment unless it is registered in the name of the Trustee in its
capacity as such, or in the name of a Financial Intermediary, and (c) any of
the foregoing that constitutes an uncertificated security shall not be
considered a Permitted Investment unless (i) it is registered in the name of
the Trustee in its capacity as such or in the name of a Financial Intermediary
(in either case as collateral agent if with respect to Reserve Fund Property);
(ii) no notation of the right of the issuer thereof to a Lien thereon is
contained in the initial transaction statement therefor sent to the Trustee;
(iii) the Trustee does not have notice or actual knowledge of (A) any
restriction on the transfer thereof imposed by the issuer thereof or (B) any
adverse claim, and no notation of any such restriction or of any specific
adverse claim as to which the issuer has a duty under the law of the state in
which the Corporate Trust Office is located at the time of registration is
contained in the initial transaction statement therefor sent to the Trustee;
and (iv) to the Trustee's actual knowledge, no creditor has served legal
process upon the issuer thereof at its chief executive office in the United
States which legal process attempts to place a Lien thereon prior to the
registration thereof in the name of the Trustee.
For purposes of this definition, any reference to the highest
available credit rating of an obligation shall mean the highest available
credit rating for such obligation (excluding any "+" signs associated with such
rating), or such lower credit rating (as approved in writing by each Rating
Agency) as will not result in the qualification, downgrading or withdrawal of
the rating then assigned to any Rated Certificates by such Rating Agency.
"Rated Certificates" means each Class of Certificates that has been
rated by a Rating Agency at the request of the Seller.
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"Rating Agency" means each of Moody's and Standard & Poor's and each
other nationally recognized statistical rating agency, but only if it has rated
any Class of Certificates as of the Closing Date at the request of the Seller
and continues to do so.
"Realization Ratio" means the ratio, expressed as the percentage
equivalent of a fraction, of (a) the aggregate Net Matured Leased Vehicle
Proceeds received in any Collection Period, and (b) the aggregate Booked
Residual Values for all such Matured Vehicles sold or disposed of during such
Collection Period.
"Realization Test" means that determination, made on each
Determination Date, of (a) the Maturity Ratio for the immediately preceding
Collection Period and (b) the average of the Realization Ratios for each of the
three immediately preceding Collection Periods (or the months of September and
October 1996 in the case of the November 1996 Determination Date, the months of
September and October 1996 and the November 1996 Collection Period in the case
of the December 1996 Determination Date, and the month of October 1996 and the
November and December 1996 Collection Periods in the case of the January 1996
Determination Date). The Realization Test will be satisfied if the Maturity
Ratio is 25% or less or the Realization Ratio is 75% or more.
"Reallocation Deposit Amount" means any amount required to be
deposited by the Servicer into the 1996-B SUBI Collection Account pursuant to
the last sentence of Section 8.03(a) of the 1996-B Servicing Supplement.
"Record Date" means, with respect to each Distribution Date, (i) in
the case of the Class A-1 Certificates, the Class A-2 Certificates or the Class
A-3 Certificates, the calendar day immediately preceding such Distribution Date
(or, if Definitive Certificates have been issued, the last day of the
immediately preceding calendar month) and (ii) in the case of the Class B
Certificates, the last day of the calendar month immediately preceding the
month in which such Distribution Date occurs (or, in the case of the first
Distribution Date, the Closing Date).
"Required Amount" means, as of any Deposit Date, the lesser of (a) the
excess of (i) the sum of any anticipated amounts to be payable as set forth in
Section 3.03(b) with respect to the related Distribution Date (plus those
amounts included in clauses (a) through (c) of the definition of "Interest
Collections" in the 1996-B SUBI Supplement), over (ii) the product of (A) the
Investor Percentage with respect to Interest Collections and (B) the Interest
Collections collected during or received with respect to the related Collection
Period and allocable to the 99.8% 1996-B SUBI Interest, and (b) the total
amount on deposit in the Reserve Fund.
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"Required Rating" means a rating on commercial paper or other short
term unsecured debt obligations of Prime-1 by Moody's so long as Moody's is a
Rating Agency and A-1+ by Standard & Poor's so long as Standard & Poor's is a
Rating Agency; and any requirement that deposits or debt obligations have the
"Required Rating" shall mean that such deposits or debt obligations have the
foregoing required ratings from Moody's and Standard & Poor's.
"Reserve Fund" means the account designated as such and established
and maintained pursuant to Section 3.04.
"Reserve Fund Cash Requirement" means with respect to any Distribution
Date the maximum sum of money required to be on deposit in the Reserve Fund at
any one time and shall be calculated as follows: (a) if the ERISA Compliance
Test is not satisfied as of such Distribution Date, there shall be no such
maximum and the Reserve Fund Cash Requirement shall be unlimited, or (b) if the
ERISA Compliance Test is satisfied as of such Distribution Date, (i) if all
applicable Reserve Fund Tests are satisfied as of the related Determination
Date and no Cure Period is in effect as of such Distribution Date, in
accordance with the Base Reserve Fund Formula, or (ii) if any Reserve Fund Test
is unsatisfied as of any Distribution Date or any Cure Period is in effect as
of the related Determination Date, in accordance with the Alternate Reserve
Fund Formula.
"Reserve Fund Deficiency" means, as of any Deposit Date, the excess,
if any, of (a) the sum of any Required Amount (considered without regard to
clause (b) of the definition thereof) and any other amounts payable out of the
Reserve Fund pursuant hereto on such Deposit Date or the related Distribution
Date, over (b) the total amount on deposit in the Reserve Fund, prior to any
deposit therein by, or on behalf of, the Seller pursuant to Section 3.04(b).
"Reserve Fund Initial Deposit" means $__________.
"Reserve Fund Test" means any of the Appraisal Test, the Charge-off
Rate Test, the Delinquency Rate Test, the Maturity Ratio Test or the
Realization Test.
"Reserve Fund Supplemental Requirement" means, as of any Deposit Date
on which there is a Reserve Fund Deficiency, the lesser of (a) such Reserve Fund
Deficiency and (b) (i) $_________ plus (ii) the aggregate of all sums previously
released to the Seller from the Reserve Fund pursuant to Section 3.04(b) hereof
as a result of a reduction for any reason (other than by reason of the
Certificate Balance being less than $__________) of the Reserve Fund Cash
Requirement below the amount of the Reserve Fund Initial Deposit, less (iii)
the aggregate of all amounts previously deposited by or on behalf of
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the Seller into the Reserve Fund to satisfy a Reserve Fund Deficiency.
"Residual Certificate" shall have the meaning specified in Section
4.01(a).
"Residual Value Insurance Policy" means that certain Residual Value
Insurance Policy number 7180161 issued on May 1, 1995, by Agricultural Excess
& Surplus Insurance Company, in favor of World Omni Financial Corp.
"Residual Value Loss Amount" means, as of any Distribution Date, the
sum of the following, but only to the extent that such sum exceeds the amount
transferred to the 1996-B SUBI Collection Account from the Residual Value
Surplus Account on the related Deposit Date pursuant to Section 12.03(b) of the
1996-B SUBI Supplement: (a) the Booked Residual Values of all 1996-B Leased
Vehicles included in Matured Leased Vehicle Inventory as of the last day of the
related Collection Period but which as of such day had remained unsold and not
otherwise disposed of by the Servicer for at least two full Collection Periods;
and (b) any excess of the sum of the Booked Residual Values of all Matured
Vehicles sold or otherwise disposed of from Matured Leased Vehicle Inventory
during the related Collection Period over Net Matured Vehicle Proceeds.
"Responsible Officer" means an officer of the Trustee assigned to the
Corporate Trust Office, including any Vice President, any trust officer or any
other officer performing functions similar to those performed by the persons
who at the time shall be such officers, and any other officer of the Trustee to
whom a matter is referred because of his or her knowledge of and familiarity
with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means WOLSI LP, in its capacity as seller of the Certificates
under this Agreement, and each successor thereto (in the same capacity)
pursuant to Section 5.03.
"Seller Amounts" means, with respect to any Distribution Date, amounts
available for distribution to the Seller in respect of the Seller Distributable
Amount for such Distribution Date that are instead distributed pursuant to
Section 3.02(b) because
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of an insufficiency in the amount of Interest Collections and the Required
Amount available to make such distributions on such Distribution Date (as
determined pursuant to Section 3.02(b)).
"Seller Certificate" means the Certificate executed and authenticated
by the Trustee in substantially the form set forth in Exhibit C to this
Agreement.
"Seller Distributable Amount" means, with respect to any Distribution
Date, the sum of the Seller Principal Distributable Amount and the Seller
Interest Distributable Amount.
"Seller Interest" means, as of any date, an amount equal to (i) 99.8%
of the Aggregate Net Investment Value less (ii) the Certificate Balance.
"Seller Interest Distributable Amount" means, with respect to any
Distribution Date, the amount equal to the Seller Percentage (with respect to
Interest Collections) of all Interest Collections collected during or received
in respect of the related Collection Period allocable to the 99.8% 1996-B SUBI
Interest, less the Seller Percentage of Capped Securitization Trust
Administrative Expenses and Uncapped Administrative Expenses.
"Seller Percentage" means, with respect to Interest Collections and
Principal Collections allocable to the 99.8% 1996-B SUBI Interest,
respectively, received in or with respect to any Collection Period, 100% minus
the Investor Percentage as applied for such Collection Period with respect to
such items, respectively.
"Seller Principal Distributable Amount" means, with respect to any
Distribution Date related to a Collection Period in the Amortization Period,
the amount equal to the Seller Percentage (with respect to Principal
Collections) of all Principal Collections collected during or received in
respect of the related Collection Period allocable to the 99.8% 1996-B SUBI
Interest.
"Servicer" means WOFCO, in its capacity as servicer of the 1996-B
Leases and 1996-B Leased Vehicles, and each successor thereto (in the same
capacity) appointed pursuant to Sections 2.10 of the Servicing Agreement and
9.11 of the 1996-B Servicing Supplement, respectively.
"Servicer's Certificate" means an Officer's Certificate of the
Servicer completed and executed pursuant to Section 10.01(b) of the 1996-B
Servicing Supplement.
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"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of McGraw Hill, Incorporated, and its successors.
"State" means any state of the United States, the District of Columbia
and the Commonwealth of Puerto Rico.
"SUBI Certificates" has the meaning set forth in Recital C.
"SUBI Certificate Agreement" has the meaning set forth in Recital E.
"Transaction Documents" has the meaning attributed to the term
"Securitization Trust Documents" in the 1996-B SUBI Supplement.
"Trust" means the trust created by this Agreement, the estate of which
consists or will consist of (i) a 99.8% interest in the 1996-B SUBI, the 99.8%
1996-B SUBI Certificate, and all monies due and to become due thereunder on and
after the Initial Cutoff Date; (ii) such monies as are from time to time
deposited in the Distribution Account and the Reserve Fund; (iii) all rights
accruing to the holder of the 99.8% 1996-B SUBI Interest as a third-party
beneficiary of the Origination Trust Agreement, the 1996-B SUBI Supplement, the
Servicing Agreement and the Servicing Supplement; and (iv) all proceeds of the
foregoing.
"Trustee" means the Person acting as Trustee under the Agreement, its
successor in interest, and any successor trustee appointed pursuant to Section
6.08.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
"Uncapped Administrative Expenses" means Administrative Expenses that
would be Capped Contingent and Excess Liability Premiums, Capped Origination
Trust Administrative Expenses or Capped Securitization Trust Administrative
Expenses, respectively, except that they exceed $300,000, $100,000 or $______
(or $_______, as applicable) in any calendar year, respectively.
"Uninvested Principal Collections" means, as of the end of the
Revolving Period, any Principal Collections with respect to the Revolving
Period (or amounts treated as Principal Collections pursuant to Section
3.03(b)) then on deposit in the 1996-B SUBI Collection Account that have not
been reinvested in additional 1996-B Leases and 1996-B Leased Contracts as
contemplated by Section 8.02 of the 1996-B Servicing Supplement.
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"United States" means the United States of America, its territories
and possessions and areas subject to its jurisdiction.
"Vice President" of any Person means any vice president of such
Person, whether or not designated by a number or words before or after the
title "Vice President."
"WOFCO" means World Omni Financial Corp. and its successors.
"WOLSI LP" means World Omni Lease Securitization L.P. and its
successors.
"0.2% 1996-B SUBI Certificate" has the meaning set forth in Recital C.
SECTION 1.02. ARTICLE AND SECTION REFERENCES.
Except as otherwise specified herein, all article and section
references shall be to Articles and Sections in this Agreement.
ARTICLE TWO
CREATION OF TRUST
SECTION 2.01. CREATION OF TRUST.
Upon the execution of this Agreement by the parties hereto, there is
hereby created the World Omni 1996-B Automobile Lease Securitization Trust.
SECTION 2.02. CONVEYANCE OF 99.8% 1996-B SUBI INTEREST.
In consideration of the Trustee's delivery to, or upon the order of,
the Seller of executed and authenticated Investor Certificates, in authorized
denominations, in an aggregate amount equal to the sum of the Initial Class A
Certificate Balance and the Initial Class B Certificate Balance, and of the
executed and authenticated Seller Certificate, the Seller does hereby transfer,
assign and otherwise convey to the Trustee, in trust for the benefit of the
Certificateholders, to the full extent of the Seller's interest therein,
without recourse (subject to the Seller's obligations herein):
(i) all right, title and interest of the Seller in and to
a 99.8% interest in the 1996-B SUBI and the 99.8% 1996-B SUBI
Certificate evidencing that interest in the 1996-B SUBI (such
interest, the "99.8% 1996-B SUBI Interest") and all monies due thereon
and paid thereon or in respect thereof;
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(ii) the right to realize upon any property that may be deemed to
secure the 99.8% 1996-B SUBI Interest;
(iii) all rights accruing to the holder of the 99.8% 1996-B SUBI
Interest as a third-party beneficiary under the Origination Trust
Agreement, the 1996-B SUBI Supplement, the Servicing Agreement and the
1996-B Servicing Supplement; and
(iv) all proceeds of the foregoing.
The Seller also does hereby grant to the Trustee a security interest
in all of the foregoing, and the Trustee shall have all the rights, powers and
privileges of a secured party under the UCC.
SECTION 2.03. ACCEPTANCE BY TRUSTEE.
The Trustee does hereby accept all consideration conveyed by the
Seller pursuant to Section 2.02 and declares that the Trustee shall hold such
consideration in trust as herein set forth for the benefit of the
Certificateholders, subject to the terms and provisions of this Agreement.
ARTICLE THREE
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO CERTIFICATEHOLDERS
SECTION 3.01. DISTRIBUTION ACCOUNT.
(a) Pursuant to Section 9.02(d) of the 1996-B Servicing
Supplement, the Servicer shall establish the Distribution Account in the name
of the Trustee for the benefit of the Certificateholders. The Distribution
Account shall be an account initially established with the Trustee and
maintained with the Trustee so long as (i) the commercial paper or other
short-term unsecured debt obligations of the Trustee have the Required Rating,
or (ii) the Distribution Account is a segregated trust account bearing a
designation clearly indicating that the funds deposited therein are held in
trust for the benefit of the Certificateholders, which Distribution Account is
located in the corporate trust department of the Trustee and, so long as
Moody's is a Rating Agency, the Trustee has a long term deposit rating from
Moody's of at least Baa3 (or such lower rating as Moody's shall approve in
writing) and corporate trust powers under applicable federal and state laws and
is organized under the laws of the United States or any State. In the event
that the Trustee no longer meets either of the requirements stated above, then
the Servicer shall, with the Trustee's assistance as necessary, cause the
Distribution Account to be moved to a bank or trust company that satisfies the
above-mentioned requirements.
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(b) For so long as the depository institution or trust company
then maintaining the Distribution Account meets the requirements of either
Section 3.01(a)(i) or (ii), all amounts held in the Distribution Account shall,
to the extent permitted by applicable laws, rules and regulations, be invested,
as directed by the Servicer pursuant to Section 9.02(i) of the 1996-B Servicing
Supplement, in Permitted Investments; otherwise such amounts shall be
maintained in cash. Earnings on investment of funds in the Distribution
Account shall be retained in the Distribution Account and shall constitute part
of the Trust, and losses shall be charged against the funds on deposit therein.
SECTION 3.02. COLLECTIONS.
(a) Pursuant to Section 12.01(c) of the 1996-B SUBI Supplement and
Section 9.02(f) of the 1996-B Servicing Supplement, on each Deposit Date the
Servicer shall cause the transfer from the 1996-B SUBI Collection Account to
the Distribution Account of 99.8% of all Interest Collections and, on each
Deposit Date related to the Collection Period in which the Amortization Date or
any Early Amortization Event occurs, and each subsequent Collection Period,
99.8% of all Principal Collections, in each case for the preceding Collection
Period (including, on the Deposit Date related to the Collection Period in
which an Early Amortization Event occurs, 99.8% of all Principal Collections
with respect to such Collection Period prior to the Early Amortization Event).
Further, on the Deposit Date related to the Collection Period in which the
Amortization Date or any Early Amortization Event occurs, the Servicer also
shall transfer from the 1996-B SUBI Collection Account to the Distribution
Account 99.8% of all Reallocation Deposit Amounts and Uninvested Principal
Collections on deposit in the 1996-B SUBI Collection Account at the time the
Amortization Period commences. Such deposit may be made in the form of a
single deposit and shall be made in immediately available funds, no later than
3:00 p.m., New York City time, on the relevant Deposit Date.
(b) The Trustee shall retain, subject to the provisions of this
Agreement and the other Transaction Documents, all collections on or in respect
of the 99.8% 1996-B SUBI Interest transferred to the Trustee, on behalf of the
Trust, in accordance with such provisions, in the Distribution Account or the
Reserve Fund, as the case may be. The Trustee shall be deemed to have
possession of such monies and collections for purposes of Section 9-305 of the
UCC of the jurisdiction in which such property is located.
SECTION 3.03. DISTRIBUTIONS.
(a) On each Determination Date, pursuant to Section 9.02(e) of the
1996-B Servicing Supplement, the Servicer shall calculate
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the amounts to be distributed to the holders of the 1996-B SUBI Certificates,
the Class A-1 Distributable Amount, the Class A-2 Distributable Amount, the
Class A-3 Distributable Amount, the Class B Distributable Amount, the Seller
Distributable Amount, and all other distributions to be made on the related
Distribution Date.
(b) The rights of the Class B Certificateholders to receive
distributions of Interest Collections allocable to the 99.8% 1996-B SUBI
Interest in respect of the Class B Certificates shall be and hereby are
subordinated to the rights of the Class A-1 Certificateholders, the Class A-2
Certificateholders and the Class A-3 Certificateholders to receive
distributions of Interest Collections allocable to the 99.8% 1996-B SUBI
Interest in respect of the Class A-1 Certificates, the Class A-2 Certificates
and the Class A-3 Certificates to the extent provided in this subsection. On
each Distribution Date the Trustee shall distribute the product of (i) the
Investor Percentage with respect to Interest Collections, multiplied by (ii)
the Interest Collections paid over to the Trustee from the 1996-B SUBI
Collection Account pursuant to Section 3.02(a), together with any Seller
Amounts, the Required Amount, if any, for such Distribution Date, and any
amount of Principal Collections that otherwise would be distributed to the
Class B Certificateholders pursuant to subsection (d) below but is required to
be applied to the payment of clauses (v), (vi) and (vii) below pursuant to
subsection (e)(iii) below, in the following amounts and otherwise in the
following order of priority to the following Persons:
(i) in the event of an Early Amortization Event involving
an Insolvency Event, as a result of which the Trustee has elected or
has been instructed to sell the property of the Trust pursuant to
Section 8.02(a), to the Trustee, the Investor Percentage of Capped
Securitization Trust Administrative Expenses;
(ii) the Class A-1 Interest Distributable Amount for such
Distribution Date together with any unpaid Class A-1 Interest
Carryover Shortfall, the Class A-2 Interest Distributable Amount for
such Distribution Date together with any Class A-2 Interest Carryover
Shortfall and the Class A-3 Interest Distributable Amount for such
Distribution Date together with any Class A-3 Interest Carryover
Shortfall, to the Class A-1, the Class A-2 and the Class A-3
Certificateholders, respectively;
(iii) the Class B Interest Distributable Amount for such
Distribution Date, together with any unpaid Class B Interest Carryover
Shortfall, to the Class B Certificateholders;
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(iv) in circumstances other than those set forth in clause (i),
the Investor Percentage of Capped Securitization Trust Administrative
Expenses for the preceding Collection Period, to the Trustee;
(v) the Class A-1 Loss Amount, the Class A-2 Loss Amount and
the Class A-3 Loss Amount to the Class A- 1, the Class A-2 and the
Class A-3 Certificateholders respectively;
(vi) to the Class A-1, the Class A-2 and Class A-3
Certificateholders, respectively, the aggregate amounts of the Class
A-1 Certificate Principal Loss Amounts, Class A-2 Certificate
Principal Loss Amounts and Class A-3 Certificate Principal Loss
Amounts, if any, for previous Distribution Dates that has not been
previously reimbursed to the Class A-1, Class A-2 or Class A-3
Certificateholders pursuant to this clause (vi);
(vii) the Class A-1 Certificate Principal Loss Interest Amount, the
Class A-2 Certificate Principal Loss Interest Amount and the Class A-3
Certificate Principal Loss Interest Amount, if any, for such
Distribution Date to the Class A-1, Class A-2 and Class A-3
Certificateholders, respectively;
(viii) the Class B Loss Amount to the Class B Certificateholders;
(ix) to the Class B Certificateholders the aggregate amount of the
Class B Certificate Principal Loss Amounts and Class B Certificate
Principal Carryover Shortfall, if any, for previous Distribution Dates
that has not been previously reimbursed to the Class B
Certificateholders pursuant to this clause (ix);
(x) the Class B Certificate Principal Loss Interest Amount and
the Class B Certificate Principal Carryover Shortfall Interest Amount,
if any, for such Distribution Date to the Class B Certificateholders;
(xi) the Investor Percentage of Uncapped Administrative Expenses,
(A) to the Origination Trustee or the Trustee, as applicable, and then
(B) to the Servicer, reimbursement of any previous advance of
Administrative Expenses that was made by the Servicer pursuant to
Section 9.05(a) of the 1996-B Servicing Supplement and has not yet
been reimbursed; and
(xii) the balance, if any, shall constitute Excess Collections and
shall be applied as set forth in subsection (c) below.
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Notwithstanding the foregoing, on any Distribution Date related to a Collection
Period in the Revolving Period, the amounts set forth in clauses (v) through
(x) above shall not be paid to the Investor Certificateholders, but shall be
treated as Principal Collections for purposes of Section 11.02 of the 1996-B
SUBI Supplement.
(c) On each Distribution Date, the Trustee shall distribute any
Excess Collections in the following amounts and in the following order of
priority:
(i) into the Reserve Fund until the amount on deposit
therein equals the Reserve Fund Cash Requirement; and
(ii) (A) if the Distribution Date relates to a Collection
Period in the Revolving Period, any remainder to the Seller, and (B)
if the Distribution Date relates to a Collection Period in the
Amortization Period, any remainder up to but not exceeding the product
of one-twelfth of .25% and 99.8% of the Aggregate Net Investment Value
as of the last day of the related Collection Period (the "Accelerated
Principal Distribution Amount") as an additional principal
distribution to the Certificateholders as follows: the Accelerated
Principal Distribution Amount will be distributed first to the Class
A-1 Certificateholders until the Class A-1 Certificates have been paid
in full, second, to the Class A-2 Certificateholders until the Class
A-2 Certificates have been paid in full and third, the Class A
Percentage and the Class B Percentage of any remaining amount will be
distributed to the Class A-3 Certificateholders and the Class B
Certificateholders, respectively, until such Certificates have been
paid in full. The balance of any remainder will then be paid to the
Seller.
(d) On each Distribution Date beginning with the Distribution
Date related to the Collection Period in which the Amortization Period
commences and ending on the Distribution Date before the Distribution Date on
which the Class A-2 Certificates have been paid in full, the Trustee shall
distribute (x) an amount equal to the Investor Percentage of all Principal
Collections collected or received in respect of the related Collection Period
allocable to the SUBI Interest as principal payments to the Class A-1
Certificateholders until the Class A-1 Certificates have been paid in full, (y)
an amount equal to the Investor Percentage of all Principal Collections
collected or received in respect of the related Collection Period allocable to
the SUBI Interest as principal payments to the Class A-2 Certificateholders
until the Class A-2 Certificates have been paid in full, and (z) the Class A
Percentage and the Class B Percentage of any such remaining Principal
Collections as principal payments to the Class A-3 Certificateholders and Class
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B Certificateholders, respectively. On each Distribution Date after the Class
A-2 Certificates have been paid in full, the Trustee shall distribute (i) to
the Class A-3 Certificateholders, the Class A Percentage of Principal
Collections collected or received in respect of the related Collection Period
allocable to the SUBI Interest and (ii) subject to subsection (e) below, to the
Class B Certificateholders, the Class B Percentage of such Principal
Collections. Distributions to Investor Certificateholders pursuant to Sections
3.03(b)(v), (vi), (viii), and (ix) also shall constitute distributions of
principal. The aggregate amount of principal distributed to any Class of
Investor Certificateholders shall not exceed the Initial Certificate Balance
attributable to that Class of Investor Certificates.
(e) If and to the extent that the amount of Interest Collections
(measured for these purposes without regard to any deduction therefrom provided
for in clauses (a) through (c) of the definition of "Interest Collections" in
the 1996-B SUBI Supplement) available to make distributions on a Distribution
Date is insufficient to (i) make distributions (or, on a Distribution Date
related to a Collection Period in the Revolving Period, applications as if such
amounts were Principal Collections) pursuant to Section 3.03(b) and clauses (a)
through (c) of the definition of the term "Interest Collections" in the 1996-B
SUBI Supplement, the Required Amount will be withdrawn from the Reserve Fund
and applied towards such shortfall, (ii) if after giving effect to clause (i),
there is still a shortfall in amounts available to make all distributions (or,
on a Distribution Date related to a Collection Period in the Revolving Period,
applications as if such amounts were Principal Collections) pursuant to Section
3.03(b) and clauses (a) through (c) of the definition of the term "Interest
Collections" in the 1996-B SUBI Supplement, amounts otherwise available for
distribution to the Seller in respect of the Seller Interest Distributable
Amount for such Distribution Date, and then in respect of the Seller Principal
Distributable Amount, will be applied towards such insufficiency, and (iii) if,
on a Distribution Date related to a Collection Period during the Amortization
Period, after giving effect to clauses (i) and (ii), there is still a shortfall
in amounts required to make all distributions (or, on a Distribution Date
related to a Collection Period in the Revolving Period, available for
reinvestment in additional 1996-B SUBI Assets pursuant to Section 11.02 of the
1996-B SUBI Supplement) pursuant to Section 3.03(b)(v), (vi) and (vii), amounts
otherwise available for distribution to the Class B Certificateholders in
respect of principal pursuant to subsection (d) above will be applied toward
such insufficiency. In the event that there remain shortfalls in the amounts
required to be distributed pursuant to Sections 3.03(b)(ii), (v), (vi) or (vii)
to both the Class A-1 Certificateholders and the Class A-2 Certificateholders,
the amounts available will be distributed pro
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rata to Class A-1 Certificateholders, Class A-2 Certificateholders and Class
A-3 Certificateholders based on the Class A-1 Allocation Percentage, the Class
A-2 Allocation Percentage and the Class A-3 Allocation Percentage,
respectively.
On such Distribution Date, after giving effect to all payments
required to be made and all required deposits to or withdrawals from the
Reserve Fund, amounts that otherwise would be payable to the Seller in respect
of the Seller Distributable Amount (other than Seller Amounts) will be
deposited into the Reserve Fund until the amount on deposit therein equals the
Reserve Fund Cash Requirement, and any remaining amounts so payable to the
Seller will be distributed to the Seller by the Trustee as follows: (A) if
such Distribution Date relates to a Collection Period during the Revolving
Period, the interest component of such remaining amounts will be paid in
respect of the Seller Interest Distributable Amount and (B) if such
Distribution Date relates to a Collection Period during the Amortization
Period, (1) the interest component of such remaining amounts will be paid in
respect of the Seller Interest Distributable Amount and (2) if and to the
extent that the Seller Interest will be equal to or greater than zero, after
all required distributions have been made on such Distribution Date, the
principal component of such remaining amounts will be paid in respect of the
Seller Principal Distributable Amount. Any amounts that would otherwise be
payable to the Seller pursuant to the foregoing as the Seller Principal
Distributable Amount, but may not be so paid because the Seller Interest would
be less than or equal to zero, shall instead be distributed to the Investor
Certificateholders pursuant to Section 3.03(d). Upon any distribution of
amounts to the Seller, the Investor Certificateholders will have no further
rights, in, or claims to, such amounts.
(f) Subject to Section 7.01 respecting the final payment upon
retirement of each Certificate, the Trustee shall on each Distribution Date
distribute to each Certificateholder of any Class of record on the related
Record Date by check mailed to such Certificateholder at the address of such
Holder appearing in the Certificate Register (or, if DTC, its nominee or a
Clearing Agency is the relevant Certificateholder, by wire transfer of
immediately available funds or pursuant to other arrangements), the amount to
be distributed to such Certificateholder pursuant to such Holder's
Certificates.
SECTION 3.04. RESERVE FUND.
(a) (i) In order to assure that sufficient amounts to make required
distributions to Investor Certificateholders will be available, pursuant to
Section 9.02(d) of the 1996-B Servicing Supplement the Servicer shall establish
and maintain with the Trustee a separate trust account to be known as the
"Reserve
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Fund", which will include the money and other property deposited and held
therein pursuant to Section 3.03(c)(i) and this Section. The Reserve Fund
shall be an account initially established with the Trustee and maintained with
the Trustee so long as (A) the commercial paper or other short-term unsecured
debt obligations of the Trustee have the Required Rating, or (B) the Reserve
Fund is a segregated trust account bearing a designation clearly indicating the
funds deposited therein are held in trust for the benefit of the
Certificateholders, which Reserve Fund is located in the corporate trust
department of the Trustee and, so long as Moody's is a Rating Agency, the
Trustee has a long-term deposit rating from Moody's of at least Baa3 (or such
lower rating as Moody's shall approve in writing) and corporate trust powers
under applicable federal and state laws and is organized under the laws of the
United States or any State. In the event that the Trustee no longer meets
either of the requirements stated above, then the Servicer shall, with the
Trustee's assistance as necessary, cause the Reserve Fund to be moved to a bank
or trust company that satisfies the above-mentioned requirements.
(ii) For so long as the depository institution or trust
company then maintaining the Reserve Fund meets the requirements of either
Section 3.04(a)(i)(A) or (B), all amounts held in the Reserve Fund shall, to
the extent permitted by applicable laws, rules and regulations, be invested, as
directed by the Servicer pursuant to Section 9.02(i) of the 1996-B Servicing
Supplement, in Permitted Investments; otherwise such amounts shall be
maintained in cash. Earnings on investment of funds in the Reserve Fund shall
be retained in the Reserve Fund and shall constitute part of the Trust, and
losses shall be charged against the funds on deposit therein.
(b) On or prior to the Closing Date, the Seller shall deposit an
amount equal to the Reserve Fund Initial Deposit into the Reserve Fund. The
Seller also does hereby grant to the Trustee a security interest in such
initial deposit, and the Trustee shall have all the rights, powers and
privileges of a secured party under the UCC. Amounts on deposit in the Reserve
Fund shall be supplemented from time to time by the deposit therein of Excess
Collections otherwise distributable to the Seller pursuant to Section 3.03(c),
and amounts that otherwise would be payable to the Seller pursuant to Section
3.03(e) but for the fact that the amount on deposit in the Reserve Fund is less
than the Reserve Fund Cash Requirement, to the extent described in this
subparagraph (b). In addition, on each Deposit Date relating to a Distribution
Date on which a Reserve Fund Deficiency will exist, the Seller shall deposit
into the Reserve Fund an additional cash amount equal to the lesser of (i) such
Reserve Fund Deficiency and (ii) the Reserve Fund Supplemental Requirement. On
each Distribution Date the amounts on deposit in the Reserve Fund shall be
available for distribution as provided
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in Section 3.03 and, on each Distribution Date, if the amount on deposit in the
Reserve Fund (after giving effect to all deposits thereto or withdrawals
therefrom on such Distribution Date) is greater than the Reserve Fund Cash
Requirement, the Trustee will distribute any remaining amounts to the Seller.
(c) Upon termination of the Trust pursuant to Section 7.01, any
amounts on deposit in the Reserve Fund shall be available for payment of any
remaining amounts due to the Investor Certificateholders, and for payment of any
remaining amounts due to the Trustee, and after payment of such amounts due,
shall be paid to the Seller.
(d) Amounts properly received by the Seller pursuant to this
Agreement shall be free of any claim of the Trust, the Trustee or the Investor
Certificateholders and shall not be available to the Trustee or the Trust for
the purpose of making deposits to the Reserve Fund or making payments to the
Investor Certificateholders, nor shall the Seller be required to refund any
amount properly received by it.
SECTION 3.05. NET DEPOSITS.
For so long as WOFCO shall be the Servicer, the Servicer and the
Trustee may make all remittances to the Distribution Account pursuant to this
Article net of amounts to be distributed by the applicable recipient to such
remitting party. The Seller may make remittances to the Distribution Account
pursuant to this Article net of amounts distributable to the Seller on the
related Distribution Date, provided that such amounts were to be paid directly
to the Seller on such Distribution Date rather than deposited into the Reserve
Fund pursuant to Section 3.04. Nonetheless, each such party shall account for
all of the above described remittances and distributions as if the amounts were
deposited and/or transferred separately, and the net remittance may only be
made to the extent that the net result thereof is the same as if the amounts
were deposited and/or transferred separately.
SECTION 3.06. STATEMENTS TO CERTIFICATEHOLDERS.
(a) On each Distribution Date, the Trustee shall include with each
distribution to each Certificateholder of record, a statement, prepared by the
Servicer, based on information in the Servicer's Certificate furnished pursuant
to Section 10.01(b) of the 1996-B Servicing Supplement, setting forth for the
related Collection Period and distribution the following information as of the
related Record Date or Deposit Date or such Distribution Date, as the case may
be:
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(i) the Investor Percentage for such Collection Period, stated
separately for Interest Collections and Loss Amounts, and for
Principal Collections;
(ii) the total amount being distributed to Investor
Certificateholders in such distribution;
(iii) the total amount being distributed to each Class of
Investor Certificateholders in such distribution;
(iv) the total amount of interest being distributed to each
Class of Investor Certificateholders in such distribution;
(v) the amount, if any, of Class A-1 Interest Carryover
Shortfall, Class A-2 Interest Carryover Shortfall, Class A-3 Interest
Carryover Shortfall and Class B Interest Carryover Shortfall included
in such distribution;
(vi) the amount, if any, of the remaining unpaid Class A-1
Interest Carryover Shortfall, Class A-2 Interest Carryover Shortfall,
Class A-3 Interest Carryover Shortfall and Class B Interest Carryover
Shortfall after giving effect to such distribution;
(vii) the total amount of principal being distributed to each
Class of Investor Certificateholders in such distribution;
(viii) the Class A-1 Allocation Percentage, the Class A-2
Allocation Percentage, the Class A-3 Allocation Percentage, the Class
B Allocation Percentage and the amount, if any, of the reimbursement
of Class A-1 Charged-off Amounts, Class A-1 Residual Value Loss
Amounts and Class A-1 Additional Loss Amounts, Class A-2 Charged-off
Amounts, Class A-2 Residual Value Loss Amounts and Class A-2
Additional Loss Amounts, Class A-3 Charged-off Amounts, Class A-3
Residual Value Loss Amounts and Class A-3 Additional Loss Amounts and
Class B Charged-off Amounts, Class B Residual Value Loss Amounts and
Class B Additional Loss Amounts being included in such distribution;
(ix) the amount, if any, of the reimbursement of Class A-1
Certificate Principal Loss Amounts, Class A-2 Certificate Principal
Loss Amounts, Class A-3 Certificate Principal Loss Amounts and Class B
Certificate Principal Loss Amounts included in such distribution;
(x) the amount, if any, of the aggregate of unreimbursed Class
A-1 Certificate Principal Loss Amounts, Class A-2 Certificate
Principal Loss Amounts, Class A-3 Certificate Principal Loss Amounts
and Class B Certificate
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Principal Loss Amounts after giving effect to such distribution;
(xi) the amount, if any, of accrued Class A-1 Certificate
Principal Loss Interest Amounts, Class A-2 Certificate Principal Loss
Interest Amounts, Class A-3 Certificate Principal Loss Interest
Amounts and Class B Certificate Principal Loss Interest Amounts
included in such distribution;
(xii) the amount, if any, of accrued and unpaid Class A-1
Certificate Principal Loss Interest Amounts, Class A-2 Certificate
Principal Loss Interest Amounts, Class A-3 Certificate Principal Loss
Interest Amounts and Class B Certificate Principal Loss Interest
Amounts after giving effect to such distribution;
(xiii) the amount, if any, of accrued and unpaid Class B
Certificate Principal Carryover Shortfall after giving effect to such
distribution;
(xiv) the Investor Percentage of the Servicing Fee allocable
to the 99.8% 1996-B SUBI Interest for such Distribution Date and any
unpaid previous such amounts with respect to prior Distribution Dates;
(xv) the Certificate Balance, the Class A-1 Certificate
Balance, the Class A-2 Certificate Balance, the Class A-3 Certificate
Balance, the Class B Certificate Balance, the Class A-1 Certificate
Factor, the Class A-2 Certificate Factor, the Class A-3 Certificate
Factor and the Class B Certificate Factor, each after giving effect to
such distribution;
(xvi) the Seller Amount, if any, included in such distribution
and the amount of the Seller Interest, after giving effect to all
payments made on such Distribution Date;
(xvii) the Required Amount, if any, included in such
distribution;
(xviii) the Aggregate Net Investment Value as of the end of
such Collection Period;
(xix) the amount on deposit in the Reserve Fund on such
Distribution Date, after giving effect to such distributions, the
change in such balance from the immediately preceding Distribution
Date, the Reserve Fund Cash Requirement and the Reserve Fund
Supplemental Requirement (if any);
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(xx) the amount of Payments Ahead on deposit in the 1996-B
SUBI Collection Account and representing Monthly Lease Payments due in
one or more immediately subsequent Collection Periods and the change
in such balance from the immediately preceding Distribution Date;
(xxi) the amount of Outstanding Advances on such Distribution
Date and the change in such amount from the immediately preceding
Distribution Date;
(xxii) the balance on deposit in the Residual Value Surplus
Account on the related Deposit Date, after giving effect to
distributions therefrom made on that date, the change in such balance
from the immediately preceding Deposit Date, the aggregate amount
deposited into the Residual Value Surplus Account on such Deposit
Date, and the aggregate amount withdrawn from the Residual Value
Surplus Account on such Deposit Date; and
(xxiii) the Maturity Ratio and weighted average Lease Rate of
the Leases in the 1996-B SUBI Portfolio for the immediately preceding
Collection Period and the Charge-off Rate, Delinquency Rate and
Realization Ratio for each of the three immediately preceding
Collection Periods.
Each amount set forth pursuant to subclauses (ii) through (xiii) above shall be
expressed as a dollar amount per $1,000 of original principal balance of an
Investor Certificate. Any Certificate Owner may obtain a copy of any such
statement, of any Servicer's Certificate required pursuant to Section 10.01)(b)
of the 1996-B Servicing Supplement, any annual report of Independent
Accountants required pursuant to Section 3.02 of the Servicing Agreement and
Section 10.02 of the 1996-B Servicing Supplement, and of any annual Officer's
Certificate required pursuant to Section 3.03 of the Servicing Agreement and
Section 10.03(a) of the 1996-B Servicing Supplement, upon written request to
the Trustee at the Corporate Trust Office.
(b) Within a reasonable period of time after the end of each
calendar year, but not later than the latest date permitted by law, the Trustee
shall mail to each Person who at any time during such calendar year shall have
been a Holder of an Investor Certificate, a statement or statements which in
the aggregate contain the sum of the amounts set forth in clauses (a)(ii)
through (vii), (viii) through (xiv) above for such calendar year or, in the
event such Person shall have been a Holder of an Investor Certificate during a
portion of such calendar year, for the applicable portion of such year, for the
purposes of such Certificateholder's preparation of federal income tax returns.
In addition, the Servicer shall furnish to the Trustee for distribution to such
Person at such time any other information
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reasonably necessary under applicable law for the preparation of such income
tax returns.
ARTICLE FOUR
THE CERTIFICATES
SECTION 4.01. THE CERTIFICATES.
(a) The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class B Certificates and the Seller Certificate
shall be substantially in the form of Exhibits A-1, A-2, A-3, B and C,
respectively, to this Agreement. The Class A-1 Certificates, the Class A-2
Certificates and the Class A-3 Certificates shall be issuable in minimum
denominations of $1,000 and integral multiples in excess thereof and the Class
B Certificates shall be issuable in minimum denominations of $250,000 and
integral multiples of $1,000 in excess thereof; provided, however, that one
Class A-1 Certificate, one Class A-2 Certificate, one Class A-3 Certificate and
one Class B Certificate may be issued in a denomination that includes any
remaining portion of the Initial Class A-1 Certificate Balance, the Initial
Class A-2 Certificate Balance, the Initial Class A-3 Certificate Balance and
the Initial Class B Certificate Balance, respectively (each, a "Residual
Certificate"). A single Seller Certificate shall be issued. The Certificates
shall be executed on behalf of the Trustee by manual or facsimile signature of
a Responsible Officer under the Trustee's seal imprinted thereon and attested
on behalf of the Trustee by the manual or facsimile signature of a Responsible
Officer. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were affixed, authorized
to sign on behalf of the Trustee shall be valid and binding obligations of the
Trust, notwithstanding that such individuals or any of them have ceased to be
so authorized prior to the authentication and delivery of such Certificates or
did not hold such offices at the date of such Certificates. All Certificates
shall be dated the date of their authentication.
(b) The Investor Certificates shall represent fractional undivided
interests in the Trust, including the benefits of the Reserve Fund and the
right to receive the Investor Percentage of Interest Collections and Principal
Collections and the other amounts at the times and in the amounts specified in
this Agreement. The Seller Certificate shall represent the interest in the
Trust not represented by the Investor Certificates.
SECTION 4.02. AUTHENTICATION AND DELIVERY OF CERTIFICATES.
In exchange for, and simultaneously with the sale, assignment and
transfer to the Trustee of the 99.8% 1996-B SUBI Interest, the 99.8% 1996-B
SUBI Certificate and the other assets
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of the Trust, the Trustee shall cause to be executed, authenticated and
delivered to or upon the order of the Seller Investor Certificates in
authorized denominations equaling in the aggregate the sum of the Initial Class
A-1 Certificate Balance, the Initial Class A-2 Certificate Balance, the Initial
Class A-3 Certificate Balance and the Initial Class B Certificate Balance, and
the Seller Certificate, each duly authorized by the Trustee, and evidencing the
entire ownership of the Trust. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A-1, A-2, A-3, B or C to this Agreement, as the case may be,
executed by the Trustee by manual signature, and such certificate upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered under this Agreement.
SECTION 4.03. REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES.
(a) The Certificate Registrar shall maintain a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Certificate Register shall provide for the registration of Certificates and
transfers and exchanges of Certificates as provided in this Agreement. The
Trustee is hereby initially appointed Certificate Registrar for the purpose of
registering Certificates and transfers and exchanges of Certificates as
provided in the Agreement. In the event that, subsequent to the Closing Date,
the Trustee notifies the Servicer that it is unable to act as Certificate
Registrar, the Servicer shall appoint another bank or trust company, having an
office or agency located in the Borough of Manhattan, The City of New York,
agreeing to act in accordance with the provisions of this Agreement applicable
to it, and otherwise acceptable to the Trustee, to act as successor Certificate
Registrar under this Agreement.
The Seller Certificate shall be owned by the Seller and may not be
transferred, as provided by Section 5.06. No transfer of a Class B Certificate
shall be made unless the registration requirements of the Securities Act and
any applicable state securities laws are complied with, or such transfer is
exempt from the registration requirements under the Securities Act and such
state securities laws. In the event that a transfer is to be made in reliance
upon an exemption from the Securities Act and such state securities laws, the
Trustee shall require one of the following, at the option of the
Certificateholder desiring to effect such transfer: (i) that such
Certificateholder and its prospective transferee jointly deliver an Opinion of
Counsel with respect to the Securities Act and a memorandum of law with respect
to any applicable state securities laws acceptable to and in form and substance
satisfactory to the Trustee and the
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Seller upon which the Trustee and the Seller may conclusively rely, to the
effect that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from the Securities Act and such
state securities laws or is being made pursuant to the Securities Act and such
state securities laws, which Opinion of Counsel and memorandum of law, as the
case may be, shall not be an expense of the Trustee, the Seller or the
Servicer; or (ii) that the transferee execute a representation letter
acceptable to and in form and substance satisfactory to the Trustee (provided
that the forms attached as Exhibits D-1 and D-2 shall be deemed acceptable if
they are completed in a manner acceptable to the Trustee) certifying to the
Trustee the facts surrounding such transfer, which representation letter shall
not be an expense of the Trustee, the Seller or the Servicer. The Holder of a
Class B Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the Seller and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with the Securities Act and such state laws. Neither the Seller,
the Servicer nor the Trustee is under any obligation to register the Class B
Certificates under the Securities Act or any state securities laws.
Notwithstanding anything to the contrary contained herein, no resale
or other transfer of a Class B Certificate or any interest therein shall be
made unless the Trustee shall have received either a representation letter or
Opinion of Counsel from the prospective transferee of such Class B Certificate,
in form and substance satisfactory to the Seller and the Trustee (provided that
the forms attached as Exhibits D-1 and D-2 shall be deemed acceptable), to the
effect that (i) such transferee will not acquire such Class B Certificate with
the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA,
(ii) no "prohibited transaction" under ERISA or the Code will occur in
connection with such prospective transferee's acquisition of such Class B
Certificate or (iii) the acquisition of such Class B Certificate is subject to
a statutory or administrative exemption, specified in such letter or opinion,
from the "prohibited transaction" provisions of ERISA and the Code. Each
prospective transferee of any Class B Certificate will be required to represent
to the Trustee whether it will purchase such Class B Certificate with the
assets of an "employee benefit plan" as defined under ERISA or other benefit
plan investor.
The Class B Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of such Class B Certificates to
reflect any change in applicable law or regulation (or the interpretation
thereof) or practices relating to the resale or transfer of restricted
securities generally.
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(b) Upon surrender for registration of transfer of any Certificate
at the Corporate Trust Office, the Trustee shall execute, authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same Class in authorized denominations of a like
aggregate principal amount.
(c) At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class of authorized denominations
of a like aggregate principal amount, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Trustee on behalf of the Trust shall execute,
authenticate and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered
for registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the Holder thereof or his attorney duly authorized
in writing.
(d) No service charge shall be made to any Holder for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of
Certificates.
(e) All Certificates surrendered for registration of transfer and
exchange shall be canceled and subsequently destroyed by the Trustee.
(f) No Class B Certificate shall be listed for trading on any
recognized securities exchange.
SECTION 4.04. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate, and (ii) there is
delivered to the Certificate Registrar and the Trustee such security or
indemnity as may be required by them to save each of them and the Trust
harmless, then, in the absence of notice that such Certificate has been
acquired by a bona fide purchaser, the Trustee on behalf of the Trust shall
execute and the Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and fractional undivided interest. In connection
with the issuance of any new Certificate under this Section, the Trustee may
require the payment by the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in
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relation thereto. Any duplicate Certificate issued pursuant to this Section
shall constitute complete and indefeasible 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, and any such lost, stolen or destroyed
Certificate shall, upon issuance of any such duplicate Certificate, be null,
void and of no effect.
SECTION 4.05. PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of
transfer, the Trustee, the Certificate Registrar and any of their respective
agents may treat the Person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions pursuant
to Section 3.03 and for all other purposes whatsoever, and neither the Trustee,
the Certificate Registrar nor any of their respective agents shall be affected
by any notice to the contrary.
SECTION 4.06. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES.
The Certificate Registrar shall furnish or cause to be furnished to
the Servicer, within 15 days after receipt by the Certificate Registrar of a
written request therefor from the Servicer, a list, in such form as the
Servicer may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders or holders of Investor Certificates evidencing not less than
25% of the aggregate Percentage Interests of any Class (hereinafter referred to
as "Applicants") apply in writing to the Trustee, and such application states
that the Applicants desire to communicate with other Investor
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application is accompanied by a copy of the
communication that such Applicants propose to transmit, then the Trustee shall,
within five Business Days after the receipt of such application, afford such
Applicants access, during normal business hours, to the current list of
Investor Certificateholders. Every Certificateholder, by receiving and holding
a Certificate, agrees with the Servicer and the Trustee that neither the
Servicer nor the Trustee shall be held accountable by reason of the disclosure
of any such information as to the names and addresses of the Certificateholders
under the Agreement, regardless of the source from which such information was
derived.
SECTION 4.07. MAINTENANCE OF OFFICE OR AGENCY.
The Trustee shall maintain in the Borough of Manhattan, The City of
New York, an office or offices or agency or agencies where Certificates may be
surrendered for registration of
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transfer or exchange. The initial such agency shall be c/o First Trust of New
York, National Association, 100 Wall Street, 20th Floor, New York, New York
10005; provided that a copy of any such Certificate surrendered shall be sent
to the Trustee at the Corporate Trust Office. The Trustee shall give prompt
written notice to the Seller, the Servicer and the Certificateholders of any
change in the location of any such office or agency. Notices and demands to or
upon the Trustee in respect of the Certificates and this Agreement shall not be
sent to such office or agency, but shall be sent as set forth in Section 10.02.
SECTION 4.08. TEMPORARY CERTIFICATES.
Pending the preparation of definitive Class A-1 Certificates, Class
A-2 Certificates or Class A-3 Certificates, the Trustee, on behalf of the
Trust, may execute, authenticate and deliver, temporary Class A-1 Certificates,
Class A-2 Certificates or Class A-3 Certificates that are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Class A-1
Certificates, Class A-2 Certificates or Class A-3 Certificates in lieu of which
they are issued. If temporary Class A-1 Certificates, Class A-2 Certificates
or Class A-3 Certificates are issued, the Seller will cause definitive Class
A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates to be
prepared without unreasonable delay. After the preparation of definitive Class
A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates, the
temporary Class A-1 Certificates, Class A-2 Certificates or Class A-3
Certificates shall be exchangeable for definitive Class A-1 Certificates, Class
A-2 Certificates or Class A-3 Certificates upon surrender of the temporary
Class A-1 Certificates, Class A-2 Certificates or Class A-3 Certificates at the
office or agency to be maintained as provided in Section 4.07, without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Class A Certificates, the Trustee shall execute and authenticate and deliver in
exchange therefor a like principal amount of definitive Class A Certificates in
authorized denominations. Until so exchanged the temporary Class A
Certificates shall in all respects be entitled to the same benefits under the
Agreement as definitive Class A Certificates.
SECTION 4.09. BOOK-ENTRY CERTIFICATES.
The Class A-1 Certificates, the Class A-2 Certificates and the Class
A-3 Certificates, upon original issuance (except for the Residual Certificates
with respect to the Class A-1 Certificates, the Class A-2 Certificates and the
Class A-3 Certificates) will be issued in the form of one or more typewritten
certificates representing the Book-Entry Certificates, to be delivered to DTC,
the initial Clearing Agency, by, or on behalf of, the Seller. The certificate
or
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certificates delivered to DTC evidencing such Class A-1 Certificates, Class A-2
Certificates and Class A-3 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-1 Certificates,
the Class A-2 Certificates or the Class A-3 Certificates, except as provided in
Section 4.11. Unless otherwise specified in this Agreement, unless and until
definitive, fully registered Class A-1 Certificates, Class A-2 Certificates and
Class A-3 Certificates (the "Definitive Certificates") have been issued to
Certificate Owners pursuant to Section 4.11:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Seller, the Servicer, the Certificate Registrar and the
Trustee may deal with the Clearing Agency for all purposes (including the
making of distributions on the Class A-1 Certificates, the Class A-2
Certificates and the Class A-3 Certificates) as the authorized
representative of the Certificate Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of the Agreement, the provisions of this Section shall
control;
(iv) the rights of Certificate Owners shall be exercised only through
(or through procedures established by) the Clearing Agency and shall be
limited to those established by law and agreements between such Certificate
Owners and the Clearing Agency and/or the Clearing Agency Participants.
Unless and until Definitive Certificates are issued pursuant to Section
4.11, 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 Class A-1 Certificates, the Class A-2
Certificates and the Class A-3 Certificates to such Clearing Agency
Participants; and
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Holders of Class A-1 Certificates,
Class A-2 Certificates or Class A-3 Certificates evidencing a specified
aggregate Percentage Interest thereof the Clearing Agency shall be deemed to
represent such percentage (if and to the extent that it will act on behalf
of Certificate Owners and/or Clearing Agency Participants) only to the
extent that it has received instructions to such effect from Certificate
Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentages of the beneficial
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interest in Class A-1 Certificates, Class A-2 Certificates or Class
A-3 Certificates and has delivered such instructions to the Trustee.
SECTION 4.10. NOTICES TO CLEARING AGENCY.
Whenever notice or other communication to the Class A-1
Certificateholders, Class A-2 Certificateholders or the Class A-3
Certificateholders is required under this Agreement, other than to the Holder
of the Residual Certificate with respect to the Class A-1 Certificates, the
Class A-2 Certificates or the Class A-3 Certificates, respectively, unless and
until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 4.11, the Trustee and the Servicer shall give all such
notices and communications specified herein to be given to Holders of the Class
A-1 Certificates, the Class A-2 Certificates or the Class A-3 Certificates to
the Clearing Agency.
SECTION 4.11. DEFINITIVE CERTIFICATES.
If (i)(A) the Seller advises the Trustee in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
as described in the letter of representations among the Seller, the Trustee and
the Clearing Agency and (B) the Trustee or the Seller is unable to locate a
qualified successor, (ii) the Seller at its option, advises the Trustee in
writing that it elects to terminate the book-entry system through the Clearing
Agency, or (iii) after the occurrence of an Early Amortization Event,
Certificate Owners representing beneficial interests in the Class A-1
Certificates, the Class A-2 Certificates and the Class A-3 Certificates (voting
together as a single class) aggregating not less than 51% of the Percentage
Interests advise the 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 best interests of the
Certificate Owners, then the Trustee shall notify all Certificate Owners,
through the Clearing Agency, of the occurrence of such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of the Class A-1 Certificates, the Class
A-2 Certificates or the Class A-3 Certificates by the Clearing Agency,
accompanied by registration instructions from the Clearing Agency for
registration, the Trustee shall issue the Definitive Certificates and deliver
such Definitive Certificates in accordance with the instructions of the
Clearing Agency. None of the Seller, the Certificate Registrar or the Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates, the Trustee shall recognize the
Holders of the Definitive Certificates as Class A-1
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Certificateholders, Class A-2 Certificateholders or Class A-3
Certificateholders hereunder, as applicable. The Trustee shall not be liable
if the Trustee or the Seller is unable to locate a qualified successor Clearing
Agency.
SECTION 4.12. TAX TREATMENT.
(a) It is the intention of the Seller and the Investor
Certificateholders that the Investor Certificates will be indebtedness of the
Seller for federal, state and local income and franchise tax purposes and for
purposes of any other tax imposed on or measured by income. The Seller, the
Trustee and each Holder of an Investor Certificate (or Certificate Owner) by
acceptance of its Investor Certificate (or, in the case of a Certificate Owner,
by virtue of such Certificate Owner's acquisition of a beneficial interest
therein) agree to treat the Investor Certificates (or beneficial interest
therein), for purposes of federal, state and local income or franchise taxes
and any other tax imposed on or measured by income, as secured indebtedness of
the Seller and to report the transactions contemplated by this Agreement on all
applicable tax returns in a manner consistent with such treatment. Each Holder
of an Investor Certificate agrees that it will cause any Certificate Owner
acquiring an interest in a Certificate through it to comply with this Agreement
as to treatment as secured indebtedness for federal, state and local income and
franchise tax purposes and for purposes of any other tax imposed on or measured
by income. Each Holder of an Investor Certificate also agrees that it will not
be entitled to any of the tax benefits related to the Contracts and Leased
Vehicles, including any of the depreciation deductions resulting therefrom.
(b) In the event that, notwithstanding the statement of intentions
and undertakings set forth in Section 4.12(a), it is finally determined that
the Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates and/or the Class B Certificates do not evidence indebtedness of
the Seller for all income and franchise tax purposes, but rather represent an
equity interest in the assets of the Trust, then the Seller, the Trustee, each
Holder of such Investor Certificate and each Certificate Owner thereof, by
virtue of acquiring a beneficial interest therein, all agree (i) to treat such
Investor Certificates, together with the Seller Certificate, as representing
an interest in a partnership for all tax purposes, (ii) to treat all payments
in respect of such Investor Certificates (to the extent not a return of
capital) as a "guaranteed payment" thereon made pursuant to Section 707(c) of
the Code, and (iii) to allocate all other items of income, gain, deduction,
loss or credit with respect to the assets and operations of the Trust to the
Seller.
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ARTICLE FIVE
THE SELLER
SECTION 5.01. REPRESENTATIONS OF SELLER.
The Seller hereby makes the following representations on which the
Trustee relies in accepting the 99.8% 1996-B SUBI Interest and 99.8% 1996-B
SUBI Certificate in trust and executing and authenticating the Certificates.
The representations speak as of the execution and delivery of this Agreement,
but shall survive the sale, transfer and assignment of the 99.8% 1996-B SUBI
Interest and 99.8% 1996-B SUBI Certificate to the Trustee.
(a) Organization and Good Standing. The Seller is a limited
partnership validly organized and existing and in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and has
power, authority and legal right to acquire, own and sell the 99.8%
1996-B SUBI Interest and 99.8% 1996-B SUBI Certificate.
(b) Due Registration. The Seller is duly registered as a
foreign limited partnership 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 requires
such qualifications, except where the failure to so qualify or to have
obtained such licenses and approvals would not have a material adverse
effect on the earnings, business affairs or business prospects of the
Seller.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and to carry out its
terms, the Seller has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Trustee as
part of the Trust and has duly authorized such sale and assignment to
the Trustee by all necessary partnership action; and the execution,
delivery and performance of this Agreement have been duly authorized
by the Seller by all necessary partnership action.
(d) Valid Sale; Binding Obligations. This Agreement
evidences a valid sale, transfer and assignment of the 99.8% 1996-B
SUBI Interest and 99.8% 1996-B SUBI Certificate, enforceable against
creditors of and purchasers from the Seller; and constitutes a legal,
valid and binding obligation of the Seller enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights in general and by general principles
of equity, regardless
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of whether such enforceability shall be considered in a proceeding in
equity or at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms of
this Agreement do not conflict with, result in any breach of any of
the terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the certificate of limited partnership
or limited partnership agreement of the Seller, or conflict with or
violate any of the material terms or provisions of, or constitute
(with or without notice or lapse of time) a default under, any
indenture, agreement or other instrument to which the Seller 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
this Agreement); nor violate any law or, to the best of the Seller's
knowledge, any order, rule or regulation applicable to the Seller of
any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Seller or its properties; which breach, default, conflict, lien or
violation would have a material adverse effect on the earnings,
business affairs or business prospects of the Seller.
(f) No Proceedings. There are no proceedings or
investigations pending, or to the Seller's best knowledge, threatened,
before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or
its properties: (i) asserting the invalidity of this Agreement 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 the Seller of its
obligations under, or the validity or enforceability of, this
Agreement or the Certificates or (iv) relating to the Seller and which
might adversely affect the federal or Alabama income tax attributes of
the Certificates.
(g) Title to 99.8% 1996-B SUBI Certificate. The Seller
has good title to, and is the sole legal and beneficial owner of, the
99.8% 1996-B SUBI Certificate, free and clear of Liens.
(h) Consents and Approvals. The Seller has obtained or
made all necessary licenses, consents, approvals, waivers and
notifications of creditors, lessors and other nongovernmental Persons,
in each case in connection with
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the execution and delivery of this Agreement and the consummation of
all the transactions herein contemplated, and the Seller is not
required to obtain the consent of any other party or the consent,
license, approval, or authorization from, or registration or
declaration with, any governmental authority, bureau or agency in
connection with the execution, delivery, performance, validity or
enforceability of this Agreement.
SECTION 5.02. LIABILITY OF SELLER; INDEMNITIES.
(a) The Seller shall be liable in accordance with this Agreement
only to the extent of the obligations in this Agreement specifically undertaken
by the Seller in such capacity under this Agreement and shall have no other
obligations or liabilities hereunder.
(b) The Seller agrees to be, and shall be, liable without
limitation for all liabilities (including taxes), contracts, expenses,
indemnity payments and other charges of the Trust, other than distributions to
Certificateholders.
SECTION 5.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER; CERTAIN LIMITATIONS.
(a) Any corporation or partnership (i) into which the Seller may
be merged or consolidated, (ii) which may result from any merger, conversion or
consolidation to which the Seller shall be a party or (ii) which may succeed to
all or substantially all of the business of the Seller, shall be the successor
to the Seller under this Agreement without the execution or filing of any
document or any further act on the part of any of the parties to this
Agreement, except that if the Seller in any of the foregoing cases is not the
surviving entity, then the surviving entity shall execute an agreement of
assumption to perform every obligation of the Seller either generally or
specifically as provided herein. The Seller shall provide notice of any
merger, consolidation or succession pursuant to this Section to each Rating
Agency and shall receive from each Rating Agency a letter to the effect that
such merger, consolidation, or succession will not result in a qualification,
downgrading or withdrawal of the then-current rating assigned to any Rated
Certificates.
(b) (i) Subject to subparagraph (ii) below, the purpose of the Seller
shall be to engage in any lawful activity for which a limited partnership may
be formed under the laws of the State of Delaware other than the practice of a
profession permitted to be operated through a limited partnership under
Delaware law.
(ii) Notwithstanding subparagraph (b)(i) above, the purpose of
the Seller shall be limited to the following purposes:
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(A) to act as settlor or grantor of one or more
securitization trusts formed pursuant to a trust agreement or other
agreement for the purpose of acquiring interests in the Origination
Trust, which securitization trust may issue certificates of beneficial
interest in the assets of such securitization trust;
(B) to acquire, own, hold, sell, transfer, convey,
dispose of, pledge, assign, borrow money against, finance, refinance
or otherwise deal with, publicly or privately and whether with
unrelated third parties or with affiliated entities, beneficial
interests in the Origination Trust, including without limitation any
undivided trust interests or special units of beneficial interest
created with respect to the Origination Trust, and certificates of the
securitization trust;
(C) to loan or otherwise invest funds received as a
result of the Seller's beneficial interest in the Origination Trust or
certificates in the securitization trust and any other income, as
determined by the general partner of the Seller from time to time;
(D) to borrow money other than pursuant to clause (B)
above, but only to the extent that any such borrowing is permitted by
the terms of the transactions contemplated by clauses (A) and (B); and
(E) to engage in any lawful act or activity and to
exercise any powers permitted to limited partnerships organized under
Delaware law that are incidental to and necessary or convenient for
the accomplishment of the foregoing purposes.
(c) Notwithstanding any other provision of this Section and any
provision of law, neither the Seller nor its general partner, on behalf of the
Seller, shall do any of the following:
(i) engage in any business or activity other than as set
forth in clause (b) above;
(ii) without the affirmative vote of a majority of the
members of the Board of Directors of the Seller's general partner
(which must include the affirmative vote of all Independent Directors
of the Seller's general partner, as required by limited partnership
agreement of the Seller), (A) dissolve or liquidate, in whole or in
part, or institute proceedings to be adjudicated bankrupt or
insolvent, (B) consent to the institution of bankruptcy or insolvency
proceedings against it, (C) file a petition seeking or consent to
reorganization or relief under any applicable federal or state law
relating to bankruptcy, (D) consent to
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the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Seller or a
substantial part of its property, (E) make a general assignment for
the benefit of creditors, (F) admit in writing its inability to pay
its debts generally as they become due, or (G) take any corporate
action or partnership action in furtherance of the actions set forth
in clauses (A) through (F) above; provided, however, that the general
partner shall in no event consent to the institution of bankruptcy or
insolvency proceedings against the Seller so long as it is solvent; or
(iii) merge or consolidate with any other limited partnership,
corporation, company or entity or sell all or substantially all of its
assets or acquire all or substantially all of the assets or
partnership interests or capital stock or other ownership interest of
any other limited partnership, corporation, company or entity (except
for the acquisition of beneficial interests in the Origination Trust
and the sale, transfer, conveyance, disposition, pledge, assignment,
financing, and refinancing of, or otherwise dealing with, beneficial
interests in the Origination Trust in accordance with the terms of
subparagraph (b)(ii) above, which shall not be otherwise restricted by
this Section 5.03(c)).
SECTION 5.04. LIMITATION ON LIABILITY OF SELLER AND OTHERS.
The Seller and any director or officer or employee or agent of the
Seller may rely in good faith on the advice of counsel or on any document of
any kind, prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement.
SECTION 5.05. SELLER MAY OWN INVESTOR CERTIFICATES.
Each of the Seller and any Person controlling, controlled by or under
common control with the Seller may in its individual or any other capacity
become the owner or pledgee of Investor Certificates with the same rights as it
would have if it were not the Seller or such an affiliate thereof except as
otherwise specifically provided in the definition of the term
"Certificateholder." Investor Certificates so owned by or pledged to the
Seller or such controlling 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 Investor Certificates.
The Seller will give notice to each Rating Agency if any such controlling or
commonly controlled Person shall at any time become the owner or pledgee of
Investor Certificates.
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SECTION 5.06. NO TRANSFER.
The Seller on behalf of itself and its successors and assigns hereby
covenants that it will not transfer, pledge or assign to any Person the Seller
Certificate or any part of its right to receive any Excess Collections pursuant
to Section 3.03(c).
SECTION 5.07. TAX MATTERS PARTNER.
In the event that the Trust is recharacterized as a partnership for
tax purposes, the Seller shall act as "Tax Matters Partner" (i) to represent
the Seller and the Class B Certificateholders, in their capacities as partners
in a partnership for tax purposes, before taxing authorities or courts of
competent jurisdiction in any tax matters affecting the Trust as a tax
partnership; and (ii) to execute any agreements or other documents relating to
or affecting such tax matters, including agreements or other documents binding
the Class B Certificateholders with respect to such tax matters or otherwise
affecting their rights, including, but not limited to, extending the statute of
limitations for assessment of tax deficiencies against the Class B
Certificateholders and adjusting the Trust's federal, state or local tax
returns. The Seller shall not be liable to the Trust or to any
Certificateholder for any action taken or omitted by the Seller with regard to
such tax matters or otherwise as a result of its holding the position of Tax
Matters Partner.
ARTICLE SIX
THE TRUSTEE
SECTION 6.01. DUTIES OF TRUSTEE.
(a) The Trustee, both prior to and after the occurrence of a
1996-B Event of Default under the Servicing Agreement and the 1996-B Servicing
Supplement, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that shall be specifically required to be furnished pursuant to
any provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement.
(c) No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, its own bad faith or its own willful misfeasance; provided,
however, that
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(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Trustee, the permissive right of the Trustee to do things
enumerated in this Agreement shall not be construed as a duty and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Trustee was negligent in performing its
duties in accordance with the terms of this Agreement; and
(iii) the 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 Holders of Investor
Certificates evidencing not less than 51% of the aggregate Percentage
Interest relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement or the
Origination Trust Agreement (as supplemented by the 1996-B SUBI
Supplement).
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties under this Agreement, or in the exercise of any of its rights or powers,
if there shall be reasonable grounds for believing that the repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(e) All information obtained by the Trustee regarding the Obligors
and the Leases contained in the 1996-B SUBI, whether upon the exercise of its
rights under this Agreement or otherwise, shall be maintained by the Trustee in
confidence and shall not be disclosed to any other Person, unless such
disclosure is required by any applicable law or regulation or pursuant to
subpoena.
SECTION 6.02. CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 6.01:
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(i) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(ii) the Trustee may consult with counsel 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 Opinion of
Counsel;
(iii) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement or the
Origination Trust Agreement (as supplemented by the 1996-B SUBI
Supplement), or to institute, conduct or defend any litigation under
this Agreement or the Origination Trust Agreement (as supplemented by
the 1996-B SUBI Supplement), or in relation to this Agreement or the
Origination Trust Agreement (as supplemented by the 1996-B SUBI
Supplement), at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this Agreement or the
Origination Trust Agreement (as supplemented by the 1996-B SUBI
Supplement), unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred therein or thereby;
(iv) the 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 or rights or powers
conferred upon it by this Agreement;
(v) the Trustee shall not be bound to recalculate,
reverify, or make any investigation into the facts of matters stated
in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing to do so by Holders of
Investor Certificates evidencing not less than 25% of the aggregate
Percentage Interest of any Class; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against
such cost, expense or liability as a condition to so proceeding; the
reasonable expense of every such examination shall be
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paid by the Seller or, if paid by the Trustee, shall be reimbursed by
the Seller upon demand; and nothing in this clause shall derogate from
the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors; and
(vi) the Trustee may execute any of the trusts or powers
under this Agreement or perform any duties under this Agreement either
directly or by or through agents or attorneys or a custodian.
(b) No Certificateholder will have any right to institute any
proceeding with respect to this Agreement except upon satisfying the conditions
set forth in Section 9.03(c).
SECTION 6.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR LEASES.
The Trustee shall make no representations as to the validity or
sufficiency of this Agreement or of the Certificates (other than the execution
by the Trustee on behalf of the Trust of, and the certificate of authentication
on, the Certificates), or of the 99.8% 1996-B SUBI Interest or 99.8% 1996-B
SUBI Certificate. The Trustee shall have no obligation to perform any of the
duties of the Seller unless explicitly set forth in this Agreement. The
Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity and enforceability of the 99.8% 1996-B SUBI
Interest or 99.8% 1996-B SUBI Certificate or any 1996-B Lease, any ownership
interest in any 1996-B Leased Vehicle, or the maintenance of any such ownership
interest, or for or with respect to the efficacy of the Trust or its ability to
generate the payments to be distributed to Certificateholders under this
Agreement, including without limitation the validity of the assignment of the
99.8% 1996-B SUBI Interest or 99.8% 1996-B SUBI Certificate to the Trust or of
any intervening assignment; the existence, condition, location and ownership of
any 1996-B Lease or 1996-B Leased Vehicle; the existence and enforceability of
any physical damage or credit life or credit disability insurance; the
existence and contents of any 1996-B Lease or any computer or other record
thereof; the completeness of any 1996-B Lease; the performance or enforcement
of any Lease; the compliance by the Seller with any covenant or the breach by
the Seller of any warranty or representation made under this Agreement or in
any related document and the accuracy of any such warranty or representation
prior to the Trustee's receipt of notice or other discovery of any
noncompliance therewith or any breach thereof; the acts or omissions of the
Seller or the Servicer; or any action by the Trustee taken at the instruction
of the Servicer; provided, however, that the foregoing shall not relieve the
Trustee of its obligation to perform its duties under this Agreement. Except
with respect to a claim based on the failure of the Trustee to perform its
duties under this Agreement
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or based on the Trustee's willful misconduct, bad faith or negligence, no
recourse shall be had for any claim based on any provision of this Agreement,
the Certificates, the 99.8% 1996-B SUBI Interest or 99.8% 1996-B SUBI
Certificate or assignment thereof against the institution serving as Trustee in
its individual capacity. The Trustee shall not have any personal obligation,
liability or duty whatsoever to any Certificateholder or any other Person with
respect to any such claim, and any such claim shall be asserted solely against
the Trust or any indemnitor who shall furnish indemnity as provided in this
Agreement. The Trustee shall not be accountable for the use or application by
the Seller of any of the Certificates or of the proceeds of such Certificates,
or for the use or application of any funds paid to the Servicer in respect of
the 99.8% 1996-B SUBI Interest or 99.8% 1996-B SUBI Certificate.
SECTION 6.04. TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not Trustee.
SECTION 6.05. TRUSTEE'S FEES AND EXPENSES.
The 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 of the Trustee under this Agreement, and payment
or reimbursement upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in its capacity as Trustee in
accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence, willful misfeasance
or bad faith or that is the responsibility of Certificateholders under this
Agreement. Such compensation and reimbursement shall be paid as set forth in
Section 3.03(b) hereof or Section 10.01 of the 1996-B SUBI Supplement (in the
definitions of the terms "Principal Collections" and "Interest Collections").
Additionally, the Certificateholders, pursuant to Section 6.02(a)(iii) or (v),
may agree to indemnify the Trustee under certain circumstances.
SECTION 6.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee under this Agreement shall at all times be a national
association or corporation having its corporate trust office in the same State
as the location of the Corporate Trust Office as specified in this Agreement;
and organized and doing
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business under the laws of such State or the United States; authorized under
such laws to exercise corporate trust powers; having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authorities; and having a long-term deposit rating no lower
than Baa3 by Moody's, so long as Moody's is a Rating Agency, or be otherwise
acceptable to each Rating Agency, as evidenced by a letter to such effect from
each of them.
If the 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, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 6.07.
SECTION 6.07. RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Trustee may at any time resign and be discharged from the
trusts created by this Agreement by giving written notice thereof to the
Seller. Upon receiving such notice of resignation, the Seller shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Trustee and one copy to
the successor Trustee. If no successor Trustee shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.06 and shall fail to resign after
written request therefor by the Seller, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Seller may remove the Trustee. If it shall remove the Trustee under the
authority of the immediately preceding sentence, the Seller shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor Trustee, and payment of all fees owed to the outgoing Trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the
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provisions of this Section shall not become effective until acceptance of
appointment by the successor Trustee as provided in Section 6.08. The Servicer
shall give each Rating Agency notice of any such resignation or removal of the
Trustee and appointment and acceptance of a successor Trustee.
SECTION 6.08. SUCCESSOR TRUSTEE.
Any successor Trustee appointed as provided in Section 6.07 shall
execute, acknowledge and deliver to the Seller 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 the rights, powers, duties and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Trustee. The predecessor Trustee shall deliver to the successor Trustee all
documents and statements held by it under this Agreement; and the Seller and
the predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations. No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 6.06. Upon acceptance of appointment
by a successor Trustee as provided in this Section, the Seller shall cause
notice of the successor of such Trustee under this Agreement to be mailed to
all Certificateholders at their addresses as shown in the Certificate Register
and shall give notice by mail to each Rating Agency. If the Seller fails to
mail or cause to be mailed such notice within ten days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Seller.
SECTION 6.09. MERGER OR CONSOLIDATION OF TRUSTEE.
Any corporation (i) into which the Trustee may be merged or
consolidated, (ii) which may result from any merger, conversion, or
consolidation to which the Trustee shall be a party, or (iii) which may succeed
to the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible pursuant to
Section 6.06, without the execution or filing of any instrument or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding, except that if the Trustee in any of the foregoing cases is
not the surviving entity, then the surviving entity shall execute an agreement
of assumption to perform every obligation of the Trustee, either generally or
particularly as provided herein. Notice of any such event shall be given by
the Trustee to each Rating Agency.
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SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE
TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust may at the time be located, the Seller and the Trustee
acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust, and to vest in such Person, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Seller and the Trustee
may consider necessary or desirable. If the Seller shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee under this Agreement shall be required to meet the terms of
eligibility as a successor Trustee pursuant to Section 6.06 and no notice of a
successor Trustee pursuant to Section 6.08 and no notice to Certificateholders
of the appointment of any co-trustee or separate trustee shall be required
pursuant to Section 6.08.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed, the Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the
holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under
this Agreement; and
(iii) the Seller and the Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee.
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Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Section. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Each such instrument shall be filed with the
Trustee and a copy thereof given to the Seller and the Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee
its agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement
on its behalf and in its name. If any separate trustee or co-trustee shall
die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee. Notwithstanding anything to the contrary in this Agreement,
the appointment of any separate trustee or co-trustee shall not relieve the
Trustee of its obligations and duties under this Agreement.
SECTION 6.11. REPRESENTATIONS AND WARRANTIES OF TRUSTEE.
The Trustee makes the following representations and warranties on
which the Seller and Certificateholders may rely:
(i) Organization and Good Standing. The Trustee is a
national banking association organized, existing and in good standing
under the laws of the United States of America.
(ii) Power and Authority. The Trustee has full power,
authority and right to execute, deliver and perform this Agreement and
has taken all necessary action to authorize the execution, delivery
and performance by it of this Agreement.
(iii) Due Execution. This Agreement has been duly executed
and delivered by the Trustee.
(iv) Enforceability. This Agreement constitutes the
legal, valid and binding obligation of the Trustee, enforceable
against it in accordance with its terms except
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as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
enforcement of creditors' rights generally and by general principles
of equity.
SECTION 6.12. TAX RETURNS.
The Trustee shall, at the direction of the Servicer and on behalf of
the Seller, prepare or shall cause to be prepared any required federal tax
information returns (in a manner consistent with the treatment of the Investor
Certificates as indebtedness) and shall file and distribute such forms as
required by law. The Servicer shall prepare or cause to be prepared any
federal and state tax returns that may be required with respect to the Trust or
the Trust assets and shall deliver any such returns to the Trustee for
signature at least five days prior to the date such returns are required by law
to be filed.
SECTION 6.13. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES.
All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
SECTION 6.14. SUIT FOR ENFORCEMENT.
If a 1996-B Event of Default shall occur and be continuing under the
Servicing Agreement, as supplemented by the 1996-B Servicing Supplement with
respect to the 1996-B SUBI Portfolio, the Trustee, in its discretion may,
subject to the provisions of Sections 6.01 and 6.02 hereof and Section 11.01(b)
of the 1996-B Servicing Supplement, proceed to protect and enforce its rights
and the rights of the Certificateholders under this Agreement, the Servicing
Agreement and the 1996-B Servicing Supplement by a suit, action or proceeding
in equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained herein or therein or in aid of the execution of
any power granted herein or therein or for the enforcement of any other legal,
equitable or other remedy as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee or the
Certificateholders.
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SECTION 6.15. RIGHTS OF CERTIFICATEHOLDERS TO DIRECT TRUSTEE.
Holders of Investor Certificates evidencing not less than 25% of the
aggregate Percentage Interest, shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
under this Agreement, or exercising any trust or power conferred on the Trustee
by this Agreement; provided, however, that (a) if any greater Percentage
Interest is required to cause any action to be taken under the Origination
Trust Agreement or the 1996-B SUBI Supplement by the Trustee in its capacity as
a transferee of the 99.8% 1996-B SUBI Certificate, the greater Percentage
Interest shall prevail; (b) subject to Sections 6.01 and 6.02, the Trustee
shall have the right to decline to follow any such direction if the Trustee
being advised by counsel determines that the action so directed may not
lawfully be taken, or if the Trustee in good faith shall, by a Responsible
Officer, determine that the proceedings so directed would be illegal or subject
it to personal liability or be unduly prejudicial to the rights of
Certificateholders not parties to such direction; and (c) nothing in this
Agreement shall impair the right of the Trustee to take any action deemed
proper by the Trustee and which is not inconsistent with such direction by the
Certificateholders.
SECTION 6.16. NO PETITION.
The Trustee covenants and agrees that prior to the date which is one
year and one day after the last date upon which (a) each Class of Investor
Certificates has been paid in full, and (b) all obligations due under any other
Securitized Financing have been paid in full, the Trustee will not institute
against, or join any other Person in instituting against the Seller, World Omni
Lease Securitization, Inc., ALFI, ALFI LP, the Origination Trustee or the
Origination Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Trustee's right
to file any claim in or otherwise take actions with respect to any such
proceeding instituted by any Person not under such a constraint. This Section
shall survive the termination of this Agreement or the resignation or removal
of the Trustee under this Agreement.
ARTICLE SEVEN
TERMINATION
SECTION 7.01. TERMINATION OF THE TRUST.
(a) The Trust and the respective obligations and responsibilities
of the Seller and the Trustee shall terminate upon the earliest of (i) the
purchase as of any Distribution
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Date by the Seller of the corpus of the Trust as described in Section 7.02
(except that the Trust shall continue solely for the limited purposes set forth
in (b) and (c) below), (ii) the day following the Distribution Date upon which
all Investor Certificates have been paid in full and after which there is no
unreimbursed Class A-1 Certificate Principal Loss Amount, Class A-2 Certificate
Principal Loss Amount, Class A-3 Certificate Principal Loss Amount, Class B
Certificate Principal Loss Amount, Class A-1 Certificate Principal Loss
Interest Amount, Class A-2 Certificate Principal Loss Interest Amount, Class
A-3 Certificate Principal Loss Interest Amount, Class B Certificate Principal
Loss Interest Amount, Class B Certificate Principal Carryover Shortfall or
Class B Certificate Principal Carryover Shortfall Interest Amount or (iii) the
expiration, disposition or termination of the 99.8% 1996-B SUBI Interest;
provided, however, that in no event shall the trust created by this Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of William Jefferson Clinton of the State of Arkansas,
living on the date of the Agreement. The Seller shall promptly notify the
Trustee and each Rating Agency of any prospective termination of the Trust.
(b) Notice of any termination, specifying the Distribution Date
upon which the Certificateholders may surrender their Certificates to the
Trustee for payment of the final distribution and retirement of the
Certificates, shall be given promptly by the Trustee by letter to
Certificateholders mailed not earlier than the 15th day and not later than the
30th day prior to the date on which such final distribution is expected to
occur specifying (i) the Distribution Date upon which final payment of the
Certificates shall be made upon presentation and surrender of Certificates at
the Corporate Trust Office or such other office of the Trustee therein
specified, (ii) the amount of any such final payment and (iii) if applicable,
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 Corporate Trust Office or such other office of the Trustee
therein specified. The Trustee shall give such notice to the Certificate
Registrar (if other than the Trustee) at the time such notice is given to
Certificateholders. In the event such notice is given, in the case of an
optional purchase of the Trust corpus pursuant to Section 7.02, the Seller
shall deposit the amount specified in Section 7.02. Upon presentation and
surrender of the Certificates, the Trustee shall cause to be distributed to
Certificateholders so surrendering amounts distributable on such Distribution
Date pursuant to Section 3.03. No further interest will accrue with respect to
any Investor Certificate from and after the final Distribution Date with
respect thereto.
(c) In the event that all of the Certificateholders shall not have
surrendered their Certificates for retirement within six
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months after the date specified in the above-mentioned written notice, the
Trustee shall give a second written notice to the remaining Certificateholders
to surrender their Certificates for retirement 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 retirement, the
Trustee may take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining Certificate-holders concerning surrender of
their Certificates, and the cost thereof shall be paid out of the funds and
other assets that remain subject to this Agreement. Any funds remaining in the
Trust after exhaustion of such remedies shall be distributed by the Trustee to
the United Way.
SECTION 7.02. OPTIONAL PURCHASE OF 99.8% 1996-B SUBI INTEREST.
(a) On each Distribution Date following the last day of a
Collection Period as of which the Certificate Balance shall be less than or
equal to ten percent (10%) of the Initial Certificate Balance, the Seller shall
have the option to purchase the Investor Certificateholders' interest in the
corpus of the Trust. To exercise such option, the Seller shall notify the
Trustee and the Servicer, in writing, no later than the tenth day of the month
preceding the month in which the Distribution Date as of which such purchase is
to be effected and shall deposit in the Distribution Account an amount equal to
the greater of (i) 99.8% of the Aggregate Net Investment Value as of the last
day of the related Collection Period, and (ii) the sum of (A) the Certificate
Balance, (B) the accrued and unpaid Class A-1 Interest Distributable Amount,
Class A-2 Interest Distributable Amount, Class A-3 Interest Distributable
Amount and Class B Interest Distributable Amount, (C) any accrued and unpaid
Class A-1 Interest Carryover Shortfall, Class A-2 Interest Carryover Shortfall,
Class A-3 Interest Carryover Shortfall and Class B Interest Carryover
Shortfall, (D) any unpaid Class A-1 Certificate Principal Loss Amount, unpaid
Class A-2 Certificate Principal Loss Amount, unpaid Class A-3 Certificate
Principal Loss Amount, unpaid Class B Certificate Principal Loss Amount and
unpaid Class B Certificate Principal Carryover Shortfall, and (E) any accrued
and unpaid Class A-1 Certificate Principal Loss Interest Amount, unpaid Class
A-2 Certificate Principal Loss Interest Amount, unpaid Class A-3 Certificate
Principal Loss Interest Amount, unpaid Class B Certificate Principal Loss
Interest Amount and Class B Certificate Principal Carryover Shortfall Interest
Amount through the day preceding the final Distribution Date. The Seller also
shall pay to the Servicer the aggregate amount of any unreimbursed Advances.
Thereupon the Seller shall succeed to all of the Investor Certificateholders'
interests in and to the Trust corpus.
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(b) The Investor Certificateholders' interest in the corpus of the
Trust may only be purchased pursuant to this Section 7.02 if the Trustee and
each Rating Agency receives an Opinion of Counsel from the Seller's counsel to
the effect that such purchase would not constitute a fraudulent conveyance, or
each Rating Agency is otherwise satisfied (as evidenced by written notice from
each to the Trustee).
ARTICLE EIGHT
EARLY AMORTIZATION EVENTS
SECTION 8.01. EARLY AMORTIZATION EVENTS.
If any one of the following events shall occur during the Revolving
Period:
(a) failure on the part of the Servicer (i) to make any
payment or deposit required with respect to the 1996-B SUBI, the 99.8%
1996-B SUBI Interest, or the Investor Certificates under this
Agreement, the Origination Trust Agreement or the 1996-B SUBI
Supplement, or the Servicing Agreement or the 1996-B Servicing
Supplement, on or before the date occurring five Business Days after
the payment or deposit is required to be made, or (ii) to deliver a
Servicer's Certificate within ten Business Days after any
Determination Date;
(b) failure on the part of the Seller or the Servicer
duly to observe or perform in any material respect any other
covenants or agreements of the Seller or the Servicer set forth in
this Agreement, the Origination Trust Agreement or the 1996-B SUBI
Supplement, or the Servicing Agreement or the 1996-B Servicing
Supplement, which failure materially and adversely affects the rights
of the holder of the 99.8% 1996-B SUBI Interest or of the Investor
Certificateholders and which continues unremedied and continues to
affect materially and adversely the rights of the holder of the 99.8%
1996-B SUBI Interest or of the Investor Certificateholders for a
period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, is given (i) to the
Seller or the Servicer, as the case may be, by the Trustee or the
Origination Trustee, or (ii) to the Seller or the Servicer, as the
case may be, and to the Trustee by the Holders of Investor
Certificates evidencing not less than 25% of the aggregate Percentage
Interest;
(c) any representation or warranty made by ALFI LP in the
SUBI Certificate Agreement, by the Seller in this Agreement, or the
representation and warranty made by the Servicer in Section 8.01(c)
of the 1996-B Servicing Supplement or any certificate given pursuant to
Section
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8.02(b) of the 1996-B Servicing Supplement, shall prove to have been
incorrect in any material respect when made or given, as a result of
which the interests of the holder of the 99.8% 1996-B SUBI Interest or
of the Investor Certificateholders are materially and adversely
affected and which continues to be incorrect in any material respect
and continues to affect materially and adversely affect the interests
of the holder of the 99.8% 1996-B SUBI Interest or of the
Certificateholders for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, is
given (i) to ALFI LP, the Seller or the Servicer, as the case may be,
by the Trustee or the Origination Trustee, or (ii) to ALFI LP, the
Seller or the Servicer, as the case may be, and to the Trustee by the
Holders of Investor Certificates evidencing not less than 25% of the
aggregate Percentage Interest; provided, however, that an Early
Amortization Event pursuant to this subparagraph (b) shall not be
deemed to have occurred hereunder if the Servicer has made the deposit
contemplated by Section 8.03 of the 1996-B Servicing Supplement and has
reallocated the relevant 1996-B Lease and 1996-B Leased Vehicle to the
UTI Portfolio within the time provided therefor;
(d) the Seller shall file a petition commencing a
voluntary case under any chapter of the Federal bankruptcy laws; or
the Seller shall file a petition or answer or consent seeking
reorganization, arrangement, adjustment, or composition under any
other similar applicable Federal law, or shall consent to the filing
of any such petition, answer, or consent; or the Seller shall appoint,
or consent to the appointment of a custodian, receiver, liquidator,
trustee, assignee, sequestrator or other similar official in
bankruptcy or insolvency of it or of any substantial part of its
property, or shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as
they become due;
(e) any order for relief against the Seller shall have
been entered by a court having jurisdiction in the premises under any
chapter of the Federal bankruptcy laws; or a decree or order by a
court having jurisdiction in the premises shall have been entered
approving as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of the Seller under any other
similar applicable Federal law; or a decree or order of a court having
jurisdiction in the premises for the appointment of a custodian,
receiver, liquidator, trustee, assignee, sequestrator or other similar
official in bankruptcy or insolvency of the Seller or of any
substantial part of its property, or for the winding up or liquidation
of its affairs, shall have been entered;
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(f) any Lien, other than Liens permitted under this Agreement,
the Origination Trust Agreement or the 1996-B SUBI Supplement, the
Servicing Agreement or the 1996-B Servicing Supplement, or the Backup
Security Agreement, shall be created on or extend to or otherwise
arise upon or burden the 99.8% 1996-B SUBI Interest, the 99.8% 1996-B
SUBI Certificate, or the 1996-B Leases or 1996-B Leased Vehicles, or
any part thereof or any interest therein or the proceeds thereof, and
not be released or bonded over within 60 days thereafter;
(g) the 0.2% interest in the 1996-B SUBI held by the Seller or
the SUBI Certificate evidencing such interest is transferred, or any
Lien, other than Liens permitted under this Agreement, the Origination
Trust Agreement or the 1996-B SUBI Supplement, the Servicing Agreement
or the 1996-B Servicing Supplement, or the Backup Security Agreement,
shall be created on or extend to or otherwise arise upon or burden
such 0.2% interest or SUBI Certificate, or any part thereof or any
interest therein or the proceeds thereof, and not be released or
bonded over within 30 days thereafter;
(h) the Seller, the Trust or the Origination Trust shall
become subject to registration as an "investment company" under the
Investment Company Act;
(i) on the twenty-fifth calendar day of any calendar month the
aggregate amount of Principal Collections collected through the last
day of the related Collection Period that have not been reinvested in
new 1996-B Leases and 1996-B Leased Vehicles, as contemplated by
Section 11.02 of the 1996-B SUBI Supplement, exceeds $1,000,000;
(j) a 1996-B Event of Default has occurred; or
(k) on any Distribution Date the aggregate amount withdrawn
from the Reserve Fund and deposited in the Distribution Account on or
prior to such Distribution Date (without reference to any subsequent
deposits to the Reserve Fund from any source) exceeds $_________;
then (but in the case of any event described in subparagraph (a), (b), (c), (f)
or (g) after any applicable grace period) an early amortization event (an
"Early Amortization Event") shall have occurred.
SECTION 8.02. ADDITIONAL RIGHTS UPON THE OCCURRENCE OF CERTAIN
EVENTS.
(a) Following the occurrence of an Early Amortization Event
described in Section 8.01(d) or (e) (such event, an "Insolvency
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Event"), the Seller shall promptly give notice to the Trustee of such
Insolvency Event. Within 15 days of the receipt by the Trustee of the notice,
the Trustee may and, upon receipt of a notice from Investor Certificateholders
evidencing more than 51% of the aggregate Percentage Interest of the Class A
Certificates or 51% of the aggregate Percentage Interests of the Class A
Certificates and the Class B Certificates (voting together as a single class),
shall (i) publish a notice in Authorized Newspapers that an Insolvency Event
has occurred and that the Trustee intends to sell, dispose of or otherwise
liquidate the 99.8% 1996-B SUBI Interest, the 99.8% 1996-B SUBI Certificate and
the other property of the Trust in a commercially reasonable manner. Following
such publication, the Trustee shall, unless otherwise prohibited by applicable
law from any such action, sell, dispose of, or otherwise liquidate the 99.8%
1996-B SUBI Interest, the 99.8% 1996-B SUBI Certificate and the other property
of the Trust, in a commercially reasonable manner and on commercially
reasonable terms, which shall include the solicitation of competitive bids, and
shall proceed to consummate the sale, liquidation or disposition thereof as
provided above with the highest bidder; provided, however, that such sale,
disposition or other liquidation shall not be made without the consent of all
Holders of Investor Certificates if a net loss would be realized. The Seller
and the Servicer shall be permitted to bid for the Trust property. The Trustee
may obtain a prior determination from the conservator, receiver, or trustee in
bankruptcy of the Seller that the terms and manner of any proposed sale,
disposition or liquidation are commercially reasonable. The provisions of
Sections 8.01 and 8.02 shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
99.8% 1996-B SUBI Interest, the 99.8% 1996-B SUBI Certificate and the other
property of the Trust pursuant to Section 8.02(a) above, net of expenses
incurred in such sale, disposition or liquidation, shall be treated as
Principal Collections and Interest Collections received during the Amortization
Period; provided that such Principal Collections, will be distributed, first,
on a pro rata basis, to the Class A-1 Certificateholders, the Class A-2
Certificateholders and the Class A-3 Certificateholders based on their
respective Certificate Balances, and second, to the Class B Certificateholders;
further provided that the Servicer on behalf of the Trustee shall determine
conclusively without liability for such determination the amount of such
proceeds which are allocable to Interest Collections and the amount of such
proceeds which are allocable to Principal Collections. On the day following
the Distribution Date on which such proceeds are distributed to the Investor
Certificateholders, the Trust shall terminate.
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ARTICLE NINE
MISCELLANEOUS PROVISIONS
SECTION 9.01. AMENDMENT.
(a) This Agreement and the other Transaction Documents may be
amended by the respective parties thereto, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein or therein, to add, change or eliminate any other provisions
hereof or thereof with respect to matters or questions arising hereunder or
thereunder that shall not be inconsistent with the provisions hereof or
thereof, or to add or amend any provision therein in connection with permitting
transfers of the Class B Certificates; provided, however, that any such action
shall not, in the good faith judgment or the parties hereto or thereto,
adversely affect in any material respect the interests of the
Certificateholders and the Origination Trustee and the Trustee shall have
received an Opinion of Counsel to the effect that such action shall not affect
the legal interests or positions of the Certificate-holders.
(b) This Agreement and the other Transaction Documents may also be
amended from time to time by the respective parties hereto or thereto including
with respect to (i) changing the formula for determining the Reserve Fund Cash
Requirement and/or the Reserve Fund Supplemental Requirement (including
changing the Reserve Fund Tests or the Cure Period) which change would result
in a decrease in the amount of the Reserve Fund Cash Requirement and/or the
Reserve Fund Supplemental Requirement, (ii) changing the manner by which the
Reserve Fund or the Residual Value Surplus Account is funded, which changes
could include borrowings by the Seller to fund all or a portion of the Reserve
Fund Initial Deposit (which borrowings would be payable from assets or cash
flow otherwise payable to the Seller), (iii) the need for the Residual Value
Surplus Account, (iv) changing the remittance schedule for collection deposits
in the Distribution Account, or (v) changing the definition of "Permitted
Investments"), if either (A) the Trustee has been furnished with a letter from
each Rating Agency to the effect that such amendment would not cause its
then-current rating of any Rated Certificate to be qualified, reduced or
withdrawn, or (B) the Trustee has received the consent of the Holders of
Investor Certificates representing not less than 51% of the aggregate
Percentage Interests (which consent of any Holder of an Investor Certificate
given pursuant to this Section or pursuant to any other provision of this
Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Investor Certificate and of any Investor Certificate issued
upon the transfer thereof or in exchange thereof or in lieu thereof whether or
not notation of such consent is made upon the Investor Certificate); provided,
however, that no such amendment shall (x) except as otherwise
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provided in Section 9.01(a), increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on the 1996-B SUBI
or any 1996-B SUBI Certificate or distributions that shall be required to be
made on any Investor Certificate or the applicable Certificate Rate or (y)
reduce the aforesaid percentage of the aggregate Percentage Interest of the
Investor Certificates of each Class required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding.
(c) The Trustee shall provide each Rating Agency prior notice of
any proposed amendment hereto, whether or not such amendment requires its
approval. Any notice of any such amendment or modification as to which notice
is required to be given to any Rating Agency shall contain both the substance
and substantial form of the proposed amendment or modification.
(d) Promptly after the execution of any such amendment or consent,
the Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder. It shall not be necessary for
the consent of Certificateholders pursuant to Section 9.01(b) 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 by
Certificateholders of the execution thereof shall be subject to such reasonable
requirements as the Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
SECTION 9.02. PROTECTION OF TITLE TO TRUST.
(a) The Seller shall execute and file, or cause to be executed and
filed, such financing statements and such continuation and other statements,
all in such manner and in such places as may be required by law fully to
preserve, maintain and protect the interest of the Certificateholders and the
Trustee under this Agreement in the 99.8% 1996-B SUBI Interest, the 99.8%
1996-B SUBI Certificate and in the proceeds thereof. The Seller shall deliver
(or cause to be delivered) to the Trustee file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) The Seller shall not change its name, identity or partnership
structure in any manner that would, could or might
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make any financing statement or continuation statement filed by the Seller in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Trustee written
notice thereof and shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements.
(c) The Seller shall give the Trustee 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 make any such filing.
(d) The Seller shall deliver to the Trustee promptly after the
execution and delivery of each amendment to this Agreement, an Opinion of
Counsel either (i) stating that, in the opinion of such Counsel, all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee in the
99.8% 1996-B SUBI Interest, 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 is necessary to
preserve and protect such interest.
(e) The Seller shall, to the extent required by applicable law,
cause the Class A-1 Certificates, the Class A-2 Certificates and the Class A-3
Certificates to be registered with the Commission pursuant to Section 12(b) or
Section 12(g) of the Exchange Act within the time periods specified in such
Sections.
(f) 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.
SECTION 9.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties to this Agreement or any of them.
(b) No Certificateholder shall have any right to vote (except as
provided in Section 9.01) 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
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Certificates, be construed so as to constitute the Certificate-holders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action pursuant to any provision of this Agreement.
(c) No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action, or proceeding in equity or at law upon or under or with respect to this
Agreement or any other Transaction Document, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
Investor Certificates evidencing not less than 25% of the aggregate Percentage
Interest, shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee under this Agreement and
shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses, and liabilities to be incurred therein or thereby,
and the Trustee, for 30 days after its receipt of such notice, request and
offer of indemnity, shall have neglected or refused to institute any such
action, suit, or proceeding and during such 30-day period, no request or waiver
inconsistent with such written request has been given to the Trustee pursuant
to this Section; it being understood and intended, and being expressly
covenanted by each Certificateholder with every other Certificateholder and the
Trustee, that 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 or any other Transaction Document 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 or any other
Transaction Document, except in the manner provided in this Agreement and for
the equal, ratable, and common benefit of all Certificateholders. For the
protection and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 9.04. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 9.05. NOTICES.
All demands, notices and communications under this Agreement shall be
in writing, personally delivered or mailed by certified
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mail, return receipt requested, and shall be deemed to have been duly given
upon receipt (i) in the case of the Seller, to the agent for service as
specified in this Agreement, or at such other address as shall be designated by
the Seller in a written notice to the Trustee; (ii) in the case of the Trustee,
at the Corporate Trust Office; (iii) in the case of Standard & Poor's, at 25
Broadway, 20th Floor, New York, New York 10004, Attention: Asset Backed
Surveillance Department; and (iv) in the case of Moody's, at 99 Church Street,
New York, New York 10007 Attention: ABS Monitoring Department. Any notice
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in
the Certificate Register. Any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Certificateholder shall receive such notice.
SECTION 9.06. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, 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 9.07. ASSIGNMENT.
Notwithstanding anything to the contrary contained in this Agreement,
except as provided in Section 5.03, this Agreement may not be assigned by the
Seller without the prior written consent of Holders of Investor Certificates
evidencing not less than 51% of the aggregate Percentage Interest.
SECTION 9.08. CERTIFICATES NONASSESSABLE AND FULLY PAID.
Except as provided in Section 5.02(b) with regard to the Seller,
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon the
execution and authentication thereof by the Trustee pursuant to Section 4.02,
4.03 or 4.04, the Certificates are and shall be deemed fully paid.
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ARTICLE TEN
AGENT FOR SERVICE
SECTION 10.01. AGENT FOR SERVICE OF SELLER.
The agent for service of process for the Seller shall be its
Treasurer, at 6150 Omni Park Drive, Mobile, Alabama 36609.
SECTION 10.02. AGENT OF TRUSTEE.
The Trustee shall maintain an office or offices or agency or agencies
where notices and demands to or upon the Trustee in respect of the Certificates
and this Agreement may be served. The initial such office shall be the
Corporate Trust Office. The Trustee shall give prompt written notice to the
Seller, the Servicer and to Certificateholders of any change in the location of
the Certificate Register or any such office or agency. Certificates shall be
surrendered for transfer or exchange not at this office, but as set forth in
Section 4.07.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
WORLD OMNI LEASE SECURITIZATION
L.P., as Seller
By: World Omni Lease Securitization,
Inc., its general partner
By: ___________________________________
Patrick C. Ossenbeck
Assistant Treasurer
FIRST BANK NATIONAL ASSOCIATION, as Trustee
By: ___________________________________
Name: _________________________________
Title: ________________________________
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EXHIBIT A-1
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.
WORLD OMNI 1996-B AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED CERTIFICATE, CLASS A-1
evidencing a percentage interest in the distributions allocable to the
Investor Certificates, as defined below, evidencing an undivided
interest in the Trust, as defined below, the property of which
includes, among other things, a 99.8% interest in a special unit of
beneficial interest (the "99.8% 1996-B SUBI Interest") in World Omni
LT, an Alabama trust, which 99.8% SUBI Interest represents a
beneficial interest in a pool of retail lease contracts for new and
used automobiles and light duty trucks (and the related automobiles
and light-duty trucks) entered into by various automobile and light
duty truck dealers pursuant to contractual arrangements with World
Omni Financial Corp. and thereafter assigned to World Omni LT, and
which 99.8% 1996-B SUBI Interest was originally issued to Auto Lease
Finance L.P. and then sold to World Omni Lease Securitization L.P. and
then to the Trust.
(This Certificate does not represent an obligation of, or an interest
in, Auto Lease Finance, Inc., Auto Lease Finance L.P., World Omni
Lease Securitization, Inc., World Omni Lease Securitization L.P.,
World Omni LT, World Omni Financial Corp., or any of their respective
affiliates.)
Aggregate Denominations of
all Class A-1 Certificates: CUSIP # _________
$___________
Number A-1-__ Denomination: $___________
A-1-1
<PAGE> 88
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
__________________________ ($___________) nonassessable, fully-paid, fractional
undivided interest in the World Omni 1996-B Automobile Lease Securitization
Trust (the "Trust") formed by World Omni Lease Securitization L.P., a Delaware
limited partnership, as Seller (the "Seller"). The Trust was created pursuant
to a Securitization Trust Agreement dated as of October 1, 1996 (the
"Agreement"), between the Seller and First Bank National Association, a
national banking association (successor trustee to Bank of America Illinois, an
Illinois banking corporation), as trustee (the "Trustee"). A summary of
certain of the pertinent provisions of the Agreement is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates issued
under the Agreement and designated as "World Omni 1996-B Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed Certificates, Class
A-1" (the "Class A-1 Certificates"). Also issued under the Agreement are
Certificates designated as "World Omni 1996-B Automobile Lease Securitization
Trust ____% Automobile Lease Asset Backed Certificates, Class A-2" (the "Class
A-2 Certificates"), Certificates designated as "World Omni 1996-B Automobile
Lease Securitization Trust ____% Automobile Lease Asset Backed Certificates,
Class A-3" (the "Class A-3 Certificates" and, together with the Class A-1
Certificates and the Class A-2 Certificates, the "Class A Certificates"),
Certificates designated as "World Omni 1996-B Automobile Lease Securitization
Trust ____% Automobile Lease Asset Backed Certificates, Class B" (the "Class B
Certificates" and, together with the Class A Certificates, the "Investor
Certificates") and a Certificate designated as the "World Omni 1996-B
Automobile Lease Securitization Trust Asset Backed Seller Certificate" (the
"Seller Certificate" and, together with the Investor Certificates, the
"Certificates"). The Class B Certificates are subordinated to the Class A
Certificates and the Seller Certificate is subordinated to the Investor
Certificates to the extent described in the Agreement. This Class A-1
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Class A-1
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.
The property of the Trust includes, among other things, a 99.8%
interest in a special unit of beneficial interest (the "99.8% 1996-B SUBI
Interest") in World Omni LT, an Alabama trust (the "Origination Trust"), which
99.8% 1996-B SUBI Interest represents a beneficial interest in a pool of retail
automobile and light duty truck lease contracts ("Leases") and the new and used
automobiles and light duty trucks leased thereby ("Leased Vehicles") (such pool
of Leases and Leased Vehicles, the "1996-B SUBI Portfolio") entered into by
various automobile and light
A-1-2
<PAGE> 89
duty truck dealers pursuant to contractual arrangements with World Omni
Financial Corp., which also acts as servicer (in that capacity, the "Servicer")
of the 1996-B SUBI Portfolio. During the Revolving Period, Principal
Collections allocable to the 99.8% 1996-B SUBI Interest generally will be
applied towards the allocation to the 1996-B SUBI Portfolio of additional
qualifying Leases and Leased Vehicles from among all other unallocated Leases
and Leased Vehicles owned by the Origination Trust.
Under the Agreement, there will be distributed on the fifteenth day of
each month or, if such fifteenth is not a Business Day, the next succeeding
Business Day (each, a "Distribution Date"), commencing on November 15, 1996, to
the Person in whose name this Class A-1 Certificate is registered at the close
of business on the last calendar day immediately preceding the related
Distribution Date or, if Definitive Certificates are issued, the last day of
the immediately preceding calendar month (each a "Record Date"), such Class A-1
Certificateholder's percentage interest in (i) the Class A-1 Distributable
Amount for such Distribution Date and (ii) the amount of any repayment of any
outstanding Class A-1 Interest Carryover Shortfall, Class A-1 Loss Amounts,
Class A-1 Certificate Principal Loss Amounts and Class A-1 Certificate
Principal Loss Interest Amounts being made on such Distribution Date, all to
the extent and as more specifically set forth in the Agreement. To the extent
provided in the Agreement, no principal payments shall be made in respect of
the Class A-2 Certificates until the Class A-1 Certificates have been paid in
full, and no principal payments shall be made in respect of the Class A-3
Certificates or the Class B Certificates until the Class A-2 Certificates have
been paid in full.
Distributions on this Class A-1 Certificate will be made by the
Trustee by check mailed to the Class A-1 Certificateholder of record in the
Certificate Register without the presentation or surrender of this Class A-1
Certificate or the making of any notation hereon except that with respect to
Class A-1 Certificates registered in the name of Cede & Co., the nominee for
The Depository Trust Company, distributions will be made in the form of
immediately available funds. Except as otherwise provided in the Agreement and
notwithstanding the foregoing, the final distribution on this Class A-1
Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Class A-1
Certificate at the Corporate Trust Office of the Trustee.
It is the intention of the Seller and the Holders of Investor
Certificates that the Investor Certificates will be indebtedness for federal,
state and local income and franchise tax purposes and for purposes of any other
tax imposed on or measured by income. The Seller, the Trustee and the Holder
of
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<PAGE> 90
this Certificate (or Certificate Owner) by acceptance of this Certificate (or,
in the case of a Certificate Owner, by virtue of such Certificate Owner's
acquisition of a beneficial interest herein) agree to treat the Investor
Certificates (or beneficial interests therein), for purposes of federal, state
and local income or franchise taxes and any other tax imposed on or measured by
income, as indebtedness and to report the transactions contemplated by the
Agreement on all applicable tax returns in a manner consistent with such
treatment. Each Holder of this Certificate agrees that it will cause any
Certificate Owner acquiring an interest in this Certificate through it to
comply with the Agreement as to treatment as indebtedness for federal, state
and local income and franchise tax purposes and for purposes of any other tax
imposed on or measured by income.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of such Certificate Owner's acquisition of
a beneficial interest herein) waives any claim to any proceeds or assets of the
Origination Trustee and to all assets of the Origination Trust other than those
from time to time included within the 1996-B SUBI Portfolio as 1996-B SUBI
Assets and those proceeds or assets derived from or earned by such 1996-B SUBI
Assets.
In the event that, notwithstanding the statement of intentions and
undertakings set forth in Section 4.12(a) of the Agreement and herein, it is
finally determined that the Class A-1 Certificates do not evidence
indebtedness of the Seller for all income and franchise tax purposes, but
rather represent an equity interest in the assets of the Trust, then the
Holder (and each Certificate Owner hereof with respect hereto by virtue of
acquiring a beneficial interest herein), agrees (i) to treat such Certificates,
together with the Seller Certificate, as representing an interest in a
partnership for all tax purposes, (ii) to treat all payments in respect of
such Certificates (to the extent not a return of capital) as a "guaranteed
payment" thereon made pursuant to Section 707(c) of the Code, and (iii) to
allocate all other items of income, gain, deduction, loss or credit with
respect to the assets and operations of the Trust to the Seller.
The Certificates do not represent an obligation of, or an interest in,
the Seller, the Servicer, the Origination Trust or any of their respective
affiliates. The Certificates are limited in right of payment to certain
collections and recoveries respecting the 99.8% 1996-B SUBI Interest and 99.8%
1996-B SUBI Certificate and certain monies on deposit in the Reserve Fund, the
Residual Value Surplus Account and in certain other accounts established for
the benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Trustee, and
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at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Seller and the Trustee. In certain limited circumstances, the
Agreement may only be amended with the consent of the Holders of Investor
Certificates evidencing not less than 51% of the aggregate Percentage Interest
of all Investor Certificates, voting together as a single class. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office of the Trustee in its capacity as
Certificate Registrar, or by any successor Certificate Registrar or at the
offices of the agent of the Trustee who shall initially be First Trust of New
York, National Association, 100 Wall Street, 20th Floor, New York, New York
10005, in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Class A-1
Certificates of authorized denominations and of a like aggregate fractional
undivided interest will be issued to the designated transferee.
The Class A-1 Certificates are issuable only as registered
Certificates without coupons in denominations of $1,000 and integral multiples
thereof (except for one Class A-1 Certificate in a smaller minimum denomination
representing any remaining portion of the Initial Class A-1 Certificate
Balance). As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of the
same Class, of authorized denominations of a like aggregate principal amount,
as requested by the Holder surrendering the same. No service charge will be
made for any such registration of transfer or exchange, but the Trustee may
require payment of a sum sufficient to cover any tax or governmental charges
payable in connection therewith.
Prior to due presentation of this Certificate for registration of
transfer, the Trustee, the Certificate Registrar and any of their respective
agents may treat the Person in whose
A-1-5
<PAGE> 92
name this Class A-1 Certificate is registered as the owner hereof for the
purpose of receiving distributions and for all other purposes, and neither the
Trustee, the Certificate Registrar nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Investor
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Seller may at its option purchase the corpus of the Trust at a price specified
in the Agreement, and such purchase of the 99.8% 1996-B SUBI Interest and 99.8%
1996-B SUBI Certificate and other property of the Trust will effect early
retirement of the Certificates; provided, however, such right of purchase is
exercisable only on the Distribution Date following the last day of a
Collection Period as of which the Certificate Balance shall be less than or
equal to ten percent (10%) of the Initial Certificate Balance.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of acquiring a beneficial interest herein)
covenants and agrees that prior to the date which is one year and one day after
the last date upon which (a) each Class of Investor Certificates has been paid
in full, and (b) all obligations due under any other Securitized Financing have
been paid in full, the Holder and/or Certificate Owner will not institute
against, or join any other Person in instituting against the Seller, World Omni
Lease Securitization, Inc., ALFI, ALFI LP, the Origination Trustee or the
Origination Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's and/or
Certificate Owner's right to file any claim in or otherwise take actions with
respect to any such proceeding instituted by any Person not under such a
constraint. This non-petition covenant shall survive the termination of the
Agreement.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Class A-1 Certificate shall not entitle the Holder hereof to any benefit under
the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-1 Certificate to be duly executed.
Dated: October __, 1996 WORLD OMNI 1996-B AUTOMOBILE
LEASE SECURITIZATION TRUST
FIRST BANK NATIONAL ASSOCIATION, as
Trustee
A-1-6
<PAGE> 93
(SEAL)
By: ______________________________
ATTEST: Authorized Officer
__________________________
Authorized Officer
A-1-7
<PAGE> 94
This is one of the Class A-1 Certificates referred
to in the within-mentioned Agreement.
FIRST BANK NATIONAL ASSOCIATION, as
Trustee
By: __________________________
A-1-8
<PAGE> 95
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 typewrite 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 as
it appears upon 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, Inc. or a
commercial bank or trust company.
A-1-9
<PAGE> 96
EXHIBIT A-2
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.
WORLD OMNI 1996-B AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED CERTIFICATE, CLASS A-2
evidencing a percentage interest in the distributions allocable to the
Investor Certificates, as defined below, evidencing an undivided
interest in the Trust, as defined below, the property of which includes,
among other things, a 99.8% interest in a special unit of beneficial
interest (the "99.8% 1996-B SUBI Interest") in World Omni LT, an Alabama
trust, which 99.8% SUBI Interest represents a beneficial interest in a
pool of retail lease contracts for new and used automobiles and light
duty trucks (and the related automobiles and light-duty trucks) entered
into by various automobile and light duty truck dealers pursuant to
contractual arrangements with World Omni Financial Corp. and thereafter
assigned to World Omni LT, and which 99.8% 1996-B SUBI Interest was
originally issued to Auto Lease Finance L.P. and then sold to World Omni
Lease Securitization L.P. and then to the Trust.
(This Certificate does not represent an obligation of, or an interest
in, Auto Lease Finance, Inc., Auto Lease Finance L.P., World Omni Lease
Securitization, Inc., World Omni Lease Securitization L.P., World Omni
LT, World Omni Financial Corp., or any of their respective affiliates.)
Aggregate Denominations of
all Class A-2 Certificates: CUSIP # _________
$___________
Number A-2-__ Denomination: $___________
A-2-1
<PAGE> 97
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
___________________________ ($___________) nonassessable, fully-paid,
fractional undivided interest in the World Omni 1996-B Automobile Lease
Securitization Trust (the "Trust") formed by World Omni Lease Securitization
L.P., a Delaware limited partnership, as Seller (the "Seller"). The Trust was
created pursuant to a Securitization Trust Agreement dated as of October 1,
1996 (the "Agreement"), between the Seller and First Bank National Association,
a national banking association (successor trustee to Bank of America Illinois,
an Illinois banking corporation), as trustee (the "Trustee"). A summary of
certain of the pertinent provisions of the Agreement is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates issued under
the Agreement and designated as "World Omni 1996-B Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed Certificates, Class
A-2" (the "Class A-2 Certificates"). Also issued under the Agreement are
Certificates designated as "World Omni 1996-B Automobile Lease Securitization
Trust ____% Automobile Lease Asset Backed Certificates, Class A-1" (the "Class
A-1 Certificates"), Certificates designated as "World Omni 1996-B Automobile
Lease Securitization Trust ____% Automobile Lease Asset Backed Certificates,
Class A-3" (the "Class A-3 Certificates" and, together with the Class A-2
Certificates and the Class A-1 Certificates, the "Class A Certificates"),
Certificates designated as "World Omni 1996-B Automobile Lease Securitization
Trust ____% Automobile Lease Asset Backed Certificates, Class B" (the "Class B
Certificates" and, together with the Class A Certificates, the "Investor
Certificates") and a Certificate designated as the "World Omni 1996-B
Automobile Lease Securitization Trust Asset Backed Seller Certificate" (the
"Seller Certificate" and, together with the Investor Certificates, the
"Certificates"). The Class B Certificates are subordinated to the Class A
Certificates and the Seller Certificate is subordinated to the Investor
Certificates to the extent described in the Agreement. This Class A-2
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Class A-2
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.
The property of the Trust includes, among other things, a 99.8% interest
in a special unit of beneficial interest (the "99.8% 1996-B SUBI Interest") in
World Omni LT, an Alabama trust (the "Origination Trust"), which 99.8% 1996-B
SUBI Interest represents a beneficial interest in a pool of retail automobile
and light duty truck lease contracts ("Leases") and the new and used
automobiles and light duty trucks leased thereby ("Leased Vehicles") (such pool
of Leases and Leased Vehicles, the "1996-B SUBI Portfolio") entered into by
various automobile and light
A-2-2
<PAGE> 98
duty truck dealers pursuant to contractual arrangements with World Omni
Financial Corp., which also acts as servicer (in that capacity, the "Servicer")
of the 1996-B SUBI Portfolio. During the Revolving Period, Principal
Collections allocable to the 99.8% 1996-B SUBI Interest generally will be
applied towards the allocation to the 1996-B SUBI Portfolio of additional
qualifying Leases and Leased Vehicles from among all other unallocated Leases
and Leased Vehicles owned by the Origination Trust.
Under the Agreement, there will be distributed on the fifteenth day of
each month or, if such fifteenth is not a Business Day, the next succeeding
Business Day (each, a "Distribution Date"), commencing on November 15, 1996, to
the Person in whose name this Class A-2 Certificate is registered at the close
of business on the last calendar day immediately preceding the related
Distribution Date or, if Definitive Certificates are issued, the last day of
the immediately preceding calendar month (each a "Record Date"), such Class A-2
Certificateholder's percentage interest in (i) the Class A-2 Distributable
Amount for such Distribution Date and (ii) the amount of any repayment of any
outstanding Class A-2 Interest Carryover Shortfall, Class A-2 Loss Amounts,
Class A-2 Certificate Principal Loss Amounts and Class A-2 Certificate
Principal Loss Interest Amounts being made on such Distribution Date, all to
the extent and as more specifically set forth in the Agreement. To the extent
provided in the Agreement, no principal payments shall be made in respect of
the Class A-2 Certificates until the Class A-1 Certificates have been paid in
full, and no principal payments shall be made in respect of the Class A-3
Certificates or the Class B Certificates until the Class A-2 Certificates have
been paid in full.
Distributions on this Class A-2 Certificate will be made by the Trustee
by check mailed to the Class A-2 Certificateholder of record in the Certificate
Register without the presentation or surrender of this Class A-2 Certificate or
the making of any notation hereon except that with respect to Class A-2
Certificates registered in the name of Cede & Co., the nominee for The
Depository Trust Company, distributions will be made in the form of immediately
available funds. Except as otherwise provided in the Agreement and
notwithstanding the foregoing, the final distribution on this Class A-2
Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Class A-2
Certificate at the Corporate Trust Office of the Trustee.
It is the intention of the Seller and the Holders of Investor
Certificates that the Investor Certificates will be indebtedness for federal,
state and local income and franchise tax purposes and for purposes of any other
tax imposed on or measured by income. The Seller, the Trustee and the Holder
of this
A-2-3
<PAGE> 99
Certificate (or Certificate Owner) by acceptance of this Certificate (or, in
the case of a Certificate Owner, by virtue of such Certificate Owner's
acquisition of a beneficial interest herein) agree to treat the Investor
Certificates (or beneficial interest therein), for purposes of federal, state
and local income or franchise taxes and any other tax imposed on or measured by
income, as indebtedness and to report the transactions contemplated by the
Agreement on all applicable tax returns in a manner consistent with such
treatment. Each Holder of this Certificate agrees that it will cause any
Certificate Owner acquiring an interest in this Certificate through it to
comply with the Agreement as to treatment as indebtedness for federal, state
and local income and franchise tax purposes and for purposes of any other tax
imposed on or measured by income.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of such Certificate Owner's acquisition of
a beneficial interest herein) waives any claim to any proceeds or assets of the
Origination Trustee and to all assets of the Origination Trust other than those
from time to time included within the 1996-B SUBI Portfolio as 1996-B SUBI
Assets and those proceeds or assets derived from or earned by such 1996-B SUBI
Assets.
In the event that, notwithstanding the statement of intentions and
undertakings set forth in Section 4.12(a) of the Agreement and herein, it is
finally determined that the Class A-2 Certificates do not evidence indebtedness
of the Seller for all income and franchise tax purposes, but rather represent
an equity interest in the assets of the Trust, then the Holder (and each
Certificate Owner hereof with respect hereto by virtue of acquiring a
beneficial interest herein), agrees (i) to treat such Certificates, together
with the Seller Certificate, as representing an interest in a partnership for
all tax purposes, (ii) to treat all payments in respect of such Certificates
(to the extent not a return of capital) as a "guaranteed payment" thereon made
pursuant to Section 707(c) of the Code, and (iii) to allocate all other items
of income, gain, deduction, loss or credit with respect to the assets and
operations of the Trust to the Seller.
The Certificates do not represent an obligation of, or an interest in,
the Seller, the Servicer, the Origination Trust or any of their respective
affiliates. The Certificates are limited in right of payment to certain
collections and recoveries respecting the 99.8% 1996-B SUBI Interest and 99.8%
1996-B SUBI Certificate and certain monies on deposit in the Reserve Fund, the
Residual Value Surplus Account and in certain other accounts established for
the benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Trustee, and
A-2-4
<PAGE> 100
at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Seller and the Trustee. In certain limited circumstances, the
Agreement may only be amended with the consent of the Holders of Investor
Certificates evidencing not less than 51% of the aggregate Percentage Interest
of all Investor Certificates, voting together as a single class. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office of the Trustee in its capacity as
Certificate Registrar, or by any successor Certificate Registrar or at the
offices of the agent of the Trustee who shall initially be First Trust of New
York, National Association, 100 Wall Street, 20th Floor, New York, New York
10005, in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Class A-2
Certificates of authorized denominations and of a like aggregate fractional
undivided interest will be issued to the designated transferee.
The Class A-2 Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for one Class A-2 Certificate in a smaller minimum denomination
representing any remaining portion of the Initial Class A-2 Certificate
Balance). As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of the
same Class, of authorized denominations of a like aggregate principal amount,
as requested by the Holder surrendering the same. No service charge will be
made for any such registration of transfer or exchange, but the Trustee may
require payment of a sum sufficient to cover any tax or governmental charges
payable in connection therewith.
Prior to due presentation of this Certificate for registration of
transfer, the Trustee, the Certificate Registrar and any of their respective
agents may treat the Person in whose
A-2-5
<PAGE> 101
name this Class A-2 Certificate is registered as the owner hereof for the
purpose of receiving distributions and for all other purposes, and neither the
Trustee, the Certificate Registrar nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Investor
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Seller may at its option purchase the corpus of the Trust at a price specified
in the Agreement, and such purchase of the 99.8% 1996-B SUBI Interest and 99.8%
1996-B SUBI Certificate and other property of the Trust will effect early
retirement of the Certificates; provided, however, such right of purchase is
exercisable only on the Distribution Date following the last day of a
Collection Period as of which the Certificate Balance shall be less than or
equal to ten percent (10%) of the Initial Certificate Balance.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of acquiring a beneficial interest herein)
covenants and agrees that prior to the date which is one year and one day after
the last date upon which (a) each Class of Investor Certificates has been paid
in full, and (b) all obligations due under any other Securitized Financing have
been paid in full, the Holder and/or Certificate Owner will not institute
against, or join any other Person in instituting against the Seller, World Omni
Lease Securitization, Inc., ALFI, ALFI LP, the Origination Trustee or the
Origination Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's and/or
Certificate Owner's right to file any claim in or otherwise take actions with
respect to any such proceeding instituted by any Person not under such a
constraint. This non-petition covenant shall survive the termination of the
Agreement.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Class A-2
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-2 Certificate to be duly executed.
Dated: October __, 1996 WORLD OMNI 1996-B AUTOMOBILE
LEASE SECURITIZATION TRUST
FIRST BANK NATIONAL ASSOCIATION, as
Trustee
A-2-6
<PAGE> 102
(SEAL) By: ____________________________
Authorized Officer
ATTEST:
__________________________
Authorized Officeer
A-2-7
<PAGE> 103
This is one of the Class A-2 Certificates referred
to in the within-mentioned Agreement.
FIRST BANK NATIONAL ASSOCIATION, as
Trustee
By: __________________________
A-2-8
<PAGE> 104
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 typewrite 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 as
it appears upon 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, Inc. or a
commercial bank or trust company.
A-2-9
<PAGE> 105
EXHIBIT A-3
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.
WORLD OMNI 1996-B AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED CERTIFICATE, CLASS A-3
evidencing a percentage interest in the distributions allocable to the
Investor Certificates, as defined below, evidencing an undivided
interest in the Trust, as defined below, the property of which includes,
among other things, a 99.8% interest in a special unit of beneficial
interest (the "99.8% 1996-B SUBI Interest") in World Omni LT, an Alabama
trust, which 99.8% SUBI Interest represents a beneficial interest in a
pool of retail lease contracts for new and used automobiles and light
duty trucks (and the related automobiles and light-duty trucks) entered
into by various automobile and light duty truck dealers pursuant to
contractual arrangements with World Omni Financial Corp. and thereafter
assigned to World Omni LT, and which 99.8% 1996-B SUBI Interest was
originally issued to Auto Lease Finance L.P. and then sold to World Omni
Lease Securitization L.P. and then to the Trust.
(This Certificate does not represent an obligation of, or an interest
in, Auto Lease Finance, Inc., Auto Lease Finance L.P., World Omni Lease
Securitization, Inc., World Omni Lease Securitization L.P., World Omni
LT, World Omni Financial Corp., or any of their respective affiliates.)
Aggregate Denominations of
all Class A-3 Certificates: CUSIP # _________
$___________
Number A-3-__ Denomination: $___________
A-3-1
<PAGE> 106
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
___________________________ ($___________) nonassessable, fully-paid,
fractional undivided interest in the World Omni 1996-B Automobile Lease
Securitization Trust (the "Trust") formed by World Omni Lease Securitization
L.P., a Delaware limited partnership, as Seller (the "Seller"). The Trust was
created pursuant to a Securitization Trust Agreement dated as of October 1,
1996 (the "Agreement"), between the Seller and First Bank National Association,
a national banking association (successor trustee to Bank of America Illinois,
an Illinois banking corporation), as trustee (the "Trustee"). A summary of
certain of the pertinent provisions of the Agreement is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates issued under
the Agreement and designated as "World Omni 1996-B Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed Certificates, Class
A-3" (the "Class A-3 Certificates"). Also issued under the Agreement are
Certificates designated as "World Omni 1996-B Automobile Lease Securitization
Trust ____% Automobile Lease Asset Backed Certificates, Class A-1" (the "Class
A-1 Certificates"), Certificates designated as "World Omni 1996-B Automobile
Lease Securitization Trust ____% Automobile Lease Asset Backed Certificates,
Class A-2" (the "Class A-2 Certificates" and, together with the Class A-3
Certificates and the Class A-1 Certificates, the "Class A Certificates"),
Certificates designated as "World Omni 1996-B Automobile Lease Securitization
Trust ____% Automobile Lease Asset Backed Certificates, Class B" (the "Class B
Certificates" and, together with the Class A Certificates, the "Investor
Certificates") and a Certificate designated as the "World Omni 1996-B
Automobile Lease Securitization Trust Asset Backed Seller Certificate" (the
"Seller Certificate" and, together with the Investor Certificates, the
"Certificates"). The Class B Certificates are subordinated to the Class A
Certificates and the Seller Certificate is subordinated to the Investor
Certificates to the extent described in the Agreement. This Class A-3
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Class A-3
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.
The property of the Trust includes, among other things, a 99.8% interest
in a special unit of beneficial interest (the "99.8% 1996-B SUBI Interest") in
World Omni LT, an Alabama trust (the "Origination Trust"), which 99.8% 1996-B
SUBI Interest represents a beneficial interest in a pool of retail automobile
and light duty truck lease contracts ("Leases") and the new and used
automobiles and light duty trucks leased thereby ("Leased Vehicles") (such pool
of Leases and Leased Vehicles, the "1996-B SUBI Portfolio") entered into by
various automobile and light
A-3-2
<PAGE> 107
duty truck dealers pursuant to contractual arrangements with World Omni
Financial Corp., which also acts as servicer (in that capacity, the "Servicer")
of the 1996-B SUBI Portfolio. During the Revolving Period, Principal
Collections allocable to the 99.8% 1996-B SUBI Interest generally will be
applied towards the allocation to the 1996-B SUBI Portfolio of additional
qualifying Leases and Leased Vehicles from among all other unallocated Leases
and Leased Vehicles owned by the Origination Trust.
Under the Agreement, there will be distributed on the fifteenth day of
each month or, if such fifteenth is not a Business Day, the next succeeding
Business Day (each, a "Distribution Date"), commencing on November 15, 1996, to
the Person in whose name this Class A-3 Certificate is registered at the close
of business on the last calendar day immediately preceding the related
Distribution Date or, if Definitive Certificates are issued, the last day of
the immediately preceding calendar month (each a "Record Date"), such Class A-3
Certificateholder's percentage interest in (i) the Class A-3 Distributable
Amount for such Distribution Date and (ii) the amount of any repayment of any
outstanding Class A-3 Interest Carryover Shortfall, Class A-3 Loss Amounts,
Class A-3 Certificate Principal Loss Amounts and Class A-3 Certificate
Principal Loss Interest Amounts being made on such Distribution Date, all to
the extent and as more specifically set forth in the Agreement. To the extent
provided in the Agreement, no principal payments shall be made in respect of
the Class A-2 Certificates until the Class A-1 Certificates have been paid in
full, and no principal payments shall be made in respect of the Class A-3
Certificates or the Class B Certificates until the Class A-2 Certificates have
been paid in full.
Distributions on this Class A-3 Certificate will be made by the Trustee
by check mailed to the Class A-3 Certificateholder of record in the Certificate
Register without the presentation or surrender of this Class A-3 Certificate or
the making of any notation hereon except that with respect to Class A-3
Certificates registered in the name of Cede & Co., the nominee for The
Depository Trust Company, distributions will be made in the form of immediately
available funds. Except as otherwise provided in the Agreement and
notwithstanding the foregoing, the final distribution on this Class A-3
Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Class A-3
Certificate at the Corporate Trust Office of the Trustee.
It is the intention of the Seller and the Holders of Investor
Certificates that the Investor Certificates will be indebtedness for federal,
state and local income and franchise tax purposes and for purposes of any other
tax imposed on or measured by income. The Seller, the Trustee and the Holder
of this
A-3-3
<PAGE> 108
Certificate (or Certificate Owner) by acceptance of this Certificate (or, in
the case of a Certificate Owner, by virtue of such Certificate Owner's
acquisition of a beneficial interest herein) agree to treat the Investor
Certificates (or beneficial interest therein), for purposes of federal, state
and local income or franchise taxes and any other tax imposed on or measured by
income, as indebtedness and to report the transactions contemplated by the
Agreement on all applicable tax returns in a manner consistent with such
treatment. Each Holder of this Certificate agrees that it will cause any
Certificate Owner acquiring an interest in this Certificate through it to
comply with the Agreement as to treatment as indebtedness for federal, state
and local income and franchise tax purposes and for purposes of any other tax
imposed on or measured by income.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of such Certificate Owner's acquisition of
a beneficial interest herein) waives any claim to any proceeds or assets of the
Origination Trustee and to all assets of the Origination Trust other than those
from time to time included within the 1996-B SUBI Portfolio as 1996-B SUBI
Assets and those proceeds or assets derived from or earned by such 1996-B SUBI
Assets.
In the event that, notwithstanding the statement of intentions and
undertakings set forth in Section 4.12(a) of the Agreement and herein, it is
finally determined that the Class A-3 Certificates do not evidence indebtedness
of the Seller for all income and franchise tax purposes, but rather represent
an equity interest in the assets of the Trust, then the Holder (and each
Certificate Owner hereof with respect hereto by virtue of acquiring a
beneficial interest herein), agrees (i) to treat such Certificates, together
with the Seller Certificate, as representing an interest in a partnership for
all tax purposes, (ii) to treat all payments in respect of such Certificates
(to the extent not a return of capital) as a "guaranteed payment" thereon made
pursuant to Section 707(c) of the Code, and (iii) to allocate all other items
of income, gain, deduction, loss or credit with respect to the assets and
operations of the Trust to the Seller.
The Certificates do not represent an obligation of, or an interest in,
the Seller, the Servicer, the Origination Trust or any of their respective
affiliates. The Certificates are limited in right of payment to certain
collections and recoveries respecting the 99.8% 1996-B SUBI Interest and 99.8%
1996-B SUBI Certificate and certain monies on deposit in the Reserve Fund, the
Residual Value Surplus Account and in certain other accounts established for
the benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Trustee, and
A-3-4
<PAGE> 109
at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Seller and the Trustee. In certain limited circumstances, the
Agreement may only be amended with the consent of the Holders of Investor
Certificates evidencing not less than 51% of the aggregate Percentage Interest
of all Investor Certificates, voting together as a single class. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office of the Trustee in its capacity as
Certificate Registrar, or by any successor Certificate Registrar or at the
offices of the agent of the Trustee who shall initially be First Trust of New
York, National Association, 100 Wall Street, 20th Floor, New York, New York
10005, in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Class A-3
Certificates of authorized denominations and of a like aggregate fractional
undivided interest will be issued to the designated transferee.
The Class A-3 Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for one Class A-3 Certificate in a smaller minimum denomination
representing any remaining portion of the Initial Class A-3 Certificate
Balance). As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of the
same Class, of authorized denominations of a like aggregate principal amount,
as requested by the Holder surrendering the same. No service charge will be
made for any such registration of transfer or exchange, but the Trustee may
require payment of a sum sufficient to cover any tax or governmental charges
payable in connection therewith.
Prior to due presentation of this Certificate for registration of
transfer, the Trustee, the Certificate Registrar and any of their respective
agents may treat the Person in whose
A-3-5
<PAGE> 110
name this Class A-3 Certificate is registered as the owner hereof for the
purpose of receiving distributions and for all other purposes, and neither the
Trustee, the Certificate Registrar nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Investor
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Seller may at its option purchase the corpus of the Trust at a price specified
in the Agreement, and such purchase of the 99.8% 1996-B SUBI Interest and 99.8%
1996-B SUBI Certificate and other property of the Trust will effect early
retirement of the Certificates; provided, however, such right of purchase is
exercisable only on the Distribution Date following the last day of a
Collection Period as of which the Certificate Balance shall be less than or
equal to ten percent (10%) of the Initial Certificate Balance.
By accepting this Certificate, the Holder hereof (and each Certificate
Owner with respect hereto, by virtue of acquiring a beneficial interest herein)
covenants and agrees that prior to the date which is one year and one day after
the last date upon which (a) each Class of Investor Certificates has been paid
in full, and (b) all obligations due under any other Securitized Financing have
been paid in full, the Holder and/or Certificate Owner will not institute
against, or join any other Person in instituting against the Seller, World Omni
Lease Securitization, Inc., ALFI, ALFI LP, the Origination Trustee or the
Origination Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law. The foregoing shall not limit the Holder's and/or
Certificate Owner's right to file any claim in or otherwise take actions with
respect to any such proceeding instituted by any Person not under such a
constraint. This non-petition covenant shall survive the termination of the
Agreement.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Class A-3
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-3 Certificate to be duly executed.
Dated: October __, 1996 WORLD OMNI 1996-B AUTOMOBILE
LEASE SECURITIZATION TRUST
FIRST BANK NATIONAL ASSOCIATION, as
Trustee
A-3-6
<PAGE> 111
(SEAL) By:________________________
Authorized Officer
ATTEST:
__________________________
Authorized Officeer
A-3-7
<PAGE> 112
This is one of the Class A-3 Certificates referred
to in the within-mentioned Agreement.
FIRST BANK NATIONAL ASSOCIATION, as
Trustee
By: __________________________
A-3-8
<PAGE> 113
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 typewrite 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 as
it appears upon 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, Inc. or a
commercial bank or trust company.
A-3-9
<PAGE> 114
EXHIBIT B
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1
CERTIFICATES, THE CLASS A-2 CERTIFICATES AND THE CLASS A-3 CERTIFICATES AS
DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS IN RELIANCE ON EXEMPTIONS
PROVIDED BY THE SECURITIES ACT AND SUCH STATE SECURITIES LAWS. NO RESALE OR
OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS SUCH RESALE OR TRANSFER
(A) IS MADE IN ACCORDANCE WITH SECTION 4.03 OF THE AGREEMENT REFERRED TO HEREIN
AND (B) IS MADE (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (II) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, (III) TO WORLD OMNI
LEASE SECURITIZATION, INC. (THE "SELLER") OR (IV) TO A PERSON WHO THE
TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT THAT IS AWARE THAT THE RESALE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A. NEITHER THE SELLER NOR
FIRST BANK NATIONAL ASSOCIATION, AS TRUSTEE (THE "TRUSTEE"), IS OBLIGATED TO
REGISTER THE CERTIFICATES UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAWS. IN THE EVENT THAT THE TRANSFER OF A CLASS B CERTIFICATE IS TO
BE MADE, EITHER (A) AN OPINION OF COUNSEL OR (B) A REPRESENTATION LETTER FROM
THE PROSPECTIVE INVESTOR, IN EITHER CASE IN FORM AND SUBSTANCE SATISFACTORY TO
THE TRUSTEE AND THE SELLER, IS REQUIRED TO BE DELIVERED TO THE TRUSTEE AND THE
SELLER, TO THE EFFECT THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE
TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION LETTER OR OPINION OF COUNSEL FROM
THE TRANSFEREE OF THIS CERTIFICATE, ACCEPTABLE TO AND IN FORM AND SUBSTANCE
SATISFACTORY TO THE SELLER AND THE TRUSTEE, TO THE EFFECT THAT (A) SUCH
TRANSFEREE WILL NOT ACQUIRE THIS CERTIFICATE ON BEHALF OR WITH THE ASSETS OF
ANY "EMPLOYEE BENEFIT PLAN" AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), (B) NO
"PROHIBITED TRANSACTION" UNDER ERISA OR THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), WILL OCCUR IN CONNECTION WITH SUCH TRANSFEREE'S
ACQUISITION OF THIS CERTIFICATE OR (C) THE ACQUISITION OF THIS CERTIFICATE IS
SUBJECT TO A STATUTORY OR ADMINISTRATIVE EXEMPTION FROM THE "PROHIBITED
TRANSACTION" PROVISIONS OF ERISA AND THE CODE. IN ADDITION, NO TRANSFER OF
THIS CERTIFICATE WILL BE PERMITTED IF, AS A RESULT OF SUCH TRANSFER, 25% OR
MORE OF THE OUTSTANDING CERTIFICATE BALANCE OF ALL CLASS B CERTIFICATES WOULD
BE HELD BY "EMPLOYEE BENEFIT PLANS" (AS DEFINED IN SECTION 3(3) OF ERISA) OR
OTHER BENEFIT PLAN INVESTORS.
B-1
<PAGE> 115
THE RESTRICTIONS ON RESALE OR TRANSFER DESCRIBED ABOVE ARE SUBJECT TO
ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THE HOLDER'S PROPERTY SHALL AT
ALL TIMES BE AND REMAIN WITHIN ITS CONTROL.
WORLD OMNI 1996-B AUTOMOBILE LEASE SECURITIZATION TRUST
____% AUTOMOBILE LEASE ASSET BACKED CERTIFICATE, CLASS B
evidencing a percentage interest in the distributions allocable to the
Investor Certificates, as defined below, evidence an undivided interest
in the Trust, as defined below, the property of which includes, among
other things, a 99.8% interest in a special unit of beneficial interest
(the "99.8% 1996-B SUBI Interest") in World Omni LT, an Alabama trust,
which 99.8% 1996-B SUBI Interest represents a beneficial interest in a
pool of retail lease contracts for new and used automobiles and light
duty trucks (and the related automobiles and light-duty trucks) entered
into by various automobile and light duty truck dealers pursuant to
contractual arrangements with World Omni Financial Corp. and thereafter
assigned to World Omni LT, and which special unit of beneficial interest
was originally issued to Auto Lease Finance L.P., and then sold to World
Omni Lease Securitization L.P. and then to the Trust.
(This Certificate does not represent an obligation of, or an interest
in, Auto Lease Finance, Inc., Auto Lease Finance L.P., World Omni Lease
Securitization, Inc., World Omni Lease Securitization L.P., World Omni
LT, World Omni Financial Corp., or any of their respective affiliates.)
Aggregate Denominations
of all Class B Certificates: CUSIP # ______________
$__________
Number B-__ Denomination: $__________
THIS CERTIFIES THAT _______________ is the registered owner of a
_______________________________________________ DOLLAR and _____________ CENTS
($_____________) nonassessable, fully-paid, fractional undivided interest in
the World Omni 1996-B Automobile Lease Securitization Trust (the "Trust")
formed by World Omni Lease Securitization L.P., a Delaware limited partnership,
as Seller (the "Seller"). The Trust was created pursuant to a Securitization
Trust Agreement dated as of October 1, 1996 (the "Agreement"), between the
Seller and First Bank National Association, a national banking association
(successor trustee to Bank of America Illinois, an Illinois banking
corporation), as trustee (the "Trustee"). A summary of certain of the
pertinent provisions of the Agreement is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in the Agreement.
B-2
<PAGE> 116
This Certificate is one of the duly authorized Certificates issued under
the Agreement and designated as "World Omni 1996-B Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed Certificates, Class B"
(the "Class B Certificates"). Also issued under the Agreement are Certificates
designated as "World Omni 1996-B Automobile Lease Securitization Trust ____%
Automobile Lease Asset Backed Certificates, Class A-1" (the "Class A-1
Certificates"), Certificates designated as "World Omni 1996-B Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed Certificates,
Certificates designated as "World Omni 1996-B Automobile Lease Securitization
Trust ____% Automobile Lease Asset Backed Certificates, Class A-2" (the "Class
A-2 Certificates"), Certificates designated as "World Omni 1996-B Automobile
Lease Securitization Trust ____% Automobile Lease Asset Backed Certificates,
Class A-3" (the "Class A-3 Certificates" and, together with the Class A-1
Certificates and the Class A-2 Certificates, the "Class A Certificates" and,
together with the Class B Certificates, the "Investor Certificates") and a
Certificate designated as the "World Omni 1996-B Automobile Lease
Securitization Trust Automobile Asset Backed Seller Certificate" (the "Seller
Certificate" and, together with the Investor Certificates, the "Certificates").
The Class B Certificates are subordinated to the Class A Certificates, and the
Seller Certificate is subordinated to the Investor Certificates, to the extent
described in the Agreement. This Class B Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class B Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
The property of the Trust includes, among other things, a 99.8% interest
in a special unit of beneficial interest (the "99.8% 1996-B SUBI Interest") in
World Omni LT, an Alabama trust (the "Origination Trust"), which 99.8% 1996-B
SUBI Interest represents a beneficial interest in a pool of retail automobile
and light duty truck lease contracts ("Leases") and the new and used
automobiles and light duty trucks leased thereby ("Leased Vehicles") (such pool
of Leases and Leased Vehicles, the "1996-B SUBI Portfolio") entered into by
various automobile and light duty truck dealers pursuant to contractual
arrangements with World Omni Financial Corp., which also acts as servicer (in
that capacity, the "Servicer") of the 1996-B SUBI Portfolio. During the
Revolving Period, Principal Collections allocable to the 99.8% 1996-B SUBI
Interest generally will be applied towards the allocation to the 1996-B SUBI
Portfolio of additional qualifying Leases and Leased Vehicles from among all
other unallocated Leases and Leased Vehicles owned by the Origination Trust.
Under the Agreement, there will be distributed on the fifteenth day of
each month or, if such fifteenth day is not a Business Day, the next succeeding
Business Day (each, a "Distribution Date"), commencing on November 15, 1996 to
the Person in whose name this Class B Certificate is registered at the close of
business on the last day of the immediately preceding calendar month [(or, with
respect to the
B-3
<PAGE> 117
first Distribution Date, November __, 1996)] (each a "Record Date"), such Class
B Certificateholder's percentage interest in (i) the Class B Distributable
Amount for such Distribution Date, and (ii) the amount of any repayment of any
outstanding Class B Interest Carryover Shortfall, Class B Certificate Principal
Carryover Shortfall, Class B Loss Amounts, Class B Certificate Principal Loss
Amounts, Class B Certificate Principal Loss Interest Amounts and Class B
Certificate Principal Carryover Shortfall Interest Amounts being made on such
Distribution Date, all to the extent and as more specifically set forth in the
Agreement. To the extent provided in the Agreement, no principal payments
shall be made in respect of the Class A-2 Certificates until the Class A-1
Certificates have been paid in full, and no principal payments shall be made in
respect of the Class A-3 Certificates or the Class B Certificates until the
Class A-2 Certificates have been paid in full.
Distributions on this Class B Certificate will be made by the Trustee by
check mailed to the Class B Certificateholder of record in the Certificate
Register without the presentation or surrender of this Class B Certificate or
the making of any notation hereon or, at the option of a Holder who owns Class
B Certificates having an aggregate initial denomination of $250,000 or more,
upon written instructions received by the Trustee not later than five days
prior to the related Record Date, by wire transfer of immediately available
funds to an account maintained by such Holder at a depository institution in
the United States having appropriate facilities therefor. Except as otherwise
provided in the Agreement and notwithstanding the foregoing, the final
distribution on this Class B Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Class B Certificate at the Corporate Trust Office of the
Trustee.
It is the intention of the Seller and the Holders of Investor
Certificates that the Investor Certificates will be indebtedness for federal,
state and local income and franchise tax purposes and for purposes of any other
tax imposed on or measured by income. The Seller, the Trustee and the Holder
of this Certificate by acceptance of this Certificate agree to treat the
Investor Certificates, for purposes of federal, state and local income or
franchise taxes and any other tax imposed on or measured by income, as
indebtedness and to report the transactions contemplated by the Agreement on
all applicable tax returns in a manner consistent with such treatment.
By accepting this Certificate, the Holder hereof waives any claim to any
proceeds or assets of the Origination Trustee and to all assets of the
Origination Trust other than those from time to time included within the 1996-B
SUBI Portfolio as 1996-B SUBI Assets and those proceeds or assets derived from
or earned by such 1996-B SUBI Assets.
In the event that, notwithstanding the statement of intentions and
undertakings set forth in Section 4.12(a) of the Agreement and herein,
B-4
<PAGE> 118
it is finally determined that the Class B Certificates do not evidence
indebtedness of the Seller for all income and franchise tax purposes, but
rather represent an equity interest in the assets of the Trust, then Holder
hereof agrees (i) to treat such Certificates, together with the Seller
Certificate, as representing an interest in a partnership for all tax purposes,
(ii) to treat all payments in respect of such Certificates (to the extent not a
return of capital) as a "guaranteed payment" thereon made pursuant to Section
707(c) of the Code, and (iii) to allocate all other items of income, gain,
deduction, loss or credit with respect to the assets and operations of the
Trust to the Seller.
The Certificates do not represent an obligation of, or an interest in,
the Seller, the Servicer, the Origination Trust or any of their respective
affiliates. The Certificates are limited in right of payment to certain
collections and recoveries respecting the 99.8% 1996-B SUBI Interest and 99.8%
1996-B SUBI Certificate and certain monies on deposit in the Reserve Fund, the
Residual Value Surplus Account and in certain other accounts established for
the benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Trustee, and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Seller and the Trustee. In certain limited circumstances, the
Agreement may only be amended with the consent of the Holders of Investor
Certificates evidencing not less than 51% of the aggregate Percentage Interest
of all Investor Certificates, voting together as a single class. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Registrar upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office of the Trustee in its capacity as
Certificate Registrar or at the offices of the agent of the Trustee who shall
initially be First Trust of New York, National Association, 100 Wall Street,
20th Floor, New York, New York 10005, or by any successor Certificate
Registrar, in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Class B
Certificates of authorized denominations and of a like aggregate
B-5
<PAGE> 119
fractional undivided interest will be issued to the designated transferee.
The Class B Certificates are issuable only as registered Certificates
without coupons in denominations of $250,000 and integral multiples of $1,000
in excess thereof, (except for one Class B Certificate in a smaller minimum
denomination representing any remaining portion of the Initial Class B
Certificate Balance). As provided in the Agreement, and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class, of authorized denominations of a like aggregate
principal amount, as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or
governmental charges payable in connection therewith.
Prior to due presentation of this Certificate for registration of
transfer, the Trustee, the Certificate Registrar and any of their respective
agents may treat the Person in whose name this Class B Certificate is
registered as the owner hereof for the purpose of receiving distributions and
for all other purposes, and neither the Trustee, the Certificate Registrar nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Investor
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Seller may at its option purchase the corpus of the Trust at a price specified
in the Agreement, and such purchase of the 99.8% 1996-B SUBI Interest and 99.8%
1996-B SUBI Certificate and other property of the Trust will effect early
retirement of the Certificates; provided, however, such right of purchase is
exercisable only on the Distribution Date following the last day of a
Collection Period as of which the Certificate Balance shall be less than or
equal to ten percent (10%) of the Initial Certificate Balance.
By accepting this Certificate, the Holder hereof covenants and agrees
that prior to the date which is one year and one day after the last date upon
which (a) each Class of Investor Certificates has been paid in full, and (b)
all obligations due under any other Securitized Financing have been paid in
full, the Holder will not institute against, or join any other Person in
instituting against the Seller, World Omni Lease Securitization, Inc., ALFI,
ALFI LP, the Origination Trustee or the Origination Trust any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceedings under any federal or state bankruptcy or similar law. The
foregoing shall not limit the Holder's right to file any claim in or otherwise
take actions with respect to any such proceeding instituted by any Person not
under such a constraint. This non-petition covenant shall survive the
termination of the Agreement.
B-6
<PAGE> 120
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual signature, this Class B
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
B-7
<PAGE> 121
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class B Certificate to be duly executed.
Dated: October __, 1996 WORLD OMNI 1996-B AUTOMOBILE LEASE
SECURITIZATION TRUST
FIRST BANK NATIONAL ASSOCIATION, as
Trustee
(SEAL) By:____________________________
Authorized Officer
ATTEST:
__________________________
Authorized Officer
This is one of the Class B Certificates referred
to in the within-mentioned Agreement.
FIRST BANK NATIONAL ASSOCIATION, as
Trustee
By: __________________________
B-8
<PAGE> 122
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 typewrite 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 as
it appears upon 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, Inc. or a
commercial bank or trust company.
B-9
<PAGE> 123
EXHIBIT C
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED.
WORLD OMNI 1996-B AUTOMOBILE LEASE SECURITIZATION TRUST
AUTOMOBILE LEASE ASSET BACKED SELLER CERTIFICATE
evidencing the entire interest in the distributions allocable to the
Seller Certificate evidencing an undivided interest in the Trust, as
defined below, the property of which includes, among other things, a
99.8% interest in a special unit of beneficial interest (the "99.8%
1996-B SUBI Interest") in World Omni LT, an Alabama trust, which 99.8%
1996-B SUBI Interest represents a beneficial interest in a pool of
retail lease contracts for new and used automobiles and light duty
trucks (and the related automobiles and light-duty trucks) entered into
by various automobile and light duty truck dealers pursuant to
contractual arrangements with World Omni Financial Corp. and thereafter
assigned to World Omni LT, and which 99.8% 1996-B SUBI Interest was
originally issued to Auto Lease Finance L.P., and then sold to World
Omni Lease Securitization L.P., and then to the Trust.
(This Certificate does not represent an obligation of, or an interest
in, Auto Lease Finance, Inc., World Omni Lease Securitization, Inc.,
World Omni LT, World Omni Financial Corp., or any of their respective
affiliates.)
THIS CERTIFIES THAT WORLD OMNI LEASE SECURITIZATION L.P. (the "Seller")
is the registered owner of the entire interest not allocated to the Investor
Certificates in the World Omni 1996-B Automobile Lease Securitization Trust
(the "Trust") formed by the Seller. The Trust was created pursuant to a
Securitization Trust Agreement dated as of October 1, 1996 (the "Agreement"),
between the Seller and First Bank National Association, a national banking
association (successor trustee to Bank of America Illinois, an Illinois banking
corporation), as trustee (the "Trustee"). A summary of certain of the
pertinent provisions of the Agreement is set forth below. To the extent not
otherwise defined herein the capitalized terms used herein have the meanings
assigned to them in the Agreement.
This Certificate is the duly authorized Seller Certificate issued under
the Agreement and designated as the "World Omni
C-1
<PAGE> 124
1996-B Automobile Lease Securitization Trust Automobile Lease Asset Backed
Seller Certificate" (the "Seller Certificate"). Also issued under the
Agreement are Certificates designated as "World Omni 1996-B Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed Certificates, Class
A-1" (the "Class A-1 Certificates"), Certificates designated as "World Omni
1996-B Automobile Lease Securitization Trust ____% Automobile Lease Asset
Backed Certificates, Class A-2" (the "Class A-2 Certificates"), Certificates
designated as "World Omni 1996-B Automobile Lease Securitization Trust ____%
Automobile Lease Asset Backed Certificates, Class A-3" (the "Class A-3
Certificates" and, together with the Class A-1 Certificates and the Class A-2
Certificates, the "Class A Certificates") and Certificates designated as "World
Omni 1996-B Securitization Trust ____% Automobile Lease Asset Backed
Certificates, Class B" (the "Class B Certificates" and, together with the Class
A Certificates, the "Investor Certificates" and, together with the Seller
Certificate, the "Certificates"). This Seller Certificate is issued under and
is subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Seller Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
The property of the Trust includes, among other things, a 99.8% interest
in a special unit of beneficial interest (the "99.8% 1996-B SUBI Interest") in
World Omni LT, an Alabama trust (the "Origination Trust"), which 99.8% 1996-B
SUBI Interest represents a beneficial interest in a pool of retail automobile
and light duty truck lease contracts ("Leases") and the new and used
automobiles and light duty trucks leased thereby ("Leased Vehicles") (such pool
of Leases and Leased Vehicles, the "1996-B SUBI Portfolio") entered into by
various automobile and light duty truck dealers pursuant to contractual
arrangements with World Omni Financial Corp., which also acts as servicer (in
that capacity, the "Servicer") of the 1996-B SUBI Portfolio. During the
Revolving Period, Principal Collections allocable to the 99.8% 1996-B SUBI
Interest generally will be applied towards the allocation to the 1996-B SUBI
Portfolio of additional qualifying Leases and Leased Vehicles from among all
other unallocated Leases and Leased Vehicles owned by the Origination Trust.
Payments in respect of the 99.8% 1996-B SUBI Interest will be allocated
between the Investor Certificates and this Seller Certificate and paid to the
registered Holder of this Seller Certificate as provided in the Agreement.
By accepting this Certificate, the Holder hereof waives any claim to any
proceeds or assets of the Origination Trustee and to all assets of the
Origination Trust other than those from time to time included within the 1996-B
SUBI Portfolio as 1996-B SUBI Assets and those proceeds or assets derived from
or earned by such 1996-B SUBI Assets.
C-2
<PAGE> 125
The Certificates do not represent an obligation of, or an interest in,
the Seller, the Servicer the Origination Trust or any of their respective
affiliates. The Certificates are limited in right of payment to certain
collections and recoveries respecting the 99.8% 1996-B SUBI Interest and 1996-B
SUBI Certificate and certain monies on deposit in the Reserve Fund and the
Residual Value Surplus Account and in certain other accounts established for
the benefit of the Certificateholders, in each case to the extent and as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the Corporate Trust Office of the
Trustee, and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Agreement at
any time by the Seller, the Servicer and the Trustee. In certain limited
circumstances, the Agreement may only be amended with the consent of the
Holders of Certificates evidencing not less than 51% of the aggregate
Percentage Interest of all Investor Certificates, voting together as a single
class.
As provided in the Agreement, this Certificate shall be owned by the
Seller and may not be transferred.
As provided in the Agreement and subject to certain limitations therein
set forth, Certificates are exchangeable for new Certificates of the same
Class, of authorized denominations of a like aggregate principal amount, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Investor
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Seller may at its option purchase the corpus of the Trust at a price specified
in the Agreement, and such purchase of the 99.8% 1996-B SUBI Interest and 99.8%
1996-B SUBI Certificate and other property of the Trust will effect early
retirement of the Certificates; provided, however, such right of purchase is
exercisable only on the Distribution Date following the last day of a
Collection Period as of which the Certificate Balance shall be less than or
equal to ten percent (10%) of the Initial Certificate Balance.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Trustee, by manual
C-3
<PAGE> 126
signature, this Seller Certificate shall not entitle the Holder hereof to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Seller Certificate to be duly executed.
Dated: October __, 1996 WORLD OMNI 1996-B AUTOMOBILE LEASE
SECURITIZATION TRUST
FIRST BANK NATIONAL ASSOCIATION, as
Trustee
(SEAL) By: _______________________
Authorized Officer
ATTEST:
______________________________
This is the Seller Certificate referred
to in the within-mentioned Agreement.
FIRST BANK NATIONAL ASSOCIATION, as
Trustee
By: ___________________________
C-4
<PAGE> 127
EXHIBIT D-1
NON-RULE 144A REPRESENTATION LETTER
World Omni Lease Securitization L.P.,
c/o World Omni Lease Securitization, Inc.,
its general partner
120 N.W. 12th Avenue
Deerfield Beach, Florida 33442
First Bank National Association
400 North Michigan Avenue
Chicago, Illinois 60611
[Placement Agent]
Re: World Omni 1996-B Automobile Lease Securitization Trust
____% Automobile Lease Asset Backed Certifi- cates,
Class B
Ladies and Gentlemen:
The undersigned purchaser (the "Purchaser") understands that the
purchase of the above-referenced certificates (the "Certificates") may be made
only by institutions which are "Accredited Investors" under Regulation D, as
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), which includes banks, savings and loan associations, registered brokers
and dealers, insurance companies, investment companies and organizations
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), corporations, business trusts and partnerships, not formed for
the specific purpose of acquiring the Certificates offered, with total assets
in excess of $5,000,000. The undersigned represents on behalf of the Purchaser
that the Purchaser is an "Accredited Investor" within the meaning of such
definition. The Purchaser is urged to review carefully the responses,
representations and warranties it is making herein.
Representations and Warranties
The Purchaser makes the following representations and warranties
in order to permit First Bank National Association (successor to Bank of
America Illinois), as trustee (the "Trustee") of the World Omni 1996-B
Automobile Lease Securitization Trust (the "Trust"), World Omni Lease
Securitization L.P. (the "Seller") and ___________________________ to determine
its suitability as a purchaser of Certificates and to determine that the
exemption from registration relied upon by the Seller under Section 4(2) of the
Securities Act is available to it.
D-1-1
<PAGE> 128
1. The Purchaser understands that the Certificates have
not been, and throughout their term will not be, registered or qualified under
the Securities Act or the securities law of any state and may be resold (which
resale is not currently contemplated) only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration under the
Securities Act and other applicable state securities laws are available, that
neither the Seller nor the Trustee is required to register the Certificates
under the Securities Act or any applicable state securities laws and that any
transfer must comply with Section 4.03 of the Securitization Trust Agreement,
dated as of October 1, 1996 (the "Agreement"), among the Seller, World Omni
Financial Corp. and the Trustee.
2. The Purchaser will comply with all applicable federal
and state securities laws in connection with any subsequent resale of the
Certificates.
3. The Purchaser is an "accredited investor" within the
meaning of Rule 501(a) under the Securities Act and a sophisticated
institutional investor and has knowledge and experience in financial and
business matters (and, in particular, in such matters related to securities
similar to the Certificates) and is capable of evaluating the merits and risks
of its investment in the Certificates and is able to bear the economic risk of
such investment. The Purchaser has been given such information concerning the
Certificates, World Omni Financial Corp. and the Seller as it has requested.
4. The Purchaser is acquiring the Certificates as
principal for its own account (or for the account of one or more other
sophisticated institutional investors for which it is acting as duly authorized
fiduciary or agent) for the purpose of investment and not with a view to or for
sale in connection with any distribution thereof, subject nevertheless to any
requirement of law that the disposition of the Purchaser's property shall at
all times be and remain within its control.
5. Neither the Purchaser nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of any
Certificate, any interest in any Certificate or any other similar security of
the Seller to, or solicited any offer to buy or accept a transfer, pledge or
other disposition of any Certificate, any interest in any Certificate or any
other similar security of the Seller with, any person in any manner, or made
any general solicitation by means of general advertising or in any other
manner, or taken any other action, which would constitute a distribution of the
Certificates under the Securities Act or which would render the disposition of
any Certificate a violation of Section 5 of the Securities Act or any state
securities law, require registration or qualification pursuant thereto, or
require registration of the Trust or the
D-1-2
<PAGE> 129
Seller as an "investment company" under the Investment Company Act of 1940, as
amended, nor will it act, nor has it authorized or will it authorize any person
to act in such manner with respect to the Certificates.
6. The Purchaser has reviewed the Private Placement
Memorandum with respect to the Certificates dated October __, 1996, including
the Prospectus attached thereto as Exhibit A (the "Private Placement
Memorandum"), and the agreements and other materials referred to therein, and
has had the opportunity to ask questions and receive answers concerning the
terms and conditions of the transaction contemplated by the Private Placement
Memorandum and to obtain additional information necessary to verify the
accuracy and completeness of any information furnished to the Purchaser or to
which the Purchaser had access.
7. [The Purchaser will not acquire the Certificates with
the assets of any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").] [No
"prohibited transaction" under the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the Code will occur in connection with our
acquisition of the Certificates.] [The acquisition of the Certificates is
subject to a statutory or administrative exemption from the "prohibited
transaction" provisions of the Employee Retirement Income Security act of 1974,
as amended ("ERISA"), and the Code [specifying exemption].]*
8. [The Purchaser will not acquire the Certificates with
the assets of any "employee benefit plan" or any other benefit plan investor.]
[The Purchaser represents that it is an insurance company and is holding and
will be holding all funds used to purchase the Certificates in its general
account, the assets of which such Purchaser reasonably believes do not
constitute "plan assets" as defined in the plan asset regulations under ERISA.]
[The Purchaser will acquire the Certificates with the assets of an "employee
benefit plan" or other benefit plan investor.]*
9. The Purchaser understands that the Certificates will
bear a legend substantially as set forth in the form of Certificate included as
Exhibit B to the Agreement.
____________________
* Purchaser required to select applicable sentence.
10. The Purchaser understands that there is no market, nor
is there any assurance that a market will develop, for the Certificates and
that the Seller does not have any obligation to make or facilitate any such
market (or to otherwise repurchase the Certificates from the Purchaser) under
any circumstances.
D-1-3
<PAGE> 130
11. The Purchaser has consulted with its own legal counsel,
independent accountants and financial advisors to the extent it deems necessary
regarding the tax consequences to it of ownership of the Certificates, is aware
that its taxable income with respect to the Certificates in any accounting
period may not correspond to the cash flow (if any) from the Certificates for
such period, and is not purchasing the Certificates in reliance on any
representations of the Seller or its counsel with respect to tax matters.
12. The Purchaser agrees that it will obtain from any
subsequent purchaser of the Certificates substantially the same
representations, warranties and agreements contained in the foregoing
paragraphs 1 through 11 and in this paragraph 12.
Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Agreement or the Private
Placement Memorandum, as the case may be.
The representations and warranties contained herein shall be
binding upon the successors of the undersigned.
Executed at ________________, this ____ day of ___________ 199__
________________________________
Purchaser's Name (Print)
By _____________________________
Signature
Its ____________________________
________________________________
Address of Purchaser
________________________________
Purchaser's Taxpayer
Identification Number
D-1-4
<PAGE> 131
EXHIBIT D-2
RULE 144A REPRESENTATION LETTER
World Omni Lease Securitization L.P.,
c/o World Omni Lease Securitization, Inc.,
its general partner
120 N.W. 12th Avenue
Deerfield Beach, Florida 33442
First Bank National Association
400 North Michigan Avenue
Chicago, Illinois 60611
[Placement Agent]
Re: World Omni 1996-B Automobile Lease Securitization Trust
____% Automobile Lease Asset Backed Certifi-cates,
Class B
Ladies and Gentlemen:
__________________ (the "Purchaser") is today purchasing in a
private resale from ______________________ (the "Seller") $_________ aggregate
principal amount of the above-captioned certificates (the "Certificates"),
issued pursuant to the securitization trust agreement, dated as of October 1,
1996 (the "Agreement"), among World Omni Lease Securitization L.P. ("the
Seller"), World Omni Financial Corp. ("World Omni") and First Bank National
Association (successor to Bank of America Illinois), as trustee (the
"Trustee").
In connection with the purchase of the Certificates, the
Purchaser hereby represents and warrants to each of you as follows:
1. The Purchaser understands that the Certificates have
not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state.
2. The Purchaser is acquiring the Certificates for its own
account only for investment and not for any other person, and not with a view
to, or for resale in connection with, a distribution that would constitute a
violation of the Securities Act or any state securities laws (subject to the
understanding that disposition of the Purchaser's property will remain at all
times within its control). The Purchaser is not an affiliate of the Seller,
World Omni, the Trustee, any custodian of the Certificates or any of their
respective affiliates.
D-2-1
<PAGE> 132
3. The Purchaser agrees that the Certificates must be held
indefinitely by it unless (i) the Certificates are subsequently registered
under the Securities Act or (ii) an exemption from the registration
requirements of the Securities Act is available.
4. The Purchaser agrees that if at some time it wishes to
dispose of or exchange any of the Certificates, it will not transfer or
exchange any of the Certificates unless such transfer or exchange is in
accordance with the provisions of Section 4.03 of the Agreement.
5. The Purchaser is a qualified institutional buyer as
defined in Rule 144A of the Securities Act and has completed and is delivering
herewith either of the forms of certification to that effect attached as
Annexes hereto, it is aware that the sale to it is being made in reliance on
Rule 144A, it is acquiring the Certificates for its own account or for the
account of a qualified institutional buyer and it understands that such
Certificates may be resold, pledged or transferred only (i) to a person who the
Seller reasonably believes is a qualified institutional buyer that purchases
for its own account or for the account of a qualified institutional buyer to
whom notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A or (ii) pursuant to another exemption from registration
under the Securities Act and applicable state securities laws.
6. Neither the Purchaser nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of any
Certificate, any interest in any Certificate or any other similar security of
the Seller to, or solicited any offer to buy or accept a transfer, pledge or
other disposition of any Certificate any interest in any Certificate or any
other similar security of the Seller with, any person in any manner, or made
any general solicitation by means of general advertising or in any other
manner, or taken any other action, which would constitute a distribution of the
Certificates under the Securities Act or which would render the disposition of
any Certificate a violation of Section 5 of the Securities Act or any state
securities law, require registration or qualification pursuant thereto, or
require registration of the World Omni 1996-B Automobile Lease Securitization
Trust (the "Trust") or the Seller as an "investment company" under the
Investment Company Act of 1940, as amended, nor will it act, nor has it
authorized or will it authorize any person to act in such manner with respect
to the Certificates.
7. [The Purchaser will not acquire the Certificates with
the assets of any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").] [No
"prohibited transaction" under the Employee Retirement Income Security Act of
1974, as amended
D-2-2
<PAGE> 133
("ERISA"), or the Internal Revenue Code of 1986, as amended (the "Code"), will
occur in connection with our acquisition of the Certificates.] [The acquisition
of the Certificates is subject to a statutory or administrative exemption from
the "prohibited transaction" provisions of the Employee Retirement Income
Security act of 1974, as amended ("ERISA"), and the Internal Revenue Code of
1986, as amended (the "Code"), [specifying exemption].]*
8. [The Purchaser will not acquire the Certificates with
the assets of any "employee benefit plan" or any other benefit plan investor.]
[The Purchaser represents that it is an insurance company and is holding and
will be holding all funds used to purchase the Certificates in its general
account, the assets of which such Purchaser reasonably believes do not
constitute "plan assets" as defined in the plan asset regulations under ERISA.]
[The Purchaser will acquire the Certificates with the assets of an "employee
benefit plan" or other benefit plan investor.]
9. The Purchaser understands that there is no market, nor
is there any assurance that a market will develop, for the Certificates and
that the Seller does not have any obligation to make or facilitate any such
market (or to otherwise repurchase the Certificates from the Purchaser) under
any circumstances.
10. The Purchaser has consulted with its own legal counsel,
independent accountants and financial advisors to the extent it deems necessary
regarding the tax consequences to it of ownership of the Certificates, is aware
that its taxable income with respect to the Certificates in any accounting
period may not correspond to the cash flow (if any) from the Certificates for
such period, and is not purchasing the Certificates in reliance on any
representations of the Seller or its counsel with respect to tax matters.
11. The Purchaser has reviewed the Private Placement
Memorandum with respect to the Certificates dated October __, 1996, including
the Prospectus attached as Exhibit A thereto (the "Private Placement
Memorandum"), and the agreements and other materials referred to therein, and
has had the opportunity to ask questions and receive answers concerning the
terms and conditions of the transaction contemplated by the Private Placement
Memorandum and to obtain additional information necessary to verify the
accuracy and completeness of any information furnished to the Purchaser or to
which the Purchaser had access.
__________________________
* Purchaser required to select applicable sentence.
12. The Purchaser understands that the Certificates will
bear a legend substantially as set forth in the form of Certificate included as
Exhibit B to the Agreement.
D-2-3
<PAGE> 134
13. The Purchaser hereby further agrees to be bound by all
the terms and conditions of the Certificates as provided in the Agreement.
14. If the Purchaser sells any of the Certificates, the
Purchaser will obtain from any subsequent purchaser substantially the same
representations contained in this Representation Letter.
Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Agreement or the Private
Placement Memorandum, as the case may be.
The representations and warranties contained herein shall be
binding upon the successors of the undersigned.
Executed at ________________, this ____ day of ___________ 199__
________________________________
Purchaser's Name (Print)
By _____________________________
Signature
Its ____________________________
________________________________
Address of Purchaser
________________________________
Purchaser's Taxpayer
Identification Number
D-2-4
<PAGE> 135
ANNEX 1 TO EXHIBIT D-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Purchaser") hereby certifies as follows to
the addressees of the Rule 144A Representation Letter to which this
certification is attached with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive officer of
the Purchaser.
2. In connection with purchases by the Purchaser, the
Purchaser is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933, as amended ("Rule 144A") because (i) the
Purchaser owned and/or invested on a discretionary basis $_________** in
securities (except for the excluded securities referred to below) as of the end
of the Purchaser's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Purchaser satisfies the criteria in the
category marked below.
___ Corporation. etc. The Purchaser is a corporation
(other than a bank, savings and loan association or
similar institution), Massachusetts or similar business
trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended.
___ Bank. The Purchaser (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business of
which is substantially confined to banking and is
supervised by the State or territorial banking
commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its
latest annual financial statements.
____________________
** Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
D-2-5
<PAGE> 136
___ Savings and Loan. The Purchaser (a) is a savings and
loan association, building and loan association,
cooperative bank, homestead association or similar
institution, which is supervised and examined by a
State or Federal authority having supervision over any
such institutions or is a foreign savings and loan
association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements,
a copy of which is attached hereto.
___ Broker-dealer. The Purchaser is a dealer registered
pursuant to Section 15 of the Securities Exchange Act
of 1934.
___ Insurance Company. The Purchaser is an insurance
company whose primary and predominant business activity
is the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or
a similar official or agency of a State, territory or
the District of Columbia.
___ State or Local Plan. The Purchaser is a plan
established and maintained by a State, its political
subdivisions, or any agency or instrumentality of the
State or its political subdivisions, for the benefit of
its employees.
___ ERISA Plan. The Purchaser is an employee benefit plan
within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
___ Investment Advisor. The Purchaser is an investment
advisor registered under the Investment Advisors Act of
1940.
___ Small Business Investment Company. The Purchaser is a
small business investment company licensed by the U.S.
Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958.
___ Business Development Company. The Purchaser is a
business development company as defined in Section
202(a) (22) of the Investment Advisors Act of 1940.
___ Trust Fund. The Purchaser is a trust fund whose
trustee is a bank or trust company and whose
participants are exclusively State or Local Plans or
D-2-6
<PAGE> 137
ERISA Plans as defined above, and no participant
of the Purchaser is an individual retirement account
or an H.R. 10 (Keogh) plan.
3. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the Purchaser, (ii)
securities that are part of an unsold allotment to or subscription by the
Purchaser, if the Purchaser is a dealer, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Purchaser, the
Purchaser used the cost of such securities to the Purchaser and did not include
any of the securities referred to in the preceding paragraph, except (i) where
the Purchaser reports its securities holdings in its financial statements on
the basis of their market value, and (ii) no current information with respect
to the cost of those securities has been published. If clause (ii) in the
preceding sentence applies, the securities may be valued at market. Further,
in determining such aggregate amount, the Purchaser may have included
securities owned by subsidiaries of the Purchaser, but only if such
subsidiaries are consolidated with the Purchaser in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Purchaser's direction.
However, such securities were not included if the Purchaser is a majority
owned, consolidated subsidiary of another enterprise and the Purchaser is not
itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Purchaser acknowledges that it is familiar with
Rule 144A and understands that the seller to it and other parties related to
the Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Purchaser may be in reliance on Rule
144A.
6. Until the date of purchase of the Certificates, the
Purchaser will notify each of the parties to which this certification is made
of any changes in the information and conclusions herein. Until such notice is
given, the Purchaser's purchase of the Certificates will constitute a
reaffirmation of this certification as of the date of such purchase. In
addition, if the Purchaser is a bank or savings and loan is provided above,
D-2-7
<PAGE> 138
the Purchaser agrees that it will furnish to such parties updated annual
financial statements promptly after they become available.
________________________________
Name of Purchaser or Adviser
By: _____________________________
Name:
Title:
Date: ___________________________
D-2-8
<PAGE> 139
ANNEX 2 TO EXHIBIT D-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Purchaser") hereby certifies as follows to
the addressees of the Rule 144A Representation Letter which this certification
is attached with respect to the Transferor Certificates described therein:
1. As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Purchaser or, if the
Purchaser is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933, as amended ("Rule 144A") because the
Purchaser is part of a Family of Investment Companies (as defined below), is
such an officer of the Adviser.
2. In connection with purchases by the Purchaser, the
Purchaser is a "qualified institutional buyer" as defined in SEC Rule 144A
because (i) the Purchaser is an investment company registered under the
Investment Company Act of 1940, as amended and (ii) as marked below, the
Purchaser alone, or the Purchaser's Family of Investment Companies, owned at
least $100,000,000 in securities (other than the excluded securities referred
to below) as of the end of the Purchaser's most recent fiscal year. For
purposes of determining the amount of securities owned by the Purchaser or the
Purchaser's Family of Investment Companies, the cost of such securities was
used, except (i) where the Purchaser or the Purchaser's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to
the cost of those securities has been published. If clause (ii) in the
preceding sentence applies, the securities may be valued at market.
___ The Purchaser owned $____________ in securities
(other than the excluded securities referred to below)
as of the end of the Purchaser's most recent fiscal
year (such amount being calculated in accordance with
Rule 144A).
___ The Purchaser is part of a Family of Investment
Companies which owned in the aggregate $__________ in
securities (other than the excluded securities referred
to below) as of the end of the Purchaser's most recent
fiscal year (such amount being calculated in accordance
with Rule 144A).
D-2-9
<PAGE> 140
3. The term "Family of Investment Companies" as used
herein means two or more registered investment companies (or series thereof)
that have the same investment adviser or investment advisers that are
affiliated (by virtue of being majority owned subsidiaries of the same parent
or because one investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the Purchaser or are part of
the Purchaser's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase agreements,
(v) securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
5. The Purchaser is familiar with Rule 144A and
understands that the parties listed in the Rule 144A Representation Letter to
which this certification relates are relying and will continue to rely on the
statements made herein because one or more sales to the Purchaser will be in
reliance on Rule 144A. In addition, the Purchaser will only purchase for the
Purchaser's own account.
6. Until the date of purchase of the Transferor
Certificates, the undersigned will notify the parties listed in the Rule 144A
Transferee Certificate to which this certification relates of any changes in
the information and conclusions herein. Until such notice is given, the
Purchaser's purchase of the Certificates will constitute a reaffirmation of
this certification by the undersigned as of the date of such purchase.
________________________________
Name of Purchaser or Adviser
By: _____________________________
Name:
Title:
IF AN ADVISER:
________________________________
Name of Purchaser
Date: __________________________
D-2-10
<PAGE> 1
EXHIBIT 5.1
[MCDERMOTT, WILL & EMERY LETTERHEAD]
October ___, 1996
World Omni Lease Securitization L.P.
120 N.W. 12th Avenue
Deerfield Beach, Florida 33442
Re: World Omni 1996-B Automobile Lease Securitization Trust _____%
Automobile Lease Asset Backed Certificates, Class A-1 (the
"CLASS A-1 CERTIFICATES"), World Omni 1996-B Automobile Lease
Securitization Trust ____% Automobile Lease Asset Backed
Certificates, Class A-2 (the "CLASS A-2 CERTIFICATES") and
World Omni 1996-B Automobile Lease Securitization Trust ____%
Automobile Lease Asset Backed Certificates, Class A-3 (the
"CLASS A-3 CERTIFICATES" and, together with the Class A-1
Certificates and the Class A-2 Certificates, the "CLASS A
CERTIFICATES") ______
Ladies and Gentlemen:
We have acted as special Illinois and New York counsel for World Omni
Financial Corp., a Florida corporation ("WOFCO"), and World Omni Lease
Securitization L.P., a Delaware limited partnership (the "SELLER"), in
connection with the proposed offering by the Seller of $__________ initial
principal amount of its Class A-1 Certificates, $__________ initial principal
amount of its Class A-2 Certificates and $__________ initial principal amount
of its Class A-3 Certificates, to be issued pursuant to a Securitization Trust
Agreement (the "SECURITIZATION TRUST AGREEMENT"), dated as of October 1, 1996,
between the Seller and First Bank National Association, as trustee (the
"TRUSTEE"). The Class A Certificates are to be acquired by CS First Boston as
underwriter (the "UNDERWRITING AGREEMENT"), dated October __, 1996, among the
Seller, WOFCO and the Underwriter and offered by the Underwriter as provided in
the Registration Statement on Form S-1 (File No. 333-11449), filed with the
Securities and Exchange Commission ("SEC") on September 5, 1996 (the
"REGISTRATION STATEMENT").
In connection with this opinion, we have relied as to matters of fact,
without investigation, upon (a) certificates of public officials and others
and (b) the representations and warranties contained in the Securitization
Trust Agreement and the Underwriting Agreement. We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
the Registration Statement, the form of Securitization Trust Agreement filed
as Exhibit 4.1 to the Registration Statement, including the form of each Class
A Certificate attached thereto, and the form of Underwriting Agreement filed
as Exhibit 1.1 to the Registration Statement.
<PAGE> 2
In connection with this opinion, we have assumed the accuracy and
completeness of all documents and records that we have reviewed, the
genuineness of all signatures, the authenticity of the documents submitted to
us as originals and the conformity to authentic original documents of all
documents submitted to us as certified, conformed or reproduced copies.
We have also assumed that the Securitization Trust Agreement and the
Underwriting Agreement will be governed by the laws of either New York or
Illinois, without regard to any applicable principles of conflicts of laws, and
that each such agreement has been duly and validly executed and delivered and
constitutes the legal, valid and binding obligation of each party thereto in
accordance with its terms. In addition, we have assumed that each Class A
Certificate, when issued, will conform to the form thereof attached to the
Securitization Trust Agreement, each Class A Certificate has been duly and
validly executed and delivered in accordance with the terms of the
Securitization Trust Agreement and the Underwriting Agreement and each Class A
Certificate constitutes the legal, valid and binding obligation of the Trustee
that is a party thereto in accordance with its terms.
Based upon and subject to the foregoing, it is our opinion that when
each Class A Certificate is issued and sold by the Seller in accordance with
the provisions of the Underwriting Agreement and authenticated by the Trustee
in accordance with the Securitization Trust Agreement, it will be legally
issued, fully paid and nonassessable.
Our opinions expressed above are limited to the laws of the States of
Illinois and New York (excluding the state securities laws thereof), and we do
not express any opinion herein concerning any other law. Specifically and
without limiting the generality of the preceding sentence, we express no
opinion herein as to the applicability of or compliance with any state
securities laws, federal securities laws or other federal laws, including
without limitation the Securities Act of 1933, as amended, and the Trust
Indenture Act of 1939, as amended. This opinion letter is given as of the date
hereof and we assume no obligation to advise you of changes that may hereafter
be brought to our attention. This opinion letter is solely for the information
of the addressee hereof and is not to be quoted in whole or in part or
otherwise referred to, nor is it to be filed with any governmental agency or
any other person, without our prior written consent. No one other than the
addressee hereof is entitled to rely on this opinion letter.
We hereby consent to (a) the use of this opinion for filing as Exhibit
5.1 to the Registration Statement and (b) to the use of our name under the
heading "Legal Matters" in the Prospectus included in the Registration
Statement, as the same may be further amended and declared effective by the
SEC.
Very truly yours,
/s/ McDermott, Will & Emery
- 2 -
<PAGE> 1
EXHIBIT 8.1
October 15, 1996
World Omni Lease Securitization L.P.
6150 Omni Park Drive
Mobile, Alabama 36609
Re: Automobile Lease Asset Backed Certificates
Class A of the World Omni 1996-B
Automobile Lease Securitization Trust
------------------------------------------
Dear Sirs:
We have acted as special federal tax counsel to World Omni Lease
Securitization, L.P. (the "Seller") in connection with the filing of a
Registration Statement on Form S-1 (File No. 33-11449) as filed with the
Securities and Exchange Commission (the "Commission") on September 5, 1996, as
amended by Amendment No. 1 thereto (such registration statement, together with
the exhibits and any amendments thereto, the "Registration Statement"),
including a form of prospectus contained therein (the "Prospectus"), relating
to the offering of approximately $__________ World Omni 1996-B Automobile Lease
Securitization Trust ___% Automobile Lease Asset Backed Certificates, Class A-1
(the "Class A-1 Certificates"), approximately $__________ World Omni 1996-B
Automobile Lease Securitization Trust ___% Automobile Lease Asset Backed
Certificates , Class A-2 (the "Class A-2 Certificates") and approximately
$__________ World Omni 1996-B Automobile Lease Securitization Trust ___%
Automobile Lease Asset Backed Certificates, Class A-3 (the "Class A-3
Certificates" and, together with the Class A-1 Certificates and the Class A-2
Certificates, the "Certificates") to be issued pursuant to a Securitization
Trust Agreement dated as of October 1, 1996 (the "Securitization Trust
Agreement"), between the Seller and First Bank National Association, as trustee
(the "Trustee").
As such counsel, we have reviewed the Registration Statement, the
Prospectus, the form of the Securitization Trust Agreement filed as an exhibit
to the Registration Statement, the forms of Certificates included in the
Securitization Trust Agreement and such agreements, instruments, certificates
and other documents, as we have deemed necessary for the purposes of this
opinion. In addition, we have examined such questions of law as we have deemed
necessary for purposes of this opinion.
We have advised the Registrant with respect to material federal income
tax consequences of the proposed issuance of the Certificates. This advice is
summarized under the headings "Summary -- Tax Status" and "Certain Income Tax
Considerations -- Federal Taxation" in the Prospectus. Such description does
not purport to discuss all possible federal income tax ramifications of the
proposed issuance, but with respect to those material federal income tax
consequences that are discussed, in our opinion, the description is accurate in
all material respects.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the use of our name under the headings "Certain
Income Tax Considerations -- Federal Taxation" and "Legal Matters" in the
Prospectus, without implying or admitting that we are "experts" within the
meaning of the Securities Act of 1933, as amended (the "Act") or the rules and
regulations of the Commission issued thereunder, with respect to any part of
the Registration Statement, including this exhibit.
Very truly yours,
/s/ BROWN & WOOD LLP
<PAGE> 1
EXHIBIT 8.2
[ENGLISH, MCCAUGHAN & O'BRYAN, P.A. LETTERHEAD]
October 11, 1996
CS First Boston Corporation, ______________________,
as Representative of the as Placement Agent and
Several Underwriters(1) Purchaser
55 East 52nd Street
New York, NY 10055
Re: WORLD OMNI 1996-B
AUTOMOBILE LEASE SECURITIZATION TRUST
Ladies and Gentlemen:
We are acting as special Florida tax counsel for World Omni Financial
Corp., a Florida corporation ("WOFCO"), World Omni Lease Securitization L.P., a
Delaware limited partnership ("WOLS LP" or the "Seller"), World Omni Lease
Securitization, Inc., a Delaware corporation ("WOLSI"), Auto Lease Finance,
Inc., a Delaware corporation ("ALFI"), Auto Lease Finance L.P., a Delaware
limited partnership ("ALFI LP"), World Omni LT, an Alabama trust (the
"Origination Trust"), and World Omni 1996-B Automobile Lease Securitization
Trust (the "Securitization Trust" or the "Trust") (WOFCO, the Seller, WOLSI,
ALFI, ALFI LP, the Origination Trust and the Securitization Trust are referred
to collectively as the "Clients") in connection with certain matters of Florida
law arising in connection with the proposed offering by the Seller of (a)
$__________ principal amount of _____% Automobile Lease Asset Backed
Certificates, Class A-1, $__________ principal amount of _____% Automobile
Lease Asset Backed Certificates, Class A-2, and $___________ principal amount
of ____% Automobile Lease Asset Backed Certificates, Class A-3 (collectively,
the "Class A Certificates"), and (b) $_________ principal amount of _____%
Automobile Lease Asset Backed Certificates, Class B (the "Class B
Certificates", and together with the Class A Certificates, the "Investor
Certificates"), to be issued pursuant to a Securitization Trust Agreement,
dated as of October 1, 1996, (the "Securitization Trust Agreement") between the
Seller and First Bank National Association, a national banking association
(successor to Bank of America Illinois ("BA Illinois"), an Illinois banking
corporation) ("First Bank"), as trustee (the "Trustee"). Simultaneously with
the issuance
____________________
(1) As used in this Opinion, "Underwriters" refers to CS First
Boston Corporation and those entities listed on Schedule I
to the Underwriting Agreement (as hereinafter defined).
<PAGE> 2
CS First Boston
October 11, 1996
Page 2
of the Investor Certificates, pursuant to the Securitization Trust Agreement,
the Securitization Trust will issue a certificate representing the interest in
the Securitization Trust not evidenced by the Investor Certificates (the
"Seller Certificate" and, together with the Investor Certificates, the
"Certificates"). This opinion (the "Opinion") is being delivered, with the
consent of the Clients, to CS First Boston Corporation ("First Boston") in its
capacity as representative of the Underwriters pursuant to Sections 6(d)(1)(c)
and 6(d)(4) of the Underwriting Agreement dated October __, 1996 (the
"Underwriting Agreement"), among the Seller, WOFCO and the Underwriters;
____________________, in its capacity as Placement Agent (in such capacity, the
"Placement Agent") pursuant to Section 7(c) of the Private Placement Agency
Agreement dated October ___, 1996 (the "Placement Agency Agreement") among the
Seller, WOFCO and ________________ (in such capacity, the "Placement Agent");
and ___________________, as Purchaser (in such capacity, the "Purchaser")
pursuant to Section 6(c) of the Purchase Agreement dated October ___, 1996 (the
"Purchase Agreement") among the Seller, the Placement Agent and the Purchaser.
This Opinion is solely for the benefit of and may be relied upon only
by (a) CS First Boston Corporation, _______________ as Placement Agent and
Purchaser, Brown & Wood LLP, as counsel to the Underwriters, and
________________ as counsel to the Placement Agent and Purchaser, in connection
with the transactions contemplated by the Underwriting Agreement, the Placement
Agency Agreement and the Purchase Agreement, (b) Moody's Investors Service,
Inc. and Standard & Poor's Ratings Services, in connection with the rating of
the Investor Certificates, (c) First Bank as Trustee, and as trust agent for
the Origination Trust (the "Trust Agent"), and (d) the parties set forth on
Annex A hereto as lenders to ALFI LP (the Persons listed in (a), (b), (c) and
(d), collectively, the "Reliance Parties"). This Opinion may not be relied
upon by, nor may copies be delivered to, any other Person or used for any other
purpose without our prior written consent except as required by any bank
regulatory agency.
Capitalized terms for which meanings are provided in the
Securitization Trust Agreement, the Underwriting Agreement, the Placement
Agency Agreement, or the Purchase Agreement, unless otherwise defined herein,
are used herein with such meanings. Captions used in this Opinion are for
convenience only, and should not be regarded as having any independent meaning.
We are members of the Bar of the State of Florida and do not express
any opinion with respect to the applicability of the laws of any jurisdiction
other than the State of Florida. We do not express any opinion with respect to
the application or applicability of: (a) any other state or federal tax laws
or regulations; or (b) pension and employee benefit laws and regulations, to
the transactions contemplated by the Reviewed Documents (as hereinafter
defined) (the "Transactions").
<PAGE> 3
CS First Boston
October 11, 1996
Page 3
DOCUMENTS REVIEWED; INVESTIGATIONS; ASSUMPTIONS
In connection with this Opinion, we have examined copies of the
following documents (the "Reviewed Documents"):
(a) the Securitization Trust Agreement;
(b) the Second Amended and Restated Servicing Agreement dated as
of July 1, 1994 between VT Inc., as trustee of World Omni
LT, WOFCO, and, for certain limited purposes, ALFI LP (the
"Second Amended and Restated Servicing Agreement");
(c) the Supplement 1996-B to Servicing Agreement dated as of
October 1, 1996 among VT Inc., as trustee of World Omni LT,
WOFCO and, for certain limited purposes only, First Bank and
WOLSI as General Partner of World Omni Lease Securitization
L.P. (the "Servicing Supplement B");
(d) the Second Amended and Restated Trust Agreement dated as of
July 1, 1994, as amended by Amendment No. 1 to Second
Amended and Restated Trust Agreement dated as of November 1,
1994, each among World Omni LT, ALFI LP, VT Inc., and, for
certain limited purposes only, BA Illinois(2) (as so amended,
the "Second Amended and Restated Trust Agreement");
(e) the Supplement 1996-B to Trust Agreement dated as of October
1, 1996 between ALFI LP, VT Inc., as Trustee of World Omni
LT, and, for certain limited purposes only, First Bank and the
Seller (the "Trust Supplement B");
(f) the World Omni Lease Securitization L.P. Amended and Restated
Limited Partnership Agreement dated as of July 1, 1994
between WOLSI, as General Partner, and WOFCO, as Limited
Partner (the "WOLS LP Amended and Restated Limited Partnership
Agreement");
(g) the Auto Lease Finance L.P. Amended and Restated Limited
Partnership Agreement dated as of July 1, 1994 between ALFI,
as General Partner, and WOFCO, as Limited Partner (the "ALFI
LP Amended and Restated Limited Partnership Agreement");
__________________________________
(2) Please note that First Bank, although not a signatory to the Second
Amended and Restated Trust Agreement, is the successor in interest to
BA Illinois by virtue of its appointment as successor Trust Agent for
the Origination Trust.
<PAGE> 4
CS First Boston
October 11, 1996
Page 4
<TABLE>
<S> <C>
(h) the SUBI Certificate Purchase and Sale Agreement dated as of
October 1, 1996 between ALFI LP and the Seller (the "SUBI
Certificate Purchase and Sale Agreement");
(i) the Backup Security Agreement dated as of October 1, 1996
among WOFCO, ALFI LP, VT Inc., as trustee of World Omni LT,
WOLS LP and First Bank, as Trustee (the "Backup Security
Agreement");
(j) the Second Amended and Restated Assignment Agreement dated as
of July 1, 1994 between WOFCO and ALFI LP as amended by
Amendment No. 1 dated as of October 1, 1995 (the "Second
Amended and Restated Assignment Agreement");
(k) the Intercreditor Agreement dated as of November 1, 1994 among
WOFCO, ALFI LP, the Seller, VT Inc., BA Illinois as Trustee,
BA Illinois as trustee for the World Omni 1994-A Automobile
Lease Securitization Trust (the "1994-A Securitization
Trust"), and BA Illinois as Trust Agent for the Origination
Trust and the parties listed on Appendix A attached thereto,
together with all Accession Agreements supplementary thereto
(together, the "Intercreditor Agreement");(3)
(l) the Accession Agreement to Intercreditor Agreement dated as of
October 1, 1995 (the "1995-A Accession Agreement") executed by
the Seller and First Bank as Trustee (the "1995-A
Securitization Trustee") of the World Omni 1995-A Automobile
Lease Securitization Trust (the "1995-A Securitization
Trust");
(m) the Accession Agreement to Intercreditor Agreement dated as of
May 1, 1996 (the "1996-A Accession Agreement") executed by the
Seller and First Bank as Trustee (the "1996-A Securitization
Trustee") of the World Omni 1996-A Automobile Lease
Securitization Trust (the "1996-A Securitization Trust");
(n) the Accession Agreement to Intercreditor Agreement dated as of
October 1, 1996 (the "Accession Agreement"), executed by the
Seller and Trustee;
(o) the Support Agreement dated as of October 1, 1995 by World
Omni Financial Corp. and World Omni Lease Securitization L.P.
(the "Support
</TABLE>
__________________________________
(3) Please note that First Bank, although not a signatory to the
Intercreditor Agreement, is the successor in interest to BA Illinois
by virtue of its appointment as: (a) successor Trustee for the
Securitization Trust; (b) successor trustee for the 1994-A
Securitization Trust; and (c) successor Trust Agent for the
Origination Trust.
<PAGE> 5
CS First Boston
October 11, 1996
Page 5
Agreement"), as amended by Amendment No. 1 dated as of May 1,
1996, as amended by Amendment No. 2 dated as of October 1,
1996;
(p) the Underwriting Agreement;
(q) the Placement Agency Agreement;
(r) the Private Placement Memorandum for the Class B Certificates
dated __________, 1996;
(s) the Purchase Agreement dated _________, 1996 (the "Purchase
Agreement") among the Seller, WOFCO and the Purchaser; and
(t) the registration statement on Form S-1 (No. 333-11449) filed
by the Seller with the Securities and Exchange Commission
(the "Commission") on September 5, 1996 pursuant to the
Securities Act of 1933, as amended (the "Act"), as amended by
Amendment No. 1 thereto filed with the Commission on ________,
1996, (the registration statement in the amended form in which
it became effective on ________, 1996 and the related
prospectus contained therein, the "Registration Statement" and
the "Prospectus").
In addition to the Reviewed Documents, we have reviewed originals or
copies certified or authenticated to our satisfaction of all such corporate
records, agreements, instruments and documents of the Clients, certificates of
public officials, any certificates provided to us by the officers of any of the
Clients and other certificates and opinions, and have made such other
investigations, as we have deemed necessary in connection with the opinions set
forth herein. In our examination, we have assumed the capacity of natural
persons, the genuineness of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies, and the
authenticity of the originals from which any such copies were made, none of
which assumptions have we independently confirmed. We have also relied,
without further independent investigation, as to certain matters of fact, on
information obtained from public officials, from officers of the Clients and
from other sources believed by us to be responsible.
We have assumed without further investigation that all officer's
certificates (which expressly permit our reliance on such certificates) and
other information and documentation provided to us by any of the Clients are
true, complete and not misleading and that all statements and assumptions of
fact set forth therein and herein are and will remain true and valid. Each
assumption specifically described in this Opinion is made with the express
consent and approval of the Reliance Parties. However, with respect to the
assumptions we have made and as to our reliance upon such matters of fact and
information, to our knowledge, there is no information that conflicts with such
assumptions or that would make such reliance unwarranted.
<PAGE> 6
CS First Boston
October 11, 1996
Page 6
This Opinion is given as of the date hereof, and we expressly disclaim
any obligation to update this Opinion or to give notice to any Reliance Party
or any third party of any future changes in facts or law, including changes
that might affect the opinions set forth herein.
OPINIONS
Based on the foregoing, it is our opinion (4) that:
1. THE INVESTOR CERTIFICATES AS DEBT; CLASSIFICATION AS A
PARTNERSHIP
(a) Based upon the assumptions, authorities and reasoning
set forth below, upon their issuance in accordance with the Reviewed Documents
the Class A Certificates will represent debt (i.e., will be treated as
indebtedness) and the Class B Certificates should represent debt (i.e., should
be treated as indebtedness) under Florida law.
Florida law references standard, accepted definitions
and sources in defining the term "debt." For example, in Holman et al. v.
Hollis, 94 Fla. 614 (1927), the court stated that the accepted definition of
"debt" is: "That which is due from one person to another, whether money, goods,
or services; that which one person is bound to pay to another; a thing owed."
Similarly, in Turner v. Gruver, 168 So.2d 192 (Fla. 3rd DCA 1964), after citing
Holman with approval, the court cited Black's Law Dictionary for the
proposition that a debt is: "... an obligation to pay a sum certain; or a sum
which may be ascertained by simple mathematical calculation from known facts;
regardless of whether the liability arises by contract or by operation of law."
See, also, Waters' Dictionary of Florida Law. The Investor Certificates will
represent debt under all such definitions and, accordingly, the Investor
Certificates will represent debt under Florida law generally.
Brown & Wood LLP, special tax counsel to the Clients,
has opined and, with the consent of the Reliance Parties, we have assumed, that
the Class A Certificates will represent debt, rather than equity, and that the
Class B Certificates should represent debt, rather than equity, for federal
income tax purposes, and we know of no reason why we should not so assume.
Accordingly, because Florida income tax law utilizes federal definitions and
concepts, the Class A Certificates will represent debt, rather than equity, and
the Class B Certificates should represent debt, rather than equity, for Florida
income tax purposes. Moreover, because the factors utilized in distinguishing
debt
__________________________________
(4) In rendering this opinion as of the date hereof, we are assuming that
the Transactions will occur as set forth in the versions of the
Reviewed Documents which have been delivered to us as of the date
hereof and the facts and circumstances known to us concerning the
Transactions and the parties thereto will be the same as of the date
the Transactions occur as known by us to exist as of the date hereof.
<PAGE> 7
CS First Boston
October 11, 1996
Page 7
from equity for federal income tax purposes are well developed and based upon
standard, accepted criteria, the Class A Certificates will represent debt,
rather than equity, and the Class B Certificates should represent debt, rather
than equity, for purposes of Florida law generally.
In addition to generally defining the term "debt",
Florida law also uses it in several specific contexts, none of which is
inconsistent with finding that the Investor Certificates represent debt for
purposes of Florida law. For example, it is clear that the Investor
Certificates will represent debt for purposes of the Florida Statutes governing
attachment and garnishment. Similarly, it is clear that the Investor
Certificates will represent debt for purposes of the Florida Statutes governing
fraudulent conveyances.
A debt is distinguished from an advancement, in that
a debt is founded on a valuable consideration, entails the obligation of
repayment, and confers on the creditor the right to enforce it in the courts.
See 17 Fla. Jur. 2d, Decedents' Property, Section 92, citing 3 Am. Jur. 2d,
Advancements, Section 2. It is clear that the Investor Certificates will be
based upon valuable consideration, compel repayment and permit enforcement in a
Florida court.
In distinguishing a debt from a trust, it has been
held that the matter depends upon the manifested intention of the parties, and
that, if it is intended that the person receiving money shall have unrestricted
use thereof, being liable to pay a similar amount with or without interest, a
debt is created. Bankers Life & Casualty Co. v. Gaines Constr. Co., 199 So.2d
482 (Fla. 3rd DCA 1967). It is manifestly clear on the face of the Reviewed
Documents that the Transactions contemplate the creation of a debtor-creditor
relationship between the Issuer and the holders of the Investor Certificates.
In light of the foregoing, and because the Investor
Certificates will represent unconditional promises to pay sums certain plus
interest on definitely ascertainable dates, it is our opinion that the Class A
Certificates will represent debt (i.e., will be treated as indebtedness) and
the Class B Certificates should represent debt (i.e., should be treated as
indebtedness), for purposes of Florida law.
(b) Notwithstanding the opinions expressed above in this
numbered paragraph 1, in the event that the Class B Certificates are not
treated as debt for Florida tax purposes, then it is our opinion that (i) the
Trust will not be classified as an association taxable as a corporation for
Florida income tax purposes, (ii) the Trust will instead either be disregarded
as an entity or classified as a partnership between the Seller and the holder
or holders of Class B Certificates, and (iii) if the Trust is characterized as
a partnership formed between the Seller and the holder or holders of the Class
B Certificates, the portion of the amounts paid to each such Class B
Certificate holder corresponding to interest paid on the Class B Certificates
will be classified as a "guaranteed payment" for the use of capital within the
meaning of Code Section 707(c), and all remaining taxable income or
<PAGE> 8
CS First Boston
October 11, 1996
Page 8
loss of such partnership and any separately allocated items thereof will be
allocated solely to the Seller. As partners of a partnership, corporate
holders of Class B Certificates may be subject to Florida income tax, currently
at a 5.5% rate, on their share of all or a portion of the Trust's taxable
income to the extent that such income is apportioned to Florida under Florida
law.
2. FLORIDA LOAN RULE
Although the matter is not free from doubt, and assuming that the
Investor Certificates are deemed to be debt pursuant to numbered paragraph 1
herein, if the matter were properly presented to a Florida court having
jurisdiction, and assuming interpretation of relevant law on a basis consistent
with existing authority, such Florida court would hold that Florida
Administrative Code Section 12C-1.011(1)(s) (the "Loan Rule") will not be
applied so as to subject the holder of an Investor Certificate with absolutely
no other Florida contacts(5) to Florida income or franchise taxation solely as a
result of an investment in an Investor Certificate.
The Loan Rule provides that a financial organization is subject to
Florida income or franchise taxation if it earns or receives interest from
loans secured by real or tangible property located in Florida, even if it has
no other Florida contacts. Section 220.15(6), F.S., defines the term
"financial organization" to include any bank, trust company, savings bank,
industrial bank, land bank, safe deposit company, private banker, savings and
loan association, credit union, cooperative bank, small loan company, sales
finance company and investment company.
A threshold issue is the meaning of the term "loans" under the Loan
Rule. In this regard, some guidance is provided in TAA 90(M)-005 (December 12,
1990).(6) At issue there was a Massachusetts investment company, which was to
invest in a portfolio of tax-exempt municipal securities of Florida issuers,
including the State, counties, municipalities and political subdivisions,
agencies and instrumentalities of the State of Florida. It was found that,
under the scenario described, the company would not be subject to Florida income
taxation. It also was noted that, should the company obtain any loans secured
by real or tangible property located in Florida, it would become subject to
Florida income tax.
__________________________________
(5) Other Florida contacts, which might require a different opinion than
the one given herein, might include the purchase of any other asset
backed security from a Florida issuer, or the making of any secured
loan in Florida, or other minimal contacts, such as sending into
Florida any employee, agent or contractor, or having any affiliate in
Florida. No opinion is given herein as to such circumstances.
(6) A Technical Assistance Advisement or TAA is a particular response by
the Florida Department of Revenue to an inquiry made by a particular
taxpayer, and generally may not be relied upon by any other taxpayer.
However, the reasoning of a particular TAA may be instructive.
<PAGE> 9
CS First Boston
October 11, 1996
Page 9
The class of securities described in the TAA includes some which might
be secured by real or tangible property located in Florida, such as industrial
development bonds. Thus, the TAA suggests a distinction between bonds or other
debt securities, particularly those which are publicly offered, which might not
be subject to the Loan Rule, and loans arising out of more traditional
commercial settings, which might be subject to the Loan Rule.
Such a distinction was further suggested by TAA 93(M)-003 (April 2,
1993). At issue there was a Massachusetts Business Trust, which included a
fund invested in tax-exempt municipal securities of Florida issuers. The TAA
noted that the Fund would become subject to Florida income taxation if the Fund
held loans secured by mortgages, deeds of trust, or other liens upon real or
tangible personal property located in Florida. However, the TAA then noted
that: "Investment in Florida Bonds, including general obligation bonds ('GOs'),
revenue bonds ('RBs'), and industrial revenue bonds ('IRBs') will not in itself
subject the Fund to Florida income tax. While these bonds may be secured, the
investment in these publicly traded bonds is to be distinguished from a private
loan secured by a mortgage, deed of trust, or other lien upon real or tangible
personal property located within Florida."
A similar distinction, one between bonds and notes, has been made
under Rev. Rul. 79-251. 1979-2 Cum. Bull. 271. The Ruling considered a
taxpayer, which purchased mortgage-backed, pass-through trust certificates, and
would have been subject to tax if it were deemed to be receiving interest from
mortgage notes. However, the Ruling determined that, in part because the
certificates were freely transferrable, the certificates were bonds rather than
notes, and the taxpayer was not subject to federal income tax, because it was
receiving interest on a bond rather than interest on the underlying mortgage
notes.(7)
A similar distinction has been made under the federal and Florida
securities laws. Although the applicable statutes treat notes as securities,
applicable case law has created a distinction between securities and certain
notes arising in traditional commercial settings. See Reves v. Ernst & Young,
110 S.Ct. 945 (1990); Chemical Bank v. Arthur Andersen & Co., 726 F.2d 930 at
939 (CA2 1984); Hunssinger v. Rockford Business Credits, Inc., 745 F.2d 484, 488
(CA7 1984); Exchange Nat'l Bank of Chicago v. Touche Ross & Co., 544 F.2d 1126,
1137 (CA2 1976); Juanita McClure v. First National Bank of Lubbock, Texas,
__________________________________
(7) Also of note is the fact that the Ruling dealt with a pass-through,
"grantor" trust. Although each beneficiary of a grantor trust
generally is "treated as the owner" of a portion of the trust, the
Ruling did not extend the legal "fiction" so as to treat the taxpayer
as the owner of and the recipient of interest on any of the underlying
mortgages (the trust assets). Similarly, although the Securitization
Trust generally is being disregarded and treated as a mere security
device, it might not have to be entirely disregarded, and the
Certificate Holders might not have to be treated as secured by
tangible property. Rather, they might be treated as secured by
intangible property, that is, by a pledge of the beneficial interest
owned by the Securitization Trust. See 1959 Op. Atty. Gen. 059-229
(Nov. 16, 1959). The Loan Rule does not apply to loans secured
by intangible property.
<PAGE> 10
CS First Boston
October 11, 1996
Page 10
497 F.2d 490, 492-494 (1974); and State v. Fried, 357 So.2d 211 (1978). In our
opinion the Investor Certificates would be treated as securities rather than
mere notes under the federal and Florida securities laws.
Although the TAA and the Loan Rule might be interpreted differently,
the most rational and compelling interpretation is that which differentiates
between bonds or other debt securities, particularly those which are publicly
offered, which might not be subject to the Loan Rule, and loans arising in more
traditional commercial settings, which might be subject to the Loan Rule.
Moreover, such a distinction might provide a basis for preserving the Loan Rule
from invalidation on constitutional grounds.
The Loan Rule is subject to constitutional attack both under the Due
Process Clause of the Fourteenth Amendment to the U.S. Constitution and under
the Commerce Clause (Article I, sec. 8, cl. 3 of the U.S. Constitution). Both
the Due Process and the Commerce Clauses require that there be some connection
or "nexus" between a state and a person sought to be taxed by the state, and
both of those nexus requirements were recently reviewed by the U.S. Supreme
Court in Quill Corporation v. North Dakota, 112 S.Ct. 1904 (1992).
The nexus requirement under the Due Process Clause is the more easily
met of the two nexus requirements. Generally, it will be met if a person
purposefully directs its activities towards the residents of a state, so as to
establish some definite link or minimum connection with the state, such that
the person has fair warning that it may be subject to the jurisdiction of the
state and such that requiring the person to defend a suit in the state would be
reasonable and would not offend traditional notions of fair play and
substantial justice. See Quill, at pages 1909 through 1911, and the cases
therein cited.
It seems questionable to suggest that a single purchase of a single
security in a nationally marketed public offering (or in a private offering
derivative to such nationally distributed public offering) constitutes
purposeful direction of one's activities toward Florida residents, or otherwise
establishes a definite link or minimal connection with the State of Florida, so
as to give one fair warning and cause it to be reasonable and inoffensive to
require one to defend a suit in the State of Florida.
While the Due Process Clause focuses on concerns over fundamental
fairness, the Commerce Clause is concerned with the effects of state regulation
on the national economy. Accordingly, the nexus requirement under the Commerce
Clause is different from and more stringent than the nexus requirement under
the Due Process Clause. Under the Commerce Clause, there must, among other
things, be a "substantial nexus" between the person and the state and a tax
must be "fairly related" to services provided by the state. See Quill, at
pages 1911 et seq., and the cases there cited, including Complete Auto Transit,
Inc. v. Brady, 430 U.S. 274 (1977).
<PAGE> 11
CS First Boston
October 11, 1996
Page 11
At issue in Quill was a North Dakota law which on its face imposed a use
tax collection duty on every vendor who advertised in North Dakota three times
in a single year. The Supreme Court stated that the North Dakota law
illustrated well how a state tax might unduly burden interstate commerce. See
Quill, at footnote 6, and accompanying test.
The Loan Rule is subject to the same objections as the North Dakota law
found to be unconstitutional in Quill. The Supreme Court found it unreasonably
burdensome that the North Dakota law required only three contacts per year. On
its face, the Loan Rule requires only one contact with Florida at any time. The
Supreme Court found it unreasonably burdensome that the North Dakota law might
subject a person to similar laws in multiple jurisdictions, thus leading to a
plethora of filing requirements. The same is true of the Loan Rule. Moreover,
it is also true that the Loan Rule presents the very real possibility of a
person being subjected to multiple taxation. In addition, without diminishing
the significance of the interests which the Supreme Court protected in Quill,
we note that the free flow of credit and free access to sources of credit are
of particular and vital importance to interstate commerce and the national
economy. The Loan Rule might strangle that flow by making it more difficult,
more expensive or, in some cases, perhaps even impossible to access national or
regional credit markets through public offerings of securities.(8)
The dubious constitutional status of the Loan Rule is exacerbated by
its uncertain scope and its uncertain statutory underpinning.(9) For example,
although it may be argued that the concept of "doing business" in Florida, for
purposes of the Florida income and franchise tax, need not be entirely the same
as the concept of "transacting business" in Florida, for purposes of the
Florida intangible tax, it is nevertheless of note that Section 199.175(b)3,
F.S., an intangible tax statute, provides that the "ownership of any interest
in a participation or syndication loan or pool of loans, notes, or receivables
shall not be sufficient to support a finding that the owner of such interest is
transacting business" in Florida.
Under the circumstances, a Florida court should determine that it is
entitled to the benefit of a clear and reasonable statute, rather than a vague
and questionable
__________________________________
(8) The Loan Rule also might fail under the Commerce Clause by causing the
tax to be "discriminatory" against interstate commerce because it is
not "fairly apportioned." For example, on its face, the Loan Rule
might cause all of the income from a loan to be apportioned to
Florida, even if only a very small part of the security for the loan
consists of Florida real or tangible property.
(9) It is true that Section 220.15, F.S., includes somewhat similar
provisions relating to financial organizations. However, it is an
apportionment statute, which presupposes that the financial
organizations are subject to tax. It does not address the nexus
issue. It is interesting to note, however, that its provisions
include some which are at least partially consistent with those of the
intangible tax statute discussed in the text following this footnote.
<PAGE> 12
\
CS First Boston
October 11, 1996
Page 12
administrative pronouncement, and should refuse to enforce the Loan Rule
pending some specific action on the part of the Florida legislature.
Further, even if the Investor Certificates were deemed to be loans for
purposes of the Loan Rule, and even if the Loan Rule were upheld on
constitutional grounds, the Investor Certificates should not be taxable under
the Loan Rule since they are not secured directly by real or tangible personal
property located in Florida. The holders of the Investor Certificates merely
have a beneficial interest in the assets of the Securitization Trust which in
turn has a beneficial interest in the assets of the Origination Trust.
Although the corpus of the Origination Trust does contain vehicles, some of
which are located in Florida, the Investor Certificates are not directly
secured by those vehicles.
Our opinions in this numbered paragraph 2 are limited to the possible
subjugation of holders of Investor Certificates, which holders are financial
organizations with no other Florida contacts, to Florida income or franchise
taxation solely as a result of their investment in an Investor Certificate.
The opinions in this numbered paragraph 2 do not purport to deal with any other
aspect of the Florida tax laws, do not address the tax consequences that would
arise if the Class B Certificates were deemed not to be debt and the Trust were
characterized as a Partnership formed between the Seller and the holder or
holders of the Class B Certificates as is further described in numbered
paragraph 1, do not address any tax consequences to any other natural or other
person or persons, and do not address any federal tax consequences, any other
state tax consequences or any local tax consequences.
The opinions expressed herein are limited to the matters expressly set
forth herein, and no opinion is to be inferred or implied beyond the matters so
stated. Captions used in this Opinion are for convenience only, and should not
be regarded as having any independent meaning. The foregoing Opinion is
expressly subject to there being no material change in the law after the date
hereof.
We hereby consent to the filing of this Opinion as an exhibit to the
Registration Statement. We also consent to the use of our name under the
headings "Legal Matters" and "Certain Income Tax Considerations - Florida
Income Taxation" in the Prospectus constituting part of the Registration
Statement.
Very truly yours,
ENGLISH, McCAUGHAN & O'BRYAN, P.A.
By: /s/ Lee W. Harvath, Jr.
-------------------------------
Lee W. Harvath, Jr., President
<PAGE> 13
ANNEX A
LIST OF LENDERS
RECEIVABLES CAPITAL CORPORATION, a Delaware corporation ("RCC");
CORPORATE ASSET FUNDING COMPANY, INC., a Delaware corporation ("CAFCO");
CIESCO L.P., a Delaware limited partnership ("CIESCO");
CITIBANK, N.A. ("Citibank");
DRESDNER BANK AG, NEW YORK BRANCH;
ENTERPRISE FUNDING CORPORATION, a Delaware corporation (EFC");
CREDIT SUISSE NEW YORK BRANCH, a branch of Credit Suisse, a Swiss banking
corporation duly licensed under the laws of the State of New York, individually
("Credit Suisse");
ALPINE SECURITIZATION CORP., a Delaware corporation ("Alpine")
CREDIT SUISSE, as agent for Credit Suisse and Alpine;
BANK OF AMERICA ILLINOIS (f/k/a Continental Bank and Continental Bank N.A.)
("Bank of America Illinois"), as agent and administrative agent for RCC;
CITICORP NORTH AMERICA, INC., a Delaware corporation, as agent for CAFCO,
CIESCO and Citibank;
NATIONSBANK N.A., a national banking association, as agent for EFC; and
BANK OF AMERICA ILLINOIS, as Collateral Agent
MARKET STREET FUNDING CORPORATION
PNC BANK, NATIONAL ASSOCIATION
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION
BAYERISCHE VEREINSBANK AG
<PAGE> 1
EXHIBIT 10.2
This instrument prepared by:
Jerry L. Shulman
Williams & Connolly
725 Twelfth St., N.W.
Washington, DC 20005
______________________________________________________________________________
AUTO LEASE FINANCE L.P.,
VT INC.,
AS TRUSTEE OF WORLD OMNI LT,
AND
FOR CERTAIN LIMITED PURPOSES ONLY
FIRST BANK NATIONAL ASSOCIATION
(SUCCESSOR TRUSTEE TO BANK OF AMERICA ILLINOIS)
FORM OF
SUPPLEMENT 1996-B TO
TRUST AGREEMENT
DATED AS OF OCTOBER 1, 1996
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PART X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 10.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 3
Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Additional Loss Amount . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Administrative Expense . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ALFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ALFI LP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Amortization Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Backup Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . 4
Bankrupt Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Capped Contingent and Excess Liability Premiums . . . . . . . . . . . . . 4
Capped Origination Trust Administrative Expenses . . . . . . . . . . . . . 5
Charged-off Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Contingent and Excess Liability Insurance Policy . . . . . . . . . . . . . 6
Contract Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Credit and Collection Policy . . . . . . . . . . . . . . . . . . . . . . . 6
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Defaulted Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Delinquent Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Deposit Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Discounted Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Discounted Principal Balance . . . . . . . . . . . . . . . . . . . . . . . 7
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Due Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Eligible Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Extension Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
First Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Grantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Independent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Initial Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Initial Grantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Initial Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Insurance Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Interest Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Lease Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Lease Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
i
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<S> <C>
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Liquidation Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Matured Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Matured Leased Vehicle Expenses . . . . . . . . . . . . . . . . . . . . . 13
Matured Leased Vehicle Inventory . . . . . . . . . . . . . . . . . . . . . 13
Matured Leased Vehicle Proceeds . . . . . . . . . . . . . . . . . . . . . 14
Matured Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Monthly Lease Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Net Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Net Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 14
Net Matured Leased Vehicle Proceeds . . . . . . . . . . . . . . . . . . . 14
Net Repossessed Vehicle Proceeds . . . . . . . . . . . . . . . . . . . . . 15
1996-B Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1996-B Leased Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1996-B SUBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1996-B SUBI Asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1996-B SUBI Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 15
1996-B SUBI Collection Account . . . . . . . . . . . . . . . . . . . . . . 15
1996-B SUBI Lease Account . . . . . . . . . . . . . . . . . . . . . . . . 15
1996-B SUBI Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . 15
99.8% 1996-B SUBI Certificate . . . . . . . . . . . . . . . . . . . . . . 15
0.2% 1996-B SUBI Certificate . . . . . . . . . . . . . . . . . . . . . . . 15
Obligee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Obligor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Outstanding Principal Balance . . . . . . . . . . . . . . . . . . . . . . 15
Payment Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Principal Collections . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Repossessed Vehicle Expenses . . . . . . . . . . . . . . . . . . . . . . . 16
Repossessed Vehicle Proceeds . . . . . . . . . . . . . . . . . . . . . . . 17
Residual Value Surplus Account . . . . . . . . . . . . . . . . . . . . . . 17
Revolving Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Securitization Trust Documents . . . . . . . . . . . . . . . . . . . . . . 17
Securitization Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Servicer Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Servicing Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SUBI Certificate Agreement . . . . . . . . . . . . . . . . . . . . . . . . 18
Subsequent Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Unallocated Principal Collections . . . . . . . . . . . . . . . . . . . . 18
WOFCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 10.02. Rights in Respect of 1996-B SUBI . . . . . . . . . . . . . 18
PART XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
CREATION OF 1996-B SUBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 11.01. Initial Creation of 1996-B SUBI
Portfolio and 1996-B SUBI . . . . . . . . . . . . . . . . 19
Section 11.02. Subsequent Additions to 1996-B SUBI Portfolio . . . . . . 20
Section 11.03. Issuance and Form of 1996-B SUBI Certificates . . . . . . 22
Section 11.04. Actions and Filings . . . . . . . . . . . . . . . . . . . 22
Section 11.05. Termination of 1996-B SUBI. . . . . . . . . . . . . . . . 23
Section 11.06. Merger or Consolidation of Trustee. . . . . . . . . . . . 23
Section 11.07. Representations and Warranties of Trustee . . . . . . . . 23
Section 11.08. Other SUBIs. . . . . . . . . . . . . . . . . . . . . . . 24
Section 11.09. Retained SUBI Interest . . . . . . . . . . . . . . . . . 25
Section 11.10. Minimum Net Worth. . . . . . . . . . . . . . . . . . . . 25
PART XII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SUBI ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 12.01. 1996-B SUBI Collection Account . . . . . . . . . . . . . . 25
Section 12.02. SUBI Lease Account . . . . . . . . . . . . . . . . . . . . 27
Section 12.03. Residual Value Surplus Account . . . . . . . . . . . . . . 29
Section 12.04. Servicer Calculations . . . . . . . . . . . . . . . . . . . 29
PART XIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 13.01. Amendment, Etc. . . . . . . . . . . . . . . . . . . . . . . 30
Section 13.02. Governing Law. . . . . . . . . . . . . . . . . . . . . . . 31
Section 13.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 13.04. Severability of Provisions . . . . . . . . . . . . . . . . 31
Section 13.05. Effect of Supplement on Trust Agreement . . . . . . . . . . 31
EXHIBITS:
EXHIBIT A - Schedule of 1996-B Leases and 1996-B Leased
Vehicles as of the Initial Cutoff Date . . . . . . . . . . . . . A-1
EXHIBIT B - Form of 1996-B SUBI Certificates . . . . . . . . . . . . . . . . B-1
</TABLE>
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<S> <C>
EXHIBIT C - Forms of 1996-B Lease . . . . . . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D - Current Credit and Collection Policy . . . . . . . . . . . . . . . . D-1
</TABLE>
iv
<PAGE> 6
SUPPLEMENT 1996-B TO
TRUST AGREEMENT
SUPPLEMENT 1996-B TO TRUST AGREEMENT (the "Supplement"), dated and
effective as of October 1, 1996, among AUTO LEASE FINANCE L.P., a Delaware
limited partnership ("ALFI LP" or, in its capacity as grantor, the "Grantor"
and in its capacity as beneficiary, the "Beneficiary"), VT INC., an Alabama
corporation, as trustee (in such capacity, together with any successor or
permitted assign, the "Trustee"), and for certain limited purposes only, FIRST
BANK NATIONAL ASSOCIATION, a national banking association (successor trustee to
Bank of America Illinois, an Illinois banking corporation) (together with any
successor, "First Bank").
RECITALS
A. The Grantor, the Trustee and First Bank have entered
into that certain Second Amended and Restated Trust Agreement dated as of July
1, 1994 (amending and restating that certain original Trust Agreement among
Auto Lease Finance, Inc., a Delaware corporation ("ALFI" or, in its capacity as
initial grantor, the "Initial Grantor"), the Trustee and First Bank dated as of
November 1, 1993, and that certain Amended and Restated Trust Agreement dated
as of June 1, 1994 among the Initial Grantor, the Grantor, the Trustee and
First Bank), as amended by that certain Amendment No. 1 to Second Amended and
Restated Trust Agreement dated as of November 1, 1994 among the same parties
(as so amended and restated, and as it may be further amended, supplemented or
modified, the "Trust Agreement"), pursuant to which the Initial Grantor and the
Trustee formed World Omni LT, an Alabama trust (the "Trust") for the purpose of
taking assignments and conveyances of, holding in trust and dealing in, various
Trust Assets (as defined in the Trust Agreement) in accordance with the Trust
Agreement. The Initial Grantor and World Omni Financial Corp. ("WOFCO"), the
sole parent of ALFI, have entered into that certain Limited Partnership
Agreement dated as of June 1, 1994, as amended and restated by that certain
Amended and Restated Limited Partnership Agreement dated as of July 1, 1994,
pursuant to which the Grantor was created and ALFI contributed to the Grantor
all of its right, title and interest in and to the Trust both as Initial
Grantor and as the Initial Beneficiary thereof.
B. The Trustee, on behalf of the Trust, and WOFCO (in
its capacity as servicer, the "Servicer") also have entered into that certain
Second Amended and Restated Servicing Agreement dated as of July 1, 1994 (the
"Servicing Agreement"), amending and restating that certain original Servicing
Agreement dated as of November 1, 1993, and that certain Amended and Restated
Servicing Agreement dated as of June 1, 1994, which provides,
<PAGE> 7
among other things, for the servicing of the Trust Assets by the Servicer.
C. The Trust Agreement contemplates that, from time to
time the Trustee, on behalf of the Trust and at the direction of the
Beneficiary, will identify and allocate on the Trust's books and records
certain Trust Assets within a separate SUBI Portfolio (as defined in the Trust
Agreement) and create and issue to the Beneficiary a separate special unit of
beneficial interest in the Trust or "SUBI" (as defined in the Trust Agreement),
whose beneficiaries generally will be entitled to the net cash flow arising
from, but only from, the related SUBI Portfolio (as defined in the Trust
Agreement), all as set forth in the Trust Agreement.
D. The parties hereto desire to supplement the terms of
the Trust Agreement to cause the Trustee to identify and allocate such a SUBI
Portfolio (the "1996-B SUBI Portfolio") and to create and issue to the
Beneficiary two (2) SUBI Certificates (as defined in the Trust Agreement) (such
SUBI Certificates, together with any replacements thereof, the "1996-B SUBI
Certificates") that, collectively, evidence the entire beneficial interest in
the related SUBI (the "1996-B SUBI"), and to set forth the terms and conditions
thereof.
E. Concurrently herewith, the Beneficiary and World Omni
Lease Securitization L.P. (the "Seller") are entering into that certain SUBI
Certificate Purchase and Sale Agreement dated as of October 1, 1996 (the "SUBI
Certificate Agreement"), pursuant to which the Beneficiary will sell to the
Seller, without recourse, all of the Beneficiary's right, title and interest in
and to the 1996-B SUBI and the 1996-B SUBI Certificates, all moneys due thereon
and paid thereon or in respect thereof and the right to realize on any property
that may be deemed to secure the 1996-B SUBI, and all proceeds thereof, all in
consideration of the cash payment to the Beneficiary of an amount equal to the
Aggregate Net Investment Value (as defined in the Securitization Trust
Agreement, as defined below) of the 1996-B SUBI Portfolio as of the Initial
Cutoff Date (as defined below).
F. Also concurrently herewith, and as contemplated by
the Servicing Agreement and the Trust Agreement, the Seller and First Bank, as
trustee (the "Securitization Trustee") are entering into that certain
Securitization Trust Agreement dated as of October 1, 1996 (the "Securitization
Trust Agreement"), pursuant to which the SUBI Certificate (as defined in the
Trust Agreement) representing a 99.8% beneficial interest in the 1996-B SUBI
(the "99.8% 1996-B SUBI Certificate") will be transferred to the Securitization
Trustee, in that capacity, in connection with a Securitized Financing (as
defined in the Trust Agreement) by the Seller, but the SUBI Certificate
representing a 0.2%
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<PAGE> 8
beneficial interest in the 1996-B SUBI (the "0.2% 1996-B SUBI Certificate")
will be retained by the Seller and not used in connection with a Securitized
Financing.
G. Also concurrently herewith, the Trustee, on behalf of
the Trust, and the Servicer also are entering into that certain Supplement
1996-B to Servicing Agreement (the "Servicing Supplement") pursuant to which,
among other things, the terms of the Servicing Agreement will be supplemented
insofar as they apply to the 1996-B SUBI Portfolio, providing for further
specific servicing obligations that will benefit the holders of the 1996-B SUBI
Certificates and the parties to the Securitized Financing (as defined in the
Trust Agreement) contemplated by the Securitization Trust Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained and in the Trust Agreement, the parties hereto agree
to the following supplemental obligations and provisions with regard to the
1996-B SUBI Portfolio:
PART X
DEFINITIONS
SECTION 10.01. DEFINITIONS.
For all purposes of this Supplement, except as otherwise
expressly provided or unless the context otherwise requires, (a) unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings attributed to them by the Trust Agreement, (b) the capitalized terms
expressly defined in this Supplement have the meanings assigned to them in this
Supplement and include (i) all genders and (ii) the plural as well as the
singular, (c) all references to words such as "herein", "hereof" and the like
shall refer to this Supplement as a whole and not to any particular article or
section within this Supplement, (d) the term "include" and all variations
thereon shall mean "include without limitation", and (e) the term "or" shall
include "and/or".
"Accountant" means a Person qualified to pass upon accounting
questions, whether or not (unless herein required to be Independent) such
person shall be an officer or employee of the Grantor, the Trust or the Seller
or of an Affiliate thereof.
"Additional Loss Amount" means, with respect to any Collection
Period, all payments (including any indemnification or reimbursement of the
Trustee or any Trust Agent) with respect to Claims by Persons other than the
Trustee, the Trust Agent, the Servicer, the Securitization Trustee, the
Certificateholders, and any other beneficiary of the Trust against or with
respect to the
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<PAGE> 9
1996-B SUBI Assets paid during that Collection Period, including reasonable
fees and expenses of attorneys incurred in defending or settling such Claims,
all as allocated by the Trustee pursuant to Section 7.01(c) of the Trust
Agreement, and the amount of reserves for future possible such payments that
the Servicer, on behalf of the Trustee, deems advisable (after consultation
with Independent Accountants) to retain in the 1996-B SUBI Collection Account
out of moneys that otherwise would constitute Collections for that Collection
Period.
"Administrative Expense" means any reasonable administrative
cost or expense associated with the Trust, including reasonable fees and
expenses of attorneys and accountants (other than such fees and expenses as
constitute an Additional Loss Amount).
"Advance" means those advances required or permitted to be
made by the Servicer pursuant to Section 9.04 of the Servicing Supplement.
"ALFI" has the meaning set forth in Recital A.
"ALFI LP" has the meaning set forth in the Preamble.
"Amortization Period" has the meaning set forth in the
Securitization Trust Agreement.
"Backup Security Agreement" means that certain Backup Security
Agreement dated as of October 1, 1996, among WOFCO, the Grantor, the Trustee on
behalf of the Trust, the Seller, and the Securitization Trustee on behalf of
the Securitization Trust.
"Bankrupt Lease" means a Lease as to which a voluntary or
involuntary case has commenced against the related Obligor under the federal
bankruptcy laws, as now or hereafter in effect, or under another present or
future federal or State bankruptcy, insolvency or similar laws, after the date
of origination of the related Lease.
"Beneficiary" has the meaning set forth in the Preamble.
"Capped Contingent and Excess Liability Premiums" means, as of
any Deposit Date, an amount sufficient to pay the premiums then due on the
portion of any Contingent and Excess Liability Insurance Policies allocable to
the 1996-B SUBI Portfolio, provided, however, that to the extent that the
portion of such amount allocable to the 99.8% 1996-B SUBI Certificate, together
with all such portions since the beginning of the calendar year, exceeds
$550,000.00, such portion shall not constitute a Capped Contingent and Excess
Liability Premium but
4
<PAGE> 10
instead shall constitute an "Uncapped Administrative Expense" (as defined in
the Securitization Trust Agreement).
"Capped Origination Trust Administrative Expenses" means, as
of any Deposit Date, Administrative Expenses with respect to the Trust due on
or before such Deposit Date as are allocable to the 1996-B SUBI Portfolio, but
specifically not including any premiums on any portion of the Contingent and
Excess Liability Insurance Policies allocable to the 1996-B SUBI Portfolio;
provided, however, that to the extent the portion of such Administrative
Expenses allocable to the 99.8% 1996-B SUBI Certificate, together with all such
portions since the beginning of the calendar year, exceeds $__________, such
portion shall not constitute a Capped Origination Trust Administrative Expense
but instead shall constitute an "Uncapped Administrative Expense" (as defined
in the Securitization Trust Agreement).
"Charged-off Lease" means a Lease (a) with respect to which
the related Leased Vehicle has been repossessed and sold or otherwise disposed
of, or (b) the Lease has been written off by the Servicer in accordance with
its normal policies for writing off lease contracts other than with respect to
repossessions.
"Collection Period" means, with respect to any Distribution
Date, the period from and including the first day of the calendar month
immediately preceding the calendar month in which such Distribution Date occurs
(or, with respect to the first Distribution Date, from and including the
Initial Cutoff Date) to and including the last day of the calendar month
immediately preceding the calendar month in which the Distribution Date occurs.
"Collections" means, with respect to any Collection Period,
all collections received on or in respect of the 1996-B Leases and 1996-B
Leased Vehicles in respect of that Collection Period, including the following,
but subject to any limitations set forth therein: (i) Monthly Lease Payments
(including amounts that previously were Payments Ahead but which became due
during that Collection Period, Prepayments, Extension Fees, and any other
payment by an Obligor under a 1996-B Lease); (ii) Net Matured Leased Vehicle
Proceeds, Net Repossessed Vehicle Proceeds, and all other Net Liquidation
Proceeds; (iii) any Net Insurance Proceeds not included in Net Liquidation
Proceeds; and (iv) Advances; provided, however, that Collections shall in no
event include and shall be net of the following, which shall be retained in the
1996-B SUBI Collection Account or paid to the appropriate party: (A) any
portion of any of the foregoing that represents late payment charges, or
collections allocable to payments to be made by Obligors for payment of
insurance premiums, excise taxes or similar items; (B) Payments Ahead; (C) the
amount of all Advances, Matured Leased Vehicle Expenses,
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<PAGE> 11
Repossessed Vehicle Expenses and other Liquidation Expenses, and Insurance
Expenses reimbursed pursuant to Section 9.02(g) of the Servicing Supplement;
(D) Additional Loss Amounts; and (E) any amounts required to be retained in the
1996-B SUBI Collection Account in order to maintain that account in good
standing.
"Contingent and Excess Liability Insurance Policy" means those
certain policies numbered 5662073, 5662074 and 5662075 issued to the Servicer
and the Trustee, on behalf of the Trust, by Gulf Insurance Company and that
certain policy numbered BE 3102525 issued to the Servicer and the Trustee on
behalf of the Trust by National Union Fire Insurance Company of Pittsburgh,
Pennsylvania and that certain policy numbered XLUMB-1260 issued to J.M. Family
Enterprises, Inc. by X.L. Insurance Company, Ltd. with the Origination Trustee
named as an additional insured or loss payee, plus all excess or umbrella
policies from time to time issued with the Origination Trustee named as an
additional insured or loss payee, in each case to the extent applicable to any
1996-B Lease or 1996-B Leased Vehicle.
"Contract Rights" means all of the Trustee's right, title, and
interest in, to, and under any 1996-B Leases and the proceeds therefrom, which
right, title, and interest include without limitation: the Lease Documents; all
Monthly Lease Payments received on or due on or after the related Cutoff Date;
Security Deposits paid by any Obligor to secure the obligations of such Obligor
to the Obligee in the amount and to the extent provided in the related 1996-B
Lease; partial prepayments and Prepayments (regardless of whether made by the
related Obligor or by any other Person) received on or after the related Cutoff
Date and Matured Leased Vehicle Proceeds, Repossessed Vehicle Proceeds and
other Liquidation Proceeds and Insurance Proceeds received on or after the
related Cutoff Date; subject, however, to the limitations set forth in Section
11.01(a).
"Credit and Collection Policy" means those lease origination
and credit and collection policies and practices of the Servicer as applied by
the Servicer with respect to Leases and Leased Vehicles, a summary of the
current form of which is attached as Exhibit D.
"Cutoff Date" means the Initial Cutoff Date or a Subsequent
Cutoff Date, as the context may require.
"Defaulted Lease" means a Lease (a) as to which any Monthly
Lease Payment or part thereof in excess of $40.00, remains unpaid for more than
90 days from the original due date for such payment, or (b) that is a
Charged-off Lease.
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<PAGE> 12
"Delinquent Lease" means, with respect to any Lease as of any
Due Date, a Lease as to which all or any part of a Monthly Lease Payment in
excess of $40 is unpaid (including without limitation because of a check being
returned for insufficient funds) 61 days or more after its Due Date (other than
a Defaulted Lease or a Lease as to which an extension has been granted with
respect to such Due Date by the Servicer pursuant to clause (ii) of Section
2.02(b) of the Servicing Agreement) (and, if applicable, Section 9.02(a) of the
Servicing Supplement).
"Deposit Date" means, with respect to a Collection Period, the
Business Day preceding the related Distribution Date.
"Discount Rate" means 8.65% per annum.
"Discounted Lease" means a 1996-B Lease with a Lease Rate of
less than 8.65%.
"Discounted Principal Balance" means (i) with respect to any
1996-B Lease that is a Discounted Lease, an amount equal to the present value
of the sum of all remaining Monthly Lease Payments on such Lease paid on a
timely basis, plus the Booked Residual Value of the related 1996-B Leased
Vehicle, calculated by discounting such Monthly Lease Payments and Booked
Residual Value by the Discount Rate, and (ii) with respect to any other 1996-B
Lease, its Outstanding Principal Balance at such time.
"Distribution Date" has the meaning set forth in the
Securitization Trust Agreement.
"Due Date" means, as to any Monthly Lease Payment, the date
during each month upon which such payment is due, which date is specified in
the related 1996-B Lease.
"Eligible Account" means either (a) an account that is
maintained with a depository institution or trust company organized under the
laws of the United States or of any State, the commercial paper or other
short-term unsecured debt obligations of which have credit ratings from Moody's
at least equal to "P-1" (so long as Moody's is a Rating Agency) and from
Standard & Poor's at least equal to "A-1+" (so long as Standard & Poor's is a
Rating Agency); or (b) a segregated trust account bearing a designation clearly
indicating that funds deposited therein are held in trust for the benefit of
the holders of the 1996-B SUBI Certificates or the Certificateholders, as the
case may be, maintained in the corporate trust department of a depositary
institution or trust company organized under the laws of the United States or
of any State and having corporate trust powers, which institution or trust
company has a rating from Moody's for its long term
7
<PAGE> 13
deposits of at least Baa3 (so long as Moody's is a Rating Agency).
"Eligible Lease" means a Lease as to which the following are
true as of the Closing Date or Transfer Date, as applicable (unless otherwise
specified below):
(a) that was originated by a Dealer (i) in the ordinary
course of its business, (ii) on the form of Lease attached as Exhibit
C, (iii) pursuant to a form of Dealer Agreement which provides for
recourse to the Dealer in the event of certain defects in the Lease
but not for default by the Obligor; and (iv) in compliance with the
Credit and Collection Policy;
(b) which Lease and the related Leased Vehicle are owned
by the Trustee, on behalf of the Trust, free of all Liens (including
tax liens, mechanics' liens and liens that arise by operation of law,
but other than any lien on the title of such Vehicle noted solely to
provide for delivery of title documentation to the Trustee or its
designee);
(c) that was originated in compliance with, and complies
with, all material applicable legal requirements, including, to the
extent applicable, the Federal Consumer Credit Protection Act, as
amended, Regulations M and Z of the Board of Governors of the Federal
Reserve System, as amended, all state leasing and consumer protection
laws and all state and federal usury laws;
(d) as to which all material consents, licenses,
approvals or authorizations of, or registrations or declarations with,
any governmental authority required to be obtained, effected or given
by the originator of such Lease in connection with (i) the origination
of such Lease, (ii) the execution, delivery and performance by such
originator of such Lease, and (iii) the acquisition by the Trustee, on
behalf of the Trust, of such Lease and the related Leased Vehicle,
have been duly obtained, effected or given and are in full force and
effect as of such date of creation or acquisition;
(e) that is the legal, valid and binding full-recourse
payment obligation of the Obligor thereunder, enforceable against such
Obligor in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors' rights in general and except
as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);
8
<PAGE> 14
(f) that, to the knowledge of the Servicer, is not
subject to any right of rescission, setoff, counterclaim or any other
defense (including defenses arising out of violations of usury laws)
of the Obligor thereof to payment of the amounts due thereunder, and
no such right of rescission, setoff, counterclaim or other defense has
been asserted or threatened;
(g) as to which each of the originator of such Lease, the
Servicer and the Trustee, on behalf of the Trust, have each satisfied
all obligations required to be fulfilled on its part with respect to
such Lease and the related Leased Vehicle;
(h) that is payable solely in United States dollars in
the United States;
(i) the Obligor of which is a Person located in one or
more of the 50 states of the United States, the District of Columbia
or a territory of the United States and is not (i) the Initial
Grantor, the Grantor, World Omni Lease Securitization, Inc. or the
Seller, or an Affiliate thereof or (ii) the United States of America
or any state or local government or any agency or political
subdivision thereof;
(j) that requires the Obligor thereunder to maintain
insurance against loss or damage to the related Leased Vehicle under
an insurance policy that names the Trustee, on behalf of the Trust, as
loss payee;
(k) the related Leased Vehicle of which is titled in the
name of the Trustee on behalf of the Trust (or properly completed
applications for such title have been submitted to the appropriate
titling authority) and all transfer and similar taxes imposed in
connection therewith have been paid;
(l) that arises under a closed-end Lease that (i)
requires equal monthly payments to be made within 60 months of the
date of origination of such Lease, and (ii) requires such payments to
be made by the Obligor thereof within 30 days after the billing date
for such payment;
(m) that is fully assignable and that does not require
the consent of the Obligor thereunder as a condition to any transfer,
sale or assignment of the rights of the originator under such Lease;
(n) as to which the Booked Residual Value of the related
Vehicle does not exceed the amount reasonably established by the
Servicer consistent with its policies
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<PAGE> 15
and practices regarding the setting of residual values as applied with
respect to closed-end retail automobile and light duty truck leases;
(o) that, as of the related Cutoff Date, has not been
extended by more than five months in the aggregate or been otherwise
compromised, adjusted or modified except in accordance with the Credit
and Collection Policy;
(p) as to which the Obligor thereof has not made a claim
under the Soldiers' and Sailors' Relief Act of 1940;
(q) that satisfies all applicable requirements of the
Credit and Collection Policy;
(r) that is not allocated to any other SUBI Portfolio
other than the 1996-B SUBI Portfolio;
(s) that, as of the related Cutoff Date, is not a
Delinquent Lease, a Defaulted Lease or a Bankrupt Lease;
(t) that is a finance lease for purposes of generally
accepted accounting principles, consistently applied;
(u) that is a "true lease", as opposed to a lease
intended as security, under the laws of the State in which it was
originated;
(v) as to which the Servicer has not exercised any right
of set off against the originating Dealer as contemplated by Section
2.01(b)(ii)(A) of the Servicing Agreement; and
(w) which Lease, as of the related Cutoff Date, (i) is
written with respect to a Leased Vehicle that was, at the time of
origination of the Lease, a new vehicle, a dealer demonstrator driven
fewer than 6,000 miles or a manufacturer's program vehicle; (ii) was
originated in the United States after November 1, 1993 (in the case of
Leases allocated to the 1996-B SUBI Portfolio as of the Initial Cutoff
Date) or on or before ________, ____ (in the case of Leased Vehicles
allocated to the 1996-B SUBI Portfolio as of a Subsequent Cutoff
Date); (iii) has a Maturity Date on or after ________, ____ and no
later than _________, ____ (in the case of Leases allocated to the
1996-B SUBI Portfolio as of the Initial Cutoff Date) or no later than
_______, ____ (in the case of Leases allocated to the 1996-B SUBI
Portfolio as of a Subsequent Cutoff Date); and (iv) fully amortizes to
an amount equal to the Booked Residual Value of the related Leased
Vehicle based on a fixed Lease Rate calculated on a constant yield
basis and provides for level
10
<PAGE> 16
payments over its term (except for payment of such Booked Residual
Value).
"Extension Fee" means, with respect to any 1996-B Lease that
has had its Maturity Date extended pursuant to the Servicing Agreement and the
Servicing Supplement, any payment required to be made with respect to such
1996-B Lease by the Obligor in exchange for the extension.
"First Bank" has the meaning set forth in the Preamble.
"Grantor" has the meaning set forth in the Preamble.
"Independent" means, when used with respect to any specified
Person, such a Person who (a) is in fact independent of the Grantor, the
Trustee, the Seller and any of their respective Affiliates; (b) does not have
any direct financial interest or any material indirect financial interest in
the Grantor, the Trust, the Seller or any of their respective Affiliates; and
(c) is not connected with the Grantor, the Trust, the Seller or any of their
respective Affiliates as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions. "Independent" when
used with respect to any Accountant means such an Accountant, who may also be
the Accountant who audits the books of the Grantor, the Trust, the Seller or
any of their respective Affiliates, who is Independent with respect to the
Grantor, the Trustee, the Seller, and their respective Affiliates as
contemplated by Rule 101 of the Code of Professional Conduct of the American
Institute of Certified Public Accountants. Whenever it is herein provided that
any Independent Person's opinion or certificate shall be furnished to the
Trustee, such Person shall be acceptable to the Trustee if such opinion or
certificate shall state that the signer has read this direction and that the
signer is independent within the meaning thereof.
"Initial Beneficiary" and "Initial Grantor" shall have the
meanings set forth in the Preamble.
"Initial Cutoff Date" means September 1, 1996.
"Insurance Expenses" means any amount of Insurance Proceeds
(a) applied to the repair of the related 1996-B Leased Vehicle, (b) released to
an Obligor in accordance with the normal servicing procedures of the Servicer,
or (c) representing other related expenses incurred by the Servicer not
otherwise included in Liquidation Expenses and recoverable under the Servicing
Agreement or the Servicing Supplement.
"Insurance Policy" means, with respect to a 1996-B Lease,
1996-B Leased Vehicle or Obligor, any policy of comprehensive, collision,
public liability, physical damage,
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<PAGE> 17
personal liability, credit health or accident, credit life or employment
insurance, or any other form of insurance.
"Insurance Proceeds" means, with respect to any 1996-B Lease,
1996-B Leased Vehicle or Obligor, proceeds paid to the Servicer or the Trustee,
on behalf of the Trust, pursuant to an Insurance Policy and amounts paid to the
Trustee, on behalf of the Trust, or the Servicer under any other insurance
policy related to such 1996-B Lease, 1996-B Leased Vehicle or Obligor
(including but not limited to any contingent and excess liability insurance
policy or residual value insurance policy maintained by or on behalf of the
Trustee, on behalf of the Trust).
"Interest Collections" means, with respect to any Collection
Period, all Collections received during or allocable to such Collection Period
other than Principal Collections, less the following, which shall be paid to
the appropriate parties or retained in the 1996-B SUBI Collection Account, as
appropriate, in the following order and priority for so long as WOFCO is the
Servicer: (a) Capped Contingent and Excess Liability Premiums, but with regard
to the Investor Percentage of Interest Collections allocable to the 99.8%
1996-B SUBI Certificate, only to the extent such deduction and payment would
have the same effect as if it followed item (iii) of Section 3.03(b) of the
Securitization Trust Agreement; (b) Capped Origination Trust Administrative
Expenses, but with regard to the Investor Percentage of Interest Collections
allocable to the 99.8% 1996-B SUBI Certificate, only to the extent that such
deduction and payment would have the same effect as if it followed item (iii)
of Section 3.03(b) of the Securitization Trust Agreement and then followed the
deduction and payment set forth in clause (a) above; and (c) the Servicing Fee
and any unpaid Servicing Fee with respect to one or more prior Collection
Periods, but with regard to the Investor Percentage of Interest Collections
allocable to the 99.8% 1996-B SUBI Certificate, only to the extent that such
deduction and payment would be made with the same effect as if it followed item
(x) of Section 3.03(b) of the Securitization Trust Agreement and the deductions
and payments in clauses (a) and (b) have been made as indicated. If WOFCO is
not the Servicer, the deduction and payment in clause (c) shall instead be made
only to the extent that it would have with the same effect as if it followed
item (iv) of Section 3.03(b) of the Securitization Trust Agreement and the
deductions and payments in clauses (a) and (b) of the preceding sentence have
been made as indicated.
"Lease Documents" means, with respect to each 1996-B Lease,
the fully executed 1996-B Lease and any agreement(s) modifying such 1996-B
Lease (including, without limitation, any extension agreement(s) relating to
extended 1996-B Lease(s)).
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<PAGE> 18
"Lease Rate" means, with respect to each Lease, the implicit
rate, calculated on the basis of an annual percentage rate, included in the
calculation of the Monthly Lease Payment due with respect to such Lease.
"Lien" means any security interest, lien, charge, pledge,
equity or encumbrance of any kind other than tax liens, mechanics' liens and
any liens that attach to the 99.8% 1996-B SUBI Interest or any other property,
as the context may require, by operation of law.
"Liquidation Expenses" means Matured Leased Vehicle Expenses,
Repossessed Vehicle Expenses, and all other reasonable out-of-pocket expenses
incurred by the Servicer in connection with the attempted realization of the
full amounts due or to become due under any 1996-B Lease, including expenses
incurred in connection with any collection effort (whether or not resulting in
a lawsuit against the Obligor under such 1996-B Lease) or an application or
request for Insurance Proceeds.
"Liquidation Proceeds" means Matured Leased Vehicle Proceeds,
Repossessed Vehicle Proceeds, and all other gross amounts received by the
Servicer or the Trustee, on behalf of the Trust (before reimbursement for
Liquidation Expenses) in connection with the realization of the full amounts
due or to become due under any 1996-B Lease, whether from the proceeds of any
collection effort (whether or not resulting in a lawsuit against the Obligor
under such Lease), receipt of Insurance Proceeds, or collection of amounts due
under the Servicing Agreement (including but not limited to the application of
Security Deposits pursuant to Section 2.04 thereof), the Servicing Supplement
(including but not limited to any amount required to be deposited by the
Servicer into the 1996-B SUBI Collection Account pursuant to Section 8.03
thereof) or otherwise.
"Matured Lease" means any 1996-B Lease that has reached its
scheduled Maturity Date and as to which all scheduled Monthly Lease Payments
and other payments due thereunder have been made.
"Matured Leased Vehicle Expenses" means reasonable
out-of-pocket expenses incurred by the Servicer in connection with the sale or
other disposition of a 1996-B Leased Vehicle included in Matured Leased Vehicle
Inventory.
"Matured Leased Vehicle Inventory" as of any date means all
Matured Vehicles that first became Matured Vehicles within the three
immediately preceding Collection Periods (or during the months of August,
September and October in respect of any date during the November 1996
Collection Period, the months of September and October 1996 and the November
1996 Collection Period in respect of the December 1996 Collection Period, and
the
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month of October 1996 and the November and December 1996 Collection Periods in
respect of any date during the January 1997 Collection Period), and that, as of
the last day of the most recent Collection Period have remained unsold and not
otherwise disposed of by the Servicer for no more than two full Collection
Periods.
"Matured Leased Vehicle Proceeds" means gross amounts received
by the Servicer or the Trustee, on behalf of the Trust (before reimbursement
for Matured Leased Vehicle Expenses) in connection with the sale or other
disposition of a 1996-B Leased Vehicle included in Matured Leased Vehicle
Inventory (including any charges for excess mileage and excess wear and use).
"Matured Vehicle" as of any date means any 1996-B Leased
Vehicle the related 1996-B Lease of which has reached its Maturity Date and as
to which all scheduled Monthly Lease Payments and other payments due thereunder
have been made, and which Leased Vehicle has been returned to the Servicer on
behalf of the Origination Trustee, on behalf of the Origination Trust,
regardless of the status of the disposition of such 1996-B Leased Vehicle as of
such date.
"Maturity Date" means, with respect to any 1996-B Lease, the
date on which the last scheduled Monthly Lease Payment shall be due and
payable, as such date may be extended pursuant to Section 2.02(b) of the
Servicing Agreement and Section 9.02(a) of the Servicing Supplement.
"Monthly Lease Payment" means, with respect to any Lease, the
amount of each fixed monthly payment payable to the Obligee of such Lease in
accordance with the terms thereof, net of any portion of such monthly payment
that represents late payment charges, Extension Fees or collections allocable
to payments to be made by Obligors for payment of insurance premiums, excise
taxes or similar items.
"Net Insurance Proceeds" means Insurance Proceeds less
Insurance Expenses.
"Net Liquidation Proceeds" means Liquidation Proceeds less
Liquidation Expenses.
"Net Matured Leased Vehicle Proceeds" means Matured Leased
Vehicle Proceeds plus (unless the context otherwise requires) any sums
transferred from the Residual Value Surplus Account pursuant to Section
12.03(b), less Matured Leased Vehicle Expenses (unless the context otherwise
requires, other than those Matured Leased Vehicle Expenses as are reimbursed
from the Residual Value Surplus Account pursuant to Section 9.02(g) of the
Servicing Supplement), and less (unless the context otherwise
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requires) any amounts transferred to the Residual Value Surplus Account
pursuant to Section 12.01(b).
"Net Repossessed Vehicle Proceeds" means Repossessed Vehicle
Proceeds less Repossessed Vehicle Expenses.
"1996-B Lease" has the meaning set forth in Section 11.01(a).
"1996-B Leased Vehicle" has the meaning set forth in Section
11.01(a).
"1996-B SUBI" has the meaning set forth in Recital D.
"1996-B SUBI Asset" has the meaning set forth in Section
11.01(a).
"1996-B SUBI Certificate" has the meaning set forth in Recital
D.
"1996-B SUBI Collection Account" means the separate account
established and maintained by the Trustee as the initial repository of all
proceeds received with respect to all 1996-B SUBI Assets, pursuant to Section
12.01(a).
"1996-B SUBI Lease Account" has the meaning set forth in
Section 12.02(a).
"1996-B SUBI Portfolio" has the meaning set forth in Recital
D.
"99.8% 1996-B SUBI Certificate" has the meaning set forth in
Recital F.
"0.2% 1996-B SUBI Certificate" has the meaning set forth in
Recital F.
"Obligee" means each Person who is the lessor under a 1996-B
Lease or the assignee thereof, including the Trustee on behalf of the Trust.
"Obligor" means each Person who is the lessee under a Lease.
"Outstanding Principal Balance" means, with respect to any
1996-B Lease as of any date, an amount equal to (a) the sum of all Monthly
Lease Payments remaining to be made (provided, however, that Payments Ahead
received but not yet applied are deemed to be Monthly Lease Payments remaining
to be made), less any unearned finance or other charges relating to the period
beginning after the next succeeding Due Date on such 1996-B Lease (determined
in accordance with the actuarial method as applied
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to the Lease Rate for such 1996-B Lease in accordance with the Servicer's usual
practices), plus (b) the Booked Residual Value of the related Leased Vehicle.
"Payment Ahead" means any payment of one or more Monthly Lease
Payments (other than in connection with a Prepayment) remitted by an Obligor
with respect to a 1996-B Lease in excess of the Monthly Lease Payment due
during such Collection Period with respect to such 1996-B Lease, which sums the
Obligor has instructed the Servicer to apply to Monthly Lease Payments due in
one or more immediately subsequent Collection Periods.
"Permitted Investments" has the meaning set forth in the
Securitization Trust Agreement.
"Person" means any legal person, including any individual,
corporation, partnership, joint venture, association, joint stock company,
trust, bank, trust company, estate (including any beneficiaries thereof),
unincorporated organization or government or any agency or political
subdivision thereof.
"Prepayment" means: (a) payment to the Servicer of 100% of the
Outstanding Principal Balance of a 1996- B Lease (exclusive of any 1996-B Lease
referred to in the definition of the term "Charged-off Lease") or such lesser
amount as may be provided for in such 1996-B Lease, including any related
payment of interest, or (b) payment by the Servicer to the Trustee, on behalf
of the Trust, of any amount required to be deposited by the Servicer into the
1996-B SUBI Collection Account pursuant to Section 8.03 of the Servicing
Supplement.
"Principal Collections" means, with respect to any Collection
Period, all Collections received during or allocable to such Collection Period
allocable to the principal component of any 1996-B Lease (including any payment
in respect of the Booked Residual Value of the related 1996-B Leased Vehicle,
but expressly not including Collections with regard to which a Loss Amount (as
defined in the Securitization Trust Agreement) has already accrued); provided,
however, that, solely for purposes of calculating Principal Collections, the
principal portion of Monthly Lease Payments included in such Collections
arising from a Discounted Lease will be discounted on a present value basis at
the Discount Rate.
"Repossessed Vehicle Expenses" means reasonable out-of-pocket
expenses incurred by the Servicer in connection with the sale or other
disposition of a 1996-B Leased Vehicle that has been repossessed by the
Servicer or has been returned to the Servicer for sale or other disposition,
other than for inclusion in Matured Leased Vehicle Inventory.
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"Repossessed Vehicle Proceeds" means gross amounts received by
the Servicer or the Trustee, on behalf of the Trust (before reimbursement for
Repossessed Vehicle Expenses) in connection with the sale or other disposition
of a 1996-B Leased Vehicle that has been repossessed by the Servicer or has
been returned to the Servicer for sale or other disposition in connection with
a Prepayment of the related 1996-B Lease.
"Residual Value Surplus Account" means the separate account
established and maintained by the Trustee pursuant to Section 12.03(a).
"Revolving Period" means the period from the Initial Cutoff
Date to but not including the earlier of October 1, 1997 and the day on which
an Early Amortization Event (as defined in the Securitization Trust Agreement)
occurs.
"Securitization Trust Documents" means and includes the Trust
Agreement, the Servicing Agreement, this Supplement, the Servicing Supplement,
the SUBI Certificate Agreement, the Securitization Trust Agreement, the Backup
Security Agreement, the 1996-B SUBI Certificates, and the Certificates (as
defined in the Securitization Trust Agreement), as the same may be amended,
supplemented or modified from time to time, and each to the extent that it
relates to the 1996-B SUBI (but specifically not including any such amendment,
supplement or modification that relates only to the UTI or to one or more SUBIs
other than the 1996-B SUBI).
"Securitization Trustee" has the meaning set forth in Recital
F.
"Security Deposit" means, with respect to any 1996-B Lease,
the refundable security deposit specified in such 1996-B Lease.
"Seller" has the meaning set forth in Recital E.
"Servicer" has the meaning set forth in Recital B.
"Servicer Reimbursement" has the meaning set forth in the
Servicing Supplement.
"Servicing Agreement" has the meaning set forth in Recital B.
"Servicing Fee" has the meaning set forth in the Servicing
Agreement, as modified or waived pursuant to Section 9.06 of the Servicing
Supplement.
"Servicing Supplement" has the meaning set forth in Recital G.
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"SUBI Certificate Agreement" has the meaning set forth in
Recital E.
"Subsequent Cutoff Date" means, with respect to any Lease and
Leased Vehicle allocated to the 1996-B SUBI Portfolio on a Transfer Date, the
last day of the preceding calendar month (or, with respect to the first
Transfer Date, October 31, 1996).
"Transfer Date" means any Business Day in any calendar month
following a Collection Period in the Revolving Period, but in no event after
the occurrence of an Early Amortization Event (as defined in the Securitization
Trust Agreement), on or prior to the twenty-fifth calendar day of that calendar
month (beginning November 1996) specified as such by the Servicer in its notice
and certificate pursuant to Section 8.02(b) of the Servicing Supplement.
"Trust" has the meaning set forth in Recital A.
"Trust Agreement" has the meaning set forth in Recital A.
"Trustee" has the meaning set forth in the Preamble.
"Unallocated Principal Collections" has the meaning set forth
in Section 11.02(d).
"WOFCO" has the meaning set forth in Recital A.
SECTION 10.02. RIGHTS IN RESPECT OF 1996-B SUBI.
Each holder of a 1996-B SUBI Certificate (including the
Securitization Trustee, on behalf of the Certificateholders) is a third-party
beneficiary of the Trust Agreement and this Supplement, insofar as they apply
to the 1996-B SUBI and the holders of 1996-B SUBI Certificates. Therefore, to
that extent, references in the Trust Agreement to the ability of any "holder of
a SUBI Certificate", "assignee of a SUBI Certificate" or the like to take any
action shall be deemed to refer to the Securitization Trustee acting at its own
instigation or upon the instruction of Investor Certificateholders (as defined
in the Securitization Trust Agreement) representing at least 51% of the
aggregate Percentage Interest (as defined in the Securitization Trust
Agreement).
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PART XI
CREATION OF 1996-B SUBI
SECTION 11.01. INITIAL CREATION OF 1996-B SUBI
PORTFOLIO AND 1996-B SUBI.
(a) Pursuant to Section 4.02(a) of the Trust Agreement,
the Beneficiary hereby directs the Trustee to identify and allocate or cause to
be identified and allocated on the books and records of the Trust an initial
separate portfolio of SUBI Assets consisting of Leases, related Leased Vehicles
and other associated Trust Assets to be accounted for and held in trust
independently from all other Trust Assets within the Trust, all of which Trust
Assets shall consist of: (i) Leases that are Eligible Leases as of the Initial
Cutoff Date, including the related Contract Rights and the related Leased
Vehicles, with an Aggregate Net Investment Value (as defined in the
Securitization Trust Agreement) as of the Initial Cutoff Date of $__________;
(ii) all other Trust Assets related to the foregoing, including (A) the 1996-B
SUBI Collection Account and the Residual Value Surplus Account, including all
cash and Permitted Investments therein and all income from the investment of
funds therein; (B) the Residual Value Insurance Policy and all Contingent and
Excess Liability Insurance Policies to the extent applicable to such Leases and
Leased Vehicles; (C) the right to proceeds from physical damage, credit life and
disability insurance policies, if any, covering such Leases, Leased Vehicles or
Obligors with respect thereto, as the case may be; (D) the right to receive the
proceeds of all Dealer repurchase obligations, if any, relating to any such
Lease or Leased Vehicle; and (E) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or other property. Based upon
their identification and allocation by the Servicer pursuant to the Servicing
Supplement, the Trustee hereby identifies and allocates as SUBI Assets the
portfolio of Leases and Leased Vehicles more particularly described on Exhibit A
hereto, and the related Trust Assets described above, each such SUBI Asset to be
identified on the books and accounts of the Trust as belonging to the 1996-B
SUBI Portfolio (such Leases and Leased Vehicles, together with those additional
Leases and Leased Vehicles allocated to the 1996-B SUBI Portfolio during the
Revolving Period, the "1996-B Leases" and the "1996-B Leased Vehicles",
respectively, and, together with those other Trust Assets so allocated either
initially or during the Revolving Period pursuant to Section 2.02 hereof, the
"1996-B SUBI Assets"). In addition to the conveyance of such 1996-B SUBI Assets
to the Trust pursuant to Section 2.01 of the Trust Agreement, the Grantor does
hereby grant to the Trustee a security interest therein, and the Trustee shall
have all of the rights, powers and privileges of a secured party under the UCC.
(b) Also pursuant to Section 4.02(a) of the Trust
Agreement, the Trustee hereby creates a SUBI which shall be known
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as the "1996-B SUBI". The 1996-B SUBI shall represent a specific divided
beneficial interest solely in the 1996-B SUBI Portfolio and the 1996-B SUBI
Assets.
(c) As required by Section 4.02(d) of the Trust
Agreement, the Beneficiary will certify to the Trustee as of the date of
execution and delivery hereof that (i) the sole pledgee of the Undivided Trust
Interest has received prior notice of the creation of the 1996-B SUBI Portfolio
and of the terms and provisions of (x) this Supplement and (y) the Securitized
Financing contemplated by the 1996-B Securitization Trust Agreement and (ii)
after giving effect to the creation of the 1996-B SUBI, the transfer to the
Beneficiary of both 1996-B SUBI Certificates and the application by the
Beneficiary of the proceeds of that Securitized Financing, no event of default
(matured or unmatured) shall exist under any Securitized Financing involving a
UTI Pledge.
SECTION 11.02. SUBSEQUENT ADDITIONS TO 1996-B SUBI PORTFOLIO.
(a) The Beneficiary hereby directs the Trustee, as of
each Transfer Date, to cause to be (i) identified on the books and records of
the Trust from among all those Leases, Leased Vehicles and other associated
Trust Assets then owned by the Trustee on behalf of the Trust and not allocated
to, or reserved for allocation to, any SUBI (or, in the circumstances
contemplated in Section 7.03 of the Trust Agreement or Section 11.02(e) below,
acquired by the Trustee on behalf of the Trust but not yet allocated to, or
reserved for allocation to, any specific Portfolio) and (ii) allocated to the
1996-B SUBI Portfolio effective as of the relevant Subsequent Cutoff Date as
additional 1996-B Leases, 1996-B Leased Vehicles and 1996-B SUBI Assets, such
further Eligible Leases, related Leased Vehicles and other associated Trust
Assets (as described in clauses (i) and (ii) of the first sentence of Section
11.01(a)) as shall have an aggregate Discounted Principal Balance of not more
than the aggregate amount of all Principal Collections received from the
Initial Cutoff Date through the end of the most recent Collection Period that
have not yet been so reinvested in additional 1996-B Leases, 1996-B Leased
Vehicles and related 1996-B SUBI Assets, all on a "first-in, first-out" basis
based on the date of origination (other than as provided in Section 11.08
herein), with only the exceptions described in clause (iii) of Section 8.02(b)
of the Servicing Supplement; provided, however, that (y) after giving effect
to such reallocation, no event of default (matured or unmatured) shall exist
under any Securitized Financing involving a UTI Pledge, and (z) prior to such
reallocation, the Servicer shall have provided the Officer's Certificate
required by Section 8.02(b) of the Servicing Supplement.
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(b) Pursuant to subsection (a) above, the Trustee agrees,
as of each Transfer Date, to cause the Servicer to identify such further
Eligible Leases, related Leased Vehicles and other associated Trust Assets as
described in Section 11.02(a) and thereafter to allocate them to the 1996-B SUBI
Portfolio.
(c) Except in the circumstances set forth in Section 7.03
of the Trust Agreement or Section 12.02 below, the Trustee shall direct the
Servicer, pursuant to Section 8.02(c) of the Servicing Supplement, effective as
of each Transfer Date, to transfer or cause to be transferred from the 1996-B
SUBI Collection Account to the Lease Funding Account an amount equal to the
aggregate Discounted Principal Balance as of the Subsequent Cutoff Date of the
1996-B Leases then being added to the 1996-B SUBI Portfolio pursuant to Section
11.02(a) hereof.
(d) To the extent that, for any reason, the additional
1996-B Leases allocated to the 1996-B SUBI Portfolio on any Transfer Date shall
have an aggregate Discounted Principal Balance, measured as of the Subsequent
Cutoff Date, that is less than the aggregate amount of all Principal
Collections received since the Initial Cutoff Date and prior to the termination
of the Revolving Period which have not yet been reinvested in additional 1996-B
Leases, 1996-B Leased Vehicles and related 1996-B SUBI Assets, the balance of
such Principal Collections ("Unallocated Principal Collections") shall continue
to be invested and reinvested in Permitted Investments as part of the 1996-B
SUBI Portfolio until the earliest of (i) the reinvestment of such unallocated
Principal Collections on a subsequent Transfer Date, (ii) the date on which an
Early Amortization Event occurs or (iii) the October 1997 Distribution Date (in
the cases of clauses (ii) and (iii), at which time such funds shall be treated
as Principal Collections collected during the Amortization Period).
(e) In the circumstances set forth in Section 7.03 of the
Trust Agreement or Section 12.02 of this Supplement, the Trustee shall direct
the Servicer, pursuant to Section 8.02(d) of the Servicing Supplement,
effective as of each Transfer Date, to transfer from the 1996-B SUBI Collection
Account to the 1996-B SUBI Lease Account those Principal Collections received
since the Initial Cutoff Date that have not yet been reinvested in additional
1996-B Leases, 1996-B Leased Vehicles and related 1996-B SUBI Assets, to be
applied in accordance with Section 7.03 of the Trust Agreement.
(f) Neither any interest in the 1996-B SUBI nor any
1996-B SUBI Certificate may be transferred or assigned by the Beneficiary, and
any such purported transfer or assignment shall be deemed null, void and of no
effect herewith, provided, however, that (i) the 1996-B SUBI and the 1996-B
SUBI Certificates may be sold to the Seller pursuant to the SUBI
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Certificate Agreement, and (ii) the 99.8% 1996-B SUBI Certificate and the
interest in the 1996-B SUBI represented thereby may be assigned by the Seller
absolutely or a security interest therein granted in connection with a
Securitized Financing.
SECTION 11.03. ISSUANCE AND FORM OF 1996-B SUBI CERTIFICATES.
(a) The 1996-B SUBI shall be represented by two 1996-B
SUBI Certificates: the 99.8% 1996-B SUBI Certificate, and the 0.2% 1996-B SUBI
Certificate, each of which shall represent a beneficial interest in the 1996-B
SUBI and the 1996-B SUBI Portfolio, as further set forth herein. The 1996-B SUBI
Certificates shall be substantially in the form of Exhibit B attached hereto,
with such appropriate insertions, omissions, substitutions and other variations
as are required by this Supplement and may have such letters, numbers or other
marks of identification and such legends and endorsements placed thereon as may,
consistently herewith and with the Trust Agreement, be directed by the
Beneficiary. Any portion of the 1996-B SUBI Certificates may be set forth on the
reverse thereof, in which case the following reference to the portion of the
text on the reverse shall be inserted on the face thereof, in relative proximity
to and prior to the signature of the Trustee executing such certificate:
"Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which provisions
shall for all purposes have the same effect as if set forth at
this place."
The 1996-B SUBI Certificates shall be printed, lithographed, typewritten,
mimeographed, photocopied or otherwise produced or may be produced in any other
manner as may, consistently herewith and with the Trust Agreement, be
determined by the Beneficiary.
(b) As required by Section 4.02(b) of the Trust Agreement,
each 1996-B SUBI Certificate shall contain an express written waiver of any
claim by any holder thereof or owner of a beneficial interest therein to any
proceeds or assets of the Trustee and to all of the Trust Assets other than
those from time to time included within the 1996-B SUBI Portfolio as 1996-B SUBI
Assets and those proceeds or assets derived from or earned by such 1996-B SUBI
Assets.
SECTION 11.04. ACTIONS AND FILINGS.
The Beneficiary hereby directs the Trustee to enter into the
Backup Security Agreement as a protective device. The Grantor and the Trustee
will undertake all other and future actions and activities as may be deemed
reasonably necessary by the Servicer (pursuant to Section 8.04 of the Servicing
Supplement) to perfect (or evidence) and confirm the foregoing allocations of
Trust Assets to the 1996-B SUBI Portfolio, including without limitation filing
or causing to be filed UCC financing statements and executing and delivering
all related filings, documents or writings as may be deemed reasonably
necessary
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by the Servicer hereunder or under any other Securitization Trust Documents
(including the Backup Security Agreement); provided, however, that in no event
will the Grantor or the Trustee be required to take any action to perfect any
security interest that may be held by the Securitization Trustee in any 1996-B
Leased Vehicle. The Grantor hereby irrevocably makes and appoints each of the
Trustee and the Servicer, and any of their respective officers, employees or
agents, as the true and lawful attorney-in-fact of the Grantor (which
appointment is coupled with an interest and is irrevocable) with power to sign
on behalf of the Grantor any financing statements, continuation statements,
security agreements, mortgages, assignments, affidavits, letters of authority,
notices or similar documents necessary or appropriate to be executed or filed
pursuant to this Section.
SECTION 11.05. TERMINATION OF 1996-B SUBI.
In connection with any purchase by the Seller of the Investor
Certificateholders' interest in the corpus of the Securitization Trust pursuant
to Section 7.02 of the Securitization Trust Agreement, and the succession of
the Seller to all of the interest in the 1996-B SUBI represented by the 1996-B
SUBI Certificates, should all of the interest in the 1996-B SUBI thereafter be
transferred to the UTI Holder, whether by sale or otherwise, then upon the
direction of the UTI Holder the 1996-B SUBI shall be terminated, the 1996-B
SUBI Certificates shall be returned to the Trustee and cancelled thereby, and
(pursuant to Section 12.01(a) of the Servicing Supplement) the Servicer shall
reallocate all 1996-B Leases, 1996-B Leased Vehicles and related 1996-B SUBI
Assets to the UTI Portfolio.
SECTION 11.06. MERGER OR CONSOLIDATION OF TRUSTEE.
The Trustee shall give notice to each Rating Agency (as
defined in the Securitization Trust Agreement) prior to effecting any merger,
consolidation, or other transaction set forth in Section 6.05 of the Trust
Agreement.
SECTION 11.07. REPRESENTATIONS AND WARRANTIES OF TRUSTEE.
The Trustee hereby makes the following representations and
warranties on which the Grantor and Beneficiary, each of their permitted
assignees and pledgees, and each pledgee or holder of a 1996-B SUBI Certificate
(and beneficial owner of
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any portion thereof in connection with a Securitized Financing, including the
Securitization Trustee and the Investor Certificateholders) may rely:
(a) Organization and Good Standing. The Trustee is a
corporation, duly organized, validly existing and in good standing under the
law of the State of Alabama and is qualified to do business as a foreign
corporation and is in good standing in each of Florida, Georgia, North Carolina
and South Carolina;
(b) Power and Authority. The Trustee has full power,
authority and right to execute, deliver and (assuming that the filings set
forth on Schedule A to the Trust Agreement are sufficient to allow the Trustee
to act as a trustee with respect to the Trust Assets and otherwise perform this
Supplement in each of Alabama, Florida, Georgia, North Carolina and South
Carolina, and in all material respects in any other jurisdiction) perform this
Supplement (in all material respects outside of the five states set forth
above) and has taken all necessary action to authorize the execution, delivery
and performance by it of this Supplement;
(c) Due Execution. This Supplement has been duly executed
and delivered by the Trustee, and is a legal, valid and binding instrument
enforceable against the Trustee in accordance with its terms;
(d) No Conflict. Neither the execution and delivery of
this Supplement nor the consummation of the transactions herein contemplated,
nor compliance with the provisions hereof, will conflict with or result in a
breach of, or constitute a default (with notice or passage of time or both)
under any provision of any law, governmental rule, regulation, judgment, decree
or order binding on the Trustee or the articles of incorporation or bylaws of
the Trustee or any provision of any mortgage, indenture, contract, agreement or
other instrument to which the Trustee is a party or by which it is bound; and
(e) Single Purpose. The Trustee has not engaged, is not
currently engaged, and will not engage during the term of this Agreement in any
other activity other than serving as Trustee and in such ancillary activities
as are necessary and proper in order to act as Trustee in accordance with the
Trust Agreement and this Supplement.
SECTION 11.08. OTHER SUBIS.
The Trustee will not create any SUBI other than the 1996-B
SUBI during the Revolving Period unless the Trustee has received from the
Servicer an Officer's Certificate certifying that the creation of such other
SUBI would not cause an Early Amortization Event (as defined in the
Securitization Trust
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Agreement). The Trustee will not allocate to any SUBI other than the 1996-B
SUBI any Leases, Leased Vehicles or associated Trust Assets booked on the
Servicer's records from September 1, 1996 through September 27, 1996 that
would be eligible to be allocated as 1996-B SUBI Assets until the Revolving
Period has terminated and all Principal Collections collected during the
Revolving Period have been reinvested in additional Leases, Leased Vehicles
and associated Trust Assets pursuant to Section 11.02. In the event that the
Trustee at any time during the Revolving Period also is allocating Trust
Assets to one or more other SUBIs pursuant to similar revolving periods (from
the Trust Assets generally, not from blocks of Trust Assets reserved for
allocation to particular SUBIs), the Trustee first shall allocate available
Trust Assets to SUBIs created prior to the 1996-B SUBI before allocating Trust
Assets to the 1996-B SUBI.
SECTION 11.09. RETAINED SUBI INTEREST.
The Beneficiary or a Special Purpose Affiliate, as applicable,
shall at all times maintain with respect to the 1996-B SUBI at a minimum a
two-tenths of one percent (0.2%) interest in the 1996-B SUBI and the related
1996-B SUBI Portfolio, including (a) a two-tenths of one percent (0.2%)
interest in each material item of income, gain, loss, deduction or credit with
respect to the 1996-B SUBI and 1996-B SUBI Portfolio, and (b) a capital account
balance (or capital investment) in the 1996-B SUBI and 1996-B SUBI Portfolio at
least equal to two-tenths of one percent (0.2%) of the aggregate capital
account balances (or capital investments) therein.
SECTION 11.10. MINIMUM NET WORTH.
Nothwithstanding anything to the contrary in Section 4.03 of
the Trust Agreement, the Grantor (or if Grantor is a partnership, the general
partner of Grantor) shall at all times maintain a minimum net worth of $10
million.
PART XII
SUBI ACCOUNTS
SECTION 12.01. 1996-B SUBI COLLECTION ACCOUNT.
(a) The Trustee shall establish and maintain with respect
to the 1996-B SUBI a "1996-B SUBI Collection Account" in the name of the
Trustee, for the benefit of the holders of 1996-B SUBI Certificates, which
account shall constitute a SUBI Collection Account. The 1996-B SUBI Collection
Account initially shall be established with First Bank, as Trust Agent, and at
all times shall be an Eligible Account. In the event that the Trust Agent no
longer meets the requirements stated in the definition of "Eligible Account",
then the Servicer shall, with the
25
<PAGE> 31
Trustee's assistance as necessary, cause the 1996-B SUBI Collection Account to
be moved to a bank or trust company that satisfies those requirements. The
1996-B SUBI Collection Account shall relate solely to the 1996-B SUBI and the
1996-B SUBI Portfolio, and funds therein shall not be commingled with any other
moneys, except as otherwise provided for or contemplated in the Trust Agreement
as supplemented by this Supplement or in the Servicing Agreement as
supplemented by the Servicing Supplement. All amounts held in the 1996-B SUBI
Collection Account shall be invested in Permitted Investments in accordance
with Section 7.01(d) of the Trust Agreement and Section 11.02(d) hereof until
distributed or otherwise applied in accordance with the Trust Agreement or this
Supplement.
(b) On each Deposit Date, the Trustee shall transfer or
cause the transfer from the 1996-B SUBI Collection Account to the Residual
Value Surplus Account of any excess of Net Matured Leased Vehicle Proceeds (for
these purposes, calculated without subtracting any amounts transferred pursuant
to this subsection (b)) for the related Collection Period over the sum of the
Booked Residual Values of all Matured Vehicles sold or otherwise disposed of
from Matured Leased Vehicle Inventory during the related Collection Period.
(c) On each Deposit Date the Trustee shall transfer or
cause the transfer of all Principal Collections and Interest Collections in the
1996-B SUBI Collection Account with respect to the related Collection Period to
the holders of the 1996-B SUBI Certificates (and more particularly, with regard
to the 99.8% 1996-B SUBI Certificate, to the Distribution Account), pro rata in
proportion to the relative percentage of the 1996-B SUBI represented by each;
provided, however, that on each Deposit Date related to a Collection Period in
the Revolving Period, the Trustee shall withhold from any such transfers all
Principal Collections, all of which shall be applied solely as provided for in
Section 11.02 hereof. After the last Deposit Date related to a Collection
Period in the Revolving Period, Principal Collections shall be included in
calculating and making any such transfers.
(d) The Trustee shall provide in the Servicing Supplement
that the Servicer shall prepare all such calculations and provide for all such
transfers as are provided for in this Section 12.01.
(e) Any transfer to the holder of the 99.8% 1996-B SUBI
Certificate shall be made as directed pursuant to the Securitization Trust
Documents. Any transfer to the holder of the 0.2% 1996-B SUBI Certificate shall
be made at the direction of such holder.
26
<PAGE> 32
(f) Notwithstanding Section 7.01(b) of the Trust
Agreement and Section 2.02 of the Servicing Agreement, the Trustee may provide
in the Servicing Supplement that, in the event the Servicer provides to the
Beneficiary, the Seller, the Trustee and the Securitization Trustee a letter
from each Rating Agency to the effect that the utilization by the Servicer of
an alternative remittance schedule with respect to collections arising out of
the 1996-B SUBI Portfolio to be deposited in the 1996-B SUBI Collection Account
pursuant to Section 2.02(c) or (d) of the Servicing Agreement (including but
not limited to the use of an alternative remittance schedule pursuant to which
the obligations of the Servicer to make such remittances are secured by a
Servicer Letter of Credit (as defined in such Servicing Supplement) satisfactory
to each such Rating Agency (as defined in the Securitization Trust Agreement))
will not result in a qualification, downgrading or withdrawal of the
then-current rating assigned to the Rated Certificates by such Rating Agency,
(i) the Servicing Supplement may be so modified without the consent of any
Certificateholders pursuant to Section 12.02 thereof and (ii) the Servicer may
remit such collections to the 1996-B SUBI Collection Account in accordance with
that alternative remittance schedule.
(g) Notwithstanding Section 5.05 or 7.01(c) or any other
provision of the Trust Agreement, the rights of the Trustee to be indemnified or
reimbursed for Administrative Expenses of the Trust incurred in connection with
or allocated to the 1996-B SUBI shall be limited to those Capped Origination
Trust Administrative Expenses as may be deducted from Collections in accordance
with the definition of "Interest Collections", any reimbursement of Uncapped
Administrative Expenses (as defined in the Securitization Trust Agreement) as
may be available pursuant to Section 3.03(b) of the Securitization Trust
Agreement, any advance of Administrative Expenses as may be available pursuant
to Section 9.05(a) of the Servicing Supplement, and any indemnity as may be
available pursuant to Section 2.07(g) of the Servicing Agreement.
SECTION 12.02. SUBI LEASE ACCOUNT.
(a) In the circumstances set forth in Section 7.03 of the
Trust Agreement, the Trustee shall establish and maintain with respect to the
1996-B SUBI a "1996-B SUBI Lease Account" in the name of the Trustee, for the
benefit of the holders of the 1996-B SUBI Certificates, which account shall
constitute a SUBI Lease Account. Any 1996-B SUBI Lease Account initially shall
be established with the Trust Agent and at all times shall be an Eligible
Account. In the event that the Trust Agent no longer meets the requirements
stated in the definition of "Eligible Account", then the Servicer shall, with
the Trustee's assistance as necessary, cause the 1996-B SUBI Lease Account to
be moved to a bank or trust company that satisfies those requirements. The
27
<PAGE> 33
1996-B SUBI Lease Account shall relate solely to the 1996-B SUBI and the 1996-B
SUBI Portfolio, and funds therein shall not be commingled with any other moneys,
except as otherwise provided for or contemplated in the Trust Agreement as
supplemented by this Supplement or in the Servicing Agreement as supplemented by
the Servicing Supplement. All amounts held in the 1996-B SUBI Lease Account
shall be invested in Permitted Investments in accordance with Section 7.01(d) of
the Trust Agreement and Section 11.02(d) hereof until distributed or otherwise
applied in accordance with the Trust Agreement or this Supplement.
(b) All transfers of funds into and out of the 1996-B
SUBI Lease Account shall be made in accordance with Section 7.03 of the Trust
Agreement.
28
<PAGE> 34
SECTION 12.03. RESIDUAL VALUE SURPLUS ACCOUNT.
(a) The Trustee shall establish and maintain with respect
to the 1996-B SUBI a "Residual Value Surplus Account" in the name of the
Trustee, for the benefit of the holders of 1996-B SUBI Certificates of the
Trust. The Residual Value Surplus Account initially shall be established with
First Bank, as Trust Agent, and at all times shall be an Eligible Account. In
the event that the Trust Agent no longer meets the requirements stated in the
definition of "Eligible Account", then the Servicer shall, with the Trustee's
assistance as necessary, cause the Residual Value Surplus Account to be moved to
a bank or trust company that satisfies those requirements. The Residual Value
Surplus Account shall relate solely to the 1996-B SUBI and the 1996-B SUBI
Portfolio, and funds therein shall not be commingled with any other moneys,
except as otherwise provided for or contemplated in the Trust Agreement as
supplemented by this Supplement or in the Servicing Agreement as supplemented by
the Servicing Supplement. All amounts held in the Residual Value Surplus Account
shall be invested in Permitted Investments in accordance with Section 7.01(d) of
the Trust Agreement and Section 11.02(d) hereof until distributed or otherwise
applied in accordance with the Trust Agreement or this Supplement.
(b) If, for any Collection Period, (i) any Matured
Vehicle included in Matured Leased Vehicle Inventory as of the last day of that
Collection Period has not been sold or otherwise disposed of by the Servicer
for at least two full Collection Periods, or (ii) the sum of the Booked
Residual Values of all Matured Vehicles sold or otherwise disposed of from
Matured Leased Vehicle Inventory during that Collection Period exceeds Net
Matured Leased Vehicle Proceeds (for purposes hereof, calculated without
including transfers made pursuant to this subsection (b)), then on the related
Deposit Date, the Trustee shall transfer or cause the transfer from the
Residual Value Surplus Account to the 1996-B SUBI Collection Account of an
amount equal to the sum of (x) the Booked Residual Values of the Matured
Vehicles described in clause (i) and (y) the excess described in clause (ii).
(c) The Trustee shall provide in the Servicing Supplement
that the Servicer shall prepare all such calculations and provide for all such
transfers as are provided for in this Section 12.03.
SECTION 12.04. SERVICER CALCULATIONS.
The Trustee shall be under no obligation to recalculate or
reverify any calculations made by the Servicer with respect to any amounts to
be transferred by the Trustee pursuant to this Part XII.
29
<PAGE> 35
PART XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. AMENDMENT, ETC.
(a) Notwithstanding Section 9.01 of the Trust Agreement,
the Trust Agreement, as supplemented by this Supplement, to the extent that it
deals solely with the 1996-B SUBI and the 1996-B SUBI Portfolio, may be amended
from time to time only in a writing signed by the Trustee and the Beneficiary
(and by First Bank to the extent that any such amendment affects it as Trust
Agent), with the prior written consent of the Securitization Trustee, which
shall be given only in the circumstances contemplated by Section 9.01 of the
Securitization Trust Agreement.
(b) ALFI LP shall provide each Rating Agency (as defined
in the Securitization Trust Agreement) prior notice of the content of any
proposed amendment to the Trust Agreement, whether or not such amendment
relates to the 1996-B SUBI or requires approval by any Rating Agency.
(c) No resignation or removal of the Trustee pursuant to
Section 6.03 of the Trust Agreement shall be effective unless and until each
Rating Agency has confirmed, in writing, that such resignation or removal would
not cause it to downgrade, withdraw, or otherwise adversely modify its
then-current rating of the Rated Certificates.
(d) The holder from time to time of the Trustee Stock
pursuant to Section 6.10 of the Trust Agreement shall at all times be a
corporation organized and doing business under the laws of such State or the
United States; authorized under such laws to exercise corporate trust powers;
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authorities; and having a
long-term deposit rating no lower than Baa3 by Moody's, so long as Moody's is a
Rating Agency or be otherwise acceptable to each Rating Agency, as evidenced by
a letter to such effect from each of them. If such holder 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 such holder shall cease to be
eligible in accordance with the provisions of this subsection (d), it will
immediately so notify the Beneficiary in the manner and with the effect
specified in Section 6.10(b) of the Trust Agreement.
30
<PAGE> 36
SECTION 13.02. GOVERNING LAW.
THIS SUPPLEMENT SHALL BE CREATED UNDER AND GOVERNED BY AND
CONSTRUED UNDER THE INTERNAL LAWS OF THE STATE OF ALABAMA, WITHOUT REGARD TO
ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 13.03. NOTICES.
The notice provisions of Section 9.03 of the Trust Agreement
shall apply equally to this Supplement, provided, that any notice to the
Securitization Trustee shall be addressed as follows:
First Bank National Association
400 North Michigan Avenue
Chicago, Illinois 60611
Attention: Corporate Trust Office
A copy of each notice or other writing required to be delivered to the Trustee
pursuant to the Trust Agreement or this Supplement also shall be delivered to
the Securitization Trustee.
SECTION 13.04. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or
terms of this Supplement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Supplement and
shall in no way affect the validity or enforceability of the other provisions
of this Supplement or of any 1996-B SUBI Certificates or the rights of the
holders thereof. To the extent permitted by law, the parties hereto waive any
provision of law that renders any provision of this Supplement invalid or
unenforceable in any respect.
SECTION 13.05. EFFECT OF SUPPLEMENT ON TRUST AGREEMENT.
(a) Except as otherwise specifically provided herein: (i)
the parties shall continue to be bound by all provisions of the Trust
Agreement; and (ii) the provisions set forth herein shall operate either as
additions to or modifications of the already-extant obligations of the parties
under the Trust Agreement, as the context may require. In the event of any
conflict between the provisions of this Supplement and the Trust Agreement with
respect to the 1996-B SUBI, the provisions of this Supplement shall prevail.
(b) For purposes of determining the parties' obligations
under this Supplement with respect to the 1996-B SUBI, general references in
the Trust Agreement to: (i) a SUBI
31
<PAGE> 37
Account shall be deemed to refer more specifically to the 1996-B SUBI Account;
(ii) a SUBI Asset shall be deemed to refer more specifically to a 1996-B SUBI
Asset; (iii) an appropriate or applicable SUBI Collection Account shall be
deemed to refer more specifically to the 1996-B SUBI Collection Account; (iv)
an appropriate or applicable SUBI Lease Account shall be deemed to refer more
specifically to a 1996-B SUBI Lease Account; (v) a SUBI Portfolio shall be
deemed to refer more specifically to the 1996-B SUBI Portfolio; (vi) a SUBI
Supplement shall be deemed to refer more specifically to this Supplement; and
(vii) a SUBI Servicing Agreement Supplement shall be deemed to refer more
specifically to the Servicing Supplement.
[SIGNATURES ON NEXT PAGE]
32
<PAGE> 38
IN WITNESS WHEREOF, the Grantor, the Trustee, and (solely for
the limited purposes set forth in Sections 5.03(e), 6.10 and 9.03 of the Trust
Agreement) First Bank, have caused this Supplement to be duly executed by their
respective officers as of the day and year first above written.
AUTO LEASE FINANCE, L.P., Grantor
and Beneficiary
By: AUTO LEASE FINANCE, INC., its
general partner
By: ____________________________
Name:____________________________
Title:___________________________
VT INC., as Trustee
By: ____________________________
Name:____________________________
Title:___________________________
FIRST BANK NATIONAL ASSOCIATION, as
Trust Agent
By: ____________________________
Name:____________________________
Title:___________________________
WORLD OMNI LEASE SECURITIZATION L.P.,
assignee of Beneficiary (solely to
acknowledge the provisions hereof)
By: WORLD OMNI LEASE SECURITIZATION,
INC., its general partner
By: ____________________________
Name:____________________________
Title:___________________________
33
<PAGE> 39
STATE OF _____________ )
)
COUNTY OF _____________ )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that ______________, whose name as _______________ of
Auto Lease Finance, Inc., a Delaware corporation, in its capacity as the
general partner of Auto Lease Finance, L.P., a Delaware limited partnership, is
signed to the foregoing instrument, and who is known to me, acknowledged before
me on this day, that, being informed of the contents thereof, he, as such
officer and with full authority, executed the same voluntarily for and as the
act of said corporation, acting in its capacity as general partner as
aforesaid.
Given under my hand and official seal, this the ___ day of
___________, 1996.
__________________________________
(SEAL) NOTARY PUBLIC
My Commission Expires: __________
34
<PAGE> 40
STATE OF ______________ )
)
COUNTY OF ______________ )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that _________________________, whose name as
_________________________ of VT Inc., an Alabama corporation, is signed to the
foregoing instrument, and who is known to me, acknowledged before me on this
day, that, being informed of the contents thereof, he, as such officer and with
full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand and official seal, this the ___ day of
___________, 1996.
__________________________________
(SEAL) NOTARY PUBLIC
My Commission Expires: __________
35
<PAGE> 41
STATE OF _______________ )
)
COUNTY OF _______________ )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that _________________________, whose name as
_________________________ of First Bank National Association, a national
banking association, is signed to the foregoing instrument, and who is known to
me, acknowledged before me on this day, that, being informed of the contents
thereof, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said national banking association.
Given under my hand and official seal, this the ___ day of _________,
1996.
__________________________________
(SEAL) NOTARY PUBLIC
My Commission Expires: __________
36
<PAGE> 42
STATE OF _______________ )
)
COUNTY OF _______________ )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that _____________________, whose name as
________________ of World Omni Lease Securitization, Inc., a Delaware
corporation, in its capacity as the general partner of World Omni Lease
Securitization, L.P., a Delaware limited partnership, is signed to the
foregoing instrument, and who is known to me, acknowledged before me on this
day, that, being informed of the contents thereof, he, as such officer and with
full authority, executed the same voluntarily for and as the act of said
corporation, acting in its capacity as general partner as aforesaid.
Given under my hand and official seal, this the ___ day of _________,
____, 1996.
_________________________________
(SEAL) NOTARY PUBLIC
My Commission Expires: __________
37
<PAGE> 43
EXHIBIT A
SCHEDULE OF 1996-B LEASES AND
1996-B LEASED VEHICLES AS OF THE INITIAL CUTOFF DATE
[Omitted. Copies on file with the Servicer, the Trustee and
the Securitization Trustee.]
A-1
<PAGE> 44
EXHIBIT B
FORM OF 1996-B SUBI CERTIFICATES
WORLD OMNI LT
SPECIAL UNIT OF BENEFICIAL INTEREST 1996-B CERTIFICATE
evidencing a fractional undivided __% interest in all 1996-B SUBI
Assets (as defined below).
(This Certificate does not represent an obligation of, or an interest
in, World Omni Financial Corp., Auto Lease Finance, Inc., Auto Lease
Finance L.P. or any of their respective affiliates.)
Number 1996-B SUBI-__
THIS CERTIFIES THAT __________________________________ is the
registered owner of a nonassessable, fully-paid, fractional undivided interest
in the 1996-B SUBI Assets (such interest, a "1996-B SUBI Interest"), of World
Omni LT, an Alabama trust (the "Trust") formed by Auto Lease Finance L.P., a
Delaware limited partnership, as grantor ("ALFI LP" or, in its capacity as
grantor thereunder, and, together with any successor or assign, the "Grantor"),
and VT Inc., an Alabama corporation, as trustee (the "Trustee"). The Trust was
created pursuant to a Trust Agreement dated and effective as of November 1,
1993, as amended and restated pursuant to an Amended and Restated Trust
Agreement dated and effective as of June 1, 1994, as further amended and
restated pursuant to a Second Amended and Restated Trust Agreement dated and
effective as of July 1, 1994, and as further amended by that certain Amendment
No. 1 to Second Amended and Restated Trust Agreement dated as of November 1,
1994 (as so amended and restated, the "Trust Agreement"), among the Grantor,
ALFI LP as the sole initial beneficiary (in such capacity, and, together with
any successor or permitted assign, the "Beneficiary"), the Trustee, and, for
certain limited purposes set forth therein, First Bank National Association, a
national banking association (successor trustee to Bank of America Illinois, an
Illinois banking corporation) ("First Bank"), as supplemented by that certain
1996-B Supplement to Trust Agreement dated and effective as of October 1, 1996
among the Grantor, the Beneficiary, the Trustee, First Bank and World Omni Lease
Securitization L.P (the "Seller") (the Trust Agreement, as so supplemented, the
"Agreement"). A summary of certain of the pertinent portions of the Agreement is
set forth below. To the extent not otherwise defined herein, the capitalized
terms herein have the meanings set forth in the Agreement.
B-1
<PAGE> 45
This Certificate is one of the duly authorized certificates issued
under the Agreement and designated as "World Omni LT Special Unit of Beneficial
Interest 1996-B Certificates" (the "1996-B SUBI Certificates"). This 1996-B SUBI
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the holder of this 1996-B SUBI
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. Also to be issued under the Agreement are various other series of
Certificates, the first designated as "World Omni LT Undivided Trust Interest
Certificates" (the "Undivided Trust Interest Certificates"), and the others each
designated as "World Omni LT Special Unit of Beneficial Interest __
Certificates" (togethr with the 1996-B SUBI certificates, the "SUBI
Certificates" and, together with the Undivided Trust Interest Certificates, the
"Certificates"). The Undivided Trust Interest Certificates, taken together,
evidence an exclusive, undivided interest in the Trust Assets, other than SUBI
Assets (each as defined below); each other series of SUBI Certificates, taken
together, will evidence an exclusive undivided interest in a separate SUBI
Portfolio (as defined below) other than the 1996-B SUBI Portfolio.
The property of the Trust includes, or will include, among other
things: cash capital; certain fixed rate retail closed-end lease contracts (the
"Leases") of automobile and light-duty trucks (the "Leased Vehicles")
originated on or after November 1, 1993 by those vehicle dealers ("Dealers")
located within the United States (to the extent permitted by law applicable to
the Trustee or otherwise) pursuant to dealer agreements entered into with the
initial Grantor's parent company, World Omni Financial Corp. ("WOFCO") (or, in
certain circumstances, by dealers or other Persons unaffiliated with WOFCO),
and the proceeds thereof; the Leased Vehicles and the proceeds thereof,
including the residual values thereof and the titles thereto; the right to
proceeds of any Dealer repurchase obligations relating to any Lease or Leased
Vehicle; and certain insurance policies or proceeds therefrom covering any
Lease, Leased Vehicles or a lessee under a Lease (such assets, together with
any other assets of the Trust, the "Trust Assets"). The Agreement provides
that, from time to time, certain of the Trust Assets will be identified and
allocated on the records of the Trust into one or more separate portfolios of
Trust Assets (such assets, "SUBI Assets" and each such portfolio, a "SUBI
Portfolio"). The beneficial interest in each such SUBI Portfolio will constitute
a separate "special unit of beneficial interest" ("SUBI") in the Trust. Pursuant
to the 1996-B SUBI Supplement, various SUBI Assets (the "1996-B SUBI Assets")
were identified and allocated on the records of the Trust into a separate SUBI
Portfolio (the "1996-B SUBI Portfolio"), and the beneficial interest in the
1996-B SUBI Portfolio was designated as a separate SUBI known as the "1996-B
SUBI". The rights of the holder of this Certificate to certain
B-2
<PAGE> 46
of the proceeds of the 1996-B SUBI Assets are and will be further set forth in
the Agreement.
The Certificates do not represent an obligation of, or an interest in,
the Grantor, WOFCO or any of their respective Affiliates. The Certificates are
limited in right of payment to certain collections and recoveries respecting
the Leases (and the related Obligors) and the Leased Vehicles allocated to the
1996-B SUBI Portfolio, all to the extent and as more specifically set forth in
the Agreement. A copy of the Agreement may be examined during normal business
hours at the principal office of the Trustee, and at such other places, if any,
designated by the Trustee, by the holder hereof upon request.
By accepting this Certificate, the holder hereof and all owners of
beneficial interests herein waives any claim to any proceeds or assets of the
Trustee and to all of the Trust Assets other than those from time to time
included within the 1996-B SUBI Portfolio as 1996-B SUBI Assets and those
proceeds or assets derived from or earned by such 1996- B SUBI Assets.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto with respect to the 1996-B SUBI Assets, the 1996-B SUBI
Portfolio and the 1996-B SUBI and the rights of holders of 1996-B SUBI
Certificates at any time by the Beneficiary and the Trustee, only with the
consent of First Bank, as Trustee (the "Securitization Trustee") under that
certain Securitization Trust Agreement dated as of October 1, 1996 (the
"Securitization Trust Agreement"), between the Seller and the Securitization
Trustee. The Securitization Trust Agreement further provides that, in certain
limited circumstances, such consent may be given only with the consent of the
Holders of Investor Certificates evidencing not less than 51% of the aggregate
Percentage Interest (as all such terms are defined in the Securitization Trust
Agreement), voting together as a single class. If approval of any holder of
this Certificate is required, any such consent shall be conclusive and binding
on such holder and on all future holders hereof and of any Certificate issued
upon the permitted transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent is made upon this Certificate.
As provided in the Agreement, this Certificate and the underlying
interests represented hereby may not be transferred or assigned, and any such
purported transfer or assignment shall be null, void, and of no effect, except
in connection with an absolute assignment or the grant of a security interest
pledge by the Seller in connection with [(I)] a sale by the Beneficiary to the
Seller[, OR (II) A SECURITIZED FINANCING]. [NOTE: BRACKETED LANGUAGE ONLY IN
99.8% 1996-B SUBI CERTIFICATE.] Such a transfer of this Certificate is
registrable upon surrender of
B-3
<PAGE> 47
this Certificate for registration of transfer at the corporate trust office of
the Trustee (or the Trust Agent, if applicable) or by any successor Trustee,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new 1996-B SUBI Certificates
of a like aggregate fractional undivided interest will be issued to the
designated permitted transferee.
Prior to due presentation of this Certificate for registration of a
permitted transfer, the Trustee, the certificate registrar and any of their
respective agents may treat the person or entity in whose name this Certificate
is registered as the owner hereof for the purpose of receiving distributions
and for all other purposes, and, except as provided for in the Agreement,
neither the Trustee, the certificate registrar nor any such agent shall be
affected by any notice to the contrary.
Unless this Certificate shall have been executed by an authorized
officer of the Trustee, by manual signature, this Certificate shall not entitle
the holder hereof to any benefit under the Agreement or be valid for any
purpose.
B-4
<PAGE> 48
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this 1996- B SUBI Certificate to be duly
executed.
Dated: WORLD OMNI LT
VT INC., as Trustee
(SEAL) By:___________________________
Authorized Officer
ATTEST:
_________________________
B-5
<PAGE> 49
EXHIBIT C
FORMS OF 1996-B LEASE
C-1
<PAGE> 50
EXHIBIT D
CREDIT AND COLLECTION POLICY
D-1
<PAGE> 1
EXHIBIT 10.4
________________________________________________________________________________
VT INC.,
AS TRUSTEE OF
WORLD OMNI LT
AND
WORLD OMNI FINANCIAL CORP.
FORM OF
SUPPLEMENT 1996-B TO
SERVICING AGREEMENT
DATED AS OF OCTOBER 1, 1996
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE SIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 6.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ALFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ALFI LP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Current Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Eligible Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
First Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1996-B SUBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1996-B SUBI Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1996-B Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1996-B SUBI Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1996-B SUBI Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Nonrecoverable Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Origination Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Origination Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 5
Origination Trust Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Origination Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Securitization Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Securitization Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . 5
Securitization Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Servicer Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Servicer Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Servicer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trust Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Unfunded Current Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE SEVEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
REPRESENTATIONS AND WARRANTIES OF SERVICER . . . . . . . . . . . . . . . . . . . . . . 6
Section 7.01. Organization and Standing . . . . . . . . . . . . . . . . . . 6
Section 7.02. Authorization, Execution and Delivery; No Conflicts . . . . . 6
Section 7.03. Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 7.04. Enforceability . . . . . . . . . . . . . . . . . . . . . . . 7
Section 7.05. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
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<TABLE>
<S> <C>
ARTICLE EIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
CREATION OF 1996-B SUBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.01. Initial Creation of 1996-B SUBI Portfolio. . . . . . . . . . 7
Section 8.02. Subsequent Additions to 1996-B SUBI Portfolio . . . . . . . . 8
Section 8.03. Servicer Payment in Respect of Certain
Leases and Leased Vehicles . . . . . . . . . . . . . . . . . 10
Section 8.04. Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE NINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SPECIFIC REQUIREMENTS FOR
ADMINISTRATION AND SERVICING OF LEASES
IN 1996-B SUBI PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 9.01. Servicer Bound by Servicing Agreement . . . . . . . . . . . . 11
Section 9.02. Collection of Monthly Lease Payments and Remittances;
Application of Proceeds; Accounts. . . . . . . . . . . . . . 12
Section 9.03. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 9.04. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 9.05. Payment of Certain Fees and Expenses; No Offset . . . . . . . 18
Section 9.06. Servicing Compensation . . . . . . . . . . . . . . . . . . . 19
Section 9.07. Repossession and Sale of Leased Vehicles. . . . . . . . . . . 20
Section 9.08. Indemnification by Servicer. . . . . . . . . . . . . . . . . 20
Section 9.09. Third Party Claims . . . . . . . . . . . . . . . . . . . . . 20
Section 9.10. Insurance Policies . . . . . . . . . . . . . . . . . . . . . 20
Section 9.11. Servicer Not to Resign; Assignment . . . . . . . . . . . . . 21
Section 9.12. Obligor Insurance Coverage in Respect of Leased Vehicles . . 22
Section 9.13. Corporate Existence; Status; Merger . . . . . . . . . . . . . 22
Section 9.14. Mobile Leased Premises. . . . . . . . . . . . . . . . . . . . 23
ARTICLE TEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
STATEMENTS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 10.01. Reporting by the Servicer . . . . . . . . . . . . . . . . . . 23
Section 10.02. Annual Accountants' Reports . . . . . . . . . . . . . . . . . 24
Section 10.03. Other Certificates and Notices from Servicer . . . . . . . . 24
Section 10.04. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE ELEVEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 11.01. Events of Default; Termination of
Servicer as to 1996-B SUBI Portfolio . . . . . . . . . . . . 25
Section 11.02. No Effect on Other Parties . . . .. . . . . . . . . . . . . . 29
</TABLE>
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<TABLE>
<S> <C>
ARTICLE TWELVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 12.01. Termination of Agreement . . . . . . . . . . . . . . . . . . . 29
Section 12.02. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 12.03. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 12.04. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 12.05. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 12.06. Inspection and Audit Rights . . . . . . . . . . . . . . . . . . 31
Section 12.07. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 12.08. Article and Section Headings . . . . . . . . . . . . . . . . . 31
Section 12.09. Execution in Counterparts . . . . . . . . . . . . . . . . . . . 31
Section 12.10. Rights Cumulative . . . . . . . . . . . . . . . . . . . . . . . 31
Section 12.11. Further Assurances . . . . . . . . . . . . . . . . . . . . . . 32
Section 12.12. Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . 32
EXHIBITS:
EXHIBIT A - Schedule of 1996-B Leases and 1996-B
Leased Vehicles as of the Initial Cutoff
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B - Form of Servicer's Certificate . . . . . . . . . . . . . . . . . . . B-1
</TABLE>
iii
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SUPPLEMENT 1996-B TO
SERVICING AGREEMENT
SUPPLEMENT 1996-B TO SERVICING AGREEMENT (the "Supplement"),
dated as October 1, 1996, between VT INC., an Alabama corporation, as trustee
(hereinafter, together with its successors and assigns, the "Origination
Trustee") of WORLD OMNI LT, an Alabama trust (the "Origination Trust"), and
WORLD OMNI FINANCIAL CORP., a Florida corporation (the "Servicer").
RECITALS
A. Auto Lease Finance L.P. ("ALFI LP"), the Origination
Trustee and, for certain limited purposes set forth therein, First Bank National
Association (successor trustee to Bank of America Illinois, an Illinois banking
corporation) (together with its successors, "First Bank") have entered into that
certain Second Amended and Restated Trust Agreement dated as of July 1, 1994
(amending and restating that certain original Trust Agreement dated as of
November 1, 1993, among Auto Lease Finance, Inc. ("ALFI"), the Origination
Trustee and First Bank, and that certain Amended and Restated Trust Agreement
dated as of June 1, 1994 among ALFI, ALFI LP, the Origination Trustee and First
Bank) as amended by that certain Amendment No. 1 to Second Amended and Restated
Trust Agreement dated as of November 1, 1994, among the same parties (as so
amended and restated, and as it may be further amended, supplemented or
modified, the "Origination Trust Agreement"), pursuant to which ALFI and the
Origination Trustee formed the Origination Trust for the purpose of taking
assignments and conveyances of, holding in trust and dealing in, various Trust
Assets (as defined in the Origination Trust Agreement) in accordance with the
Origination Trust Agreement. ALFI and the Servicer have entered into that
certain Limited Partnership Agreement dated as of June 1, 1994, as amended and
restated by that certain First Amended and Restated Limited Partnership
Agreement dated as of July 1, 1994, pursuant to which ALFI LP was formed and
ALFI contributed to ALFI LP all of its right, title and interest in and to the
Origination Trust.
B. The parties hereto also have entered into that certain
Second Amended and Restated Servicing Agreement dated as of July 1, 1994 (as the
same has been supplemented, is supplemented hereby and may be further amended,
supplemented or modified, the "Servicing Agreement"), amending and restating
that certain original Servicing Agreement dated as of November 1, 1993, and that
certain Amended and Restated Servicing Agreement dated as of June 1, 1994, which
provides for, among other things, the servicing of the Trust Assets by the
Servicer.
C. Concurrently herewith, and as contemplated by the
Servicing Agreement and the Origination Trust Agreement, ALFI LP, the
Origination Trustee, First Bank and World Omni Lease
<PAGE> 6
Securitization L.P. (the "Seller") are entering into that certain Supplement
1996-B to Trust Agreement dated as of October 1, 1996 (the "1996-B SUBI
Supplement"), pursuant to which the Origination Trustee, on behalf of the
Origination Trust and at the direction of ALFI LP, which also will be at that
time a beneficiary of the Origination Trust, will create and issue to ALFI LP a
special unit of beneficial interest in the Origination Trust, or SUBI (as
defined in the Origination Trust Agreement) (such SUBI, the "1996-B SUBI"),
whose beneficiaries generally will be entitled to the net cash flow arising
from, but only from, the related SUBI Portfolio (as defined in the Origination
Trust Agreement) (such SUBI Portfolio, the "1996-B SUBI Portfolio"), a SUBI
Certificate (as defined in the Origination Trust Agreement) representing a 99.8%
beneficial interest in the 1996-B SUBI (such SUBI Certificate, the "99.8% 1996-B
SUBI Certificate") and a SUBI Certificate representing the remaining 0.2%
beneficial interest in the 1996-B SUBI (such SUBI Certificate, the "0.2% 1996-B
SUBI Certificate" and, together with the 99.8% 1996-B SUBI Certificate and any
replacements of either of them, the "1996-B SUBI Certificates"), all as set
forth in the Origination Trust Agreement and the 1996-B SUBI Supplement.
D. Also concurrently herewith, ALFI LP and the Seller are
entering into that certain SUBI Certificate Purchase and Sale Agreement dated as
of October 1, 1996, pursuant to which ALFI LP is selling to the Seller, without
recourse, all of ALFI LP's right, title and interest in and to the 1996-B SUBI
and the 1996-B SUBI Certificates, all moneys due thereon and paid thereon or in
respect thereof and the right to realize on any property that may be deemed to
secure the 1996-B SUBI, and all proceeds thereof, all in consideration of the
cash payment to ALFI LP of an amount equal to the Aggregate Net Investment Value
(as defined in the Securitization Trust Agreement) of the 1996-B SUBI Portfolio
as of the Initial Cutoff Date (as defined in the 1996-B SUBI Supplement).
E. Also concurrently herewith, and as contemplated by the
Servicing Agreement and the Origination Trust Agreement, the Seller and First
Bank, as Trustee (the "Securitization Trustee"), are entering into that certain
Securitization Trust Agreement dated as of October 1, 1996 (the "Securitization
Trust Agreement") pursuant to which the 99.8% 1996-B SUBI Certificate will be
transferred to the Securitization Trustee, in that capacity, in connection with
a Securitized Financing (as defined in the Origination Trust Agreement) by the
Seller, but the 0.2% 1996-B SUBI Certificate will be retained by the Seller and
not used in connection with such Securitized Financing.
F. The parties desire to supplement the terms of the
Servicing Agreement insofar as they apply to the 1996-B SUBI, the 1996-B SUBI
Portfolio, and the 1996-B SUBI Certificates to provide for further specific
servicing obligations that will
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<PAGE> 7
benefit the holders of the 1996-B SUBI Certificates and the parties to and the
beneficiaries of the Securitized Financing contemplated by the Securitization
Trust Agreement, all as generally contemplated by the Servicing Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained and in the Servicing Agreement, the parties hereto
agree to the following supplemental obligations with regard to the 1996-B SUBI
Portfolio:
ARTICLE SIX
DEFINITIONS
SECTION 6.01. DEFINITIONS.
For all purposes of this Supplement, except as otherwise
expressly provided or unless the context otherwise requires, (a) unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings attributed to them by Section 1.01 of the Servicing Agreement, by
Section 0.01 of the Origination Trust Agreement, by Section 13.01 of the 1996-B
SUBI Supplement, or by Section 1.01 of the Securitization Trust Agreement, as
applicable, (b) the capitalized terms defined in this Supplement have the
meanings assigned to them in this Supplement and include (i) all genders and
(ii) the plural as well as the singular, (c) all references to words such as
"herein", "hereof" and the like shall refer to this Supplement as a whole and
not to any particular article or section within this Supplement, (d) the term
"include" and all variations thereon shall mean "include without limitation",
(e) the term "or" shall include "and/or", and (f) any reference herein to the
"Origination Trustee, acting on behalf of the Origination Trust," or words of
similar import, shall be deemed to mean the Origination Trustee, acting on
behalf of the Origination Trust and all beneficiaries thereof.
"Advance" means, (i) with respect to all Delinquent Leases
included in the 1996-B SUBI Portfolio during a Collection Period, an aggregate
advance required to be made with respect to such Delinquent Leases, the amount
of which shall equal the sum of all Monthly Lease Payments due but not received
during such Collection Period; provided, however, that for purposes of this
definition, the term "Delinquent Lease" shall have the meaning set forth in the
1996- B SUBI Supplement, except that it shall refer to 1996-B Leases that are
31 days or more past due, not 61 days or more past due; and (ii) with respect
to Leases that are included in the 1996-B SUBI Portfolio during a Collection
Period but which are not Delinquent Leases, an aggregate advance permitted (but
not required) to be made with respect to any Monthly Lease Payments under such
Leases that are one or more days, but less than 31 days, past due.
3
<PAGE> 8
"ALFI" and "ALFI LP" have the respective meanings set forth in
Recital A.
"Code" means the Internal Revenue Code of 1986, as amended.
"Current Liability" means, with respect to any Plan, the
present value of the accrued benefits under the Plan, as set forth in the most
recent audited consolidated financial statements of JM Family Enterprises, Inc.
and its subsidiaries.
"Eligible Servicer" means the Trust Agent or an entity that is
currently servicing a portfolio of automobile and/or light truck retail
installment lease contracts, that is legally qualified and has the capacity to
service the 1996-B Leases and that has demonstrated the ability to service a
portfolio of similar lease contracts professionally and competently in
accordance with high standards of skill and care.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute of similar
import, together with the regulations thereunder, in each case as in effect
from time to time. References to sections of ERISA shall be construed to refer
also to any successor sections.
"ERISA Affiliate" means each person (as defined in Section
3(9) of ERISA) which, together with the identified person, would be deemed to
be a member of the same "controlled group" within the meaning of Section
414(b), (c), (m) and (o) of the Code or Section 4001 of ERISA.
"First Bank" has the meaning set forth in Recital A.
"1996-B SUBI" has the meaning set forth in Recital C.
"1996-B SUBI Account" means any SUBI Account related to the
1996-B SUBI.
"1996-B Event of Default" means any of the acts, events or
occurrences set forth in Section 11.01.
"1996-B SUBI Portfolio" has the meaning set forth in Recital C.
"1996-B SUBI Supplement" has the meaning set forth in Recital
C.
"Nonrecoverable Advance" means any Advance that, in the
Servicer's reasonable judgment, may not be ultimately recoverable by the
Servicer from Matured Leased Vehicle Proceeds, Repossessed
4
<PAGE> 9
Vehicle Proceeds or other Liquidation Proceeds or Insurance Proceeds, any
Residual Value Insurance Policy or otherwise.
"Origination Trust" has the meaning set forth in the Preamble.
"Origination Trust Agreement" has the meaning set forth in
Recital A.
"Origination Trust Expenses" has the meaning set forth in
Section 9.02(e).
"Origination Trustee" has the meaning set forth in the
Preamble.
"Plan" means an "employee benefit plan," as such term is
defined in Section 3(3) of ERISA.
"Prospectus" means that certain prospectus dated October __,
1996 relating to the public offering of the Class A Certificates issued by the
Securitization Trust.
"Securitization Trust" means the trust created by the
Securitization Trust Agreement.
"Securitization Trust Agreement" has the meaning set forth in
Recital E.
"Securitization Trustee" has the meaning set forth in Recital
E.
"Seller" has the meaning set forth in Recital C.
"Servicer Letter of Credit" means a letter of credit, surety
bond or insurance policy under which demands for payment may be made to secure
timely remittance by the Servicer of monthly collections received in respect of
the 1996-B SUBI Assets to the 1996-B SUBI Collection Account.
"Servicer Reimbursement" has the meaning set forth in Section
9.02(g).
"Servicer's Certificate" has the meaning set forth in Section
10.01(b).
"Servicing Agreement" has the meaning set forth in Recital B.
"Supplement" has the meaning set forth in the Preamble.
"Trust Agent" has the meaning set forth in the Preamble.
5
<PAGE> 10
"Unfunded Current Liability" of any Plan means the amount, if
any, by which the present value of the accrued benefits under the Plan as of
the close of its most recent Plan year exceeds the value of the Plan's assets,
which value shall be determined as set forth in the most recent audited
consolidated financial statements of JM Family Enterprises, Inc. and its
subsidiaries.
ARTICLE SEVEN
REPRESENTATIONS AND WARRANTIES OF SERVICER
The Servicer represents and warrants to the Securitization
Trustee as follows:
SECTION 7.01. ORGANIZATION AND STANDING.
The Servicer: (i) is a corporation validly organized and
existing and in good standing under the laws of the State of Florida; (ii) has
qualified to do business as a foreign corporation and is in good standing in
the State of Alabama and any other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not have a
material adverse effect on the ability of the Servicer to carry out its
obligations as Servicer under the Servicing Agreement or this Supplement; (iii)
has full power, authority and legal right to own its property, to carry on its
business as presently conducted, and to enter into and perform its obligations
under the Servicing Agreement and this Supplement; and (iv) holds all requisite
licenses and permits, the absence of which would have a material adverse effect
on its ability to carry on its business as presently conducted.
SECTION 7.02. AUTHORIZATION, EXECUTION AND DELIVERY; NO
CONFLICTS.
The execution and delivery by the Servicer of this Supplement
are within the corporate power of the Servicer and have been duly authorized by
all necessary corporate action on the part of the Servicer. Neither the
execution and delivery of this Supplement, nor the consummation of the
transactions herein contemplated, nor compliance with the provisions hereof,
will conflict with or result in a breach of, or constitute a default (with
notice or passage of time or both) under any provision of any law, governmental
rule, regulation, judgment, decree or order binding on the Servicer or its
properties or the articles of incorporation or bylaws of the Servicer, or any
provision of any indenture, mortgage, contract or other instrument to which the
Servicer is a party or by which it is bound, or result in the acceleration of
any obligation under, or the creation or imposition of any Lien upon, any of its
property pursuant to the
6
<PAGE> 11
terms of any such indenture, mortgage, contract or other instrument.
SECTION 7.03. APPROVALS.
The Servicer has obtained or made all necessary licenses,
consents, approvals, waivers and notifications of creditors, lessors and other
nongovernmental persons, in each case in connection with the execution and
delivery of this Supplement and the consummation of all the transactions herein
contemplated, and the Servicer is not required to obtain the consent of any
other party or the consent, license, approval, waiver or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Supplement.
SECTION 7.04. ENFORCEABILITY.
This Supplement constitutes a legal, valid and binding
instrument enforceable against the Servicer in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance, and other similar laws
relating to the enforcement of creditors' rights generally and to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
SECTION 7.05. LITIGATION.
Except as referred to in the Prospectus under "Risk Factors --
Legal Proceedings", there are no actions, suits or proceedings pending or, to
the knowledge of the Servicer, threatened against or affecting the Servicer or
any Affiliate thereof, before or by any court, administrative agency, arbitrator
or governmental body with respect to any of the transactions contemplated by
this Supplement, or which will, if determined adversely to the Servicer or any
such Affiliate, materially and adversely affect the Servicer's ability to
perform its obligations hereunder. The Servicer is not in default with respect
to any order of any court, administrative agency, arbitrator or governmental
body so as materially and adversely to affect the transactions contemplated by
this Supplement.
ARTICLE EIGHT
CREATION OF 1996-B SUBI
SECTION 8.01. INITIAL CREATION OF 1996-B SUBI PORTFOLIO.
(a) Pursuant to Section 4.02 of the Origination Trust
Agreement and Section 11.01 of the 1996-B SUBI Supplement, the Origination
Trustee has been directed to cause to be identified
7
<PAGE> 12
and allocated on the books and records of the Origination Trust an initial
separate portfolio of SUBI Assets consisting of Leases, related Leased Vehicles
and other associated Trust Assets, which Trust Assets shall meet the criteria
specified therein. Pursuant to Section 2.02(f) of the Servicing Agreement, the
Origination Trustee, on behalf of the Origination Trust, hereby directs that
the Servicer so identify and allocate such a separate portfolio of SUBI Assets
consisting of Leases, related Leased Vehicles and other associated Trust Assets
from among all those Leases, related Leased Vehicles and other associated Trust
Assets owned by the Origination Trustee, on behalf of the Origination Trust,
and currently accounted for as part of the Undivided Trust Interest.
(b) Pursuant to subsection (a) above and Section 2.02(f) of
the Servicing Agreement, the Servicer hereby identifies and allocates the
portfolio of Leases, related Leased Vehicles and other associated Trust Assets
(as described in clauses (i) through (ii) of the first sentence of Section
11.01(a) of the 1996-B SUBI Supplement) more particularly described on Exhibit
A hereto (which is in substantially the form of a Schedule of Leases and Leased
Vehicles), in order to create the initial 1996-B SUBI Portfolio.
(c) The Servicer hereby represents and warrants to the
Origination Trustee, on behalf of the Origination Trust, and to the
Securitization Trustee, on behalf of the Certificateholders, that (i) all 1996-B
Leases as of the Initial Cutoff Date were Eligible Leases as of the Initial
Cutoff Date, (ii) no adverse selection procedures were employed in selecting
such 1996-B Leases, and (iii) it is not aware of any bias in the selection of
such 1996-B Leases that would cause the delinquencies or losses therein to be
worse than those of other Leases.
SECTION 8.02. SUBSEQUENT ADDITIONS TO 1996-B SUBI PORTFOLIO.
(a) Pursuant to Section 11.02 of the 1996-B SUBI
Supplement, the Origination Trustee has been directed to cause to be identified
and allocated on the books and records of the Origination Trust on or before
each Transfer Date certain additional Eligible Leases, related Leased Vehicles
and other associated Trust Assets not then allocated, or reserved for allocation
to, any SUBI Portfolio, with an aggregate Discounted Principal Balance
determined as provided for in such Section. Pursuant to Section 2.02(f) of the
Servicing Agreement, the Origination Trustee, on behalf of the Origination
Trust, hereby directs that the Servicer identify such additional Eligible
Leases, related Leased Vehicles and other associated Trust Assets (as described
in clauses (i) and (ii) of the first sentence of Section 11.01(a) of the 1996-B
SUBI Supplement and as meet the other requirements set forth in Section 11.02
thereof) on
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or before each Transfer Date, and cause such Leases and Leased Vehicles to be
specifically identified on the revised Schedule of Leases and Leased Vehicles
to be delivered pursuant to Section 10.01(b) hereof. On each such Transfer
Date, but effective as of the related Subsequent Cutoff Date, such additional
Eligible Leases, Leased Vehicles and other associated Trust Assets shall be
added to the 1996-B SUBI Portfolio as additional 1996-B SUBI Assets.
(b) The Servicer shall give one Business Day's prior
notice to the Trustee of each Transfer Date. On each Transfer Date, prior to
the reallocation described in the last sentence of subparagraph (a), the
Servicer also shall provide to the Origination Trustee, on behalf of the
Origination Trust, an Officer's Certificate certifying that (i) all 1996-B
Leases added to the 1996-B SUBI Portfolio on that date were Eligible Leases as
of the relevant Subsequent Cutoff Date, (ii) no adverse selection procedures
were employed in selecting such 1996-B Leases, (iii) it is not aware of any
bias in the selection of such 1996-B Leases that would cause the delinquencies
or losses thereof to be worse than other Leases, other than the fact that such
1996-B Leases were selected from all Eligible Leases not then allocated to any
SUBI Portfolio or reserved for allocation to another SUBI Portfolio on a
"first-in, first-out" basis, based on the date of origination (other than as
provided in Section 11.08 of the 1996-B SUBI Supplement) and (iv) unless the
Origination Trustee receives a letter from each Rating Agency to the effect
that the use of different criteria would not result in the qualification,
reduction or withdrawal of its then current rating on any Rated Certificates,
after giving effect to such reallocation (A) each such 1996-B Lease will be
allocated to the 1996-B SUBI Portfolio based upon its Discounted Principal
Balance as of the relevant Subsequent Cutoff Date, (B) the weighted average
remaining term of all 1996-B Leases will be not greater than 38 months, and
(C) the weighted average Booked Residual Value of all 1996-B Leases, as a
percentage of the aggregate Outstanding Principal Balance of the 1996-B
Leases, will be not greater than 65%, based on the characteristics of each
1996-B Lease as of its date of origination.
(c) Except in the circumstances set forth in Section
11.02(e) of the 1996-B SUBI Supplement, on each Transfer Date, the Servicer
shall transfer from the 1996-B SUBI Collection Account to the Lease Funding
Account an amount equal to the
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aggregate Discounted Principal Balance as of the relevant Subsequent Cutoff
Date of the 1996-B Leases then being added to the 1996-B SUBI Portfolio
pursuant to Section 11.02(a) of the 1996-B SUBI Supplement.
(d) In the circumstances set forth in Section 11.02(e) of
the 1996-B SUBI Supplement, the Servicer shall transfer from the 1996-B SUBI
Collection Account to the 1996-B SUBI Lease Account the amounts specified in
such Section.
SECTION 8.03. SERVICER PAYMENT IN RESPECT OF CERTAIN
LEASES AND LEASED VEHICLES.
(a) The representation and warranty of the Servicer set
forth in Section 8.01(c), and the certifications of the Servicer pursuant to
Section 8.02(b)(i), with respect to each 1996-B Lease shall survive delivery of
the related Lease Documents to the Servicer and shall continue so long as such
1996-B Lease remains outstanding, or until the termination of the Securitization
Trust Agreement pursuant to Section 7.01 thereof, whichever occurs earlier. Upon
discovery by the Origination Trustee, the Securitization Trustee or the Servicer
that any such representation or warranty was incorrect as of the time effective
and materially and adversely affects such 1996-B Lease, the party discovering
such incorrectness shall give prompt written notice to the others. Within 60
days of its discovery of such incorrectness or notice to such effect to the
Servicer, the Servicer shall cure in all material respects the circumstances or
condition in respect of which the representation or warranty was incorrect as of
the time effective. If the Servicer is unable or unwilling to do so timely, it
shall, as the sole remedy for such breach, promptly (i) deposit (or cause to be
deposited) into the 1996-B SUBI Collection Account an amount equal to the then
Discounted Principal Balance of such Lease as of the Deposit Date related to the
Collection Period in which the 60-day cure period ended, plus an amount equal to
the imputed interest, or lease charge, portion of any Monthly Lease Payments
with respect thereto at the related Lease Rate that was delinquent as of that
Collection Period, (ii) reallocate such Lease and the related Leased Vehicle
from the 1996-B SUBI Portfolio to the UTI Portfolio, and (iii) indemnify, defend
and hold harmless the holders of any 1996-B SUBI Certificate (including without
limitation the Securitization Trustee on behalf of the Securitization Trust and
the Certificateholders) and any subsequent servicer (if other than the current
Servicer) from and against, any and all loss or liability with respect to or
resulting from any such Lease or Leased Vehicle (including without limitation
the reasonable fees and expenses of counsel). Notwithstanding the foregoing, if
any reallocation described in clause (ii) would cause the Seller Interest to be
equal to or less than zero, the Servicer also shall deposit promptly into the
1996-B SUBI Collection Account an amount so that the Seller
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Interest will not be reduced to less than zero, and the reallocation will not
be made until such deposit has been made.
(b) In the event that the Servicer receives funds from a
Dealer required pursuant to such Dealer's obligation under a Dealer Agreement
with the Servicer to repurchase a misrepresented Lease or Leased Vehicle
included in the 1996-B SUBI Portfolio, the Servicer shall, within two Business
Days of receipt thereof, deposit such funds into the 1996-B SUBI Collection
Account, which deposit shall satisfy the Servicer's obligations pursuant to
Section 8.03(a)(i), and return to the repurchasing Dealer the Certificate of
Title and Lease with respect to such Leased Vehicle.
(c) The obligations of the Servicer pursuant to this
Section 8.03 shall survive any termination of the Servicer with respect to the
1996-B SUBI Portfolio under this Supplement or the Servicing Agreement.
SECTION 8.04. FILINGS.
The Servicer will undertake all other and future actions and
activities as may be reasonably necessary to perfect (or evidence) and confirm
the foregoing allocations of Trust Assets to the 1996-B SUBI Portfolio,
including without limitation filing or causing to be filed UCC financing
statements and executing and delivering all related filings, documents or
writings as may be reasonably necessary hereunder or under any other
Securitization Trust Documents (including the Backup Security Agreement),
whether on its own behalf or pursuant to the power of attorney granted by the
Grantor pursuant to Section 11.04 of the 1996-B SUBI Supplement; provided,
however, that in no event shall the Servicer be required to take any action to
perfect a security interest that may be held by the Securitization Trustee in
any 1996-B Leased Vehicle.
ARTICLE NINE
SPECIFIC REQUIREMENTS FOR
ADMINISTRATION AND SERVICING OF LEASES
IN 1996-B SUBI PORTFOLIO
SECTION 9.01. SERVICER BOUND BY SERVICING AGREEMENT.
(a) Except as otherwise specifically provided herein: (i) the
Servicer shall continue to be bound by all provisions of the Servicing Agreement
with respect to the Leases, Leased Vehicles and other associated Trust Assets in
the 1996-B SUBI Portfolio, including without limitation the provisions of
Article Two thereof relating to the administration and servicing of Leases; and
(ii) the provisions set forth herein shall operate either as additions to or
modifications of the already-extant obligations of the Servicer under the
Servicing Agreement, as
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the context may require. In the event of any conflict between the provisions of
this Supplement and the Servicing Agreement with respect to the 1996-B SUBI,
the provisions of this Supplement shall prevail.
(b) For purposes of determining the Servicer's obligations
with respect to the servicing of the 1996-B SUBI Portfolio under this Supplement
(including without limitation pursuant to Article Two thereof), general
references in the Servicing Agreement to: (i) a SUBI Account shall be deemed to
refer more specifically to the 1996-B SUBI Account; (ii) a SUBI Asset shall be
deemed to refer more specifically to a 1996-B SUBI Asset; (iii) an appropriate
or applicable SUBI Collection Account shall be deemed to refer more specifically
to the 1996-B SUBI Collection Account; (iv) an appropriate or applicable SUBI
Lease Account shall be deemed to refer more specifically to a 1996-B SUBI Lease
Account; (v) a SUBI Portfolio shall be deemed to refer more specifically to the
1996-B SUBI Portfolio; (vi) a SUBI Servicing Agreement Supplement shall be
deemed to refer more specifically to this Supplement; and (vii) a SUBI
Supplement shall be deemed to refer more specifically to the 1996-B SUBI
Supplement.
(c) Coincident with the execution and delivery of this
Supplement, the Servicer shall furnish the Securitization Trustee, on behalf of
the 1996-B Securitization Trust, with an Officer's Certificate listing the
officers of the Servicer currently involved in, or responsible for, the
administration and servicing of the Leases in the 1996-B SUBI Portfolio, which
list shall from time to time be updated by the Servicer.
SECTION 9.02. COLLECTION OF MONTHLY LEASE PAYMENTS AND
REMITTANCES; APPLICATION OF PROCEEDS;
ACCOUNTS
(a) With reference to Section 2.02(b) of the Servicing
Agreement:
(i) the Servicer shall transfer into the 1996-B SUBI
Collection Account any Extension Fee that it may receive in connection with the
extension of a 1996-B Lease;
(ii) except as provided in clause (iii) below, the
extended Maturity Date of any 1996-B Lease may not occur later than the last
day of the Collection Period related to the Final Scheduled Distribution Date;
and
(iii) if the Servicer does extend the Maturity Date
of a Lease included in the 1996-B SUBI Portfolio by more than a total of five
times or by more than five months in the aggregate as described in Section
2.02(b) of the Servicing Agreement, or extends the Maturity Date so that the
extended
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Maturity Date will occur later than the last day of the Collection Period
relating to the Final Scheduled Maturity Date, then, as the sole remedy
therefor, the Servicer shall, on the Deposit Date related to the Collection
Period in which such extension was granted or on the Deposit Date relating to
the Collection Period in which the Servicer discovers or is notified that an
improper extension was granted, (y) deposit into the 1996-B SUBI Collection
Account an amount equal to the then Discounted Principal Balance of such Lease
plus an amount equal to the interest, or lease charge, portion of any Monthly
Lease Payments with respect thereto at the related Lease Rate that were
delinquent as of the end of that Collection Period, and (z) reallocate such
Lease and the related Leased Vehicle from the 1996-B SUBI Portfolio to the UTI
Portfolio. The obligations of the Servicer pursuant to this Section 9.02(a)
shall survive any termination of the Servicer's obligations with respect to the
1996-B SUBI Portfolio under this Supplement or the Servicing Agreement.
(b) With reference to Section 2.02(d) of the Servicing
Agreement, the Servicer shall treat all Repossessed Vehicle Proceeds and Matured
Leased Vehicle Proceeds in the manner provided for other Liquidation Proceeds;
provided, however, as set forth in Section 9.07, that the Servicer may be
reimbursed for related unreimbursed Repossessed Vehicle Expenses, Matured Leased
Vehicle Expenses, other Liquidation Expenses and Insurance Expenses as provided
in subsection (g).
(c) With reference to Section 2.04 of the Servicing
Agreement, the Servicer shall deposit into the 1996-B SUBI Collection Account
on or before each Deposit Date each Security Deposit that became Liquidation
Proceeds during the related Collection Period.
(d) The Servicer, on behalf of the Origination Trustee,
shall establish and maintain the 1996-B SUBI Collection Account in the
circumstances set forth in Section 12.01(a) of the 1996-B SUBI Supplement. The
Servicer, on behalf of the Origination Trustee, shall establish and maintain the
Residual Value Surplus Account in the circumstances set forth in Section
12.03(a) of the 1996-B SUBI Supplement. The Servicer shall establish and
maintain the Distribution Account in the circumstances set forth in Section 3.01
of the Securitization Trust Agreement. The Servicer shall establish and maintain
the Reserve Fund in the circumstances set forth in Section 3.04(a) of the
Securitization Trust Agreement.
(e) On each Determination Date the Servicer shall make the
calculations necessary to allow the distribution by the Origination Trustee to
holders of the 1996-B SUBI Certificates on the related Distribution Date in
accordance with Section 12.01(c) of the 1996-B SUBI Supplement. In connection
therewith, the
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Servicer shall determine the amount of Origination Trust expenses and
liabilities ("Origination Trust Expenses") incurred or suffered during the
preceding Collection Period and shall calculate the allocations of such
Origination Trust Expenses among the various Portfolios, including the 1996-B
SUBI Portfolio, in good faith and so as not to disproportionately affect any
Portfolio, generally as provided for in Section 7.01(c) of the Trust Agreement.
On each Determination Date, the Servicer also shall make the calculations
necessary to allow the distributions to Certificateholders and others on the
related Distribution Date in accordance with Section 3.03 of the Securitization
Trust Agreement.
(f) On each Deposit Date, the Servicer shall (i) cause the
transfer from the 1996-B SUBI Collection Account to the Residual Value Surplus
Account as provided in Section 12.01(b) of the 1996-B SUBI Supplement or make
the transfer from the Residual Value Surplus Account to the 1996-B SUBI
Collection Account as provided in Section 12.03(b) of the 1996-B SUBI
Supplement, as appropriate, and (ii) cause the transfers from the 1996-B SUBI
Collection Account in respect of the 1996-B SUBI Certificates to the
Distribution Account at the direction of the Seller, as provided in Section
3.02(a) of the Securitization Trust Agreement and Section 12.01(c) of the 1996-B
SUBI Supplement. On each Distribution Date, the Servicer shall make the
distributions from the Distribution Account and the Reserve Fund in respect of
the Certificates, as provided in Section 3.03 of the Securitization Trust
Agreement.
(g) To the extent that during any Collection Period the
Servicer has incurred Matured Leased Vehicle Expenses as would result in Net
Matured Leased Vehicle Proceeds (for purposes hereof, calculated without netting
any Matured Leased Vehicle Expenses as are reimbursed pursuant to subsection
(b)), being less than the sum of the Booked Residual Values of all Matured
Vehicles sold or otherwise disposed of from Matured Leased Vehicle Inventory
during the related Collection period, then on the related Deposit Date, (w) the
Servicer shall provide to the Origination Trustee and the Securitization Trustee
an Officer's Certificate setting forth the basis for its determination of any
such amount, and (x) the Origination Trustee shall promptly transfer the amount
of such Matured Leased Vehicle Expenses for the related Collection Period from
the Residual Value Surplus Account to the Lease Funding Account (but only to the
extent as would result in the Net Matured Leased Vehicle Proceeds (but instead
calculated fully in accordance with the definition thereof) being no more than
the sum of the Booked Residual Values of all Matured Vehicles sold or otherwise
disposed of from Matured Leased Vehicle Inventory during that Collection
Period). To the extent that during any Collection Period (i) the Servicer has
incurred Matured Leased Vehicle Expenses that may not be reimbursed from the
Residual Value Surplus Account as described
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above, whether because Net Matured Lease Vehicle Proceeds (again calculated
fully in accordance with the definition thereof) would be more than the sum of
the Booked Residual Values of all Matured Vehicles sold or otherwise disposed of
from Matured Leased Vehicle Inventory during that Collection Period or because
there are insufficient amounts available on deposit in the Residual Value
Surplus Account to reimburse the Servicer for any Matured Leased Vehicle
Expenses as would otherwise be reimbursable from the Residual Value Surplus
Account as provided above; (ii) the Servicer has incurred any Repossessed
Vehicle Expenses or other Liquidation Expenses or Insurance Expenses; (iii) any
Monthly Lease Payments arising from a Lease allocated to the 1996-B SUBI
Portfolio are received by the Origination Trustee or the Servicer with respect
to any prior Collection Period as to which the Servicer has outstanding an
unreimbursed Advance; or (iv) any amount of unreimbursed Advances are reasonably
determined by the Servicer to be Nonrecoverable Advances, then, on the related
Deposit Date, (y) the Servicer shall provide to the Origination Trustee and the
Securitization Trustee an Officer's Certificate setting forth the basis for its
determination of any such amount and (z) the Origination Trustee shall promptly
transfer an amount equal to the aggregate of such amounts from the 1996-B SUBI
Collection Account to the Lease Funding Account. Thereafter, the Origination
Trustee shall remit to the Servicer from the Lease Funding Account the total of
such amounts set forth in the first sentence above and clauses (i) through (iv)
of the second sentence above, without interest (the "Servicer Reimbursement").
In lieu of causing the Origination Trustee to transfer to the Lease Funding
Account and then remit to the Servicer all or part of any such Servicer
Reimbursement, upon providing an Officer's Certificate, the Servicer may deduct
from deposits otherwise to be made into the 1996-B SUBI Collection Account or
Residual Value Surplus Account, as applicable, an amount up to but not exceeding
the total of such amounts as are due and owing to the Servicer.
(h) The Servicer shall account to the Origination Trustee
and the Securitization Trustee with respect to the 1996-B SUBI Portfolio
separately from any other Portfolio.
(i) The Servicer shall direct the Origination Trustee's or
the Securitization Trustee's, as applicable, investments from time to time of
funds in the 1996-B SUBI Accounts, the Distribution Account and the Reserve
Fund, all as provided for in (and subject to the limitations of) Section 7.01(d)
of the Trust Agreement, Sections 11.02(d), 12.01, 12.02 and 12.03 of the 1996-B
SUBI Supplement, and Sections 3.01(b) and 3.04(a) of the Securitization Trust
Agreement. The maximum permissible maturities of any such investments pursuant
to this clause on any date shall be not later than the Business Day immediately
preceding the Deposit Date (with regard
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to investment of funds in 1996-B SUBI Accounts) or the Business Day immediately
preceding the Distribution Date (with regard to investment of funds in the
Distribution Account and the Reserve Fund) next succeeding the date of such
investment, except for (i) investments on which the Origination Trustee or
Securitization Trustee, respectively, is the obligor (including repurchase
agreements on which it, in its commercial capacity, is liable as principal),
which may mature on the Deposit Date or Distribution Date, respectively, and
(ii) investments during the Revolving Period of Principal Collections on deposit
in the 1996-B SUBI Collection Account, which may mature on such dates as
specified by the Origination Trustee at the Servicer's direction so as to
maintain the availability of sufficient cash to make the payments described in
Sections 8.02(c) and (d) hereof.
(j) In the event the Servicer provides to the UTI Holder,
the Origination Trustee and the Securitization Trustee a letter from each Rating
Agency to the effect that the utilization by the Servicer of an alternative
remittance schedule with respect to collections arising out of the 1996-B SUBI
Portfolio to be deposited in the 1996-B SUBI Collection Account pursuant to
Section 2.02(c) or (d) of the Servicing Agreement (including but not limited to
the use of an alternative remittance schedule pursuant to which the obligations
of the Servicer to make such remittances are secured by a Servicer Letter of
Credit satisfactory to each such Rating Agency) will not result in a
qualification, downgrading or withdrawal of the then-current rating assigned to
the Rated Certificates by such Rating Agency, (i) this Supplement may be so
modified without the consent of any Certificateholders pursuant to Section 12.02
of this Agreement and 9.01 of the Securitization Trust Agreement and (ii) the
Servicer may remit such collections to the 1996-B SUBI Collection Account in
accordance with that alternative remittance schedule.
(k) The Servicer may make remittances to the Distribution
Account net of certain other amounts, as and to the extent set forth in Section
3.05 of the Securitization Trust Agreement.
(l) The parties hereto acknowledge that the Origination
Trustee, on behalf of the Origination Trust, has made a complete transfer to
the Securitization Trustee of the initial proceeds of the 99.8% 1996-B SUBI
Certificate contained in the Distribution Account and the Reserve Fund and,
except as provided in this Supplement, the 1996-B SUBI Supplement and the
Securitization Trust Agreement, neither the Origination Trustee nor the
Servicer has any right to direct such funds to a third party or to receive such
funds.
(m) In the event of a sale, disposition or other
liquidation of the 99.8% 1996-B SUBI Certificate and the other property of the
Securitization Trust pursuant to Section 8.02 of the Securitization Trust
Agreement, the Servicer shall allocate
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the net proceeds thereof between Principal Collections and Interest Collections
as set forth in Section 8.01(b) of the Securitization Trust Agreement.
SECTION 9.03. RECORDS.
Upon the occurrence and during the continuance of a 1996-B
Event of Default hereunder, the Servicer shall, on demand of the Origination
Trustee, on behalf of the Origination Trust (either at the request of the
Securitization Trustee or, as provided in Section 11.01(b) hereof, upon demand
of Investor Certificateholders representing not less than 51% of the aggregate
Percentage Interest), deliver to the Origination Trustee all such data,
operating software and appropriate documentation necessary for the servicing of
the 1996-B Leases, including but not limited to the related Lease Documents and
Title Documents, all moneys collected by it and required to be deposited in any
1996-B SUBI Account on behalf of the Origination Trust, or in the Distribution
Account or the Reserve Fund on behalf of the Securitization Trust, all Security
Deposits with respect to 1996-B Leases, and any 1996-B Leased Vehicle in the
possession of the Servicer that has been repossessed or is part of Matured
Leased Vehicle Inventory and in either case has not yet been sold or otherwise
disposed of pursuant to Section 2.06 of the Servicing Agreement. Without
limitation of the foregoing, if the rights of the Servicer with respect to the
1996-B SUBI Portfolio shall have been terminated in accordance with Section
4.01(b) of the Servicing Agreement and Section 11.01(b) hereof or if this
Supplement shall have been terminated pursuant to Section 12.01 hereof, the
Servicer shall, upon demand of the Origination Trustee, on behalf of the
Origination Trust (either at the request of the Securitization Trustee, the
Investor Certificateholders representing not less than 51% of the aggregate
Percentage Interest, or otherwise), deliver to the Origination Trustee all such
data, operating software and appropriate documentation necessary for the
servicing of the 1996-B Leases and all moneys collected by it and required to be
deposited, as appropriate, in any 1996-B SUBI Account or the Distribution
Account or the Reserve Fund. In addition to delivering such data, operating
software and appropriate documentation and moneys, the Servicer shall use its
commercially reasonable efforts to effect the orderly and efficient transfer of
the servicing of the 1996-B Leases to the party that will be assuming
responsibility for such servicing, including, without limitation, directing
Obligors to remit payments in respect of those Leases to an account or address
designated by the Origination Trustee or such new servicer.
SECTION 9.04. ADVANCES.
(a) On or prior to each Deposit Date, the Servicer shall
make any Advance required by clause (i) of the definition
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thereof, and may make any Advance permitted by clause (ii) of the definition
thereof which the Servicer chooses to make, into the 1996-B SUBI Collection
Account.
(b) Notwithstanding any other provision of this
Supplement, the Servicer shall not be obligated to make any Advance in respect
of any 1996-B Lease if the Servicer shall have reasonably determined that any
such Advance, if made, would constitute a Nonrecoverable Advance. Any such
determination shall be evidenced by an Officer's Certificate of the Servicer
furnished to the UTI Holder, the Origination Trustee and the Securitization
Trustee setting out the basis for such determination, which determination shall
be conclusive and binding absent manifest error.
SECTION 9.05. PAYMENT OF CERTAIN FEES AND EXPENSES;
NO OFFSET.
(a) As part of its obligations hereunder, to the extent
that cash flows arising from the 1996-B SUBI Portfolio, as set forth in Section
3.03(b) of the Securitization Trust Agreement, are insufficient to provide for
the payment of all fees and expenses due to the Origination Trustee or the
Securitization Trustee as Capped Origination Trust Administrative Expenses,
Capped Securitization Trust Administrative Expenses or Uncapped Administrative
Expenses, the Servicer shall advance an amount equal to such excess fees and
expenses as they become payable from time to time and agrees to indemnify the
Origination Trustee and the Securitization Trustee and their respective agents
for such amounts. The Servicer shall be entitled to reimbursement of such
advances as set forth in Section 3.03(b) of the Securitization Trust Agreement.
The obligations of the Servicer pursuant to this Section 9.05(a) shall survive
any termination of the Servicer's rights and obligations with respect to the
1996-B SUBI Portfolio under this Supplement or the Servicing Agreement.
(b) Prior to the termination of the Servicer's rights and
obligations with respect to the 1996-B SUBI Portfolio and thereafter if such
termination results from a 1996-B Event of Default, the obligations of the
Servicer with respect to the 1996-B SUBI Portfolio shall not be subject to any
defense, counterclaim or right of offset that the Servicer has or may have
against any UTI Holder, the Origination Trustee on behalf of the Origination
Trust, any Special Purpose Affiliate or the Securitization Trustee, whether in
respect of this Supplement, the 1996-B SUBI Supplement, the Servicing Agreement,
any
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Securitization Trust Document, any 1996-B Lease, any related Lease Document,
any 1996-B Leased Vehicle or otherwise.
SECTION 9.06. SERVICING COMPENSATION.
(a) Notwithstanding anything to the contrary in Section
2.05 of the Servicing Agreement, (a) the Servicing Rate Portion with regard to
the 1996-B SUBI Portfolio shall be calculated and (unless waived in accordance
with Section 9.06(b) hereof) paid on each Distribution Date based upon the
Aggregate Net Investment Value as of the first day of the related Collection
Period (or, in the case of the first Distribution Date, as of the Initial Cutoff
Date), rather than based upon the allocable portion of the Pool Balance, (b) the
portion of the Servicing Fee allocable to the 1996-B SUBI Portfolio shall be
paid out of cash flows arising from the 1996-B SUBI Portfolio as and to the
extent set forth in Section 12.01(c) of the 1996-B SUBI Supplement and the
definition of the term "Collections" set forth in Section 10.01 thereof, (c) no
Extension Fee with respect to a Lease included in the 1996-B SUBI Portfolio
shall constitute part of the Servicing Fee, and (d) the Servicer may be
reimbursed for advancing certain Administrative Expenses as provided in Section
9.05(a). Further, as additional servicing compensation with regard to the 1996-B
SUBI Portfolio, the Servicer also shall receive income on investment of funds in
the Reserve Fund if and to the extent that the balance therein is greater than
the Reserve Fund Cash Requirement (and so long as the ERISA Compliance Test is
satisfied) as and to the extent provided in Section 3.04(b) of the
Securitization Trust Agreement.
(b) So long as World Omni Financial Corp. is the Servicer,
the Servicer may, by notice to the Origination Trustee and the Securitization
Trustee on or prior to any Determination Date, waive its Servicing Fee with
respect to the related Collection Period, so long as the Servicer believes that
sufficient collections will be available from Interest Collections on one or
more future Distribution Dates (other than from amounts on deposit in the
Reserve Fund) to pay such waived Servicing Fee, without interest. If the
Servicer so waives such Servicing Fee, the Servicing Fee with respect to such
Collection Period shall be deemed to be zero for all purposes, provided,
however, that for purposes of clause (c) of the definition of "Interest
Collections" in the 1996-B SUBI Supplement and Section 3.03 of the
Securitization Trust Agreement, any such waived Servicing Fee thereafter shall
be treated as an unpaid Servicing Fee with respect to a prior Collection Period
(unless the Servicer continues to waive such Servicing Fee).
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SECTION 9.07. REPOSSESSION AND SALE OF LEASED VEHICLES.
Notwithstanding Section 2.06 of the Servicing Agreement, the
Servicer need not deduct from Repossessed Vehicle Proceeds, Matured Leased
Vehicle Proceeds or other Liquidation Proceeds or Insurance Proceeds with
respect to any particular 1996-B Leased Vehicle all related unreimbursed
Repossessed Vehicle Expenses, Matured Leased Vehicle Expenses or other
Liquidation Expenses or Insurance Expenses prior to transferring such funds out
of its operating account. Such expenses may instead be reimbursed as provided
in Section 9.02(g).
SECTION 9.08. INDEMNIFICATION BY SERVICER.
The Servicer agrees to indemnify, defend and hold harmless the
Securitization Trustee and its agents for any and all liabilities, losses,
damages and expenses (including without limitation reasonable fees and expenses
of counsel) that may be incurred by the Securitization Trustee or its agents as
a result of any act or omission by the Servicer in connection with its
maintenance and custody of the Lease Documents, Title Documents, and Lease
Records with respect to 1996-B Leases and 1996-B Leased Vehicles, the servicing
of the 1996-B Leases, the Servicer's undertakings in clause (e) of Section 2.07
of the Servicing Agreement or any other activity undertaken or omitted by the
Servicer with respect to any Trust Asset included in the 1996-B SUBI Portfolio.
The obligations set forth in this Section 9.08 shall survive the termination of
this Supplement or the resignation or removal of the Servicer (generally or
with respect to the 1996-B SUBI Portfolio) or the Securitization Trustee.
SECTION 9.09. THIRD PARTY CLAIMS.
The Servicer shall immediately notify the Securitization
Trustee and any other holder of any 1996-B SUBI Certificate upon its learning
that a claim of whatever kind that would have a material adverse impact on any
UTI Holder, the Seller, the Origination Trustee, the Origination Trust, the
Securitization Trust, the Securitization Trustee, any 1996-B SUBI Asset or the
Servicer is being made by a third party with respect to any Lease or Leased
Vehicle (whether or not included in the 1996-B SUBI Portfolio) or the servicing
thereof or with respect to any other Trust Asset (whether or not constituting a
1996-B SUBI Asset).
SECTION 9.10. INSURANCE POLICIES.
So long as any 1996-B SUBI Certificates are outstanding, the
Servicer will maintain and pay when due all premiums with respect to, and the
Servicer may not terminate
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or cause the termination of the following, all premiums with respect to which
shall constitute Administrative Expenses: (i) each Contingent and Excess
Liability Insurance Policy unless (A) a replacement insurance policy or
policies is obtained providing coverage against third party claims that may be
raised against the Origination Trustee, on behalf of the Origination Trust,
with respect to any Leased Vehicle included in the 1996-B SUBI Portfolio in an
amount at least equal to $10 million per claim, not subject, to this extent, to
any annual or aggregate cap (which policy or policies may be a blanket
insurance policy or policies covering the Servicer and one or more of its
Affiliates), and (B) either each Rating Agency has delivered a letter to the
Securitization Trustee to the effect that the obtaining of any such replacement
insurance policy or policies, in and of itself, will not cause its then-current
rating of any of the Rated Certificates to be qualified, reduced or withdrawn,
or alternatively (with respect to Moody's only, so long as Moody's is a Rating
Agency) such replacement policy is issued by a carrier with a claims paying
ability rating of A-2 or better; or (ii) the Residual Value Insurance Policy,
unless the 1996-B Leases may properly be treated as finance leases for purposes
of generally accepted accounting principles, consistently applied, by virtue of
some reason other than maintenance of that policy, and the Servicer has
provided to the Trustee and the Origination Trustee an Officer's Certificate to
that effect, describing such reasons which shall be in accordance with GAAP. On
or before December 31 of each year, the Servicer shall provide to the
Origination Trustee one or more insurance certificates certifying that each of
the particular policies it is required to maintain pursuant to this Section
9.10 remains in full force and effect. The obligations of the Servicer
pursuant to this Section 9.10 shall survive any termination of the Servicer's
obligations with respect to the 1996-B SUBI Portfolio under this Supplement or
the Servicing Agreement.
SECTION 9.11. SERVICER NOT TO RESIGN; ASSIGNMENT.
(a) If the Servicer resigns in the circumstances
contemplated by Section 2.10(a) of the Servicing Agreement, in addition to the
requirements set forth therein, the Opinion of Counsel required thereby also
shall be reasonably satisfactory to the Securitization Trustee. Any servicing
agreement entered into by a new servicer pursuant to that Section 2.10(a) also
must contain substantially the same provisions as this Supplement. The
Securitization Trustee shall not unreasonably fail to consent to a servicing
agreement with a new servicer that proposes to enter into a servicing agreement
that meets the standards required by Section 2.10 of the Servicing Agreement and
this Supplement. No such resignation shall affect the obligation of the
Servicer to remit moneys to the 1996-B SUBI Collection Account (in lieu of
unrecoverable insurance proceeds) as set forth in Section 2.11 of the Servicing
Agreement and Section
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9.11 hereof, or the obligations of the Servicer pursuant to Section 8.03(c)
hereof, Section 2.07(g) of the Servicing Agreement or Section 9.07 hereof,
Section 9.02(a) hereof (as to any 1996-B Lease the Maturity Date of which has
been extended beyond the specified limit by the Servicer), Section 9.05(a)
hereof, or Section 9.09 hereof; no successor Servicer shall be required to
undertake any of the foregoing, other than the obligation set forth in Section
9.05(a) (which shall remain a joint and several obligation of the initial
Servicer and any successor Servicer). The Origination Trustee shall give prompt
notice to each Rating Agency of any such resignation of the Servicer, and the
Origination Trustee and Securitization Trustee must obtain from each Rating
Agency a letter approving each substitute servicer.
(b) The Servicer may not assign this Supplement or any of
its rights, powers, duties or obligations hereunder except in connection with an
assignment of the Servicing Agreement as permitted thereby.
(c) Except as provided in paragraphs (a) and (b) above,
the duties and obligations of the Servicer under this Supplement shall continue
until they shall have been terminated as provided in Section 12.01 hereof or in
the Servicing Agreement and shall survive the exercise by the Origination
Trustee, on behalf of the Origination Trust, of any right or remedy under this
Supplement or the Servicing Agreement or the enforcement by the Origination
Trustee, on behalf of the Origination Trust, of any provision of the Origination
Trust Documents.
SECTION 9.12. OBLIGOR INSURANCE COVERAGE IN RESPECT OF
LEASED VEHICLES.
With reference to Section 2.11 of the Servicing Agreement,
except as provided in Section 9.02 hereof, the required deposits of insurance
proceeds with respect to 1996-B Leased Vehicles into the 1996-B SUBI Collection
Account shall be made within two Business Days after receipt thereof.
SECTION 9.13. CORPORATE EXISTENCE; STATUS; MERGER.
(a) With reference to Section 2.13(a) of the Servicing
Agreement, the Servicer also will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of, or to permit the Servicer to perform its obligations under,
this Supplement, the Servicing Agreement and the Securitization Trust
Agreement.
(b) With reference to Section 2.13(b) of the Servicing
Agreement, whenever the consent of the Origination Trustee is required, so also
shall the consent of the Securitization Trustee
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be required, and whenever a successor to the Servicer by merger or consolidation
is required to execute and deliver to the Origination Trustee an agreement in
form and substance reasonably satisfactory to the Origination Trustee as to the
assumption by the successor of the Servicer's obligations under the Servicing
Agreement and the other Origination Trust Documents, such agreement also must be
reasonably satisfactory to the Securitization Trustee and must contain a similar
assumption of the Servicer's obligations under this Supplement.
SECTION 9.14. MOBILE LEASED PREMISES.
The Servicer as "Lessor," hereby leases to the Seller and its
general partner, World Omni Lease Securitization, Inc., each as "Lessee," and
Lessee hereby hires and takes as tenant, for a rental of $100 per year for
Lessee, certain premises located at 6150 Omni Park Drive, Mobile, Alabama of
the minimum dimensions of five (5) feet by eleven (11) feet and surrounded on
at least three (3) sides by walls or moveable partitions (the "Mobile Leased
Premises"), to be used as the Alabama office of Lessee. The lease of the Mobile
Leased Premises to the Lessee pursuant to this Section 9.14 shall continue
throughout the term of this Supplement, except in the case of a change in the
Servicer's principal Alabama offices, in which case the lease of functionally
equivalent premises in the new location from time to time shall continue
throughout such term.
ARTICLE TEN
STATEMENTS AND REPORTS
SECTION 10.01. REPORTING BY THE SERVICER.
(a) The Servicer shall deliver to the Securitization Trustee
all reports and other documents required to be delivered to the Origination
Trustee pursuant to the Servicing Agreement (including Section 3.01 thereof)
concurrently with their delivery to the Origination Trustee.
(b) On or prior to each Determination Date and each Transfer
Date, the Servicer shall cause to be delivered to the Origination Trustee and
the Securitization Trustee a revised Schedule of Leases and Leased Vehicles,
containing data as of the last day of the prior Collection Period (in the case
of each Determination Date) or as of the related Subsequent Cutoff Date (in the
case of each Transfer Date), and which shall contain in addition to the data
required by the definition of the term "Schedule of Leases and Leased Vehicles"
an identification of all Leases and Leased Vehicles that are 1996-B Leases and
1996-B Leased Vehicles, the Discounted Principal Balance of each 1996-B Lease
and the related Cutoff Date for each 1996-B Lease, and on or prior to each
Determination Date, shall cause to be
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delivered to the Origination Trustee, the Securitization Trustee and each
Rating Agency a certificate in respect of such Collection Period (the
"Servicer's Certificate") substantially in the form attached as Exhibit B (and
setting forth such additional information as requested by each Rating Agency
from time to time which information the Servicer is able to reasonably
provide), containing all information necessary to make the distributions
required by Sections 9.02(f) hereof, 12.01(c) of the 1996-B SUBI Supplement and
3.03 of the Securitization Trust Agreement in respect of the Collection Period
immediately preceding such Determination Date. On or prior to each Deposit
Date, the Servicer shall cause to be delivered to the Securitization Trustee
the statement required by Section 3.06(a) of the Securitization Trust
Agreement. Within the time required by Section 3.06(b) of the Securitization
Trust Agreement, the Servicer shall cause to be delivered to the Securitization
Trustee the statements required by that Section. Any Certificate Owner may
obtain a copy of a Servicer's Certificate upon written request.
SECTION 10.02. ANNUAL ACCOUNTANTS' REPORTS.
The annual report of the Independent Accountants of the
Servicer required by Section 3.02 of the Servicing Agreement, to the extent
that it refers to the Servicing Agreement, shall also specifically refer to the
Servicing Agreement as supplemented by this Supplement, and shall additionally
be delivered to the Securitization Trustee and each Rating Agency.
SECTION 10.03. OTHER CERTIFICATES AND NOTICES FROM SERVICER.
(a) The annual Officer's Certificate of the Servicer
required by Section 3.03 of the Servicing Agreement, to the extent that it
refers to the Servicing Agreement, shall also specifically refer to the
Servicing Agreement as supplemented by this Supplement, and shall additionally
be delivered to the Securitization Trustee and each Rating Agency.
(b) The Servicer shall deliver to the Securitization
Trustee, the Origination Trustee and each Rating Agency, promptly after having
obtained knowledge thereof, but in no event later than five Business Days
thereafter, an Officer's Certificate specifying the nature and status of any
event which with the giving of notice or lapse of time, or both, would become a
1996-B Event of Default.
(c) On or prior to each Determination Date, the Servicer
shall cause to be delivered to the Securitization Trustee and each Rating
Agency an Officer's Certificate stating that neither the Trust nor any of its
ERISA Affiliates: (i) maintains a Plan, which, as of its last valuation date,
has
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Unfunded Current Liability; (ii) anticipates that the value of the assets of
any Plan it maintains would not be sufficient to cover any Current Liability;
or (iii) is contemplating benefit improvements with respect to any Plan then
maintained by any such entity or the establishment of any new Plan, either of
which would cause any such entity to maintain a Plan with Unfunded Current
Liability.
SECTION 10.04. TAX RETURNS.
As contemplated by Section 6.12 of the Securitization Trust
Agreement, the Servicer shall direct the Securitization Trustee to prepare or
cause to be prepared, on behalf of the Seller, any required federal tax
information returns (in a manner consistent with the treatment of the Investor
Certificates as indebtedness). Also as contemplated by Section 6.12 of the
Securitization Trust Agreement, the Servicer shall prepare or cause to be
prepared any federal and state tax returns that may be required with respect to
the Securitization Trust or the assets thereof and shall deliver any such
returns to the Securitization Trustee for signature at least five days prior to
the date such returns are required by law to be filed.
ARTICLE ELEVEN
DEFAULT
SECTION 11.01. EVENTS OF DEFAULT; TERMINATION OF SERVICER AS
TO 1996-B SUBI PORTFOLIO.
(a) Any of the following acts or occurrences shall
constitute a 1996-B Event of Default under the Servicing Agreement, as
supplemented by this Supplement:
(i) The Servicer shall have failed to deliver to the
Origination Trustee for distribution to or for the account of the
holders of 1996-B SUBI Certificates or to the Securitization Trustee
for distribution to the Investor Certificateholders any amounts
required to be so distributed pursuant to the Servicing Agreement or
this Supplement, which failure continues for five Business Days after
discovery of such failure by an officer of the Servicer or receipt by
the Servicer of written notice thereof from the Origination Trustee,
the Securitization Trustee or Investor Certificateholders representing
not less than 25% of the aggregate Percentage Interests;
(ii) The Origination Trustee or the Securitization
Trustee shall not have received any report relating to the 1996-B SUBI
Portfolio and required to be delivered to it pursuant to the Servicing
Agreement or this Supplement within ten Business Days after the date
any such report is due;
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(iii) The Servicer shall default in the due
performance and observance of any other provision of the Servicing
Agreement or this Supplement with regard to the 1996-B SUBI Portfolio,
which default materially and adversely affects the rights of holders
of 1996-B SUBI Certificates or the Investor Certificateholders, and
such default shall have continued for a period of 60 days after
written notice thereof shall have been given to the Servicer by the
Origination Trustee, the Securitization Trustee or by Investor
Certificateholders representing not less than 25% of the aggregate
Percentage Interests;
(iv) The Event of Default set forth in Section
4.01(a)(iv) of the Servicing Agreement;
(v) The Event of Default set forth in Section
4.01(a)(v) of the Servicing Agreement;
(vi) Any representation, warranty or statement of the
Servicer made in the Servicing Agreement or this Supplement relating
to the 1996-B SUBI Portfolio or any certificate, report or other
writing delivered pursuant hereto or thereto relating to the 1996-B
SUBI Portfolio shall prove to be incorrect in any material respect as
of the time when the same shall have been made and, within 30 days
after written notice thereof shall have been given to the Servicer by
the Origination Trustee, the Securitization Trustee or Investor
Certificateholders representing not less than 25% of the aggregate
Percentage Interests, the circumstance or condition in respect of
which such representation, warranty or statement was incorrect shall
not have been eliminated or otherwise cured;
(vii) The Servicer shall have failed to make an
Advance (other than any Nonrecoverable Advance) at the time and in the
amount required by Section 9.04 hereof, which failure continues for
five Business Days after discovery of such failure by an officer of
the Servicer or receipt by the Servicer of written notice thereof from
the Origination Trustee, the Securitization Trustee or Investor
Certificateholders representing not less than 25% of the aggregate
Percentage Interests;
(viii) The Servicer shall have failed to pay promptly
any Insurance Proceeds pursuant to Section 9.12 hereof and Section
2.11 of the Servicing Agreement at the time such moneys would
otherwise be recoverable under the comprehensive, collision, public
liability and property damage policy required to be maintained by an
Obligor under the related Lease, which failure continues for five
Business Days after discovery of such failure by an officer of the
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Servicer or receipt by the Servicer of written notice thereof from the
Origination Trustee, the Securitization Trustee or Investor
Certificateholders representing not less than 25% of the aggregate
Percentage Interests; or
(ix) The Servicer shall have failed to perform its
obligations under Section 9.10 hereof with respect to the Contingent
and Excess Liability Insurance Policies or the Residual Value
Insurance Policy.
Notwithstanding the foregoing, a delay or failure in the performance
referred to under clause (i), (vii) or (viii) above for a period of ten
Business Days, or referred to in clause (ii) above for a period of 20 Business
Days, or referred to in clause (iii) for a period of 90 days, or referred to in
clause (vi) for a period of 60 days, shall not constitute a 1996-B Event of
Default if arising from a Force Majeure. Upon the occurrence of a Force
Majeure, the Servicer shall not be relieved from using all commercially
reasonable efforts to perform its obligations in a timely manner, and the
Servicer shall provide to the Trustee, the Origination Trustee, the Seller and
the Investor Certificateholders prompt notice of such failure or delay,
together with a description of its efforts to perform its obligations.
(b) Notwithstanding anything to the contrary in the Servicing
Agreement, the rights and powers of the Servicer may not be terminated with
regard to the 1996-B SUBI Portfolio absent a 1996-B Event of Default, as
further set forth below. The consequences of a 1996-B Event of Default shall be
as set forth in Section 4.01(b) of the Servicing Agreement with respect to an
Event of Default, as modified by this Section 11.01(b). For those purposes,
references in Section 4.01(b) of the Servicing Agreement, to an Event of
Default shall mean a 1996-B Event of Default. Further, in the case of the
1996-B SUBI, references to "the holder of the requisite percentage of any SUBI"
shall refer either to the Securitization Trustee, or to Investor
Certificateholders representing not less than 51% of the aggregate Percentage
Interests. If a 1996-B Event of Default shall have occurred and be continuing,
the Origination Trustee, on behalf of the Origination Trust, upon the direction
of the Securitization Trustee or Investor Certificateholders representing not
less than 51% of the aggregate Percentage Interests, shall, by notice given to
the Servicer, terminate the portion of the rights and powers of the Servicer
under the Servicing Agreement, as supplemented by this Supplement, with respect
to the 1996-B SUBI Portfolio. Upon the giving of any such notice described in
the preceding sentence or in Section 4.01(b) of the Servicing Agreement, all
rights, powers, duties and responsibilities of the Servicer under the Servicing
Agreement, as supplemented by this Supplement with respect to the 1996-B SUBI
Portfolio, whether with respect to the related Lease
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Documents, the related Title Documents or Lease Records, the 1996-B SUBI
Collection Account, the Distribution Account, any 1996-B Lease Funding Account,
the Reserve Fund, the Residual Value Surplus Account, the Servicing Fee or
otherwise, but excluding the obligations set forth below as being retained by
the Servicer, shall vest in and be assumed by the Trust Agent or, if the Trust
Agent declines to act as successor servicer as permitted below, a new servicer
as provided in Section 4.01(b) of the Servicing Agreement, and each of the
Trust Agent and the Origination Trustee is each hereby irrevocably authorized
and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments (including
any notices to Obligors deemed necessary or advisable by the Trust Agent or
Origination Trustee), and to do or accomplish all other acts or things
necessary or appropriate to effect such vesting and assumption, including,
without limitation, directing the Obligors to remit Monthly Contract Payments,
Prepayments and all other payments on or in respect of the 1996-B Leases and
the 1996-B Leased Vehicles to an account or address designated by the Trust
Agent or such new servicer. Further, in such event, the Servicer shall use
commercially reasonable efforts to effect the orderly and efficient transfer of
the servicing of the 1996-B Leases to the Trust Agent or new servicer, and as
promptly as practicable, the Servicer shall provide to the Trust Agent or new
servicer, as the case may be, a current computer tape containing all
information from the Lease Records required for the proper servicing of the
1996-B Leases, together with documentation containing any and all information
necessary for use of the tape. The Trust Agent may resign or decline to serve
as the Servicer of the 1996-B SUBI Portfolio by giving written notice of such
resignation or declination to the Origination Trustee and the Securitization
Trustee and in such event will be released from such duties and obligations,
such resignation or declination and such release not to be effective until the
date a new servicer enters into a servicing agreement with the Origination
Trustee as provided in Section 4.01(b) of the Servicing Agreement and the
Origination Trustee and Securitization Trustee receive from each Rating Agency
a letter approving such substitute servicer. Upon delivery of any such notice
to the Origination Trustee, the Origination Trustee shall use its commercially
reasonable efforts, upon not less than 30 days' prior written notice to the
Securitization Trustee and the Investor Certificateholders, to obtain a new
servicer for the 1996-B SUBI Portfolio, which shall be an Eligible Servicer,
and which shall enter into a servicing agreement with the Origination Trustee
as provided in Section 4.01(b) of the Servicing Agreement. If, within 30 days
after the delivery of the notice to the Origination Trustee and the
Securitization Trustee referred to above, the Origination Trustee shall not
have obtained such a new servicer for the 1996-B SUBI Portfolio, the
Securitization Trustee may appoint, or may
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petition a court of competent jurisdiction to appoint, a successor servicer to
service the 1996-B Leases.
No termination of the Servicer as to the 1996-B SUBI Portfolio
shall affect the obligations of the Servicer pursuant to Section 2.01(b)(i) of
the Servicing Agreement, Section 2.11 of the Servicing Agreement or Section
9.10 hereof, Section 2.07(g) of the Servicing Agreement or Section 9.08 hereof,
Section 8.03 hereof, Section 9.02(a) hereof (as to any 1996-B Lease the
Maturity Date of which has been extended beyond the specified limit by the
Servicer), or Section 9.01(a) hereof.
The Origination Trustee shall give prompt notice to each
Rating Agency of any termination of the Servicer affecting the 1996-B SUBI
Portfolio pursuant to this Section 11.01(b) or pursuant to Section 4.01(b) of
the Servicing Agreement.
SECTION 11.02. NO EFFECT ON OTHER PARTIES.
Upon any termination of the rights and powers of the Servicer
with respect to the 1996-B SUBI Portfolio from time to time pursuant to Section
11.01 hereof or Section 4.01 of the Servicing Agreement, or upon any appointment
of a successor to the Servicer with respect to the 1996-B SUBI Portfolio, all
the rights, powers, duties and obligations of the Origination Trustee, the UTI
Holder and the Seller under this Agreement, the Securitization Trust Agreement,
the 1996-B SUBI Supplement, or any other Origination Trust Document shall remain
unaffected by such termination or appointment and shall remain in full force and
effect thereafter, except as otherwise expressly provided herein or therein.
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. TERMINATION OF AGREEMENT.
(a) In connection with any purchase by the Seller of the
Investor Certificateholders' interest in the corpus of the Securitization Trust
pursuant to Section 7.02 of the Securitization Trust Agreement, and the
Seller's then succeeding to all of the interest in the 1996-B SUBI represented
by the 1996-B SUBI Certificates, and if the UTI Holder shall thereafter succeed
to such interest in the 1996-B SUBI, the Servicer, upon the direction of the
UTI Holder as provided in Section 11.05 of the 1996-B SUBI Supplement, shall
reallocate all 1996-B Leases, 1996-B Leased Vehicles and related 1996-B SUBI
Assets to the UTI Portfolio.
(b) Except as provided in this Section 12.01, the
respective duties and obligations of the Servicer and the Origination Trustee
with respect to the 1996-B SUBI Portfolio
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created by the Servicing Agreement and this Supplement shall terminate upon the
termination of the Securitization Trust Agreement pursuant to Section 7.01
thereof or upon the earlier termination of the Servicing Agreement pursuant to
Section 5.01 thereof. Upon such a termination, the Servicer shall pay over to
the Origination Trustee or any other Person entitled thereto all moneys held by
the Servicer with respect to the 1996-B SUBI Portfolio pursuant to the
Servicing Agreement and this Supplement.
SECTION 12.02. AMENDMENT.
(a) Notwithstanding Section 5.02(a) of the Servicing
Agreement, the Servicing Agreement, as supplemented by this Supplement, to the
extent that it deals with the 1996-B SUBI Portfolio, may be amended from time
to time in a writing signed by the Origination Trustee, on behalf of the
Origination Trust, the Trust Agent (but only to the extent that such amendment
deals with Section 11.01(b)) and the Servicer, with the prior written consent
of the Securitization Trustee, which shall be given only in the circumstances
contemplated by Section 9.01 of the Securitization Trust Agreement.
(b) The Servicer shall provide each Rating Agency (as
defined in the Securitization Trust Agreement) prior notice of the content of
any proposed amendment to the Servicing Agreement, whether or not such
amendment relates to the 1996-B SUBI or requires approval of any Rating Agency.
SECTION 12.03. GOVERNING LAW.
THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
SECTION 12.04. NOTICES.
The notice provisions of Section 5.04 of the Servicing
Agreement shall apply equally to this Supplement provided that any notice to
the Securitization Trustee shall be addressed as follows:
First Bank National Association
400 North Michigan Avenue
Chicago, Illinois 60611
Attention: Corporate Trust Office
SECTION 12.05. SEVERABILITY.
If one or more of the provisions of this Supplement shall be
for any reason whatever held invalid or unenforceable,
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such provisions shall be deemed severable from the remaining covenants,
agreements and provisions of this Supplement, and such invalidity or
unenforceability shall in no way affect the validity or enforceability of such
remaining covenants, agreements and provisions, or the rights of any parties
hereto. To the extent permitted by law, the parties hereto waive any provision
of law that renders any provision of this Supplement invalid or unenforceable
in any respect.
SECTION 12.06. INSPECTION AND AUDIT RIGHTS.
The Servicer agrees to afford the same inspection and audit
rights to any representative or designee of the Securitization Trustee as
granted to any representative or designee of the Origination Trustee pursuant
to Section 5.06 of the Servicing Agreement, but only with respect to the books
of account, records, reports and other papers of the Servicer relating to the
1996-B SUBI Portfolio.
SECTION 12.07. BINDING EFFECT.
The provisions of the Servicing Agreement and this Supplement,
insofar as they relate to the 1996-B SUBI Portfolio, shall be binding upon and
inure to the benefit of the respective successors and permitted assigns of the
parties hereto, and shall inure to the benefit of the Origination Trustee, on
behalf of the Origination Trust, and the Securitization Trustee.
SECTION 12.08. ARTICLE AND SECTION HEADINGS.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
SECTION 12.09. EXECUTION IN COUNTERPARTS.
This Supplement may be executed in any number of counterparts,
each of which so executed and delivered shall be deemed to be an original, but
all of which counterparts shall together constitute but one and the same
instrument.
SECTION 12.10. RIGHTS CUMULATIVE.
All rights and remedies from time to time conferred upon or
reserved to the Origination Trustee, on behalf of the Origination Trust, the
Servicer or the Securitization Trustee or to any or all of the foregoing are
cumulative, and none is intended to be exclusive of another. No delay or
omission in insisting upon the strict observance or performance of any
provision of this Agreement, or in exercising any right or remedy, shall be
construed as a waiver or relinquishment of such provision, nor shall it impair
such right or remedy. Every
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right and remedy may be exercised from time to time and as often as deemed
expedient.
SECTION 12.11. FURTHER ASSURANCES.
Each party will do such acts, and execute and deliver to any
other party such additional documents or instruments as may be reasonably
requested in order to effect the purposes of this Supplement and to better
assure and confirm unto the requesting party its rights, powers and remedies
hereunder.
SECTION 12.12. THIRD-PARTY BENEFICIARIES.
The Servicing Agreement and this Supplement, insofar as they
relate to the 1996-B SUBI Portfolio, will inure to the benefit of and be
binding upon the parties hereto, and each of the holders of any legal or
beneficial interest in the 1996-B SUBI Certificates (including without
limitation the Securitization Trustee and the Certificateholders), who shall be
considered to be third-party beneficiaries hereof. Except as otherwise provided
in this Agreement, no other Person will have any right or obligation hereunder.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers duly authorized as
of the day and year first above written.
WORLD OMNI FINANCIAL CORP.
By:________________________________
Patrick C. Ossenbeck
Assistant Treasurer
VT INC., as
trustee of World Omni LT
By:________________________________
Name:______________________________
Title:_____________________________
WORLD OMNI LEASE SECURITIZATION L.P.
(solely for purposes of Section 9.14)
By: WORLD OMNI LEASE SECURITIZATION,
INC., its general partner
By:________________________________
Patrick C. Ossenbeck
Assistant Treasurer
FIRST BANK NATIONAL ASSOCATION, as
Trust Agent (solely for purposes of
Section 11.01(b))
By:________________________________
Name:______________________________
Title:_____________________________
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Acknowledged and Agreed:
FIRST BANK NATIONAL ASSOCIATION, as
Securitization Trustee
By:__________________________________
Name:________________________________
Title:_______________________________
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EXHIBIT A
SCHEDULE OF 1996-B LEASES AND
1996-B LEASED VEHICLES AS OF THE INITIAL CUTOFF DATE
[Omitted. Copies on file with the Servicer, the Trustee and
the Securitization Trustee.]
A-1
<PAGE> 40
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
B-1
<PAGE> 1
EXHIBIT 10.13
FORM OF
AMENDMENT NO. 2
TO
SUPPORT AGREEMENT
AMENDMENT NO. 2 TO SUPPORT AGREEMENT dated as of October 1,
1996 (the "Amendment") made by World Omni Financial Corp., a Florida corporation
("World Omni") having its principal place of business at 120 N.W. 12th Avenue,
Deerfield Beach, FL 33442, and World Omni Lease Securitization L.P., a Delaware
limited partnership ("WOLS LP").
World Omni is the sole limited partner of WOLS LP. The sole
general partner of WOLS LP is World Omni Lease Securitization, Inc., a Delaware
corporation ("WOLSI") and a wholly owned subsidiary of World Omni. In order to
better assure WOLS LP that it will be able to meet its financial obligations as
and when they become due and payable, and therefore to assist WOLS LP in
inducing third parties to enter into financial arrangements with it as it deems
desirable, the undersigned have entered into a Support Agreement dated as of
October 1, 1995 as amended by Amendment No. 1 to Support Agreement dated as of
May 1, 1996 (the "Support Agreement") to provide support to WOLS LP in
maintaining a favorable financial condition, and desires to amend the Support
Agreement to provide additional support to WOLS LP.
For the foregoing reasons, and for other good and valuable
consideration, receipt of which is hereby acknowledged, World Omni, having a
financial interest in WOLS LP, and WOLS LP, intending to be legally bound,
hereby agree as follows:
SECTION 1. DEFINITIONS.
For all purposes of this Amendment, except as otherwise
expressly provided for or unless the context otherwise requires, (a) unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings attributed to them by the Second Amended and Restated Assignment
Agreement, (b) all terms used in this Amendment include (i) all genders and (ii)
the plural as well as the singular, (c) all references to words such as
"herein", "hereof" and the like shall refer to this Amendment as a whole and not
to any particular article or sections within this Amendment, (d) the term
"include" and all variations thereon shall mean "include without limitation",
and (e) the term "or" shall include "and/or".
SECTION 2. AMENDMENT OF SECTION 3.
Section 3 of the Support Agreement is hereby amended by
deleting the proviso contained at the end of the second full sentence thereof
that reads "provided that such obligations of World Omni under this Support
Agreement shall not exceed $25
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million in the aggregate" and inserting in its place "provided that such
obligations of World Omni under this Support Agreement shall not exceed $__
million in the aggregate."
SECTION 3. EFFECT OF AMENDMENT.
Other than as specifically amended in this Amendment, the
Support Agreement remains in full force and effect and is hereby reaffirmed in
all respects, and all references therein to the "Agreement" shall be deemed to
refer to the Support Agreement, as amended by this Amendment.
SECTION 4. GOVERNING LAW.
THIS AMENDMENT SHALL BE CREATED UNDER THE LAWS AND GOVERNED BY
AND CONSTRUED UNDER THE INTERNAL LAWS OF THE STATE OF FLORIDA, WITHOUT REGARD
TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
SECTION 5. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or
terms of this Amendment shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provision or terms of this Amendment and
shall in no way affect the validity or enforceability of the other provisions
of this Amendment. To the extent permitted by law, the parties hereto waive any
provision of law that renders any provision of this Amendment invalid or
unenforceable in any respect.
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be duly executed as of the date first set forth above.
WORLD OMNI FINANCIAL CORP.
By: ___________________________________
Patrick C.Ossenbeck
Assistant Treasurer
WORLD OMNI LEASE SECURITIZATION L.P.
By: World Omni Lease Securitization,
Inc., its general partner
By: ____________________________________
Patrick Ossenbeck
Assistant C. Treasurer
2
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EXHIBIT 23.4
[WILLIAMS & CONNOLLY LETTERHEAD]
CONSENT OF WILLIAMS & CONNOLLY
We hereby consent to the use of our name under the headings
"Legal Matters" and "Risk Factors -- Insolvency of World Omni; Substantive
Consolidation with World Omni" in the Prospectus included in the Registration
Statement on Form S-1 (No. 333-11449) filed by World Omni Lease Securitization
L.P. with the Securities and Exchange Commission (the "SEC") on September 5,
1996, as it may be further amended and declared effective by the SEC.
Date: Otober 12, 1996
/s/ Charles A. Sweet
------------------------------
Williams & Connolly
By: Charles A. Sweet
for the firm
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EXHIBIT 23.5
[HAND ARENDALL, L.L.C. LETTERHEAD]
CONSENT OF HAND ARENDALL, L.L.C.
We hereby consent to the use of our name under the heading "Legal
Matters" in the prospectus included in the Registration Statement on Form S-1
(No. 333-11449) filed by World Omni Lease Securitization L.P. with the
Securities and Exchange Commission (the "SEC") on September 5, 1996 and as may
be further amended and declared effective by the SEC.
HAND ARENDALL, L.L.C.
By: /s/ W. Clark Watson
-----------------------
W. Clark Watson, Member
