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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 6, 1997
Registration No. 333-12431
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-----------------------------
KEY CONSUMER ACCEPTANCE CORPORATION
as Seller to the Trusts described herein
(Exact name of Registrant as specified in its charter)
DELAWARE KEY TOWER 52-1995940
(State or other jurisdiction of 127 PUBLIC SQUARE (I.R.S. Employer
incorporation or organization) CLEVELAND, OHIO 44114-1306 Identification No.)
(216) 689-6300
(Address, including zip code, and telephone
number, including area code, of
Registrant's principal executive offices)
FORREST F. STANLEY, ESQ.
GENERAL COUNSEL
KEY BANK USA, NATIONAL ASSOCIATION
KEY TOWER
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114-1306
(216) 689-6300
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
COPIES TO:
RAYMOND T. SAWYER, ESQ. STUART M. LITWIN, ESQ.
THOMPSON HINE & FLORY LLP MAYER, BROWN & PLATT
127 PUBLIC SQUARE 190 SOUTH LASALLE STREET
CLEVELAND, OHIO 44114-1216 CHICAGO, ILLINOIS 60603
(216) 566-5500 (312) 782-0600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective as determined by
market conditions.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
===================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT(1) PRICE(1) REGISTRATION FEE(3)
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ASSET BACKED NOTES AND CERTIFICATES(2)...... $1,000,000 100% $1,000,000 $344.83
===================================================================================================================================
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Also registered hereby are secondary market sales in Asset Backed Notes and
Asset Backed Certificates to be effected by Key Capital Markets, Inc., the
volume of which cannot be determined.
(3) Previously paid.
-----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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INTRODUCTORY STATEMENT
This Registration Statement contains (i) the form of Prospectus
relating to the offering of a series of Asset Backed Notes and/or Asset Backed
Certificates by various Key Auto Finance Trusts created from time to time by Key
Consumer Acceptance Corporation, and (ii) two forms of Prospectus Supplement
relating to offerings of particular series of Asset Backed Certificates (such
form of Prospectus Supplement is identified on the outside front cover page
thereof as the "Preliminary Grantor Trust Prospectus Supplement Form") or of
Asset Backed Notes and Asset Backed Certificates (such form of Prospectus
Supplement is identified on the outside front cover page thereof as the
"Preliminary Owner Trust Prospectus Supplement Form" and, together with the
form of Grantor Trust Prospectus Supplement, the "Prospectus Supplement Forms")
described therein. Each Prospectus Supplement Form relates only to the
securities described therein and is a form which may be used, among others, by
the Seller to offer Asset Backed Notes and/or Asset Backed Certificates under
this Registration Statement.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
PROSPECTUS
SUBJECT TO COMPLETION, DATED __________, 1997
KEY AUTO FINANCE TRUSTS
Asset Backed Notes
Asset Backed Certificates
[KEYCORP LOGO]
KEY CONSUMER ACCEPTANCE CORPORATION
Seller
KEY BANK USA, NATIONAL ASSOCIATION
Servicer
THE ASSET BACKED NOTES (THE "NOTES") AND THE ASSET BACKED CERTIFICATES
(THE "CERTIFICATES" AND, TOGETHER WITH THE NOTES, THE "SECURITIES") DESCRIBED
HEREIN MAY BE SOLD FROM TIME TO TIME IN ONE OR MORE SERIES, IN AMOUNTS, AT
PRICES AND ON TERMS TO BE DETERMINED AT THE TIME OF SALE AND TO BE SET FORTH IN
A SUPPLEMENT TO THIS PROSPECTUS (A "PROSPECTUS SUPPLEMENT"). EACH SERIES OF
SECURITIES, WHICH MAY INCLUDE ONE OR MORE CLASSES OF NOTES OR ONE OR MORE
CLASSES OF CERTIFICATES (OR BOTH), WILL BE ISSUED BY A TRUST TO BE FORMED ON OR
BEFORE THE ISSUANCE DATE FOR THAT SERIES (EACH, A "TRUST"). EACH TRUST WILL BE
FORMED PURSUANT TO EITHER A TRUST AGREEMENT TO BE ENTERED INTO AMONG KEY
CONSUMER ACCEPTANCE CORPORATION, A DELAWARE CORPORATION, AS SELLER (THE
"SELLER"), KEY BANK USA, NATIONAL ASSOCIATION, IN ITS CAPACITY AS SERVICER (IN
SUCH CAPACITY, THE "SERVICER"), AND THE TRUSTEE SPECIFIED IN THE RELATED
PROSPECTUS SUPPLEMENT (THE "TRUSTEE") OR A POOLING AND SERVICING AGREEMENT TO BE
ENTERED INTO AMONG THE TRUSTEE, THE SELLER AND THE SERVICER. IF A SERIES OF
SECURITIES INCLUDES NOTES, SUCH NOTES WILL BE ISSUED AND SECURED PURSUANT TO AN
INDENTURE BETWEEN THE TRUST AND THE INDENTURE TRUSTEE SPECIFIED IN THE RELATED
PROSPECTUS SUPPLEMENT (THE "INDENTURE TRUSTEE") AND WILL REPRESENT INDEBTEDNESS
OF THE RELATED TRUST. THE CERTIFICATES OF A SERIES WILL REPRESENT FRACTIONAL
UNDIVIDED INTERESTS IN THE RELATED TRUST. CERTAIN CAPITALIZED TERMS USED IN THIS
PROSPECTUS ARE DEFINED IN THIS PROSPECTUS ON THE PAGES INDICATED IN THE "INDEX
OF TERMS" ON PAGE 72 OF THIS PROSPECTUS. THE PROPERTY OF EACH TRUST WILL
INCLUDE A POOL OF PROMISSORY NOTES AND SECURITY AGREEMENTS AND/OR RETAIL
INSTALLMENT SALES CONTRACTS SECURED BY NEW OR USED AUTOMOBILES AND LIGHT DUTY
TRUCKS (COLLECTIVELY, THE "RECEIVABLES"), PAYMENTS RECEIVED THEREUNDER ON AND
AFTER THE APPLICABLE CUTOFF DATE SET FORTH IN THE RELATED PROSPECTUS
SUPPLEMENT, SECURITY INTERESTS IN THE VEHICLES FINANCED THEREBY, RIGHTS UNDER
DEALER AGREEMENTS, RIGHTS WITH RESPECT TO DEPOSIT ACCOUNTS IN WHICH COLLECTIONS
ARE HELD OR THAT SERVE AS CREDIT ENHANCEMENT, ANY OTHER CREDIT ENHANCEMENTS,
THE PROCEEDS OF THE FOREGOING AND ANY PROCEEDS FROM CLAIMS ON INSURANCE
POLICIES WITH RESPECT TO THE FINANCIAL VEHICLES, ALL AS DESCRIBED HEREIN AND IN
THE RELATED PROSPECTUS SUPPLEMENT. SEE "THE TRUSTS."
(CONTINUED ON NEXT PAGE)
PROSPECTIVE INVESTORS SHOULD CONSIDER THE "RISK FACTORS" SET
FORTH AT PAGE 15 HEREIN, WHICH DISCUSSES MATERIAL RISKS INVOLVED WITH AN
INVESTMENT IN THE SECURITIES.
ANY NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF A SERIES
REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN KEY CONSUMER ACCEPTANCE CORPORATION, KEY
BANK USA, NATIONAL ASSOCIATION, OR ANY OF THEIR AFFILIATES. NONE OF
THE NOTES, THE CERTIFICATES OR THE RECEIVABLES ARE GUARANTEED
OR INSURED BY, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
ANY OTHER GOVERNMENT AGENCY OR INSTRUMENTALITY, KEY
CONSUMER ACCEPTANCE CORPORATION, KEY BANK USA,
NATIONAL ASSOCIATION, OR ANY OF
THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES OFFERED HEREBY
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THE DATE OF THIS PROSPECTUS IS _______ __, 1997.
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(Continued from previous page)
The related Prospectus Supplement will specify which class or classes
of Notes, if any, and which class or classes of Certificates, if any, of the
related series are being offered thereby. Each class of Securities of any
series other than any Strip Notes and Strip Certificates will represent the
right to receive a specified amount of payments of principal and interest on the
related Receivables, at the rates, on the dates and in the manner described
herein and in the related Prospectus Supplement. See "Description of the Notes,"
"Description of the Certificates" and "Description of the Securities" herein and
in the related Prospectus Supplement. If a series includes multiple classes of
Securities, the rights of one or more classes of Securities to receive payments
may be senior or subordinate to the rights of one or more of the other classes
of such series. Distributions on Certificates of a series may be subordinated in
priority to payments due on any related Notes or any other Certificates to the
extent described herein and in the related Prospectus Supplement. See "Risk
Factors--Subordination" herein and in the related Prospectus Supplement.
A series may include one or more classes of Notes and/or Certificates
which differ as to the timing and priority of payment, interest rate or amount
of distributions in respect of principal or interest or both. A series may
include one or more classes of Notes or Certificates entitled to distributions
in respect of principal with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate, nominal or
no distributions in respect of principal. The rate of payment in respect of the
principal of any class of Notes and distributions in respect of the Certificate
Balance of any class of the Certificates will depend on the priority of payment
of such class and the rate and timing of payments (including prepayments,
defaults, liquidations and repurchases of Receivables) on the related
Receivables. A rate of payment lower or higher than that anticipated may affect
the weighted average life of each class of Securities in the manner described
herein and in the related Prospectus Supplement. See "Weighted Average Life of
the Securities."
AVAILABLE INFORMATION
The Seller, as originator of each Trust, has filed with the Securities
and Exchange Commission (the "Commission") a Registration Statement (together
with all amendments and exhibits thereto, referred to herein as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Notes and/or the Certificates offered
pursuant to this Prospectus. For further information, reference is made to the
Registration Statement, which may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the Commission's regional offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7
World Trade Center, Suite 1300, New York, New York 10048. Copies of the
Registration Statement may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, the Commission maintains a public access site on the
Internet through the World Wide Web at which site reports, information
statements and other information, including all electronic filings, may be
viewed. The Internet address of such World Wide Web site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Seller, as originator of any Trust, pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), subsequent to the date of this Prospectus and
prior to the termination of the offering of the Securities shall be deemed to be
incorporated by reference in this Prospectus or in any related Prospectus
Supplement. Any statement contained in a document incorporated or
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deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
See "Certain Information Regarding the Securities--Reports to Securityholders."
The Seller will provide without charge to each person, including any
beneficial owner of Securities, to whom a copy of this Prospectus is delivered,
on the written or oral request of such person, a copy of any or all of the
documents incorporated herein or in any related Prospectus Supplement by
reference, except the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to the Seller, in care of Key Tower, 127 Public
Square, Cleveland, Ohio, 44114-1306 (Telephone: (216) 689-6300). The Servicer
intends to continue to file with respect to each Trust periodic reports
pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
for the period after such filings could be discontinued in reliance on Section
15(d) thereof until the Securities issued by such Trust are no longer
outstanding.
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SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in this summary
are defined elsewhere in this Prospectus on the pages indicated in the "Index of
Terms" beginning on page 72.
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Issuer.................................. The issuer (the "Issuer") with respect to each series of
Securities shall be the Trust to be formed pursuant to
either a Trust Agreement (as amended and supplemented
from time to time, a "Trust Agreement") among the
Trustee for such Trust (the "Trustee"), the Seller and the
Servicer, or a Pooling and Servicing Agreement among
the Trustee, the Seller and the Servicer.
Seller.................................. Key Consumer Acceptance Corporation, a Delaware
corporation (the "Seller") and a wholly owned subsidiary
of KeyCorp. See "The Seller" and "The Seller, The Servicer
and KeyCorp" in the related Prospectus Supplement.
Servicer................................ Key Bank USA, National Association, a national banking
association (the "Bank" or, in its capacity as servicer, the
"Servicer").
Trustee................................. With respect to each series of Securities, the Trustee
specified in the related Prospectus Supplement.
Indenture Trustee ...................... With respect to each series of Securities that includes any
Notes, the Indenture Trustee specified in the related
Prospectus Supplement.
The Notes............................... The terms of the Notes generally are described below.
A. General............................. A series of Securities may include one or more classes of
Notes, which will be issued pursuant to an Indenture
between the Trust and the Indenture Trustee (as
amended and supplemented from time to time, an
"Indenture"). The related Prospectus Supplement will
specify which class or classes, if any, of Notes of the
related series are being offered thereby.
B. Denomination; Book-Entry............ Notes will be available for purchase in denominations
specified in the related Prospectus Supplement or, if not
so specified, in original denominations of $1,000 and
integral multiples thereof. Notes will initially be issued
in book-entry form and beneficial owners of Notes
("Note Owners") will be able to receive Definitive Notes
only in the limited circumstances described herein or in
the related Prospectus Supplement. See "Certain
Information Regarding the Securities--Definitive
Securities."
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C. Note Interest Rates................. Each class of Notes other than Strip Notes will have a
stated principal amount and will bear interest at a
specified rate or rates (with respect to each class of
Notes, the "Interest Rate"). Each such class of Notes
may have a different Interest Rate, which may be a fixed,
variable or adjustable Interest Rate, or any combination
of the foregoing. The related Prospectus Supplement will
specify the Interest Rate for each class of Notes, or the
method for determining the Interest Rate. See
"Description of the Notes" herein and in the related
Prospectus Supplement for any Trust that issues Notes.
D. Characteristics..................... With respect to a series that includes two or more classes of
Notes, each class may differ as to the timing and priority
of payments, seniority, Interest Rate or amount of
payments of principal or interest, or payments of
principal or interest in respect of any such class or classes
may or may not be made upon the occurrence of
specified events or on the basis of collections from
designated portions of the Receivables Pool. To the
extent provided in the related Prospectus Supplement, a
series may include one or more classes of Notes
designated as fixed payment notes, short term asset
backed notes, targeted amortization classes, planned
amortization classes or companion classes. See
"Description of the Notes--Principal and Interest on the
Notes."
E. Strip Notes......................... In addition, a series may include one or more classes of
Notes ("Strip Notes") entitled to (i) principal payments
with disproportionately small, nominal or no interest
payments or (ii) interest payments with
disproportionately small, nominal or no principal
payments. Any Strip Notes will be extremely sensitive
to the rate and timing of principal payments, including
prepayments, on the Receivables. See "Risk Factors--Risk
of Prepayment and Possible Adverse Effect on
Yield--Risks Associated with Yield Sensitivity of the
Strip Securities."
F. Subordination to Securities
of the Same Trust................. If the series of Securities issued by a Trust includes
classes of Notes, the Notes will be entitled to
receive payments and distributions from the same Trust
property, and distributions in respect of certain classes
of the Notes may be subordinated in priority of payment
to payments on other classes of Notes to the extent
specified in the related Prospectus Supplement.
G. Clean-Up Call; Redemption........... If the Seller or Servicer exercises its option to
purchase the Receivables of a Trust in the event the
outstanding Pool Balance is equal to or less than the
percentage of the Initial Pool Balance set forth in the
related Prospectus Supplement in the manner and on the
respective terms and conditions described under
"Description of the Transfer and Servicing
Agreements--Termination," the outstanding Notes of such
series will be redeemed in full as set forth in the
related Prospectus Supplement.
H. Pre-Funding Account;
Redemption........................ If the related Prospectus Supplement provides that the
property of a Trust will include a Pre-Funding Account
(as
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such term is defined in the related Prospectus
Supplement, the "Pre-Funding Account"), one or more
classes of the outstanding Notes of such series will be
subject to partial redemption on or immediately
following the end of the applicable Funding Period (as
such term is defined in the related Prospectus
Supplement, the "Funding Period") in an amount and
manner specified in the related Prospectus Supplement.
The Certificates........................ The terms of the Certificates generally are described below.
A. General............................. A series may include one or more classes of Certificates and
may or may not include any Notes. The related
Prospectus Supplement will specify which class or classes,
if any, of the Certificates are being offered thereby.
B. Denominations; Book-Entry........... Certificates will be available for purchase in denominations
specified in the related Prospectus Supplement or, if not
so specified, except for the Certificates, if any, of a given
series purchased by the Seller, in minimum denominations
of $1,000 and integral multiples of $1,000 in excess
thereof. Certificates will initially be issued in book-entry
form and the beneficial owners of Certificates
("Certificate Owners") will be able to receive Definitive
Certificates only in the limited circumstances described
herein or in the related Prospectus Supplement. See
"Certain Information Regarding the Securities--Definitive
Securities."
C. Certificate Rate.................... Each class of Certificates other than any Strip Certificates
will have a stated Certificate Balance specified in the
related Prospectus Supplement (the "Certificate Balance")
and will accrue interest on such Certificate Balance at a
specified rate (with respect to each class of Certificates,
the "Certificate Rate"). Each such class of Certificates
may have a different Certificate Rate, which may be a
fixed, variable or adjustable Certificate Rate, or any
combination of the foregoing. The related Prospectus
Supplement will specify the Certificate Rate for each
class of Certificates or the method for determining the
Certificate Rate. See "Description of the Certificates"
herein and in the related Prospectus Supplement.
D. Characteristics..................... With respect to a series that includes two or more classes of
Certificates, each class may differ as to timing and
priority of distributions, seniority, allocations of losses,
Certificate Rate or amount of distributions in respect of
principal or interest. Distributions in respect of principal
or interest in respect of any such class or classes of
Certificates may or may not be made upon the
occurrence of specified events or on the basis of
collections from designated portions of the
Receivables Pool.
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E. Strip Certificates.................. A series may include one or more classes of Certificates
("Strip Certificates" and, together with Strip Notes,
"Strip Securities") entitled to (i) principal payments with
disproportionately small, nominal or no interest
payments or (ii) interest payments with
disproportionately small, nominal or no principal
payments. Any Strip Certificates will be extremely
sensitive to the rate and timing of principal payments,
including prepayments, on the Receivables. See "Risk
Factors--Risk of Prepayment and Possible Adverse Effect
on Yield--Risks Associated with Yield Sensitivity of the
Strip Securities."
F. Subordination to Securities of the
Same Trust........................ If the series of Securities issued by a Trust includes classes
of Notes or more than one class of Certificates, all of the
Notes and Certificates will be entitled to receive
payments and distributions from the same Trust
property, and distributions in respect of the Certificates
may be subordinated in priority of payment to payments
on the Notes or to other classes of Certificates to the
extent specified in the related Prospectus Supplement.
G. Clean-Up Call;
Prepayment........................ If the Seller or Servicer exercises its option to purchase the
Receivables of a Trust in the event the outstanding Pool
Balance is equal to or less than the percentage of the
Initial Pool Balance set forth in the related Prospectus
Supplement in the manner and on the respective terms and
conditions described under "Description of the Transfer and
Servicing Agreements--Termination," Certificateholders
will receive as a prepayment in full an amount in respect
of the Certificates of such series as specified in the related
Prospectus Supplement.
H. Pre-Funding Account; Partial
Prepayment........................ If the related Prospectus Supplement provides that the
property of a Trust will include a Pre-Funding Account,
Certificateholders may receive a partial prepayment of
principal on or immediately following the end of the
applicable Funding Period in an amount and manner
specified in the related Prospectus Supplement.
The Trust Property...................... The property of each Trust will include a pool of motor
vehicle promissory notes and security agreements and/or
retail installment sales contracts secured by new or used
automobiles or light duty trucks (collectively, the
"Receivables"), including rights to receive payments
received under such Receivables after the applicable
Cutoff Date, security interests in the vehicles financed
thereby (the "Financed Vehicles"), rights under
agreements with automobile or light duty truck dealers
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("Dealer Agreements"), rights with respect to Eligible
Deposit Accounts, which will include the Collection
Account and may include a Reserve Account and/or a Yield
Supplement Account, rights under the related Purchase
Agreements and any proceeds from claims on or rebates of
premiums relating to insurance policies and rebates of
amounts relating to items such as extended warranties
with respect to the Financed Vehicles. On or before the
Closing Date specified in the related Prospectus
Supplement with respect to a Trust, the Seller will sell
or transfer Receivables (the "Initial Receivables")
having an aggregate principal balance specified in the
related Prospectus Supplement as of the dates specified
therein to such Trust pursuant to either a Sale and
Servicing Agreement among the Seller, the Servicer and
the Trust (as amended and supplemented from time to time,
the "Sale and Servicing Agreement") or, if the Trust is
to be treated as a grantor trust for federal income tax
purposes, the related Pooling and Servicing Agreement
among the Seller, the Servicer and the Trustee (as
amended and supplemented from time to time, the "Pooling
and Servicing Agreement" and, together with the Sale and
Servicing Agreement, each a "Transfer and Servicing
Agreement"). The property of each Trust will also include
amounts on deposit in certain trust accounts, including
the related Collection Account, any Pre-Funding Account,
any Revolving Account and any other account identified in
the related Prospectus Supplement. See "The Trusts" herein
and "The Trust" in the related Prospectus Supplement.
In addition, to the extent provided in the related Prospectus
Supplement, from time to time during the related
Revolving Period and/or Pre-Funding Period, as the case
may be, the Seller may purchase from Affiliates additional
Receivables ("Subsequent Receivables") having an
aggregate principal balance approximately equal to the
amount of principal collections on the related Receivables
deposited in the Revolving Account from time to time
during the Revolving Period and/or the amount
deposited in the Pre-Funding Account on the related
Closing Date (the "Pre-Funded Amount"), and will
transfer and assign such Subsequent Receivables to the
related Trust in exchange for the payment to the Seller
of funds on deposit in such Revolving Account or Pre-
Funding Account equal to the aggregate outstanding
principal balance of the Subsequent Receivables so
transferred as of the applicable subsequent cutoff date.
See "Pre-Funding Account" and "Revolving Account"
below in this summary and "Certain Information
Regarding the Securities--Funding Period and Revolving
Period."
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The Receivables ........................ The Receivables will generally consist of (i) motor vehicle
promissory notes and security agreements executed by an
Obligor in favor of a motor vehicle lender ("Direct
Loans") and/or (ii) motor vehicle retail installment
sales contracts between an Obligor and a vehicle dealer
(collectively, "Motor Vehicle Loans"). Direct Loans may
include promissory notes and security agreements for
which a vehicle dealer (a "Dealer") performed certain
ministerial loan processing functions on behalf of the
lender. In addition, the related Receivables Pool may
include Motor Vehicle Loans acquired by an Affiliate
("Acquired Receivables"). "Originator" means, with
respect to any Motor Vehicle Loan, the Affiliate that (i)
was the lender with respect to a Direct Loan or (ii)
acquired such Motor Vehicle Loan from a Dealer or other
third party. "Affiliate" means a bank or other nonbank
entity owned or acquired by KeyCorp or by its subsidiaries.
"Subsidiary" includes both direct and indirect
subsidiaries. As of the date of this Prospectus, the Bank
and AutoFinance Group, Inc., a wholly-owned subsidiary of
KeyCorp ("AutoFinance Group" and, together with the Bank,
the "Primary Originators") are the only KeyCorp
subsidiaries that make or acquire Motor Vehicle Loans.
Receivables that are to be included in any Receivables Pool
will be transferred by an Affiliate to the Seller for
purposes of sale to the applicable Trust. The Receivables
for any given Receivables Pool will be selected from the
Motor Vehicle Loans owned by Affiliates based on the criteria
specified in the applicable Transfer and Servicing Agreement,
and described herein and in the related Prospectus Supplement.
See "The Receivables Pools" herein and "The Receivables Pool"
in the related Prospectus Supplement.
Credit and Cash
Flow Enhancement........................ The form and amount of any credit enhancement will be
specified in the related Prospectus Supplement. Credit
enhancement with respect to a Trust or any class or
classes of Securities may include any one or more of the
following: subordination of one or more other classes of
Securities or all or a portion of any servicing fees, a
reserve account, over-collateralization, letters of
credit, credit or liquidity facilities, surety bonds,
guaranteed investment contracts, swaps or other interest
rate protection agreements, repurchase obligations, yield
supplement agreements, other agreements with respect to
third party payments or other support, cash deposits or
other arrangements. Certain forms of credit enhancement
may contain limitations on, and exclusions from, coverage
thereunder, which will be described in the related
Prospectus Supplement. See "Description of the Transfer
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and Servicing Agreements--Credit and Cash Flow
Enhancement" herein and in the related Prospectus
Supplement.
Pre-Funding Account..................... If specified in the related Prospectus Supplement,
during a Funding Period until the earliest of (a) the Determination Date on which
the amount on deposit in the Pre-Funding Account is less than the minimum amount
specified in the related Prospectus Supplement, (b) the occurrence of an Event of
Default under the Indenture or a Servicer Termination Event under the applicable
Transfer and Servicing Agreement, (c) the occurrence of certain events of
insolvency with respect to the Seller or the Servicer or (d) the close of business
on a business day specified in the related Prospectus Supplement not later than
one year after the applicable Closing Date, the Pre-Funding Account will be
maintained as a trust account in the name of the Applicable Trustee. The
Pre-Funded Amount will initially equal the amount specified in the related
Prospectus Supplement, which may be up to 100% of the aggregate principal amount
of the series of Securities offered thereunder. During the Funding Period, the
Pre-Funded Amount will be reduced by the amount thereof used to purchase
Subsequent Receivables in accordance with the applicable Transfer and Servicing
Agreement, and the amounts thereof deposited in the Reserve Account in connection
with the purchase of such Subsequent Receivables. Prior to being used to purchase
Subsequent Receivables or paid to the registered holders of each class of Notes
("Noteholders") and the registered holders of Certificates ("Certificateholders"
and together with any Noteholders, "Securityholders") the Pre-Funded Amount will
be invested from time to time in Permitted Investments. Although the specific
parameters of the Pre-Funding Account with respect to any issuance of Securities
will be specifed in the related Prospectus Supplement, it is anticipated that (a)
the Funding Period will not exceed one year from the related Closing Date, and (b)
that the Subsequent Receivables to be acquired during the Funding Period will be
subject to the same types of representation and warranties as the Initial
Receivables included in the related Receivables Pool on the Closing Date
(although additional criteria may also be required to be satisfied, as described
in the related Prospectus Supplement). It is anticipated that any Subsequent
Receivables originated by a Primary Originator will be originated in accordance
with the underwriting criteria described under "The Receivables Pools --
Underwriting." See "Description of the Transfer and Servicing Agreements --
Accounts" herein and in the related Prospectus Supplement.
Revolving Account....................... If specified in the related Prospectus Supplement for any Trust that
issues Notes, all principal collections received on the related Receivables during
the Revolving Period (as such term is defined in the related Prospectus
Supplement, the "Revolving Period") for such Trust and, on each Distribution Date
during such Revolving Period, such other amounts described in the related
Prospectus Supplement, will be deposited in the Revolving Account (as such term is
defined in such Prospectus Supplement, the "Revolving Account") for such Trust
and, except as provided below, no principal collections under the Receivables will
be distributed to the holders of a series of Securities issued by such Trust on
any Distribution Date occurring during such Revolving Period. Although the
specific parameters of the Revolving Account with respect to any issuance of
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Securities will be specified in the related Prospectus
Supplement, it is anticipated that (a) the Revolving
Period will not exceed three years from the related
Closing Date, and (b) that the Subsequent Receivables to
be acquired during the Revolving Period will be subject to
the same types of representations and warranties as the
Initial Receivables included in the related Receivables
Pool on the Closing Date (although additional criteria
may also be required to be satisfied, as described in the
related Prospectus Supplement). It is anticipated that any
Subsequent Receivables originated by a Primary Originator
will be originated in accordance with the underwriting
criteria described under "The Receivables Pools --
Underwriting." If the amount on the deposit in a Revolving
Account at the close of business on the last day of a calendar
month during the Revolving Period exceeds the maximum
permitted Revolving Account balance specified in the related
Prospectus Supplement, the holders of such series of Securities
will receive a distribution of principal on their Securities on
the next Distribution Date in an amount equal to the amount of
such excess.
In addition, if the related Trust includes a Revolving
Account, a principal payment equal to the sum of (a) the
amount, if any, on deposit in such Revolving Account as
of the close of business on the first business day
following the applicable Revolving Period and (b) such
other amounts described in the related Prospectus
Supplement for the next Distribution Date thereafter will
be distributed to the holders of the related series of
Securities on such next Distribution Date and thereafter
principal distributions will be made to the holders of the
related series of Securities in the manner otherwise
specified herein and in the related Prospectus
Supplement.
Reserve Account......................... If specified in the related Prospectus Supplement, a Reserve
Account will be created for each Trust which may
require an initial deposit of cash or certain investments
having a value equal to the amount specified in the
related Prospectus Supplement. To the extent specified
in the related Prospectus Supplement, funds in the
Reserve Account will thereafter be supplemented by the
deposit of amounts remaining on any Distribution Date
after making all other distributions required on such date
and any amounts deposited from time to time from the
Pre-Funding Account and/or Revolving Account in
connection with a purchase of Subsequent Receivables.
Amounts in the Reserve Account will be available to
cover shortfalls in amounts due to the holders of those
classes of Securities specified in the related Prospectus
Supplement in the manner and under the circumstances
specified therein. The related Prospectus Supplement
will also specify to whom and the manner and
circumstances under which amounts on deposit in the
Reserve Account (after giving effect to all other required
distributions to be made by the applicable Trust) in
excess of the Specified Reserve Account Balance (as
defined in the related Prospectus Supplement, the
"Specified Reserve Account Balance") will be distributed.
See "Description of the Transfer and Servicing
Agreements--Accounts" herein and in the related
Prospectus Supplement.
Transfer and
Servicing Agreements.................... With respect to each Trust, the Seller will sell the related
Receivables to such Trust pursuant to a Transfer and
Servicing Agreement. The rights and benefits of any
Trust under a Sale and Servicing Agreement will be
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assigned to the Indenture Trustee as collateral for the
Notes of the related series. The Servicer will agree with
each Trust to be responsible for servicing, managing,
maintaining custody of and making collections on the
related Receivables. The Servicer will undertake certain
administrative duties under an Administration Agreement
with respect to any Trust that has issued Notes.
The Seller will be obligated to repurchase any Receivable if
the interest of the applicable Trust in such Receivable is
materially and adversely affected by a breach of any
representation or warranty made by the Seller with
respect to the Receivable, if such breach has not been
cured following the discovery by or notice to the Seller
of the breach.
The Servicer will be obligated to purchase any Receivable
if, among other things, it extends the date for final
payment by the Obligor of such Receivable beyond the
applicable Final Scheduled Maturity Date (as defined in
the related Prospectus Supplement, the "Final Scheduled
Maturity Date"), reduces the contractual rate of interest
on such Receivable ("Contract Rate") or principal balance
of such Receivable or fails to maintain a perfected
security interest in the related Financed Vehicle.
The Servicer will be entitled to receive a fee for servicing
the Receivables of each Trust equal to a specified
percentage of the aggregate principal balance of the
related Receivables Pool, as set forth in the related
Prospectus Supplement, and, in addition to such fee, is
entitled to receive certain late fees, extension fees,
prepayment charges, non-sufficient funds charges and
other administrative fees or similar charges relating to the
servicing of the Receivables. In addition, the Servicer or
the Seller will be entitled to receive such fees and other
amounts specified in the related Prospectus Supplement.
To the extent provided in the related Prospectus
Supplement, the right to receive all or a portion of any
such servicing fees may be subordinated to rights of
Securityholders and all or a portion of any such servicing
fees may otherwise serve as credit enhancement for the
related Securities. See "Description of the Transfer and
Servicing Agreements--Servicing Compensation and
Payment of Expenses herein and "Description of the
Transfer and Servicing Agreements--Servicing
Compensation and Payment of Expenses" and
"--Distributions" in the related Prospectus Supplement."
No Recourse to Sellers or
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Servicer................................ The Receivables sold and assigned to the applicable Trust
will be sold and assigned by the Seller to such Trust
without recourse to the Seller, the Servicer or any of
their respective affiliates for credit losses on such
Receivables. The Notes of any series will represent
obligations solely of, and the Certificates of any series
will represent interests solely in, the related Trust and,
except as may be set forth in an applicable Prospectus
Supplement in connection with any credit enhancement,
neither the Notes nor the Certificates of any series will
be insured or guaranteed by the Seller, the Servicer, the
Applicable Trustee, any Indenture Trustee or any other
person or entity.
Tax Status.............................. Unless the Prospectus Supplement specifies that the related
Trust will be treated as a grantor trust, upon the issuance
of the related series of Securities, Federal Tax Counsel to
such Trust will deliver an opinion to the effect that, for
federal income tax purposes: (i) any Notes of such series
will be characterized as debt and (ii) such Trust will not
be classified as an association (or a publicly traded
partnership) taxable as a corporation. In respect of any
such series, each Note Owner, by the acceptance of a
beneficial interest in a Note of such series, will agree to
treat such Note as indebtedness, and each Certificate
Owner, by the acceptance of a beneficial interest in a
Certificate of such series, will agree to treat such Trust as
a partnership in which such Certificate Owner is a
partner for federal, state and local tax purposes.
If the Prospectus Supplement specifies that the related Trust
will be treated as a grantor trust, upon the issuance of
the related series of Certificates, Federal Tax Counsel to
such Trust will deliver an opinion to the effect that such
Trust will be treated as a grantor trust for federal income
tax purposes and will not be subject to federal income
tax. Accordingly, the Certificate Owners would be
treated as owners of the Receivables for federal income
tax purposes.
See "Federal Income Tax Consequences" and "State Tax
Consequences" herein and in the related Prospectus
Supplement for additional information concerning the
application of federal and state tax laws.
ERISA Considerations.................... The related Prospectus Supplement will set forth certain
information as to whether each class of Securities issued
by the related Trust will be eligible for purchase by
employee benefit plans subject to the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), or by any individual retirement account. See
"ERISA
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Considerations" herein and in the related Prospectus
Supplement.
Rating of Securities.................... It is a condition to the issuance of each class of Securities
offered hereby that they are rated by at least one
nationally recognized statistical rating agency in one of
its generic rating categories which signifies investment
grade. The ratings of the Securities address the
likelihood of the timely payment of interest on and the
ultimate payment of principal of the Securities pursuant
to their terms. There can be no assurance that such
ratings will not be lowered or withdrawn by a Rating
Agency if circumstances so warrant. See "Risk
Factors--Ratings of the Securities."
Material Risks.......................... There are material risks associated with an investment in
the Securities. Prospective investors should consider the
factors set forth under "Risk Factors" on pages 14 to
23, and as are provided in the related Prospectus
Supplement.
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RISK FACTORS
LIMITED LIQUIDITY
There is currently no secondary market for the Securities. Each
Underwriter (as defined in the related Prospectus Supplement, an "Underwriter")
currently intends to make a market in the Securities for which it is an
Underwriter, but it is under no obligation to do so. There can be no assurance
that a secondary market will develop or, if a secondary market does develop,
that it will provide the Securityholders with liquidity of investment or that it
will continue for the life of the Securities.
RISK OF PREPAYMENT AND POSSIBLE ADVERSE EFFECT ON YIELD
Reinvestment Risks from Prepayments. All the Receivables are prepayable
at any time without penalty to the Obligor. (For this purpose the term
"prepayments" includes prepayments in full, partial prepayments and liquidations
due to default, as well as receipts of proceeds from physical damage, credit
life and disability insurance policies and certain other Receivables repurchased
for administrative reasons). The weighted average life (i.e., the average time
in which each dollar of principal is paid on the Securities) of the Securities
may be reduced by full or partial prepayments on the Receivables. The rate of
prepayments on the Receivables may be influenced by a variety of economic,
social and other factors, including the fact that an Obligor generally may not
sell or transfer the Financed Vehicle securing a Receivable without the payment
in full of such Receivable. In addition, under certain circumstances, the Seller
will be obligated to repurchase Receivables pursuant to a Transfer and Servicing
Agreement as a result of uncured breaches of representations and warranties and,
under certain circumstances, the Servicer will be obligated to purchase
Receivables pursuant to such Transfer and Servicing Agreement as a result of
uncured breaches of certain covenants. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables" and "--Servicing
Procedures." Any reinvestment risks (i.e., risks that amounts received by
Securityholders will not be able to be invested at interest rates that are
greater than or equal to the applicable Interest Rate or Certificate Rate)
resulting from a faster or slower incidence of prepayment of Receivables held by
a given Trust will be borne entirely by the Securityholders of the related
series of Securities. See also "Description of the Transfer and Servicing
Agreements--Termination" regarding the option of the Servicer and/or Seller to
purchase the remaining Receivables of a given Receivables Pool, "--Insolvency
Event" regarding the sale of the Receivables owned by a Trust that is not a
grantor trust if an Insolvency Event with respect to the Seller occurs and "Risk
Factors--Financial Institution Insolvency Risks" regarding the right of the FDIC
to prepay Securities in certain circumstances.
Risks Associated with Securities Purchased at a Discount or Premium.
Holders of Securities should consider, in the case of any Securities purchased
at a discount, the risk that a slower than anticipated rate of principal
payments on the Receivables will result in an actual yield (i.e., the effective
interest rate) that is less than the anticipated yield and, in the case of any
Securities purchased at a premium, the risk that a faster than anticipated rate
of principal payments on the Receivables will result in an actual yield that is
less than the anticipated yield. See "--Reinvestment Risks from Prepayments."
Risks Associated with Yield Sensitivity of the Strip Securities. The
yield to maturity of any Strip Securities will be extremely sensitive to the
prepayment, and default experience on the Receivables, which may fluctuate
significantly from time to time. See "--Reinvestment Risks from Prepayments."
Holders of any Strip Securities entitled to principal payments with
disproportionately small, nominal or no interest payments should consider the
risk that a slower than anticipated rate of payments on the Receivables will
result in an actual yield that is less than the anticipated yield. Holders of
Strip Securities entitled to interest payments with disproportionately small,
nominal or no principal payments should consider the risk that a faster than
anticipated rate of payments on the Receivables will result in an actual yield
that is less than the anticipated yields. Prospective investors in Strip
Securities should fully consider the risk that an extremely rapid rate of
principal prepayments could result in the failure of investors
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in the Strip Securities entitled to disproportionately small, nominal or no
principal payments to recoup their initial investment.
RISK OF COMMINGLING OF RECEIVABLES FILES
The Seller will cause financing statements to be filed with the
appropriate governmental authorities to perfect the interest of the related
Trust in its purchase of Receivables from the Seller and in the appropriate
jurisdictions in which the Affiliates are located to perfect the interest of the
Seller in its purchase of Receivables from the Affiliates in accordance with the
UCC in effect in the relevant jurisdiction. The Servicer will hold the
Receivables, either directly or through subservicers, as custodian for the
Applicable Trustee following the sale and assignment of the Receivables to the
related Trust. The Receivables will not be segregated, stamped or otherwise
marked to indicate that they have been sold to the related Trust. The Seller
believes that it is customary for Receivables to not be segregated or stamped
or otherwise marked in connection with asset securitizations of the type
contemplated hereby and in other types of receivables financings where the
parent company of the transferor has credit ratings that are investment grade
or better and servicing is retained by the transferor. The Seller's affiliates,
in their traditional lending practices, generally would take possession of the
financed receivables if servicing is not retained by the transferor or the
transferor has a lower than investment grade credit rating. If through
inadvertence or otherwise (for example, if an Affiliate or the Seller were to
sell or grant a security interest in Receivables in violation of the
applicable Transfer and Servicing Agreements), another party purchases (or
takes a security interest in) the Receivables for new value in the ordinary
course of business and takes possession of the Receivables without actual
knowledge of the related Trust's interest, the purchaser (or secured party)
will acquire an interest in the Receivables superior to the interest of the
related Trust. Under such circumstances, there is a risk that the Trust would
not be able to realize some or all of the cash flow from such Receivable.
Although such Affiliate or the Seller would be liable to the Trust in that
event, if such Affiliate or the Seller became insolvent, holders of
Securities could suffer losses.
RISK OF UNENFORCEABLE SECURITY INTEREST IN FINANCED VEHICLES
In connection with the sale of Receivables by each Originator to the
Seller and by the Seller to a Trust, security interests in the Financed Vehicles
securing such Receivables will be assigned by such Originator to the Seller and
by the Seller to such Trust simultaneously with the sale of such Receivables by
such Originator to the Seller and by the Seller to such Trust. Due to
administrative burden and expense (i.e., fees payable to state motor vehicle
departments ranging up to approximately forty dollars per vehicle and related
paperwork), the certificates of title to the Financed Vehicles will not be
amended to reflect the assignments to the Seller or to the Trust. In the
absence of such amendments, the Seller and such Trust may not have a perfected
security interest in the Financed Vehicles securing the Receivables in some
states. The Seller will be obligated to repurchase any Receivable sold to such
Trust as to which the Seller has breached its representation that it has a
perfected security interest in the Financed Vehicle securing such Receivable as
of the date such Receivable is transferred to such Trust, if such breach shall
materially and adversely affect the interest of such Trust in such Receivable
and if a breach of such representation shall not have been cured by the last
day of the month that includes the sixtieth day (or, if the Seller elects, the
thirtieth day) following the discovery by or notice to the Seller of such
breach. If such Trust does not have a perfected security interest in a Financed
Vehicle, its ability to realize on such Financed Vehicle in the event of a
default may be adversely affected, which could result in delays in payments on
the related Notes (if any) and Certificates and possible reductions in the
amount of those payments. The applicable Affiliate will be obligated, pursuant
to the Purchase Agreement to which it is a party, to repurchase from the Seller
any Receivable sold by it thereunder that the Seller has repurchased as a
result of such a breach. The Seller will assign its rights under each Purchase
Agreement to the related Trust. The Seller believes that it is customary for
certificates of title or ownership to not be endorsed or amended in connection
with asset securitizations of the type contemplated hereby.
RISK OF NON-PRIORITY OF TRUST'S SECURITY INTEREST IN FINANCED VEHICLES
To the extent the security interest in the Financed Vehicles is
perfected, such Trust will have a prior claim over subsequent purchasers of such
Financed Vehicles and holders of subsequently perfected security interests.
However, as against liens for repairs of Financed Vehicles or for taxes unpaid
by an Obligor under a Receivable, or through fraud or negligence, such Trust
could lose the priority of its security interest or its security interest in a
Financed Vehicle, which could result in delays in payments on the related Notes
(if any) and Certificates and possible reductions in the amount of those
payments. Neither the Seller nor the Servicer will have an obligation to
repurchase a Receivable as to which any of the aforementioned occurrences result
in such Trust's losing the priority
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of its security interest or its security interest in such Financed Vehicle after
the date such security interest was conveyed to such Trust. See "Certain Legal
Aspects of the Receivables--Security Interest in Vehicles."
RISK OF SUBSTANTIVE CONSOLIDATION
Seller has taken steps in structuring the transactions described herein
and in the related Prospectus Supplement that are intended to ensure that the
voluntary or involuntary application for relief by KeyCorp or any Affiliate
subject to the United States Bankruptcy Code (the "Bankruptcy Code") under the
Bankruptcy Code or similar applicable state laws ("Insolvency Laws") will not
result in consolidation of the assets and liabilities of the Seller with those
of KeyCorp or such Affiliate. These steps include the creation of the Seller as
a separate, limited-purpose subsidiary pursuant to a certificate of
incorporation containing certain limitations (including restrictions on the
nature of the Seller's business and a restriction on the Seller's ability to
commence a voluntary case or proceeding under any Insolvency Law without the
prior unanimous affirmative vote of all of its directors). However, there can be
no assurance that the activities of the Seller would not result in a court's
concluding that the assets and liabilities of the Seller should be consolidated
with those of KeyCorp or any Affiliate in a proceeding under any Insolvency Law.
See "The Seller." If a court were to conclude that the assets and liabilities of
the Seller should be consolidated with those of KeyCorp or any Affiliate in a
proceeding under any Insolvency Law, then any "true sale" to the Seller would be
ineffective to remove the Receivables and other assets from the bankruptcy
estate of KeyCorp or such Affiliate, and delays in payments of collections of
the Receivables could occur or reductions in the amount of such payments could
result. See "Risk of No 'True Sale'" below. Although there can be no assurance,
the Seller believes there is no material risk that the Trust would be
substantively consolidated with any other entity if that entity were to become
the subject of a proceeding under any Insolvency Law.
RISK OF NO "TRUE SALE"
The Seller and each Affiliate subject to the Bankruptcy Code each
intend that the transfer of Receivables by it to the Trust, in the case of the
Seller, and to the Seller, in the case of such Affiliates, will each constitute
a "true sale" of such Receivables. The Seller has taken steps in structuring
its purchases of Receivables from each Affiliate that is subject to the
Bankruptcy Code to increase the likelihood that such purchases will each be
deemed a "true sale". In particular, each such purchase will be without
recourse to the applicable Affiliate for credit losses and at a purchase price
believed by the parties to represent the fair market value of the applicable
Receivables. Notwithstanding the foregoing, if the Seller or such an Affiliate
were to become a debtor in a bankruptcy case and a creditor or trustee in
bankruptcy of the Seller or such Affiliate or the Seller or such Affiliate
itself were to take the position that the transfer of Receivables by the
Seller to the Trust, or by such Affiliate to the Seller, as the case may be,
should instead be treated as a pledge of the Receivables to secure a borrowing
of the Seller or such Affiliate, as the case may be, then delays in payments
of collections of the Receivables could occur or (should the court rule in
favor of any such trustee, debtor or creditor) reductions in the amount of
such payments could result. If the transfer of the Receivables by the Seller to
the Trust, or by an Affiliate subject to the Bankruptcy Code to the Seller, is
treated as a pledge instead of a sale, a tax, government or other lien on the
property of the Seller or such Affiliate, as the case may be, arising before
the transfer of the Receivables to the Trust may have priority over the
Trust's or the Seller's interest in the Receivables. If the conveyance by the
Seller or such an Affiliate of the Receivables is treated as a sale, the
Receivables would not be part of the bankruptcy estate of the Seller or such
Affiliate and would not be available to the creditors of the Seller or such
Affiliate, as the case may be.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993),
cert. denied 114 S.Ct 554 (1993), the United States Court of Appeals for the
10th Circuit suggested that even where a transfer of accounts from a seller to a
buyer constitutes a "true sale," the accounts would nevertheless constitute
property of the seller's bankruptcy estate in a bankruptcy of the seller. If the
Seller were to become subject to a bankruptcy proceeding and a court were to
follow the Octagon court's reasoning, Securityholders might experience delays in
payment or possibly losses on their investment in the Securities. The Permanent
Editorial Board of the UCC has issued an official commentary (PEB Commentary No.
14) which characterizes the Octagon court's interpretation of Article 9 of the
UCC as erroneous. Such commentary states that nothing in Article 9 is intended
to prevent the transfer of ownership of accounts or chattel paper. However, such
commentary is not legally binding on any court.
FINANCIAL INSTITUTION INSOLVENCY RISKS
Each Affiliate subject to the Financial Institutions Reform, Recovery
and Enforcement Act of 1989 ("FIRREA"), intends that the transfer of the
Receivables by it to the Seller constitutes a sale. In the event that an
Affiliate subject to FIRREA were to become insolvent, FIRREA sets forth certain
powers that the Federal Deposit Insurance Corporation (the "FDIC") could
exercise if it were appointed as receiver of such Affiliate. Subject to
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certain qualifications, to the extent that the Seller or related Trust has a
valid perfected security interest in the Receivables, such security interest
should be enforceable (to the extent of the "actual direct compensatory damages"
of the Seller or such Trust) notwithstanding the insolvency of, or the
appointment of a receiver or conservator for, any Affiliate, and payments to
such Trust with respect to the Receivables transferred to it from the Seller (up
to the amount of such damages) should not be subject to recovery by such a
conservator or receiver. See "Certain Legal Aspects of the Receivables--Other
Limitations." If, however, the FDIC were to assert a contrary position, such as
by requiring the Seller or related Trust to establish its right to those
payments by submitting to and completing the administrative claims procedure
established under FIRREA, delays in payments on the related Notes (if any) and
the Certificates and possible reductions in the amount of those payments could
occur. Alternatively, in such circumstances, the FDIC might have the right to
repudiate the applicable Purchase Agreement and pay damages to the Seller which,
in turn, would prepay the related Notes (if any) and Certificates, and would
shorten their respective weighted average lives.
RATINGS OF THE SECURITIES
It is a condition to the issuance of each class of Securities offered
hereby that they are rated by at least one nationally recognized statistical
rating agency in one of its generic rating categories which signifies investment
grade. A rating is not a recommendation to purchase, hold or sell Securities,
inasmuch as such rating does not comment as to market price or suitability for a
particular investor. The ratings of the Securities address the likelihood of the
timely payment of interest on and the ultimate payment of principal of the
Securities pursuant to their terms. There can be no assurance that a rating will
remain for any given period of time or that a rating will not be lowered or
withdrawn entirely by a Rating Agency if in its judgment circumstances in the
future so warrant.
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REALIZATION UPON FINANCED VEHICLES; OBLIGOR INSOLVENCY-RELATED RISKS
Numerous statutory provisions, including Insolvency Laws, may interfere
with or affect the ability of a secured party to realize upon collateral or to
enforce a deficiency judgment against an obligor. For example, in a Chapter 13
proceeding under the Bankruptcy Code, a court may prevent a creditor from
repossessing a vehicle, and, as part of the obligor's rehabilitation plan,
reduce the amount of the secured indebtedness to the market value of the vehicle
at the time of bankruptcy (as determined by the court), leaving the creditor as
a general unsecured creditor for the remainder of the indebtedness. A bankruptcy
court may also reduce the monthly payments due under a contract or change the
rate of interest and time of repayment of the indebtedness. To the extent that
any credit enhancement for such Trust were insufficient to cover all such
losses, such actions could result in an inability of holders of the Notes (if
any) and Certificates issued by such Trust to recover payment in full of their
respective principal amounts and interest thereon or could result in delays in
such payments.
CONSUMER PROTECTION LAWS
Federal and state consumer protection laws impose requirements upon
creditors in connection with retail installment sales contracts and notes and
security agreements and certain of these laws make an assignee thereof (such as
a Trust) liable to the obligor thereon for any violation by the creditor or
subject to defenses which could be asserted by the obligor against the
applicable Dealer or Originator. Application of such laws could render a
Receivable unenforceable, cause the Trust to be unable to collect any balance
remaining due on the Receivable or result in liability to the Trust. Such
consequences could result in delays in payments on the related Notes (if any)
and Certificates and possible reductions in the amount of those payments. The
Seller will be obligated to repurchase any Receivable which fails to comply with
such requirements. See "Certain Legal Aspects of the Receivables--Consumer
Protection Laws."
LACK OF RECOURSE TO THE SELLER, THE SERVICER AND THEIR AFFILIATES
None of the Seller, the Servicer or their affiliates is generally
obligated to make any payments in respect of any Notes, the Certificates or the
Receivables of a given Trust. The Securities will not be guaranteed by,
represent an interest in or obligation, either recourse or nonrecourse, of the
Seller, the Servicer or any person other than the Trust.
However, in connection with the sale of Receivables by the Seller to a
given Trust, the Seller will make representations and warranties with respect to
the characteristics of such Receivables and, in certain circumstances, the
Seller may be required to repurchase Receivables with respect to which such
representations and warranties have been breached. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables." In
addition, under certain circumstances, the Servicer may be required to purchase
Receivables. See "Description of the Transfer and Servicing
Agreements--Servicing Procedures." To the extent that collections on any
Receivable were reduced as a result of any matter giving rise to a repurchase
obligation on the part of the Seller or the Servicer, and the Seller or the
Servicer failed for any reason to perform in accordance with that obligation,
then delays in payments on the related Notes (if any) and Certificates and
possible reductions in the amount of those payments could occur. Moreover, if
the Bank were to cease acting as the Servicer, delays in processing payments on
the Receivables and information in respect thereof could occur and result in
delays in payments to the Securityholders.
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SUBORDINATION
To the extent specified in the related Prospectus Supplement,
distributions of interest and principal on one or more classes of Certificates
of a series may be subordinated in priority of payment to interest and principal
due on the Notes, if any, of such series or one or more other classes of
Certificates of such series. Because all of such Securities will be issued by
the same Trust and entitled to receive payments and distributions from the same
Trust Property, investors in any such subordinated class or classes of
Certificates should consider the risk that losses on the Receivables will be
borne by such investors if any Reserve Account or any other credit enhancement
is exhausted and could result in the failure of such investors to recover their
initial investment.
LIMITED ASSETS; RISK OF CREDIT LOSSES ON RECEIVABLES
No Trust will have, or be permitted or expected to have, any
significant assets or sources of funds other than the Receivables and, to the
extent provided in the related Prospectus Supplement, a Pre-Funding Account, a
Revolving Account, a Reserve Account and any other credit enhancement. The Notes
of any series will represent obligations solely of, and the Certificates of any
series will represent interests solely in, the related Trust and neither the
Notes nor the Certificates of any series will be insured or guaranteed by any
Affiliate, the Seller, the Servicer, any Trustee, any Indenture Trustee or any
other person or entity. Consequently, holders of the Securities of any series
must rely for repayment upon payments on the related Receivables and, if and to
the extent available, amounts on deposit in the Pre-Funding Account (if any),
the Revolving Account (if any), the Reserve Account (if any) and any other
credit enhancement, all as specified in the related Prospectus Supplement.
Amounts to be deposited in any such Reserve Account with respect to any Trust
will be limited in amount and the amount required to be on deposit in such
Reserve Account will be reduced as the Pool Balance is reduced. In addition,
funds in any such Reserve Account will be available on each Distribution Date to
cover shortfalls in distributions of interest and principal on the related
Securities. If any such Reserve Account is depleted, the related Trust will
depend solely on current payments on its Receivables and other credit
enhancement (if any) to make payments on the related Securities. If losses occur
which are not covered by the Reserve Account (if any) or any other credit
enhancement or which exceed the amount covered by such credit enhancement,
holders of Securities may be unable to receive payment in full of principal and
interest on their respective Securities.
If so directed by the holders of the requisite percentage of
outstanding Notes of a series issued with respect to a Trust that issues Notes,
following an acceleration of the Notes upon an Event of Default, the applicable
Indenture Trustee may sell the related Receivables in certain limited
circumstances as specified in the related Indenture. See "Description of the
Notes--The Indenture--Events of Default; Rights upon Event of Default." However,
there is no assurance that the market value of such Receivables will at any time
be equal to or greater than the aggregate principal amount of such outstanding
Notes. Therefore, upon an Event of Default with respect to the Notes of any
series, there can be no assurance that sufficient funds will be available to
repay the related Noteholders in full. In addition, the amount of principal
required to be paid to Noteholders of such series under the related Indenture
will generally be limited to amounts available to be deposited in the applicable
Note Distribution Account. Therefore, the failure to pay principal on a class of
Notes generally will not result in the occurrence of an Event of Default until
the Final Scheduled Distribution Date (as defined in the related Prospectus
Supplement, the "Final Scheduled Distribution Date") for such class of Notes.
RISKS ASSOCIATED WITH SUBSEQUENT RECEIVABLES
If so specified in the applicable Prospectus Supplement, the property
of a Trust may include monies on deposit in a Pre-Funding Account or Revolving
Account, which monies will be used to purchase or otherwise acquire Subsequent
Receivables from the Seller from time to time during the Funding Period or
Revolving Period
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specified in the related Prospectus Supplement. If a Pre-Funding Account or
Revolving Account is included in the property of a Trust, the ability of the
Originators to generate Subsequent Receivables to be conveyed to the Seller for
subsequent conveyance to such Trust will affect the amount on deposit in such
account which is not applied to the purchase of Subsequent Receivables during
the Funding Period or Revolving Period, as applicable. Such Funding Period may
be up to one year in length in the case of any Trust that issues Notes and 90
days after the Closing Date for any other Trust. The duration of any Revolving
Period will be set forth in the related Prospectus Supplement. At the end of the
Funding Period or Revolving Period, as applicable, the holders of Securities
issued by such Trust may receive a prepayment of principal in an amount equal to
the amount remaining in the Pre-Funding Account or Revolving Account, as
applicable. The reinvestment risk associated with any such distribution of
principal will be borne by the holders of the Securities issued by such Trust.
The amount that may be initially deposited into a Pre-Funding Account may be up
to 100% of the principal amount of the Securities issued by a Trust. There is no
limitation on the percentage of a Trust's property which may be represented by
amounts on deposit in a Pre-Funding Account and consequently, there is no
limitation on the percentage of a series or class of Securities which may be
represented by amounts on deposit in a Pre-Funding Account. Amounts on deposit
in a Revolving Account will be limited to the amount set forth in the related
Prospectus Supplement. Amounts on deposit in any Pre-Funding Account or
Revolving Account may be invested only in certain permitted investments deemed
acceptable by the Rating Agencies as consistent with the applicable ratings on
the Securities. Subsequent Receivables may be originated by the Originators at a
later date using credit criteria different from those which were applied to any
Initial Receivables and may be of a different credit quality. In addition,
following the transfer of Subsequent Receivables to the applicable Trust, the
characteristics of the entire pool of Receivables included in such Trust may
vary significantly from those of the Initial Receivables transferred to such
Trust. Accordingly, it is possible that the credit quality of the Receivables in
a Trust, as a whole, may decline due to the transfer of Subsequent Receivables
to the Trust. The transfer of Subsequent Receivables to the Trust may also
result in an accelerated rate of payment to the applicable Securityholders
caused by an increased level of defaults on such Receivables. Securityholders
will bear all reinvestment risk associated with a higher than expected rate of
payment on the Securities. In addition, if such Securities were purchased at a
premium, a higher than expected rate of payment would result in a reduction in
the yield to maturity of any class of Securities to which such payments are
distributed. To the extent that amounts on deposit in the Pre-Funding Account or
Revolving Account have not been fully applied to the purchase of Subsequent
Receivables by a Trust by the end of the applicable Funding Period or Revolving
Period and such amounts exceed the applicable amount described in the related
Prospectus Supplement, the holders of Securities issued by the related Trust
will receive, on the Distribution Date on or immediately following the last day
of the applicable Funding Period or Revolving Period, as applicable, a
prepayment of principal in an amount equal to the amount remaining in the
Pre-Funding Account or Revolving Account following the purchase of any
Subsequent Receivables on such Distribution Date. It is anticipated that the
principal balance of Subsequent Receivables sold to a Trust will not be exactly
equal to the amount on deposit in the Pre-Funding Account or Revolving Account,
and that therefore there will be at least a nominal amount of principal prepaid
to the holders of the Securities issued by such Trust. Holders of Securities
issued by a Trust the property of which includes a Pre-Funding Account or
Revolving Account will bear the reinvestment risk associated with any such
distribution of amounts on deposit in the Pre-Funding Account or Revolving
Account after the termination of the applicable Pre-Funding Period or Revolving
Period, as applicable. Any such distribution will have the effect of a
prepayment on the related Receivables and, if such Securities were purchased at
a premium, would result in a reduction in the yield to maturity of any class of
Securities to which such amounts are distributed.
EXTENSIONS AND DEFERRALS OF PAYMENTS ON RECEIVABLES
Consistent with its customary servicing practices and procedures, the
Servicer or its designee may, in its discretion and on a case-by-case basis,
arrange with Obligors to extend or modify the terms of the related Receivables.
Some, but not all, of such arrangements will cause the Servicer to be obligated
to purchase such Receivables. Any such extensions or modifications which do not
result in a Servicer obligation to purchase such Receivables may increase the
weighted average life of the related Securities. Any reinvestment risks
resulting from purchases by the Servicer of Receivables or faster or slower
payment resulting from extensions and modifications
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of payments on Receivables held by the Trust will be borne entirely by the
Securityholders of the related series of Securities. The Servicer will not be
permitted to grant any such extension or modification if as a result the final
scheduled payment on a Receivable would fall after the related Final Scheduled
Maturity Date, unless the Servicer repurchases the affected Receivable. See
"Risk Factors--Risk of Prepayment and Possible Adverse Effect on Yield" and
"Weighted Average Life of the Securities."
RISK OF COMMINGLING
With respect to each Trust, the Servicer will deposit all payments on
the related Receivables (from whatever source) and all proceeds of such
Receivables collected during each Collection Period into the Collection Account
for such Trust or, during any Revolving Period, into the Revolving Account for
such Trust. For so long as the Bank satisfies certain requirements for monthly
or less frequent remittances and the Rating Agencies (as such term is defined in
the related Prospectus Supplement, the "Rating Agencies") so permit in
connection with the ratings of the related Securities, then for so long as the
Bank serves as the Servicer and provided that (i) there exists no Servicer
Termination Event and (ii) each other condition to making such monthly or less
frequent deposits as may be described in the related Prospectus Supplement is
satisfied, the Servicer will not be required to deposit such amounts into the
Collection Account or, during any Revolving Period, into the Revolving Account
of such Trust until on or before the business day preceding each Distribution
Date. The Servicer will deposit the aggregate Purchase Amount of Receivables
purchased by the Servicer into the applicable Collection Account on or before
the business day preceding each Distribution Date. Pending deposit into such
Collection Account or, during any Revolving Period, into the Revolving Account,
collections may be invested by the Servicer at its own risk and for its own
benefit and will not be segregated from funds of the Servicer. If the Servicer
were unable to remit such funds, the applicable Securityholders might incur a
loss. For example, the Servicer might not be able to remit such funds if it were
to become a debtor in an insolvency proceeding. Under the UCC, the Trust's
interest in cash collected by the Servicer that has been commingled with other
funds of the Servicer would become unperfected ten days after receipt by the
Servicer. If the Servicer were to become a debtor in an insolvency proceeding,
the Trust might be deemed an unsecured creditor with respect to commingled funds
held by the Servicer longer than ten days. To the extent set forth in the
related Prospectus Supplement, the Servicer may, in order to satisfy the
requirements described above, obtain a letter of credit or other security for
the benefit of the related Trust to secure timely remittances of collections on
the related Receivables and payment of the aggregate Purchase Amount with
respect to Receivables purchased by the Servicer.
SERVICER TERMINATION EVENTS
With respect to a series of Securities that includes Notes, in the
event a Servicer Termination Event occurs, the Indenture Trustee or the
Noteholders with respect to such series, as described under "Description of the
Transfer and Servicing Agreements--Rights upon Servicer Termination Event" may
remove the Servicer without the consent of the Trustee or any of the
Certificateholders with respect to such series. The Trustee or the
Certificateholders with respect to such series will not have the ability to
remove the Servicer if a Servicer Termination Event occurs. In addition, the
Noteholders of such series will have the ability, with certain specified
exceptions, to waive Servicer Termination Events by the Servicer, including
Servicer Termination Events that could materially adversely affect the
Certificateholders of such series. See "Description of the Transfer and
Servicing Agreements -- Waiver of Past Defaults."
BOOK-ENTRY REGISTRATION
Each class of Securities of a given series will be initially
represented by one or more certificates registered in the name of Cede & Co.
("Cede"), or any other nominee for the Depository Trust Company ("DTC") set
forth in the related Prospectus Supplement (Cede, or such other nominee, "DTC's
Nominee"), and will not be registered in the names of the beneficial owners of
the Securities ("Security Owners") of such series or their nominees unless
Definitive Securities are issued. As a result, unless and until Definitive
Securities for such series are issued, such
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Security Owners will not be recognized by the Trustee or any applicable
Indenture Trustee as "Certificateholders", "Noteholders" or "Securityholders",
as the case may be (as such terms are used herein or in the related Pooling and
Servicing Agreement or related Indenture and Trust Agreement, as applicable).
Hence, until Definitive Securities are issued, such Security Owners will only be
able to exercise the rights of Securityholders indirectly through DTC, Cedel or
Euroclear and their participating organizations. See "Certain Information
Regarding the Securities--Book-Entry Registration" and "--Definitive
Securities."
THE TRUSTS
With respect to each series of Securities, the Seller will establish a
separate Trust pursuant to the respective Trust Agreement or Pooling and
Servicing Agreement, as applicable, for the transactions described herein and in
the related Prospectus Supplement. The property of each Trust will include a
pool (a "Receivables Pool") of Receivables pursuant to which a purchaser (an
"Obligor") of a Financed Vehicle is obligated. The property of each Trust will
also include all payments received with respect to any Simple Interest
Receivables on and after the Cutoff Date (as such term is defined in the related
Prospectus Supplement, a "Cutoff Date") and all payments due with respect to
Precomputed Receivables on and after the applicable Cutoff Date. Pursuant to
each Dealer Agreement, the applicable Dealer is obligated to purchase from the
Originator that is a party to such Dealer Agreement any Receivables sold or
originated thereunder which do not meet certain representations made by that
Dealer, and, to the extent set forth in the related Prospectus Supplement, any
uncollectible Receivables covered by recourse plans ("Dealer Recourse"). The
Receivables of each Receivables Pool will be serviced by the Servicer. See "The
Servicer." Receivables that are to be included in any Receivables Pool will be
transferred pursuant to a Purchase Agreement by an Affiliate to the Seller for
purposes of transfer to the applicable Trust. In addition, to the extent
described in any Prospectus Supplement, the related Receivables Pool may include
Receivables acquired by an Affiliate through acquisitions.
On or before the applicable Closing Date, the Seller will sell the
Initial Receivables of the applicable Receivables Pool to the Trust. To the
extent so provided in the related Prospectus Supplement, Subsequent Receivables
will be conveyed to the Trust as frequently as daily during a Funding Period.
Any Subsequent Receivables so conveyed will also be assets of the applicable
Trust and will be subject to the prior rights of the related Indenture Trustee
and the Noteholders, if any, therein. The property of each Trust will also
include (i) such amounts as from time to time may be held in separate trust
accounts established and maintained pursuant to the related Transfer and
Servicing Agreement and the proceeds of such accounts, as described herein and
in the related Prospectus Supplement (see "Description of the Transfer and
Servicing Agreement--Accounts" herein and in the related Prospectus Supplement);
(ii) security interests in the Financed Vehicles and any other interest of the
Seller in such Financed Vehicles; (iii) the Seller's rights to proceeds from
claims on physical damage, credit life and disability insurance policies, if
any, covering the Financed Vehicles or the Obligors, as the case may be and
rebates of premiums relating to any insurance policies and rebates of other
items such as extended warranties financed under the Receivables, to the extent
applied to reduce the principal balance of the related Receivable; (iv) any
property or rights that shall have secured a Receivable and that shall have been
acquired by the applicable Trust; (v) any Dealer Recourse and other rights of
Affiliates under Dealer Agreements; (vi) the Seller's rights under the related
Purchase Agreements; (vii) the Seller's rights to documents and instruments
relating to the Receivables; and (viii) any and all proceeds of the foregoing;
provided that, with respect to any series of Notes, the relevant rights and
benefits with respect to such property will be assigned by the Seller and the
applicable Trustee to the related Indenture Trustee for the benefit of the
related Securityholders. To the extent specified in the related Prospectus
Supplement, a Pre-Funding Account, a Revolving Account, a Reserve Account or
other form of credit enhancement may be a part of the property of any given
Trust or may be held by the Trustee or an Indenture Trustee for the benefit of
holders of the related Securities.
If so specified in the related Prospectus Supplement, a Trust may
acquire Initial Receivables pursuant to warehouse financing arrangements entered
into prior to the sale by that Trust of any Notes offered hereby.
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"Warehouse financing" generally refers to interim financing of Motor Vehicle
Loans during the period from the purchase or funding of the Motor Vehicle Loans
by Originators until the securitization of the Motor Vehicle Loans. Often, an
Originator will obtain some or all of the funds to purchase or fund Motor
Vehicle Loans through internal funds. Any remaining funds necessary may be
borrowed from a bank or other third party. In some cases, to the extent
specified in the related Prospectus Supplement, a Trust that issues Notes will
acquire Receivables prior to the issuance of the Notes and/or Certificates
ultimately to be issued by that Trust. The interim financing for such
acquisitions will be provided by the issuance by the Trust of notes or
certificates which were privately placed. Such notes or certificates will be
refinanced by the sale of the Notes and/or Certificates. It will be a condition
to the issuance of any Securities which refinance other securities issued by any
such Trust that such warehouse financing be repaid to the extent provided in the
related Prospectus Supplement, and any related security interests released, at
or prior to the time of such issuance.
The Servicer will service the Receivables held by each Trust and will
receive fees for such services. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" herein and
"--Servicing Compensation and Payment of Expenses" in the related Prospectus
Supplement. To facilitate the servicing of the Receivables, each Trustee will
authorize the Servicer or the applicable Originator acting as subservicer, as
the case may be, to retain physical possession of the documents representing the
Receivables held by each Trust and other documents relating thereto as custodian
for each such Trust. Due to administrative burden and expense, the certificates
of title to the Financed Vehicles will not be amended to reflect the sale and
assignment of the security interest in the Financed Vehicles to the Seller or
each Trust. In the absence of such amendments, the Seller and such Trust may not
have a perfected security interest in the Financed Vehicles in all states. See
"Certain Legal Aspects of the Receivables" and "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables."
Notes and Certificates of a given Series will be issued by the same
Trust and payable from the same Trust property. If the protection provided to
any Noteholders of a given series by the subordination of the related
Certificates and by the Reserve Account (if any) or other credit enhancement for
such series, or the protection provided to Certificateholders by any such
Reserve Account or other credit enhancement is insufficient, such Noteholders or
Certificateholders, as the case may be, would have to look principally to the
Obligors on the related Receivables, the proceeds from the repossession and sale
of Financed Vehicles which secure defaulted Receivables and the proceeds from
any recourse against Dealers with respect to such Receivables. In such event,
certain factors, such as the applicable Trust's not having perfected security
interests in the Financed Vehicles in all states, may affect the Servicer's
ability to repossess and sell the collateral securing the Receivables, and thus
may reduce the proceeds to be distributed to the holders of the Securities of
such series. See "Description of the Transfer and Servicing
Agreements--Distributions", "--Credit and Cash Flow Enhancement" and "Certain
Legal Aspects of the Receivables."
If so specified in the related Prospectus Supplement, a Trust may make
an election to be treated as a "financial asset securitization investment trust"
or "FASIT." The applicable Transfer and Servicing Agreement for such a Trust
may contain any such terms and provide for the issuance of Notes or Certificates
on such terms and conditions as are permitted to a FASIT and described in the
related Prospectus Supplement. See "Federal Income Tax Consequences--FASIT
Legislation."
The principal offices of the applicable Trust (if any) and the related
Trustee will be specified in the related Prospectus Supplement.
THE TRUSTEE
The Trustee for each Trust will be specified in the related Prospectus
Supplement. The Trustee's liability in connection with the issuance and sale of
the related Securities is limited solely to the express obligations of such
Trustee set forth in the related Trust Agreement and the applicable Transfer and
Servicing Agreement. The Trustee
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under each Trust Agreement will perform administrative functions under such
Trust Agreement, including making distributions from the Certificate
Distribution Account. A Trustee may resign at any time, in which event the
Servicer, or its successor, will be obligated to appoint a successor trustee.
The Servicer may also remove the Trustee if the Trustee ceases to be eligible
to continue as Trustee under the related Trust Agreement or Pooling and
Servicing Agreement, as applicable, or if the Trustee becomes insolvent. In
such circumstances, the Servicer will be obligated to appoint a successor
trustee. Any resignation or removal of a Trustee and appointment of a successor
trustee will not become effective until acceptance of the appointment by the
successor trustee.
THE RECEIVABLES POOLS
GENERAL
The Receivables in each Receivables Pool are and will be motor vehicle
retail installment sales contracts entered into between Obligors and automotive
dealers and Direct Loans (collectively, "Motor Vehicle Loans"). Each Receivables
Pool generally will include Receivables originated by one or more of the Primary
Originators. In addition, the related Receivables Pool may include Receivables
originated by other Affiliates, including Receivables acquired through
acquisitions of such Affiliates. Receivables of an Affiliate that are to be
included in any Receivables Pool will be transferred pursuant to a Purchase
Agreement by an Affiliate to the Seller for purposes of sale to the applicable
Trust.
The Primary Originators originate Motor Vehicle Loans across a wide
credit spectrum of Obligors. Obligors which do not meet traditional credit
standards are the focus of specialty finance programs. The Bank is considered a
traditional credit originator and AutoFinance Group is considered a specialty
finance originator. Specialty finance credits will have higher loss rates and
may have higher delinquency rates than traditional credits.
The Receivables to be held by each Trust will be selected from the
Motor Vehicle Loan portfolio of each Affiliate for inclusion in a Receivables
Pool by several criteria, including that each Receivable (i) is secured by a new
or used vehicle, (ii) was originated in the United States, (iii) is a
Precomputed Receivable or a Simple Interest Receivable and (iv) as of the Cutoff
Date (a) had an outstanding principal balance of at least the amount set forth
in the related Prospectus Supplement, (b) had a scheduled maturity not later
than the date set forth in the related Prospectus Supplement, (c) had an
original term to maturity of not more than the period set forth in the related
Prospectus Supplement and (d) had a Contract Rate of not less than the rate per
annum set forth in the related Prospectus Supplement. No selection criteria or
procedures believed by the Seller to be adverse to the Securityholders are to be
used in selecting the Receivables.
"Precomputed Receivables" consist of any of the following (i) monthly
actuarial receivables ("Actuarial Receivables"), (ii) receivables that provide
for allocation of payments according to the "Rule of 78's" ("Rule of 78's
Receivables") or (iii) receivables that provide for allocation of payments
according to the "Sum of Periodic Balances" method ("Sum of Periodic Balances
Receivables"). An Actuarial Receivable provides for amortization of the loan
over a series of fixed level payment monthly installments. Each monthly
installment, including the monthly installment representing the final payment on
the receivable, consists of an amount of interest equal to 1/12 of the Contract
Rate of the loan multiplied by the unpaid principal balance of the loan, and an
amount of principal equal to the remainder of the monthly installment. Rule of
78's Receivables and Sum of Periodic Balances Receivables provide for the
payment by the obligor of a specified total amount of payments, payable in equal
monthly installments on each due date, which total represents the principal
amount financed and add-on interest in an amount calculated at the stated
Contract Rate for the term of the receivable. For a Rule of 78's Receivable, the
rate at which such amount of add-on interest is earned and, correspondingly, the
amount of each fixed monthly installment allocated to reduction of the
outstanding principal are calculated in accordance with the "Rule of 78's." For
a Sum of Periodic Balances Receivable, the rate at which such amount of add-on
interest is earned and,
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correspondingly, the amount of each fixed monthly installment allocated to
reduction of the outstanding principal are calculated in accordance with the Sum
of Periodic Balances method. In either case, the fraction used in the
calculation of add-on interest earned each month has as its denominator a number
equal to the sum of the series of numbers (the sum of the numbers of payments,
in the case of a Rule of 78's Receivable, and the sum of the periodic principal
balances for each month, in the case of Sum of Periodic Balances Receivables).
The numerator of the fraction for a given month is the number of payments or the
principal balance, as the case may be, before giving effect to the payment to be
made in that month. For example, in the case of a Rule of 78's Receivable
providing for twelve payments, the denominator of each month's fraction will be
78, the sum of the series of numbers from one to twelve. The fraction for the
first payment would be 12/78, the fraction for the second payment would be 11/78
and the fraction for the last payment would be 1/78. The applicable fraction is
then multiplied by the total add-on interest payable over the entire term of the
receivable, and the resulting amount is the amount of add-on interest "earned"
that month. The difference between the amount of the monthly payment and the
amount of add-on interest earned for the month is applied to reduce the
outstanding principal balance of the receivable.
"Simple Interest Receivables" are receivables that provide for the
amortization of the amount financed under each receivable over a series of
fixed level payment monthly installments. Unlike the monthly installment under
an Actuarial Receivable, however, each monthly installment consists of an
amount of interest which is calculated on the basis of the outstanding
principal balance of the receivable multiplied by the stated Contract Rate and
further multiplied by the period elapsed (as a fraction of a calendar year)
since the preceding payment of interest was made. As payments are received
under a Simple Interest Receivable, the amount received is applied first to
interest accrued to the date of payment and the balance is applied to reduce
the unpaid principal balance. Accordingly, if an obligor pays a fixed monthly
installment before its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be less
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an obligor pays a fixed monthly
installment after its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be greater
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly less. In either case, the obligor pays a fixed monthly
installment until the final scheduled payment date, at which time the amount of
the final installment is increased or decreased, or additional monthly payments
are required after the final scheduled payment date, as necessary to repay the
then outstanding principal balance and unpaid accrued interest. If a Receivable
is prepaid, the Obligor is required to pay interest only to the date of
prepayment.
Interest accrues more rapidly and principal is amortized more slowly
on Rule of 78's and Sum of Periodic Balances Receivables than on Actuarial
Receivables. Each Trust will account for the Rule of 78's and Sum of Periodic
Balances Receivables as if such Receivables were Actuarial Receivables. Amounts
received upon prepayment in full of a Rule of 78's or Sum of Periodic Balances
Receivable in excess of the then outstanding principal balance of such
Receivable and accrued interest thereon (calculated pursuant to the actuarial
method) will not be paid to the Noteholders or passed through
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to the Certificateholders of the applicable series but will be paid to the
Servicer as additional servicing compensation.
Information with respect to each Receivables Pool will be set forth in
the related Prospectus Supplement, including, to the extent appropriate, the
composition, the distribution by Contract Rate and by geographic location,
the portion of such Receivables Pool consisting of Precomputed Receivables and
of Simple Interest Receivables and the portion of such Receivables Pool secured
by new vehicles and by used vehicles.
UNDERWRITING
The Primary Originators may originate Motor Vehicle Loans in any of the
following ways: (1) making a Direct Loan to an Obligor, through a Dealer that
performs certain ministerial loan processing functions on behalf of the
Primary Originator, (2) purchasing a retail installment sales contract from a
Dealer pursuant to a Dealer Agreement between the Primary Originator and the
Dealer, (3) purchasing/originating a Motor Vehicle Loan pursuant to a purchase
agreement (a "Flow Agreement") with a third party ("Flow Purchases") or (4)
bulk purchases of Motor Vehicle Loan portfolios from third parties ("Bulk
Purchases").
Each Primary Originator establishes and maintains relationships with
Dealers. Each Primary Originator selects Dealers based upon the Dealer's
commercial reputation, the prior experience of the Dealer (or a predecessor
organization) and, in some cases, a financial review of the Dealer. Each Dealer
from whom any of the Originators purchases a Motor Vehicle Loan or that
performs certain loan processing functions for Direct Loans must execute a
Dealer Agreement with such Originator which sets out, among other things, the
guidelines and procedures of the purchasing/originating process. Such Dealer
Agreements provide for the repurchase by the Dealer of any Motor Vehicle Loan
if any representations or warranties made by the Dealer relating to the Motor
Vehicle Loan are breached.
Each Primary Originator also may establish and maintain relationships
with third parties ("Flow Parties") who will refer individual Motor Vehicle Loan
applications to such Primary Originator or sell individual Motor Vehicle Loans
to the Primary Originator from time to time. Each Flow Party must execute a Flow
Agreement with such Primary Originator which sets out, among other things, the
guidelines and procedures of the purchasing process. Such Flow Agreements
provide for the repurchase by the Flow Party of any Motor Vehicle Loan if any
representations or warranties made by the Flow Party relating to the Motor
Vehicle Loan are breached.
Except in the case of Bulk Purchases, Motor Vehicle Loans are
originated or acquired by a Primary Originator in accordance with such Primary
Originator's underwriting standards (or, in the case of Motor Vehicle Loans
originated by a third party and subsequently acquired by a Primary Originator,
the underwriting standards of such third party). In the case of Bulk Purchases,
the Primary Originator's underwriting standards are used solely to assist in the
determination of the purchase price such Primary Originator is willing to pay
for a Motor Vehicle Loan Portfolio. While underwriting standards differ by
Primary Originator, the underwriting of traditional credits places greater
emphasis on the vehicle buyer's ability to repay the obligation and less
emphasis on the value of the vehicle being purchased, while the underwriting of
specialty finance credits focuses upon both factors more evenly. In general, but
to a greater extent with specialty finance credits, the underwriting standards
of the Primary Originators are not a fixed set of criteria which are required to
be met by all Motor Vehicle Loans. Underwriting standards are intended to guide
and complement, but not replace, the judgment of the credit underwriter in
reviewing a credit application.
The credit underwriting process for both traditional and specialty
finance credits is consistent in that applicants are required to complete an
application which generally includes such information as the applicant's income,
residential status, deposit accounts, liabilities, credit and employment history
and other personal information. The application is reviewed for completeness.
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Depending on the type of credit, use of subjective credit judgment
varies. Traditional credit underwriting relies heavily on credit scores derived
from both proprietary score cards and credit bureau reports. Specialty finance
credit underwriting relies more heavily on information provided in the
application and the credit bureau report(s) with the underwriter evaluating,
among other things, the relationships among the applicant's income, debt and
expenses generally and debt and expenses related to the proposed Motor Vehicle
Loan. The applicant's creditworthiness may be (and typically is, in the case of
specialty finance) further evaluated through verification of employment and/or
income of the applicant. Additionally, other factors deemed appropriate by the
credit underwriter may be evaluated and/or verified prior to making the credit
decision. Finally, the "value" of the vehicle to be purchased is determined
based upon the manufacturer's suggested retail price (MSRP) or average retail
value reported in the National Automotive Dealers Association's Used Car Guide
(or similar value source) for traditional programs, or dealer invoice or
wholesale value for specialty finance programs, and an evaluation is made of the
collateral and the applicant's ability to repay.
Generally, the Primary Originators will not finance more than
approximately 100% of the "value" of the vehicle plus related amounts financed
in connection therewith, if any, such as title and licensing fees, taxes,
credit and life insurance premiums and extended warranties. Applications for
Motor Vehicle Loans which do not meet customary guidelines require review and
approval by a more senior credit underwriting employee than Motor Vehicle Loans
which conform to such guidelines.
The credit underwriting process for Bulk Purchases differs
significantly from the underwriting process for individual Motor Vehicle Loans.
In Bulk Purchases, the applicable Primary Originator uses its underwriting
standards solely to assist in the determination of an appropriate purchase
price for the Motor Vehicle Loan portfolio. Bulk Purchases are typically
non-recourse to the seller. The purchase agreement for a Bulk Purchase will
require the seller to repurchase Motor Vehicle Loans which violate any material
representations or warranties made by the seller.
SUBSEQUENT RECEIVABLES
Subsequent Receivables may be originated at a later date using credit
criteria different from those which were applied to any Initial Receivables and
may be of a different credit quality. In addition, following the transfer of
Subsequent Receivables to the applicable Trust, the characteristics of the
entire pool of Receivables included in such Trust may vary significantly from
those of the Initial Receivables transferred to such Trust. See "Risk Factors --
Risks Associated with Subsequent Receivables." Regular periodic information
regarding the Subsequent Receivables will be included under Item 5 in each
Current Report filed on Form 8-K with the Commission pursuant to the Exchange
Act with respect to each Trust to which Subsequent Receivables have been
transferred.
SERVICING AND COLLECTIONS
Each Trust will hire the Bank as the Servicer. The Servicer is
permitted to delegate any and all of its servicing duties to any of its
Affiliates, provided that the Servicer will remain obligated and liable for
servicing the Receivables as if the Servicer alone were servicing the
Receivables. It is expected that the Servicer will delegate to AutoFinance Group
servicing of all Receivables originated or purchased by AutoFinance Group.
The servicing functions performed by the Servicer include customer
service, document file keeping, computerized account record keeping, vehicle
title processing, and collections. Specific servicing policies and practices of
the Servicer may be tailored to groups or types of Motor Vehicle Loans based
upon the perceived credit risk of each such group, and may change over time in
accordance with the Servicer's business judgment and experience.
The servicing policies and practices of the Servicer generally are
somewhat different for traditional credits and specialty finance credits. These
differences relate primarily to tolerance for delinquency, willingness to adjust
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contract terms due to specific circumstances, timeliness with which other
collection remedies are activated and charge off policies.
Tolerance for Delinquency. For traditional credits, typically payment
coupon books are utilized and accounts are allowed to become as much as 15 to
20 days delinquent before customer contact about the past due payment is
initiated. As the perception of risk increases, the tolerance for delinquency is
reduced and, accordingly, such contact is initiated sooner. For those
traditional credits which are perceived to be in the greatest risk category, the
customer contact time frame is initiated in as few as 5 days of delinquency. For
specialty finance credits, collection procedures typically attempt to be more
proactive. Monthly billing statements, rather than coupon books, serve as a
monthly reminder to the customer of his or her upcoming payment obligation.
Monthly statements also serve as an early warning mechanism in the event the
customer has failed to notify the Servicer of an address change. Customer
contact often is initiated within the first day or two of delinquency.
Willingness to Adjust Contract Terms. For traditional credits, the
Servicer is generally willing to adjust contract terms by extending the
contract term and/or deferring monthly payments based upon a customer's
circumstances. Consistent with its customary servicing practices and
procedures, the Servicer or its designee may, in its discretion and on a
case-by-case basis arrange with obligors to extend or modify the terms of the
related Receivables. In addition to extensions granted in connection with
special or seasonal programs, the Servicer generally permits an obligor on a
traditional credit who has met certain requirements to defer the full scheduled
amount of a loan payment on up to two occasions in any twelve month period. In
addition, the Servicer generally grants extensions or modifications with
respect to traditional credits, in situations where the Servicer believes such
action is likely to maximize the amount collected. Extensions are not granted
to forestall an inevitable loss. Extensions and payment deferrals generally are
not permitted in the case of specialty finance credits except in unusual cases.
Activation of Other Collection Remedies. For traditional credits, the
decision to repossess the collateral typically does not occur until
approximately 60 days of delinquency. For specialty finance credits such
decisions generally occur between 15 and 45 days of delinquency.
Charge Off Policies. A delinquent traditional credit account typically
will be charged-off at the earlier of approximately 120 days of delinquency or
receipt of repossession proceeds. A specialty finance credit account in the
Trust typically will be charged-off at the earlier of the time repossession
proceeds are received or 90 days of delinquency.
Regardless of the type of credit, any deficiency balance remaining
generally is pursued to the extent practicable and legally permitted.
PHYSICAL DAMAGE INSURANCE
Each Primary Originator requires Obligors to obtain and maintain
physical damage insurance on each Financed Vehicle sufficient to cover the
balance of the Motor Vehicle Loan. In the event such insurance coverage is not
maintained, the Primary Originator has the right, but is not obligated, to
declare the Motor Vehicle Loan to be in default. The Primary Originators will
not force-place (i.e., purchase a policy and charge the Obligor for the amount
of the premium) an insurance policy to cover any Financed Vehicle. After the
origination of a Motor Vehicle Loan, the Primary Originators do not directly
verify coverage of insurance but contract with an unaffiliated company to
monitor insurance coverage on all outstanding Motor Vehicle Loans.
DELINQUENCIES AND NET LOSSES
Certain information concerning the experience of the Servicer or the
applicable Originators pertaining to delinquencies and net losses with respect
to Motor Vehicle Loans will be set forth in the related Prospectus Supplement.
There can be no assurance that the delinquency and net loss experience on any
Receivables Pool will be comparable to prior experience or to such information.
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WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the Notes, if any, and the Certificates of
any series will generally be influenced by the rate at which the principal
balances of the related Receivables are paid, which payment may be in the form
of scheduled amortization or prepayments. (For this purpose, the term
"prepayments" includes prepayments in full, partial prepayments, liquidations
due to default, as well as receipts of proceeds from physical damage, credit
life and disability insurance policies and certain other Receivables repurchased
by the Seller or the Servicer for administrative reasons but does not include
Payaheads.) See "Description of the Transfer and Servicing
Agreements--Accounts." All of the Receivables are repayable at any time without
penalty to the Obligor. The rate of prepayment of automotive receivables is
influenced by a variety of economic, social and other factors, including
decreases in the general level of prevailing interest rates, the desire of the
Obligor to purchase a new vehicle and the fact that an Obligor generally may not
sell or transfer the Financed Vehicle securing a Receivable unless such
Receivable is paid in full. In addition, under certain circumstances, the Seller
will be obligated to repurchase Receivables from a given Trust pursuant to the
related Transfer and Servicing Agreement as a result of breaches of
representations and warranties and the Servicer will be obligated to purchase
Receivables from such Trust pursuant to such Transfer and Servicing Agreement as
a result of breaches of certain covenants. Holders of Securities should
consider, in the case of Securities purchased at a discount, the risk that a
slower than anticipated rate of principal payments on the Receivables could
result in an actual yield that is less than the anticipated yield and, in the
case of Securities purchased at a premium, the risk that a faster than
anticipated rate of principal payments on the Receivables could result in an
actual yield that is less than the anticipated yield. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables" and
"--Servicing Procedures." See also "Description of the Transfer and Servicing
Agreements--Termination" regarding the option of the Seller and Servicer to
purchase the Receivables from a given Trust, "--Insolvency Event" regarding the
sale of the Receivables owned by a Trust that is not a grantor trust if an
Insolvency Event with respect to the Seller occurs and "Risk Factors--Financial
Institution Insolvency Risks" regarding the right of the FDIC to prepay
Securities in certain circumstances.
No prediction can be made as to the rate of prepayment on the
Receivables. The Servicer maintains limited records of the historical prepayment
experience of the Motor Vehicle Loans included in its portfolio and is not aware
of any publicly available industry statistics for the entire industry on an
aggregate basis that set forth principal prepayment experience for Motor Vehicle
Loans similar to the Receivables over an extended period of time.
In light of the above considerations, there can be no assurance as to
the amount of principal payments to be made on the Notes, if any, or the
Certificates of a given series on each Payment Date or Distribution Date, as
applicable, since such amount will depend, in part, on the amount of principal
collected on the related Receivables Pool during the applicable Collection
Period. Any reinvestment risks resulting from a faster or slower incidence of
prepayment of Receivables will be borne entirely by the Noteholders, if any, and
the Certificateholders of a given series. The related Prospectus Supplement may
set forth certain additional information with respect to the maturity and
prepayment considerations applicable to the particular Receivables Pool and the
related series of Securities.
Any extensions or modifications of Receivables which do not
result in a Servicer obligation to purchase such Receivables may increase the
weighted average life of the related Securities. Unless the Servicer repurchases
the affected Receivable, the Servicer will not be permitted voluntarily to (i)
make modifications to the Receivables that reduce the original rates of interest
or the aggregate principal amount of scheduled payments on the Receivables (ii)
grant any extension or modification if as a result the final
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scheduled payment on a Receivable would fall after the related Final Scheduled
Maturity Date or (iii) amend or otherwise modify a Receivable in a Trust to be
treated as a grantor trust if such amendment or modification would result in a
deemed exchange of such Receivable under Section 1001 of the Code.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit
decimal which the Servicer will compute prior to each distribution with respect
to such class of Notes expressing the remaining outstanding principal balance of
such class of Notes, as of the applicable Payment Date (after giving effect to
payments to be made on such Payment Date), as a fraction of the initial
outstanding principal balance of such class of Notes. The "Certificate Pool
Factor" for each class of Certificates will be a seven-digit decimal which the
Servicer will compute prior to each distribution with respect to such class of
Certificates expressing the remaining Certificate Balance of such class of
Certificates, as of the applicable Distribution Date (after giving effect to
distributions to be made on such Distribution Date), as a fraction of the
initial Certificate Balance of such class of Certificates. Each Note Pool Factor
and each Certificate Pool Factor will initially be 1.0000000 and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable class of Notes, or the reduction of the Certificate Balance of the
applicable class of Certificates, as the case may be. A Noteholder's portion of
the aggregate outstanding principal balance of the related class of Notes is the
product of (i) the original denomination of such Noteholder's Note and (ii) the
applicable Note Pool Factor. A Certificateholder's portion of the aggregate
outstanding Certificate Balance for the related class of Certificates is the
product of (i) the original denomination of such Certificateholder's Certificate
and (ii) the applicable Certificate Pool Factor.
The Noteholders, if any, and the Certificateholders will receive
reports on or about each Payment Date concerning payments received on the
Receivables, the Pool Balance (as such term is defined in the related Prospectus
Supplement, the "Pool Balance"), each Certificate Pool Factor or Note Pool
Factor, as applicable, and various other items of information, including amounts
allocated or distributed for such Payment Date. In addition, Securityholders of
record during any calendar year will be furnished information for tax reporting
purposes not later than the latest date permitted by law. See "Certain
Information Regarding the Securities--Reports to Securityholders."
USE OF PROCEEDS
The net proceeds from the sale of the Securities of a given series will
be applied by the Seller or the applicable Trust (i) to the purchase of the
Receivables and/or repayment of any related Warehouse Financing, (ii) to make
the initial required deposit (if any) into any Reserve Account, (iii) to make
the deposit of the Pre-Funded Amount into the Pre-Funding Account, if any, and
(iv) such other uses as may be set forth in the related Prospectus Supplement.
The portion of the net proceeds paid to the Seller will be used to purchase the
Receivables from the Affiliates.
THE SELLER
The Seller is a wholly-owned subsidiary of KeyCorp, an Ohio financial
services holding company headquartered in Cleveland, Ohio ("KeyCorp"). The
Seller was incorporated in the State of Delaware on September 13, 1996. The
principal executive offices of the Seller are located at Key Tower, 127 Public
Square, Cleveland, Ohio 44114-1306 and its telephone number is (216) 689-3000.
The Seller has taken steps in structuring the transactions described
herein and in the Prospectus Supplement that are intended to ensure that the
voluntary or involuntary application for relief by KeyCorp under any Insolvency
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Laws will not result in consolidation of the assets and liabilities of the
Seller with those of KeyCorp. These steps include the creation of the Seller as
a separate, limited-purpose subsidiary pursuant to a certificate of
incorporation and by laws containing certain limitations (including restrictions
on the nature of the Seller's business and a restriction on the Seller's ability
to commence a voluntary case or proceeding under any Insolvency Law without the
prior unanimous affirmative vote of all of its directors). However, there can be
no assurance that the activities of the Seller would not result in a court's
concluding that the assets and liabilities of the Seller should be consolidated
with those of KeyCorp in a proceeding under any Insolvency Law. See "Risk
Factors--Certain Legal Aspects."
The Seller will warrant to the Trust in the applicable Transfer and
Servicing Agreement that the sale of the Receivables by the Seller to the
Trustee on behalf of the Trust is a valid sale of such Receivables. In addition,
the Seller, the Trustee and the Trust will treat the conveyance by the Seller of
the Receivables as a sale of the Receivables by the Seller to the Trustee on
behalf of the Trust and the Seller will take or cause to be taken all actions
that are required to perfect the Trustee's ownership in such Receivables. If the
Seller were to become a debtor in a bankruptcy case and a creditor or trustee in
bankruptcy of the Seller or the Seller itself were to take the position that the
sale of Receivables by the Seller to the Trust should instead be treated as a
pledge of the Receivables to secure a borrowing of the Seller, then delays in
payments of collections of the Receivables could occur or (should the court rule
in favor of any such trustee, debtor or creditor) reductions in the amount of
such payments could result. If the transfer of the Receivables by the Seller to
the Trustee on behalf of the Trust is treated as a pledge instead of a sale, a
tax or government lien on the property of the Seller arising before the transfer
of the Receivables to the Trustee on behalf of the Trust may have priority over
such Trustee's interest in the Receivables. If the conveyance by the Seller of
the Receivables is treated as a sale, the Receivables would not be part of the
Seller's bankruptcy estate and would not be available to the Seller's creditors.
THE BANK
Key Bank USA, National Association, a national banking association, is
a wholly-owned subsidiary of KeyCorp. The Bank is engaged in banking and related
activities, including providing automotive financing services to its customers
and to automotive dealers and their customers. The principal executive offices
of the Bank are located at Key Center, 127 Public Square, Cleveland, Ohio,
44114-1306 and its telephone number is (216) 689-6300.
AUTOFINANCE GROUP
AutoFinance Group, Inc. is an Ohio corporation and a wholly-owned
subsidiary of KeyCorp. AutoFinance Group was formed in 1995 to facilitate the
consummation of a merger, which became effective September 27, 1995, pursuant to
which AutoFinance Group, Inc., a California corporation, merged with and into
AutoFinance Group, with AutoFinance Group continuing as the surviving
corporation under the name "AutoFinance Group, Inc." The executive offices of
AutoFinance Group are located at 601 Oakmont Lane, Suite 110, Westmont,
Illinois, 60559-5549.
AutoFinance Group is an automotive finance company engaged primarily in
the indirect financing (the purchase of retail installment sales contracts from
Dealers) of automotive purchases by individuals which do not qualify for
traditional credit financing. This specialty finance market segment is comprised
of individuals who are deemed to be higher credit risks due to various factors,
including, among other things, the manner in which they have handled previous
credit, the absence or limited extent of their prior credit history, or their
limited financial resources. AutoFinance Group serves as an alternative source
of financing to automotive dealers and offers such automotive dealers the
opportunity for increased sales to customers who typically do not qualify for
financing by the automotive dealers' traditional financing sources.
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DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust that issues Notes, one or more classes of
Notes of the related series will be issued pursuant to the terms of an
Indenture, a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following summary describes
the material terms and provisions of the Indenture and Notes, but it does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the applicable Notes and Indenture.
Each class of Notes will initially be represented by one or more Notes,
in each case registered in the name of a nominee of DTC (together with any
successor depository selected by the Trust, the "Depository") except as set
forth below. See "Certain Information Regarding the Securities--Definitive
Securities." Notes will be available for purchase in denominations specified in
the related Prospectus Supplement or, if not so specified, in denominations of
$1,000 and integral multiples thereof. Notes may be issued in book-entry form or
as Definitive Notes and if not otherwise specified in the related Prospectus
Supplement, will be issued in book-entry form only. As to Notes issued in
book-entry form, the Seller has been informed by DTC that DTC's nominee will be
Cede, unless another nominee is specified in the related Prospectus Supplement.
Accordingly, such nominee is expected to be the holder of record of the Notes of
each such class. Unless and until Definitive Notes are issued in replacement for
book-entry Notes under the limited circumstances described herein or in the
related Prospectus Supplement, no Note Owner will be entitled to receive a
physical certificate representing a Note. See "Certain Information Regarding the
Securities--Definitive Securities." As to the Notes issued in book-entry form,
all references herein and in the related Prospectus Supplement to actions by
Noteholders refer to actions taken by DTC upon instructions from its
participating organizations (the "Participants") and all references herein and
in the related Prospectus Supplement to distributions, notices, reports and
statements to Noteholders refer to distributions, notices, reports and
statements to DTC or its nominee, as the registered holder of the Notes, for
distribution to Noteholders in accordance with DTC's procedures with respect
thereto. See "Certain Information Regarding the Securities--Book-Entry
Registration" and "--Definitive Securities."
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, Interest Rate and amount
of or method of determining payments of principal and interest on each class of
Notes of a given series will be described in the related Prospectus Supplement.
The right of holders of any class of Notes to receive payments of principal and
interest may be senior or subordinate to the rights of holders of any other
class or classes of Notes of such series, as described in the related Prospectus
Supplement. The dates for payments of interest and principal on the Notes of
such series may be different from the Distribution Dates for the Certificates of
such series. To the extent specified in the related Prospectus Supplement,
payments of interest on the Notes other than certain Strip Notes, if any, of
such series will be made prior to payments of principal thereon. To the extent
provided in the related Prospectus Supplement, a series may include one or more
classes of Strip Notes entitled to (i) principal payments with disproportionate,
nominal or no interest payments or (ii) interest payments with disproportionate,
nominal or no principal payments. Each class of Notes may have a different
Interest Rate, which may be a fixed, variable or adjustable Interest Rate (and
which may be zero for certain classes of Strip Notes), or any combination of the
foregoing. The related Prospectus Supplement will specify the Interest Rate for
each class of Notes of a given series or the method for determining such
Interest Rate. See also "Certain Information Regarding the Securities--Fixed
Rate Securities" and "--Floating Rate Securities." One or more classes of Notes
of a series may be redeemable in whole or in part under the circumstances
specified in the related Prospectus Supplement, including at the end of the
Funding Period (if any) or as a result of the exercise by the Seller or Servicer
of its option to purchase the related Receivables Pool.
To the extent specified in the related Prospectus Supplement, payments
to Noteholders of all classes within a series in respect of interest will have
the same priority. Under certain circumstances, the amount available for
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such payments could be less than the amount of interest payable on the Notes on
any of the dates specified for payments in the related Prospectus Supplement
(each, a "Payment Date", which may be the same date as each applicable
Distribution Date as specified in the related Prospectus Supplement), in which
case each class of Noteholders will receive its ratable share (based upon the
aggregate amount of interest due to such class of Noteholders) of the aggregate
amount available to be distributed in respect of interest on the Notes of such
series. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Credit and Cash Flow Enhancement."
In the case of a series of Notes which includes two or more classes of
Notes, the sequential order and priority of payment in respect of principal and
interest, and any schedule or formula or other provisions applicable to the
determination thereof, of each such class will be set forth in the related
Prospectus Supplement. Payments in respect of principal and interest of any
class of Notes will be made on a pro rata basis among all the Noteholders of
such class.
Fixed Payment Notes. To the extent specified in any Prospectus
Supplement, one or more classes of Notes of a given series may have fixed
principal payment schedules. Noteholders of such Notes would be entitled to
receive as payments of principal on any given Payment Date the applicable
amounts set forth on such schedule with respect to such Notes, in the manner and
to the extent set forth in the related Prospectus Supplement.
Short Term Asset Backed Notes. To the extent specified in any
Prospectus Supplement, one or more classes of Notes of a given series may be
entitled to receive principal payments prior to the receipt of principal
payments by other classes of Securities issued by the applicable Trust. If so
provided in the related Prospectus Supplement, such class or classes of Notes
will have a final scheduled maturity date of less than 397 days from the initial
trade date related thereto and such class or classes will have received a
short-term rating by a Rating Agency that is in one of the two highest
short-term rating categories. The failure to pay such a class of Notes on or
prior to the related Final Scheduled Maturity Date would constitute an event of
default under the related Indenture. In general, such class or classes of Notes
will otherwise be similar to Notes which are described in this Prospectus.
Planned Amortization Class. To the extent specified in any Prospectus
Supplement, one or more classes of Notes of a given series may be structured as
a planned amortization class ("PAC"). A PAC will be retired according to a
predetermined amortization schedule set forth in the related Prospectus
Supplement and structured to be substantially independent of the prepayment rate
on the Receivables. The timing of distributions in respect of the other classes
of Securities in the related series in some instances may be slowed down or
accelerated so that the PAC scheduled amortization may be met as provided in the
related Prospectus Supplement. The planned amortization for a PAC set forth in
the related Prospectus Supplement generally will require scheduled sinking fund
payments for the PAC on each Payment Date. Payments to the other classes of
Securities in the related series will be allocated as otherwise set forth in the
related Prospectus Supplement only after the scheduled sinking fund payments or
scheduled amortization payments to the PAC have been made.
Targeted Amortization Class. To the extent specified in any Prospectus
Supplement, one or more classes of Notes of a given series may be structured as
a targeted amortization class ("TAC"). Any TAC will be similar to a PAC, with
support classes providing protection against prepayment risks to the TAC.
However, a TAC will differ from a PAC in that it generally will not receive as
much protection against prepayments on the Receivables as a PAC. In particular,
a TAC will generally provide no protection against the risk of prepayments
occurring more slowly than the rate of prepayment assumed for structuring
purposes and generally will not be structured to permit expected cash flows from
non-TAC classes of Securities to be diverted to the TAC.
Companion Class. To the extent specified in any Prospectus Supplement,
one or more classes of Notes of a given series may be designed to receive
principal payments on a Payment Date only if principal payments have been made
on a specified planned amortization class of Notes or targeted amortization
class of Notes, and to receive any excess payments over the amount required to
reduce the principal amount of the planned amortization class or targeted
amortization class to the planned or targeted balance for such Payment Date.
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THE INDENTURE
Modification of Indenture. With respect to each Trust that has issued
Notes pursuant to an Indenture, the Trust and the Indenture Trustee may, with
the consent of the holders of a majority of the outstanding Notes of the related
series, execute a supplemental indenture to add provisions to, change in any
manner or eliminate any provisions of, the related Indenture, or modify (except
as provided below) in any manner the rights of the related Noteholders.
With respect to the Notes of a given series, without the consent of the
holder of each outstanding Note affected thereby, no supplemental indenture
will: (i) change the due date of any installment of principal of or interest on
any such Note or reduce the principal amount thereof, the Interest Rate
specified thereon or the redemption price with respect thereto or change any
place of payment where or the coin or currency in which any such Note or any
interest thereon is payable; (ii) impair the right to institute suit for the
enforcement of certain provisions of the related Indenture regarding payment;
(iii) reduce the percentage of the aggregate amount of the outstanding Notes of
such series, the consent of the holders of which is required for any such
supplemental indenture or the consent of the holders of which is required for
any waiver of compliance with certain provisions of the related Indenture or of
certain defaults thereunder and their consequences as provided for in such
Indenture; (iv) modify or alter the provisions of the related Indenture
regarding the voting of Notes held by the applicable Trust, any other obligor on
such Notes, the Seller or an affiliate of any of them; (v) reduce the percentage
of the aggregate outstanding amount of such Notes, the consent of the holders of
which is required to direct the related Indenture Trustee to sell or liquidate
the Receivables; (vi) decrease the percentage of the aggregate principal amount
of such Notes required to amend the sections of the related Indenture which
specify the applicable percentage of aggregate principal amount of the Notes of
such series necessary to amend such Indenture or certain other related
agreements; or (vii) permit the creation of any lien ranking prior to or on a
parity with the lien of the related Indenture with respect to any of the
collateral for such Notes or, except as otherwise permitted or contemplated in
such Indenture, terminate the lien of such Indenture on any such collateral or
deprive the holder of any such Note of the security afforded by the lien of such
Indenture.
The Trust and the applicable Indenture Trustee may also enter into
supplemental indentures, without obtaining the consent of the Noteholders of the
related series, for the purpose of, among other things, adding any provisions to
or changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of such Noteholders; provided
that such action will not adversely affect in any material respect the interest
of any such Noteholder, unless each Rating Agency then rating the Notes shall
have notified the Seller, the Servicer and the Indenture Trustee in writing that
such action will not result in a reduction or withdrawal of the rating of the
affected Notes of such series.
Events Of Default; Rights Upon Event of Default. With respect to the
Notes of a given series, "Events of Default" under the related Indenture will
consist of: (i) a default for five days or more in the payment of any interest
on any such Note; (ii) a default in the payment of the principal of or any
installment of the principal of any such Note when the same becomes due and
payable; (iii) a default in the observance or performance of any covenant or
agreement of the applicable Trust made in the related Indenture and the
continuation of any such default for a period of 30 days (or for such longer
period, not in excess of 90 days, as may be reasonably necessary to remedy such
default; provided that such default is capable of remedy within 90 days or less
and the Servicer on behalf of the related Indenture Trustee delivers an
officer's certificate to the Trustee to the effect that such Trust has
commenced, or will promptly commence and diligently pursue, all reasonable
efforts to remedy such default) after notice thereof is given to such Trust by
the applicable Indenture Trustee or to such Trust and such Indenture Trustee by
the holders of at least 25% in principal amount of such Notes then outstanding;
(iv) any representation or warranty made by such Trust in the related Indenture
or in any certificate delivered pursuant thereto or in connection therewith
having been incorrect in a material respect as of the time made, and such breach
not having been cured within 30 days (or for such longer period, not in excess
of 90 days, as may be reasonably necessary to remedy such default; provided that
such default is capable of remedy within 90 days or less and the Servicer on
behalf of the related Indenture Trustee delivers an officer's certificate to the
related Indenture Trustee to the effect that such Trust has commenced, or will
promptly commence and diligently pursue, all reasonable efforts to remedy such
default) after notice thereof
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is given to such Trust by the applicable Indenture Trustee or to such Trust and
such Indenture Trustee by the holders of at least 25% in principal amount of
such Notes then outstanding; or (v) certain events of bankruptcy, insolvency,
receivership or liquidation of the applicable Trust or the Seller. However, the
amount of principal required to be paid to Noteholders of such series under the
related Indenture will generally be limited to amounts available to be deposited
in the applicable Note Distribution Account. Therefore, the failure to pay
principal on a class of Notes generally will not result in the occurrence of an
Event of Default until the final scheduled Payment Date for such class of Notes.
If an Event of Default should occur and be continuing with respect to
the Notes of any series, the related Indenture Trustee or holders of a majority
in principal amount of such Notes then outstanding may declare the principal of
such Notes to be immediately due and payable. Such declaration may, under
certain circumstances, be rescinded by the holders of a percentage of the
principal amount of Notes then outstanding specified in the related Prospectus
Supplement and, if not so specified, may be rescinded by the holder of a
majority in principal amount of such Notes then outstanding.
If the Notes of any series are due and payable following an Event of
Default with respect thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on Trust property, exercise
remedies as a secured party, sell the related Receivables or elect to have the
applicable Trust maintain possession of such Receivables and continue to apply
collections on such Receivables as if there had been no declaration of
acceleration. Such Indenture Trustee is prohibited from selling the related
Receivables following an Event of Default, other than a default in the payment
of any principal of or a default for five days or more in the payment of any
interest on any Note of such series, unless (i) the holders of all such
outstanding Notes consent to such sale, (ii) the proceeds of such sale are
sufficient to pay in full the principal of and the accrued interest on such
outstanding Notes on the date of such sale, or (iii) such Indenture Trustee
determines that the proceeds of Receivables would not be sufficient on an
ongoing basis to make all payments on such Notes as such payments would have
become due if such obligations had not been declared due and payable, and such
Indenture Trustee obtains the consent of the holders of 66-2/3% of the aggregate
outstanding amount of such Notes.
If an Event of Default occurs and is continuing with respect to a
series of Notes, such Indenture Trustee will be under no obligation to exercise
any of the rights or powers under such Indenture at the request or direction of
any of the holders of such Notes, if such Indenture Trustee believes it will not
be adequately indemnified against the costs, expenses and liabilities which
might be incurred by it in complying with such request or direction. Subject to
the provisions for indemnification and certain limitations contained in the
related Indenture, the holders of a majority in principal amount of the
outstanding Notes of a given series will have the right to direct the time,
method and place of conducting any proceeding or any remedy available to the
applicable Indenture Trustee, and the holders of a majority in principal amount
of such Notes then outstanding may, in certain cases, waive any default with
respect thereto, except a default in the payment of principal or interest or a
default in respect of a covenant or provision of such Indenture that cannot be
modified without the waiver or consent of all the holders of such outstanding
Notes.
No holder of a Note of any series will have the right to institute any
proceeding with respect to the related Indenture, unless (i) such holder
previously has given to the applicable Indenture Trustee written notice of a
continuing Event of Default, (ii) the holders of not less than 25% in principal
amount of the outstanding Notes of such series have made written request to such
Indenture Trustee to institute such proceeding in its own name as Indenture
Trustee, (iii) such holder or holders have offered such Indenture Trustee
satisfactory indemnity, (iv) such Indenture Trustee has for 60 days failed to
institute such proceeding, and (v) no direction inconsistent with such written
request has been given to such Indenture Trustee during such 60-day period by
the holders of a majority in principal amount of such outstanding Notes.
With respect to any Trust, neither the related Indenture Trustee nor
the related Trustee in its individual capacity, nor any holder of a Certificate
representing an ownership interest in such Trust nor any of their respective
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owners, beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or interest
on the related Notes or for the agreements of such Trust contained in the
applicable Indenture.
CERTAIN COVENANTS
Each Indenture will provide that the related Trust may not consolidate
with or merge into any other entity, unless (i) the entity formed by or
surviving such consolidation or merger is organized under the laws of the United
States or any state, (ii) such entity expressly assumes such Trust's obligation
to make due and punctual payments upon the Notes of the related series and the
performance or observance of every agreement and covenant of such Trust under
the Indenture, (iii) no Event of Default shall have occurred and be continuing
immediately after such merger or consolidation, (iv) such Trust has been advised
that the rating of the Notes or the Certificates of such series then in effect
would not be reduced or withdrawn by the Rating Agencies as a result of such
merger or consolidation, (v) such Trust has received an opinion of counsel to
the effect that such consolidation or merger would have no material adverse tax
consequence to the Trust or to any related Noteholder or Certificateholder, and
(vi) any action necessary to maintain the lien and security interest under the
Indenture has been taken.
Each Trust will not, among other things, (i) except as expressly
permitted by the applicable Indenture, the applicable Transfer and Servicing
Agreements or certain related documents with respect to such Trust
(collectively, the "Related Documents"), sell, transfer, exchange or otherwise
dispose of any of the assets of such Trust, (ii) claim any credit on or make any
deduction from the principal and interest payable in respect of the Notes of the
related series (other than amounts withheld under the Code or applicable state
law) or assert any claim against any present or former holder of such Notes
because of the payment of taxes levied or assessed upon such Trust, (iii) permit
the validity or effectiveness of the related Indenture to be impaired or permit
any person to be released from any covenants or obligations with respect to such
Notes under such Indenture except as may be expressly permitted thereby, (iv)
permit any lien, charge, excise, claim, security interest, mortgage or other
encumbrance (other than certain liens that arise by operation of law) to be
created on or extend to or otherwise arise upon or burden the assets of such
Trust or any part thereof, or any interest therein or the proceeds thereof, or
(v) permit the lien of the related Indenture not to constitute a valid first
priority (other than certain liens that arise by operation of law) security
interest in the assets of such Trust.
No Trust may engage in any activity other than as specified under the
section of the related Prospectus Supplement entitled "The Trust." No Trust will
incur, assume or guarantee any indebtedness other than indebtedness incurred
pursuant to the related Notes and the related Indenture or otherwise in
accordance with the Related Documents.
Annual Compliance Statement. Each Trust will be required to file
annually with the related Indenture Trustee a written statement as to the
fulfillment of its obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee for each Trust
will be required to mail each year to all related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture Trustee
under the related Indenture, any amounts advanced by it under the Indenture, the
amount, interest rate and maturity date of certain indebtedness owing by such
Trust to the applicable Indenture Trustee in its individual capacity, the
property and funds physically held by such Indenture Trustee as such and any
action taken by it that materially affects the related Notes and that has not
been previously reported.
Satisfaction and Discharge of Indenture. An Indenture will be
discharged with respect to the collateral securing the related Notes upon the
delivery to the related Indenture Trustee for cancellation of all such Notes or,
with certain limitations, upon deposit with such Indenture Trustee of funds
sufficient for the payment in full of all such Notes.
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THE INDENTURE TRUSTEE
The Indenture Trustee for a series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any series may resign
at any time, in which event the Issuer will be obligated to appoint a successor
trustee for such series. The Issuer may also remove any such Indenture Trustee
if such Indenture Trustee ceases to be eligible to continue as such under the
related Indenture or if such Indenture Trustee becomes insolvent. In such
circumstances, the Issuer will be obligated to appoint a successor trustee for
the applicable series of Notes. Any resignation or removal of the Indenture
Trustee and appointment of a successor trustee for any series of Notes does not
become effective until acceptance of the appointment by the successor trustee
for such series.
DESCRIPTION OF THE CERTIFICATES
GENERAL
With respect to each Trust, one or more classes of Certificates of the
related series will be issued pursuant to the terms of a Trust Agreement or a
Pooling and Servicing Agreement, a form of each of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
following summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the
Certificates and the Trust Agreement or Pooling and Servicing Agreement, as
applicable.
Except for the Certificates, if any, of a given series purchased by the
Seller, each class of Certificates will initially be represented by one or more
Certificates registered in the name of the Depository, except as set forth
below. See "Certain Information Regarding the Securities -- Definitive
Securities." Except for the Certificates, if any, of a given series purchased by
the Seller, the Certificates will be available for purchase in minimum
denominations specified in the related Prospectus Supplement, or if not so
specified, in denominations of $1,000 and integral multiples of $1,000 in excess
thereof. Certificates may be issued in book-entry form or as Definitive
Certificates and if not otherwise specified in the related Prospectus Supplement
will be available in book-entry form only. As to the Certificates issued in
book-entry form, the Seller has been informed by DTC that DTC's nominee will be
Cede, unless another nominee is specified in the related Prospectus Supplement.
Accordingly, such nominee is expected to be the holder of record of the
Certificates of any series that are not purchased by the Seller. Unless and
until Definitive Certificates are issued in replacement for book-entry
Certificates under the limited circumstances described herein or in the related
Prospectus Supplement, no Certificate Owner (other than the Seller) will be
entitled to receive a physical certificate representing a Certificate. See
"Certain Information Regarding the Securities -- Definitive Securities." As to
Certificates issued in book-entry form, all references herein and in the related
Prospectus Supplement to actions by Certificateholders refer to actions taken by
DTC upon instructions from the Participants and all references herein and in the
related Prospectus Supplement to distributions, notices, reports and statements
to Certificateholders refer to distributions, notices, reports and statements to
DTC or its nominee, as the case may be, as the registered holder of the
Certificates, for distribution to Certificateholders in accordance with DTC's
procedures with respect thereto. See "Certain Information Regarding the
Securities -- Book-Entry Registration" and "-- Definitive Securities." Any
Certificates of such series owned by the Seller or its affiliates will be
entitled to equal and proportionate benefits under the applicable Trust
Agreement, except that such Certificates will be deemed not to be outstanding
for the purpose of determining whether the requisite percentage of
Certificateholders have given any request, demand, authorization, direction,
notice, consent or other action under the Related Documents (other than the
commencement by the related Trust of a voluntary proceeding in bankruptcy as
described under "Description of the Transfer and Servicing
Agreements--Insolvency Event").
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DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations of
losses, Certificate Rate and amount of or method of determining distributions
with respect to principal and interest of each class of Certificates will be
described in the related Prospectus Supplement. Distributions of interest on
such Certificates other than certain Strip Certificates will be made on the
dates specified in the related Prospectus Supplement (each, a "Distribution
Date") and will be made prior to distributions with respect to principal of such
Certificates. To the extent provided in the related Prospectus Supplement, a
series may include one or more classes of Strip Certificates entitled to (i)
distributions in respect of principal with disproportionate, nominal or no
interest distributions, or (ii) interest distributions with disproportionate,
nominal or no distributions in respect of principal. Each class of Certificates
may have a different Certificate Rate, which may be a fixed, variable or
adjustable Certificate Rate (and which may be zero for certain classes of Strip
Certificates) or any combination of the foregoing. The related Prospectus
Supplement will specify the Certificate Rate for each class of Certificates of a
given series or the method for determining such Certificate Rate. See also
"Certain Information Regarding the Securities--Fixed Rate Securities" and
"--Floating Rate Securities." If a series of Securities includes classes of
Notes, such Notes and Certificates will be issued by the same Trust and payable
from the same Trust property, to the extent specified in the related Prospectus
Supplement, distributions in respect of the Certificates of such series will be
subordinate to payments in respect of the Notes of such series as more fully
described in the related Prospectus Supplement. Distributions in respect of
interest on and principal of any class of Certificates will be made on a pro
rata basis among all the Certificateholders of such class.
In the case of a series of Certificates which includes two or more
classes of Certificates, the timing, sequential order, priority of payment or
amount of distributions in respect of interest and principal, and any schedule
or formula or other provisions applicable to the determination thereof, of each
such class shall be as set forth in the related Prospectus Supplement.
CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Each class of Securities (other than certain classes of Strip Notes or
Strip Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Securities") or at a variable or adjustable rate per annum ("Floating Rate
Securities"), as more fully described below and in the related Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable per annum Interest Rate or Certificate Rate, as the case may be,
specified in the related Prospectus Supplement. Interest on each class of Fixed
Rate Securities will be computed on the basis of a 360-day year of twelve 30-day
months or on such other day count basis as is specified in the applicable
Prospectus Supplement. See "Description of the Notes--Principal and Interest on
the Notes" and "Description of the Certificates--Distributions of Principal and
Interest."
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear interest for each
applicable Interest Reset Period (as such term is defined in the related
Prospectus Supplement with respect to a class of Floating Rate Securities,
"Interest Reset Period") at a rate per annum determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in the
related Prospectus Supplement. The "Spread" is the number of basis points (one
basis point equals one one-hundredth of a percentage point) that may be
specified in the applicable Prospectus Supplement as being applicable to such
class, and the "Spread Multiplier" is the percentage that may be specified in
the applicable Prospectus Supplement as being applicable to such class.
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The applicable Prospectus Supplement will designate a Base Rate for a
given Floating Rate Security based on the London interbank offered rate
("LIBOR"), commercial paper rates, Federal funds rates, U.S. Government treasury
securities rates, negotiable certificates of deposit rates or another rate as
set forth in such Prospectus Supplement.
As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (i) a maximum limitation, or ceiling,
on the rate at which interest may accrue during any interest period and (ii) a
minimum limitation, or floor, on the rate at which interest may accrue during
any interest period. In addition to any maximum interest rate that may be
applicable to any class of Floating Rate Securities, the interest rate
applicable to any class of Floating Rate Securities will in no event be higher
than the maximum rate permitted by applicable law, as the same may be modified
by United States law of general application.
Each Trust with respect to which a class of Floating Rate Securities
will be issued will appoint, and enter into agreements with, a calculation agent
(each, a "Calculation Agent") to calculate interest rates on each such class of
Floating Rate Securities issued with respect thereto. The applicable Prospectus
Supplement will set forth the identity of the Calculation Agent for each such
class of Floating Rate Securities of a given series, which may be either the
Trustee or Indenture Trustee with respect to such series. All determinations of
interest by the Calculation Agent shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holders of Floating Rate
Securities of a given class. All percentages resulting from any calculation of
the rate of interest on a Floating Rate Security will be rounded, if necessary,
in the manner specified in the related Prospectus Supplement or, if not so
specified to the nearest 1/100,000 of 1% (.0000001), with five one-millionths of
a percentage point rounded upward.
BOOK-ENTRY REGISTRATION
With respect to each class of Securities of a given series issued in
book-entry form, Securityholders may hold their Securities through DTC (in the
United States) or Cedel or Euroclear (in Europe) if they are participants of
such systems, or indirectly through organizations that are participants in such
systems. DTC's Nominee will hold the global Securities. Cedel and Euroclear will
hold omnibus positions on behalf of the Cedel Participants and the Euroclear
Participants, respectively, through customers' securities accounts in Cedel's
and Euroclear's names on the books of their respective depositories
(collectively, the "Depositaries") which in turn will hold such positions in
customers' securities accounts in the Depositaries' names on the books of DTC.
For additional information regarding clearance and settlement procedures see
Annex I hereto.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities for its Participants ("DTC Participants") and facilitates the
clearance and settlement among DTC Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic book-entry
changes in DTC Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. DTC Participants include securities brokers
and dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to the DTC system is also available to others
such as securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a DTC Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and DTC Participants are on file with the Securities and Exchange Commission.
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between Cedel Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
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Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Participant or Euroclear Participant on such business day. Cash received in
Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
Cedel or Euroclear cash account only as of the business day following settlement
in DTC.
Purchases of Securities under the DTC system must be made by or through
DTC Participants, which will receive a credit for the Securities on DTC's
records. The ownership interest of each actual Security Owner is in turn to be
recorded on the DTC Participants' and Indirect Participants' records. Security
Owners will not receive written confirmation from DTC of their purchase, but
Security Owners are expected to receive written confirmations providing details
of the transaction, as well as periodic statements of their holdings, from the
DTC Participant or Indirect Participant through which the Security Owner entered
into the transaction. Transfers of ownership interests in the Securities are to
be accomplished by entries made on the books of DTC Participants acting on
behalf of Security Owners. Security Owners will not receive certificates
representing their ownership interest in Securities, except in the event that
use of the book-entry system for the Securities is discontinued. Except to the
extent Seller holds Certificates with respect to any series of Securities, it is
anticipated that the only "Securityholder", "Noteholder" and "Certificateholder"
will be DTC's Nominee. Note Owners will not be recognized by each Indenture
Trustee as Noteholders, as such term is used in each Indenture, and Note Owners
will be permitted to exercise the rights of Noteholders only indirectly through
DTC and DTC Participants. Similarly, Certificate Owners will not be recognized
by each Trustee as Certificateholders as such term is used in each Trust
Agreement or Pooling and Servicing Agreement, and Certificate Owners will be
permitted to exercise the rights of Certificateholders only indirectly through
DTC and DTC Participants.
To facilitate subsequent transfers, all Securities deposited by DTC
Participants with DTC are registered in the name of DTC's Nominee. The deposit
of Securities with DTC and their registration in the name of DTC's Nominee
effects no change in beneficial ownership. DTC has no knowledge of the actual
Security Owners of the Securities; DTC's records reflect only the identity of
the DTC Participants to whose accounts such Securities are credited, which may
or may not be the Security Owners. The DTC Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC
Participants, by DTC Participants to Indirect Participants, and by DTC
Participants and Indirect Participants to Security Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither DTC nor DTC's Nominee will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an omnibus proxy to the issuer
as soon as possible after the record date, which assigns
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DTC's Nominees's consenting or voting rights to those DTC Participants to whose
accounts the Securities are credited on the record date (identified in a listing
attached thereto).
Principal and interest payments on the Securities will be made to DTC.
DTC's practice is to credit Participants' accounts on the applicable
Distribution Date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment on
such Distribution Date. Payments by DTC Participants to Security Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name" and will be the responsibility of such DTC Participant and not of
DTC, the related Indenture Trustee or the related Trustee, as applicable (the
"Applicable Trustee") or the Seller, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and
interest to DTC is the responsibility of the Applicable Trustee, disbursement of
such payments to DTC Participants shall be the responsibility of DTC, and
disbursement of such payments to Security Owners shall be the responsibility of
DTC Participants and Indirect Participants. Under a book-entry format,
Securityholders may experience some delay in their receipt of payments, since
such payments will be forwarded by the Applicable Trustee to DTC's Nominee. DTC
will forward such payments to DTC Participants which thereafter will forward
them to Indirect Participants or Security Owners.
Because DTC can only act on behalf of DTC Participants, who in turn act
on behalf of Indirect Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or otherwise take actions with respect to such
Securities, may be limited due to the lack of a physical certificate for such
Securities.
DTC has advised the Seller that it will take any action permitted to be
taken by a Noteholder under the related Indenture or a Certificateholder under
the related Trust Agreement or Pooling and Servicing Agreement only at the
direction of one or more DTC Participants to whose accounts with DTC the
applicable Notes or Certificates are credited. DTC may take conflicting actions
with respect to other undivided interests to the extent that such actions are
taken on behalf of Participants whose holdings include such undivided interests.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Seller believes to be reliable,
but the Seller takes no responsibility for the accuracy thereof.
Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the clearance
and settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedel in any of 32 currencies, including United States dollars. Cedel
provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel interfaces with domestic
markets in several countries. As a professional depository, Cedel is subject to
regulation by the Luxembourg Monetary Institute. Cedel Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters of any series
of Securities. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("Euroclear Participants") and to clear and
settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in any of 32
currencies, including United States dollars. The Euroclear System includes
various other services, including securities lending and borrowing and
interfaces with domestic markets in 25 countries generally similar to the
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arrangements for cross-market transfers with DTC described above. The Euroclear
System is operated by Morgan Guaranty Trust Company of New York, Brussels,
Belgium office (the "Euroclear Operator" or "Euroclear"), under contract with
Euroclear Clearance System, Societe Cooperative, a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative Board establishes policy for the Euroclear System. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
underwriters of any series of Securities. Indirect access to the Euroclear
System is also available to other firms that maintain a custodial relationship
with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System (collectively, the
"Terms and Conditions"). The Terms and Conditions govern transfers of securities
and cash within the Euroclear System, withdrawal of securities and cash from the
Euroclear System, and receipts of payments with respect to securities in the
Euroclear System. All securities in the Euroclear System are held on a fungible
basis without attribution of specific certificates to specific securities
clearance accounts. The Euroclear Operator acts under the Terms and Conditions
only on behalf of Euroclear Participants and has no record of or relationship
with persons holding through Euroclear Participants.
Distributions with respect to Securities held through Cedel or
Euroclear will be credited to the cash accounts of Cedel Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will be
subject to tax reporting in accordance with relevant United States tax laws and
regulations. See "Federal Income Tax Consequences." Cedel or the Euroclear
Operator, as the case may be, will take any other action permitted to be taken
by a Securityholder under a related Agreement on behalf of a Cedel Participant
or Euroclear Participant only in accordance with its relevant rules and
procedures and subject to its Depositary's ability to effect such actions on its
behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Securities among participants of
DTC, Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
Under such circumstances, in the event that a successor securities depository
for DTC is not obtained, Definitive Securities are required to be printed and
delivered. The Seller may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Definitive Securities will be delivered to Securityholders. See "--Definitive
Securities."
NONE OF THE TRUST, THE SELLER, THE BANK, THE SERVICER, ANY SUBSERVICER,
ANY APPLICABLE TRUSTEE NOR ANY OF THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY
OR OBLIGATION TO ANY DTC PARTICIPANTS, CEDEL PARTICIPANTS OR EUROCLEAR
PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO (1)
THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, CEDEL, EUROCLEAR OR ANY
PARTICIPANT, (2) THE PAYMENT BY DTC, CEDEL, EUROCLEAR OR ANY PARTICIPANT OF ANY
AMOUNT DUE TO ANY SECURITY OWNER IN RESPECT OF THE PRINCIPAL BALANCE OF, OR
INTEREST ON, THE SECURITIES, (3) THE DELIVERY BY ANY DTC PARTICIPANT, CEDEL
PARTICIPANT, OR EUROCLEAR PARTICIPANT OF ANY NOTICE TO ANY SECURITY OWNER WHICH
IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE APPLICABLE AGREEMENTS TO BE
GIVEN TO SECURITYHOLDERS OR (4) ANY OTHER ACTION TAKEN BY DTC OR DTC'S NOMINEE
AS THE SECURITYHOLDER.
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DEFINITIVE SECURITIES
With respect to any series of Notes and any series of Certificates
issued in book-entry form, such Notes or Certificates will be issued in fully
registered, certificated form ("Definitive Notes" and "Definitive Certificates",
respectively, and collectively referred to herein as "Definitive Securities") to
Noteholders or Certificateholders or their respective nominees, rather than to
DTC or its nominee, if the related Prospectus Supplement so provides with
respect to the initial issuance of any such Securities thereunder and, if the
related Prospectus Supplement does not so provide, only if (i) Seller advises
the related Trustee that DTC is no longer willing or able to discharge properly
its responsibilities as depository with respect to such Securities and such
Trustee is unable to locate a qualified successor, (ii) the Seller at its
option, advises the related Trustee that it elects to terminate the book-entry
system through DTC, or (iii) after the occurrence of an Event of Default or a
Servicer Termination Event with respect to such Securities, holders representing
at least a majority of the outstanding principal amount of the Notes or the
Certificates, as the case may be, of such series advise the Applicable Trustee
and DTC through its Participants in writing that the continuation of a
book-entry system through DTC (or a successor thereto) with respect to such
Notes or Certificates is no longer in the best interest of the holders of such
Securities.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Applicable Trustee will be required to notify all applicable
Security Owners of a given series through Participants of the availability of
Definitive Securities. Upon surrender by DTC of the definitive certificates
representing the corresponding Securities and receipt of instructions for
re-registration, the Applicable Trustee will reissue such Securities as
Definitive Securities to such Securityholders.
Distributions of principal of, and interest on, Definitive Securities
will be made by the Applicable Trustee in accordance with the procedures set
forth in the related Indenture or the related Trust Agreement or Pooling and
Servicing Agreement, as applicable, directly to holders of Definitive Securities
in whose names the Definitive Securities were registered at the close of
business on the applicable record date specified for such Securities in the
related Prospectus Supplement. Such distributions will be made by check mailed
to the address of such holder as it appears on the register maintained by the
Applicable Trustee. The final payment on any such Definitive Security, however,
will be made only upon presentation and surrender of such Definitive Security at
the office or agency specified in the notice of final distribution to the
applicable Securityholders.
Definitive Securities will be transferable and exchangeable at the
offices of the Applicable Trustee or of a registrar named in a notice delivered
to holders of Definitive Securities. No service charge will be imposed for any
registration of transfer or exchange, but the Applicable Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.
LIST OF SECURITYHOLDERS
Three or more holders of the Notes of a given series or one or more
holders of such Notes evidencing not less than 25% of the aggregate outstanding
principal balance of such Notes may, by written request to the related Indenture
Trustee, obtain access to the list of all Noteholders of such series maintained
by such Indenture Trustee for the purpose of communicating with other
Noteholders with respect to their rights under the related Indenture or under
such Notes. Unless Definitive Notes have been issued, the only "Noteholder"
appearing on the list maintained by the related Indenture Trustee will be Cede,
as nominee for DTC. In such circumstances, any Note Owner wishing to communicate
with other Note Owners will not be able to identify those Note Owners through
the Indenture Trustee and instead will have to attempt to identify them through
DTC and its Participants or such other means as such Note Owner may find
available.
Three or more holders of the Certificates of a given series or one or
more holders of such Certificates evidencing not less than 25% of the
Certificate Balance of such Certificates may, by written request to the related
Trustee, obtain access to the list of all Certificateholders of such series
maintained by such Trustee for the purpose
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of communicating with other Certificateholders with respect to their rights
under the related Trust Agreement or Pooling and Servicing Agreement or under
such Certificates. Unless Definitive Certificates have been issued, the only
"Certificateholder" appearing on the list maintained by the related Trustee will
be Cede, as nominee for DTC. In such circumstances, any Certificate Owner
wishing to communicate with other Certificate Owners will not be able to
identify those Certificate Owners through the Trustee and instead will have to
attempt to identify them through DTC and its Participants or such other means as
such Certificate Owner may find available.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities, on or prior to each Payment
Date or Distribution Date, as applicable, the Servicer will prepare and provide
to the related Trustee a statement to be delivered to the related
Securityholders. With respect to each series of Securities, each such statement
to be delivered to Noteholders will include (to the extent applicable) the
following information (and any other information so specified in the related
Prospectus Supplement) as to the Notes of such series with respect to such
Payment Date or the period since the previous Payment Date, as applicable, and
each such statement to be delivered to Certificateholders will include (to the
extent applicable) the following information (and any other information so
specified in the related Prospectus Supplement) as to the Certificates of such
series with respect to such Distribution Date or the period since the previous
Distribution Date, as applicable:
(i) the amount of the distribution allocable to principal of
each class of such Notes and to the Certificate Balance of each class
of such Certificates;
(ii) the amount of the distribution allocable to interest on
or with respect to each class of Securities of such series;
(iii) the amount of the distribution allocable to draws from
the Reserve Account (if any), any Yield Supplement Account or payments
in respect of any other credit or cash flow enhancement arrangement;
(iv) the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
(v) the aggregate outstanding principal balance and the Note
Pool Factor for each class of such Notes, and the Certificate Balance
and the Certificate Pool Factor for each class of such Certificates,
each after giving effect to all payments reported under clause (i)
above on such date;
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period or Collection Periods, as the
case may be;
(vii) the Interest Rate or Certificate Rate for the next
period for any class of Notes or Certificates of such series with
variable or adjustable rates;
(viii) the amount of the aggregate Realized Losses, if any,
for the preceding Collection Period;
(ix) the Noteholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover Shortfall, the Certificateholders'
Interest Carryover Shortfall and the Certificateholders' Principal
Carryover Shortfall (each as defined in the related Prospectus
Supplement), if any, in each case as applicable to each class of
Securities, and the change in such amounts from the preceding
statement;
(x) the aggregate Purchase Amounts for Receivables, if any,
that were repurchased in such Collection Period;
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(xi) the balance of any Yield Supplement Account or the
Reserve Account (if any) on such date, after giving effect to changes
therein on such date;
(xii) for each such date during the Funding Period (if any),
the remaining Pre-Funded Amount;
(xiii) for the first such date that is on or immediately
following the end of the Funding Period (if any), the amount of any
remaining Pre-Funded Amount that has not been used to fund the purchase
of Subsequent Receivables and is being passed through as payments of
principal on the Securities of such series;
(xiv) to the extent provided in the related Prospectus
Supplement, the amount of the advances made by the Servicer, if any,
on such date;
(xv) the number, and aggregate principal amount outstanding,
of Receivables past due 31-60, 61-90, and over 90 days; and
(xvi) such other information as may be specified in the
related Prospectus Supplement.
Each amount set forth pursuant to subclauses (i), (ii), (vi) and (ix)
with respect to the Notes or the Certificates of any series will be expressed as
a dollar amount per $1,000 of the initial principal balance of such Notes or the
initial Certificate Balance of such Certificates, as applicable.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of each Trust, the Applicable
Trustee will mail to each person who at any time during such calendar year has
been a Securityholder with respect to such Trust and received any payment
thereon a statement containing certain information for the purposes of such
Securityholder's preparation of federal income tax returns.
See "Federal Income Tax Consequences."
FUNDING PERIOD OR REVOLVING PERIOD
If specified in the related Prospectus Supplement, during a Funding
Period and/or Revolving Period, the Pre-Funding Account and/or Revolving Account
will be maintained as a trust account in the name of the Applicable Trustee. The
Pre-Funded Amount will initially equal the amount specified in the related
Prospectus Supplement, which may be up to 100% of the aggregate principal amount
of the series of Securities offered thereunder. During the Funding Period, the
Pre-Funded Amount will be reduced by the amount thereof used to purchase
Subsequent Receivables in accordance with the applicable Transfer and Servicing
Agreement and the amounts thereof deposited in the Reserve Account in connection
with the purchase of such Subsequent Receivables.
Prior to being used to purchase Subsequent Receivables or paid to the
Noteholders and Certificateholders, the Pre-Funded Amount and amounts or deposit
in the Revolving Account will be invested from time to time in Permitted
Investments. See "Description of the Transfer and Servicing
Agreements--Accounts."
If specified in the related Prospectus Supplement for a Trust that
issues Notes, during a Revolving Period, the Applicable Trustee will deposit in
the related Revolving Account the principal collections on the related
Receivables as described above. In addition, on each Distribution Date or
Payment Date, as applicable during the Revolving Period, the applicable Trustee
will deposit in the related Revolving Account any other amount described in the
related Prospectus Supplement. Funds on deposit in a Revolving Account will be
withdrawn from time to time during the related Revolving Period for delivery to
the Seller in exchange for the transfer and assignment of Subsequent Receivables
to the related Trust in the manner specified in the related Prospectus
Supplement. In addition, on the Distribution Date or Payment Date, as applicable
following the end of the related Revolving Period, the Applicable Trustee will
transfer the amount, if any, on deposit in the related Revolving Account at the
close of business on the last day of such Revolving Period, less any investment
earnings on deposit therein, to the related Collection Account for distribution
to the related Securityholders on such Distribution Date or Payment Date. In
addition, on each Distribution Date or Payment Date, as applicable during the
related Revolving Period, the Applicable Trustee will transfer to the related
Collection Account for distribution to the related Securityholders on such
Distribution Date or Payment Date the amount, if any, by which the amount on
deposit in the related Revolving Account at the close of business on the last
day of the preceding calendar month, less any investment
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earnings on deposit therein, exceeds the maximum permitted Revolving Account
balance specified in the related Prospectus Supplement.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes the material terms of each Sale and
Servicing Agreement or Pooling and Servicing Agreement pursuant to which a Trust
will purchase Receivables from the Seller and the Servicer will agree to service
such Receivables and each Trust Agreement (in the case of a grantor trust, the
Pooling and Servicing Agreement) pursuant to which a Trust will be created and
Certificates will be issued and pursuant to which the Trustee will undertake
certain administrative duties with respect to a Trust that issues Notes. Forms
of each type of the Transfer and Servicing Agreements and the Trust Agreement
have been filed as exhibits to the Registration Statement of which this
Prospectus forms a part. This summary does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all the provisions of
the Transfer and Servicing Agreements and the Trust Agreement.
SALE AND ASSIGNMENT OF RECEIVABLES
Prior to or at the time of issuance of the Securities of a given Trust,
pursuant to a related Purchase Agreement, each Originator will sell and assign
to the Seller, without recourse, its entire interest in the Initial Receivables,
if any, of the related Receivables Pool, including its security interests in the
related Financed Vehicles. The Seller will, if so specified in the related
Prospectus Supplement, transfer and assign to the Applicable Trustee, without
recourse, pursuant to a Transfer and Servicing Agreement, its entire interest in
the Initial Receivables, if any, of the related Receivables Pool, including its
security interests in the related Financed Vehicles. The Trustee will not
independently verify the existence and qualification of any Receivables. The
Trustee will, concurrently with such sale and assignment, execute, authenticate,
and deliver the related Notes and/or Certificates to the Seller in exchange for
the Receivables. Each such Receivable will be identified in a schedule delivered
pursuant to such Transfer and Servicing Agreement (a "Schedule of Receivables").
The net proceeds received by the Seller from the sale of the Certificates and
the Notes of a given series will be applied to the purchase of the related
Receivables from each Originator and, to the extent specified in the related
Prospectus Supplement, to the repayment of any Warehouse Financing or deposit of
the Pre-Funded Amount into the Pre-Funding Account and to make any required
initial deposit in any Reserve Account. The related Prospectus Supplement for a
given Trust will specify whether, and the terms, conditions and manner under
which, Subsequent Receivables will be sold by the Seller to the applicable Trust
from time to time during any Funding Period on each date specified as a transfer
date in the related Prospectus Supplement (each, a "Subsequent Transfer Date").
The purchase price for the Receivables purchased by the Trust from the
Seller and by the Seller from any Originator may be more or less than the
aggregate principal balance thereof. If any Receivables are purchased for a
purchase price less than their respective principal balances, a portion of the
collections or proceeds in respect of principal from such Receivables may be
deemed collections or proceeds in respect of interest on such Receivables for
the purposes of allocating distributions on the Securities.
If so specified in the related Prospectus Supplement, a Trust may
acquire Initial Receivables pursuant to Warehouse Financing arrangements
entered into prior to the issuance by that Trust of any Securities offered
hereby. It will be a condition to the issuance of Securities by any such Trust
that any Warehouse Financing be repaid in full, and any related security
interests released, at or prior to the time of such issuance.
In each Purchase Agreement, each Originator will represent and warrant
to the Seller and in each Transfer and Servicing Agreement, the Seller will
represent and warrant to the applicable Trust, among other things, that: (i) the
information provided in the related Schedule of Receivables is correct in all
material respects; (ii) the Obligor on each related Receivable is required to
maintain physical damage insurance covering the Financed Vehicle; (iii) neither
Seller nor any Originator has received notice of any liens or claims, including
liens for work, labor, materials or unpaid state or federal taxes, relating to
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the Financed Vehicle securing the Receivable that are or may be prior to or
equal to the lien granted by the Receivable; (iv) as of the Closing Date or the
applicable Subsequent Transfer Date, if any, each of such Receivables is owned
by Seller free and clear of any lien and is secured by a first perfected
security interest in favor of the Seller in the Financed Vehicle; (v) each
related Receivable, at the time it was originated, complied and, as of the
Closing Date or the applicable Subsequent Transfer Date, if any, complies in
all material respects with applicable federal and state laws, including,
without limitation, consumer credit, truth in lending, equal credit opportunity
and disclosure laws; and (vi) any other representations and warranties that may
be described in the related Prospectus Supplement.
As of the last day of the month that includes the sixtieth day (or if
the Seller elects, the thirtieth day) following the discovery by or notice to
the Seller of a breach of any representation or warranty of the Seller that
materially and adversely affects the interests of the related Trust in any
Receivable, the Seller, unless the breach is cured, will repurchase such
Receivable from such Trust at a price equal to the amount of principal plus
accrued interest calculated in accordance with the Servicer's customary
practices for such Receivable, after giving effect to the receipt of any moneys
collected (from whatever source) on such Receivable, if any (the "Purchase
Amount"). The repurchase obligation constitutes the sole remedy available to the
Certificateholders or the Trustee and any Noteholders or Indenture Trustee in
respect of such Trust for any such uncured breach.
Pursuant to each Transfer and Servicing Agreement, to assure uniform
quality in servicing the Receivables and to reduce administrative costs, the
Seller and each Trust will designate the Servicer or an Affiliate as custodian
to maintain possession, as such Trust's agent, of the related motor vehicle
retail installment sales contract or promissory note and security agreement and
any other documents relating to the Receivables. The Receivables will not be
segregated, stamped or otherwise marked to indicate that they have been sold to
the related Trust. The accounting records and computer systems of each
Affiliate, the Servicer and the Seller will reflect the sales and assignments of
the related Receivables to the Seller or a Trust, as applicable, and Uniform
Commercial Code ("UCC") financing statements reflecting such sales and
assignments will be filed. If through inadvertence or otherwise, another party
purchases (or takes a security interest in) the Receivables for new value in the
ordinary course of business and takes possession of the Receivables without
actual knowledge of the related Trust's interest, the purchaser (or secured
party) will acquire an interest in the Receivables superior to the interest of
the related Trust. See "Certain Legal Aspects of the Receivables--Security
Interest in Vehicles."
ACCOUNTS
With respect to each Trust that issues Notes, the Servicer will
establish and maintain with the related Indenture Trustee one or more accounts,
in the name of the Indenture Trustee on behalf of the related Noteholders and
Certificateholders, into which all payments made on or with respect to the
related Receivables will be deposited (the "Collection Account"). The Servicer
will establish and maintain with such Indenture Trustee an account, in the name
of such Indenture Trustee on behalf of such Noteholders, into which amounts
released from the Collection Account and any Pre-Funding Account, Revolving
Account, Reserve Account or other credit enhancement for payment to such
Noteholders will be deposited and from which all distributions to such
Noteholders will be made (the "Note Distribution Account"). The Servicer will
establish and maintain with the related Trustee one or more accounts, in the
name of such Trustee on behalf of such Certificateholders, into which amounts
released from the Collection Account and any Pre-Funding Account, Revolving
Account, Reserve Account or other credit or cash flow enhancement for
distribution to such Certificateholders will be deposited and from which all
distributions to such Certificateholders will be made (each, a "Certificate
Distribution Account"). With respect to each Trust that does not issue Notes,
the Servicer will also establish and maintain the Collection Account and any
other Trust Account in the name of the related Trustee on behalf of the related
Certificateholders.
If so provided in the related Prospectus Supplement, the Servicer will
establish an additional account (the "Payahead Account"), into which, to the
extent required by the applicable Transfer and Servicing Agreement, early
payments by or on behalf of Obligors on Precomputed Receivables which do not
constitute scheduled payments,
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full prepayments, nor certain partial prepayments that result in a reduction of
the Obligor's periodic payment below the scheduled payment as of the applicable
Cutoff Date ("Payaheads") will be deposited until such time as the payment falls
due. Until such time as payments are transferred from the Payahead Account to
the Collection Account, they will not constitute collected interest or collected
principal and will not be available for distribution to the applicable
Noteholders or Certificateholders. For each Trust that issues Notes, the
Payahead Account will initially be maintained with and in the name of the
applicable Indenture Trustee. With respect to each Trust that does not issue
Notes, the Servicer will establish and maintain with the related Trustee the
Payahead Account in the name of such Trustee. So long as the Bank is the
Servicer and provided that (i) there exists no Servicer Termination Event and
(ii) each other condition to holding Payaheads as may be required by the
applicable Transfer and Servicing Agreement is satisfied, Payaheads may be
retained by the Servicer until the applicable Payment Date or Distribution Date.
Any other accounts to be established with respect to a Trust, including
any Pre-Funding Account, Revolving Account, Yield Supplement Account (as such
term is defined in the related Prospectus Supplement, the "Yield Supplement
Account") or Reserve Account, will be described in the related Prospectus
Supplement.
For any series of Securities, funds in the Collection Account, the Note
Distribution Account, the Certificate Distribution Account(s) and any
Pre-Funding Account, Revolving Account, Reserve Account and other accounts
identified as such in the related Prospectus Supplement (collectively, the
"Trust Accounts") will be invested as provided in the related Transfer and
Servicing Agreement in Permitted Investments.
"Permitted Investments" will be any Eligible Investments, except that
money market funds will not be Permitted Investments in the case of a
Pre-Funding Account unless the Indenture Trustee receives an opinion of counsel
to the effect that making such investments will not require the related Trust
to register as an investment company under the Investment Company Act of 1940,
as amended. "Eligible Investments" consist of book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence: (a) direct obligations of, and obligations fully guaranteed
as to timely payment by, the United States of America; (b) demand deposits, time
deposits or certificates of deposit of any depository institution (including the
Seller or any affiliate of the Seller) or trust company incorporated under the
laws of the United States of America or any state thereof or the District of
Columbia (or any domestic branch of a foreign bank) and subject to supervision
and examination by Federal or state banking of depository institution
authorities (but excluding depository receipts issued by any such institution or
trust company); provided that at the time of the investment or contractual
commitment to invest therein (which shall be deemed to be made again each time
funds are reinvested following each Distribution Date), the commercial paper or
other short-term senior unsecured debt obligations (other than such obligations
the rating of which is based on the credit of a Person other than such
depository institution or trust company) of such depository institution or trust
company shall have a short term unsecured debt rating acceptable to the Rating
Agencies; (c) commercial paper (including commercial paper of the Seller or any
affiliate of the Seller) having, at the time of the investment or contractual
commitment to invest therein, a short term unsecured debt rating acceptable to
the Rating Agencies; (d) investments in money market funds (including funds for
which the Seller, Indenture Trustee or Trustee or any of their respective
affiliates is investment manager or advisor) having a rating acceptable to the
Rating Agencies; (e) bankers' acceptances issued by any depository institution
or trust company referred to in clause (b) above; (f) repurchase obligations
with respect to any security that is a direct obligation of, or fully guaranteed
by, the United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with a depository institution or
trust company (acting as principal) referred to in clause (b) above; and (g) any
other investment which would not cause either Rating Agency to downgrade or
withdraw its then current rating of any class of Notes or the Certificates.
Permitted Investments generally are limited to obligations or
securities that mature on or before the date of the next distribution for such
series. However, to the extent permitted by the Rating Agencies, funds in any
Reserve Account may be invested in securities that will not mature prior to the
date of the next distribution with respect to such Certificates or Notes and
will not be sold to meet any shortfalls. Thus, the amount of cash in any
Reserve Account at any time may be less than the balance of the Reserve
Account. If the amount required to be withdrawn
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from any Reserve Account to cover shortfalls in collections on the related
Receivables (as provided in the related Prospectus Supplement) exceeds the
amount of cash in the Reserve Account, a temporary shortfall in the amounts
distributed to the related Noteholders or Certificateholders could result, which
could, in turn, increase the average life of the Notes or the Certificates of
such series. To the extent specified in the related Prospectus Supplement,
investment earnings on funds deposited in the Trust Accounts, net of losses and
investment expenses (collectively, "Investment Earnings"), will be either
deposited in the applicable Collection Account on each Distribution Date and
shall be treated as collections of interest on the related Receivables or
distributed to the Servicer and not be treated as collections on the Receivables
or otherwise be available for Noteholders or Certificateholders.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (x) a segregated account with an
Eligible Institution or (y) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution have a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"Eligible Institution" means, with respect to a Trust, (a) the corporate trust
department of the related Indenture Trustee or the related Trustee, as
applicable, or (b) a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), in each case (i) which has
either (A) a long-term unsecured debt rating acceptable to the Rating Agencies
or (B) a short-term unsecured debt rating or certificate of deposit rating
acceptable to the Rating Agencies and (ii) whose deposits are insured by the
FDIC.
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due
with respect to the Receivables held by any Trust and will, consistent with the
related Transfer and Servicing Agreement, follow such collection procedures as
it follows with respect to comparable motor vehicle retail installment sales
contracts and promissory note and security agreements it services for itself or
others. Consistent with its customary procedures, the Servicer may, in its
discretion, arrange with the Obligor on a Receivable to extend or modify the
payment schedule, but no such arrangement will, for purposes of any Transfer and
Servicing Agreement, reduce the principal balance or Contract Rate of any
Receivable or modify any Receivable if such amendment or modification would
extend the final payment date of any Receivable beyond the Final Scheduled
Maturity Date. Some of such arrangements may result in the Servicer purchasing
the Receivable for the Purchase Amount. See "Risk Factors--Risk of Prepayment
and Possible Adverse Effect on Yield." The Servicer may sell the Financed
Vehicle securing the respective Receivable at public or private sale, or take
any other action permitted by applicable law.
See "Certain Legal Aspects of the Receivables."
Pursuant to the applicable Transfer and Servicing Agreement, the Bank,
as Servicer, has the right to delegate any or all of its responsibilities and
obligations as Servicer to any of its affiliates and to delegate specific duties
to third-party service providers who are in the business of performing such
duties. The Bank intends to delegate to AutoFinance Group and certain other
Affiliates (if any), responsibilities and obligations as Servicer with respect
to Receivables acquired by the Seller from AutoFinance Group or such other
Affiliates. Notwithstanding any delegation of its responsibilities and
obligations to any other entity, the Servicer will continue to be liable for all
its servicing obligations under the applicable Transfer and Servicing Agreement
as if the Servicer alone were servicing the Receivables.
COLLECTIONS
With respect to each Trust, the Servicer will deposit all payments on
the related Receivables received from Obligors and all proceeds of the related
Receivables collected during each collection period specified in the related
Prospectus Supplement (each, a "Collection Period") into the related Collection
Account not later than two business
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days after receipt. However, so long as the Bank is the Servicer and
provided that (i) there exists no Servicer Termination Event and (ii) each other
condition to making monthly deposits as may be required by the related Transfer
and Servicing Agreement is satisfied, the Servicer may retain such amounts until
the Business Day (as defined in the related Prospectus Supplement, a "Business
Day") prior to the applicable Distribution Date or Payment Date. The Servicer or
the Seller, as the case may be, will remit the aggregate Purchase Amount of any
Receivables to be purchased from a Trust to the related Collection Account on
the Business Day prior to the applicable Distribution Date or Payment Date.
Pending deposit into the Collection Account, collections may be employed by the
Servicer at its own risk and for its own benefit and will not be segregated from
its own funds. To the extent set forth in the related Prospectus Supplement, the
Servicer may, in order to satisfy the requirements described above, obtain a
letter of credit or other security for the benefit of the related Trust to
secure timely remittances of collections on the related Receivables and payment
of the aggregate Purchase Amount with respect to Receivables purchased by the
Servicer. If so provided in the related Prospectus Supplement, to the extent the
collections on a Precomputed Receivable for a Collection Period are less than
the scheduled payment, the amount of Payaheads made on such Precomputed
Receivable not previously applied (the "Payahead Balance"), if any, with respect
to such Precomputed Receivable shall be applied by the Servicer to the extent of
the shortfall.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
On each Distribution Date, the Servicer will be entitled to receive the
Servicing Fee for the related Collection Period in an amount generally equal to
a specified percentage per annum (as set forth in the related Prospectus
Supplement, the "Servicing Fee Rate") of the Pool Balance as of the first day of
such Collection Period (the "Servicing Fee"). To the extent provided in the
related Prospectus Supplement, the Servicer's right to receive all or a portion
of the Servicing Fee on one or more Distribution Dates may be subordinated to
the rights of Securityholders to receive principal and interest for the related
Collection Period. In addition, to the extent provided in the related Prospectus
Supplement, on one or more Distribution Dates all or a portion of such Servicing
Fee may be deposited in the Reserve Account until the Specified Reserve Account
Balance or such other amount specified in the related Prospectus Supplement is
on deposit in the Reserve Account. If it is acceptable to each Rating Agency
without a reduction in the rating of any of the Securities, the Servicing Fee in
respect of a Collection Period (together with any portion of a Servicing Fee
that remains unpaid from prior Distribution Dates) at the option of the Servicer
may be paid at or as soon as possible after the beginning of such Collection
Period out of the first collections of interest received on the Receivables for
such Collection Period.
The Servicer will also collect and retain any late fees, extension
fees, prepayment charges and certain non- sufficient funds charges and other
administrative fees or similar charges ("Supplemental Servicing Fees") allowed
by applicable law with respect to the related Receivables and will be entitled
to reimbursement from such Trust for certain liabilities. Payments by or on
behalf of Obligors will be allocated to scheduled payments and late fees and
other charges in accordance with the Servicer's customary practices and
procedures. To the extent specified in the related Prospectus Supplement,
Supplemental Servicing Fees will include investment earnings on investments of
funds deposited in the Trust Accounts and other accounts with respect to a
Trust. In addition, the Servicer or the Seller will be entitled to receive such
fees and other amounts specified in the related Prospectus Supplement. See
"Description of the Transfer and Servicing Agreements--Servicing Compensation
and Payment of Expenses" and "--Distributions" in the related Prospectus
Supplement.
The Servicing Fee and Supplemental Servicing Fee will compensate the
Servicer for performing the functions of a third party servicer of motor vehicle
receivables as an agent for its beneficial owner, including collecting and
posting all payments, responding to inquiries of Obligors on the Receivables,
investigating delinquencies, sending billing information to Obligors, reporting
tax information to Obligors, paying costs of collections and disposition of
defaults and policing the collateral. The Servicing Fee also will compensate the
Servicer for administering the particular Receivables Pool, accounting for
collections and furnishing monthly and annual statements to the related Trustee
and Indenture Trustee with respect to distributions and generating federal
income tax information for such Trust and for the related Noteholders and
Certificateholders. The Servicing Fee
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also will reimburse the Servicer for certain taxes, the fees of the related
Trustee and Indenture Trustee, if any, accounting fees, outside auditor fees,
data processing costs and other costs incurred in connection with administering
the applicable Receivables Pool.
DISTRIBUTIONS
With respect to each series of Securities, beginning on the Payment
Date or Distribution Date, as applicable, specified in the related Prospectus
Supplement, distributions of principal and interest (or, where applicable, of
principal or interest only) on each class of such Securities entitled thereto
will be made by the Applicable Trustee to the Noteholders and the
Certificateholders of such series. The timing, calculation, allocation, order,
source, priorities of and requirements for all payments to each class of
Noteholders and all distributions to each class of Certificateholders of such
series will be set forth in the related Prospectus Supplement.
With respect to each Trust, on each Payment Date and Distribution Date,
as applicable, collections on the related Receivables will be transferred from
the Collection Account to the Note Distribution Account for distribution to
Noteholders, if any, and to each Certificate Distribution Account for
distribution to Certificateholders to the extent provided in the related
Prospectus Supplement. Credit enhancement, such as a Reserve Account, will be
available to cover any shortfalls in the amount available for distribution on
such date to the extent (a) specified in the related Prospectus Supplement and
(b) that such credit enhancement is actually available for such purpose from
time to time. As more fully described in the related Prospectus Supplement,
distributions in respect of principal of a class of Securities of a given series
will be subordinate to distributions in respect of interest on such class, and
distributions in respect of one or more classes of Certificates of such series
may be subordinate to payments in respect of Notes, if any, of such series or
other classes of Certificates of such series.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit and cash flow enhancement arrangements
and the provider thereof, if applicable, with respect to each class of
Securities of a given series, if any, will be set forth in the related
Prospectus Supplement. If and to the extent provided in the related Prospectus
Supplement, credit and cash flow enhancement may be in the form of subordination
of one or more classes of Securities or all or a portion of the Servicing Fee,
Supplemental Servicing Fee or certain other amounts payable to the Servicer or
the Seller pursuant to the applicable Transfer and Servicing Agreement, Reserve
Accounts, over-collateralization, letters of credit, credit or liquidity
facilities, surety bonds, guaranteed investment contracts, guaranteed rate
agreements, swaps or other interest rate protection agreements, repurchase
obligations, yield supplement agreements, other agreements with respect to third
party payments or other support, cash deposits or such other arrangements as may
be described in the related Prospectus Supplement or any combination of two or
more of the foregoing. If specified in the related Prospectus Supplement, credit
or cash flow enhancement for a class of Securities may cover one or more other
classes of Securities of the same series, and credit or cash flow enhancement
for a series of Securities may cover one or more other series of Securities.
The presence of a Reserve Account and other forms of credit enhancement
for the benefit of any class or series of Securities is intended to enhance the
likelihood of receipt by the Securityholders of such class or series of the full
amount of principal and interest due thereon and to decrease the likelihood that
such Securityholders will experience losses. The credit enhancement for a class
or series of Securities will not provide protection against all risks of loss
and will not guarantee repayment of the entire principal balance and interest
thereon except to the extent so specified in the related Prospectus Supplement.
If losses occur which exceed the amount covered by any credit enhancement or
which are not covered by any credit enhancement, Securityholders of any class or
series will bear their allocable share of deficiencies, as described in the
related Prospectus Supplement. In addition, if a form of credit enhancement
covers more than one series of Securities, Securityholders of any such series
will be subject to the risk that such credit enhancement will be exhausted by
the claims of Securityholders of other series.
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Reserve Account. If so provided in the related Prospectus Supplement,
pursuant to the related Transfer and Servicing Agreement, the Seller will
establish for a series or class of Securities an account, as specified in the
related Prospectus Supplement (the "Reserve Account"), which will be maintained
with the related Trustee or Indenture Trustee, as applicable. The Reserve
Account will be funded by an initial deposit on the Closing Date in the amount
(if any) set forth in the related Prospectus Supplement and, if the related
series has a Funding Period, will also be funded on each Subsequent Transfer
Date to the extent described in the related Prospectus Supplement. To the extent
described in the related Prospectus Supplement, the amount (if any) on deposit
in the Reserve Account will be increased on each Distribution Date or Payment
Date thereafter up to the Specified Reserve Account Balance (as defined in the
related Prospectus Supplement) by the deposit therein of the amount of
collections on the related Receivables remaining on each such Distribution Date
or Payment Date after the payment of all other required payments and
distributions on such date. The related Prospectus Supplement will describe the
circumstances and manner under which distributions may be made out of the
Reserve Account, either to holders of the Securities covered thereby or to the
Seller.
The Seller may at any time, without consent of the Securityholders,
sell, transfer, convey or assign in any manner its rights to and interests in
distributions from the Reserve Account provided that (i) the Rating Agencies
confirm in writing that such action will not result in a reduction or withdrawal
of the rating of any class of Securities, (ii) the Seller provides to the
applicable trustee and any Indenture Trustee an opinion of counsel from
independent counsel that such action will not cause the related Trust to be
classified as an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes and (iii) such transferee or
assignee agrees in writing to take positions for federal income tax purposes
consistent with the federal income tax positions agreed to be taken by the
Seller.
Yield Supplement Account; Yield Supplement Agreement. If so provided in
the related Prospectus Supplement, pursuant to the related Transfer and
Servicing Agreement, the Affiliates, the Seller or another person will enter
into a Yield Supplement Agreement (as such term is defined in the related
Prospectus Supplement, the "Yield Supplement Agreement") pursuant to which the
Affiliates, the Seller or such other person will establish for a series a Yield
Supplement Account which will be maintained with the same entity at which the
related Collection Account is maintained and, if so specified in the related
Prospectus Supplement, will be created with an initial deposit by the Seller.
Each Yield Supplement Account will be designed solely to hold funds to be
applied by the Indenture Trustee or applicable Trustee to provide payments to
Securityholders in respect of Receivables the Contract Rate of which is less
than the Required Rate (as such term is defined in the related Prospectus
Supplement, the "Required Rate").
On each Distribution Date, the obligor under the Yield Supplement
Agreement will pay to the Trust an amount equal to the Yield Supplement Amount
(as such term is defined in the related Prospectus Supplement, the "Yield
Supplement Amount") in respect of the Receivables for such Distribution Date. If
so specified in the Prospectus Supplement, in the event that such obligor
defaults on its obligation to make payments under the Yield Supplement
Agreement, the related Prospectus Supplement will describe the manner and
circumstances in which amounts on deposit on any Distribution Date in the Yield
Supplement Account in excess of the Required Yield Supplement Amount (as such
term is defined in the related Prospectus Supplement, the "Required Yield
Supplement Amount") will be released, and to whom such amounts will be
distributed. Monies on deposit in the Yield Supplement Account may be invested
in Permitted Investments under the circumstances and in the manner described in
the related Transfer and Servicing Agreement. If so specified in the related
Prospectus Supplement, investment earnings on investment of funds in a Yield
Supplement Account will be deposited into such Yield Supplement Account. The
related Prospectus Supplement, will describe the manner in which any monies
remaining on deposit in a Yield Supplement Account upon the termination of the
related Trust pursuant to its terms will be released and to whom such amounts
will be distributed.
If a Yield Supplement Account is established with respect to any Trust
as to which a Pre-Funding Account has been established, the Seller and the
related Indenture Trustee or applicable Trustee, will enter into a Yield
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Supplement Agreement pursuant to which, on each Subsequent Transfer Date, the
Seller will deposit into the Yield Supplement Account the Additional Yield
Supplement Amount (as such term is defined in the related Prospectus Supplement,
the "Additional Yield Supplement Amount") in respect of the related Subsequent
Receivables. Each Yield Supplement Agreement will affect only Receivables having
a Contract Rate less than the related Required Rate.
NET DEPOSITS
As an administrative convenience if certain conditions acceptable to
the Rating Agencies are satisfied, the Servicer will be permitted to make the
deposit of collections and aggregate Purchase Amounts for any Trust for or with
respect to the related Collection Period net of distributions to be made to the
Servicer for such Trust with respect to such Collection Period. See
"--Collections." With respect to any Trust that issues both Certificates and
Notes, if the related Payment Dates do not coincide with Distribution Dates, all
distributions, deposits or other remittances made on a Payment Date will be
treated as having been distributed, deposited or remitted on the Distribution
Date for the applicable Collection Period for purposes of determining other
amounts required to be distributed, deposited or otherwise remitted on such
Distribution Date. Similarly, the Servicer may cause to be made a single, net
transfer from the Collection Account to the related Payahead Account, if any, or
vice versa. The Servicer, however, will account to the Trustee, any Indenture
Trustee, the Noteholders, if any, and the Certificateholders with respect to
each Trust as if all deposits, distributions, and transfers were made
individually.
STATEMENTS TO TRUSTEES AND TRUST
Prior to each Distribution Date with respect to each series of
Securities, the Servicer will provide to the applicable Indenture Trustee, if
any, and the Applicable Trustee as of the close of business on the last day of
the preceding Collection Period a statement setting forth substantially the same
information as is required to be provided in the periodic reports provided to
Securityholders of such series described under "Certain Information Regarding
the Securities -- Reports to Securityholders."
EVIDENCE AS TO COMPLIANCE
Each Transfer and Servicing Agreement will provide that the Servicer
will furnish to the related Trust and Indenture Trustee or Trustee, as
applicable, on or before October 31 each year, beginning in the calendar year
following the establishment of the related Trust, a statement of a firm of
independent certified public accountants (or other evidence satisfactory to the
applicable Rating Agencies) as to compliance by the Servicer during the
preceding twelve months ended June 30 (or, in the case of the first such
certificate, from the applicable Closing Date) with certain standards relating
to the servicing of the applicable Receivables, the Servicer's accounting
records and computer files with respect thereto and certain other matters.
Each Transfer and Servicing Agreement will also provide for delivery to
the related Trust and Indenture Trustee or Trustee, as applicable, substantially
simultaneously with the delivery of such accountants' statement referred to
above, of a certificate signed by an officer of the Servicer stating that the
Servicer has fulfilled its obligations under the applicable Transfer and
Servicing Agreement, throughout the preceding twelve months (or, in the case of
the first such certificate, from the Closing Date) or, if there has been a
default in the fulfillment of any such obligation, describing each such default.
The Servicer has agreed to give each Indenture Trustee and each Trustee notice
of certain Servicer Termination Events under the related Transfer and Servicing
Agreement.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Applicable Trustee at
the appropriate address set forth in the Prospectus Supplement.
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CERTAIN MATTERS REGARDING THE SERVICER
Each Transfer and Servicing Agreement will provide that the Servicer
may not resign from its obligations and duties as Servicer thereunder, except
upon determination that the Servicer's performance of such duties is no longer
permissible under applicable law. No such resignation will become effective
until the related Indenture Trustee or Trustee, as applicable, or a successor
servicer, has assumed the Servicer's servicing obligations and duties under such
Transfer and Servicing Agreement.
Each Transfer and Servicing Agreement will further provide that neither
the Servicer nor any of its directors, officers, employees and agents will be
under any liability to the related Trust or the related Noteholders or
Certificateholders for taking any action or for refraining from taking any
action pursuant to such Transfer and Servicing Agreement or for errors in
judgment; except that neither the Servicer nor any such person will be protected
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of the Servicer's duties
thereunder or by reason of reckless disregard of its obligations and duties
thereunder. In addition, each Transfer and Servicing Agreement will provide that
the Servicer is under no obligation to appear in, prosecute or defend any legal
action that is not incidental to the Servicer's servicing responsibilities under
such Transfer and Servicing Agreement and that, in its opinion, may cause it to
incur any expense or liability.
Under the circumstances specified in each Transfer and Servicing
Agreement, any entity into which the Servicer may be merged or consolidated, or
any entity resulting from any merger or consolidation to which the Servicer is a
party, or any entity succeeding to the business of the Servicer or, with respect
to its obligations as Servicer, any corporation 50% or more of the voting stock
of which is owned, directly or indirectly, by KeyCorp, which corporation or
other entity in each of the foregoing cases assumes the obligations of the
Servicer, will be the successor of the Servicer under such Transfer and
Servicing Agreement.
SERVICER TERMINATION EVENTS
"Servicer Termination Events" under each Transfer and Servicing
Agreement will consist of (i) any failure by the Servicer to deliver to the
Applicable Trustee for deposit in any of the Trust Accounts any required payment
or to direct the Applicable Trustee to make any required distributions
therefrom, which failure continues unremedied for five business days after
written notice from the Applicable Trustee is received by the Servicer or after
discovery of such failure by the Servicer, (ii) any failure by the Servicer duly
to observe or perform in any material respect any other covenant or agreement in
such Transfer and Servicing Agreement, which failure materially and adversely
affects the rights of the Noteholders or the Certificateholders of the related
series and which continues unremedied for 60 days after the giving of written
notice of such failure (A) to the Servicer by the Applicable Trustee or (B) to
the Servicer and to the Applicable Trustee by holders of Notes or Certificates
of such series, as applicable, evidencing not less than 25% in principal amount
of such outstanding Notes or of such Certificate Balance (or, in either case,
for such longer period, not in excess of 120 days, as may be reasonably
necessary to remedy such default; provided that such default is capable of
remedy within 120 days and the Servicer delivers an officer's certificate to the
Applicable Trustee to such effect and to the effect that Servicer has commenced
or will promptly commence, and will diligently pursue, all reasonable efforts to
remedy such default); and (iii) the occurrence of an Insolvency Event with
respect to the Servicer. "Insolvency Event" means, with respect to any person,
any of the following events or actions: certain events of insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings with respect to such person and certain actions by such person
indicating its insolvency, reorganization pursuant to bankruptcy proceedings or
inability to pay its obligations.
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RIGHTS UPON SERVICER TERMINATION EVENTS
In the case of any Trust that has issued Notes, as long as a Servicer
Termination Event under a Sale and Servicing Agreement remains unremedied, the
related Trustee or the related Indenture Trustee or holders of Notes of the
related series evidencing greater than 50% of the principal amount of such Notes
then outstanding may terminate all the rights and obligations of the Servicer
under such Sale and Servicing Agreement, whereupon such Indenture Trustee or a
successor servicer appointed by such Indenture Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer under such Sale and
Servicing Agreement and will be entitled to similar compensation arrangements.
In the case of any Trust that has not issued Notes, as long as a Servicer
Termination Event under the related Pooling and Servicing Agreement remains
unremedied, the related Trustee or holders of Certificates of the related series
evidencing greater than 50% of the principal amount of such Certificates then
outstanding may terminate all the rights and obligations of the Servicer under
such Pooling and Servicing Agreement, whereupon such Trustee or a successor
servicer appointed by such Trustee will succeed to all the responsibilities,
duties and liabilities of the Servicer under such Pooling and Servicing
Agreement and will be entitled to similar compensation arrangements. If,
however, a conservator, receiver or similar official has been appointed for the
Servicer, and no Servicer Termination Event other than such appointment has
occurred, such official may have the power to prevent such Indenture Trustee,
such Noteholders, such Trustee or such Certificateholders from effecting a
transfer of servicing. In the event that such Indenture Trustee or Trustee is
unwilling or unable to so act, it may appoint, or petition a court of competent
jurisdiction for the appointment of, a successor with a net worth of at least
$50,000,000 and whose regular business includes the servicing of motor vehicle
receivables. Such Indenture Trustee or Trustee may make such arrangements for
compensation to be paid, which in no event may be greater than the servicing
compensation to the Servicer under the applicable Transfer and Servicing
Agreement.
WAIVER OF PAST SERVICER TERMINATION EVENTS
With respect to each Trust that has issued Notes, the holders of Notes
evidencing at least a majority in principal amount of the then outstanding Notes
of the related series (or the holders of the Certificates of such series
evidencing not less than a majority of the outstanding Certificate Balance, in
the case of any Servicer Termination Event which does not adversely affect the
related Indenture Trustee or such Noteholders) may, on behalf of all such
Noteholders and Certificateholders, waive any Servicer Termination Event by the
Servicer in the performance of its obligations under the related Sale and
Servicing Agreement and its consequences, except a Servicer Termination Event in
making any required deposits to or payments from any of the Trust Accounts in
accordance with such Sale and Servicing Agreement. With respect to each Trust
that has not issued Notes, holders of Certificates of such series evidencing not
less than a majority of the principal amount of such Certificates then
outstanding may, on behalf of all such Certificateholders, waive any Servicer
Termination Event by the Servicer in the performance of its obligations under
the related Transfer and Servicing Agreement, except a Servicer Termination
Event in making any required deposits to or payments from the related Trust
Accounts in accordance with such Transfer and Servicing Agreement. No such
waiver will impair such Noteholders' or Certificateholders' rights with respect
to subsequent defaults.
AMENDMENT
Each of the Transfer and Servicing Agreements may be amended by the
parties thereto, without the consent of the related Noteholders or
Certificateholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of such Transfer and Servicing
Agreements or of modifying in any manner the rights of such Noteholders or
Certificateholders; provided that such action will not, in the opinion of
counsel satisfactory to the related Trustee or Indenture Trustee, as applicable,
materially and adversely affect the interest of any such Noteholder or
Certificateholder. The Transfer and Servicing Agreements may also be amended by
the Seller, the Servicer, the related Trustee and any related Indenture Trustee
with the consent of the holders of Notes evidencing at least a majority in
principal amount of then outstanding Notes, if any, of the related series
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and the holders of the Certificates of such series evidencing at least a
majority of the Certificate Balance of such Certificates then outstanding, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of such Transfer and Servicing Agreements or of modifying
in any manner the rights of such Noteholders or Certificateholders; provided,
however, that no such amendment may (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on the
related Receivables or distributions that are required to be made for the
benefit of such Noteholders or Certificateholders or (ii) reduce the aforesaid
percentage of the Notes or Certificates of such series which are required to
consent to any such amendment, without the consent of the holders of all the
outstanding Notes or Certificates, as the case may be, of such series.
Additionally, each of the Transfer and Servicing Agreements may be
amended by the parties thereto at the direction of the Seller or Servicer
without the consent of any of the Securityholders to add, modify or
eliminate such provisions as may be necessary or advisable in order to enable
all or a portion of a Trust to qualify as, and to permit an election to be made
to cause all or a portion of a Trust to be treated as, a "financial asset
securitization investment trust" as described in the provisions of the "Small
Business Job Protection Act of 1996," H.R. 3448, and in connection with any
such election, to modify or eliminate existing provisions of a Transfer and
Servicing Agreement relating to the intended federal income tax treatment of
the Securities and the related Trust in the absence of the election. See
"Federal Income Tax Consequences--FASIT Legislation." It is a condition to any
such amendment that each Rating Agency will have notified the Seller, the
Servicer and the Applicable Trustee in writing that the amendment will not
result in a reduction or withdrawal of the rating of any outstanding Securities
with respect to which it is a Rating Agency.
Additionally, each of the Transfer and Servicing Agreements may be
amended by the parties thereto at the direction of the Seller or Servicer
without the consent of any of the Securityholders (i) to add, modify or
eliminate such provisions as may be necessary or advisable in order to enable
(a) the transfer to the Trust of all or any portion of the Receivables to be
derecognized under generally accepted accounting principles ("GAAP") by the
Seller to the applicable Trust (b) the applicable Trust to avoid becoming a
member of the Seller's consolidated group under GAAP, or (c) the Seller or any
of its affiliates to otherwise comply with or obtain more favorable treatment
under any law or regulation or any accounting rule or principle; and (ii) in
connection with any such addition, modification or elimination, without
limiting the generality of the foregoing clause (i), to cause the Receivables
to be transferred by the Seller first to a bankruptcy remote affiliate and from
such affiliate to a Trust; provided, however, that it is a condition to any
such amendment that (i) the Seller delivers an officer's certificate to the
related Trustee to the effect that such amendment meets the requirements set
forth in this paragraph and (ii) such amendment will not result in a withdrawal
or reduction of the rating of any outstanding series of Securities under the
related Trust.
INSOLVENCY
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Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect to
the related Trust without the unanimous prior approval of all Certificateholders
(including the Seller) of such Trust and the delivery to such Trustee by each
such Certificateholder (including the Seller) of a certificate certifying that
such Certificateholder reasonably believes that such Trust is insolvent.
NON-RECOURSE SALE AND ASSIGNMENT
The Notes of any series will represent obligations solely of, and the
Certificates of any series will represent interests solely in, the related Trust
and neither the Notes nor the Certificates of any series will be insured or
guaranteed by any Affiliate, the Seller, the Servicer, any Trustee, any
Indenture Trustee or any other person or entity.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes of a given series and
the satisfaction and discharge of the related Indenture, the related Trustee
will succeed to all the rights of the Indenture Trustee, and the
Certificateholders of such series will succeed to all the rights of the
Noteholders of such series, under the related Sale and Servicing Agreement,
except as otherwise provided therein.
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TERMINATION
With respect to each Trust, the obligations of the Servicer, the
Seller, the related Trustee and the related Indenture Trustee, if any, pursuant
to the Transfer and Servicing Agreements will terminate upon the earlier of (i)
the maturity or other liquidation of the last related Receivable and the
disposition of any amounts received upon liquidation of any such remaining
Receivables, (ii) the payment to Noteholders, if any, and Certificateholders of
the related series of all amounts required to be paid to them pursuant to the
Transfer and Servicing Agreements and (iii) the occurrence of either event
described below.
In order to avoid excessive administrative expense, each of the Seller
and the Servicer will be permitted at its respective option to purchase from
each Trust, as of the end of any applicable Collection Period, if the then
outstanding Pool Balance with respect to the Receivables held by such Trust is
equal to or less than the percentage of the Initial Pool Balance set forth in
the related Prospectus Supplement (as defined in the related Prospectus
Supplement, the "Initial Pool Balance"), all remaining related Receivables at a
price equal to the aggregate of the Purchase Amounts thereof as of the end of
such Collection Period.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement or Pooling and Servicing Agreement
will effect early retirement of the Certificates of such series.
ADMINISTRATION AGREEMENT
The Bank, in its capacity as administrator (the "Administrator"), will
enter into an agreement (as amended and supplemented from time to time, an
"Administration Agreement") with each Trust that issues Notes and the related
Indenture Trustee pursuant to which the Administrator will agree, to the extent
provided in such Administration Agreement, to provide the notices and to perform
other administrative obligations required by the related Indenture. With respect
to any such Trust, as compensation for the performance of the Administrator's
obligations under the applicable Administration Agreement and as reimbursement
for its expenses related thereto, the Administrator will be entitled to a
monthly administration fee in an amount equal to such amount as may be set forth
in the related Prospectus Supplement (the "Administration Fee"), which fee will
be paid by the Seller.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
RIGHTS IN THE RECEIVABLES
The Receivables are "chattel paper" as defined in the UCC. Pursuant to
the UCC, a sale of chattel paper is treated in a manner similar to a transaction
creating a security interest in chattel paper. The Seller will cause appropriate
financing statements to be filed with the appropriate governmental authorities
to perfect the interest of the related Trust in its purchase of Receivables from
the Seller and in the appropriate jurisdictions in which the Affiliates are
located to perfect the interest of the Seller in its purchase of Receivables
from the Affiliates.
Pursuant to the applicable Transfer and Servicing Agreement, an
Originator will hold the Receivables as custodian for the Applicable Trustee
following the sale and assignment of the Receivables to the related Trust. The
Seller will take such action as is required to perfect the rights of the
Applicable Trustee in the Receivables. The Receivables will not be segregated,
stamped or otherwise marked to indicate that they have been sold to the related
Trust. If through inadvertence or otherwise, another party purchases (or takes a
security interest in) the Receivables
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for new value in the ordinary course of business and takes possession of the
Receivables without actual knowledge of the related Trust's interest, the
purchaser (or secured party) will acquire an interest in the Receivables
superior to the interest of the related Trust.
Under the applicable Transfer and Servicing Agreement, the Servicer
will be obligated from time to time to take such actions as are necessary to
protect and perfect the related Trust's interest in the Receivables and their
proceeds.
SECURITY INTEREST IN VEHICLES
Each retail installment sales contract or promissory note and security
agreement evidencing a Receivable grants a security interest in the Financed
Vehicle under the applicable UCC. Perfection of security interests in
automobiles and light duty trucks is generally governed by the motor vehicle
registration laws of the state in which the vehicle is located. In most states
in which the Receivables are originated, a security interest in automobiles and
light duty trucks is perfected by notation of the secured party's lien on the
vehicles' certificate of title. Each Affiliate takes all actions necessary under
the laws of the state in which the financed vehicle is located to perfect its
security interest in the financed vehicle securing a retail installment sales
contract purchased by it from a Dealer or Direct Loan made by such Affiliate,
including, where applicable, having a notation of its lien recorded on such
vehicle's certificate of title. Because the Servicer continues to service the
contracts and loans, the Obligors on the contracts and loans will not be
notified of the sales from an Affiliate to the Seller or from the Seller to the
Trust, and no action will be taken to record the transfer of the security
interest from an Affiliate to the Seller or from the Seller to the Trust by
amendment of the certificates of title for the Financed Vehicles or otherwise.
Pursuant to each Purchase Agreement, each Affiliate will assign to the
Seller its interests in the Financed Vehicles securing the Receivables assigned
by that Affiliate to the Seller and, with respect to each Trust, pursuant to the
related Transfer and Servicing Agreement, the Seller will assign its interests
in the Financed Vehicles securing the related Receivables to such Trust.
However, because of the administrative burden and expense, none of the
Affiliates, the Seller, the Servicer or the related Trustee will amend any
certificate of title to identify either the Seller or such Trust as the new
secured party on such certificate of title relating to a Financed Vehicle. Also,
each Affiliate will continue to hold any certificates of title relating to the
Financed Vehicles in its possession as custodian for the Seller and such Trust
pursuant to the related Transfer and Servicing Agreement. See "Description of
the Transfer and Servicing Agreements--Sale and Assignment of Receivables."
In most states, an assignment such as that under each Transfer and
Servicing Agreement is an effective conveyance of a security interest without
amendment of any lien noted on a vehicle's certificate of title, and the
assignee succeeds thereby to the assignor's rights as secured party. However, by
not identifying the related Trust as the secured party on the certificate of
title, the security interest of such Trust in the vehicle could be defeated
through fraud or negligence. In most states, in the absence of fraud or forgery
by the vehicle owner or an Affiliate or administrative error by state or local
agencies, the notation of the lien of the applicable Affiliate on the
certificates of title will be sufficient to protect the related Trust against
the rights of subsequent purchasers of a Financed Vehicle or subsequent lenders
who take a security interest in a Financed Vehicle. If there are any Financed
Vehicles as to which the Seller failed to obtain and assign to the related Trust
a perfected security interest, the security interest of such Trust would be
subordinate to, among others, subsequent purchasers of the Financed Vehicles and
holders of perfected security interests. Such a failure, however, would
constitute a breach of the warranties of the Seller under the related Transfer
and Servicing Agreement and would create an obligation of the Seller to
repurchase the related Receivable unless the breach is cured. Pursuant to each
Transfer and Servicing Agreement the Seller will assign such rights to the
related Trust. See "Description of the Transfer and Servicing Agreements--Sale
and Assignment of Receivables" and "Risk Factors--Risk of Unenforceable Security
Interest in Financed Vehicles."
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Under the laws of most states, the perfected security interest in a
vehicle would continue for four months after the vehicle is moved to a state
other than the state in which it is initially registered and thereafter until
the owner thereof re-registers the vehicle in the new state. A majority of
states generally require surrender of a certificate of title to re-register a
vehicle. Accordingly, a secured party must surrender possession if it holds the
certificate of title to the vehicle or, in the case of a vehicle registered in a
state providing for the notation of a lien on the certificate of title but not
possession by the secured party, the secured party would receive notice of
surrender if the security interest is noted on the certificate of title. Thus,
the secured party would have the opportunity to re-perfect its security interest
in the vehicle in the state of relocation. In states that do not require a
certificate of title for registration of a motor vehicle, re-registration could
defeat perfection. In the ordinary course of servicing motor vehicle
receivables, the applicable Affiliate takes any necessary steps to effect re-
perfection upon receipt of notice of re-registration or information from the
Obligor as to relocation. Similarly, when an Obligor sells a vehicle, the
applicable Affiliate must surrender possession of the certificate of title or
will receive notice as a result of its lien noted thereon and accordingly will
have an opportunity to require satisfaction of the related Receivable before
release of the lien. Under each Transfer and Servicing Agreement, the Servicer
is obligated to take appropriate steps, at the Servicer's expense, to maintain
perfection of security interests in the Financed Vehicles and is obligated to
purchase the related Receivable if it fails to do so.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes take priority over even a perfected security
interest in a financed vehicle. The Code also grants priority to certain federal
tax liens over the lien of a secured party. The laws of certain states and
federal law permit the confiscation of vehicles by governmental authorities
under certain circumstances if used in unlawful activities, which may result in
the loss of a secured party's perfected security interest in the confiscated
vehicle. Under each Transfer and Servicing Agreement, the Seller will represent
to the related Trust that, as of the date the related Receivable is sold to such
Trust, each security interest in a Financed Vehicle is or will be prior to all
other present liens (other than tax liens and other liens that arise by
operation of law) upon and security interests in such Financed Vehicle. However,
liens for repairs or taxes could arise, or the confiscation of a Financed
Vehicle could occur, at any time during the term of a Receivable. No notice will
be given to the Trustee, any Indenture Trustee, any Noteholders or the
Certificateholders in respect of a given Trust if such a lien arises or
confiscation occurs.
REPOSSESSION
In the event of default by vehicle purchasers, the holder of the motor
vehicle retail installment sales contract or Direct Loan has all the remedies of
a secured party under the UCC, except where specifically limited by other state
laws. Among the UCC remedies, the secured party has the right to perform
self-help repossession unless such act would constitute a breach of the peace.
Self-help is the method employed by the Servicer in most cases and is
accomplished simply by retaking possession of the financed vehicle. In the event
of default by the obligor, some jurisdictions require that the obligor be
notified of the default and be given a time period within which he may cure the
default prior to repossession. Generally, the right of reinstatement may be
exercised on a limited number of occasions in any one-year period. In cases
where the obligor objects or raises a defense to repossession, or if otherwise
required by applicable state law, a court order must be obtained from the
appropriate state court, and the vehicle must then be repossessed in accordance
with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. The
obligor has the right to redeem the collateral prior to actual sale, in some
states, by payment of delinquent installments or the unpaid balance and, in
other states, by paying the secured party the unpaid principal balance of the
obligation plus reasonable expenses for repossessing, holding and preparing the
collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees.
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DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the vehicles generally will be applied first
to the expenses of resale and repossession and then to the satisfaction of the
indebtedness. While some states impose prohibitions or limitations on deficiency
judgments if the net proceeds from resale do not cover the full amount of the
indebtedness, a deficiency judgment can be sought in those states that do not
prohibit or limit such judgments. However, the deficiency judgment would be a
personal judgment against the obligor for the shortfall, and a defaulting
obligor can be expected to have very little capital or sources of income
available following repossession. Therefore, in many cases, it may not be useful
to seek a deficiency judgment or, if one is obtained, it may be settled at a
significant discount.
Occasionally, after resale of a vehicle and payment of all expenses and
all indebtedness, there is a surplus of funds. In that case, the UCC requires
the creditor to remit the surplus to any holder of a lien with respect to the
vehicle or if no such lienholder exists or there are remaining funds, to remit
the surplus to the former owner of the vehicle.
SOLDIERS' AND SAILORS CIVIL RELIEF ACT
The Soldiers' and Sailors Civil Relief Act of 1940 (the "Relief Act")
imposes certain limitations upon the actions of creditors with respect to
persons serving in the Armed Forces of the United States, and, to a more limited
extent, their dependents and guarantors and sureties of debt incurred by such
persons. An obligation incurred by a person prior to entering military service
cannot bear interest at a rate in excess of 6% during the person's term of
military service, unless the obligee petitions a court which determines that the
person's military service does not impair his or her ability to pay interest at
a higher rate. Further, a secured party may not repossess during a person's
military service a motor vehicle subject to an installment sales contract or a
promissory note entered into prior to the person's entering military service,
for a loan default which occurred prior to or during such service, without court
action. The Relief Act imposes penalties for knowingly repossessing property in
contravention of its provisions. Additionally, dependents of military personnel
are entitled to the protection of the Relief Act, upon application to a court,
if such court determines the obligation of such dependent has been materially
impaired by reason of military service. To the extent an obligation is
unenforceable against the person in military service or a dependent, any
guarantor or surety of such obligation will not be liable for performance.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers involved
in consumer finance. These laws include, but are not limited to, the
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade
Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the
Fair Debt Collection Procedures Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations B, Z and AA, the Relief Act, state adoptions of the
National Consumer Act and of the Uniform Consumer Credit Code and state motor
vehicle retail installment sales acts, retail installment sales acts and other
similar laws. In addition to Federal law, state consumer protection statutes
regulate, among other things, the terms and conditions of the motor vehicle
retail installment sales contracts and promissory notes and security agreements
pursuant to which purchasers finance the acquisition of motor vehicles. These
laws place finance charge ceilings and other restrictions on consumer
transactions and require contract disclosures in addition to those required
under federal law. These requirements impose specific statutory liabilities upon
creditors who fail to comply. In some cases, this liability could affect the
ability of an assignee, such as the Applicable Trustee, to enforce consumer
finance contracts such as the Receivables. The "Credit Practices" Rule of the
Federal Trade Commission imposes additional restrictions on contract provisions
and credit practices.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally duplicated by
the Uniform Consumer Credit Code, other statutes or the common
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law, has the effect of subjecting a seller in a consumer credit transaction (and
certain related creditors and their assignees) to all claims and defenses which
the obligor in the transaction could assert against the seller of the goods.
Liability under the FTC Rule is limited to the amounts paid by the obligor under
the contract and the holder of the contract may also be unable to collect any
balance remaining due thereunder from the obligor.
Most of the Receivables will be subject to the requirements of the FTC
Rule. Accordingly, each Trust, as holder of the related Receivables, will be
subject to any claims or defenses that the purchaser of the applicable Financed
Vehicle may assert against the seller of the Financed Vehicle. Such claims are
limited to a maximum liability equal to the amounts paid by the Obligor on the
Receivable. If an Obligor were successful in asserting any such claim or
defense, such claim or defense would constitute a breach of the Seller's
warranties under the related Transfer and Servicing Agreement and would create
an obligation of the Seller to repurchase the Receivable unless the breach is
cured. See "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables."
Under the motor vehicle dealer licensing laws of most states, sellers
of motor vehicles are required to be licensed to sell such vehicles at retail
sale. In addition, with respect to used motor vehicles , the FTC's Rule on Sale
of Used Vehicles requires all sellers of used motor vehicles to prepare,
complete and display a "Buyer's Guide" which explains the warranty coverage for
such vehicles. Federal Odometer Regulations promulgated under the Motor Vehicle
Information and Cost Savings Act require that all sellers of used motor vehicles
furnish a written statement signed by the seller certifying the accuracy of the
odometer reading. If a seller is not properly licensed or if either a Buyer's
Guide or Odometer Disclosure Statement was not properly provided to the
purchaser of a Financed Vehicle, such purchaser may be able to assert a claim
against the seller of such vehicle. Although the Affiliates are not sellers of
motor vehicles and are not subject to these laws, a violation thereof may form
the basis for a claim or defense against the applicable Affiliate, the Seller or
the Applicable Trustee as holder of the Receivables.
Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an Obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice provisions of the UCC and
related laws as reasonable or have found that the repossession and resale by the
creditor do not involve sufficient state action to afford constitutional
protection to borrowers.
Under each Transfer and Servicing Agreement, the Seller will warrant to
the related Trust that each Receivable complies with all requirements of law in
all material respects. Accordingly, if an Obligor has a claim against a Trust
for violation of any law and such claim materially and adversely affects such
Trust's interest in a Receivable, such violation would constitute a breach of
the warranties of the Seller under such Transfer and Servicing Agreement and
would create an obligation of the Seller to repurchase the Receivable unless the
breach is cured. See "Description of the Transfer and Servicing Agreements --
Sale and Assignment of Receivables."
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured party
to realize upon collateral or to enforce a deficiency judgment. For example, in
a Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a vehicle, and, as part of the rehabilitation plan,
reduce the amount of the secured indebtedness to the market value of the vehicle
at the time of bankruptcy (as determined by the court), leaving the creditor as
a general unsecured creditor for the remainder of the
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indebtedness. A bankruptcy court may also reduce the monthly payments due under
a contract or change the rate of interest and time of repayment of the
indebtedness.
Each Affiliate subject to FIRREA intends that the transfer of the
Receivables by it under a Purchase Agreement constitutes a sale. In the event
that an Affiliate that is subject to FIRREA were to become insolvent, FIRREA
sets forth certain powers that the FDIC could exercise if it were appointed as
receiver of such Affiliate. Subject to clarification by FDIC regulations or
interpretations, it would appear from the positions taken by the FDIC before and
after the passage of FIRREA that the FDIC in its capacity as receiver for an
Affiliate would not interfere with the timely transfer to the Trust of payments
collected on the Receivables. If the transfer of Receivables by an Affiliate to
the Seller were to be characterized as a secured loan, to the extent that such
Affiliate would be deemed to have granted a security interest in the Receivables
to the Seller or the related Trust, and that interest had been validly perfected
before the insolvency of such Affiliate, and had not been taken in contemplation
of insolvency, that security interest should not be subject to avoidance and
payments to the Trust (to the extent of the "actual direct compensatory damages"
of the Seller or Trust) with respect to the Receivables should not be subject to
recovery by the FDIC as receiver of such Affiliate.
If the FDIC were to assert a position contrary to its position with
respect to secured loans described in the preceding paragraph, such as by
requiring the Seller or the related Trust to establish its right to those
payments by submitting to and completing the administrative claims procedure
established under FIRREA, delays in payments on the related Notes (if any) and
the Certificates and possible reductions in the amount of those payments could
occur. Alternatively, in such circumstances, the FDIC might have the right to
repudiate the applicable Purchase Agreement and pay damages to the Seller which,
in turn would prepay the related Notes (if any) and Certificates, which would
shorten their respective weighted average lives.
FEDERAL INCOME TAX CONSEQUENCES
Set forth in the related Prospectus Supplement is a general summary of
material federal income tax consequences of the purchase, ownership and
disposition of the Notes and the Certificates. The summary is intended as an
explanatory discussion of the possible effects of certain federal income tax
consequences to holders generally, but does not purport to furnish information
in the level of detail or with the attention to a holder's specific tax
circumstances that would be provided by a holder's own tax advisor. For
example, it does not discuss the tax treatment of Noteholders or
Certificateholders that are insurance companies, regulated investment companies
or dealers in securities. In addition, any discussion regarding the Notes is
limited to the federal income tax consequences of the initial Noteholders and
not a purchaser in the secondary market. Moreover, there are no cases or
Internal Revenue Service ("IRS") rulings on similar transactions involving both
debt and equity interests issued by a trust with terms similar to those of the
Notes and the Certificates. As a result, the IRS may disagree with all or a
part of the discussion in the Prospectus Supplement. Prospective investors are
urged to consult their own tax advisors in determining the federal, state,
local, foreign and any other tax consequences to them of the purchase,
ownership and disposition of the Notes and the Certificates.
The summary is based upon current provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), the Treasury regulations promulgated
thereunder and judicial or ruling authority, all of which are subject to change,
which change may be retroactive. Each Trust will be provided with an opinion of
Federal Tax Counsel, regarding certain federal income tax matters. An opinion of
Federal Tax Counsel, however, is not binding on the IRS or the courts. No ruling
on any of the issues discussed in the related Prospectus Supplement will be
sought from the IRS. For purposes of the summary, references to the Trust, the
Notes, the Certificates and related terms, parties and documents shall be deemed
to refer, unless otherwise specified therein, to each Trust and the Notes,
Certificates and related terms, parties and documents applicable to such Trust.
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The general summary of material federal tax consequences to the
Certificateholders, and, if applicable, to the Noteholders, is set forth in the
related Prospectus Supplement. The federal income tax consequences to
Certificateholders will vary depending on whether the Trust is intended to be
treated as a partnership under the Code or as a grantor trust. The Prospectus
Supplement for each series of Certificates will specify whether a partnership
election will be made or the Trust will be treated as a grantor trust. In
addition, to the extent set forth in the related Prospectus Supplement, the tax
consequences to Securityholders may vary depending upon whether the related
Prospectus Supplement provides for a Revolving Period for Trusts that issue
Notes.
SCOPE OF THE TAX OPINIONS
Unless the Prospectus Supplement specifies that the Trust will be
treated as a grantor trust, Thompson Hine & Flory LLP, special tax counsel for
the Seller ("Federal Tax Counsel") will, prior to issuance of a series of Notes
and/or Certificates, deliver its opinion that the applicable Trust will not be
classified as an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes. Further, with respect to each
series of Notes, Federal Tax Counsel will advise the Trust that the Notes will
be characterized as debt for federal income tax purposes.
If the Prospectus Supplement specifies that the Trust will be treated
as a grantor trust, Federal Tax Counsel will, prior to issuance of a series of
Certificates, deliver its opinion that the applicable Trust will not be
classified as an association (or publicly traded partnership) taxable as a
corporation and that such Trust will be classified as a grantor trust under
subpart E, Part I of subchapter J of the Code for federal income tax
purposes.
In addition, Federal Tax Counsel will render its opinion that it has
prepared or reviewed the statements herein and in the related Prospectus
Supplement under the heading "Summary of Terms--Tax Status" as they relate to
federal income tax matters and under the heading "Federal Income Tax
Consequences," and is of the opinion that such statements are correct in all
material respects. Any such opinions will be filed either as an exhibit to the
registration statement of which this Prospectus forms a part or will be filed as
an exhibit to a Form 8-K filed prior to the establishment of the related Trust
and issuance of the Securities. Such statements are intended as an explanatory
discussion of the possible effects of the classification of the Trust as a
partnership or a grantor trust, as the case may be, for federal income tax
purposes on investors generally and of related tax matters affecting investors
generally, but do not purport to furnish information in the level of detail or
with the attention to the investor's specific tax circumstances that would be
provided by an investor's own tax adviser. Accordingly, each investor is
advised to consult its own tax advisers with regard to the tax consequences to
it of investing in the Notes and/or Certificates.
FASIT LEGISLATION
In August, 1996, the United States Congress passed and President
Clinton signed into law the "Small Business Job Protection Act of 1996," H.R.
3448 (the "Act"). The Act creates a new type of entity for federal income tax
purposes called a "financial asset securitization investment trust" or "FASIT."
The effective date of the FASIT provisions of the Act is September 1, 1997. The
Act enables certain arrangements similar to a Trust to elect to be treated as a
FASIT. Under the FASIT provisions of the Act a FASIT generally would avoid
federal income taxation and could issue securities substantially similar to the
Certificates and Notes, and those securities would be treated as debt for
federal income tax purposes. If so specified in the related Prospectus
Supplement, a Trust may make an election to be treated as a FASIT. The
applicable Transfer and Servicing Agreement for such a Trust may contain any
such terms and provide for the issuance of Notes or Certificates on such terms
and conditions as are permitted to a FASIT and described in the related
Prospectus Supplement. In addition, upon satisfying certain conditions set forth
in the Transfer and Servicing Agreements, the Seller and Servicer will be
permitted to amend the Transfer and Servicing Agreements in order to enable all
or a portion of a Trust to qualify as a FASIT and to permit a FASIT election to
be made with respect thereto, and to make such modifications to a Transfer and
Servicing Agreement as may be permitted by reason of the making of such an
election. See "Description of the Transfer and Servicing Agreements--Amendment."
However, there can be no assurance that the Seller will or will not cause any
permissible FASIT election to be made with respect to a Trust or amend a
Transfer and Servicing Agreement in connection with any election. In addition,
if such an election is made, it may cause a holder to recognize gain (but not
loss) with respect to any Notes or Certificates held by it, even though Federal
Tax Counsel will deliver its opinion that a Note will be treated as debt for
federal income tax purposes without regard to the election and the Note or
Certificate would be treated as debt following the election. Additionally, any
such election and any related
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amendments to a Transfer and Servicing Agreement may have other tax and non-tax
consequences to Securityholders. Accordingly, prospective Securityholders should
consult their tax advisors with regard to the effects of any such election and
any permitted related amendments on them in their particular circumstances.
STATE TAX CONSEQUENCES
The above discussion does not address the tax treatment of any Tax
Partnership, Grantor Trust, Notes, Certificates, Noteholders or
Certificateholders under any state tax laws. Prospective investors are urged to
consult with their own tax advisors regarding the state tax treatment of any Tax
Partnership or Grantor Trust as well as any state tax consequences to them of
purchasing, holding and disposing of Notes or Certificates.
* * *
THE FEDERAL TAX DISCUSSIONS SET FORTH ABOVE AND IN THE RELATED
PROSPECTUS SUPPLEMENT ARE INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE
APPLICABLE DEPENDING UPON A NOTEHOLDER'S OR CERTIFICATEHOLDER'S PARTICULAR TAX
SITUATION. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
NOTES AND CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan subject to ERISA, as well as
individual retirement accounts, certain types of Keogh Plans and other plans
subject to Section 4975 of the Code (each a "Benefit Plan"), from engaging in
certain transactions with persons that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to such Benefit Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other penalties and liabilities under ERISA and the Code for such persons.
A fiduciary of a Benefit Plan considering the purchase of Securities of
any series should carefully review with its legal and other advisors whether the
assets of the related Trust would be considered plan assets, whether the
purchase or holding of the Securities could give rise to a transaction
prohibited or otherwise impermissible under ERISA or the Code, and should refer
to the discussion under "ERISA Considerations" in the related Prospectus
Supplement regarding any restrictions on the purchase or holding of the
Securities offered thereby.
Certain employee benefit plans, such as governmental plans (as defined
in Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33)
of ERISA) are not subject to the fiduciary and prohibited transaction provisions
under ERISA or the Code discussed herein, but governmental plans may be subject
to comparable restrictions under applicable state law.
TRUSTS THAT ISSUE NOTES
The following discussion applies only to Trusts that issue Notes.
Certain transactions involving a Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit Plan
that purchased Notes or Certificates if assets of the Trust were deemed to be
assets of the Benefit Plan. Under a regulation issued by the United States
Department of Labor (the "Plan Asset Regulation"), the assets of a Trust would
be treated as plan assets of a Benefit Plan for the purposes of ERISA
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and the Code only if the Benefit Plan acquired an "equity interest" in the Trust
and none of the exceptions contained in the Plan Asset Regulation was
applicable. An equity interest is defined under the Plan Asset Regulation as an
interest other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features. Although
there is little guidance on the subject, to the extent provided in the related
Prospectus Supplement, the Seller believes that, at the time of their issuance,
the Notes of each Series should be treated as indebtedness without substantial
equity features for purpose of the Plan Asset Regulation. The debt status of the
Notes could be affected, after their initial issuance, by certain changes in the
financial condition of the related Trust.
Regardless of whether the Notes are treated as an equity interest for
purposes of the Plan Asset Regulation, the acquisition or holding of such Notes
with plan assets of a Benefit Plan could be considered to give rise to a
prohibited transaction if the Seller, the Servicer or the applicable Issuer,
Trustee or Indenture Trustee is or becomes a party in interest under ERISA or a
disqualified person under the Code with respect to such Benefit Plan. In such
case, certain exemptions from the prohibited transactions rules may be
available, depending upon the type and circumstances of the Benefit Plan
fiduciary making the decision to purchase the Notes with assets of the Benefit
Plan. Included among these exemptions are Prohibited Transaction Exemption
("PTE") 84-14, applicable to certain transactions effected by a qualified
professional asset manager; PTE 90-1, applicable to certain transactions entered
into by an insurance company separate account; PTE 91-38, applicable to certain
transactions entered into by a bank collective investment trust; PTE 95-60,
applicable to certain transactions entered into by an insurance company general
account; and PTE 96-23, applicable to certain transactions entered into by an
in-house asset manager. Purchasers acquiring Notes of any series with the assets
of a Benefit Plan shall be deemed to represent and warrant that such purchase
and holding will not give rise to a nonexempt prohibited transaction.
Because the Certificates issued by a Trust that also issues Notes will
most likely be treated as equity interests under the Plan Asset Regulation, such
Certificates may not be acquired with the assets of any Benefit Plan. Purchasers
of the Certificates issued by a Trust that also issues Notes shall be deemed to
represent and warrant that they are not purchasing the Certificates with the
assets of a Benefit Plan.
TRUSTS THAT DO NOT ISSUE NOTES
The following discussion applies only to nonsubordinated Certificates
(referred to herein as "Senior Certificates") issued by a Trust that does not
issue Notes.
The related Prospectus Supplement will indicate whether the lead
underwriter named therein has been granted by the U.S. Department of Labor, an
exemption (the "Exemption") from certain of the prohibited transaction rules of
ERISA with respect to the initial purchase, the holding and the subsequent
resale by Benefit Plans of certificates representing interests in asset-backed
pass-through trusts that consist of certain receivables, loans and other
obligations that meet the conditions and requirements of the Exemption. The
receivables covered by the Exemption include motor vehicle installment sales
contracts such as the Receivables. The fact that a portion of the Receivables in
certain Trusts may be acquired subsequent to closing with the assets held in a
Pre- Funding Account raises an issue as to whether the Trust can be
characterized as containing a "fixed pool" of receivables, as required by the
Exemption, during the Funding Period. In addition, the assets held in a Pre-
Funding Account prior to the acquisition of Receivables are not within the list
of permitted assets for purposes of the Exemption. Accordingly, it is not clear
whether the terms of the Exemption will be satisfied during the Funding Period
with respect to Senior Certificates issued by a Trust with Prefunding Account.
The Department of Labor has under consideration an amendment to the Exemption to
extend its application to trusts with prefunding accounts.
Among the conditions which must be satisfied for the Exemption to apply
to the Senior Certificates are the following:
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(1) the acquisition of the Senior Certificates by a Benefit
Plan is on terms (including the price for the Senior Certificates) that
are at least as favorable to the Benefit Plan as they would be in an
arm's length transaction with an unrelated party;
(2) the rights and interests evidenced by the Senior
Certificates acquired by the Benefit Plan are not subordinated to the
rights and interests evidenced by other certificates of the Trust;
(3) the Senior Certificates acquired by the Benefit Plan have
received a rating at the time of such acquisition that is in one of the
three highest generic rating categories from either Standard & Poor's
Ratings Services, Moody's Investors Service, Inc., Duff & Phelps Credit
Rating Co. or Fitch Investors Service, L.P.;
(4) the Trustee is not an affiliate of any other member of the
Restricted Group (as defined below);
(5) the sum of all payments made to the underwriters in
connection with the distribution of the Senior Certificates represents
not more than reasonable compensation for underwriting the Senior
Certificates; the sum of all payments made to and retained by the
Seller pursuant to the sale of the Receivables to the Trust represents
not more than the fair market value of such Receivables; and the sum of
all payments made to and retained by the Servicer represents not more
than reasonable compensation for the Servicer's services under the Sale
and Servicing Agreement and reimbursement of the Servicer's reasonable
expenses in connection therewith; and
(6) the Benefit Plan investing in the Senior Certificates is
an "accredited investor" as defined in Rule 501(a)(1) of Regulation D
of the Commission under the Securities Act.
Moreover, the Exemption would provide relief from certain
self-dealing/conflict of interest or prohibited transactions only if, among
other requirements, (i) in the case of the acquisition of Senior Certificates in
connection with the initial issuance, at least fifty (50) percent of the Senior
Certificates are acquired by persons independent of the Restricted Group, (ii)
the Benefit Plan's investment in Senior Certificates does not exceed twenty-five
(25) percent of all of the Senior Certificates outstanding at the time of the
acquisition, and (iii) immediately after the acquisition, no more than
twenty-five (25) percent of the assets of the Benefit Plan are invested in
certificates representing an interest in one or more trusts containing assets
sold or serviced by the same entity. The Exemption does not apply to Benefit
Plans sponsored by the Seller, any underwriter, the Trustee, the Servicer, any
Obligor with respect to Receivables included in the Trust constituting more than
five percent of the aggregate unamortized principal balance of the assets in the
Trust, or any affiliate of such parties (the "Restricted Group").
The related Prospectus Supplement will indicate whether the Seller
believes that all conditions of the Exemption other than those within the
control of the investors have been met with respect to the Senior Certificates,
and whether the Senior Certificates may be acquired by Benefit Plans.
Because any Certificates issued by a Trust that are subordinate to any
other class of Securities (the "Subordinate Certificates") will not be eligible
for the relief afforded by the Exemption, such Subordinate Certificates may not
be acquired with the assets of a Benefit Plan. Each purchaser of a Subordinate
Certificate shall be deemed to represent and warrant that it is not acquiring or
holding the Subordinate Certificate with the assets of a Benefit Plan.
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PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement with
respect to the Notes, if any, of a given series and an underwriting agreement
with respect to the Certificates of such series (collectively, the "Underwriting
Agreements"), the Seller will agree to cause the related Trust to sell to the
underwriters named therein and in the related Prospectus Supplement, and each of
such underwriters will severally agree to purchase, the principal amount of each
class of Notes and Certificates, as the case may be, of the related series set
forth therein and in the related Prospectus Supplement.
In each of the Underwriting Agreements with respect to any given series
of Securities, the several underwriters will agree, subject to the terms and
conditions set forth therein, to purchase all the Notes and Certificates, as the
case may be, described therein which are offered hereby and by the related
Prospectus Supplement if any of such Notes and Certificates, as the case may be,
are purchased.
Each Prospectus Supplement will either (i) set forth the price at which
each class of Notes and Certificates, as the case may be, being offered thereby
will be offered to the public and any concessions that may be offered to certain
dealers, if any, participating in the offering of such Notes and Certificates or
(ii) specify that the related Notes and Certificates, as the case may be, are to
be resold by the underwriters in negotiated transactions at varying prices to be
determined at the time of such sale. After the initial public offering of any
such Notes and Certificates, such public offering prices and such concessions
may be changed.
Each Underwriting Agreement will provide that the Seller will indemnify
the underwriters against certain civil liabilities, including liabilities under
the Securities Act, or contribute to payments the several underwriters may be
required to make in respect thereof.
Each Trust may, from time to time, invest the funds in its Trust
Accounts in Permitted Investments acquired from such underwriters or from the
Seller.
Pursuant to each Underwriting Agreement with respect to a given series
of Securities, the closing of the sale of any class of Securities subject to
such Underwriting Agreement will be conditioned on the closing of the sale of
all other such classes of Securities of that series.
This Prospectus may be used by Key Capital Markets, Inc. ("KCMI"), an
affiliate of the Affiliates, the Servicer, the Seller and KeyCorp, in connection
with offers and sales related to market-making transactions in the Securities in
which KCMI acts as principal. KCMI may also act as agent in such transactions.
KCMI is a broker-dealer and a member of the National Association of Securities
Dealers, Inc. and the Securities Investor Protection Corporation. Transactions
will be at prices related to the prevailing prices at the time of sale. KCMI is
not a bank or thrift, is a subsidiary of KeyCorp and an entity separate from any
Affiliate, and is solely responsible for its contractual obligations and
commitments. The portion of the net proceeds paid to the Seller will be used to
purchase the Receivables from the Affiliates.
The place and time of delivery for the Securities in respect of which
this Prospectus is delivered will be set forth in the related Prospectus
Supplement.
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NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Securities in Canada is being made only on a
private placement basis exempt from the requirement that each Trust prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of the Securities are effected. Accordingly, any resale of the
Securities in Canada must be made in accordance with applicable securities law
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or pursuant
to a discretionary exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal advice prior to any
resale of the Securities.
REPRESENTATION OF PURCHASERS
Each purchaser of Securities in Canada who receives a purchase
confirmation will be deemed to represent to the Seller, the applicable Trust and
the dealer from whom such purchase confirmation is received that (i) such
purchaser is entitled under applicable provincial securities laws to purchase
such Securities without the benefit of a prospectus qualified under such
securities laws, (ii) where required by law, that such purchaser is purchasing
as principal and not as agent, and (iii) such purchaser has reviewed the text
above under "Resale Restrictions."
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
The applicable Trust, the Seller, the Bank, the Servicer and the
Applicable Trustee and their respective directors and officers, if any, as well
as the experts named herein, may be located outside of Canada and, as a result,
it may not be possible for Ontario purchasers to effect service of process
within Canada upon the Seller or such persons. All or a substantial portion of
the assets of the Seller and such persons may be located outside of Canada and,
as a result, it may not be possible to satisfy a judgment against the Seller or
such persons in Canada or to enforce a judgment obtained in Canadian courts
against such Seller or persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of the Securities to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any of the Securities acquired by such purchaser pursuant to this offering. Such
report must be in the form attached to British Columbia Securities Commission
Blanket Order BOR #88/5. Only one such report must be filed in respect of the
Securities acquired on the same date and under the same prospectus exemption.
LEGAL OPINIONS
Certain legal matters relating to the Securities of any series will be
passed upon for the related Trust, the Seller and the Servicer by Forrest F.
Stanley, Esq., General Counsel of the Bank and by Thompson Hine & Flory LLP,
Cleveland, Ohio. Certain legal matters will be passed upon for the Underwriters
by Mayer, Brown & Platt, Chicago, Illinois. Thompson Hine & Flory LLP and
Mayer, Brown & Platt may from time to time render legal services to the Seller,
the Servicer and their affiliates.
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INDEX OF TERMS
Acquired Receivables...........................................................9
Additional Yield Supplement Amount............................................54
Administration Agreement......................................................60
Administration Fee............................................................60
Administrator.................................................................60
Affiliate......................................................................9
Applicable Trustee............................................................42
AutoFinance Group..............................................................9
Bank...........................................................................4
Bankruptcy Code...............................................................17
Base Rate.....................................................................39
Benefit Plan..................................................................67
Bill..........................................................................66
Business Day..................................................................51
Calculation Agent.............................................................40
Cede..........................................................................22
Cedel.........................................................................42
Cedel Participants............................................................42
Certificate Balance............................................................6
Certificate Distribution Account..............................................49
Certificate Owners.............................................................6
Certificate Pool Factor.......................................................31
Certificate Rate...............................................................6
Certificateholders............................................................10
Certificates...................................................................1
Closing Date..................................................................47
Code..........................................................................65
Collection Account............................................................49
Collection Period.............................................................51
Commission.....................................................................2
Contract Rate.................................................................12
Cooperative...................................................................43
Cutoff Date...................................................................23
Dealer.........................................................................9
Dealer Agreements..............................................................8
Dealer Recourse...............................................................23
Definitive Certificates.......................................................44
Definitive Notes..............................................................44
Definitive Securities.........................................................44
Depositaries..................................................................40
Depository....................................................................33
Direct Loans...................................................................9
Distribution Date.............................................................39
DTC...........................................................................22
DTC Participants..............................................................40
DTC's Nominee.................................................................22
Eligible Deposit Account......................................................50
Eligible Institution..........................................................50
Eligible Investments..........................................................49
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ERISA.........................................................................14
Euroclear.....................................................................43
Euroclear Operator............................................................43
Euroclear Participants........................................................43
Events of Default.............................................................35
Exchange Act...................................................................2
Exemption.....................................................................68
FDIC..........................................................................64
Federal Tax Counsel...........................................................65
Final Scheduled Distribution Date.............................................20
Final Scheduled Maturity Date.................................................12
Financed Vehicles..............................................................8
FIRREA........................................................................18
Fixed Rate Securities.........................................................39
Floating Rate Securities......................................................39
FTC Rule......................................................................63
Funding Period.................................................................6
GAAP..........................................................................58
Indenture......................................................................4
Indenture Trustee..............................................................1
Indirect Participants.........................................................41
Initial Pool Balance..........................................................59
Initial Receivables............................................................8
Insolvency Event..............................................................56
Insolvency Laws...............................................................17
Interest Rate..................................................................5
Interest Reset Period.........................................................39
Investment Earnings...........................................................50
IRS...........................................................................65
Issuer.........................................................................4
KCMI..........................................................................70
KeyCorp.......................................................................31
LIBOR.........................................................................40
Motor Vehicle Loans............................................................9
Note Distribution Account.....................................................49
Note Owners....................................................................4
Note Pool Factor..............................................................31
Noteholders...................................................................10
Notes..........................................................................1
Obligor.......................................................................23
Originator.....................................................................9
PAC...........................................................................34
Participants..................................................................33
Payahead Account..............................................................49
Payahead Balance..............................................................51
Payaheads.....................................................................49
Payment Date..................................................................34
Permitted Investments.........................................................51
Plan Assets Regulation........................................................67
Pool Balance..................................................................31
Pooling and Servicing Agreement................................................8
Pre-Funded Amount..............................................................8
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Pre-Funding Account............................................................6
Precomputed Receivables.......................................................25
Prepayments...................................................................15
Primary Originators............................................................9
Prospectus Supplement..........................................................1
Purchase Amount...............................................................49
Rating Agencies...............................................................22
Receivables....................................................................8
Receivables Pool..............................................................23
Registration Statement.........................................................2
Related Documents.............................................................37
Relief Act....................................................................63
Required Rate.................................................................54
Required Yield Supplement Amount..............................................54
Reserve Account...............................................................53
Restricted Group..............................................................69
Revolving Account.............................................................10
Revolving Period..............................................................10
Rule of 78's Receivables......................................................25
Sale and Servicing Agreement...................................................8
Schedule of Receivables.......................................................48
Securities.....................................................................1
Securities Act.................................................................2
Security Owners...............................................................23
Securityholders...............................................................18
Seller.........................................................................4
Senior Certificates...........................................................68
Servicer.......................................................................4
Servicer Termination Events...................................................56
Servicing Fee.................................................................52
Servicing Fee Rate............................................................52
Simple Interest Receivables...................................................26
Specified Reserve Account Balance.............................................11
Spread........................................................................40
Spread Multiplier.............................................................40
Strip Certificates.............................................................7
Strip Notes....................................................................5
Strip Securities...............................................................7
Subsequent Transfer Date......................................................48
Subsidiary.....................................................................9
Supplemental Servicing Fees...................................................52
TAC...........................................................................35
Terms and Conditions..........................................................43
Transfer and Servicing Agreement...............................................8
Trust..........................................................................1
Trust Accounts................................................................50
Trust Agreement................................................................4
UCC...........................................................................49
Underwriter...................................................................15
Underwriting Agreements.......................................................70
Warehouse Financing...........................................................48
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Yield Supplement Account......................................................50
Yield Supplement Agreement....................................................54
Yield Supplement Amount.......................................................54
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Key Auto
Finance Trust Asset Backed Notes and Asset Backed Certificates (the "Global
Securities") will be available only in book-entry form. Investors in the Global
Securities may hold such Global Securities through any of The Depository Trust
Company ("DTC"), Cedel or Euroclear. The Global Securities will be tradeable as
home market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Securities will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedel and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede as nominee of DTC. Investors' interests in the Global Securities will be
represented through financial institutions acting on their behalf as direct and
indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to U.S. corporate debt obligations. Investor
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
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Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. Cedel or Euroclear
will instruct the respective Depositary, as the case may be, to receive the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date. Payment will then be made by the respective
Depositary to the DTC Participant's account against delivery of the Global
Securities. After settlement has been completed, the Global Securities will be
credited to the respective clearing system and by the clearing system, in
accordance with its usual procedures, to the Cedel Participant's or Euroclear
Participant's account. The Global Securities credit will appear the next day
(European time) and the cash debit will be back-valued to, and the interest on
the Global Securities will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the Cedel or
Euroclear cash debit will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-position
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each Cedel Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, Cedel or Euroclear
will instruct the respective Depositary, as appropriate, to deliver the Global
Securities to the DTC Participant's account against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date. The payment will then
be reflected in the account of the Cedel Participant or Euroclear Participant
the following day, and receipt of the cash proceeds in the Cedel Participant's
or Euroclear Participant's account would be back-valued to the value date (which
would be the preceding day, when settlement occurred in New York). Should the
Cedel Participant or Euroclear Participant have a line of credit with its
respective clearing system and elect to be in debit in anticipation of receipt
of the sale proceeds in its account, the back-valuation will extinguish any
overdraft charges incurred over that one-day period. If settlement is not
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completed on the intended value date (i.e., the trade fails), receipt of the
cash proceeds in the Cedel Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date. Finally, day traders
that use Cedel or Euroclear and that purchase Global Securities from DTC
Participants for delivery to Cedel Participants or Euroclear Participants should
note that these trades would automatically fail on the sale side unless
affirmative action were taken. At least three techniques should be readily
available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at
least one day prior to the value date for the sale to the Cedel Participant
or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Securities
that are non-U.S. Persons can obtain a complete exemption from the withholding
tax by filing a signed Form W-8 (Certificate of Foreign Status). If the
information shown on Form W-8 changes, a new Form W-8 must be filed within 30
days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are Security Owners residing in a country
that has a tax treaty with the United States can obtain an exemption or reduced
tax rate (depending on the treaty terms) by filing Form 1001 (Ownership,
Exemption or Reduced Rate Certificate). If the treaty provides only for a
reduced rate, withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the Security Owner or
his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Request for Taxpayer
Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Security Owner of a Global
Security or in the case of a Form 1001 or a Form 4224 filer, his agent, files by
submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
A-3
<PAGE> 80
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includible in gross income for United States tax
purposes, regardless of its source. This summary does not deal with all aspects
of U.S. Federal income tax withholding that may be relevant to foreign holders
of the Global Securities. Investors are advised to consult their own tax
advisers for specific tax advice concerning their holding and disposing of the
Global Securities.
On April 15, 1996, proposed Treasury Regulations (the "1996 Proposed
Regulations") were issued which, if adopted in final form, could affect the
United States taxation of non-U.S. holders. The 1996 Proposed Regulations are
generally proposed to be effective for payments after December 31, 1997, subject
to certain transition rules. It cannot be predicted at this time whether the
1996 Proposed Regulations will become effective as proposed or what, if any,
modifications may be made to them. The 1996 Proposed Regulations would, if
adopted, alter the rules under this heading in certain respects. Prospective
investors are urged to consult their tax advisors with respect to the effect the
1996 Proposed Regulations may have if adopted.
A-4
<PAGE> 81
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
SUBJECT TO COMPLETION, DATED __________, 199_
PRELIMINARY GRANTOR TRUST PROSPECTUS SUPPLEMENT FORM
(To Prospectus dated __________, 199_)
[$--------------]
Key Auto Finance Trust 199_ - _
$____________________ ____% Asset Backed Certificates, Class A
$______________ Class ____% Asset Backed Certificates, Class B
Key Consumer Acceptance Corporation
Seller
Key Bank USA, National Association
Servicer
The Key Auto Finance Trust 199__-__ (the "Trust") will be formed pursuant to a
Pooling and Servicing Agreement, to be dated as of _________, 199__, among
Key Consumer Acceptance Corporation, as seller (the "Seller"), Key Bank
USA, National Association in its capacity as servicer (in such
capacity, the "Servicer"), and ___________, as Trustee. The Trust
will issue $_________ aggregate principal amount of ____% Asset
Backed Certificates, Class A (the "Class A Certificates"),
and $________ aggregate principal amount of ____% Asset
Backed Certificates, Class B (the "Class B
Certificates" and, together with the Class A Certifi-
cates, the "Certificates"). The Class A Certificates
will evidence in the aggregate an approximate ___%
undivided ownership in the Trust and the Class B
Certificates will evidence in the aggregate an
approximate ___% undivided ownership interest
in the Trust. The rights of the Class B Cer-
tificateholders to receive distributions
with respect to the Receivables are
subordinated to the rights of the
Class A Certificateholders to the
extent described herein. See
"Description of the Certif-
icates--Distributions." The
Trust property will include a
pool of motor vehicle promissory
notes and security agreements
and/or retail installment sale
contracts secured by new or used
automobiles and light duty trucks
(collectively, the "Receivables"),
payments received thereunder after
, 199 , security interests
in the motor vehicles financed thereby,
rights under Dealer Agreements, rights
under Purchase Agreements, rights with
respect to deposit accounts in which
collections are held, any proceeds from
claims on certain insurance policies
and the proceeds of the foregoing.
(cover continued on following next page)
------------------
PROSPECTIVE INVESTORS SHOULD CONSIDER THE MATERIAL RISKS INVOLVED WITH AN
INVESTMENT IN THE SECURITIES DISCUSSED IN THE "RISK FACTORS" SET FORTH AT PAGE
S-__ HEREIN AND AT PAGE ___ IN THE ACCOMPANYING PROSPECTUS (THE "PROSPECTUS").
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN THE KEY CONSUMER ACCEPTANCE
CORPORATION, KEY BANK USA, NATIONAL ASSOCIATION OR ANY OF THEIR
AFFILIATES. NEITHER THE CERTIFICATES NOR THE RECEIVABLES ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE COR-
PORATION, ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY
OR BY KEY CONSUMER ACCEPTANCE CORPORATION, KEY BANK USA,
NATIONAL ASSOCIATION OR ANY OF THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions the Seller(1)(2)
------------- ------------- -----------------
<S> <C> <C> <C>
Per Class A Certificate % % %
Per Class B Certificate % % %
Total $____________ $____________ $____________
</TABLE>
- --------------------------
(1) Plus accrued interest, if any, from _______, 199__.
(2) Before deducting expenses, estimated to be $_________.
------------------
The Certificates are offered by the Underwriters when, as and if issued and
accepted by the Underwriters and subject to their right to reject orders in
whole or in part. It is expected that delivery of the Certificates will be made
in book-entry form through the Same Day Funds Settlement System of The
Depository Trust Company, or through Cedel Bank, societe anonyme or the
Euroclear System, on or about _______, 199__.
After the initial distribution of the Certificates by the Underwriters, the
Prospectus and this Prospectus Supplement may be used by Key Capital Markets,
Inc., an affiliate of the Seller, in connection with market making transactions
in the Certificates. Key Capital Markets, Inc. may act as principal or agent in
such transactions. Such transactions will be at prices related to prevailing
market prices at the time of sale. Certain information in this Prospectus
Supplement will be updated from time to time as described in "Incorporation of
Certain Documents by Reference."
__________________, 19 __.
<PAGE> 82
Certain capitalized terms used in this Prospectus Supplement are
defined in this Prospectus Supplement on the pages indicated in the "Index of
Terms" on page ___ of this Prospectus Supplement or, to the extent not defined
herein, have the meanings assigned to such terms in the Prospectus. Principal
and interest to the extent of the Class A Certificate Rate or Class B
Certificate Rate, as appropriate, generally will be distributed on the [15th]
day of each month (the "Distribution Date") commencing ________, 199__. The
Final Scheduled Distribution Date on the Certificates will be in ____________,
199__ (the "Final Scheduled Distribution Date").
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS, AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
There is currently no secondary market for the Certificates offered
hereby and there is no assurance that one will develop. Each Underwriter
expects, but it is not obligated, to make a market in the Certificates. There
can be no assurance that a secondary market will develop, or that it will
provide Certificateholders with liquidity of investment or that it will continue
for the life of the Certificates offered hereby.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and annual
unaudited reports containing information concerning the Receivables will be
prepared by the Servicer and sent on behalf of the Trust only to Cede & Co., as
nominee of the Depository Trust Company and registered holder of the
Certificates. See "Certain Information Regarding the Securities--Book-Entry
Registration" and "--Reports to Securityholders" in the accompanying Prospectus.
Such reports will not constitute financial statements prepared in accordance
with generally accepted accounting principles. The Seller, as originator of the
Trust, will file with the Securities and Exchange Commission (the "Commission")
such periodic reports as are required under the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder. In
addition, the Commission maintains a public access site on the Internet through
the World Wide Web at which site reports, information statements and other
information, including all electronic filings, may be viewed. The Internet
address of such World Wide Web site is http://www.sec.gov.
S-2
<PAGE> 83
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and in the
Prospectus. Certain capitalized terms used herein are defined elsewhere in this
Prospectus Supplement on the pages indicated in the "Index of Terms" beginning
at page S-__ or, to the extent not defined herein, have the meanings assigned to
such terms in the Prospectus.
<TABLE>
<CAPTION>
<S> <C>
Issuer................................ Key Auto Finance Trust 199_-_ (the "Trust" or the "Issuer"), a
trust established pursuant to a Pooling and Servicing
Agreement, to be dated as of ______, 199__ (as amended
and supplemented from time to time, the "Agreement"),
among the Seller, the Servicer and the Trustee.
Seller................................ Key Consumer Acceptance Corporation, a Delaware corporation
(the "Seller"). See "The Seller."
Servicer.............................. Key Bank USA, National Association a national banking
association (the "Bank" or in its capacity as servicer, the
"Servicer").
Trustee............................... _________________________, a ____________ banking
corporation, as trustee under the Agreement (the "Trustee").
The principal offices of the Trustee from which information
regarding the Trust and the Certificates are located at
_________________.
The Certificates...................... The Trust will issue Asset Backed Certificates pursuant to the
Agreement in an aggregate initial principal amount of
$_______. The Certificates represent fractional undivided
interests in the Trust.
The Certificates will consist of $_____ aggregate principal
amount of ____% Asset Backed Certificates, Class A (the
"Class A Certificates"), and $_____ aggregate principal
amount of ____% Asset Backed Certificates, Class B (the
"Class B Certificates"). The Trust assets will include a pool
of motor vehicle promissory notes and security agreements
and/or retail installment sale contracts secured by new or
used automobiles or light duty trucks (collectively, the
"Receivables"), all monies received thereunder on and after
__________, 199__ (the "Cutoff Date"), security interests in
the vehicles financed thereby (the "Financed Vehicles"),
certain rights under Dealer Agreements, certain Eligible
Deposit Accounts in which collections are held, any proceeds
from claims on certain insurance policies and the proceeds of
the foregoing. The Certificates will be issued in fully
registered form in denominations of $1,000 and integral
multiples thereof.
The Class A Certificates will evidence in the aggregate an
approximate ___% undivided ownership interest (the "Class
A Percentage") in the Trust, and the Class B Certificates will
evidence in the aggregate an approximate _____% undivided
</TABLE>
S-3
<PAGE> 84
<TABLE>
<CAPTION>
<S> <C>
ownership interest (the "Class B Percentage") in the Trust.
The Class B Certificates are subordinated to the Class A
Certificates to the extent described herein. See "Description
of the Certificates--Distributions."
The Receivables....................... On __________, 199__ (the "Closing Date"), pursuant to the
Agreement, the Trust will purchase from the Seller
Receivables having an aggregate principal balance of
approximately $______________ as of the Cutoff Date.
The Receivables consist of (i) motor vehicle promissory notes
and security agreements executed by an Obligor in favor of
a motor vehicle lender ("Direct Loans") and/or (ii) motor
vehicle retail installment sales contracts between an Obligor
and a vehicle dealer (collectively, "Motor Vehicle Loans").
Direct Loans include promissory notes and security agreements
for which a Dealer performed certain ministerial loan processing
functions on behalf of the lender. In addition, the Receivables
Pool includes Motor Vehicle Loans acquired by an Affiliate
through acquisitions or Motor Vehicle Loans originated by a
bank, financial institution or other entity acquired by an
Affiliate ("Acquired Receivables"). "Originator" means, with
respect to any Motor Vehicle Loan, the Affiliate that (i) was
the lender with respect to a Direct Loan made by an Affiliate
or (ii) acquired such Motor Vehicle Loan from a Dealer or other
third party. "Affiliate" means a bank or other nonbank entity
owned or acquired by KeyCorp or by its subsidiaries. "Subsidiary"
includes both direct and indirect subsidiaries. As of the date
of this Prospectus Supplement, the Bank and AutoFinance
Group, Inc., a wholly-owned subsidiary of KeyCorp are the only
KeyCorp subsidiaries that make or acquire Motor Vehicle Loans.
See "The Receivables Pool" herein and "The Receivables
Pools" in the Prospectus.
The Receivables have been selected from the Motor Vehicle
Loans owned by the Affiliate based on the criteria specified
in the Agreement and described herein and in the Prospectus.
See "The Receivables Pool" herein and "The Receivables
Pools" in the Prospectus. No Receivable has or will have a
scheduled maturity that, after giving prospective effect to any
permitted extensions or deferrals, would be later than
_________, 199__ (the "Final Scheduled Maturity Date"). As
of the Cutoff Date, the weighted average annual percentage
rate of the Receivables was approximately ______% per
annum, the weighted average remaining term to maturity of
the Receivables was approximately _____ months and the
weighted average original term to maturity of the
Receivables was approximately _____ months. As of the
Cutoff Date, approximately _____% of the aggregate
principal balance of the Receivables represented financing of
new vehicles and the remainder represented financing of used
vehicles.
</TABLE>
S-4
<PAGE> 85
<TABLE>
<CAPTION>
<S> <C>
The "Pool Balance" means, at any time, the sum of the
outstanding Principal Balances of the Receivables. The
"Principal Balance" for any Receivable, at any time, means
the principal balance of such Receivable at the end of the
preceding Collection Period, after giving effect to all
payments received from Obligors and Purchase Amounts to
be remitted by the Servicer or the Seller, as the case may be,
for such Collection Period and all losses realized on
Receivables liquidated during such Collection Period.
Terms of the Certificates
A. Distribution Dates............... Distributions with respect to the Certificates will be made on the
15th day of each month or, if any such day is not a Business
Day, on the next succeeding Business Day (each, a
"Distribution Date"), commencing __________, 199__.
Distributions will be made to Certificateholders of record as
of the last Business Day of the Collection Period
immediately preceding the applicable Distribution Date (each,
a "Record Date"). A "Business Day" is a day that is not a
Saturday or a Sunday and a day that in New York City,
Cleveland, Ohio and _____________, Delaware, is neither a
legal holiday nor a day on which banking institutions are
authorized by law, regulation or executive order to be closed.
"Collection Period" means (a) the period from (but not
including) the Cutoff Date to and including __________,
199__ and (b) thereafter, each calendar month during the
term of the Agreement.
B. Class A Certificate Rate......... ____% per annum (the "Class A Certificate Rate").
C. Class B Certificate Rate......... ____% per annum (the "Class B Certificate Rate").
D. Interest......................... On each Distribution Date, interest at the Class A Certificate
Rate on the Class A Certificate Balance and interest at the
Class B Certificate Rate on the Class B Certificate Balance,
in each case as of the immediately preceding Distribution
Date (after giving effect to all payments of principal made on
such preceding Distribution Date) will be paid to the holders
of record of the Class A Certificates ("Class A
Certificateholders") and the holders of record of the Class B
Certificates ("Class B Certificateholders"; the Class A
Certificateholders and the Class B Certificateholders are
collectively referred to herein as the "Certificateholders") as
of the Record Date to the extent that sufficient funds are on
deposit for such Distribution Date in the Collection Account
or available in the Reserve Account to make such
distribution. See "Description of the Certificates--Distributions"
and "--Accounts" herein. The rights of Class B Certificateholders
to receive payments of interest will be subordinated to the
rights of the Class A Certificateholders to receive payments of
interest to the extent described herein. See "Description of the
</TABLE>
S-5
<PAGE> 86
<TABLE>
<CAPTION>
<S> <C>
Certificates--Distributions." Interest in respect of a
Distribution Date will accrue from the preceding Distribution
Date (or, for the first Distribution Date, from ______, 199__)
to and including such Distribution Date.
E. Principal........................ On each Distribution Date, all payments of principal on the
Receivables received by the Servicer during the preceding
Collection Period, as described more fully herein, plus an
amount equal to the aggregate principal balance of any
Receivables which became Defaulted Receivables during the
preceding Collection Period, will be distributed by the
Trustee pro rata to the Class A Certificateholders and to the
Class B Certificateholders of record on the preceding Record
Date, to the extent that sufficient funds are on deposit in the
Collection Account or available in the Reserve Account to
make such distribution. See "Description of the
Certificates--Distributions" and "--Accounts." The rights of
the Class B Certificateholders to receive payments of
principal will be subordinated to the rights of the Class A
Certificateholders to receive payments of interest and
principal to the extent described herein. See "Description of
the Certificates--Distributions." The "Class A Certificate
Balance" and "Class B Certificate Balance" will initially
equal $________ and $_________, respectively, and, in each
case, will thereafter equal the initial Class A Certificate
Balance or the initial Class B Certificate Balance, as the case
may be, reduced by all principal distributions on the Class A
Certificates and the Class B Certificates, respectively.
F. Optional Prepayment.............. If the Pool Balance as of the last day of a Collection Period has
declined to 5% or less of the Original Pool Balance, the
Seller or Servicer may purchase all remaining Trust Property
on any Distribution Date occurring in a subsequent
Collection Period at a purchase price equal to the aggregate
of the Purchase Amounts of the remaining Receivables (other
than Defaulted Receivables), which would result in a
prepayment of the Certificates. The "Original Pool Balance"
will equal the Pool Balance as of the Cutoff Date. See
"Description of the Certificates--Optional Prepayment."
Subordination of Class B
Certificates.......................... Distributions of interest and principal on the Class B Certificates
will be subordinated in priority of payment to interest and
principal due on the Class A Certificates to the extent
described herein. See "Description of the Certificates--Distributions."
The Class B Certificateholders will not receive any distributions of
interest with respect to a Collection Period until the full amount
of interest on the Class A Certificates relating to such Collection
Period has been deposited in the Class A Distribution Account. The
Class B Certificateholders will not receive any distributions
of principal with respect to such Collection Period until the
full amount of interest on and principal of the Class A
Certificates relating to such Collection Period has been
</TABLE>
S-6
<PAGE> 87
<TABLE>
<CAPTION>
<S> <C>
deposited in the Class A Distribution Account. See "Risk
Factors--Subordination and "--Limited Assets" in the
Prospectus.
[Pre-Funding Account]................. [During the period (the "Funding Period") from and including
the Closing Date until the earliest of (i) the
Determination Date on which (a) the Pre-Funded Amount
is less than $ , (b) an Event of Default has
occurred under the Indenture or a Servicer Termination
Event has occurred under the Sale and Servicing
Agreement, (c) certain events of insolvency have occurred
with respect to the Seller or the Servicer or (ii) the close
of business on the [Date] Distribution Date, the
Pre-Funded Amount will be maintained in an account in
the name of the Indenture Trustee (the "Pre-Funding
Account"), The Pre-Funded Amount is expected to initially
equal approximately $ and, during the
Funding Period, will be reduced by the principal balance
of Subsequent Receivables purchased by the Trust from
time to time in accordance with the Sale and Servicing
Agreement. The Seller expects that the Pre-Funded
Amount will be reduced to less than $ by the
[Date] Distribution Date. Any Pre-Funded Amount
remaining at the end of the Funding Period will be
payable to the Noteholders and Certificateholders pro
rata in proportion to the respective principal balances of
each class of Notes and the Certificates. See "Description
of the Transfer and Servicing Agreements -- Pre-Funding
Account; Subsequent Receivables."]
Reserve Account....................... A reserve account (the "Reserve Account") will be created with
an initial deposit by the Seller of cash or certain investments
having a value of at least $________ (the "Reserve Account
Initial Deposit"). In addition, on each Distribution Date, any
amounts on deposit in the Collection Account with respect to
the preceding Collection Period after payments to the
Certificateholders and the Servicer have been made will be
deposited into the Reserve Account until the amount on
deposit in the Reserve Account is equal to the Specified
Reserve Account Balance.
On or prior to the Business Day preceding each Distribution
Date (the "Deposit Date"), the Trustee will withdraw funds
from the Reserve Account, to the extent of the funds therein
(exclusive of investment earnings), to the extent (a) the sum
of the amounts required to be distributed to Certificateholders
and the Servicer on the related Distribution Date exceeds (b)
the amount on deposit in the Collection Account with respect
to the preceding Collection Period (net of investment
income). If the amount on deposit in the Reserve Account is
reduced to zero, Certificateholders will bear the credit and
other risks associated with ownership of the Receivables,
including the risk that the Trust may not have a perfected
security interest in the Financed Vehicles. See "Risk Factors"
herein and in the Prospectus, "Description of the
Certificates--Accounts" herein and "Certain Legal Aspects of
the Receivables" in the Prospectus.
Tax Status............................ In the opinion of Thompson Hine & Flory LLP, the Trust
will be treated as a grantor trust for federal income tax
purposes and will not be subject to federal income tax.
Accordingly, the Certificateholders will be treated as owners
of the Receivables for federal income tax purposes.
Certificateholders will report their pro rata share of all
income earned on the Receivables (other than amounts, if
any, treated as "stripped coupons") and, subject to certain
limitations in the case of Certificateholders who are
individuals, trusts, or estates, may deduct their pro rata share
of reasonable servicing and other fees. See "Federal Income
Tax Consequences" and "Certain State Tax Consequences" in
the Prospectus for additional information concerning the
application of federal and state tax laws to the Trust and the
Securities.
ERISA Considerations.................. Subject to the considerations discussed under "ERISA
Considerations" herein and in the Prospectus, the Class A
Certificates are eligible for purchase by employee benefit
plans.
</TABLE>
S-7
<PAGE> 88
<TABLE>
<CAPTION>
<S> <C>
The Class B Certificates and any beneficial interest in such
Class B Certificates may not be acquired with the assets of
an employee benefit plan subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or
with the assets of an individual retirement account. See
"ERISA Considerations" herein and in the Prospectus.
Risk Factors.......................... See "Risk Factors" herein and in the Prospectus for a discussion
of certain factors that potential investors should consider in
determining whether to invest in the Certificates.
[No] Listing of
Certificates.......................... [The Certificates will not be listed on any national securities
exchange or on any automated quotation system of a
registered securities association.] [The Certificates will be
listed on the _____________.]
Ratings of the Certificates........... It is a condition to the issuance of the Class A Certificates that
they be rated in the highest investment rating category by at
least two nationally recognized rating agencies (the "Rating
Agencies"), and it is a condition to the issuance of the Class
B Certificates that they be rated by at least two nationally
recognized rating agencies in the "A" category. There can be
no assurance that a rating will not be lowered or withdrawn
by a rating agency if circumstances so warrant. See "Risk
Factors--Ratings of the Securities" in the Prospectus and
"Risk Factors--Ratings of the Certificates" herein.
</TABLE>
S-8
<PAGE> 89
RISK FACTORS
In addition to the other information contained herein and in the
Prospectus, prospective investors should consider carefully the following risk
factors and the information contained in "Risk Factors" in the Prospectus.
SUBORDINATION
Distributions of interest and principal on the Class B Certificates
will be subordinated in priority of payment to interest on the Class A
Certificates. No distributions with respect to a Collection Period will be made
on the Class B Certificates until the full amount of interest on and principal
of the Class A Certificates on the related Distribution Date has been
distributed to the Class A Certificateholders.
LIMITED ASSETS
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the
Reserve Account. Holders of the Certificates must rely for repayment upon
payments on the Receivables and, if and to the extent available, amounts on
deposit in the Reserve Account. Similarly, although funds in the Reserve Account
will be available on each Distribution Date to cover shortfalls in distributions
of interest and principal on the Certificates, amounts to be deposited in the
Reserve Account are limited in amount. If the Reserve Account is exhausted, the
Trust will depend solely on current distributions on the Receivables to make
payments on the Certificates.
Amounts on deposit in the Reserve Account will be available on any
Distribution Date first to cover payment of Servicing Fees to the Servicer, then
shortfalls in distributions of interest on the Class A Certificates and then
shortfalls in distributions of interest on the Class B Certificates. After
distributions of interest on the Certificates have been made, the remaining
amounts on deposit in the Reserve Account will be available first to cover
shortfalls in distributions of principal on the Class A Certificates and then
shortfalls in distributions of principal on the Class B Certificates. If the
Reserve Account is exhausted, the Trust will depend solely on payments on the
Receivables to make distributions on the Certificates, and Certificateholders
will bear the risk of delinquency, loan losses and repossessions with respect to
the Receivables. There can be no assurance that the future delinquency, loan
loss and repossession experience of the Trust with respect to the Receivables
will be better or worse than that set forth herein with respect to the Motor
Vehicle Loans serviced by the Servicer. Any amounts released from the Reserve
Account to the Seller will not be available to the Certificateholders. See "The
Receivables Pool--Pool Composition" and "Delinquency and Net Losses" and "The
Receivables Pools" in the Prospectus and "Description of the
Certificates--Reserve Account" and "Distributions."
MATURITY AND PREPAYMENT CONSIDERATIONS
As the rate of payment of principal of each class of the Certificates
depends on the rate of payment (including prepayments) of the principal balance
of the Receivables, the final distribution in respect of each class of the
Certificates could occur significantly earlier than the Final Scheduled
Distribution Date. It is expected that the final distribution in respect of the
Certificates will occur on or prior to the Final Scheduled Distribution Date.
However, if sufficient funds are not available to reduce the aggregate
Certificate Balance of either class of Certificates to zero on or prior to the
Final Scheduled Distribution Date, the final distribution in respect of such
class of Certificates could occur later than such date. See "Weighted Average
Life of the Certificates" herein and "Weighted Average Life of the Securities"
in the Prospectus.
S-9
<PAGE> 90
RATINGS OF THE CERTIFICATES
It is a condition to the issuance of the Class A Certificates that they
be rated in the highest investment rating category by at least two Rating
Agencies, and it is a condition to the issuance of the Class B Certificates that
they be rated by at least two Rating Agencies in the "A" category. A rating is
not a recommendation to purchase, hold or sell the Certificates, inasmuch as
such rating does not comment as to market price or suitability for a particular
investor. The ratings of the Certificates address the likelihood of the payment
of principal and interest on the Certificates pursuant to their terms. There can
be no assurance that a rating will remain for any given period of time or that a
rating will not be lowered or withdrawn entirely by a Rating Agency if in its
judgment circumstances in the future so warrant.
THE TRUST
The Seller will establish the Trust by selling and assigning the Trust
property, as described below, to the Trustee in exchange for the Certificates.
The Servicer will service the Receivables pursuant to the Agreement and will be
compensated for acting as the Servicer. See "Description of the
Certificates--Servicing Compensation and Payment of Expenses." To facilitate
servicing and to minimize administrative burden and expense, each Originator
will be appointed to act as custodian for the Receivables originated by it or
purchased by it from a Dealer, but the Trustee will not stamp the Receivables to
reflect the sale and assignment of the Receivables to the Trust or amend the
certificates of title to the Financed Vehicles. In the absence of amendments to
the certificates of title, the Trustee may not have perfected security interests
in the Financed Vehicles securing the Receivables originated in some states.
See "Certain Legal Aspects of the Receivables" in the Prospectus.
If the protection provided to the investment of the Certificateholders
by the Reserve Account and, in the case of the Class A Certificateholders, the
subordination of the Class B Certificates, is insufficient, the Trust will look
only to the Obligors on the Receivables, the proceeds from the repossession and
sale of Financed Vehicles which secure defaulted Receivables and the proceeds
from any Dealer Recourse. In such event, certain factors, such as the Trust's
not having first priority perfected security interests in some of the Financed
Vehicles, may affect the Trust's ability to realize on the collateral securing
the Receivables, and thus may reduce the proceeds to be distributed to
Certificateholders with respect to the Certificates. See "Description of the
Certificates--Distributions" and "--Accounts" herein and "Certain Legal Aspects
of the Receivables" in the Prospectus.
Each Certificate represents a fractional undivided ownership interest
in the Trust. The Trust property includes Direct Loans and/or retail installment
sale contracts secured by new or used automobiles or light duty trucks, and all
payments received thereunder after the Cutoff Date. The Trust property also
includes (a) such amounts as from time to time may be held in one or more trust
accounts established and maintained by the Servicer pursuant to the Agreement,
as described below; (b) security interests in the Financed Vehicles and any
accessions thereto; (c) the rights to proceeds with respect to the Receivables
from claims on insurance policies covering the Financed Vehicles; (d) any
property that shall have secured a Receivable and that shall have been acquired
by the Trustee; (e) any Dealer Recourse and any other rights of Affiliates under
Dealer Agreements; (f) rights under the Purchase Agreement; (g) the Seller's
rights to certain documents and instruments relating to the Receivables; (h)
certain rebates of premiums and other amounts relating to certain insurance
policies and other items financed under the Receivables; and (i) any and all
proceeds of the foregoing. The Reserve Account will be maintained by the Trustee
for the benefit of the Certificateholders, but will not be part of the Trust.
THE RECEIVABLES POOL
The Receivables were purchased or originated by the Originators in the
ordinary course of their respective businesses. The pool of Receivables
(the "Receivables Pool") will consist of Receivables purchased by the Trust as
of the Cutoff Date. The
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Receivables have been selected from the Motor Vehicle Loan portfolio of each
Affiliate for inclusion in the Receivables Pool by several criteria, some of
which are set forth in the Prospectus under "The Receivables Pool," as well as
the requirement that each Receivable (a) has an outstanding principal balance of
at least $_____, (b) as of the Cutoff Date, was not more than 30 days past due,
(c) has a scheduled maturity not later than six months before the Final
Scheduled Maturity Date, (d) was not subject to a force-placed physical damage
insurance policy on the related Financed Vehicle and (e) had an original term to
maturity of not more than ___ months. No selection criteria or procedures
believed by the Seller to be adverse to the Certificateholders were used in
selecting the Receivables.
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<PAGE> 92
POOL COMPOSITION
Set forth in the following tables is information concerning the
composition, distribution by Contract Rate and the geographic distribution of
the Receivables to be conveyed by the Seller to the Trust as of the Cutoff Date.
COMPOSITION OF THE RECEIVABLES POOL
AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
<S> <C>
Aggregate Principal Balance.......................................................................$________________
Number of Receivables.............................................................................$________________
Average Principal Balance.........................................................................$________________
(Range)..................................................................................$______ to $_____
Average Original Amount Financed $________________
(Range)..................................................................................$______ to $_____
Weighted Average Contract Rate..............................................................................._____%
(Range)........................................................................................___% to___%
Weighted Average Original Term..........................................................................____ months
(Range).................................................................................____ to ___ months
Weighted Average Remaining Term.........................................................................____ months
(Range).................................................................................____ to ___ months
Scheduled Weighted Average Life (1)......................................................................____ years
</TABLE>
_______________
(1) Based on payments due on or after the Cutoff Date, assuming that no
prepayments on the Receivables are made after the Cutoff Date and that
all payments on Simple Interest Receivables are received on their
respective due dates.
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<PAGE> 93
DISTRIBUTION BY CONTRACT RATE OF THE RECEIVABLES
AS OF THE CUTOFF DATE(1)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
PERCENTAGE
OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
CONTRACT RANGE RECEIVABLES BALANCE BALANCE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
7.75 to 8.00
8.01 to 9.00
9.01 to 10.00
10.01 to 11.00
11.01 to 12.00
12.01 to 13.00
13.01 to 14.00
14.01 to 15.00
15.01 to 16.00
16.01 to 17.00
17.01 to 18.00
18.01 to 19.00
19.01 to 20.00
20.01 to 21.00
21.01 to 22.00
22.01 to 23.00
23.01 to 24.00
24.01 to 25.00
Totals 100%
========== ========== ====
</TABLE>
- ---------------
(1) Percentages may not add to 100% because of rounding.
Approximately ___% of the aggregate principal balance of the
Receivables, constituting ___% of the number of such Receivables, as of the
Cutoff Date represented financing of new vehicles and the remainder represented
financing of used vehicles. Approximately __% of the aggregate principal balance
of the Receivables, constituting __% of the number of such Receivables, were
originated or purchased by AutoFinance Group. Approximately __% of the aggregate
principal balance of the Receivables, constituting __% of the number of such
Receivables, are Precomputed Receivables and the remainder are Simple Interest
Receivables.
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<PAGE> 94
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL
AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE
PRINCIPAL
BALANCE
<S> <C>
STATE(1)
Alabama..........................
Alaska...........................
Arizona..........................
Arkansas.........................
California.......................
Colorado.........................
Connecticut......................
Delaware.........................
District of Columbia.............
Florida..........................
Georgia..........................
Hawaii...........................
Idaho............................
Illinois.........................
Indiana..........................
Iowa.............................
Kansas...........................
Kentucky.........................
Louisiana........................
Maine............................
Maryland.........................
Massachusetts....................
Michigan.........................
Minnesota........................
Mississippi......................
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE
PRINCIPAL
BALANCE
<S> <C>
STATE(1)
Missouri.............................
Montana..............................
Nebraska.............................
Nevada...............................
New Hampshire........................
New Jersey...........................
New Mexico...........................
New York.............................
North Carolina.......................
North Dakota.........................
Ohio.................................
Oklahoma.............................
Oregon...............................
Pennsylvania.........................
Rhode Island.........................
South Carolina.......................
South Dakota.........................
Tennessee............................
Texas................................
Utah.................................
Vermont..............................
Virginia.............................
Washington...........................
West Virginia........................
Wisconsin............................
Wyoming..............................
</TABLE>
- ---------------
(1) Based on the billing addresses of the Obligors on the Receivables as of the
Cutoff Date.
DELINQUENCIES AND NET LOSSES
Set forth below is certain information concerning the combined
historical delinquency and loss experience of the Originators pertaining to
Motor Vehicle Loans.
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<PAGE> 95
The tables set forth below combine historical Motor Vehicle Loan data
for banks and other financial institutions which are direct or indirect
subsidiaries of KeyCorp (the "Combined Motor Vehicle Loan Portfolio"). These
tables include data for banks and other financial institutions which were
acquired by KeyCorp and its subsidiaries since January 1, 1993, including
AutoFinance Group, which was acquired by KeyCorp on September 27, 1995. The
tables include data for AutoFinance Group prior to the date AutoFinance Group
was acquired by KeyCorp. The Bank began originating Motor Vehicle Loans on
September 5, 1995. The underwriting standards and servicing procedures used by
some banks or financial institutions may have been different from those
currently used by the Bank and, consequently, the experience shown in the tables
below may not be comparable to the performance of the Receivables.
AutoFinance Group originated or purchased __% of the aggregate
principal balance of the Receivables included in the Trust. As of [September
30, 1996], __% of the aggregate principal balance of the Motor Vehicle Loans in
the Combined Motor Vehicle Loan Portfolio were originated or purchased by
AutoFinance Group. Consequently, because of the higher proportion of specialty
finance loans originated or purchased by AutoFinance Group in the Receivables
Pool, the experience shown in the tables below may not be comparable to the
performance of the Receivables.
Because the composition of the Receivables included in the Trust
differs from the Combined Motor Vehicle Loan Portfolio and the underwriting
standards and servicing procedures used by some banks or financial institutions
in the origination and servicing of Motor Vehicle Loans included in the Combined
Motor Vehicle Loan Portfolio prior to the formation of the Bank may have been
different from those used by the Bank, there can be no assurance that the
delinquency and net loss experience on the Receivables of the Trust will be
comparable to that set forth below.
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<PAGE> 96
COMBINED MOTOR VEHICLE LOAN PORTFOLIO
DELINQUENCY EXPERIENCE(1)
(Dollars in Millions)
- --------------------------------------------------------------------------------
At September 30,
- --------------------------------------------------------------------------------
1996 1995
----------------------- ----------------------
- --------------------------------------------------------------------------------
$ Percent $ Percent
----------- -------- ------- ----------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Amount of Motor Vehicle
Loans Outstanding...........
- --------------------------------------------------------------------------------
Period of Delinquency:
- --------------------------------------------------------------------------------
31-90 days................
- --------------------------------------------------------------------------------
over 90 days..............
- --------------------------------------------------------------------------------
Repossessions...............
- --------------------------------------------------------------------------------
Total.......................
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
- ----------------------------------------------------------------------------------------------------
At December 31,
- ----------------------------------------------------------------------------------------------------
1995 1994 1993
-------------------- --------------------- ------------
- ----------------------------------------------------------------------------------------------------
$ Percent $ Percent $ Percent
------ ------- -------- --------- --------- --------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Amount of Motor Vehicle
Loans Outstanding...........
- ----------------------------------------------------------------------------------------------------
Period of Delinquency:
- ----------------------------------------------------------------------------------------------------
31-90 days................
- ----------------------------------------------------------------------------------------------------
over 90 days..............
- ----------------------------------------------------------------------------------------------------
Repossessions...............
- ----------------------------------------------------------------------------------------------------
Total.......................
- ----------------------------------------------------------------------------------------------------
</TABLE>
- --------------
(1) All amounts and percentages are based on the principal amount scheduled to
be paid on each Motor Vehicle Loan, including unearned finance and other
charges.
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<PAGE> 97
COMBINED MOTOR VEHICLE LOAN PORTFOLIO
HISTORICAL NET LOSS EXPERIENCE
(Dollars in Millions)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
----------------- -----------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Principal Amount of Motor Vehicle Loans Outstanding (1)........
Average Principal Amount of Motor Vehicle Loans Outstanding....
Gross Charge-Offs..............................................
Recoveries.....................................................
Net Losses(2)..................................................
Net Losses as a Percent of Principal Amount Outstanding(2).....
Net Losses as a Percent of Average Principal Amount............
Outstanding (2)............................................
</TABLE>
- ---------------
(1) Amount represents net principal amounts of Motor Vehicle Loans outstanding.
(2) Amount represents the aggregate balance of all Motor Vehicle Loans which
were determined to be uncollectible in the period, less any recoveries on
Motor Vehicle Loans charged-off in the period or any prior period.
Delinquencies and net charge-offs are affected by a number of social,
economic and other factors that may affect an Obligor's ability or willingness
to pay, such as the amount or types of indebtedness incurred by such Obligor in
addition to the Receivable on which such Obligor is indebted, and there can be
no assurance as to the level of future total delinquencies or the severity of
future net charge-offs. As a result, the delinquency and net charge-off
experience of the Receivables may differ from those shown in the tables.
THE SELLER, THE SERVICER AND KEYCORP
Information regarding the Seller is set forth under "The Seller" in the
Prospectus and information regarding the Servicer is set forth under "The Bank"
in the Prospectus. Each of the Seller and the Servicer is a wholly-owned
subsidiary of KeyCorp. KeyCorp operates through subsidiaries engaged in banking
and a variety of related businesses. As of June 30, 1996, KeyCorp had
consolidated total assets of $____________ billion, total deposits of
$_______________ billion, and total stockholders' equity of $____________
billion. Based on total assets as of June 30, 1996, KeyCorp was the [__________]
largest commercial banking organization in the United States.
WEIGHTED AVERAGE LIFE OF THE CERTIFICATES
Information regarding certain maturity and prepayment considerations
with respect to the Certificates is set forth under "Weighted Average Life of
the Securities" in the Prospectus. As the rate of payment of principal of each
class of the Certificates
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<PAGE> 98
depends primarily on the rate of payment (including prepayments and liquidations
due to default) of the aggregate principal balance of the Receivables, the final
distribution in respect of the Certificates could occur significantly earlier
than the Final Scheduled Distribution Date. [Consistent with its customary
servicing practices and procedures, the Servicer may, in its discretion and on a
case-by-case basis, arrange with Obligors to extend or modify the terms of
Receivables.] Any such extension or modification will have the effect of
extending the weighted average life of the Certificates. However, the Servicer
will not be permitted to grant any such deferral or extension if as a result the
final scheduled payment on a Receivable would fall after the Final Scheduled
Maturity Date, unless the Servicer repurchases such Receivable.
Certificateholders will bear the risk of being able to reinvest principal
payments on the Certificates at yields at least equal to the yield on their
respective Certificates.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the terms of the Agreement,
a form of which has been filed as an exhibit to the Registration Statement. A
copy of the Agreement will be filed with the Commission following the issuance
of the Certificates. The following summary describes certain terms of the
Certificates and the Agreement. The summary describes the material terms of the
Certificates and the Agreement, but it does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all the provisions of
the Certificates and the Agreement. The following summary supplements the
description of the general terms and provisions of the Certificates of any given
series and the related Agreement set forth in the Prospectus, to which
description reference is hereby made.
GENERAL
The Certificates will evidence interests in the Trust created pursuant
to the Agreement. The Class A Certificates will evidence in the aggregate an
undivided ownership interest of approximately ___% (the "Class A Percentage") in
the Trust and the Class B Certificates will evidence in the aggregate an
undivided ownership interest of approximately ___% (the "Class B Percentage") in
the Trust. In general, it is intended that Class A Certificateholders receive,
on each Distribution Date, the Class A Percentage of the Principal Distribution
Amount plus interest at the Class A Certificate Rate on the Class A Certificate
Balance. Subject to the prior rights of the Class A Certificateholders, it is
intended that the Class B Certificateholders receive, on each Distribution Date,
the Class B Percentage of the Principal Distribution Amount plus interest at the
Class B Certificate Rate on the Class B Principal Certificate.
"Available Principal" for a Distribution Date means the sum of
the following amounts with respect to the related Collection Period:
(a) that portion of the collections on the Receivables received during
the related Collection Period that is allocable to interest in
accordance with the Servicer's customary procedures; (b) all
Liquidation Proceeds received during such Collection Period; and (c)
all Purchase Amounts, each to the extent attributable to accrued
interest, of all Receivables that are repurchased by the Seller or
purchased by the Servicer under an obligation which arose during the
related Collection Period. "Available Interest" for any Distribution
Date shall exclude all payments and proceeds of any Receivables the
Purchase Amount of which has been distributed on a prior Distribution
Date.
"Defaulted Receivable" means, with respect to any Collection
Period, a Receivable (other than a Purchased Receivable) which the
Servicer has determined to charge off during such Collection Period in
accordance with its customary servicing practices; provided, that any
Receivable which the Seller or Servicer is obligated to repurchase or
purchase shall be deemed to have become a Defaulted Receivable during a
Collection Period if the Seller or Servicer fails to deposit the
Purchase Amount on the related Deposit Date when due.
"Principal Distribution Amount" means, for any Distribution
Date, the sum of the Available Principal for such Distribution Date
plus the Realized Losses with respect to the related Collection Period.
"Purchased Receivable" means, at any time, a Receivable as to
which payment of the Purchase Amount has previously been made by the
Seller or the Servicer pursuant to the Agreement.
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<PAGE> 99
"Realized Losses" means, for any Collection Period, the
aggregate principal balances of any Receivables that became Defaulted
Receivables during such Collection Period.
OPTIONAL PREPAYMENT
If the Pool Balance as of the last day of a Collection Period has
declined to 5% or less of the Original Pool Balance, the Seller or Servicer may
purchase all remaining Trust Property on any Distribution Date occurring in a
subsequent Collection Period at a purchase price equal to the aggregate of the
Purchase Amounts of the remaining Receivables (other than Defaulted
Receivables), which purchases would result in a prepayment of the Certificates.
See "Description of the Transfer and Servicing Agreements--Termination" in the
Prospectus.
ACCOUNTS
Separate Certificate Distribution Accounts will be established for the
Class A Certificates (the "Class A Distribution Account") and the Class B
Certificates (the "Class B Distribution Account"). In addition to those accounts
and a Collection Account for the Trust (see "Description of the Transfer and
Servicing Agreements--Accounts" in the Prospectus), the Seller will also
establish and maintain in the name of the Trustee, the Reserve Account. The
Reserve Account will be created with an initial deposit by the Seller of cash or
Eligible Investments having a value of at least equal to the Reserve Account
Initial Deposit. In addition, on each Distribution Date, any amounts on deposit
in the Collection Account with respect to the preceding Collection Period after
payments to the Certificateholders and the Servicer have been made will be
deposited into the Reserve Account until the amount on deposit in the Reserve
Account is equal to the Specified Reserve Account Balance. All investment
earnings on funds deposited in the Trust Accounts, net of losses and investment
expenses, will be distributed to the Seller and not be treated as collections on
the Receivables or otherwise be available for Certificateholders.
The Reserve Account will be an Eligible Deposit Account which the
Seller shall establish and maintain in the name of the Trustee. Funds on deposit
in the Reserve Account will be invested in Eligible Investments selected by the
Seller and, if permitted by the Rating Agencies, funds on deposit in the Reserve
Account may be invested in Eligible Investments that mature later than the next
Deposit Date. The Reserve Account and any amounts therein will not be property
of the Trust, but will be pledged to and held for the benefit of the Trustee, as
secured party.
On each Distribution Date, the amount available in the Reserve Account
(the "Available Reserve Amount") will equal the lesser of (a) the amount on
deposit in the Reserve Account (exclusive of investment earnings) and (b) the
Specified Reserve Account Balance.
On each Deposit Date, the Trustee will withdraw funds from the Reserve
Account to the extent (a) the sum of the amounts required to be distributed to
Certificateholders and the accrued and unpaid Servicing Fees payable to the
Servicer on such Distribution Date exceeds (b) the amount on deposit in the
Collection Account with respect to the preceding Collection Period (net of
investment income). Such deficiencies in the Collection Account may result from,
among other things, Receivables becoming Defaulted Receivables or the failure by
the Servicer to make any remittance required to be made under the Agreement. The
aggregate amount to be withdrawn from the Reserve Account on any Deposit Date
will not exceed the Available Reserve Amount with respect to the related
Distribution Date. The Trustee will deposit the proceeds of such withdrawal into
the Collection Account on or before the Distribution Date with respect to which
such withdrawal was made.
Subject to reduction as described below, the "Specified Reserve Account
Balance" means the greater of (i) the excess, if any, of (A) _____% of the Pool
Balance at the end of the preceding Collection Period over (B) the
Overcollateralization Amount (after giving effect to any distributions on the
Securities on such Distribution Date), and (ii) the Minimum Specified Reserve
Balance. The Specified Reserve Account Balance may be reduced from time to time
if the Rating Agencies have delivered prior written notice to the Seller, the
Servicer and the Trustee that such reduction will not result in a reduction,
withdrawal or qualification of each Rating Agency's then current ratings of each
class of the Certificates. The time necessary for the Reserve Account to reach
and maintain the Specified Reserve Account Balance at any time after the Closing
Date will be affected by the delinquency, credit loss, repossession and
prepayment experience of the Receivables and, therefore, cannot be accurately
predicted. Amounts on deposit in the Reserve
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<PAGE> 100
Account will be released to the Servicer on each Distribution Date to the extent
that the amount on deposit in the Reserve Account would exceed the Specified
Reserve Account Balance. The Trustee also will cause all investment earnings
attributable to the Reserve Account to be distributed on each Distribution Date
to the Seller. Upon any distribution to the Servicer of amounts from the Reserve
Account, the Certificateholders will not have any rights in, or claims to, such
amounts.
"Liquidation Proceeds" means, with respect to any Receivable
that has become a Defaulted Receivable, (a) insurance proceeds received
by the Servicer, with respect to insurance policies relating to the
Financed Vehicles or the Obligors and/or any proceeds from lender's
single interest insurance policies to the extent not included in
collections distributable to Certificateholders, (b) amounts received
by the Servicer in connection with such Defaulted Receivable pursuant
to the exercise of rights under the related Motor Vehicle Loan, and (c)
the monies collected by the Servicer (from whatever source, including,
but not limited to proceeds of a sale of a Financed Vehicle or
deficiency balance recovered after the charge-off of the related
Receivable or as a result of the exercise of any rights against the
related Dealer) on such Defaulted Receivable net of any expenses
incurred by the Servicer in connection therewith and any payments
required by law to be remitted to the Obligor.
"Minimum Specified Reserve Balance" with respect to any
Distribution Date means the lesser of (i) $________________ and (ii)
the Certificate Balance (after giving effect to any distributions on
the Securities on such Distribution Date).
"Overcollateralization Amount" means, with respect to any
Distribution Date, the excess, if any, of the Pool Balance at the end
of the preceding Collection Period over the Certificate Balance on such
Distribution Date (after giving effect to any distributions made on
such Distribution Date).
If funds in the Reserve Account are reduced to zero, the
Certificateholders will bear the credit and other risks associated with
ownership of the Receivables. In such a case, the amount available for
distribution may be less than that described below, and the Certificateholders
may experience delays or suffer losses as a result, among other things, of
defaults or delinquencies by the Obligors or previous extensions made by the
Servicer.
[PRE-FUNDING ACCOUNT; SUBSEQUENT RECEIVABLES]
[On the Closing Date, approximately $ of Initial
Receivables will be transferred to the Trust by the Seller and the
approximately $ Pre-Funded Amount will be deposited by the Trust in
the Pre-Funding Account. If the principal amount of eligible Receivables
originated by the Originators during the Funding Period is less than the
Pre-Funded Amount, the Seller will have insufficient Receivables to sell to the
Trust on the Subsequent Transfer Dates, thereby resulting in a prepayment of
principal in the Noteholders and the Certificateholders as described in the
following paragraph.] [In addition, any conveyance of Subsequent Receivables is
subject to the satisfaction, on or before the related Subsequent Transfer Date,
of the condition that each such Subsequent Receivable satisfies the eligibility
criteria specified in the Sale and Servicing Agreement for Initial
Receivables.]
[To the extent that the Pre-Funded Amount has not been fully
applied to the purchase of Subsequent Receivables by the Trust during the
Funding Period, the Noteholders and the Certificateholders will receive in the
Distribution Date on or immediately following the last day of the Funding
Period, a prepayment of principal in an amount equal to their pro rata share
(based on the current principal balance of each class of Notes and the
Certificate Balance) of any remaining Pre-Funded Amount following the purchase
of any Subsequent Receivables on such Distribution Date. It is anticipated that
the principal amount of Subsequent Receivables sold to the Trust will not be
exactly equal to the original Pre-Funded Amount and that therefore there will
be at least a nominal amount of principal prepaid to the Noteholders and to the
Certificateholders.]
[If the amount of the Pre-Funding Account will exceed 25% of the
aggregate proceeds from the offering include the specific investments in which
the Pre-Funding Account will be invested and specify that the actual
investments of the Pre-Funding Account as of the end of the preceding month
will be provided in the periodic reports on Form 8-K and Form 10-K to be filed
by the Seller with respect to the Trust.]
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicing Fee Rate will be 1.0% per annum of the Pool Balance as of
the first day of the related Collection Period (after giving effect to the
distributions to be made on the following Distribution Date). The Servicing Fee
(together with any portion of the Servicing Fee that remains unpaid from prior
Distribution Dates) will be paid on each Distribution Date solely to the extent
of the Available Interest. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" in the Prospectus.
The Servicer will also collect and retain any late fees, extension fees,
prepayment charges and certain non-sufficient funds charges and other
administrative fees or similar charges (the "Supplemental Servicing Fee")
allowed by applicable law with respect to the Receivables. Payments by or on
behalf of Obligors will be allocated to scheduled payments and late fees and
other charges in accordance with the Servicer's normal practices and
procedures. As additional compensation, the Servicer may be entitled to
receive for the related Collection Period some or all of the portion, if any,
of the Available Interest and Available Principal for such Collection Period
remaining after payment of the Servicing Fee and interest and principal in
respect of the Certificates and any required deposit to the Reserve Account.
See "Description of the Transfer and Servicing Agreements -- Servicing
Compensation and Payment of Expenses" in the Prospectus and "--Distributions"
herein.
DISTRIBUTIONS
Deposits to Collection Account. On or before the eighth calendar day of
each month, or if such eighth day is not a Business Day, the immediately
preceding Business Day (the "Determination Date"), the Servicer will provide the
Trustee with a report (the "Servicer's Report") containing certain information
with respect to the preceding Collection Period, including the amount of
aggregate collections on the Receivables during such Collection Period, the
aggregate amount of Receivables which became Defaulted Receivables during such
Collection Period, the aggregate Purchase Amounts of Receivables to be
repurchased by the Seller or to be purchased by the Servicer on the related
Deposit Date and the aggregate amount to be withdrawn from the Reserve Account.
Trustee has agreed to act as Servicer's agent for the purpose of preparing and
delivering Servicer's Reports, and so long as Trustee timely prepares and
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<PAGE> 101
delivers Servicer's Report, Servicer shall not be required to do so. Any failure
by Trustee to prepare and deliver a Servicer's Report, or inaccuracy in any
Servicer's Report so prepared and delivered shall (so long as Servicer shall
also not timely prepare and deliver such Servicer's Report or correct any such
inaccuracy) have the same effect as would such a failure by Servicer or
inaccuracy in a Servicer's Report prepared and filed by Servicer.
On or before each Deposit Date, (a) the Servicer will cause all
collections and Liquidation Proceeds to be deposited into the Collection Account
and will deposit into the Collection Account all Purchase Amounts of Receivables
to be purchased by the Servicer on such Deposit Date, (b) the Seller will
deposit into the Collection Account all Purchase Amounts of Receivables to be
repurchased by the Seller on such Deposit Date, (c) the Trustee will make any
required withdrawals for the related Distribution Date from the Reserve Account
and deposit such amounts into the Collection Account and (d) the Servicer will
deposit all Advances for the related Distribution Date into the Collection
Account.
Deposits to the Distribution Accounts. On each Distribution Date, the
Trustee will make the following deposits and distributions from the Collection
Account, to the extent of the sum of Available Interest and any Available
Reserve Amount remaining after such reimbursements (and, in the case of
shortfalls occurring under clause (b) below in the Class A Interest
Distributable Amount, the Class B Percentage of Available Principal to the
extent of such shortfalls), in the following priority:
(a) to the Servicer, any unpaid Servicing Fee for the related
Collection Period and all unpaid Servicing Fees from prior
Collection Periods;
(b) to the Class A Distribution Account, the Class A Interest
Distributable Amount for such Distribution Date; and
(c) to the Class B Distribution Account, the Class B Interest
Distributable Amount for such Distribution Date.
On each Distribution Date based on the related Servicer's Report, the
Trustee will make the following deposits and distributions, to the extent of
Available Principal and the portions of Available Interest and Available Reserve
Amount remaining after the application of clauses (a), (b) and (c) above, in the
following priority:
(d) to the Class A Distribution Account, the Class A Principal
Distributable Amount for such Distribution Date;
(e) to the Class B Distribution Account, the Class B Principal
Distributable Amount for such Distribution Date;
(f) to the Reserve Account, any amounts remaining, until the
amount on deposit in the Reserve Account equals the Specified
Reserve Account Balance; and
(g) to the Seller or Servicer, any amounts remaining.
On each Distribution Date, all amounts on deposit in the Class A
Distribution Account will be distributed to the Class A Certificateholders as of
the Record Date and all amounts on deposit in the Class B Distribution Account
will be distributed to the Class B Certificateholders as of the Record Date by
the Trustee.
"Class A Interest Carryover Shortfall" means, (a) with respect
to the initial Distribution Date, zero, and (b) with respect to any
other Distribution Date, the excess of Class A Monthly Interest for the
preceding Distribution Date and any outstanding Class A Interest
Carryover Shortfall on such preceding Distribution Date, over the
amount in respect of interest that is actually deposited in the Class A
Distribution Account on such preceding Distribution Date, plus 30 days
of interest on such excess, to the extent permitted by law, at the
Class A Certificate Rate.
"Class A Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of Class A Monthly Interest for such
Distribution Date and the Class A Interest Carryover Shortfall for such
Distribution Date.
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"Class A Monthly Interest" means, with respect to any Distribution
Date, one-twelfth of the Class A Certificate Rate multiplied by the Class A
Certificate Balance as of the Distribution Date occurring in the preceding
Collection Period (after giving effect to any payments made on such Distribution
Date) or, in the case of the first Distribution Date, as of the Closing Date.
"Class A Monthly Principal" means, with respect to any Distribution
Date, the Class A Percentage of the Principal Distribution Amount for such
Distribution Date.
"Class A Principal Carryover Shortfall" means, as of the close of
business on any Distribution Date, the excess of Class A Monthly Principal for
such Distribution Date and any outstanding Class A Principal Carryover Shortfall
from the preceding Distribution Date over the amount in respect of principal
that is actually deposited in the Class A Distribution Account on such
Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of Class A Monthly Principal for such Distribution
Date and, in the case of any Distribution Date other than the initial
Distribution Date, the Class A Principal Carryover Shortfall as of the close of
business on the preceding Distribution Date; provided, however, that the Class A
Principal Distributable Amount shall not exceed the outstanding aggregate
principal balance of the Class A Certificates prior to such Distribution Date.
In addition, on the Final Scheduled Distribution Date, the Class A Principal
Distributable Amount shall include any additional amount available to reduce the
outstanding aggregate principal balance of the Class A Certificates to zero.
"Class B Interest Carryover Shortfall" means, (a) with respect to the
initial Distribution Date, zero, and (b) with respect to any other Distribution
Date, the excess of Class B Monthly Interest for the preceding Distribution Date
and any outstanding Class B Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that is actually
deposited in the Class B Distribution Account on such preceding Distribution
Date, plus 30 days of interest on such excess, to the extent permitted by law,
at the Class B Certificate Rate.
"Class B Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of Class B Monthly Interest for such Distribution
Date and the Class B Interest Carryover Shortfall for such Distribution Date.
"Class B Monthly Interest" means, with respect to any Distribution
Date, one-twelfth of the Class B Certificate Rate multiplied by the Class B
Certificate Balance as of the Distribution Date occurring in the preceding
Collection Period (after giving effect to any payments made on such Distribution
Date) or, in the case of the first Distribution Date, as of the Closing Date.
"Class B Monthly Principal" means, with respect to any Distribution
Date, the Class B Percentage of the Principal Distribution Amount for such
Distribution Date.
"Class B Principal Carryover Shortfall" means, as of the close of
business on any Distribution Date, the excess of Class B Monthly Principal for
such Distribution Date and any outstanding Class B Principal Carryover Shortfall
from the preceding Distribution Date over the amount in respect of principal
that is actually deposited in the Class B Distribution Account on such
Distribution Date.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of Class B Monthly Principal for such Distribution
Date and, in the case of any Distribution Date other than the initial
Distribution Date, the Class B Principal Carryover Shortfall as of the close of
business on the preceding Distribution Date; provided, however, that the Class B
Interest Distributable Amount shall not exceed the outstanding aggregate
principal balance of the Class B Certificates prior to such Distribution Date.
In addition, on the Final Scheduled Distribution Date, the Class B Interest
Distributable Amount will include any additional amount available to reduce the
outstanding aggregate principal balance of the Class B Certificates to zero.
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The following chart sets forth an example of the application of the
foregoing provisions to a hypothetical monthly distribution:
March 1 - March 31................ Collection Period. The Servicer receives
monthly payments, prepayments, and other
proceeds in respect of the Receivables.
March 31.......................... Record Date. Distributions on the next
Distribution Date are made to
Certificateholders of record at the close
of business on this date.
April 8........................... Determination Date. On or before this
date, the Servicer, delivers to the
Trustee the Servicer's Report, which
notifies the Trustee of the amounts
required to be distributed and the amounts
available for distribution on the next
Distribution Date.
April 12.......................... Deposit Date. All Collections relating to
the preceding Collection Period are
required to be deposited in the Collection
Account on or before this date. The
Trustee withdraws funds from the Reserve
Account to the extent necessary.
April 15.......................... Distribution Date. The Trustee distributes
to Certificateholders amounts payable in
respect of the Certificates, pays the
Servicing Fee to the Servicer, deposits
any excess funds to the Reserve Account
and, if the Reserve Account is equal to
the Specified Reserve Account Balance,
pays any remaining funds to the Seller.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Information regarding certain legal aspects of the Receivables is set
forth under "Certain Legal Aspects of the Receivables" in the Prospectus.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of material federal income tax
consequences of the purchase, ownership and disposition of the Certificates.
Such summary represents the opinion of Federal Tax Counsel subject to the
qualifications set forth herein. The following summary is intended as an
explanatory discussion of the possible effects of certain federal income tax
consequences to holders generally, but does not purport to furnish information
in the level of detail or with the attention to a holder's specific tax
circumstances that would be provided by a holder's own tax advisor. For
example, it does not discuss the tax treatment of Certificate- holders that are
insurance companies, regulated investment companies or dealers in securities.
Moreover, there are no cases or Internal Revenue Service ("IRS") rulings on
similar transactions involving interests issued by a trust with terms similar
to those of the Certificates. As a result, the IRS may disagree with all or a
part of the discussion below. Prospective investors are urged to consult their
own tax advisors in determining the federal, state, local, foreign and any
other tax consequences to them of the purchase, ownership and disposition of
the Certificates.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended, the Treasury regulations promulgated
thereunder and judicial or ruling authority, all of which are subject to change,
which change may be retroactive. Each Trust will be provided with an opinion of
Federal Tax Counsel, regarding certain federal income tax matters
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discussed below. An opinion of Federal Tax Counsel, however, is not binding on
the IRS or the courts. No ruling on any of the issues discussed below will be
sought from the IRS.
SCOPE OF THE TAX OPINIONS
Federal Tax Counsel will, prior to issuance of the Certificates,
deliver its opinion that the Trust will not be classified as an
association (or publicly traded partnership) taxable as a corporation and that
such Trust will be classified as a grantor trust under subpart E, Part I of
subchapter J of the Code for federal income tax purposes.
In addition, Federal Tax Counsel has prepared or reviewed the
statements herein and in the Prospectus under the heading "Summary of Terms--Tax
Status" as they relate to federal income tax matters and under the heading
"Federal Income Tax Consequences," and is of the opinion that such statements
are correct in all material respects. Such statements are intended as an
explanatory discussion of the possible effects of the classification of the
Trust as a grantor trust for federal income tax purposes on investors generally
and of related tax matters affecting investors generally, but do not purport to
furnish information in the level of detail or with the attention to the
investor's specific tax circumstances that would be provided by an investor's
own tax adviser. Accordingly, each investor is advised to consult its own tax
advisers with regard to the tax consequences to it of investing in the
Certificates.
TAX CLASSIFICATION OF THE TRUST AS A GRANTOR TRUST
As set forth above, Federal Tax Counsel will deliver its opinion that
the Trust will not be classified as an association taxable as a corporation and
that such Trust will be classified as a grantor trust under subpart E, Part 1 of
subchapter J of the Code. A copy of such opinion of Federal Tax Counsel will be
filed with the Commission as an exhibit to a Form 8-K prior to the issuance of
the Certificates by the Trust. Owners of Certificates (referred to herein as
"Grantor Trust Certificateholders") will be treated for federal income tax
purposes as owners of a portion of the Trust's assets as described below. The
Certificates issued by the Trust are referred to herein as "Grantor Trust
Certificates".
Characterization. Each Grantor Trust Certificateholder will be treated
as the owner of a pro rata undivided interest in the interest and principal
portions of the Trust represented by the Grantor Trust Certificates and will be
considered the equitable owner of a pro rata undivided interest in each of the
Receivables in the Trust. Any amounts received by a Grantor Trust
Certificateholder in lieu of amounts due with respect to any Receivable because
of a default or delinquency in payment will be treated for federal income tax
purposes as having the same character as the payments they replace.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire income
from the Receivables in the Trust represented by the Grantor Trust Certificates,
including interest, OID, if any, market discount, if any, prepayment fees,
assumption fees, any gain recognized upon an assumption and late payment charges
received by the Servicer. Under Sections 162 or 212 of the Code each Grantor
Trust Certificateholder will be entitled to deduct its pro rata share of
servicing fees, prepayment fees, assumption fees, any loss recognized upon an
assumption and late payment charges retained by the Servicer, provided that such
amounts are reasonable compensation for services rendered to the Trust. Grantor
Trust Certificateholders that are individuals, estates or trusts will be
entitled to deduct their share of expenses only to the extent such expenses plus
all other miscellaneous itemized deductions exceed two percent of its adjusted
gross income. In addition, the Code provides that the amount of itemized
deductions otherwise allowable for the taxable year for an individual whose
adjusted gross income exceeds a threshold amount specified in the Code adjusted
for inflation ($117,950 in 1996, in the case of a joint return) will be reduced
by the lesser of (i) 3% of the excess of adjusted gross income over the
specified threshold amount or (ii) 80% of the amount of itemized deductions
otherwise allowable for such taxable year. A Grantor Trust Certificateholder
using the cash method of accounting must take into account its pro rata share of
income and deductions as and when collected by or paid to the Servicer. A
Grantor Trust Certificateholder using an accrual method of accounting must take
into account its pro rata share of income and deductions as they become due or
are paid to the Servicer, whichever is earlier. If the servicing fees paid to
the Servicer are deemed to exceed reasonable servicing compensation, the amount
of such excess could be considered as an ownership interest retained by the
Servicer (or any person to whom the Servicer assigned for value all or a portion
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of the servicing fees) in a portion of the interest payments on the Receivables.
The Receivables would then be subject to the "coupon stripping" rules of the
Code discussed below.
Premium. The price paid for a Grantor Trust Certificate by a holder
will be allocated to such holder's undivided interest in each Receivable based
on each Receivable's relative fair market value, so that such holder's undivided
interest in each Receivable will have its own tax basis. A Grantor Trust
Certificateholder that acquires an interest in Receivables at a premium may
elect to amortize such premium under a constant yield method. Amortizable bond
premium will be treated as an offset to interest income on such Grantor Trust
Certificate. The basis for such Grantor Trust Certificate will be reduced to the
extent that amortizable premium is applied to offset interest payments. A
Grantor Trust Certificateholder that makes this election for a Grantor Trust
Certificate that is acquired at a premium will be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such Grantor Trust Certificateholder held at the
beginning of the year of the election or acquired thereafter. Absent such an
election, the premium will be deductible as an ordinary loss only upon
disposition of the Certificate or pro rata as principal is paid on the
Receivables.
STRIPPED BONDS AND STRIPPED COUPONS
To the extent a transaction is determined to involve "excess servicing"
(as described above), or that the classes of Certificates represent stripped
interests in the underlying Receivables, the Grantor Trust Certificates will
represent interests in stripped bonds for federal income tax purposes. Although
the tax treatment of stripped bonds is not entirely clear, based on recent
guidance by the IRS, each purchaser of a Grantor Trust Certificate will be
treated as the purchaser of a stripped bond which generally should be treated as
a single debt instrument issued on the day it is purchased for purposes of
calculating any OID. Generally, under Treasury regulations (the "Section 1286
Treasury Regulations"), if the discount on a stripped bond is larger than a de
minimis amount (as calculated for purposes of the OID rules of the Code) such
stripped bond will be considered to have been issued with OID. If OID rules were
to apply, all of the taxable income to be recognized with respect to the
Certificates would be includible in income as OID but would not be includible
again when the interest is actually received. Regulations do not adequately
address the circumstances in which payment of interest on Certificates such as
the Grantor Trust Certificates would be considered unconditionally payable, and
thus, Federal Tax Counsel is unable to opine as to the extent to which interest
payments on the Certificates would be treated as qualified stated interest.
Market Discount and Premium. A Grantor Trust Certificateholder that
acquires an undivided interest in Receivables may be subject to the market
discount rules of Code Sections 1276 through 1278 to the extent an undivided
interest in a Receivable is considered to have been purchased at a "market
discount." Generally, the amount of market discount is equal to the excess of
the portion of the principal amount of such Receivable allocable to such
holder's undivided interest over such holder's tax basis in such interest.
Market discount with respect to a Grantor Trust Certificate will be considered
to be zero if the amount allocable to the Grantor Trust Certificate is less than
0.25% of the Grantor Trust Certificate's stated redemption price at maturity
multiplied by the weighted average maturity remaining after the date of
purchase. Treasury regulations implementing the market discount rules have not
yet been issued; therefore, investors should consult their own tax advisors
regarding the application of these rules and the advisability of making any of
the elections allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain on disposition of a market discount bond
shall be treated as ordinary income to the extent that it does not exceed the
accrued market discount at the time of such payment. The amount of accrued
market discount for purposes of determining the tax treatment of subsequent
principal payments or dispositions of the market discount bond is to be reduced
by the amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
While the Treasury Department has not yet issued regulations, rules described in
the relevant legislative history likely will apply. Under those rules, the
holder of a market discount bond may elect to accrue market discount on the
basis of a constant yield method.
A holder who acquired a Grantor Trust Certificate at a market discount
may be required to defer a portion of its interest deductions for the taxable
year attributable to any indebtedness incurred or continued to purchase or carry
such Grantor Trust Certificate purchased with market discount. For these
purposes, the de minimis rule referred to above applies. Any such deferred
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interest expense would not exceed the market discount that accrues during such
taxable year and is, in general, allowed as a deduction not later than the year
in which such market discount is includible in income. If such holder elects to
include market discount in income currently as it accrues on all market discount
instruments acquired by such holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.
To the extent a Grantor Trust Certificateholder is considered to have
purchased an undivided interest in a Receivable for an amount that is greater
than its stated redemption price at maturity of such Receivable, such Grantor
Trust Certificateholder will be considered to have purchased the Receivable with
"amortizable bond premium" equal in amount to such excess. See "--Premium."
Election to Treat All Interest as OID. The OID regulations permit a
Grantor Trust Certificateholder to elect to accrue all interest, discount
(including de minimis market or OID) and premium in income as interest, based on
a constant yield method. If such an election were to be made with respect to a
Grantor Trust Certificate with market discount, the Certificateholder would be
deemed to have made an election to include in income currently market discount
with respect to all other debt instruments having market discount that such
Grantor Trust Certificateholder acquires during the year of the election or
thereafter. Similarly, a Grantor Trust Certificateholder that makes this
election for a Grantor Trust Certificate that is acquired at a premium will be
deemed to have made an election to amortize bond premium with respect to all
debt instruments having amortizable bond premium that such Grantor Trust
Certificateholder held at the beginning of the year of the election or acquired
thereafter. See "--Premium." The election to accrue interest, discount and
premium on a constant yield method with respect to a Grantor Trust Certificate
is generally irrevocable.
Sale or Exchange of a Grantor Trust Certificate. Sale or exchange of a
Grantor Trust Certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the Grantor Trust Certificate. Such adjusted basis generally
will equal the seller's purchase price for the Grantor Trust Certificate,
increased by the OID included in the seller's gross income with respect to the
Grantor Trust Certificate, and reduced by principal payments on the Grantor
Trust Certificate previously received by the seller. Such gain or loss will be
capital gain or loss to an owner for which a Grantor Trust Certificate is a
"capital asset" within the meaning of Code Section 1221, and will be long-term
or short-term depending on whether the Grantor Trust Certificate has been owned
for the long-term capital gain holding period (currently more than one year).
Grantor Trust Certificates will be "evidences of indebtedness" within
the meaning of Code Section 582(c)(1), so that gain or loss recognized from the
sale of a Grantor Trust Certificate by a bank or a thrift institution to which
such section applies will be treated as ordinary income or loss.
Non-U.S. Persons. Generally, interest or OID paid by the person
required to withhold tax under Code Section 1441 or 1442 to (i) an owner that is
not a U.S. Person (as defined below) or (ii) a Grantor Trust Certificateholder
holding on behalf of an owner that is not a U.S. Person would not be subject to
withholding if such Grantor Trust Certificateholder complies with certain
identification requirements (including delivery of a statement, signed by the
Grantor Trust Certificateholder under penalties of perjury, certifying that such
Grantor Trust Certificateholder is not a U.S. Person and providing the name and
address of such Grantor Trust Certificateholder).
As used herein, a "U.S. Person" means a citizen or resident of the
United States, a corporation or a partnership organized in or under the laws of
the United States or any political subdivision thereof or an estate or trust,
the income of which is includible in gross income for federal income tax
purposes regardless of its source.
On April 15, 1996, proposed Treasury Regulations (the "1996 Proposed
Regulations") were issued which, if adopted in final form, could affect the
United States taxation of non-U.S. holders. The 1996 Proposed Regulations are
generally proposed to be effective for payments after December 31, 1997, subject
to certain transition rules. It cannot be predicted at this time whether the
1996 Proposed Regulations will become effective as proposed or what, if any,
modifications may be made to them. The 1996 Proposed Regulations would, if
adopted, alter the rules under this heading and under "--Information Reporting
and Backup Withholding" below in certain respects. Prospective investors are
urged to consult their tax advisors with respect to the effect the 1996 Proposed
Regulations may have if adopted.
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Information Reporting and Backup Withholding. The Servicer will furnish
or make available, within a reasonable time after the end of each calendar year,
to each person who was a Grantor Trust Certificateholder at any time during such
year, such information as may be deemed necessary or desirable to assist Grantor
Trust Certificateholders in preparing their federal income tax returns, or to
enable holders to make such information available to beneficial owners or
financial intermediaries that hold Grantor Trust Certificates as nominees on
behalf of beneficial owners. If a holder, beneficial owner, financial
intermediary or other recipient of a payment on behalf of a beneficial owner
fails to supply a certified taxpayer identification number or if the Secretary
of the Treasury determines that such person has not reported all interest and
dividend income required to be shown on its federal income tax return, 31%
backup withholding may be required with respect to any payments. Any amounts
deducted and withheld from a distribution to a recipient would be allowed as a
credit against such recipient's federal income tax liability. The 1996 Proposed
Regulations would, if adopted, alter the foregoing rules in certain respects.
ERISA CONSIDERATIONS
THE CLASS A CERTIFICATES
Subject to the considerations set forth under "ERISA
Considerations--Trusts That Do Not Issue Notes" in the Prospectus, the Class A
Certificates may be purchased with the assets of an employee benefit plan or an
individual retirement account (a "Plan") subject to ERISA or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"). A fiduciary of a Plan
must determine that the purchase of a Class A Certificate is consistent with its
fiduciary duties under ERISA and does not result in a nonexempt prohibited
transaction as defined in Section 406 of ERISA or Section 4975 of the Code. For
additional information regarding treatment of the Class A Certificates under
ERISA, see "ERISA Considerations" in the Prospectus.
THE CLASS B CERTIFICATES
The Class B Certificates and any beneficial interest in such Class B
Certificates may not be acquired (a) with the assets of an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (b) by a plan described in Section 4975(e)(1) of the Code or (c) by
any entity whose underlying assets include plan assets by reason of a plan's
investment in the entity. By its acceptance of a Class B Certificate, each Class
B Certificateholder will be deemed to have represented and warranted that it is
not subject to the foregoing limitation. For additional information regarding
treatment of the Class B Certificates under ERISA, see "ERISA Considerations" in
the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement, the Seller has agreed to cause the Trust to sell to each of the
underwriters listed below (each, an "Underwriter"), and each of the Underwriters
has agreed to purchase, the principal amount of the Certificates set forth
opposite its name below. Under the terms and conditions of the Underwriting
Agreement, each of the Underwriters is obligated to take and pay for all of the
Certificates, if any are taken.
<TABLE>
<CAPTION>
Principal Amount of Principal Amount of
Class A Certificates Class B Certificates
-------------------- ---------------------
<S> <C> <C>
- ------------------------- ................. $--------------------- $------------------------
- ------------------------- ................. --------------------- ------------------------
- ------------------------- ................. --------------------- ------------------------
Total $_____________________ $________________________
</TABLE>
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<PAGE> 108
The Seller has been advised by the Underwriters that they propose
initially to offer the Certificates to the public at the prices set forth
herein, and to certain dealers at such prices less the initial concession not in
excess of _____% per Class A Certificate and ____% per Class B Certificate. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of ____% per Class A Certificate and ____% per Class B Certificate to certain
other dealers. After the initial public offering of the Certificates, the public
offering prices and such concessions may be changed.
The Seller does not intend to apply for listing of the Certificates on
a national securities exchange, but has been advised by the Underwriters that
they intend to make a market in the Certificates. The Underwriters are not
obligated, however, to make a market in the Certificates and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Certificates.
The Seller has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
In the ordinary course of their respective businesses, each Underwriter
and its affiliates have engaged and may in the future engage in commercial
banking and investment banking transactions with the Seller.
After the initial distribution of the Certificates by the Underwriters,
this Prospectus Supplement may be used by Key Capital Markets, Inc., an
affiliate of the Seller, the Servicer, the Affiliates and KeyCorp, in connection
with offers and sales relating to market making transactions in the
Certificates. Key Capital Markets, Inc. may act as principal or agent in such
transactions. Such transactions will be at prices related to prevailing market
prices at the time of sale.
KCMI is a broker-dealer registered as such with the National
Association of Securities Dealers, Inc. and commenced business on February 26,
1996. KCMI has acted as an underwriter with respect to a variety of public
finance transactions as well as several asset-backed securitizations for
subsidiaries of KeyCorp.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain
federal income tax and other legal matters will be passed upon for the Trust by
Thompson Hine & Flory LLP, Cleveland, Ohio. Attorneys at Thompson Hine &
Flory LLP owned approximately ________ KeyCorp Common Shares on September
16, 1996. Certain legal matters will be passed upon for the Underwriters by
Mayer, Brown & Platt, Chicago, Illinois. Thompson Hine & Flory LLP and
Mayer, Brown & Platt may from time to time render legal services to the Seller,
the Servicer and its affiliates.
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INDEX OF DEFINED TERMS
Page
----
Acquired Receivables...................................................... S-4
Additional Servicing...................................................... S-18
Advance................................................................... S-7
Agreement................................................................. S-3
Available Interest........................................................ S-16
Available Principal....................................................... S-13
Available Reserve Amount.................................................. S-14
Bank...................................................................... S-3
Business Day.............................................................. S-5
Certificate Rate.......................................................... S-5
Certificateholders........................................................ S-5
Certificates.............................................................. S-1
Class A Certificate Balance............................................... S-6
Class A Certificate Rate.................................................. S-5
Class A Certificateholders................................................ S-5
Class A Certificates...................................................... S-1
Class A Distribution Account.............................................. S-13
Class A Interest Carryover Shortfall...................................... S-18
Class A Interest Distributable Amount..................................... S-18
Class A Monthly Interest.................................................. S-18
Class A Monthly Principal................................................. S-18
Class A Percentage........................................................ S-3
Class A Principal Carryover Shortfall..................................... S-18
Class A Principal Distributable Amount.................................... S-18
Class B Certificate Balance............................................... S-6
Class B Certificate Rate.................................................. S-5
Class B Certificateholders................................................ S-5
Class B Certificates...................................................... S-1
Class B Distribution Account.............................................. S-13
Class B Interest Carryover Shortfall...................................... S-18
Class B Interest Distributable Amount..................................... S-18
Class B Monthly Interest.................................................. S-19
Class B Monthly Principal................................................. S-19
Class B Percentage........................................................ S-4
Class B Principal Carryover Shortfall..................................... S-19
Class B Principal Distributable Amount.................................... S-19
Closing Date.............................................................. S-4
Code...................................................................... S-24
Collection Period......................................................... S-5
Commission................................................................ S-2
Cutoff Date............................................................... S-3
Defaulted Receivable...................................................... S-13
Delinquency Ratio......................................................... S-15
Deposit Date.............................................................. S-7
Determination Date........................................................ S-17
Direct Loans.............................................................. S-4
Distribution Date......................................................... S-2
S-29
<PAGE> 110
ERISA..................................................................... S-9
Expected Interest......................................................... S-15
Federal Tax Counsel....................................................... S-20
Final Scheduled Distribution Date......................................... S-2
Final Scheduled Maturity Date............................................. S-4
Financed Vehicles......................................................... S-3
Grantor Trust Certificateholders.......................................... S-21
Grantor Trust Certificates................................................ S-21
Interest Collections...................................................... S-15
Interest Shortfall........................................................ S-16
IRS....................................................................... S-20
Issuer.................................................................... S-3
Liquidation Proceeds...................................................... S-15
Motor Vehicle Loans....................................................... S-4
Net Interest Collections.................................................. S-16
Non-Advance Receivables................................................... S-16
Original Pool Balance..................................................... S-6
Outstanding Advances...................................................... S-16
Plan...................................................................... S-24
Pool Balance.............................................................. S-4
Principal Balance......................................................... S-4
Principal Distribution Amount............................................. S-13
Prospectus................................................................ S-1
Purchased Receivable...................................................... S-13
Rating Agencies........................................................... S-9
Realized Losses........................................................... S-13
Receivables............................................................... S-1
Record Date............................................................... S-5
Reserve Account........................................................... S-7
Reserve Account Initial Deposit........................................... S-7
Section 1286 Treasury Regulations......................................... S-22
Seller.................................................................... S-1
Servicer.................................................................. S-1
Servicer's Report......................................................... S-17
Specified Reserve Account Balance......................................... S-14
Supplemental Servicing Fee................................................ S-16
Trust..................................................................... S-1
Trustee................................................................... S-3
U.S. Person............................................................... S-24
Underwriter............................................................... S-25
Weighted Average Contract Rate............................................ S-16
S-30
<PAGE> 111
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER OR THE UNDERWRITERS. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OF ANY
SECURITIES OTHER THAN THOSE TO WHICH THEY RELATE OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN
OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES.
---------------------------
TABLE OF CONTENTS
Prospectus Supplement
Page
----
Reports to Certificateholders................. S-2
Summary of Terms.............................. S-3
Risk Factors.................................. S-9
The Trust..................................... S-10
The Receivables Pool.......................... S-10
The Seller, the Servicer and KeyCorp.......... S-14
Weighted Average Life of the Certificates..... S-14
Description of the Certificates............... S-14
Certain Legal Aspects of the Receivables...... S-20
ERISA Considerations.......................... S-20
Underwriting.................................. S-21
Legal Opinions................................ S-21
Index of Defined Terms........................ S-22
Prospectus
Page
----
Available Information.........................
Incorporation of Certain Documents
by Reference................................
Summary of Terms..............................
Risk Factors..................................
The Trusts....................................
The Receivables Pools.........................
Weighted Average Life of the Securities.......
Pool Factors and Trading Information..........
Use of Proceeds...............................
The Seller....................................
The Bank......................................
AutoFinance Group.............................
Description of the Notes......................
Description of the Certificates...............
Certain Information Regarding the
Securities..................................
Description of the Transfer and
Servicing Agreements........................
Certain Legal Aspects of the Receivables......
Federal Income Tax Consequences...............
Certain State Tax Consequences................
ERISA Considerations..........................
Plan of Distribution..........................
Notice to Canadian Residents..................
Legal Opinions................................
Index of Defined Terms........................
Global Clearance, Settlement and Tax
Documentation Procedures....................
$_______________________________
KEYCORP CONSUMER
ACCEPTANCE CORPORATION
(Seller)
$__________________
__% Asset Backed
Certificates
Class A
$___________________
__% Asset Backed
Certificates
Class B
==================
PROSPECTUS SUPPLEMENT
_____________, 199__
==================
<PAGE> 112
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
SUBJECT TO COMPLETION, DATED __________, 199_
PRELIMINARY OWNER TRUST PROSPECTUS SUPPLEMENT FORM
[$--------------]
Key Auto Finance Trust 199_ - _
$______________ Class A-1 ____% Asset Backed Notes
$______________ Class A-2 ____% Asset Backed Notes
$______________ ____% Asset Backed Certificates
Key Consumer Acceptance Corporation
Seller
Key Bank USA, National Association
Servicer
The Key Auto Finance Trust 199_-__ (the "Trust") will be governed by a Trust
Agreement, to be dated as of ___________________, 199_, between Key Consumer
Acceptance Corporation, as seller (the "Seller") and ___________________,
as Owner Trustee. The Trust will issue $_____________ aggregate principal
amount of Class A-1 ___% Asset Backed Notes (the "Class A-1 Notes"),and
$____________ aggregate principal amount of Class A-2 ___ Asset Backed
Notes (the "Class A-2 Notes" and, together with the Class A-1 Notes,
the "Notes") pursuant to an Indenture to be dated as of
__________, 199_, between the Trust and _____________,
as Indenture Trustee. The Trust will also issue
$__________________ aggregate principal amount of
___% Asset Backed Certificates (the "Certificates"
and, together with the Notes, the "Securities"). The
rights of Certificateholders will be subordinated
to the rights of Noteholders to the extent described
herein. The assets of the Trust will include a pool
of motor vehicle promissory notes and security
agreements and/or retail installment sale contracts
secured by new or used automobiles and light duty
trucks (collectively, the "Receivables"), payments
received thereunder after , 199 ,
security interests in the motor vehicles financed
thereby, rights under Dealer Agreements, rights
under Purchase Agreements, rights with respect
to deposit accounts in which collections are held,
any proceeds from claims on insurance policies
relating to the Financed Vehicles and the
proceeds of the foregoing.
(cover continued on next page)
-----------------------------
PROSPECTIVE INVESTORS SHOULD CONSIDER THE MATERIAL RISKS INVOLVED WITH
OR INVESTMENT IN THE SECURITIES DESCRIBED IN "RISK FACTORS" SET FORTH AT
PAGE S-__ HEREIN AND AT PAGE ___ IN THE ACCOMPANYING PROSPECTUS (THE
"PROSPECTUS").
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS
IN KEY CONSUMER ACCEPTANCE CORPORATION, KEY BANK USA, NATIONAL ASSOCIATION,
OR ANY OF THEIR AFFILIATES. NEITHER THE SECURITIES NOR THE RECEIVABLES
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY KEY CONSUMER
ACCEPTANCE CORPORATION, KEY BANK USA, NATIONAL ASSOCIATION, OR ANY
OF THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions the Seller(1)(2)
--------- ------------- ----------------
Per Class A-1 Note % % %
Per Class A-2 Note % % %
Per Certificate % % %
Total $____________ $____________ $____________
- ----------------------
(1) Plus accrued interest, if any, from ___________, 199__.
(2) Before deducting expenses, estimated to be $___________.
-----------------------------
The Notes and Certificates are offered by the Underwriters when, as and if
issued and accepted by the Underwriters and subject to their right to reject
orders in whole or in part. It is expected that delivery of the Notes and the
Certificates will be made in book-entry form only through the Same Day Funds
Settlement System of The Depository Trust Company, or through Cedel Bank,
societe anonyme or the Euroclear System, on or about __________, 199__.
After the initial distribution of the Certificates and Notes by the
Underwriters, the Prospectus and this Prospectus Supplement may be used by Key
Capital Markets, Inc., an affiliate of the Seller, in connection with market
making transactions in the Certificates and Notes. Key Capital Markets, Inc.,
may act as principal or agent in such transactions. Such transactions will be at
prices related to prevailing market prices at the time of sale. Certain
information in this Prospectus Supplement will be updated from time to time as
described in "Incorporation of Certain Documents by Reference."
_____________, 199__.
<PAGE> 113
The assets of the Trust will be transferred by the Seller to
the Trust on or prior to the Closing Date. The Notes will be secured by the
assets of the Trust pursuant to the Indenture. Certain capitalized terms used
in this Prospectus Supplement are defined in this Prospectus Supplement on the
pages indicated in the "Index of Terms" on page ___ of this Prospectus
Supplement or, to the extent not defined herein, have the meanings assigned to
such terms in the Prospectus. Interest on all classes of Notes will accrue at
the fixed per annum interest rates specified above. Interest on the Notes will
generally be payable on the [15th] day of each month (each, a "Distribution
Date"), commencing _______, 199_. Principal of the Notes will be payable on
each Distribution Date to the extent described herein, except that no principal
will be paid on the Class A-2 Notes until the Class A-1 Notes have been paid
in full. See "Description of the Notes--Payments of Interest."
The Certificates will represent fractional undivided interests in
the Trust. Interest, at the Certificate Rate, will be distributed to the
Certificateholders on each Distribution Date to the extent of available funds.
Principal, to the extent described herein, will be distributed to the
Certificateholders on each Distribution Date commencing with the Distribution
Date on which the Notes were paid in full to the extent of available funds. See
"Description of the Certificates--Distributions of Principal Payments."
Distributions of interest and principal on the Certificates will be subordinated
in priority to payments due on the Notes as described herein. See "Description
of the Transfer and Servicing Agreements--Subordination of Certificates."
Each class of the Notes and the Certificates will be payable in
full on the applicable final scheduled Distribution Date as set forth herein.
However, payment in full of a class of Notes or of the Certificates could occur
earlier or later than such dates as described herein. See "Weighted Average Life
of the Securities." In addition, the Class A-2 Notes and the Certificates will
be subject to prepayment in whole, but not in part, on any Distribution Date on
which Key Bank USA, National Association in its capacity as servicer (in such
capacity, the "Servicer"), or the Seller exercises its option to purchase the
Receivables. The Seller or Servicer may purchase the Receivables when the
aggregate principal balance of the Receivables has declined to 5% or less of the
initial aggregate principal balance of the Receivables purchased by the Trust.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPETE INFORMATION
ABOUT THE OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL INFORMATION IS
CONTAINED IN THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE NOTES OR THE
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. TO THE EXTENT ANY STATEMENTS IN THIS
PROSPECTUS SUPPLEMENT OR SPECIFY ADDITIONAL INFORMATION WITH RESPECT TO
STATEMENTS IN THE PROSPECTUS, THE STATEMENTS IN THIS PROSPECTUS SUPPLEMENT SHALL
CONTROL.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
NOTES AND THE CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL
DEALERS EFFECTING TRANSACTIONS IN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS WHEN ACTING AS UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
There is currently no secondary market for the Securities offered
hereby. Each Underwriter expects, but is not obligated to make a market in the
Notes and Certificates. There can be no assurance that a secondary market will
develop or that it will provide Securityholders with liquidity of investment or
that it will continue for the life of the Securities offered hereby.
S-2
<PAGE> 114
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates are
issued, monthly and annual unaudited reports containing information concerning
the Receivables will be prepared by the Servicer and sent on behalf of the Trust
only to Cede & Co., as nominee of the Depository Trust Company and registered
holder of the Notes and the Certificates. See "Certain Information Regarding the
Securities--Book-Entry Registration" and "--Reports to Securityholders" in the
accompanying Prospectus. Such reports will not constitute financial statements
prepared in accordance with generally accepted accounting principles. The
Seller, as originator of the Trust, will file with the Securities and Exchange
Commission (the "Commission") such periodic reports as are required under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder. In addition, the Commission maintains a public access
site on the Internet through the World Wide Web at which site reports,
information statements and other information, including all electronic filings,
may be viewed. The Internet address of such World Wide Web site is
http://www.sec.gov.
S-3
<PAGE> 115
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the Prospectus. Certain capitalized terms used herein are defined elsewhere in
this Prospectus Supplement on the pages indicated in the "Index of Terms"
beginning at page S-__ or, to the extent not defined herein, have the meanings
assigned to such terms in the Prospectus.
<TABLE>
<S> <C>
Issuer........................... Key Auto Finance Trust 199_-__ (the "Trust" or the
"Issuer"), a [Delaware business] trust established
pursuant to a trust agreement (as amended and
supplemented, the "Trust Agreement"), dated as of
________________, 199_ between the Seller and the
Owner Trustee.
Seller........................... Key Consumer Acceptance Corporation, a Delaware
corporation (the "Seller"). See "The Seller."
Servicer......................... Key Bank USA, National Association, a national banking
association (the "Bank" or in its capacity as
servicer, the "Servicer").
Indenture Trustee................ ____________________, as trustee under the Indenture (the
"Indenture Trustee").
Owner Trustee.................... ____________________, as trustee under the Trust Agreement
(the "Owner Trustee").
The Notes........................ The Trust will issue Asset Backed Notes (the "Notes"),
pursuant to an Indenture to be dated as of
_______________, 199_ (as amended and supplemented
from time to time, the "Indenture"), between the Issuer and
the Indenture Trustee, as follows: (a) Class A-1 __%
Money Market Asset Backed Notes (the "Class A-1 Notes")
in the aggregate initial principal amount of
$______________; and (b) Class A-2 __% Asset Backed
Notes (the "Class A-2 Notes") in the aggregate initial
principal amount of $____________.
The Notes will be secured by the assets of the Trust
pursuant to the Indenture.
The Certificates................. The Trust will issue __% Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities")
with an aggregate initial Certificate Balance of
$________________. The Certificates will represent
fractional undivided interests in the Trust and will be issued
pursuant to the Trust Agreement.
The Receivables.................. On or prior to __________, 199_ (the "Closing Date"), the
Trust will purchase a pool of motor vehicle promissory notes
and security agreements and/or retail installment sale
contracts secured by new or used automobiles or light duty
</TABLE>
S-4
<PAGE> 116
<TABLE>
<S> <C>
trucks (collectively, the "Receivables"), including rights
to receive certain payments made with respect to such
Receivables, security interests in the vehicles
financed thereby (the "Financed Vehicles"), rights
under Dealer Agreements, certain deposit accounts in
which collections are held, any proceeds from claims
on insurance policies and the proceeds of the
foregoing, having an aggregate principal balance of
approximately $___________ as of ______________, 199_
(the "Cutoff Date"), from the Seller pursuant to a
Sale and Servicing Agreement to be dated as of
____________, 199_ (as amended and supplemented from
time to time, the "Sale and Servicing Agreement"),
among the Trust, the Seller and the Servicer. See
"Description of the Transfer and Servicing Agreements"
herein and in the Prospectus.
The Receivables consist of (i) motor vehicle promissory notes
and security agreements executed by an Obligor in favor of
a motor vehicle lender ("Direct Loans") and/or (ii) motor
vehicle retail installment sales contracts between an Obligor
and a vehicle dealer (collectively, "Motor Vehicle Loans").
Direct Loans include promissory notes and security
agreements for which a Dealer performed certain ministerial
loan processing functions on behalf of the lender. In addition,
the Receivables Pool includes Motor Vehicle Loans acquired by an
Affiliate through acquisitions or Motor Vehicle Loans originated
by a bank, financial institution or other entity acquired by an
Affiliate ("Acquired Receivables"). "Originator" means, with
respect to any Motor Vehicle Loan, the Affiliate that (i) was
the lender with respect to a Direct Loan made by an Affiliate
or (ii) acquired such Motor Vehicle Loan from a vehicle dealer
or other third party. "Affiliate" means a bank or other nonbank
entity owned or acquired by KeyCorp or by its subsidiaries.
"Subsidiary" includes both direct and indirect subsidiaries.
As of the date of this Prospectus Supplement, the Bank and
AutoFinance Group, Inc., a wholly-owned subsidiary of
KeyCorp are the only KeyCorp subsidiaries that make or acquire
Motor Vehicle Loans. See "The Receivables Pool" herein and
"The Receivables Pools" in the Prospectus.
The Receivables have been selected from Motor Vehicle Loans
owned by the Affiliates based on the criteria specified in the
Sale and Servicing Agreement and described herein and in
the Prospectus. See "The Receivables Pool" herein and
"The Receivables Pools" in the Prospectus. No Receivable
will have a scheduled maturity that, after giving prospective
effect to any permitted extensions or such deferrals, would
be later than ____________ (the "Final Scheduled Maturity
Date"). As of the Cutoff Date, the weighted average
</TABLE>
S-5
<PAGE> 117
<TABLE>
<S> <C>
remaining maturity of the Receivables was approximately
_____ months and the weighted average original
maturity of the Receivables was approximately ____
months. As of the Cutoff Date, approximately ____% of
the aggregate principal balance of the Receivables
represented financing of new vehicles and the
remainder represented financing of use vehicles.
The "Pool Balance" means, at any time, the sum of the
outstanding Principal Balances of the Receivables. The
"Principal Balance" for any Receivable, at any time, means
the principal balance of such Receivable at the end of the
preceding Collection Period, after giving effect to all
payments received from Obligors and Purchase Amounts to
be remitted by the Servicer or the Seller, as the case may
be, for such Collection Period and all losses realized on
Receivables liquidated during such Collection Period.
Terms of the Notes
A. Distribution Dates........... Payments of interest and principal on the Notes will be made on
the [15th] day of each month or, if any such day is not a
Business Day, on the next succeeding Business Day (each,
a "Distribution Date"), commencing ______________, 199_.
Each reference to a "Payment Date" in the Prospectus shall
refer to a Distribution Date herein. Payments will be made
to holders of record of the Notes (the "Noteholders") as of
the day immediately preceding such Distribution Date or, if
Definitive Notes are issued, as of the last Business Day of
the preceding month (a "Record Date"). A "Business Day"
is a day other than a Saturday, a Sunday and a day that, in
New York City, Cleveland, Ohio and _____________,
Delaware, is neither a legal holiday nor a day on which
banking institutions are authorized by law, regulation or
executive order to be closed.
B. Interest Rates............... The Class A-1 Notes will bear interest at the rate of __% per
annum (the "Class A-1 Interest Rate") and the Class A-2
Notes will bear interest at the rate of __% per annum (the
"Class A-2 Interest Rate"). The Class A-1 Interest Rate and
the Class A-2 Interest Rate are referred to herein collectively
as "Interest Rates".
C. Interest..................... Interest on the outstanding principal amount of the Notes of
each class will accrue at the applicable Interest Rate from
the Closing Date (in the case of the first Distribution Date)
and thereafter from the preceding Distribution Date through
the current Distribution Date (each an "Interest Period").
Interest on the Notes will be calculated on the basis of a
360-day year consisting of twelve 30-day months. See
"Description of the Notes--Payments of Interest."
</TABLE>
S-6
<PAGE> 118
<TABLE>
<S> <C>
D. Principal.................... Principal of the Notes will be payable on each Distribution Date
in an amount equal to the Noteholders' Principal
Distributable Amount for the calendar month (the
"Collection Period") preceding such Distribution Date.
No principal payments will be made on the Class A-2 Notes
until the Class A-1 Notes have been paid in full.
The outstanding principal amount of the Class A-1 Notes, to the
extent not previously paid, will be payable on the
_____________, 199_ Distribution Date (the "Class A-1
Final Scheduled Distribution Date"); and the outstanding
principal amount of the Class A-2 Notes, to the extent not
previously paid, will be payable on the ____________, 199_
Distribution Date (the "Class A-2 Final Scheduled
Distribution Date").
E. Significant Characteristics
of Class Notes............... [Interest will accrue on the Class __ Notes from [the Closing
Date] but no interest will be payable on the Class __ Notes
until [[the Distribution] [Payment] Date]] [the [Distribution]
[Payment] Date on or after which the Class __ Notes have
been paid in full]. [The Class __ Notes [do not bear interest]
[bear interest at a nominal rate] and principal thereon is due
and payable on [and after] [the [Distribution] [Payment]
Date following the [Distribution] [Payment] Date on or after
which the Class __ Notes have been paid in full] [each
[Distribution] [Payment] Date to the extent that principal
available to be paid on the Class __ Notes exceeds the
amount necessary to reduce the outstanding principal balance
of the Class __ Notes to the [planned balance] for such
[Distribution] [Payment] Date. [No principal is payable with
respect to the Class __ Notes. The Class __ Notes are
entitled only to interest on the [nominal] [notional] amount
thereof, as described above under "Principal."] As a result
the yield to maturity on the Class __ Notes will be
particularly sensitive to the rate and timing of repayment,
repurchase and defaults on the Receivables.] [See "Risk
Factors" and "The Receivables Pool-- Weighted Average
Life of the Securities."]
F. Optional Redemption.......... After the Class A-1 Notes have been paid in full, the Class A-2
Notes will be redeemed in whole, but not in part, on any
Distribution Date on which the Seller or Servicer exercises
its option to purchase the Receivables, which can occur after
the Pool Balance declines to 5% or less of the Original Pool
Balance, at a redemption price equal to the unpaid principal
amount of the Class A-2 Notes plus accrued and unpaid
interest thereon. See "Description of the Notes--Optional
Redemption." The "Original Pool Balance" will equal the
aggregate principal balance of the Receivables as of the
Cutoff Date.
</TABLE>
S-7
<PAGE> 119
<TABLE>
<S> <C>
Terms of the Certificates
A. Distribution Dates............... Distributions with respect to the Certificates will be made on
each Distribution Date, commencing __________, 199_.
Distributions will be made to holders of record of the
Certificates (the "Certificateholders" and, together with the
Noteholders, the "Securityholders") as of the related Record
Date (which will be the last Business Day of the preceding
month if Definitive Certificates are issued).
B. Certificate Rate................. ___% per annum (the "Certificate Rate").
C. Interest......................... On each Distribution Date, the Owner Trustee will distribute
pro rata to Certificateholders accrued interest at the
Certificate Rate on the outstanding Certificate Balance
generally to the extent of funds available following payment
of the Servicing Fee and distributions in respect of interest
on the Notes from the Total Distribution Amount and the
Reserve Account. Interest will be calculated on the basis of
a 360-day year consisting of twelve 30-day months. Interest
in respect of a Distribution Date will accrue from the
Closing Date (in the case of the first Distribution Date) and
thereafter from the preceding Distribution Date to and
including such Distribution Date.
D. Principal........................ No distributions of principal on the Certificates will be made
until all of the Notes have been paid in full. On each
Distribution Date commencing on the Distribution Date on
which the Class A-2 Notes are paid in full, principal of the
Certificates will be payable in an amount generally equal to
the Certificateholders' Principal Distributable Amount for
the Collection Period preceding such Distribution Date, to
the extent of funds available therefor following payment of
the Servicing Fee, payments of interest and principal, if any,
due in respect of the Notes and the distribution of interest in
respect of the Certificates.
The outstanding principal amount, if any, of the Certificates
will be payable in full on the __________ Distribution Date
(the "Certificate Final Scheduled Distribution Date").
E. Optional Prepayment.............. If the Pool Balance as of the last day of a Collection Period has
declined to 5% or less of the Original Pool Balance, the
Seller or Servicer may purchase all remaining Trust Property
on any Distribution Date occurring in a subsequent
Collection Period at a purchase price equal to the aggregate
of the Purchase Amounts of the remaining Receivables
(other than Defaulted Receivables), which would result in a
prepayment of the Certificates. See "Description of the
Certificates--Optional Prepayment."
</TABLE>
S-8
<PAGE> 120
<TABLE>
<S> <C>
[Pre-Funding Account]................. [During the period (the "Funding Period") from and including
the Closing Date until the earliest of (i) the
Determination Date on which (a) the Pre-Funded Amount
is less than $ , (b) an Event of Default has
occurred under the Indenture or a Servicer Termination
Event has occurred under the Sale and Servicing
Agreement, (c) certain events of insolvency have occurred
with respect to the Seller or the Servicer or (ii) the close
of business on the [Date] Distribution Date, the
Pre-Funded Amount will be maintained in an account in
the name of the Indenture Trustee (the "Pre-Funding
Account"), The Pre-Funded Amount is expected to initially
equal approximately $ and, during the
Funding Period, will be reduced by the principal balance
of Subsequent Receivables purchased by the Trust from
time to time in accordance with the Sale and Servicing
Agreement. The Seller expects that the Pre-Funded
Amount will be reduced to less than $ by the
[Date] Distribution Date. Any Pre-Funded Amount
remaining at the end of the Funding Period will be
payable to the Noteholders and Certificateholders pro
rata in properties to the respective principal balances of
each class of Notes and the Certificates. See "Description
of the Transfer and Servicing Agreements -- Pre-Funding
Account; Subsequent Receivables."]
Reserve Account................... A reserve account (the "Reserve Account") will be created with
an initial deposit by the Seller of cash or certain investments
having a value of at least $________ (the "Reserve Account
Deposit"). In addition, on each Distribution Date, any
amounts on deposit in the Collection Account with respect
to the preceding Collection Period after payments to the
Certificateholders and the Servicer have been made will be
deposited into the Reserve Account until the amount of the
Reserve Account is equal to the Specified Reserve Account
Balance.
On or prior to the Business Day preceding each Distribution
Date (the "Deposit Date"), the Indenture Trustee will
withdraw funds from the Reserve Account, to the extent of
the funds therein (exclusive of investment earnings), to the
extent (a) the sum of the amounts required to be distributed
to Certificateholders and the Servicer on the related
Distribution Date exceeds (b) the amount on deposit in the
Collection Account with respect to the preceding Collection
Period (net of investment income). If the amount in the
Reserve Account is reduced to zero, Certificateholders will
bear the credit and other risks associated with ownership of
the Receivables, including the risk that the Trust may not
have a perfected security interest in the Financed Vehicles.
See "Risk Factors" herein and in the Prospectus,
"Description of the Certificates--The Reserve Account"; and
"Certain Legal Aspects of the Receivables" in the
Prospectus.
Tax Status........................ In the opinion of Thompson Hine & Flory LLP, for federal income
tax purposes, the Notes will be characterized as debt, and
the Trust will not be classified as an association (or a publicly
traded partnership) taxable as a corporation. In the opinion of
Thompson Hine & Flory LLP, Ohio tax counsel to the Trust, the
same characterization of the Notes as debt would apply for Ohio
corporation franchise tax purposes as for federal income tax purposes.
The Trust may, however, be treated as a taxable corporation for Ohio
corporation franchise tax purposes. Any franchise tax liability of the
Trust incurred by the Trust is expected not to be material, and the
Servicer will indemnify the Trust for any such franchise tax liability.
Each Noteholder, by the acceptance of a Note, will agree to treat the
Notes as indebtedness, and each Certificateholder, by the acceptance of a
Certificate, will agree to treat the Trust as a partnership in which the
Certificateholders are partners for federal, state and local income and
franchise tax purposes. See "Federal Income Tax Consequences" and
"State Tax Consequences" herein and in the Prospectus for additional
information concerning the application of federal and state tax laws to
the Trust and the Securities.
ERISA Considerations.............. Subject to the considerations discussed under "ERISA
Considerations" herein and in the Prospectus, the Notes are
eligible for purchase by employee benefit plans.
</TABLE>
S-9
<PAGE> 121
<TABLE>
<S> <C>
The Certificates may not be acquired with the assets of any
employee benefit plan subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), or with the assets of an individual
retirement account. See "ERISA Considerations" herein and
in the Prospectus.
Legal Investment.................. The Class A-1 Notes will be eligible securities for purchase by
money market funds under Rule 2a-7 under the Investment
Company Act of 1940, as amended.
Risk Factors...................... See "Risk Factors" herein and in the Prospectus for a
discussion of certain factors that potential investors should
consider in determining whether to invest in the Securities.
[No] Listing of Securities........ [The [Securities]/[Notes]/[Certificates] will not be listed on any
national securities exchange or automated quotation system
of a registered securities association.] [The Certificates]
[Notes] [Securities] will be listed on ______________.]
Rating of the Notes............... It is a condition to the issuance of the Notes that the Class A-1
Notes be rated in the highest short-term rating category and
that the Class A-2 Notes be rated in the highest long-term
rating category by at least two nationally recognized rating
agencies (the "Rating Agencies"). There can be no
assurance that a rating will not be lowered or withdrawn by
a Rating Agency if circumstances so warrant. See "Risk
Factors--Ratings of the Securities" herein and in the
Prospectus.
Rating of the Certificates........ It is a condition to the issuance of the Certificates that they be
rated at least "A" or its equivalent by at least two nationally
recognized rating agencies. There can be no assurance that
a rating will not be lowered or withdrawn by a rating agency
if circumstances so warrant. See "Risk Factors--Ratings of
the Securities" in the Prospectus.
</TABLE>
S-10
<PAGE> 122
RISK FACTORS
In addition to the other information contained herein and in the
Prospectus, prospective investors should consider carefully the following risk
factors and the information contained in "Risk Factors" in the Prospectus.
SUBORDINATION
Distributions of interest and principal on the Certificates will
be subordinated in priority of payment to interest and principal due on the
Class A-1 Notes and Class A-2 Notes. Consequently, the Certificateholders will
not receive any distributions with respect to a Collection Period until the full
amount of interest on and principal of the Notes on such Distribution Date has
been deposited in the Note Distribution Account. The Certificateholders will not
receive any distributions of principal until the Distribution Date on which the
Class A-2 Notes were paid in full. However, upon the occurrence and during the
continuation of an Event of Default which has resulted in an acceleration of the
Notes, distributions of all amounts on the Certificates will be subordinated in
priority of payment to payment in full of principal of the Notes.
If an Event of Default occurs, the Indenture Trustee or the
holders of a majority of the aggregate principal amount of all the Notes may
declare the principal of the Notes to be immediately due and payable, and the
Indenture Trustee may institute or be required to institute proceedings to
collect amounts due or exercise its remedies as a secured party (including
foreclosure or sale of the Receivables). In the event of a sale of Receivables
by the Indenture Trustee following an Event of Default, there is no assurance
that the proceeds of such sale will be equal to or greater than the aggregate
outstanding principal amount of the Notes and the Certificate Balance plus
accrued interest. Because neither interest nor principal is distributed to
Certificateholders upon sale of the Receivables following an Event of Default
and acceleration of the Notes under the Indenture until all the Notes have been
paid in full, the interests of Noteholders and the Certificateholders may
conflict, and the exercise by the Indenture Trustee of its right to sell the
Receivables or exercise other remedies under the Indenture and applicable law
may cause the Certificateholders to suffer a loss of all or part of their
investment. See "Description of the Notes--The Indenture--Events of Default;
Rights upon Event of Default" and "Description of the Transfer and Servicing
Agreements--Insolvency Event" in the Prospectus.
In general, the Seller may, and in certain circumstances the
Certificateholders may, direct the Owner Trustee in the administration of the
Trust. However, because the Trust has pledged the property of the Trust to the
Indenture Trustee to secure the payment of the Notes, including in such pledge
certain rights of the Trust under the Sale and Servicing Agreement, the
Indenture Trustee and not the Seller or the Certificateholders has the power to
direct the Trust to take certain actions in connection with the administration
of the property of the Trust until the Notes have been paid in full and the lien
of the Indenture has been released. In addition, the Seller and
Certificateholders are not allowed to direct the Owner Trustee to take any
action which conflicts with the provisions of any of the Sale and Servicing
Agreement, the Trust Agreement or the Indenture (together the "Basic
Documents"). The Indenture specifically prohibits the Issuer from taking any
action which would impair the Indenture Trustee's security interest in the Trust
and generally requires the Owner Trustee to obtain the consent of the Indenture
Trustee or the holders of a majority of the aggregate principal amount of the
Notes before modifying, amending, supplementing, waiving or terminating any
Basic Document or any provision of any Basic Document. Therefore, until the
Notes have been paid in full, the ability to direct the Trust with respect to
certain actions permitted to be taken by it under the Basic Documents rests with
the Indenture Trustee and the Noteholders instead of the Seller or the
Certificateholders.
If a Servicer Termination Event were to occur, the holders of a
majority of the outstanding principal amount of the Notes, the Indenture Trustee
acting on behalf of the Noteholders, or the Owner Trustee and not the Seller or
the Certificateholders, would have the right to terminate the Servicer as the
servicer of the Receivables without consideration of the effect such termination
would have on Certificateholders. In addition, the holders of not less than a
majority of the outstanding principal amount of the Notes would have the right
to waive certain
S-11
<PAGE> 123
Servicer Termination Events, without consideration of the effect such waiver
would have on Certificateholders. See "Description of the Transfer and Servicing
Agreements--Servicer Termination Events" and "--Rights upon Servicer Termination
Events" in the Prospectus.
LIMITED ASSETS
The Trust will not have, nor is it permitted or expected to have,
any significant assets or sources of funds other than the Receivables and the
Reserve Account. Holders of the Notes and the Certificates must rely for
repayment upon payments on the Receivables and, if and to the extent available,
amounts on deposit in the Reserve Account. Similarly, although funds in the
Reserve Account will be available on each Distribution Date to cover shortfalls
in distributions of interest and principal on the Notes and the Certificates,
amounts to be deposited in the Reserve Account are limited in amount. If the
Reserve Account is exhausted, the Trust will depend solely on current
distributions on the Receivables to make payments on the Notes and the
Certificates.
Amounts on deposit in the Reserve Account will be available on
any Distribution Date first to cover payment of Servicing Fees to the Servicer,
then shortfalls in distributions of interest on the Notes then shortfalls in
distributions of interest on Certificates. After distributions of interest on
the Certificates have been made, the remaining amounts on deposit in the Reserve
Account will be available first to cover shortfalls in distributions of
principal on the Notes and then shortfalls in distributions of principal on the
Certificates. If the Reserve Account is exhausted, the Trust will depend solely
on payments on the Receivables to make distributions on the Securities, and
Securityholders will bear the risk of delinquency, loan losses and repossessions
with respect to the Receivables. There can be no assurance that the future
delinquency, loan loss and repossession experience of the Trust with respect to
the Receivables will be better or worse than that set forth herein with respect
to the portfolio of Motor Vehicle Loans serviced by the Servicer. Any amounts
released from the Reserve Account to the Seller will not be available to the
Securityholders. See "The Receivables Pool--Pool Composition" and "Delinquency
and Net Losses" herein and "The Receivables Pools" in the Prospectus and
"Description of the Transfer and Servicing Agreements--Subordination of
Certificateholders; Reserve Account" and "--Distributions" herein.
MATURITY AND PREPAYMENT CONSIDERATIONS
The Class A-2 Notes will not receive any principal payments until
the Class A-1 Notes have been paid in full. In addition, no principal payments
on the Certificates will be made until the Distribution Date on which the Notes
are paid in full. As the rate of payment of principal of the Notes and the
Certificates depends on the rate of payment (including prepayments) of the
principal balance of the Receivables, final payment of the Notes and the final
distribution in respect of the Certificates could occur significantly earlier
than the applicable Final Scheduled Distribution Date. It is expected that final
payment of the Notes and the final distribution in respect of the Certificates
will occur on or prior to the applicable Final Scheduled Distribution Date.
However, if sufficient funds are not available to pay the Notes or the
Certificates in full on or prior to the applicable Final Scheduled Distribution
Date, final payment of the Notes and the final distribution in respect of the
Certificates could occur later than such date. See "Weighted Average Life of the
Securities" herein and in the Prospectus.
[THE YIELD ON THE CLASS ____ NOTES WILL BE EXTREMELY SENSITIVE TO
THE RATE AND TIMING OF PAYMENTS (INCLUDING PREPAYMENTS) ON THE RECEIVABLES. [AN
INVESTOR PURCHASING A CLASS ____ NOTE AT A SIGNIFICANT PREMIUM COULD, UNDER
CERTAIN PREPAYMENT SCENARIOS, FAIL TO RECOUP ITS ORIGINAL INVESTMENT.] [THE
YIELD TO MATURITY ON THE CLASS ____ NOTES WILL BE ADVERSELY AFFECTED BY A LOWER
THAN ANTICIPATED RATE OF PAYMENT ON THE RECEIVABLES.] [The reinvestment risk to
an investor in the Class ____ Notes may be exacerbated in the event of [an
increase in the rate of payment on the Receivables in a decreasing interest rate
environment] [a decrease in the rate of payment on the Receivables in an
increasing rate environment]. Any ratings assigned to the Class ____ Notes by a
Rating Agency will reflect only such Rating Agency's assessment of the
likelihood that timely distributions will be made with respect to the Class ____
Notes
S-12
<PAGE> 124
in accordance with the Sale and Servicing Agreement and the Indenture. Such
rating will not constitute an assessment of the likelihood that principal
prepayments on the Receivables will occur or of the degree to which the rate of
such prepayments might differ from that originally anticipated. As a result,
such rating will not address the possibility that prepayment rates higher or
lower than anticipated by an investor may cause [such investor to experience a
lower than anticipated yield] [an investor purchasing a Class ____ Note at a
significant premium might fail to recoup its investment]. See "The Receivable
Pool -- Sensitivity of the Class ____ Notes to Prepayments."]
RATINGS OF THE SECURITIES
It is a condition to the issuance of the Notes and of the
Certificates that the Class A-1 Notes be rated in the highest short-term rating
category and that the Class A-2 Notes be rated in the highest long-term rating
category, and that the Certificates be rated at least "A" or its equivalent, by
at least two nationally recognized rating agencies. A rating is not a
recommendation to purchase, hold or sell Securities, inasmuch as such rating
does not comment as to market price or suitability for a particular investor.
The ratings of the Securities address the likelihood of the payment of principal
and interest on the Securities pursuant to their terms. There can be no
assurance that a rating will remain for any given period of time or that a
rating will not be lowered or withdrawn entirely by a Rating Agency if in its
judgment circumstances in the future so warrant.
THE TRUST
GENERAL
The Issuer, Key Auto Finance Trust 199_-_, is a [business] trust
formed under the laws of the State of [Delaware] pursuant to the Trust Agreement
for the transactions described in this Prospectus Supplement. After its
formation, the Trust will not engage in any activity other than (a) acquiring,
holding and managing the Receivables and the other assets of the Trust and
proceeds therefrom, (b) from time to time prior to the Closing Date, issuing
indebtedness or other securities to finance its purchase of the Receivables and
such other assets and, on and after the Closing Date, issuing the Notes and the
Certificates to finance such assets, (c) making payments on the indebtedness and
other securities and the Notes and the Certificates issued by it, and (d)
engaging in other activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith.
At the time the Notes and Certificates are issued, the Trust will
be capitalized with equity in an amount equal to the Certificate Balance of
$__________, excluding amounts deposited in the Reserve Account. The equity of
the Trust, together with the net proceeds from the sale of the Notes, will be
used by the Trust to purchase the Receivables from the Seller pursuant to the
Sale and Servicing Agreement [or to repayment of any related Warehouse
Financing.]
If the protection provided to the investment of the
Securityholders by the Reserve Account is insufficient, the Trust will look only
to the Obligors on the Receivables, the proceeds from the repossession and sale
of Financed Vehicles which secure defaulted Receivables and the proceeds from
any Dealer Recourse. In such event, certain factors, such as the Trust's not
having first priority perfected security interests in some of the Financed
Vehicles, may affect the Trust's ability to realize on the collateral securing
the Receivables, and thus may reduce the proceeds to be distributed to
Securityholders with respect to the Securities. See "Description of the Transfer
and Servicing Agreements--Distributions" and "--Reserve Account" and "Certain
Legal Aspects of the Receivables" in the Prospectus.
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<PAGE> 125
The Trust's principal offices are in Delaware, in care of
__________________, as Owner Trustee, at the address listed below under "--The
Owner Trustee".
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust
as of the Closing Date, as if the issuance and sale of the Notes and the
Certificates have taken place on such date:
Class A-1 __% Money Market Asset Backed Notes.......... $____________
Class A-2 __% Asset Backed Notes....................... ____________
__% Asset Backed Certificates.......................... ____________
Total.................................................. $
============
THE OWNER TRUSTEE
_______________ is the Owner Trustee under the Trust Agreement.
_____________ is a __________________ and its principal offices where
information can be obtained relating to the Trust and the Certificates are
located at _____________________. The Seller and its affiliates may maintain
normal commercial banking relations with the Owner Trustee and its affiliates.
THE RECEIVABLES POOL
The Receivables were purchased or originated by the Originators
in the ordinary course of their respective businesses. The pool of Receivables
(the "Receivables Pool") will consist of Receivables purchased by the Trust as
of the Cutoff Date. The Receivables have been selected from the Motor Vehicle
Loan portfolio of each Affiliate for inclusion in the Receivables Pool by
several criteria, some of which are set forth in the Prospectus under "The
Receivables Pool," as well as the requirement that each Receivable (a) has an
outstanding principal balance of at least $_____, (b) as of the Cutoff Date,
was not more than 30 days past due, (c) has a scheduled maturity not later
than six months before the Final Scheduled Maturity Date, (d) was not subject
to a force-placed physical damage insurance policy on the related Financed
Vehicle and (e) had an original term to maturity of not more than ___ months.
No selection criteria or procedures believed by the Seller to be adverse to the
Certificateholders were used in selecting the Receivables.
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<PAGE> 126
POOL COMPOSITION
Set forth in the following tables is information concerning the
composition, distribution by Contract Rate and the geographic distribution of
the Receivables to be conveyed by the Seller to the Trust as of the Cutoff Date.
COMPOSITION OF THE RECEIVABLES POOL
AS OF THE CUTOFF DATE
<TABLE>
<S> <C>
Aggregate Principal Balance.................................................................... $________________
Number of Receivables.......................................................................... $________________
Average Principal Balance...................................................................... $________________
(Range)......................................................................... $______ to $_____
Average Original Amount Financed $________________
(Range)......................................................................... $______ to $_____
Weighted Average Contract Rate................................................................. _____%
(Range)......................................................................... ___% to___%
Weighted Average Original Term................................................................. ____ months
(Range)......................................................................... ____ to ___ months
Weighted Average Remaining Term................................................................ ____ months
(Range)......................................................................... ____ to ___ months
Scheduled Weighted Average Life (1)............................................................ ____ years
</TABLE>
(1) Based on payments due on or after the Cutoff Date, assuming that no
prepayments on the Receivables are made after the Cutoff Date and that
all payments on Simple Interest Receivables are received on their
respective due dates.
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<PAGE> 127
DISTRIBUTION BY CONTRACT RATE OF THE RECEIVABLES
AS OF THE CUTOFF DATE(1)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
CONTRACT RANGE RECEIVABLES BALANCE BALANCE
- ------------------------- ---------------- --------------- ---------------
<S> <C> <C> <C>
7.75 to 8.00
8.01 to 9.00
9.01 to 10.00
10.01 to 11.00
11.01 to 12.00
12.01 to 13.00
13.01 to 14.00
14.01 to 15.00
15.01 to 16.00
16.01 to 17.00
17.01 to 18.00
18.01 to 19.00
19.01 to 20.00
20.01 to 21.00
21.01 to 22.00
22.01 to 23.00
23.01 to 24.00
24.01 to 25.00
Totals 100%
========== ========== ====
</TABLE>
- ---------------
(1) Percentages may not add to 100% because of rounding.
Approximately ___% of the aggregate principal balance of the
Receivables, constituting ___% of the number of such Receivables, as of the
Cutoff Date represented financing of new vehicles and the remainder represented
financing of used vehicles. Approximately __% of the aggregate principal balance
of the Receivables, constituting __% of the number of such Receivables, were
originated or purchased by AutoFinance Group. Approximately __% of the aggregate
principal balance of the Receivables, constituting __% of the number of such
Receivables, are Precomputed Receivables and the remainder are Simple Interest
Receivables.
S-16
<PAGE> 128
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL
AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
AGGREGATE AGGREGATE
PRINCIPAL PRINCIPAL
BALANCE BALANCE
<S> <C> <C> <C>
STATE(1) STATE(1)
Alabama................... Missouri......................
Alaska.................... Montana.......................
Arizona................... Nebraska......................
Arkansas.................. Nevada........................
California................ New Hampshire.................
Colorado.................. New Jersey....................
Connecticut............... New Mexico....................
Delaware.................. New York......................
District of Columbia...... North Carolina................
Florida................... North Dakota..................
Georgia................... Ohio..........................
Hawaii.................... Oklahoma......................
Idaho..................... Oregon........................
Illinois.................. Pennsylvania..................
Indiana................... Rhode Island..................
Iowa...................... South Carolina................
Kansas.................... South Dakota..................
Kentucky.................. Tennessee.....................
Louisiana................. Texas.........................
Maine..................... Utah..........................
Maryland.................. Vermont.......................
Massachusetts............. Virginia......................
Michigan.................. Washington....................
Minnesota................. West Virginia.................
Mississippi............... Wisconsin.....................
Wyoming.......................
</TABLE>
- ---------------
(1) Based on the billing addresses of the Obligors on the Receivables as of
the Cutoff Date.
DELINQUENCIES AND NET LOSSES
Set forth below is certain information concerning the combined
historical delinquency and loss experience of the Originators pertaining to
Motor Vehicle Loans.
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<PAGE> 129
The tables set forth below combine historical Motor Vehicle Loan
data for banks and other financial institutions which are direct or indirect
subsidiaries of KeyCorp (the "Combined Motor Vehicle Loan Portfolio"). These
tables include data for banks and other financial institutions which were
acquired by KeyCorp and its subsidiaries since January 1, 1993, including
AutoFinance Group, which was acquired by KeyCorp on September 27, 1995. The
tables include data for AutoFinance Group prior to the date AutoFinance Group
was acquired by KeyCorp. The Bank began originating Motor Vehicle Loans on
September 5, 1995. The underwriting standards and servicing procedures used by
some banks or financial institutions may have been different from those
currently used by the Bank and, consequently, the experience shown in the tables
below may not be comparable to the performance of the Receivables.
AutoFinance Group originated or purchased__% of the aggregate
principal balance of the Receivables included in the Trust. As of [September
30, 1996], __% of the aggregate principal balance of the Motor Vehicle Loans in
the Combined Motor Vehicle Loan Portfolio were originated or purchased by
AutoFinance Group. Consequently, because of the higher proportion of specialty
finance loans originated or purchased by AutoFinance Group in the Receivables
Pool, the experience shown in the tables below may not be comparable to the
performance of the Receivables.
Because the composition of the Receivables included in the Trust
differs from the Combined Motor Vehicle Loan Portfolio and the underwriting
standards and servicing procedures used by some banks or financial institutions
in the origination and servicing of Motor Vehicle Loans included in the Combined
Motor Vehicle Loan Portfolio prior to the formation of the Bank may have been
different from those used by the Bank, there can be no assurance that the
delinquency and net loss experience on the Receivables of the Trust will be
comparable to that set forth below.
S-18
<PAGE> 130
COMBINED MOTOR VEHICLE LOAN PORTFOLIO
DELINQUENCY EXPERIENCE(1)
(Dollars in Millions)
<TABLE>
<CAPTION>
At September 30, At December 31,
------------------------------------ ---------------------------------------------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
- -----------------------------------------------------------------------------------------------------------------------------------
$ Percent $ Percent $ Percent $ Percent $ Percent
--- ------- --- ------- --- ------- --- ------- --- -------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Amount of Motor Vehicle
Loans Outstanding.............
- -----------------------------------------------------------------------------------------------------------------------------------
Period of Delinquency:
- -----------------------------------------------------------------------------------------------------------------------------------
31-90 days..................
- -----------------------------------------------------------------------------------------------------------------------------------
over 90 days................
- -----------------------------------------------------------------------------------------------------------------------------------
Repossessions.................
- -----------------------------------------------------------------------------------------------------------------------------------
Total.........................
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------
(1) All amounts and percentages are based on the principal amount scheduled
to be paid on each Motor Vehicle Loan, including unearned finance and
other charges.
S-19
<PAGE> 131
COMBINED MOTOR VEHICLE LOAN PORTFOLIO
HISTORICAL NET LOSS EXPERIENCE
(Dollars in Millions)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
----------------- -----------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Principal Amount of Motor Vehicle Loans Outstanding (1)............
Average Principal Amount of Motor Vehicle Loans Outstanding........
Gross Charge-Offs..................................................
Recoveries.........................................................
Net Losses(2)......................................................
Net Losses as a Percent of Principal Amount Outstanding(2).........
Net Losses as a Percent of Average Principal Amount
Outstanding (2)................................................
</TABLE>
- ---------------
(1) Amount represents net principal amounts of Motor Vehicle Loans
outstanding.
(2) Amount represents the aggregate balance of all Motor Vehicle Loans
which were determined to be uncollectible in the period, less any
recoveries on Motor Vehicle Loans charged-off in the period or any
prior period.
Delinquencies and net charge-offs are affected by a number of
social, economic and other factors that may affect an Obligor's ability or
willingness to pay, such as the amount or types of indebtedness incurred by such
Obligor in addition to the Receivable on which such Obligor is indebted, and
there can be no assurance as to the level of future total delinquencies or the
severity of future net charge-offs. As a result, the delinquency and net
charge-off experience of the Receivables may differ from those shown in the
tables.
THE SELLER, THE SERVICER AND KEYCORP
Information regarding the Seller is set forth under "The Seller"
in the Prospectus and information regarding the Servicer is set forth under "The
Bank" in the Prospectus. Each of the Seller and the Servicer is a wholly-owned
subsidiary of KeyCorp. KeyCorp operates through subsidiaries engaged in banking
and a variety of related businesses. As of June 30, 1996, KeyCorp had
consolidated total assets of $_____________ billion, total deposits of
$_____________ billion, and total stockholders' equity of $______________
billion. Based on total assets as of June 30, 1996, KeyCorp was the
[______________] largest commercial banking organization in the United States.
S-20
<PAGE> 132
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Information regarding certain maturity and prepayment
considerations with respect to the Securities is set forth under "Weighted
Average Life of Securities" in the Prospectus. No principal payments will be
made on the Class A-2 Notes until all Class A-1 Notes have been paid in full. In
addition, no principal payments on the Certificates will be made until all of
the Notes have been paid in full. See "Description of the Notes--Payments of
Principal" and "Description of the Certificates--Distributions of Principal
Payments." As the rate of payment of principal of each class of Notes and the
Certificates depends primarily on the rate of payment (including prepayments) of
the principal balance of the Receivables, final payment of any class of the
Notes and the final distribution in respect of the Certificates could occur
significantly earlier than the respective Final Scheduled Distribution Dates. It
is expected that final payment of the Notes and the final distribution in
respect of the Certificates will occur on or prior to the applicable Final
Scheduled Distribution Date. However, if sufficient funds are not available to
pay the Notes or the Certificates in full on or prior to the applicable Final
Scheduled Distribution Date, final payment of the Notes and the final
distribution in respect of the Certificates could occur later than such date.
Prepayments on motor vehicle receivables can be measured relative
to a prepayment standard or model. The model used in this Prospectus Supplement,
the Absolute Prepayment Model ("ABS"), represents an assumed rate of prepayment
each month relative to the original number of receivables in a pool of
receivables. ABS further assumes that all the receivables are the same size and
amortize at the same rate and that each receivable in each month of its life
will either be paid as scheduled or be prepaid in full. For example, in a pool
of receivables originally containing 10,000 receivables, a 1% ABS rate means
that 100 receivables prepay each month. ABS does not purport to be an historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of receivables, including the Receivables.
As the rate of payment of principal with respect of the
Securities will depend on the rate of payment (including prepayments) of the
principal balance of the Receivables, final payment of any class of Notes could
occur significantly earlier than the Class A-1 or Class A-2 Final Scheduled
Distribution Date, as applicable. The final distribution in respect of the
Certificates also could occur prior to the Certificate Final Scheduled
Distribution Date. Reinvestment risk associated with early payment of the Notes
and the Certificates will be borne exclusively by the Noteholders and the
Certificateholders, respectively.
The table captioned "Percent of Initial Note Principal Balance or
Initial Certificate Balance at Various ABS Percentages" (the "ABS Table") has
been prepared on the basis of the characteristics of the Receivables. The ABS
Table assumes that (a) the Receivables prepay in full at the specified constant
percentage of ABS monthly, with no defaults, losses or repurchases, (b) each
scheduled monthly payment on the Receivables is made on the last day of each
month and each month has 30 days, (c) payments on the Notes and distributions on
the Certificates are made on each Distribution Date (and each such date is
assumed to be the 15th day of each applicable month), (d) the balance in the
Reserve Account on each Distribution Date is equal to the Specified Reserve
Account Balance, and (e) the Seller or Servicer does not exercise its option to
purchase the Receivables. The pool has an assumed cutoff date of the Cutoff
Date. The ABS Table indicates the projected weighted average life of each class
of Notes and the Certificates and sets forth the percent of the initial
principal amount of each class of Notes and the percent of the initial
Certificate Balance that is projected to be outstanding after each of the
Distribution Dates shown at various constant ABS percentages.
The ABS Tables also assume that the Receivables have been
aggregated into hypothetical pools with all of the Receivables within each such
pool having the following characteristics and that the level scheduled monthly
payment for each of the pools (which is based on its aggregate principal
balance, Contract Rate, original number of scheduled payments and remaining
number of scheduled payments as of the Cut-Off Date) will be such that each pool
will be fully amortized by the end of its remaining term to maturity.
<TABLE>
<CAPTION>
Original Term Remaining Term
Aggregate to Maturity to Maturity
Pool Principal Balance Contract Rate (in Months) (in Months)
- ---------------- -------------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
1............... $ %
</TABLE>
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The actual characteristics and performance of the Receivables
will differ from the assumptions used in constructing the ABS Table. The
assumptions used are hypothetical and have been provided only to give a general
sense of how the principal cash flows might behave under varying prepayment
scenarios. For example, it is very unlikely that the Receivables will prepay at
a constant level of ABS until maturity or that all of the Receivables will
prepay at the same level of ABS. Moreover, the diverse terms of Receivables
within each of the four hypothetical pools could produce slower or faster
principal distributions than indicated in the ABS Table at the various constant
percentages of ABS specified, even if the original and remaining terms to
maturity of the Receivables are as assumed. Any difference between such
assumptions and the actual characteristics and performance of the Receivables,
or actual prepayment experience, will affect the percentages of initial balances
outstanding over time and the weighted average lives of each class of Notes and
the Certificates.
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
Class A-1 Notes Class A-2 Notes Class A-3 Notes
-------------------------------- -------------------------------- -----------------------------------
Distribution Date 0.0% 1.0% 1.5% 1.7% 2.0% 0.0% 1.0% 1.5% 1.7% 2.0% 0.0% 1.0% 1.5% 1.7% 2.0%
- ----------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date............
December 1996...........
January 1997............
February 1997...........
March 1997..............
April 1997..............
May 1997................
June 1997...............
July 1997...............
August 1997.............
September 1997..........
October 1997............
November 1997...........
Weighted Average Life
(years) (1)...........
</TABLE>
- --------------------------------------------
(1) The weighted average life of a Class A-1 Note or Class A-2 Note is
determined by (a) multiplying the amount of each principal payment of
such Note by the number of years from the date of the issuance of such
Note to the related Distribution Date, (b) adding the results and (c)
dividing the sum by the related initial principal amount of such Note.
THE ABS TABLE HAS BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
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PERCENT OF INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
Certificates
--------------------------------------
Distribution Date 0.0% 1.0% 1.5% 1.7% 2.0%
- ----------------- --- --- --- --- ---
<S> <C> <C> <C> <C> <C>
Closing Date...............................
December 1996..............................
January 1997...............................
February 1997..............................
March 1997.................................
April 1997.................................
May 1997...................................
June 1997..................................
July 1997..................................
August 1997................................
September 1997.............................
October 1997...............................
November 1997..............................
Weighted Average Life (years)(1)...........
</TABLE>
- --------------------------------------------
(1) The weighted average life of a Certificate is determined by (a)
multiplying the amount of each distribution in respect of the
Certificate Balance of such Certificate by the number of years from the
date of the issuance of such Certificate to the related Distribution
Date, (b) adding the results and (c) dividing the sum by the original
Certificate Balance of such Certificate.
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
[SENSITIVITY OF THE CLASS ____ NOTES TO PREPAYMENTS
[Describe method of calculating principal and interest payable on the Class
____ Notes, including setting forth notional balance for each [Distribution]
[Payment] Date, if applicable. Set forth in tabular form relationship between
yield to maturity of the Class ____ Notes and assumed prepayment speeds. State
assumptions, including as to purchase price of the Class ____ Notes, if
applicable, used in calculating the data set forth in the table.]
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. A copy of the
Indenture will be filed with the Commission following the issuance of the
Securities. The following summary describes certain terms of the Notes and the
Indenture. The summary describes the material terms of the Notes and the
Indenture, but it does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Notes and
the Indenture. Where particular provisions or terms used in the Indenture are
referred to, the actual provisions (including definitions of terms) are
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incorporated by reference as part of such summary. The following summary
supplements the description of the general terms and provisions of the Notes of
any given series and the related Indenture set forth in the Prospectus, to which
description reference is hereby made. _____________________ will be the
Indenture Trustee under the Indenture. The address of the Indenture Trustee at
which information regarding the Trust and Notes may be obtained is
________________.
PAYMENTS OF INTEREST
Each class of the Notes will constitute Fixed Rate Securities, as
such term is defined under "Certain Information Regarding the Securities--Fixed
Rate Securities" in the Prospectus. Interest on the principal balances of the
classes of the Notes will accrue at their respective per annum Interest Rates
and will be payable to the Noteholders monthly on each Distribution Date,
commencing , 199 . Interest on the outstanding principal amount of the Notes
will accrue at the applicable Interest Rate for the applicable Interest Accrual
Period. Interest distributions due for any Distribution Date but not distributed
on such Distribution Date will be due on the next Distribution Date increased by
an amount equal to interest on such amount at the applicable Interest Rate (to
the extent lawful). Interest on the Notes will be calculated on the basis of a
360-day year consisting of twelve 30-day months. Interest payments on the Notes
will generally be derived from the Total Distribution Amount remaining after the
payment of the Servicing Fee. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account."
Interest payments to both classes of Noteholders will have the
same priority. Under certain circumstances, the amount available for interest
payments could be less than the amount of interest payable on the Notes on any
Distribution Date, in which case each class of Noteholders will receive their
ratable share (based upon the aggregate amount of interest due to such class of
Noteholders) of the aggregate amount available to be distributed in respect of
interest on the Notes.
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders on each
Distribution Date in an amount generally equal to the Noteholders' Principal
Distributable Amount. Principal payments on the Notes will generally be derived
from the Total Distribution Amount remaining after the payment of the Servicing
Fee and the Noteholders' Interest Distributable Amount. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account."
On the Business Day immediately preceding each Distribution Date
(a "Determination Date"), the Indenture Trustee shall determine the amount in
the Collection Account allocable to interest and the amount allocable to
principal.
On each Distribution Date, principal payments on the Notes will
be applied in the following order of priority: (a) to the principal balance of
the Class A-1 Notes until the principal balance of the Class A-1 Notes is
reduced to zero; and (b) to the principal balance of the Class A-2 Notes until
the principal balance of the Class A-2 Notes is reduced to zero. The principal
balance of the Class A-1 Notes, to the extent not previously paid, will be due
on the Class A-1 Final Scheduled Distribution Date and the principal balance of
the Class A-2 Notes, to the extent not previously paid, will be due on the Class
A-2 Final Scheduled Distribution Date. The actual date on which the aggregate
outstanding principal amount of either class of Notes is paid may be earlier
than the respective final scheduled Distribution Dates set forth above based on
a variety of factors, including those described under "Weighted Average Life of
the Securities" herein and in the Prospectus.
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<PAGE> 136
OPTIONAL REDEMPTION
On any Distribution Date after the Class A-1 Notes have been paid
in full, the Class A-2 Notes will be redeemed in whole, but not in part, if the
Seller or Servicer exercises its option to purchase the Receivables. The Seller
or Servicer may purchase the Receivables when the Pool Balance shall have
declined to 5% or less of the Original Pool Balance, as described in the
Prospectus under "Description of the Transfer and Servicing
Agreements--Termination". The redemption price will be equal to the unpaid
principal amount of the Class A-2 Notes plus accrued and unpaid interest
thereon.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Trust Agreement,
a form of which has been filed as an exhibit to the Registration Statement. A
copy of the Trust Agreement will be filed with the Commission following the
issuance of the Securities. The following summary describes certain terms of the
Certificates and the Trust Agreement. The summary describes the material terms
of the Certificates and the Trust Agreement, but it does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
the provisions of the Certificates and the Trust Agreement. The following
summary supplements the description of the general terms and provisions of the
Certificates of any given series and the related Trust Agreement set forth in
the Prospectus, to which description reference is hereby made.
DISTRIBUTION OF INTEREST INCOME
On each Distribution Date, commencing , 199 , the
Certificateholders will be entitled to distributions in an amount equal to the
amount of interest that would accrue on the Certificate Balance at the
Certificate Rate. The Certificates will constitute Fixed Rate Securities, as
such term is defined under "Certain Information Regarding the Securities--Fixed
Rate Securities" in the Prospectus. Interest in respect of a Distribution Date
will accrue from the Closing Date (in the case of the First Distribution Date)
and thereafter, from the [15th] day of the month preceding the month of the
Distribution Date to and including the ___ day of the month of such Distribution
Date. Interest distributions due for any Distribution Date but not distributed
on such Distribution Date will be due on the next Distribution Date increased by
an amount equal to interest on such amount at the Certificate Rate (to the
extent lawful). Interest distributions with respect to the Certificates will
generally be funded from the portion of the Total Distribution Amount and the
funds in the Reserve Account remaining after the distribution of the Servicing
Fee and the Noteholders' Interest Distributable Amount. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account."
DISTRIBUTIONS OF PRINCIPAL PAYMENTS
Certificateholders will be entitled to distributions of principal
on each Distribution Date, commencing with the Distribution Date on which the
Notes are paid in full, in an amount generally equal to the Principal
Distribution Amount (less on the Distribution Date on which the Notes are paid
in full, the portion thereof payable on the Notes). Distributions with respect
to principal payments will generally be funded from the portion of the Total
Distribution Amount remaining after the distribution of the Servicing Fee, the
Noteholders' Distributable Amount (on the Distribution Date on which the Notes
are paid in full) and the Certificateholders' Interest Distributable Amount. See
"Description of the Transfer and Servicing Agreements--Distributions" and
"--Reserve Account".
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<PAGE> 137
OPTIONAL PREPAYMENT
If the Seller or Servicer exercises its option to purchase the
Receivables when the Pool Balance declines to 5% or less of the Original Pool
Balance, the Seller or Servicer may purchase all remaining Trust Property on any
Distribution Date occurring in a subsequent Collection Period at a purchase
price equal to the aggregate of the Purchase Amounts of the remaining
Receivables (other than Defaulted Receivables), which purchases would result in
a prepayment of the Certificates. The proceeds from any such purchase would be
first be applied to any unpaid principal amount on the Class A-2 Notes and
accrued interest thereon and then to the Certificates and accrued interest
thereon. See "Description of the Transfer and Servicing Agreements--Termination"
in the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Sale and
Servicing Agreement and the Trust Agreement. Forms of the Sale and Servicing
Agreement and the Trust Agreement have been filed as exhibits to the
Registration Statement. A copy of the Sale and Servicing Agreement will be filed
with the Commission following the issuance of the Securities. The summary
describes the material terms of the Sale and Servicing Agreement and the Trust
Agreement, but it does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the Sale and
Servicing Agreement and the Trust Agreement. The following summary supplements
the description of the general terms and provisions of the Sale and Servicing
Agreement and the Trust Agreement set forth in the Prospectus, to which
description reference is hereby made.
ACCOUNTS
Accounts referred to under "Description of the Transfer and
Servicing Agreements--Accounts" in the Prospectus, as well as the Reserve
Account, will be established by the Servicer and maintained in the name of the
Indenture Trustee on behalf of the Noteholders and the Certificateholders.
Amounts held from time to time in the Reserve Account will be held for the
benefit of Noteholders and Certificateholders. Funds on deposit in the Reserve
Account will be invested in Eligible Investments selected by the Seller and, if
permitted by the Rating Agencies, funds on deposit in the Reserve Account may be
invested in Eligible Investments that mature later than the next Deposit Date.
All investment earnings on funds deposited in the Trust Accounts, net of losses
and investment expenses, will be distributed to the Servicer and will not be
treated as Collections on the Receivables or otherwise be available for
Noteholders or Certificateholders. Upon any distribution to the Servicer of
amounts from the Reserve Account, the Securityholders will not have any rights
in, or claims to, such amounts. On or before each Distribution Date, funds in
the amount of the Reserve Account Transfer Amount for such Distribution Date
will be withdrawn from the Reserve Account and deposited in the Collection
Account.
On each Distribution Date, the amount available in the Reserve
Account (the "Available Reserve Amount") will equal the lesser of (a) the amount
on deposit in the Reserve Account (exclusive of investment earnings) and (b) the
Specified Reserve Account Balance.
On each Deposit Date, the Trustee will withdraw funds from the
Reserve Account in the amount of the Reserve Account Transfer Amount. Such
excess may result from, among other things, Receivables becoming Defaulted
Receivables or the failure by the Servicer to make any remittance required to be
made under the Agreement. The aggregate amount to be withdrawn from the Reserve
Account on any Deposit Date will not exceed the Available Reserve Amount with
respect to the related Distribution Date. The Trustee will deposit the proceeds
of such withdrawal into the Collection Account on or before the Distribution
Date with respect to which such withdrawal was made.
Subject to reduction as described below, the "Specified Reserve
Account Balance" means the greater of (i) the excess, if any, of (A) _____% of
the Pool Balance at the end of the preceding Collection Period over (B)
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<PAGE> 138
the Overcollateralization Amount (after giving effect to any distributions on
the Securities on such Distribution Date), and (ii) the Minimum Specified
Reserve Balance. The Specified Reserve Account Balance may be reduced from time
to time if the Rating Agencies have delivered prior written notice to the
Seller, the Servicer, the Indenture Trustee and the Owner Trustee that such
reduction will not result in a reduction, withdrawal or qualification of each
Rating Agency's then current ratings of each class of the Notes and the
Certificates. The time necessary for the Reserve Account to reach and maintain
the Specified Reserve Account Balance at any time after the Closing Date will be
affected by the delinquency, credit loss, repossession and prepayment experience
of the Receivables and, therefore, cannot be accurately predicted. Amounts on
deposit in the Reserve Account will be released to the Servicer on each
Distribution Date to the extent that the amount on deposit in the Reserve
Account would exceed the Specified Reserve Account Balance.
"Liquidation Proceeds" means, with respect to any
Receivable that has become a Defaulted Receivable, (a) insurance
proceeds received by the Servicer, with respect to insurance
policies relating to the Financed Vehicles or the Obligors and/or
any proceeds from lender's single interest insurance policies to
the extent not included in collections distributable to
Securityholders, (b) amounts received by the Servicer in
connection with such Defaulted Receivable pursuant to the
exercise of rights under the related Motor Vehicle Loan, and (c)
the monies collected by the Servicer (from whatever source,
including, but not limited to proceeds of a sale of a Financed
Vehicle or deficiency balance recovered after the charge-off of
the related Receivable) on such Defaulted Receivable, net of any
expenses incurred by the Servicer in connection therewith and any
payments required by law to be remitted to the Obligor.
"Minimum Specified Reserve Balance" with respect to
any Distribution Date means the lesser of (i) $__________________
and (ii) the aggregate outstanding principal amount of the Notes
and the Certificate Balance (after giving effect to any
distributions on the Securities on such Distribution Date).
"Overcollateralization Amount" means, with respect
to any Distribution Date, the excess, if any, of the Pool Balance
at the end of the preceding Collection Period over the sum of the
aggregate outstanding principal amount of the Notes and the
Certificate Balance on such Distribution Date (after giving
effect to any distributions made on such Distribution Date).
"Reserve Account Transfer Amount" means, on any
Distribution Date, an amount equal to the lesser of (a) the
amount of cash or other immediately available funds on deposit in
the Reserve Account on such Distribution Date (before giving
effect to any withdrawals therefrom relating to such Distribution
Date) or (b) the amount, if any, by which (i) the sum of the
Servicing Fee for the related Collection Period and all accrued
and unpaid Servicing Fees for prior Collection Periods, the
Noteholders' Interest Distributable Amount, the
Certificateholders' Interest Distributable Amount, the
Noteholders' Principal Distributable Amount and the
Certificateholders' Principal Distributable Amount for such
Distribution Date exceeds (ii) the sum of the Available Interest
and the Available Principal for such Distribution Date.
If funds in the Reserve Account are reduced to zero, the
Securityholders will bear the credit and other risks associated with ownership
of the Receivables. In such a case, the amount available for distribution may be
less than that described below, and the Certificateholders may experience delays
or suffer losses as a result, among other things, of defaults or delinquencies
by the Obligors or previous extensions made by the Servicer.
[PRE-FUNDING ACCOUNT; SUBSEQUENT RECEIVABLES]
[On the Closing Date, approximately $ of Initial
Receivables will be transferred to the Trust by the Seller and the
approximately $ Pre-Funded Amount will be deposited by the Trust in
the Pre-Funding Account. If the principal amount of eligible Receivables
originated by the Originators during the Funding Period is less than the
Pre-Funded Amount, the Seller will have insufficient Receivables to sell to the
Trust on the Subsequent Transfer Dates, thereby resulting in a prepayment of
principal in the Noteholders and the Certificateholders as described in the
following paragraph.] [In addition, any conveyance of Subsequent Receivables is
subject to the satisfaction, on or before the related Subsequent Transfer Date,
of the condition that each such Subsequent Receivable satisfies the eligibility
criteria specified in the Sale and Servicing Agreement for Initial
Receivables.]
[To the extent that the Pre-Funded Amount has not been fully
applied to the purchase of Subsequent Receivables by the Trust during the
Funding Period, the Noteholders and the Certificateholders will receive in the
Distribution Date on or immediately following the last day of the Funding
Period, a prepayment of principal in an amount equal to their pro rata share
(based on the current principal balance of each class of Notes and the
Certificate Balance) of any remaining Pre-Funded Amount following the purchase
of any Subsequent Receivables on such Distribution Date. It is anticipated that
the principal amount of Subsequent Receivables sold to the Trust will not be
exactly equal to the original Pre-Funded Amount and that therefore there will
be at least a nominal amount of principal prepaid to the Noteholders and to the
Certificateholders.]
[If the amount of the Pre-Funding Account will exceed 25% of the
aggregate proceeds from the offering include the specific investments in which
the Pre-Funding Account will be invested and specify that the actual
investments of the Pre-Funding Account as of the end of the preceding month
will be provided in the periodic reports on Form 8-K and Form 10-K to be filed
by the Seller with respect to the Trust.]
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicing Fee Rate shall be 1.0% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months. The Servicing Fee,
with respect to any Distribution Date, will be an amount equal to the product of
(a) one-twelfth of the Servicing Fee Rate, multiplied by (b) the Pool Balance as
of the first day of the preceding Collection Period. The Servicing Fee in
respect of a Collection Period (together with any portion of the Servicing Fee
that remains unpaid from prior Distribution Dates) may be paid at the beginning
of such Collection
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<PAGE> 139
Period out of collections for such Collection Period. See "Description of the
Transfer and Servicing Agreements--Servicing Compensation and Payment of
Expenses" in the Prospectus.
The Servicer will also collect and retain any late fees,
extension fees, prepayment charges and certain nonsufficient funds charges and
other administrative fees or similar charges (the "Supplemental Servicing Fee")
allowed by applicable law with respect to the Receivables. Payments by or on
behalf of Obligors will be allocated to scheduled payments and late fees and
other charges in accordance with the Servicer's normal practices and procedures.
As additional compensation, the Servicer may be entitled to receive for the
related Collection Period some or all of the portion, if any, of the Total
Distribution Amount for such Collection Period remaining after payment of the
Servicing Fee and interest and principal in respect of the Securities and any
required deposit to the Reserve Account. See "Description of the Transfer and
Servicing Agreements--Servicing Compensation and Payment of Expenses" in the
Prospectus and "--Distributions" herein.
DISTRIBUTIONS
Deposits to Collection Account. On or before each Distribution
Date, the Servicer will cause all collections and other amounts constituting the
Total Distribution Amount to be deposited into the Collection Account.
"Available Interest" for a Distribution Date shall
mean the sum of the following amounts with respect to the related
Collection Period: (a) that portion of the Collections on the
Receivables received during the related Collection Period that is
allocable to interest in accordance with the Servicer's customary
procedures; (b) all Liquidation Proceeds received during such
Collection Period; and (c) all Purchase Amounts, to the extent
attributable to accrued interest, of all Receivables that are
repurchased by the Seller or purchased by the Servicer under an
obligation which arose during the related Collection Period.
"Available Interest" for any Distribution Date shall exclude all
payments and proceeds of any Receivables the Purchase Amount of
which has been distributed on a prior Distribution Date.
"Available Principal" for a Distribution Date means
the sum of the following amounts with respect to the preceding
Collection Period: (a) that portion of all Collections received
during such Collection Period and allocable to principal in
accordance with Servicer's customary servicing procedures; and
(b) to the extent attributable to principal, the Purchase Amount
received with respect to each Receivable repurchased by Seller or
purchased by Servicer under an obligation which arose during the
related Collection Period. "Available Principal" on any
Distribution Date shall exclude all payments and proceeds of any
Receivables the Purchase Amount of which has been distributed on
a prior Distribution Date.
"Certificate Balance" equals, initially, $ and,
thereafter, equals the initial Certificate Balance, reduced by
all amounts allocable to principal previously distributed to
Certificateholders.
"Certificateholders' Interest Carryover Shortfall"
means, with respect to any Distribution Date, the excess of the
Certificateholders' Monthly Interest Distributable Amount for the
preceding Distribution Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such
preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, plus
interest on such excess, to the extent permitted by law, at the
Certificate Rate from and including such preceding Distribution
Date to but excluding the current Distribution Date.
"Certificateholders' Interest Distributable Amount"
means, for any Distribution Date, the sum of the
Certificateholders' Monthly Interest Distributable Amount for
such Distribution Date and the Certificateholders' Interest
Carryover Shortfall for such Distribution Date.
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<PAGE> 140
"Certificateholders' Monthly Interest Distributable
Amount" means, for any Distribution Date, the amount of interest
accrued on the Certificates at the Certificate Rate during the
related Interest Period (calculated on the basis of a 360-day
year and twelve 30-day months).
"Certificateholders' Percentage" means 100% minus
the Noteholders' Percentage.
"Certificateholders' Principal Distributable
Amount" means, for any Distribution Date, the sum of the
Certificateholders' Monthly Principal Distributable Amount for
such Distribution Date and the Certificateholders' Principal
Carryover Shortfall as of the close of the preceding Distribution
Date; provided that the Certificateholders' Principal
Distributable Amount shall not exceed the Certificate Balance. In
addition, on the Certificate Final Scheduled Distribution Date,
the principal required to be distributed to Certificateholders
will include the lesser of (a) any payments of principal due and
remaining unpaid on each Receivable owned by Issuer as of
___________ or (b) the portion of the amount that is necessary
(after giving effect to the other amounts to be deposited in the
Certificate Distribution Account on such Distribution Date and
allocable to principal) to reduce the Certificate Balance to
zero, in either case after giving effect to any required
distribution of the Noteholders' Principal Distributable Amount
to the Note Distribution Account. In addition, on any
Distribution Date on which, after giving effect to all
distributions to Servicer, the Noteholders and the
Certificateholders on such Distribution Date, (i) the outstanding
principal balance of the Notes is zero and (ii) the amount on
deposit in the Reserve Account is equal to or greater than the
Certificate Balance, Certificateholders' Principal Distributable
Amount shall include an amount equal to such Certificate Balance.
"Certificateholder's Monthly Principal
Distributable Amount" means, for any Distribution Date, the
Certificateholders' Percentage of the Principal Distribution
Amount or, for any Distribution Date on or after the Distribution
Date on which the outstanding principal balance of the Class A-2
Notes is reduced to zero, 100% of the Principal Distribution
Amount (less any amount required on the first such Distribution
Date to reduce the outstanding principal balance of the Class A-2
Notes to zero, which shall be deposited into the Note
Distribution Account).
"Certificateholders' Principal Carryover Shortfall"
means, as of the close of any Distribution Date, the excess of
the Certificateholders' Monthly Principal Distributable Amount
and any outstanding Certificateholders' Principal Carryover
Shortfall from the preceding Distribution Date, over the amount
in respect of principal that is actually deposited in the
Certificate Distribution Account.
"Contract Rate" means, with respect to a
Receivable, the rate per annum of interest charged on the
outstanding principal balance of such Receivable.
"Defaulted Receivable" means, with respect to any
Collection Period, a Receivable (other than a Purchased
Receivable) which the Servicer has determined to charge off
during such Collection Period in accordance with its customary
servicing practices; provided, however, that any Receivable which
the Seller or Servicer is obligated to repurchase or purchase
shall be deemed to have become a Defaulted Receivable during a
Collection Period if the Seller or Servicer fails to deposit the
Purchase Amount on the related Deposit Date when due.
"Principal Distribution Amount" means, for any
Distribution Date, the sum of (a) the Available Principal for
such Distribution Date, and (b) the amount of Realized Losses for
the related Collection Period.
"Purchase Amount" means for any Receivable, as of
the close of business on the last day of a Collection Period, the
amount of principal plus accrued interest calculated in
accordance with the Servicer's customary practices, for such
Receivable as of such day.
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<PAGE> 141
"Purchased Receivable" means a Receivable purchased
as of the close of business on the last day of a Collection
Period by the Servicer or repurchased by the Seller pursuant to
the Sale and Servicing Agreement.
"Realized Losses" means, for any Collection Period,
the aggregate principal balances of any Receivables that became
Defaulted Receivables during such Collection Period.
"Total Distribution Amount" means, for each
Distribution Date, the sum of (a) the Available Interest, (b) the
Available Principal and (c) the Reserve Account Transfer Amount,
in each case in respect of such Distribution Date.
Deposits to the Distribution Accounts. On each Distribution Date,
Servicer shall instruct Indenture Trustee or, in the event that the Collection
Account is maintained with an institution other than Indenture Trustee, instruct
and cause such institution (based on the information contained in the Servicer's
Report delivered on the related Determination Date) to make, and Indenture
Trustee or such other institution shall make, the following deposits and
distributions from the Collection Account for deposit in the applicable account
by 11:00 a.m. (New York time), to the extent of the Total Distribution Amount,
in the following order of priority:
(a) to Servicer, from the Total Distribution
Amount, the Servicing Fee for the related Collection Period and
all accrued and unpaid Servicing Fees for prior Collection
Periods;
(b) to the Note Distribution Account, from the
Total Distribution Amount remaining after the application of
clause (a), the Noteholders' Interest Distributable Amount;
(c) to the Note Distribution Account, from the
Total Distribution Amount remaining after the application of
clause (a) and (b), the Noteholders' Principal Distributable
Amount;
(d) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount
remaining after the application of clauses (a) through (c), the
Certificateholders' Interest Distributable Amount;
(e) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount
remaining after the application of clauses (a) through (d), the
Certificateholders' Principal Distributable Amount;
(f) to the Reserve Account until the amount on
deposit in the Reserve Account equals the Specified Reserve
Account Balance; and
(g) to the Seller or the Servicer, any amounts
remaining.
On each Determination Date (other than the first Determination
Date), the Servicer will provide the Owner Trustee and the Indenture Trustee
with certain information with respect to the Collection Period related to the
prior Distribution Date, including the amount of aggregate collections on the
Receivables, the aggregate amount of Receivables which were written off and the
aggregate Purchase Amount of Receivables to be repurchased by the Seller or to
be purchased by the Servicer.
For purposes hereof, the following terms shall have the following
meanings:
"Noteholders' Distributable Amount" means, with
respect to any Distribution Date, the sum of the Noteholders'
Principal Distributable Amount and the Noteholders' Interest
Distributable Amount.
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"Noteholders' Interest Carryover Shortfall" means,
with respect to any Distribution Date, the excess of the
Noteholders' Monthly Interest Distributable Amount for the
preceding Distribution Date and any outstanding Noteholders'
Interest Carryover Shortfall on such preceding Distribution Date,
over the amount in respect of interest that is actually deposited
in the Note Distribution Account on such preceding Distribution
Date, plus interest on the amount of interest due but not paid to
Noteholders on the preceding Distribution Date, to the extent
permitted by law, at the respective Interest Rates borne by each
class of Notes from such preceding Distribution Date through the
current Distribution Date.
"Noteholders' Interest Distributable Amount" means,
for any Distribution Date, the sum of the Noteholders' Monthly
Interest Distributable Amount for such Distribution Date and the
Noteholders' Interest Carryover Shortfall for such Distribution
Date.
"Noteholders' Monthly Interest Distributable
Amount" means, for any Distribution Date and for each class of
Notes, the amount of interest accrued on such class at its
respective Interest Rate during the related Interest Period
(calculated on the basis of a 360-day year and twelve 30-day
months).
"Noteholders' Monthly Principal Distributable
Amount" means, for any Distribution Date, the Noteholders'
Percentage of the Principal Distribution Amount.
"Noteholders' Percentage" means 100% until the
point in time at which Class A-1 Notes and Class A-2 Notes have
been paid in full and zero thereafter.
"Noteholders' Principal Carryover Shortfall" means,
as of the close of any Distribution Date, the excess of the
Noteholders' Monthly Principal Distributable Amount and any
outstanding Noteholders' Principal Carryover Shortfall from the
preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution
Account.
"Noteholders' Principal Distributable Amount"
means, for any Distribution Date, the sum of the Noteholder's
Monthly Principal Distributable Amount for such Distribution Date
and the Noteholders' Principal Carryover Shortfall as of the
close of the preceding Distribution Date; provided that the
Noteholders' Principal Distributable Amount shall not exceed the
outstanding principal balance of the Notes. In addition, on the
Final Scheduled Distribution Date of each class of Notes, the
principal required to be deposited in the Note Distribution
Account will include the amount necessary (after giving effect to
the other amounts to be deposited in the Note Distribution
Account on such Distribution Date and allocable to principal) to
reduce the outstanding amount of such class of Notes to zero.
On each Distribution Date, all amounts on deposit in the Note
Distribution Account (other than investment earnings) will be generally paid in
the following order of priority:
(a) to the applicable Noteholders, accrued and
unpaid interest on the outstanding principal balance of the
applicable class of Notes at the applicable Interest Rate;
(b) the Noteholders' Principal Distributable Amount
in the following order of priority:
(i) to the Holders of the Class A-1
Notes in reduction of principal until the principal
balance of the Class A-1 Notes has been reduced to
zero; and
(ii) to the Holders of the Class A-2
Notes in reduction of principal until the principal
balance of the Class A-2 Notes has been reduced to
zero.
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On each Distribution Date, all amounts on deposit in the
Certificate Distribution Account will be distributed to the Certificateholders
in the following priority:
(a) first, to the Certificateholders, on a pro rata
basis, an amount equal to the Certificateholders' Interest
Distributable Amount; and
(b) second, to the Certificateholders, on a pro
rata basis, an amount equal to the Certificateholders' Principal
Distributable Amount.
SUBORDINATION OF CERTIFICATEHOLDERS
The rights of the Certificateholders to receive distributions
with respect to the Receivables generally will be subordinated to the rights of
the Noteholders in the event of defaults and delinquencies on the Receivables as
provided in the Sale and Servicing Agreement. The protection afforded to the
Noteholders through subordination will be effected both by the preferential
right of the Noteholders to receive current distributions with respect to the
Receivables and by the establishment of the Reserve Account. If on any
Distribution Date the entire Noteholders' Interest Distributable Amount for such
Distribution Date (after giving effect to any amounts withdrawn from the Reserve
Account) is not deposited in the Note Distribution Account, the
Certificateholders will not receive any distributions.
The subordination of the Certificates and the Reserve Account are
intended to enhance the likelihood of receipt by Noteholders of the full amount
of principal and interest due them and to decrease the likelihood that the
Noteholders will experience losses. In addition, the Reserve Account is intended
to enhance the likelihood of receipt by Certificateholders of the full amount of
principal and interest due them and to decrease the likelihood that the
Certificateholders will experience losses. However, in certain circumstances,
the Reserve Account could be depleted. If the amount required to be withdrawn
from the Reserve Account to cover shortfalls in collections on the Receivables
exceeds the amount of available cash in the Reserve Account, Noteholders or
Certificateholders could incur losses or a temporary shortfall in the amounts
distributed to the Noteholders or the Certificateholders could result, which
could, in turn, increase the average life of the Notes or the Certificates.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Information regarding certain legal aspects of the Receivables is
set forth under "Certain Legal Aspects of the Receivables" in the Prospectus.
LEGAL INVESTMENT
The Class A-1 Notes will be eligible for purchase by money market
funds under Rule 2a-7 under the Investment Company Act of 1940, as amended.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of material federal income tax
consequences of the purchase, ownership and disposition of the Notes and the
Certificates. The following summary represents the opinion of Federal Tax
Counsel subject to the qualifications set forth herein. The following summary
is intended as an explanatory discussion of the possible effects of certain
federal income tax consequences to holders generally, but does not purport to
furnish information in the level of detail or with the attention to a holder's
specific tax circumstances that
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would be provided by a holder's own tax advisor. For example, it does not
discuss the tax treatment of Noteholders or Certificateholders that are
insurance companies, regulated investment companies or dealers in securities. In
addition, the discussion regarding the Notes is limited to the federal income
tax consequences of the initial Noteholders and not a purchaser in the secondary
market. Moreover, there are no cases or Internal Revenue Service ("IRS") rulings
on similar transactions involving both debt and equity interests issued by a
trust with terms similar to those of the Notes and the Certificates. As a
result, the IRS may disagree with all or a part of the discussion below.
Prospective investors are urged to consult their own tax advisors in determining
the federal, state, local, foreign and any other tax consequences to them of the
purchase, ownership and disposition of the Notes and the Certificates.
The following summary is based upon current provisions of the
Internal Revenue Code of 1986, as amended, the Treasury regulations promulgated
thereunder and judicial or ruling authority, all of which are subject to change,
which change may be retroactive. Each Trust will be provided with an opinion of
Federal Tax Counsel, regarding certain federal income tax matters discussed
below. An opinion of Federal Tax Counsel, however, is not binding on the IRS or
the courts. No ruling on any of the issues discussed below will be sought from
the IRS.
SCOPE OF THE TAX OPINIONS
Federal Tax Counsel will, prior to issuance of the Notes and
Certificates, deliver its opinion that the Trust will not be classified as an
association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes. Further, with respect to the Notes, Federal Tax
Counsel will advise the Trust that the Notes will be characterized as debt
for federal income tax purposes.
In addition, Federal Tax Counsel has prepared or reviewed the
statements under the heading "Summary of Terms--Tax Status" as they relate to
federal income tax matters and under the heading "Federal Income Tax
Consequences" herein and in the Prospectus and is of the opinion that such
statements are correct in all material respects. Such statements are intended as
an explanatory discussion of the possible effects of the classification of the
Trust as a partnership for federal income tax purposes on investors generally
and of related tax matters affecting investors generally, but do not purport to
furnish information in the level of detail or with the attention to the
investor's specific tax circumstances that would be provided by an investor's
own tax adviser. Accordingly, each investor is advised to consult its own tax
advisers with regard to the tax consequences to it of investing in the Notes and
the Certificates.
TAX CLASSIFICATION OF THE TRUST AS A PARTNERSHIP
As set forth above, Federal Tax Counsel will deliver its opinion
that the Trust (which the Trust Agreement specifies is intended to be treated as
a partnership) will not be classified as an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes. A copy of
such opinion of Federal Tax Counsel will be filed with the Commission as an
exhibit to a Form 8-K prior to an issuance of Securities by the Trust. This
opinion will be based on the assumption that the terms of the Trust Agreement
and related documents will be complied with, and on Federal Tax Counsel's
conclusions that (1) the Trust will not have certain characteristics necessary
for a business trust to be classified as an association taxable as a
corporation and (2) the nature of the income of the Trust will exempt it from
the rule that certain publicly traded partnerships are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax
purposes, the Trust would be subject to corporate income tax on its taxable
income. The Trust's taxable income would include all its income on the
Receivables, reduced by its interest expense on the Notes provided the Notes are
respected as debt for federal income tax purposes (see discussion in the
following paragraph). Any such corporate income tax could materially reduce cash
available to make payments on the Notes and distributions on the Certificates,
and Certificateholders could be liable for any such tax that is unpaid by the
Trust.
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TAX CONSEQUENCES TO HOLDERS OF THE NOTES
Treatment of the Notes as Indebtedness. The Seller will agree,
and the Noteholders will agree by their purchase of Notes, to treat the Notes as
debt for federal, state and local income and franchise tax purposes. Federal Tax
Counsel will deliver its opinion that the Notes will be characterized as debt
for federal income tax purposes. A copy of such opinion of Federal Tax Counsel
will be filed with the Commission with a Form 8-K following the issuance of the
Notes. The discussion below assumes this characterization of the Notes is
correct.
The discussion below assumes that all payments on the Notes are
denominated in U.S. dollars, and that the Notes are not Strip Notes. Moreover,
the discussion assumes that the interest formula for the Notes meets the
requirements for "qualified stated interest" under Treasury regulations (the
"OID regulations") relating to original issue discount ("OID"), and that any
OID on the Notes (i.e., any excess of the principal amount of the Notes over
their issue price) does not exceed a de minimis amount (i.e., 1/4% of their
principal amount multiplied by the number of full years included in their
term), all within the meaning of the OID regulations.
Interest Income on the Notes. Based on the above assumptions,
except as discussed in the following paragraph, the Notes will not be considered
issued with OID. The stated interest thereon will be taxable to a Noteholder as
ordinary interest income when received or accrued in accordance with such
Noteholder's method of tax accounting. Under the OID regulations, a holder of a
Note issued with a de minimis amount of OID must include such OID in income, on
a pro rata basis, as principal payments are made on the Note. It is believed
that any prepayment premium paid as a result of a mandatory redemption will be
taxable as contingent interest when it becomes fixed and unconditionally
payable. A purchaser who buys a Note for more or less than its principal amount
will generally be subject, respectively, to the premium amortization or market
discount rules of the Code.
Sale or Other Disposition. If a Noteholder sells a Note, the
holder will recognize gain or loss in an amount equal to the difference between
the amount realized on the sale and the holder's adjusted tax basis in the Note.
The adjusted tax basis of a Note to a particular Noteholder will equal the
holder's cost for the Note, increased by any market discount, OID and gain
previously included by such Noteholder in income with respect to the Note and
decreased by the amount of bond premium (if any) previously amortized and by the
amount of principal payments previously received by such Noteholder with respect
to such Note. Any such gain or loss will be capital gain or loss if the Note was
held as a capital asset, except for gain representing accrued interest and
accrued market discount not previously included in income. Capital losses
generally may be used by a corporate taxpayer only to offset capital gains, and
by an individual taxpayer only to the extent of capital gains plus $3,000 of
other income.
Foreign Holders. Interest payments made (or accrued) to a
Noteholder who is a nonresident alien, foreign corporation or other non-United
States person (a "foreign person") generally will be considered "portfolio
interest", and generally will not be subject to United States federal income tax
and withholding tax, if the interest is not effectively connected with the
conduct of a trade or business within the United States by the foreign person
and the foreign person (i) is not actually or constructively a "10 percent
shareholder" of the Trust or the Seller (including a holder of 10% of the
outstanding Certificates) or a "controlled foreign corporation" with respect to
which the Trust or the Seller is a "related person" within the meaning of the
Code and (ii) provides the Trustee or other person who is otherwise required to
withhold U.S. tax with respect to the Notes with an appropriate statement (on
Form W-8 or a similar form), signed under penalties of perjury, certifying that
the beneficial owner of the Note is a foreign person and providing the foreign
person's name and address. If a Note is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide the relevant signed statement to the withholding agent;
in that case, however, the signed statement must be accompanied by a Form W-8 or
substitute form provided by the foreign person that owns the Note. If such
interest is not portfolio interest, then it will be subject to United States
federal income and withholding tax at a rate of 30 percent, unless reduced or
eliminated pursuant to an applicable tax treaty.
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Any capital gain realized on the sale, redemption, retirement or
other taxable disposition of a Note by a foreign person will be exempt from
United States federal income and withholding tax, provided that (i) such gain is
not effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.
Backup Withholding. Each holder of a Note (other than an exempt
holder such as a corporation, tax exempt organization, qualified pension and
profit sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate containing the holder's name,
address, correct federal taxpayer identification number and a statement that the
holder is not subject to backup withholding. Should a nonexempt Noteholder fail
to provide the required certification, the Trust will be required to withhold 31
percent of the amount otherwise payable to the holder, and remit the withheld
amount to the IRS as a credit against the holder's federal income tax liability.
Noteholders should consult with their tax advisors as to their eligibility for
exemption from backup withholding and the procedure for obtaining the exemption.
Possible Alternative Treatments of the Notes. If, contrary to the
opinion of Federal Tax Counsel, the IRS successfully asserted that one or more
of the Notes did not represent debt for federal income tax purposes, the Notes
might be treated as equity interests in the Trust. If so treated, the Trust
might be taxable as a corporation with the adverse consequences described above
(and the taxable corporation would not be able to reduce its taxable income by
deductions for interest expense on Notes recharacterized as equity).
Alternatively, and most likely in the view of Federal Tax Counsel, the Trust
might be treated as a publicly traded partnership that would not be taxable as a
corporation because it would meet certain qualifying income tests. Nonetheless,
treatment of the Notes as equity interests in such a publicly traded partnership
could have adverse tax consequences to certain holders. For example, income to
certain tax-exempt entities (including pension funds) would be "unrelated
business taxable income", income to foreign holders generally would be subject
to U.S. tax and U.S. tax return filing and withholding requirements, and
individual holders might be subject to certain limitations on their ability to
deduct their share of Trust expenses. Furthermore, such a characterization could
subject holders to state and local taxation in jurisdictions in which they are
not currently subject to tax.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
Treatment of the Trust as a Partnership. The Seller, the
Servicer, the Trustee, and the Certificateholders, by their purchase of
Certificates, will agree to treat the Trust as a partnership for purposes of
federal and state income tax, franchise tax and any other tax measured in whole
or in part by income, with the assets of the partnership being the assets held
by the Trust, the partners of the partnership being the Certificateholders, and
the Notes being debt of the partnership. However, the proper characterization of
the arrangement involving the Trust, the Certificates, the Notes, the Seller,
and the Servicer is not clear because there is no authority on transactions
closely comparable to that contemplated herein.
A variety of alternative characterizations are possible. For
example, because the Certificates have certain features characteristic of debt,
the Certificates might be considered debt of the Seller or the Trust. Any such
characterization would not result in materially adverse tax consequences to
Certificateholders as compared to the intended consequences from treatment of
the Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership.
The following discussion assumes that all payments on the
Certificates are denominated in U.S. dollars, none of the Certificates are Strip
Certificates, and that a series of Securities includes a single class of
Certificates.
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Partnership Taxation. As a partnership, the Trust will not be
subject to federal income tax. Rather, each Certificateholder will be required
to separately take into account such holder's accruals of guaranteed payments
from the Trust and its allocated share of other income, gains, losses,
deductions and credits of the Trust. The Trust's income will consist primarily
of interest and finance charges earned on the Receivables (including appropriate
adjustments for market discount, OID and bond premium) and any gain upon
collection or disposition of Receivables. The Trust's deductions will consist
primarily of interest accruing with respect to the Notes, guaranteed payments on
the Certificates, servicing and other fees, and losses or deductions upon
collection or disposition of Receivables.
The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership agreement
(here, the Trust Agreement and related documents). Under the Trust Agreement,
interest payments on the Certificates at the Certificate Rate (including
interest on amounts previously due on the Certificates but not yet distributed)
will be treated as "guaranteed payments" under Section 707(c) of the Code.
Guaranteed payments are payments to partners for the use of their capital and,
in the present circumstances, are treated as deductible to the Trust and
ordinary income to the Certificateholders. The Trust will have a calendar year
tax year and will deduct the guaranteed payments under the accrual method of
accounting. Certificateholders with a calendar year tax year are required to
include the accruals of guaranteed payments in income in their taxable year that
corresponds to the year in which the Trust deducts the payments, and
Certificateholders with a different taxable year are required to include the
payments in income in their taxable year that includes the December 31 of the
Trust year in which the Trust deducts the payments. It is possible that
guaranteed payments will not be treated as interest for all purposes of the
Code.
In addition, the Trust Agreement will provide, in general, that
the Certificateholders will be allocated taxable income of the Trust for each
Collection Period equal to the sum of (i) any Trust income attributable to
discount on the Receivables that corresponds to any excess of the principal
amount of the Certificates over their initial issue price, (ii) prepayment
premium, if any, payable to the Certificateholders for such month and (iii) any
other amounts of income payable to the Certificateholders for such month. Such
allocation will be reduced by any amortization by the Trust of premium on
Receivables that corresponds to any excess of the issue price of Certificates
over their principal amount. All remaining items of taxable income, gain, loss
and deduction of the Trust, if any, will be allocated to the Seller.
Based on the economic arrangement of the parties, this approach
for allocating Trust income arguably should be permissible under applicable
Treasury regulations, although no assurance can be given that the IRS would not
require a greater amount of income to be allocated to Certificateholders.
Moreover, even under the foregoing method of allocation, Certificateholders may
be allocated income equal to the entire Certificate Rate plus the other items
described above even though the Trust might not have sufficient cash to make
current cash distributions of such amount. Thus, cash basis holders would, in
effect, be required to report income from the Certificates on the accrual basis
and Certificateholders may become liable for taxes on Trust income even if they
have not received cash from the Trust to pay such taxes. In addition, because
tax allocations and tax reporting will be done on a uniform basis for all
Certificateholders but Certificateholders may be purchasing Certificates at
different times and at different prices, Certificateholders may be required to
report on their tax returns taxable income that is greater or less than the
amount reported to them by the Trust.
All of the guaranteed payments and taxable income allocated to a
Certificateholder that is a pension, profit sharing or employee benefit plan or
other tax-exempt entity (including an individual retirement account) will
constitute "unrelated business taxable income" generally taxable to such a
holder under the Code.
An individual taxpayer's share of expenses of the Trust
(including fees to the Servicer but not interest expense) would be miscellaneous
itemized deductions. Such deductions might be disallowed to the individual in
whole or in part and might result in such holder being taxed on an amount of
income that exceeds the amount of
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cash actually distributed to such holder over the life of the Trust. It is not
clear whether these rules would be applicable to a Certificateholder accruing
guaranteed payments.
The Trust intends to make all tax calculations relating to income
and allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the Trust
might be required to incur additional expense but it is believed that there
would not be a material adverse effect on Certificateholders.
Discount and Premium. It is believed that the Receivables were
not issued with OID, and, therefore, the Trust should not have OID income.
However, the purchase price paid by the Trust for the Receivables may be greater
or less than the remaining principal balance of the Receivables at the time of
purchase. If so, the Receivables will have been acquired at a premium or
discount, as the case may be. (As indicated above, the Trust will make this
calculation on an aggregate basis, but might be required to recompute it on a
Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or
premium, the Trust will elect to include any such discount in income currently
as it accrues over the life of the Receivables or to offset any such premium
against interest income on the Receivables. As indicated above, a portion of
such market discount income or premium deduction may be allocated to
Certificateholders.
Section 708 Termination. Under Section 708 of the Code, the Trust
will be deemed to terminate for federal income tax purposes if 50% or more of
the capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a termination occurs, under current Treasury
regulations the Trust will be considered to distribute its assets to the
partners, who would then be treated as recontributing those assets to the Trust,
as a new partnership. Proposed Treasury regulations would modify this treatment.
The Trust will not comply with certain technical requirements that might apply
when such a constructive termination occurs. As a result, the Trust may be
subject to certain tax penalties and may incur additional expenses if it is
required to comply with those requirements. Furthermore, the Trust might not be
able to comply due to lack of data.
Disposition of Certificates. Subject to the discussion in the
immediately following paragraph, generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
A Certificateholder's tax basis in a Certificate will generally equal the
holder's cost increased by the holder's share of Trust income (includible in
income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the amount
realized on a sale of a Certificate would include the holder's share of the
Notes and other liabilities of the Trust. A holder acquiring Certificates at
different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a portion of such aggregate tax basis to the Certificates
sold (rather than maintaining a separate tax basis in each Certificate for
purposes of computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the
holder's share of unrecognized accrued market discount on the Receivables would
generally be treated as ordinary income to the holder and would give rise to
special tax reporting requirements. The Trust does not expect to have any other
assets that would give rise to such special reporting requirements. Thus, to
avoid those special reporting requirements, the Trust will elect to include
market discount in income as it accrues.
If a Certificateholder is required to recognize an aggregate
amount of income (not including income attributable to disallowed itemized
deductions described above) over the life of the Certificates that exceeds the
aggregate cash distributions with respect thereto, such excess will generally
give rise to a capital loss upon the retirement of the Certificates.
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Allocations Between Transferors and Transferees. In general, the
Trust's taxable income and losses will be determined monthly and the tax items
for a particular calendar month will be apportioned among the Certificateholders
in proportion to the principal amount of Certificates owned by them as of the
close of the last day of such month. As a result, a holder purchasing
Certificates may be allocated tax items (which will affect its tax liability and
tax basis) attributable to periods before the actual purchase.
The use of such a monthly convention may not be permitted by
existing Treasury regulations. If a monthly convention is not allowed (or only
applies to transfers of less than all of the partner's interest), taxable income
or losses of the Trust might be reallocated among the Certificateholders. The
Seller is authorized to revise the Trust's method of allocation between
transferors and transferees to conform to a method permitted by future
regulations.
Section 754 Election. In the event that a Certificateholder sells
its Certificates at a profit (loss), the purchasing Certificateholder will have
a higher (lower) basis in the Certificates than the selling Certificateholder
had. The tax basis of the Trust's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust were to file an election under Section
754 of the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make such election. As a
result, Certificateholders might be allocated a greater or lesser amount of
Trust income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Trustee is required to keep or have
kept complete and accurate books of the Trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the Trust will be the calendar year. The Trust will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
Trust and will report each Certificateholder's allocable share of items of Trust
income and expense to holders and the IRS on Schedule K-1. The Trust will
provide the Schedule K-1 information to nominees that fail to provide the Trust
with the information statement described below and such nominees will be
required to forward such information to the beneficial owners of the
Certificates. Generally, holders must file tax returns that are consistent with
the information return filed by the Trust or be subject to penalties unless the
holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds
Certificates as a nominee at any time during a calendar year is required to
furnish the Trust with a statement containing certain information on the
nominee, the beneficial owners and the Certificates so held. Such information
includes (i) the name, address and taxpayer identification number of the nominee
and (ii) as to each beneficial owner (x) the name, address and identification
number of such person, (y) whether such person is a United States person, a
tax-exempt entity or a foreign government, an international organization, or any
wholly-owned agency or instrumentality of either of the foregoing, and (z)
certain information on Certificates that were held, bought or sold on behalf of
such person throughout the year. In addition, brokers and financial institutions
that hold Certificates through a nominee are required to furnish directly to the
Trust information as to themselves and their ownership of Certificates. A
clearing agency registered under Section 17A of the Exchange Act is not required
to furnish any such information statement to the Trust. The information referred
to above for any calendar year must be furnished to the Trust on or before the
following January 31. Nominees, brokers and financial institutions that fail to
provide the Trust with the information described above may be subject to
penalties.
The Seller will be designated as the tax matters partner in the
related Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust by the appropriate taxing authorities could
result in an adjustment of the returns of the Certificateholders, and, under
certain circumstances, a Certificateholder may be precluded from separately
litigating a proposed adjustment to the
S-38
<PAGE> 150
items of the Trust. An adjustment could also result in an audit of a
Certificateholder's returns and adjustments of items not related to the income
and losses of the Trust.
Tax Consequences to Foreign Certificateholders. It is not clear
whether the Trust would be considered to be engaged in a trade or business in
the United States for purposes of federal withholding taxes with respect to non-
U.S. persons because there is no clear authority dealing with that issue under
facts substantially similar to those described herein. Although it is not
expected that the Trust would be engaged in a trade or business in the United
States for such purposes, the Trust will withhold as if it were so engaged in
order to protect the Trust from possible adverse consequences of a failure to
withhold. The Trust expects to withhold on the portion of its taxable income
that is allocable to foreign Certificateholders pursuant to Section 1446 of the
Code, as if such income were effectively connected to a U.S. trade or business,
at a rate of 35% for foreign holders that are taxable as corporations and 39.6%
for all other foreign holders. Subsequent adoption of Treasury regulations or
the issuance of other administrative pronouncements may require the Trust to
change its withholding procedures. In determining a Certificateholder's
withholding status, the Trust may rely on IRS Form W-8, IRS Form W-9 or the
holder's certification of nonforeign status signed under penalties of perjury.
Each foreign Certificateholder might be required to file a U.S.
individual or corporate income tax return and pay U.S. income tax on the amount
computed therein (including, in the case of a corporation, the branch profits
tax) on its share of accruals of guaranteed payments and the Trust's income.
Each foreign Certificateholder must obtain a taxpayer identification number from
the IRS and submit that number to the Trust on Form W-8 in order to assure
appropriate crediting of the taxes withheld. A foreign Certificateholder
generally would be entitled to file with the IRS a claim for refund with respect
to taxes withheld by the Trust, taking the position that no taxes were due
because the Trust was not engaged in a U.S. trade or business. However, the IRS
may assert additional taxes are due, and no assurance can be given as to the
appropriate amount of tax liability.
On April 15, 1996, proposed Treasury Regulations (the "1996
Proposed Regulations") were issued which, if adopted in final form, could affect
the United States taxation of non-U.S. holders. The 1996 Proposed Regulations
are generally proposed to be effective for payments after December 31, 1997,
subject to certain transition rules. It cannot be predicted at this time whether
the 1996 Proposed Regulations will become effective as proposed or what, if any,
modifications may be made to them. The 1996 Proposed Regulations would, if
adopted, alter the rules under this heading and under "--Backup Withholding"
below in certain respects. Prospective investors are urged to consult their tax
advisors with respect to the effect the 1996 Proposed Regulations may have if
adopted.
Backup Withholding. Distributions made on the Certificates and
proceeds from the sale of the Certificates will be subject to a "backup"
withholding tax of 31% if, in general, the Certificateholder fails to comply
with certain identification procedures, unless the holder is an exempt recipient
under applicable provisions of the Code. Certificateholders should consult with
their tax advisors as to their eligibility for exemption to backup withholding
and the procedure for obtaining the exemption. The 1996 Proposed Regulations
would, if adopted, alter the foregoing rules in certain respects.
STATE TAX CONSEQUENCES
In the opinion of Thompson Hine & Flory LLP, Ohio tax counsel to the
Trust, the Notes will be characterized as debt for Ohio corporation franchise
tax purposes. The Trust may, however, be treated as a taxable corporation for
Ohio corporation franchise tax purposes. Any franchise tax liability of the
Trust incurred by the Trust is expected not to be material, and the Servicer
will indemnify the Trust for any such franchise tax liability.
Prospective investors are urged to consult with their own tax advisors
regarding the state tax consequence to them of purchasing, holding and disposing
of Notes or Certificates.
ERISA CONSIDERATIONS
THE NOTES
The Notes may be purchased by an employee benefit plan or an
individual retirement account (a "Plan") subject to ERISA or Section 4975 of the
Code. A fiduciary of a Plan must determine that the purchase of a Note is
consistent with its fiduciary duties under ERISA and does not result in the
assets of the Trust being deemed to constitute plan assets or in a nonexempt
prohibited transaction as defined in Section 406 of ERISA or Section 4975
S-39
<PAGE> 151
of the Code. For additional information regarding the likely treatment of the
Notes as debt under ERISA, see "ERISA Considerations" in the Prospectus.
However, without regard to whether the Notes are treated as an
equity interest for such purposes, the acquisition or holding of Notes by or on
behalf of a Plan could be considered to give rise to a prohibited transaction if
an Affiliate, the Seller, the Trust, the Servicer, the Indenture Trustee or the
Owner Trustee is or becomes a party in interest under ERISA or disqualified
person under the Code with respect to such Plan. Certain exemptions from the
prohibited transaction rules could be applicable to the purchase and holding of
Notes by a Plan depending on the type and circumstances of the plan fiduciary
making the decision to acquire such Notes. Included among these exemptions, each
of which contains several conditions which must be satisfied before the
exemption applies, are: Prohibited Transaction Class Exemption ("PTCE") 95-60,
regarding investments by insurance company general accounts, PTCE 91-38,
regarding investments by bank collective investment funds; PTCE 90-1, regarding
investments by insurance company separate accounts, and PTCE 84-14, regarding
transactions effected by "qualified professional asset managers". By its
acceptance of a Note, each Noteholder shall be deemed to have represented and
warranted that its purchase and holding of the Note will not result in a
nonexempt prohibited transaction under Section 406(a) of ERISA or Section 4975
of the Code.
THE CERTIFICATES
The Certificates may not be acquired (a) with the assets of an
employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to
the provisions of Title I of ERISA, (b) by a plan described in Section 4975(e)
(1) of the Code or (c) by any entity whose underlying assets include plan assets
by reason of a plan's investment in the entity or which uses plan assets to
acquire Certificates. By its acceptance of a Certificate, each Certificateholder
will be deemed to have represented and warranted that it is not subject to the
foregoing limitation. In this regard, purchasers that are insurance companies
should consult with their counsel with respect to the United States Supreme
Court case interpreting the fiduciary responsibility rules of ERISA, John
Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank (decided
December 13, 1993). In John Hancock, the Supreme Court ruled that assets held in
an insurance company's general account may be deemed to be "plan assets" for
ERISA purposes under certain circumstances. Prospective purchasers should
determine whether the decision affects their ability to make purchases of the
Certificates. For additional information regarding treatment of the Certificates
under ERISA, see "ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement, the Seller has agreed to cause the Trust to sell to each of the
underwriters listed below (each, an "Underwriter"), and each of the Underwriters
has agreed to purchase, the principal amount of the Securities set forth
opposite its name below. Under the terms and conditions of the Underwriting
Agreement, each of the Underwriters is obligated to take and pay for all of the
Securities if any are taken.
<TABLE>
<CAPTION>
Principal Amount of Principal Amount Principal Amount
Class A-1 of Class A-2 of Asset-Backed
Asset-Backed Notes Asset-Backed Notes Certificates
------------------- ------------------ ----------------
<S> <C> <C> <C>
- --------------------- $-------------------- $-------------------- $--------------------
- --------------------- --------------------- --------------------- ---------------------
- --------------------- --------------------- --------------------- ---------------------
Total: $ $ $
===================== ===================== =====================
</TABLE>
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<PAGE> 152
The Seller has been advised by the Underwriters that they propose
initially to offer the Securities to the public at the prices set forth herein,
and to certain dealers at such prices less the initial concession not in excess
of ____% per Class A-1 Note; _____% per Class A-2 Note; and _____% per
Certificate. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of .__% of the principal amount of the Securities to
certain other dealers. After the initial public offering, the public offering
price and such concessions may be changed.
The Seller does not intend to apply for listing of the Notes or
the Certificates on a national securities exchange, but has been advised by the
Underwriters that they intend to make a market in the Notes and Certificates.
The Underwriters are not obligated, however, to make a market in the Notes and
the Certificates and may discontinue market making at any time without notice.
No assurance can be given as to the liquidity of the trading market for the
Notes or the Certificates.
The Seller has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
In the ordinary course of their respective businesses, each
Underwriter and its affiliates have engaged and may in the future engage in
commercial banking and investment banking transactions with the Seller.
After the initial distribution of the Certificates by the
Underwriters, this Prospectus Supplement may be used by Key Capital Markets,
Inc., an affiliate of the Seller, the Servicer, the Affiliates and KeyCorp, in
connection with offers and sales relating to market making transactions in the
Certificates. Key Capital Markets, Inc. may act as principal or agent in such
transactions. Such transactions will be at prices related to prevailing market
prices at the time of sale.
KCMI is a broker-dealer registered as such with the National
Association of Securities Dealers, Inc. and commenced business on February 26,
1996. KCMI has acted as an underwriter with respect to a variety of public
finance transactions as well as several asset-backed securitizations for
subsidiaries of KeyCorp.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain legal matters relating to the Notes and the Certificates and certain
federal income tax and other matters will be passed upon for the Trust by
Thompson Hine & Flory LLP, Cleveland, Ohio. Attorneys at Thompson Hine &
Flory LLP owned approximately ________ KeyCorp Common Shares on [Date].
Certain legal matters will be passed upon for the Underwriters by Mayer,
Brown & Platt, Chicago, Illinois. Thompson Hine & Flory LLP and Mayer, Brown
& Platt may from time to time render legal services to the Seller, the Servicer
and its affiliates.
S-41
<PAGE> 153
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Page
<S> <C>
ABS ...................................................... S-15
ABS Table ...................................................... S-15
Available Interest ...................................................... S-22
Available Reserve Amount ...................................................... S-20
Basic Documents ...................................................... S-11
Business Day ...................................................... S-6
Certificate Balance ...................................................... S-22
Certificate Final Scheduled Distribution Date...................................... S-8
Certificate Rate ...................................................... S-8
Certificateholder's Monthly Principal Distributable Amount......................... S-23
Certificateholders ...................................................... S-7
Certificateholders' Interest Carryover Shortfall................................... S-22
Certificateholders' Interest Distributable Amount.................................. S-22
Certificateholders' Monthly Interest Distributable Amount.......................... S-22
Certificateholders' Principal Carryover Shortfall.................................. S-23
Certificateholders' Principal Distributable Amount................................. S-23
Certificates ...................................................... S-1
Class A-1 Final Scheduled Distribution Date........................................ S-7
Class A-1 Interest Rate ...................................................... S-6
Class A-1 Notes ...................................................... S-1
Class A-2 Final Scheduled Distribution Date........................................ S-7
Class A-2 Interest Rate ...................................................... S-6
Class A-2 Notes ...................................................... S-1
Closing Date ...................................................... S-4,S-5
Code ...................................................... S-9
Collection Period ...................................................... S-6
Commission ...................................................... S-3
Contract Rate ...................................................... S-23
Cutoff Date ...................................................... S-5
Defaulted Receivable ...................................................... S-23
Deposit Date ...................................................... S-9
Determination Date ...................................................... S-18
Distribution Date ...................................................... S-6
ERISA ...................................................... S-9
Final Scheduled Maturity Date...................................................... S-5
Financed Vehicles ...................................................... S-5
Foreign person ...................................................... S-28
Indenture ...................................................... S-4
Indenture Trustee ...................................................... S-4
Interest Accrual Period ...................................................... S-6
Interest Period ...................................................... S-6
Interest Rates ...................................................... S-6
IRS ...................................................... S-26
Issuer ...................................................... S-4
Liquidation Proceeds ...................................................... S-21
Minimum Specified Reserve Balance.................................................. S-21
Noteholders ...................................................... S-6
Noteholders' Distributable Amount.................................................. S-24
Noteholders' Interest Carryover Shortfall.......................................... S-24
Noteholders' Interest Distributable Amount......................................... S-25
Noteholders' Monthly Interest Distributable Amount................................. S-25
</TABLE>
S-42
<PAGE> 154
<TABLE>
<S> <C>
Noteholders' Monthly Principal Distributable Amount............................... S-25
Noteholders' Principal Carryover Shortfall........................................ S-25
Noteholders' Principal Distributable Amount....................................... S-25
Notes............................................................................. S-4
OID............................................................................... S-28
OID regulations................................................................... S-28
Original Pool Balance............................................................. S-7
Overcollateralization Amount...................................................... S-21
Owner Trustee..................................................................... S-4
Payment Date...................................................................... S-6
Plan.............................................................................. S-33
Pool Balance...................................................................... S-6
Portfolio interest................................................................ S-28
Principal Balance................................................................. S-6
Prospectus........................................................................ S-1
Purchase Amount................................................................... S-23
Purchased Receivable.............................................................. S-23
Qualified stated interest......................................................... S-28
Rating Agencies................................................................... S-10
Realized Losses................................................................... S-24
Receivables................................................................... S-1, S-5
Record Date....................................................................... S-6
Reserve Account................................................................... S-8
Reserve Account Deposit........................................................... S-8
Sale and Servicing Agreement...................................................... S-5
Securities........................................................................ S-4
Securityholders................................................................... S-7
Seller............................................................................ S-4
Servicer.......................................................................... S-2
Specified Reserve Account Balance................................................. S-20
Supplemental Servicing Fee........................................................ S-21
Total Distribution Amount......................................................... S-24
Transfer and Servicing Agreement.................................................. S-20
Trust............................................................................. S-4
Trust Agreement................................................................... S-4
Underwriter....................................................................... S-34
</TABLE>
S-43
<PAGE> 155
================================================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER OR THE UNDERWRITERS. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OF ANY
SECURITIES OTHER THAN THOSE TO WHICH THEY RELATE OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN
OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES.
---------------------------
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
<S> <C>
Reports to Securityholders................................................. S-2
Summary of Terms........................................................... S-3
Risk Factors............................................................... S-9
The Trust.................................................................. S-11
The Receivables Pool....................................................... S-11
The Seller, the Servicer and KeyCorp....................................... S-15
Weighted Average Life of the Securities.................................... S-15
Description of the Notes................................................... S-17
Description of the Certificates............................................ S-18
Description of the Transfer and Servicing
Agreements............................................................... S-19
Certain Legal Aspects of the Receivables................................... S-26
Legal Investment........................................................... S-26
ERISA Considerations....................................................... S-26
Underwriting............................................................... S-27
Legal Opinions............................................................. S-27
Index of Defined Terms..................................................... S-28
</TABLE>
Prospectus
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information......................................................
Incorporation of Certain Documents
by Reference.............................................................
Summary of Terms...........................................................
Risk Factors...............................................................
The Trusts.................................................................
The Receivables Pools......................................................
Weighted Average Life of the Securities....................................
Pool Factors and Trading Information.......................................
Use of Proceeds............................................................
The Seller.................................................................
The Bank...................................................................
AutoFinance Group..........................................................
Description of the Notes...................................................
Description of the Certificates............................................
Certain Information Regarding the
Securities...............................................................
Description of the Transfer and Servicing
Agreements
Certain Legal Aspects of the Receivables...................................
Federal Income Tax Consequences............................................
Certain State Tax Consequences.............................................
ERISA Considerations.......................................................
Plan of Distribution.......................................................
Notice to Canadian Residents...............................................
Legal Opinions.............................................................
Index of Defined Terms.....................................................
Global Clearance, Settlement and
Documentation Procedures.................................................
</TABLE>
===============================================================================
===============================================================================
$__________
KEY CONSUMER
ACCEPTANCE CORPORATION
(Seller)
$__________
Class A-1
Asset Backed Notes
$__________
Class A-2 ____%
Asset Backed Notes
$__________
____%
Asset Backed Certificates
______________
PROSPECTUS SUPPLEMENT
_____________, 199___
______________
===============================================================================
<PAGE> 156
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be incurred in
connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
<TABLE>
<CAPTION>
<S> <C> <C>
Registration Fee............................................... $[______]
"Blue Sky" Registration Fees................................... [5,000]
Printing and Engraving Expenses................................ [60,000]
Trustee Fees and Expenses...................................... [75,000]
Legal Fees and Expenses........................................ [______]
Accountants' Fees and Expenses................................. [60,000]
Rating Agencies' Fees.......................................... [300,000]
Miscellaneous.................................................. [50,000]
Total.......................................... $[______]
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware provides as follows:
145. Indemnification of officers, directors, employees and
agents; insurance
(a) A corporation may indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best
II-1
<PAGE> 157
interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action
or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee
or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding
referred to in subsections (a) and (b) of this section, or in
defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection
therewith.
(d) Any indemnification under subsections (a) and (b)
of this section (unless ordered by a court) shall be made by
the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination
shall be made (1) by a majority vote of the directors who are
not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or
if such directors so direct, by independent legal counsel in a
written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by
an officer or director in defending a civil, criminal,
administrative or investigative action, suit or proceeding may
be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he
is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the board
of directors deems appropriate.
(f) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other subsections of
this section shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another
capacity while holding such office.
(g) A corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him
against such liability under this section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors,
officers, and employees or agents, so that any person who is
or was a director, officer, employee or agent of such
constituent
II-2
<PAGE> 158
corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position
under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to
"other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed
on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation"
shall include any service as a director, officer, employee, or
agent of the corporation which imposes duties on, or involves
services by, such director, officer, employee, or agent with
respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the
best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses
provided by, or granted pursuant to, this section shall,
unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with
exclusive jurisdiction to hear and determine all actions for
advancement of expenses or indemnification brought under this
section or under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise. The Court of Chancery
may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees).
Article VIII of the Bylaws of Key Consumer Acceptance Corporation
(referred to as the "Company" therein) provides as follows:
Section 1. INDEMNIFICATION. The Corporation shall indemnify, to the full
extent permitted or authorized by the Delaware General Corporation law as it
may from time to time be amended, any person made or threatened to be made a
party to any threatened, pending or completed action, suit of proceeding,
whether civil, criminal, administrative, or investigative, by reason of the
fact that he is or was a director, officer, or employee of the Corporation, or
is or was serving at the request of the Corporation as a director, trustee,
officer, or employee of another corporation, bank, partnership, joint venture,
trust or other enterprise; in the case of a person serving at the request of
the Corporation, such request shall be evidenced by a resolution of the Board
of Directors or a duly-authorized committee thereof or by a writing executed by
an officer of the Corporation pursuant to a resolution of the Board of
Directors or a duly-authorized committee thereof. In the case of a merger into
this Corporation of a constituent corporation which, if its separate existence
had continued, would have been required to indemnify directors, officers or
employees in specified situations prior to the merger, any person who served as
a director, officer or employee of the constituent corporation, or served at
the request of the constituent corporation as a director, trustee, officer or
employee of another corporation, bank, partnership, joint venture, trust or
other enterprise, shall be entitled to indemnification by this Corporation (as
the surviving corporation) for acts, omissions or other events or occurrences
prior to the merger to the same extent he would have been entitled to
indemnification by the constituent corporation if its separate existence had
continued. The indemnification provided by this Article VIII shall not be
deemed exclusive of any other rights to which any person seeking
indemnification may be entitled by law or under the Articles of Incorporation of
the Corporation or these Bylaws, or any agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, trustee, officer
or employee and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 2. PURCHASE OF INSURANCE. The Corporation may purchase and maintain
insurance or furnish similar protection, including but not limited to trust
funds, letters of credit or self-insurance on behalf of or for any person who
is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, trustee, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any liability asserted against him and incurred by
him in any capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against liability under the
provisions of this Article or of the Delaware General Corporation Law.
Insurance may be purchased from or maintained with a person in which the
Corporation has a financial interest.
Section 3. ADVANCEMENT OF EXPENSES. Expenses, including attorneys'
fees, incurred by a present or former director of the Corporation in
defending an action, suit or proceeding referred to in Section 1
hereof brought against him in his capacity as a director shall be
paid by the Corporation as they are incurred in advance of the final
disposition of the action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director to repay such amount if
it ultimately is determined that he is not entitled to be indemnified
by the Corporation. Expenses, including attorneys' fees, incurred by
a present or former director of the Corporation in any capacity other
than as a director or by a present or former officer or employee of
the Corporation in defending an action, suit or proceeding referred
to in Section 1 hereof may be paid by the Corporation as they are
incurred in advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of the
director, officer or employee to repay such amount if it ultimately
is determined that he is not entitled to be indemnified by the
Corporation.
II-3
<PAGE> 159
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
(a) All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
<TABLE>
<CAPTION>
<S> <C> <C>
1.1 Form of Underwriting Agreement.**
3.1 Certificate of Incorporation of Key Consumer Acceptance Corporation**
3.2 By-Laws of Key Consumer Acceptance Corporation**
3.3 Form of Certificate of Trust for Key Auto Finance Trusts (included in Exhibit 4.2).**
4.1 Form of Indenture between the Trust and the Indenture Trustee
(including forms of Notes). **
4.2 Form of Trust Agreement between the Registrant and the Trustee (including forms of
Certificates).**
4.3 Form of Pooling and Servicing Agreement, among the Registrant, the Servicer and the Trustee
(including forms of Certificates).**
5.1 Opinion of Forrest F. Stanley with respect to legality.**
8.1 Opinion of Thompson Hine & Flory LLP with respect to federal and Ohio tax matters**
23.1 Consents of Forrest F. Stanley and Thompson Hine & Flory LLP (included in their opinions
filed as Exhibits 5.1 and 8.1).**
24.1 Powers of Attorney.*
99.1 Form of Sale and Servicing Agreement among the Registrant, the Servicer and the Trust.**
99.2 Form of Administration Agreement among the Seller, the Servicer and
the Indenture Trustee**
99.3 Form of Purchase Agreement between an Affiliate and the Registrant.**
- -----------------------------
<FN>
* Previously filed
** Filed herewith.
</TABLE>
ITEM 17. UNDERTAKINGS
(a) As to Rule 415 and Rule 430A:
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective amendment to
this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most
recent post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement; and
II-4
<PAGE> 160
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
provided, however, that the undertakings set forth in clauses (i) and (ii) above
do not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended, that are incorporated by reference in this registration
statement.
(2) For purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(3) That, for the purpose of determining any liability under
the Securities Act each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(4) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) As to documents subsequently filed that are incorporated by
reference:
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) As to Equity Offerings of Nonreporting Registrants:
The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser.
(d) As to indemnification:
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(e) As to qualification of Trust Indentures under Trust Indenture Act
of 1939 for delayed offerings:
II-5
<PAGE> 161
The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
II-6
<PAGE> 162
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this Amendment
No. 2 to Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Cleveland, State of Ohio, on the 6th
day of January, 1997.
KEY CONSUMER ACCEPTANCE CORPORATION
By: /s/ Forrest F. Stanley
------------------------------------------
Forrest F. Stanley
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* President and Chief January 6, 1997
- ----------------------------- Executive Officer
Craig T. Platt (principal executive
officer) and Director
* Treasurer January 6, 1997
- ----------------------------- (principal financial
Ronald J. Nicolas and accounting officer)
and Director
*
- ----------------------------- Director January 6, 1997
A. Jay Meyerson
[*] Signature by Forrest F. Stanley Attorney-in-Fact under January 6, 1997
as Attorney-in-Fact under Power of Power of Attorney
Attorney
/s/ Forrest F. Stanley
- ------------------------------------------
Forrest F. Stanley
</TABLE>
II-7
<PAGE> 163
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
No. Description of Exhibit Page Number
- ----- ---------------------- -----------
<S> <C>
1.1 Form of Underwriting Agreement.**
3.1 Certificate of Incorporation of Key Consumer Acceptance Corporation.**
3.2 By-Laws of Key Consumer Acceptance Corporation.**
3.3 Form of Certificate of Trust for Key Auto Finance Trusts
(included in Exhibit 4.2).**
4.1 Form of Indenture between the Trust and the Indenture Trustee
(including forms of Notes). **
4.2 Form of Trust Agreement between the Registrant and the Trustee
(including forms of Certificates).**
4.3 Form of Pooling and Servicing Agreement, among the Registrant,
the Servicer and the Trustee (including forms of Certificates).**
5.1 Opinion of Forrest F. Stanley with respect to legality.**
8.1 Opinion of Thompson Hine & Flory LLP with respect to federal and Ohio
tax matters**
23.1 Consents of Forrest F. Stanley and Thompson Hine & Flory LLP (included in
their opinions filed as Exhibits 5.1 and 8.1).**
24.1 Powers of Attorney.*
99.1 Form of Sale and Servicing Agreement among the Registrant, the
Servicer and the Trust.**
99.2 Form of Administration Agreement among the Seller, the Servicer and
the Indenture Trustee**
99.3 Form of Purchase Agreement between an Affiliate and the Registrant.**
- ---------------
<FN>
* Previously filed
** Filed Herewith.
</TABLE>
II-8
<PAGE> 1
Exhibit 1.1
KEY AUTO FINANCE TRUST 199_-_
[$__________ ASSET BACKED CERTIFICATES, CLASS A
$__________ ASSET BACKED CERTIFICATES, CLASS B]
[$__________ CLASS A-1 _____% ASSET BACKED NOTES
$__________ CLASS A-2 _____% ASSET BACKED NOTES
$__________ CLASS A-3 _____% ASSET BACKED NOTES
$__________ ____% ASSET BACKED CERTIFICATES](1)
KEY CONSUMER ACCEPTANCE CORPORATION
(Seller)
KEY BANK USA, NATIONAL ASSOCIATION
(Servicer)
FORM OF UNDERWRITING AGREEMENT
______________, 199_
[Representative],
As Representative of the
Underwriters Listed in
Schedule I
(the "Representative")
[address]
Ladies and Gentlemen:
Key Consumer Acceptance Corporation, a Delaware corporation (the
"Seller") and a wholly owned limited-purpose subsidiary of KeyCorp, an Ohio
corporation ("KeyCorp"), proposes to sell to the Underwriters listed in Schedule
I hereto (the "Underwriters") [the aggregate principal amount of ____% Asset
Backed Certificates, Class A (together with the Tail Certificate described
below, the "Class A Certificates") and the aggregate principal amount of ____%
Asset Backed Certificates, Class B (the "Class B Certificates", and together
with the Class A Certificates, the "Securities" or the "Certificates"), set
forth in Section 1 hereof] [the aggregate principal amount of Class A-1 ____%
Asset Backed Notes (the "Class A-1 Notes"), the aggregate principal amount of
Class A-2 ____% Asset Backed Notes (the "Class A-2 Notes"), the aggregate
principal amount of Class A-3
- --------
(1) This form of Underwriting Agreement contains alternative provisions
that relate to offerings of Asset Backed Certificates, on the one hand,
and Asset Backed Notes and Asset Backed Certificates, on the other
hand.
<PAGE> 2
____% Asset Backed Notes (the "Class A-3 Notes," and, together with the Class
A-1 Notes and the Class A-2 Notes, the "Notes") and the aggregate principal
amount of certificates designated ____% Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities"), set forth in
Section 1 hereof]. The Securities are issued by the Key Auto Finance Trust
199_-_ (the "Trust"). Each Certificate will represent a fractional undivided
interest in the Trust. [Each Note will be secured by the assets of the Trust
pursuant to the Indenture (as hereinafter defined.]
The assets of the Trust include, among other things, a pool of retail
motor vehicle loans and/or retail installment sale contracts secured by new and
used automobiles and light trucks (the "Receivables") and certain monies
received under the Receivables [on and] after ___________, 199_ (the "Cutoff
Date"), such Receivables to be serviced for the Trust by Key Bank USA, National
Association (the "Bank") in its capacity as servicer (in such capacity, the
"Servicer").
The Receivables will be sold to the Seller by each of the Bank and
AutoFinance Group, Inc., an Ohio corporation ("AFG," and together with the Bank,
the "Originators") pursuant to a Purchase Agreement, dated as of the Closing
Date (each such agreement, a "Purchase Agreement") between the Seller and each
of the Bank and AFG. The Receivables will be conveyed by the Seller to the Trust
pursuant to a [Pooling and Servicing Agreement] [Sale and Servicing Agreement]
dated as of the Closing Date among the Seller, the Servicer, [[Indenture
Trustee], as indenture trustee (the "Indenture Trustee")] and ______________, as
[owner] trustee (the "Trustee") [(the "Pooling and Servicing Agreement")] [(the
"Sale and Servicing Agreement")]. The Bank will grant the Trust a security
interest in the Receivables and related assets under and subject to the terms
of an Affiliate Security Agreement dated as of the Closing Date (the "Affiliate
Security Agreement") between the Bank and the Trust.
[The Class A Certificates will be issued in an aggregate principal
amount of $______________, which is equal to approximately ___% of the aggregate
principal balance of the Receivables as of the Cutoff Date, and $__________
aggregate principal amount of the Class A Certificates (the "Tail Certificate")
will initially be retained by the Seller. The Class B Certificates will be
issued in an aggregate principal amount of $_____________, which is equal to
approximately ___% of the aggregate principal balance of the Receivables as of
the Cutoff Date. Payments in respect of the Class B Certificates are, to the
extent specified in the Pooling and Servicing Agreement, subordinated to the
rights of the holders of the Class A Certificates. The Certificates will be
issued pursuant to the Pooling and Servicing Agreement.] [The Notes will be
issued
-2-
<PAGE> 3
pursuant to an Indenture to be dated as of the Closing Date (the "Indenture"),
between the Trust and the Indenture Trustee. The Servicer will agree to perform
certain administrative tasks pursuant to an Administration Agreement to be dated
as of the Closing Date (the "Administration Agreement"). The Certificates will
be issued pursuant to a Trust Agreement to be dated as of the Closing Date (the
"Trust Agreement") between Seller and the Trustee.]
The Seller has prepared in conformity in all material respects with the
provisions of the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations of the Commission thereunder (the "Rules and Regulations"), and
filed with the Securities and Exchange Commission (the "Commission") a
registration statement (Reg. No. 333-12431), including a prospectus, relating to
the Securities. The registration statement as amended at the time it became
effective, or, if any post-effective amendment has been filed with respect
thereto, as amended by the most recent post-effective amendment at the time of
its effectiveness, is referred to as the "Registration Statement," the form of
base prospectus included in the Registration Statement as most recently filed
with the Commission is referred to as the "Base Prospectus" and the form of the
prospectus which includes the Base Prospectus and a prospectus supplement
describing the Securities and the offering thereof (the "Prospectus Supplement")
which prospectus is first filed on or after the date of this Agreement in
accordance with Rule 424(b) is referred to in this Agreement as the
"Prospectus".
The terms which follow, when used in this Agreement, shall have the
meanings indicated. "Effective Date" shall mean the latest of the dates that the
Registration Statement or the most recent post-effective amendment thereto
became effective. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto. "Rule 424" refers to
such rule under the Act. "Basic Documents" shall mean each Purchase Agreement,
the Affiliate Security Agreement, the [Pooling and Servicing Agreement,] [Sale
and Servicing Agreement,] [the Indenture, the Trust Agreement, the
Administration Agreement,] this Agreement, the Securities and [the] [each]
Depository Agreement. "Participating Entity" means each of AFG, the Bank and the
Seller. "Securityholder" means any Noteholder and any Certificateholder and
"Security Owner" means the beneficial owner of any Note or Certificate. To the
extent not defined herein, capitalized terms used herein have the meanings
assigned to such terms in [the Pooling and Servicing Agreement] [Appendix X to
the Sale and Servicing Agreement].
The Participating Entities agree (severally and not jointly, except as
otherwise expressly provided herein) with the Underwriters as follows:
-3-
<PAGE> 4
1. The Seller agrees to sell and deliver to the Underwriters as
hereinafter provided, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees to purchase, severally and not jointly, from the
Seller, the respective aggregate principal amounts and classes of Securities set
forth opposite such Underwriter's name in Schedule I hereto. [The purchase price
for Securities of any class will be the applicable percentage set forth on
Schedule I hereto of the aggregate principal amount of such class purchased,
plus, in each case, accrued interest, if any, on the principal amount thereof at
the applicable [Interest Rate or] Certificate Rate (as such terms are defined in
the Prospectus), as the case may be, from (but excluding) __________________,
199_, to (and including) the Closing Date.]
2. The Seller understands that the Underwriters intend (i) to make a
public offering of the Securities purchased by the Underwriters hereunder as
soon after the Registration Statement and this Agreement have become effective
as in the judgment of the Seller and the Representative is advisable and (ii)
initially to offer the Securities purchased by the Underwriters hereunder upon
the terms set forth in the Prospectus.
3. Payment for the Securities purchased by the Underwriters hereunder
shall be made to the Seller or to its order by wire transfer of same day funds
at the office of ____________________, ________________________,
_________________ at [10:00 A.M.] [City, State] time on ______________, 199_ or
at such other time on the same or such other date, not later than the fifth
Business Day thereafter, as the Representative and the Seller may agree upon in
writing (the "Closing Date"). As used herein, the term "Business Day" means any
day other than a day on which banks generally are permitted or required to be
closed in New York, New York or Cleveland, Ohio.
Payment for the Securities purchased by the Underwriters hereunder
shall be made against delivery to the Representative for the respective accounts
of the Underwriters on the Closing Date of such Securities in definitive form
registered in the name of Cede & Co. as nominee of The Depositary Trust Company
and in such denominations, as permitted by the Basic Documents, as the
Representative shall request in writing not later than three full Business Days
prior to the Closing Date, with any transfer taxes payable in connection with
the transfer to the Underwriters of the Securities duly paid by the Seller. [The
Seller shall make such definitive certificates representing the Securities
available for inspection by the Representative at the office of
___________________________, ____________________,
_____________________________ not later than [1:00 P.M.], [City,
State] time, on the Business Day prior to the Closing Date.]
-4-
<PAGE> 5
4. Each Participating Entity represents and warrants
(severally and not jointly) to and agrees with each Underwriter
that:
(a) The Registration Statement and including amendments
thereto as may have been required on or prior to the date hereof,
relating to the Securities, have been filed with the Commission and
such Registration Statement as amended has become effective. The
conditions to the use by the Seller of a Registration Statement on
Form S-3 under the Act, as set forth in the General Instructions to
Form S-3, have been satisfied with respect to the Registration
Statement and the Prospectus.
(b) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of such Participating
Entity, threatened by the Commission, and (i) on the Effective Date of
the Registration Statement, the Registration Statement conformed in all
material respects to the requirements of the Act and the Rules and
Regulations, and 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, in light of the
circumstances under which they were made, not misleading, (ii) on the
date of this Agreement, the Prospectus conforms in all material
respects to the requirements of the Act and the Rules and Regulations,
and does 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, in light of the circumstances under which
they were made, not misleading, and (iii) at the time of filing of the
Prospectus pursuant to Rule 424(b) and on the Closing 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 neither of such documents will 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, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished to the Participating Entities in writing by any
Underwriter through the Representative expressly for use in the
Registration Statement or the Prospectus (collectively, "Underwriter
Information"). Each Participating Entity hereby agrees with the
Underwriters that, for all purposes of this Agreement, the only
Underwriter Information furnished consists of [the statements in the
first sentence
-5-
<PAGE> 6
of the paragraph immediately below the pricing table with respect to
the terms of the offering on the cover page of the Prospectus
Supplement, the capitalized paragraph with respect to stabilizing
transactions in secondary markets in the Securities on page S-2 of the
Prospectus Supplement, and the statements in the paragraph below the
table under the caption "Underwriting" in the Prospectus Supplements.]
(c) The computer tape with respect to the Receivables to be
sold to the Trust created as of the Cutoff Date (the "Computer Tape"),
and made available to the Representative by each of the Bank and AFG,
respectively, were complete and accurate in all material respects as of
the date thereof.
(d) Such Participating Entity is either a corporation or
national bank that is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, with power
and authority to own its properties and conduct its business and had at
all relevant times, and has, full power, authority and legal right to
acquire, own and sell the Receivables and the other Trust Property.
Such Participating Entity has the power, authority and legal right to
execute, deliver and perform this Agreement and each of the other Basic
Documents to which it is a party and to carry out their respective
terms and to sell and assign the respective property to be sold and
assigned to and deposited with the Trustee as Trust Property.
(e) The Securities have been duly authorized, and, when issued
and delivered pursuant to the Basic Documents and duly executed and
authenticated by the Trustee [and the Indenture Trustee, as applicable]
will be duly and validly issued, authenticated and delivered and
entitled to the benefits provided by the Basic Documents. The
execution, delivery and performance by such Participating Entity of
each of the Basic Documents to which it is a party and the consummation
of the transactions contemplated hereby and thereby have been duly
authorized by such Participating Entity by all necessary corporate
action. The Basic Documents to which such Participating Entity is a
Party have been duly executed and delivered by such Participating
Entity and, when executed and delivered by such Participating Entity
and the other parties thereto, each of such Basic Documents will
constitute a legal, valid and binding obligation of such Participating
Entity, enforceable against such Participating Entity in accordance
with its respective terms, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, moratorium, conservatorship,
receivership, liquidation and other similar laws affecting enforcement
of the rights of creditors generally and to equitable limitations on
the
-6-
<PAGE> 7
availability of specific remedies. The Securities, this Agreement and
the Basic Documents each conforms to the descriptions thereof in the
Prospectus in all material respects. [The Notes and the Indenture have
been duly executed and delivered by the Trust and, when the Indenture
is executed and the Notes are authenticated by the Indenture Trustee,
the Indenture and the Notes will constitute legal, valid and binding
obligations of the Trust, enforceable in accordance with their
respective terms, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, moratorium, conservatorship,
receivership, liquidation and other similar laws affecting enforcement
of the rights of creditors generally and to equitable limitations on
the availability of specific remedies.]
(f) No consent, approval, authorization, license or other
order or action of, or filing or registration with, any court or
governmental authority, bureau or agency is required in connection with
the execution, delivery or performance by such Participating Entity of
any of the Basic Documents to which it is a party or the consummation
of the transactions contemplated hereby or thereby except such as have
been obtained and made under the Act and the Rules and Regulations or
state securities laws and any filings of UCC financing statements.
(g) Such Participating Entity is not in violation of its
articles or certificate of incorporation, articles of association, code
of regulations or bylaws or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any agreement or instrument to which it is a party or by which it is
bound which violation or default would have a material adverse effect
on the transactions contemplated herein or in the Basic Documents. The
execution, delivery and performance by such Participating Entity of the
Basic Documents to which it is a party, the consummation of the
transactions contemplated hereby and thereby and the compliance with
the terms and provisions hereof and thereof will not conflict with or
result in a material breach or violation of any of the terms and
provisions of, constitute (with or without notice or lapse of time or
both) a material default under or result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of, (A)
the articles or certificate of incorporation, articles of association,
code of regulations or bylaws of such Participating Entity, (B) any
material indenture, contract, lease, mortgage, deed of trust or other
instrument or agreement to which such Participating Entity is a party
or by which such Participating Entity is bound, which violation or
default would have a material adverse effect on the transactions
-7-
<PAGE> 8
contemplated herein or in the Basic Documents or (C) any law, order,
rule or regulation applicable to such Participating Entity of any
regulatory body, any court, administrative agency or other governmental
instrumentality having jurisdiction over such Participating Entity.
(h) There are no proceedings or investigations pending, or, to
the knowledge of such Participating Entity threatened, to which such
Participating Entity is a party before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality
(i) that are required to be disclosed in the Registration Statement or
the Prospectus and are not so disclosed, (ii) asserting the invalidity
of this Agreement or any of the Basic Documents, (iii) seeking to
prevent the issuance of the Securities or the consummation of any of
the transactions contemplated by this Agreement or any of the Basic
Documents, (iv) seeking any determination or ruling that might
materially and adversely affect the performance by such Participating
Entity of its obligations under, or the validity or enforceability of,
this Agreement or any of the Basic Documents, (v) that may adversely
affect the federal or state income, excise, franchise or similar tax
attributes of any of the Securities, or (vi) which, if determined
adversely, could individually or in the aggregate reasonably be
expected to materially adversely affect the interests of the holders of
any of the Securities or the marketability of any of the Securities.
(i) There are no contracts or other documents of a character
required to be filed as an exhibit to the Registration Statement or
required to be described in the Registration Statement or the
Prospectus pursuant to the Act and the Rules and Regulations which are
not filed or described as required.
(j) The representations and warranties of such Participating
Entity contained in the Basic Documents to which it is a party are true
and correct as of the dates of the respective Basic Documents in all
material respects.
(k) By assignment and delivery of each of the Receivables of
each Originator to the Seller as of the Closing Date, such Originator
will transfer title in such Receivables to the Seller, subject to no
Lien prior or equal to the ownership interest granted to the Seller. By
assignment and delivery of each of the Receivables to the Trust as of
the Closing Date, the Seller will transfer title in the Receivables to
the Trust, subject to no Lien prior or equal to the ownership or
security interest granted to the Trust.
-8-
<PAGE> 9
(l) Ernst & Young are independent public accountants with
respect to the Participating Entities within the meaning of the Act and
the Rules and Regulations.
5. Each Participating Entity covenants and agrees (severally and not
jointly) with the Underwriters that:
(a) Prior to the termination of the offering of the
Securities, the Seller will not file or cause to be filed any amendment
of the Registration Statement or supplement to the Prospectus without
first furnishing to the Representative a copy of the proposed amendment
or supplement and giving the Representative a reasonable opportunity to
review the same. Subject to the foregoing sentence, the Seller will
cause the Prospectus, properly completed, and any supplement thereto,
to be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Underwriters of such timely filing. The Seller will
promptly advise the Underwriters (i) when the Prospectus, and any
supplement thereto, shall have been filed with the Commission pursuant
to Rule 424(b), (ii) when any amendment to the Registration Statement
shall have become effective, (iii) of any request by the Commission for
any amendment of the Registration Statement or supplement to the
Prospectus or for any additional information, (iv) of the receipt by
the Seller of notification with respect to the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation or threatening of any
proceeding for that purpose and (v) of the receipt by the Seller of
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. Such Participating
Entity will use its reasonable efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof. The receipt by the Representative of any amendment
or supplement to the Registration Statement or Prospectus, as
applicable, shall not be deemed a waiver of any condition set forth in
Section 7 hereof.
(b) The Seller will deliver, at its expense, to the
Representative, two signed copies of the Registration Statement (as
originally filed) and each amendment thereto, in each case including
exhibits, and, during the period mentioned in paragraph (e) below, to
each Underwriter as many copies of the Prospectus (including all
amendments and supplements thereto) as the Representative may
reasonably request. The Seller will furnish or cause to be furnished
-9-
<PAGE> 10
to the Representative copies of all reports on Form SR required by Rule
463 under the Act.
(c) If during such period of time after the first date of the
public offering of the Securities as in the opinion of counsel for the
Underwriters a prospectus relating to the Securities is required by law
to be delivered in connection with sales by an Underwriter or a dealer,
any event shall occur as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, not materially misleading, or it is necessary to amend or
supplement the Prospectus to comply with applicable law, the Seller
will forthwith prepare and furnish, at the expense of the Seller, to
the Underwriters and to the dealers (whose names and addresses the
Representative will furnish to the Seller) to which Securities may have
been sold by the Representative on behalf of the Underwriters and upon
request by the Representative to any other dealers identified by the
Representative, such amendments or supplements to the Prospectus as may
be necessary so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be materially misleading or so
that the Prospectus will comply with applicable law.
(d) The Seller will endeavor to qualify the Securities for
offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representative shall reasonably request and will
continue such qualification in effect so long as reasonably required
for distribution of the Securities and will pay all reasonable fees and
expenses (including fees and disbursements of counsel to the
Representative to the extent provided in Section 6(iii) hereof)
incurred in connection with such qualification and in connection with
the determination of the eligibility of the Securities for investment
under the laws of such jurisdictions as the Representative may
designate; provided, however, that the Seller shall not be obligated to
qualify to do business in any jurisdiction in which it is not currently
so qualified; and provided further that the Seller shall not be
required to file a general consent to service of process in any
jurisdiction.
(e) On or before ___________, 199_ the Seller will cause the
Trust to make generally available to Securityholders and to the
Representative all financial information required to be sent to
Securityholders pursuant to the Basic Documents.
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<PAGE> 11
(f) For the period from the date of this Agreement until the
retirement of all of the Securities the Servicer will furnish to the
Representative (i) copies of each Servicer's Certificate and the annual
statements of compliance delivered to the Trustee [or Indenture
Trustee] pursuant to the Basic Documents and the annual independent
certified public accountant's servicing reports furnished to the
Trustee [or Indenture Trustee] pursuant to the Basic Documents, by
first-class mail at the same time such statements and reports are
furnished to the Trustee [or Indenture Trustee], (ii) copies of each
amendment to any of the Basic Documents, (iii) copies of all other
reports and communications to any Securityholders or Security Owners,
or to or from the Trustee, [Indenture Trustee,] the Clearing Agency,
any Rating Agency or the Commission relating to the Trust or the
Securities, (iv) copies of each Opinion of Counsel and Officer's
Certificate delivered pursuant to the Basic Documents, as soon as
available, and (v) from time to time, such other information concerning
the Trust or the Participating Entities as the Representative may
reasonably request.
(g) If required, the Seller will register the Securities
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), prior to __________, 199_.
(h) To the extent, if any, that the ratings provided with
respect to the Securities by the Rating Agencies are conditional upon
the furnishing of documents or the taking of any other action by any
Participating Entity, the Bank shall furnish or cause such other
Participating Entity to furnish such documents and use reasonable
efforts to take any such other action.
6. The Participating Entities will pay all costs and expenses incident
to the performance of their respective obligations under this Agreement,
including, without limiting the generality of the foregoing, all costs and
expenses (i) incident to the preparation, issuance, execution, authentication
and delivery of the Securities, (ii) incident to the preparation, printing (or
otherwise reproducing), filing and delivery under the Act of the Registration
Statement, the Prospectus and any preliminary prospectus (including in each case
all exhibits, amendments and supplements thereto), (iii) incurred in connection
with the registration or qualification and determination of eligibility for
investment of the Securities under the laws of such jurisdictions as the
Representative may designate (including fees and disbursements of counsel for
the Underwriters with respect thereto up to $________), (iv) related to any
filing with the National Association of Securities Dealers, Inc., (v) in
connection with the printing (including word processing and
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<PAGE> 12
duplication costs) and delivery of this Agreement, the Basic Documents and any
Blue Sky Memorandum and the furnishing to the Underwriters and dealers of copies
of the Registration Statement, any preliminary prospectus and the Prospectus
(including exhibits, amendments and supplements thereto) as herein provided,
(vi) the fees and disbursements of the counsel of the Participating Entities and
accountants and [all fees and disbursements of Underwriters' counsel other than
$_________,] (vii) any fees and expenses payable to the Clearing Agency, (viii)
any fees and expenses payable to the Rating Agencies in connection with the
rating of the Securities and (ix) any fees and expenses of the Trustee.
7. The obligations of the Underwriters to purchase and pay for the
Securities will be subject to the accuracy, as of the date hereof and the
Closing Date, of the representations and warranties on the part of the
Participating Entities herein, to the accuracy of the statements of officers of
the Participating Entities made in any writing delivered at the closing pursuant
to the provisions hereof, to the performance by each of the Participating
Entities of its obligations hereunder and to the following additional conditions
precedent:
(a) At each of the time this Agreement is executed and
delivered by the Participating Entities and at the Closing Date, Ernst
& Young shall have furnished to the Representative letters dated,
respectively, as of the date of this Agreement and as of the Closing
Date, substantially in the forms of the drafts to which the
Representative previously agreed and otherwise in form and substance
satisfactory to the Representative and Ernst & Young.
(b) The form of prospectus used to confirm sales of Securities
shall have been filed with the Commission pursuant to Rule 424(b)
within the applicable time period prescribed for such filing by the
Rules and Regulations and in accordance with Section 5(a) of this
Agreement; no stop order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceedings for such
purpose shall be pending before or, to the knowledge of the
Participating Entities, contemplated by the Commission; and all
requests for additional information from the Commission with respect to
the Registration Statement shall have been complied with to the
reasonable satisfaction of the Representative.
(c) The Representative shall have received officer's
certificates, dated the Closing Date, signed by any Vice President or
more senior officer of each Participating Entity, representing and
warranting that, as of the Closing Date, the representations and
warranties of such
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<PAGE> 13
Participating Entity in this Agreement and the Basic Documents are true
and correct, that such Participating Entity has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder or under the Basic Documents at or prior to the
Closing Date, that no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the best of such officer's
knowledge, contemplated by the Commission, and that since ___________,
199_, there has been no material adverse change, or any development
involving a material adverse change, in or affecting particularly any
Originator's portfolio of Motor Vehicle Loans or the business or
properties of the Trust, any Participating Entity or KeyCorp which
materially impairs the investment quality of the Securities.(2)
(d) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any material adverse
change, or any development involving a material adverse change, in or
affecting the business, operations, financial condition or properties
of the Trust, any Participating Entity or KeyCorp which, in the
reasonable judgment of the Representative, materially impairs the
investment quality of the Securities or makes it impractical or
inadvisable to proceed with completion of the sale of and payment for
the Securities, (ii) any downgrading in the rating of any debt
securities of KeyCorp or any Participating Entity by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any such
debt securities (other than an announcement with no implication of a
possible downgrading, of such rating).
(e) Forrest F. Stanley, Esq., General Counsel of the Bank,
shall have furnished to the Representative his written opinion, dated
the Closing Date, in form and substance satisfactory to the
Representative, to the effect that:
(i) Each Participating Entity has been duly organized
and is validly existing and in good standing under the laws of
its jurisdiction of organization. Each Participating Entity
has corporate power and authority (a) to own its properties
and conduct its
--------
(2) NOTE: The statements relating to KeyCorp may, in the discretion of the
Seller, be contained in a separate officer's certificate from an
officer of KeyCorp.
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<PAGE> 14
business as now conducted by it; (b) to own, sell, assign and,
in the case of the Servicer and AFG, service the Receivables
and the other Trust Property; (c) in the case of the Seller,
to establish the Trust and sell the Securities as contemplated
by this Agreement and the Basic Documents; and (d) to execute
and deliver this Agreement and the Basic Documents to which it
is a party and to carry out their respective terms.
(ii) The execution, delivery, and performance of each
of this Agreement and the Basic Documents and the consummation
of the transactions contemplated hereby and thereby have been
duly authorized by each Participating Entity that is a party
thereto by all necessary corporate action. This Agreement and
the Basic Documents have been duly executed and delivered by,
and each constitutes a legal, valid and binding obligation of
each Participating Entity that is a party thereto enforceable
against such Participating Entity in accordance with its
respective terms, subject to the General Qualifications (as
defined in Schedule II).
(iii) The execution, delivery and performance by each
Participating Entity of this Agreement and the Basic Documents
to which it is a party, the consummation of the transactions
contemplated hereby and thereby and the compliance with the
terms and provisions hereof and thereof will not materially
conflict with or result in a material breach of any of the
terms or provisions of, or constitute (with or without notice
or lapse of time or both) a material default under or result
in the creation or imposition of any Lien (other than as
contemplated by the Basic Documents) upon any of its
properties pursuant to the terms of, (A) the certificate of
incorporation, articles of association or bylaws of such
Participating Entity, (B) to the actual knowledge of such
counsel, any material indenture, contract, lease, mortgage,
deed of trust or other instrument or agreement to which such
Participating Entity is a party or by which such Participating
Entity is bound, which breach or default would reasonably be
expected to have a material adverse impact on such
Participating Entity or the transactions contemplated by the
Basic Documents, (C) any Court Order (as defined in Schedule
II) actually known to me, or (D) applicable provisions of
statutory law or regulations.
(iv) No consent, approval, authorization, license or
other order or action of, or filing or registration
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<PAGE> 15
with, any court or governmental authority, bureau or agency is
required in connection with the execution, delivery or
performance by any Participating Entity of this Agreement and
the Basic Documents to which it is a party, or the
consummation of the transactions contemplated hereby or
thereby, except such as have been obtained or made under the
Act and the Rules and Regulations and state securities laws
and any filings of UCC financing statements.
(v) The Seller has duly authorized, executed and
delivered the written order to [each of] the Trustee [and
Indenture Trustee] to execute and authenticate the
[applicable] Securities. When the Receivables have been
transferred to the Trust, the Basic Documents have been
executed, the Securities have been authenticated by the
Trustee [and Indenture Trustee, as applicable] in accordance
with the Basic Documents, and the Securities have been
delivered and paid for pursuant to this Agreement, the
Securities will be validly issued and outstanding and entitled
to the benefits provided by the Basic Documents, subject to
the General Qualifications, [and the Indenture and the Notes
will constitute legal, valid and binding obligations of the
Trust, enforceable in accordance with their respective terms,
subject, as to enforceability, to the General Qualifications.]
(vi) There are no proceedings or investigations
pending or, to my actual knowledge, threatened to which any
Participating Entity is a party before any court, regulatory
body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over any Participating
Entity, (A) that are required to be disclosed in the
Registration Statement or the Prospectus, other than those
disclosed therein, (B) asserting the invalidity of this
Agreement or any of the Basic Documents, (C) seeking to
prevent the issuance of the Securities or the consummation of
any of the transactions contemplated by this Agreement or any
of the Basic Documents, (D) seeking any determination or
ruling that could materially and adversely affect the
performance of any Participating Entity's obligations under,
or the validity or enforceability of, this Agreement or any of
the Basic Documents to which it is a party, (E) that may
affect materially and adversely the federal or state income,
excise, franchise or similar tax attributes of any of the
Securities, or (F) that would reasonably be expected to
materially adversely affect the interests of the holders of
any of the Securities.
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<PAGE> 16
(vii) Such counsel is generally familiar with
standard operating procedures relating to each Originator's
acquisition of a perfected security interest in the vehicles
financed by such Originator pursuant to retail motor vehicle
loans and retail installment sale contracts in the ordinary
course of such Originator's business. Assuming that each
Originator's standard procedures are followed with respect to
the perfection of security interests in the Financed Vehicles,
such Originator has acquired or will acquire a perfected
security interest in the Financed Vehicles.
(viii) To such counsel's actual knowledge, there are
no contracts or other documents to which a Participating
Entity is a party of a character required to be filed as an
exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus
which are not filed or described as required.
(ix) Nothing has come to such counsel's attention
that would cause it to believe that as of the date of the
Prospectus and at the Closing Date (x) the Registration
Statement and any amendments and supplements thereto (other
than the financial statements and other accounting,
statistical and financial information contained therein or
omitted therefrom, as to which such counsel need express no
belief) contained or contain any untrue statement of a
material fact or omitted or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading, (y) the Prospectus and any
amendments and supplements thereto (other than the financial
statements and other accounting, statistical and financial
information contained therein or omitted therefrom, as to
which such counsel need express no belief) contained or
contain any untrue statement of a material fact or omitted or
omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading,
and (z) the descriptions therein of laws, rules, regulations,
governmental proceedings, legal matters, contracts and
documents are not accurate in all material respects or do not
fairly present the information required to be shown therein.
Such opinion may be made subject to the qualifications
that the enforceability of the terms of the Basic Documents
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<PAGE> 17
may be subject to the General Qualifications and the
assumptions and limitations set forth in Schedule III.
(f) Thompson Hine & Flory LLP, special counsel to the
Participating Entities, shall have furnished to the Representative its
written opinion, dated the Closing Date, in form and substance
satisfactory to the Representative, to the effect that:
(i) The Receivables are "chattel paper" as defined in
the UCC.
(ii) All filings necessary under applicable law to
perfect (A) the transfer of the Receivables by each Originator
to the Seller, (B) the transfer of the Receivables by the
Seller to the Trust, (C) the security interest granted by the
Bank to the Trust pursuant to the Affiliate Security Agreement
[and (D) the security interest granted by the Trust in the
Receivables to the Indenture Trustee,] have been made and,
provided that the Participating Entities and the Trust do not
relocate their respective principal places of business and
that the Trustee maintains the list of Receivables for
inspection by interested parties, no other filings (other than
the filing of continuation statements) need be made to
maintain such perfection, and the interest of the Seller, the
Trust and the Indenture Trustee, respectively, will constitute
a perfected security or ownership interest prior to any other
security or ownership interest that may be perfected by the
filing of a financing statement under the UCC.
(iii) The statements in the Registration Statement
and the Prospectus under the headings ["Description of the
Notes,"] "Description of the Certificates," "Certain
Information Regarding the Securities" and "Description of the
Transfer and Servicing Agreements," to the extent they purport
to summarize the provisions of the Basic Documents, constitute
a fair summary of such documents. The statements in the
Registration Statement and the Prospectus under the headings
"Summary of Terms - Tax Status," "Summary of Terms ERISA
Considerations," "Federal Income Tax Consequences," "State
Tax Consequences" and "ERISA Considerations" accurately
describe the material Federal and state income tax and ERISA
consequences to Securityholders and Security Owners and, to
the extent they constitute descriptions of matters of law or
legal conclusions with respect thereto, have been prepared or
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<PAGE> 18
reviewed by such counsel and are correct in all material
respects.
(iv) Except as described in the Prospectus, the Trust
will not be subject to income or franchise taxation in Ohio.
(v) Securityholders who are not residents or
domiciled in or otherwise subject to taxation in Ohio will not
be subject to income or franchise taxation in such state
solely by reason of being Securityholders.
(vi) [The Trust created by the Pooling and Servicing
Agreement will not be classified as an association taxable as
a corporation for federal income tax purposes and, instead,
under subpart E, part I of subchapter J of the Internal
Revenue Code of 1986, as amended, the Trust will be treated as
a grantor trust and, subject to possible recharacterization of
certain fees or payments paid by the Trust to the Seller or
the Servicer, each Certificateholder will be treated as the
owner of an undivided pro rata interest in the income and
corpus attributable to the Trust.] [The Trust will be
classified for federal income tax purposes as a partnership
and not as an association taxable as a corporation, and the
Notes will be characterized as debt for federal and Ohio
income and franchise tax purposes.]
(vii) The [Pooling and Servicing Agreement] [Trust
Agreement] is not required to be qualified [and the Indenture
has been duly qualified] under the Trust Indenture Act of
1939, as amended, and the Trust is not required to be
registered as an "investment company" under the Investment
Company Act of 1940, as amended.
(viii) The Registration Statement has become
effective under the Act and no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceeding for that purpose has been initiated or, to
the best of such counsel's knowledge, threatened by the
Commission. The Registration Statement and the Prospectus
(other than the accounting, financial and statistical data
contained in the Registration Statement or the Prospectus, or
omitted therefrom, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations.
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<PAGE> 19
(ix) The Securities, this Agreement and the Basic
Documents each conforms in all material respects with the
descriptions thereof contained in the Registration Statement
and the Prospectus.
(x) The Class A-1 Notes will be "eligible securities"
within the meaning of paragraph (a)(9) of Rule 2a-7 under the
Investment Company Act of 1940, as amended.
(xi) To the extent, if any, that the Purchase
Agreement between the Bank and the Seller does not constitute
a valid sale, transfer and assignment of the Receivables from
the Bank to the Seller, the Affiliate Security Agreement
constitutes the creation of a valid perfected first priority
security interest in the Receivables in favor of the Trust.
(xii) In the event that the Federal Deposit Insurance
Corporation were to be appointed as conservator or receiver
for the Bank pursuant to the Federal Deposit Insurance Act,
the interests in the Receivables granted to the Trust [and the
Indenture Trustee] would be enforceable against the Bank and
the Federal Deposit Insurance Corporation as receiver or
conservator for the Bank.
(xiii) Nothing has come to such counsel's attention
that would cause it to believe that as of the date of the
Prospectus and at the Closing Date (x) the Registration
Statement, the Prospectus and any amendments and supplements
thereto (other than the financial statements and other
accounting, statistical and financial information contained
therein or omitted therefrom, as to which such counsel need
express no belief) contained or contain any untrue statement
of a material fact or omitted or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading and (y) the descriptions
therein of laws, rules, regulations, governmental proceedings,
legal matters, contracts and documents are not accurate in all
material respects or do not fairly present the information
required to be shown therein.
Such opinion may be made subject to the qualifications that
the enforceability of the terms of the Basic Documents may be subject
to bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of the rights of creditors of national banks
generally and to
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<PAGE> 20
equitable limitations on the availability of specific
remedies.
(g) Thompson Hine & Flory LLP, special counsel to the
Participating Entities, shall have furnished its written opinion, dated
the Closing Date, with respect to (i) nonconsolidation under the
Bankruptcy Code of the assets and liabilities of the Seller on the one
hand, and those of either KeyCorp, AFG or any other Affiliate subject
to the Bankruptcy Code on the other, in the event KeyCorp, AFG or any
such Affiliate were to become subject of a case under the Bankruptcy
Code, (ii) the characterization of the transfer of the Receivables from
each Originator to the Seller and from the Seller to the Trust and
perfection of the Trust's [and the Indenture Trustee's] interest in the
Receivables, (iii) perfection of the [Indenture] Trustee's security
interests in the Reserve Account and the investments therein, and (iv)
that the Trust [and the Indenture Trustee] will have a first priority
perfected security interest in the Financed Vehicles located in [insert
any state with a 10% or more concentration], and such opinions shall be
in substantially the forms previously agreed with the Representative
and its counsel and in any event satisfactory in form and in substance
to the Representative and its counsel.
(h) The Representative shall have received an opinion of
Mayer, Brown & Platt, counsel to the Underwriters dated the Closing
Date, with respect to the validity of the Securities and such other
related matters as the Representative shall require and the
Participating Entities shall have furnished or caused to be furnished
to such counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(i) The Representative shall have received an opinion
addressed to the Underwriters of counsel to the Trustee, dated the
Closing Date and satisfactory in form and substance to the
Representative and its counsel, to the effect that:
(i) The Trustee has been duly organized and is
validly existing as a ___________________ and in good standing
under the laws of its jurisdiction of organization. The
Trustee has full power, authority and legal right to execute,
deliver and perform the Basic Documents to which it is a party
and to carry out their respective terms.
(ii) The execution, delivery and performance by
the Trustee of each of the Basic Documents to which the
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<PAGE> 21
Trustee or the Trust is a party and the consummation of the
transactions contemplated thereby, have been duly authorized
by the Trustee by all necessary action. The Basic Documents to
which the Trustee is a party have been duly executed and
delivered by the Trustee, and, when executed and delivered by
the other parties thereto, such Basic Documents will
constitute legal, valid and binding obligations of the Trustee
enforceable against the Trustee in accordance with their
respective terms, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation and other similar laws affecting
enforcement of the rights of creditors [of national banks]
generally and to equitable limitations on the availability of
specific remedies. The Basic Documents to which the Trust is a
party have been duly executed and delivered by the Trust, and
when executed and delivered by the other parties thereto, such
Basic Documents will constitute legal, valid and binding
obligations of the Trust enforceable against the Trust in
accordance with their respective terms, subject, as to
enforceability, to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation and
other similar laws affecting enforcement of the rights of
creditors [of national banks] generally and to equitable
limitations on the availability of specific remedies.
(iii) No consent, approval, authorization, license or
other order or action of, or filing or registration with, any
court or governmental authority, bureau or agency is required
in connection with the execution, delivery or performance by
the Trustee or the Trust of the Basic Documents to which it is
a party or the consummation of the transactions contemplated
thereby except such as have been obtained and made under the
Act and the Rules and Regulations or state securities laws and
the filing of any UCC financing statements required to perfect
the Trust's interest in the Receivables.
(iv) The execution, delivery and performance by the
Trustee of the Basic Documents to which it is a party, the
consummation of the transactions contemplated thereby and the
compliance with the terms and provisions thereof will not
conflict with or result in a breach or violation of any of the
terms and provisions of, constitute (with or without notice or
lapse of time or both) a default under or result in the
creation or imposition of any Lien upon any of its
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<PAGE> 22
properties pursuant to the terms of, (A) the articles of
association or bylaws of the Trustee, (B) any indenture,
contract, lease, mortgage, deed of trust or other instrument
or agreement to which the Trustee is a party or by which the
Trustee is bound or any of its properties are subject, or (C)
any law, order, rule or regulation applicable to the Trustee
or its properties, of any regulatory body, any court,
administrative agency or other governmental instrumentality
having jurisdiction over the Trustee or any of its properties.
(v) The Certificates have been duly executed,
authenticated and delivered by the Trustee.
[(vi) If the Trustee were acting as Servicer under
the Basic Documents as of the date of this Agreement, the
Trustee would have the corporate power and authority to
perform the obligations of the Servicer as provided in the
Basic Documents.]
(vii) There are no actions, suits or proceedings
pending or, to the best of such counsel's knowledge,
threatened against the Trustee before any court, or by or
before any federal, state, municipal or other governmental
department, commission, board, bureau or governmental agency
or instrumentality, or arbitrator which would, if adversely
determined, affect in any material respect the consummation,
validity or enforceability against the Trustee of any of the
Basic Documents.
[(vii) The Trust has been duly formed and is validly
existing as a statutory business trust under the laws of the
State of Delaware, with full power and authority to execute,
deliver and perform its obligations under the Basic Documents
to which it is a party.
[(j) The Representative shall have received from counsel for
the Indenture Trustee a favorable opinion, dated the Closing Date and
satisfactory in form and substance to the Representative and its
counsel to the effect that:
(i) The Indenture Trustee is a _______________ duly
organized, validly existing and in good standing under the
laws of ______________. The Indenture Trustee has full power,
authority and legal right to execute, deliver and perform the
Basic Documents to which it is a party and carry out their
respective terms.
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<PAGE> 23
(ii) The execution, delivery and performance by the
Indenture Trustee of the Basic Documents to which it is a
party and the consummation of the transactions contemplated
thereby have been duly authorized by the Indenture Trustee by
all necessary action. The Basic Documents to which it is a
party have been duly executed and delivered by the Indenture
Trustee, and when executed and delivered by the other parties
thereto, will constitute legal, valid and binding obligations
of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with their respective terms, subject, as
to enforceability, to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation or
other similar laws affecting the enforcement of rights of
creditors generally and to equitable limitations on the
availability of specific remedies.
(iii) The Notes have been duly authenticated and
delivered by the Indenture Trustee.
(iv) No consent, approval, authorization, license or
other order or action of, or filing or registration with, any
court or governmental authority, bureau or agency is required
in connection with the execution, delivery or performance of
the Basic Documents to which it is a party by the Indenture
Trustee or the consummation of the transactions contemplated
thereby.
(v) The execution, delivery and performance of the
Basic Documents to which it is a party by the Indenture
Trustee, the consummation of the transactions contemplated
thereby and compliance with the terms and provisions thereof
will not conflict with or result in a breach or violation of
any of the terms and provisions of, constitute (with or
without notice or lapse of time or both) a default under or
result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of, (A) the charter,
articles of association or bylaws of the Indenture Trustee,
(B) any indenture, contract, lease, mortgage, deed of trust or
other instrument or agreement to which the Indenture Trustee
is a party or by which the Indenture Trustee is bound or any
of its properties are subject, or (C) any law, order, rule or
regulation applicable to the Indenture Trustee or its
properties, of any regulatory body, any court, administrative
agency or other governmental instrumentality having
jurisdiction over the Indenture Trustee or any of its
properties.
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<PAGE> 24
(vi) There are no actions, suits or proceedings
pending or, to the best of such counsel's knowledge,
threatened against the Indenture Trustee before any court, or
by or before any federal, state, municipal or other
governmental department, commission, board, bureau or
governmental agency or instrumentality, or arbitrator which
would, if adversely determined, affect in any material respect
the consummation, validity or enforceability against the
Indenture Trustee of the Indenture.]
(k) If any Rating Agency shall have requested any legal
opinion, officer's certificate or other document not required by this
Agreement, the Representative also shall have received such legal
opinion, officer's certificate or other document together with a letter
from the party delivering such opinion, certificate or document
allowing the Underwriters to rely on such opinion, certificate or
document as if it were addressed to the Underwriters.
(l) [The Class A Certificates shall have been rated in the
highest category, and the Class B Certificates shall have been rated at
least in the "A" category or its equivalent by Moody's Investors
Service, Inc. and Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.] [The Class A-1 Notes [shall have been
rated in the highest possible short-term rating category and the] Class
A-2 Notes and Class A-3 Notes shall have been rated the highest
possible long-term rating category by each of the Rating Agencies and
the Certificates shall have been rated at least in the "A" category or
its equivalent by each of the Rating Agencies.]
(m) On the Closing Date, the representations and warranties of
the Participating Entities in the Basic Documents will be true and
correct in all material respects.
(n) Any taxes, fees and other governmental charges which are
due and payable in connection with the execution, delivery and
performance of this Agreement and the Basic Documents shall have been
paid by the Seller at or prior to the Closing Date.
(o) The Seller shall have made or caused to be made a deposit
in the Reserve Account in the amount of the Reserve Account Initial
Deposit.
(p) The Representative shall have received evidence
satisfactory to it that, on or before the Closing Date, UCC- 1
financing statements have been filed in the offices of the Secretaries
of State of Ohio and [list of central filing
-24-
<PAGE> 25
locations other than Ohio] and [list of local filing offices]
reflecting the interest of each of the Seller, the Trust [and the
Indenture Trustee] in the Receivables, the other Trust property and the
proceeds thereof.
8. Each Participating Entity jointly and severally (except as otherwise
set forth at the conclusion of this paragraph) agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities
(including, without limitation, the legal fees and other expenses reasonably
incurred in connection with investigating, preparing or defending any suit,
action or proceeding or any claim asserted), incurred by such Underwriter or
such controlling person and caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus (as amended or supplemented if the Seller shall have furnished such
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with the Underwriter Information; provided that the foregoing
indemnity with respect to any untrue statement or omission in any preliminary
prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) from whom the person asserting any
losses, claims or damages purchased Securities if such untrue statement or
omission or alleged untrue statement or omission made in such preliminary
prospectus is eliminated or remedied in the Prospectus (as amended or
supplemented if the Seller shall have furnished any amendments or supplements
thereto) and a copy of the Prospectus (as so amended or supplemented) shall not
have been furnished to such person at or prior to the written confirmation of
the sale of such Securities to such person to the extent required by law, and,
provided further, that to the extent that any such losses, claims, damages or
liabilities incurred by such Underwriter or such controlling person shall have
been caused by such an untrue statement or alleged untrue statement (i) relating
to Receivables originated by AFG in its capacity as an Originator or as to any
such Receivables assigned and sold by AFG to the Seller, (ii) with respect to
AFG as the [sub]servicer of such Receivables or relating to any such Receivables
[sub]serviced by AFG, or (iii) with respect to AFG as the purchaser of any such
Receivables from the Seller or the Trust upon a breach of a representation,
warranty or covenant or as to any Receivables so purchased, in
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<PAGE> 26
each case as provided by the applicable Basic Documents, then and in each such
event AFG and the Seller shall be solely and severally liable to such
Underwriter and such controlling persons for all such losses, claims, damages
and liabilities incurred by each of them in accordance with the terms and
provisions of this Section 8, and the Bank shall not have any liability
whatsoever to such Underwriter or such controlling person for or to the extent
of any such losses, claims, damages or liabilities.
Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Participating Entities, each director and
officer of the Participating Entities and each person who controls any
Participating Entity within the meaning of Section 15 of the Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Participating Entities to each Underwriter, but only with reference to
Underwriter Information.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Person may designate in such proceeding and shall
pay the reasonable fees and expenses of such counsel related to such proceeding;
provided that the failure of the Indemnified Person to give notice shall not
relieve the Indemnifying Person of its obligations under this Section 8 except
to the extent (if any) that the Indemnifying Person shall have been prejudiced
thereby. In any such proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) the Indemnifying Person and
the Indemnified Person shall have mutually agreed to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Person
shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred promptly
following submission of a documented
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<PAGE> 27
request for such reimbursement. Any such separate firm for the Underwriters and
such control persons of the Underwriters shall be designated in writing by the
Representative and any such separate firm for the Participating Entities, their
directors, officers and control persons shall be designated in writing by the
Bank. The Indemnifying Person shall not be liable for any settlement of any
claim or proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have made two
requests of an Indemnifying Person to reimburse the Indemnified Person for fees
and expenses of counsel as contemplated by the third sentence of this paragraph,
the Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
second aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such requests prior to the
date of such settlement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first and second
paragraphs of this Section 8 is determined by a court to be unavailable to an
Indemnified Person in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraph, in lieu
of indemnifying such Indemnified Person thereunder, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Participating Entities on the one
hand and the Underwriters on the other hand from the offering of the Securities
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Participating Entities on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Participating Entities on
the one hand
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<PAGE> 28
and the Underwriters on the other shall be deemed to be in the same respective
proportions as the net proceeds from the offering (before deducting expenses)
received by the Participating Entities and the total underwriting discounts and
the commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus, bear to the aggregate public offering
price of the Securities. The relative fault of the Participating Entities on the
one hand and the Underwriters on the other 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 Participating Entities or by any of the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Participating Entities and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
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 to contribute
pursuant to this Section 8 are several in proportion to the respective aggregate
principal amount of Securities set forth opposite their names in Schedule I
hereto, and not joint.
The indemnity and contribution agreements contained in this
Section 8 are in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
The indemnity and contribution agreements contained in this
Section 8 and the representations and warranties of the Participating Entities
set forth in this Agreement shall remain
-28-
<PAGE> 29
operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Underwriter or any
person controlling any Underwriter or by or on behalf of any Participating
Entity or any of their officers or directors or any other person controlling any
Participating Entity and (iii) acceptance of and payment for any of the
Securities.
9. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Representative, by notice given to
the Seller, if after the execution and delivery of this Agreement and prior to
the Closing Date (i) trading generally shall have been suspended or materially
limited on or by, as the case may be, the New York Stock Exchange or the
American Stock Exchange, or there shall have been any setting of minimum prices
for trading on either such exchange; (ii) trading of any securities of or
guaranteed by KeyCorp or any Participating Entity shall have been suspended on
any exchange or in any over-the-counter market; (iii) a moratorium on commercial
banking activities in New York or Ohio shall have been declared by either
federal, New York or Ohio authorities; or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the judgment of the Representative is material and
adverse and which, in the judgment of the Representative, makes it impracticable
to market the Securities on the terms and in the manner contemplated in the
Prospectus.
10. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
11. If on the Closing Date (i) any Underwriter shall fail or refuse to
purchase any Securities which it has agreed to purchase hereunder on such date,
(ii) such failure or refusal shall constitute a default in the performance of
such Underwriter's obligations hereunder, and (iii) the aggregate principal
amount of Securities which such defaulting Underwriter agreed but failed or
refused to purchase is not more than one-tenth of the aggregate principal amount
of the Securities to be purchased by the Underwriters on such date, the other
Underwriters shall be obligated to purchase Securities which such defaulting
Underwriter agreed but failed or refused to purchase on such date. If on the
Closing Date (i) any Underwriter shall fail or refuse to purchase Securities
which it has agreed to purchase hereunder on such date, (ii) such failure or
refusal shall constitute a default in the performance of such Underwriter's
obligations hereunder, (iii) the aggregate
-29-
<PAGE> 30
principal amount of Securities with respect to which such default occurs is more
than one-tenth of the aggregate principal amount of Securities to be purchased
by the Underwriters on such date, and (iv) arrangements satisfactory to the
non-defaulting Underwriters and the Seller for the purchase of such Securities
are not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter or any
Participating Entity. In any such case either the Representative or the Seller
shall have the right to postpone the Closing Date, but in no event for longer
than seven business days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
12. If this Agreement shall be terminated by the Underwriters, or any
one of them, because of any failure or refusal on the part of any Participating
Entity to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason any Participating Entity shall be unable to
perform its obligations under this Agreement or any condition of the
Underwriters' obligations cannot be fulfilled, the Participating Entities agree
to reimburse the Underwriters, severally, or such Underwriter which has so
terminated this Agreement with respect to itself, for all out-of-pocket expenses
(including the fees and expenses of their counsel) reasonably incurred by such
Underwriter(s) in connection with this Agreement or the offering contemplated
thereunder.
13. Any action by the Underwriters hereunder may be taken by the
Representative alone on behalf of the Underwriters, and any such action taken by
the Representative alone shall be binding upon the Underwriters. All notices and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if mailed, delivered by hand or transmitted by any standard form
of telecommunication. Notices to the Underwriters shall be given to the
Representative, c/o____________________________, ________________________,
_________________________ (Facsimile No.: ____________), Attention:
_______________]. Notices to the Participating Entities shall be given to them
at Key Tower, 127 Public Square, Cleveland, Ohio 44114 (Facsimile No.: [(216)
689-5708)], Attention: [Craig T. Platt].
14. This Agreement shall inure to the benefit of and be binding upon
the Participating Entities, the Underwriters, any controlling persons referred
to herein and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
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<PAGE> 31
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. No purchaser
of Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
15. This Agreement may be signed in counterparts, each of which shall
be an original and all of which together shall constitute one and the same
instrument. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF
LAWS PROVISIONS THEREOF.
[SIGNATURE PAGE FOLLOWS]
-31-
<PAGE> 32
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement among the Participating Entities
and the Underwriters in accordance with its terms.
Very truly yours,
KEY CONSUMER ACCEPTANCE CORPORATION
By:____________________________________
Name:
Title:
KEY BANK USA, NATIONAL ASSOCIATION
By:____________________________________
Name:
Title:
AUTOFINANCE GROUP, INC.
By:____________________________________
Name:
Title:
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
__________________________________
As Representative of the
Underwriters
By:________________________________
Name:
Title:
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<PAGE> 33
SCHEDULE I
<TABLE>
<CAPTION>
Initial Initial Initial Initial
Principal Amount Principal Amount Principal Amount Certificate Balance
of Class A-1 of Class A-2 of Class A-3 of Asset-Backed
Asset-Backed Asset-Backed Asset-Backed Certificates
Notes Notes Notes -------
------- ------- -------
Total
-----
<S> <C> <C> <C> <C> <C>
$ $ $ $ $
Total: . . $ $ $ $ $
======= ======= ======= ========== =======
Purchase Price: % % % % %
====== ====== ===== ========= ======
</TABLE>
I-1
<PAGE> 34
SCHEDULE II
CERTAIN DEFINED TERMS
A. General Qualifications. As used in the Opinion Letter, the
term "General Qualifications" shall mean and include,
without limitation:
(1) the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium, and similar laws affecting
the rights and remedies of creditors generally,
including, without limitation, (a) the Federal
Bankruptcy Code; (b) all other Federal and state
bankruptcy, insolvency, reorganization, receivership,
moratorium, arrangement, and assignment for the benefit
of creditors laws that affect the rights and remedies
of creditors generally or that have reference to or
affect generally only creditors of specific types of
debtors, and state laws of like character affecting
generally only creditors of financial institutions; (c)
state fraudulent transfer and conveyance laws; (d)
judicially developed doctrines relevant to any of the
foregoing laws, such as substantive consolidation of
entities;
(2) the effect of general principles of equity, whether
applied by a court of law or equity, including, without
limitation, principles: (a) governing the availability
of specific performance, injunctive relief, or other
equitable remedies, including those principles which
may place the award of such remedies, subject to
certain guidelines, in the discretion of the court to
which application for such relief is made; (b)
affording equitable defenses against a party seeking
enforcement; (c) requiring good faith and fair dealing
in the performance and enforcement of a contract by the
party seeking its enforcement; (d) requiring
reasonableness in the performance and enforcement of an
agreement by the party seeking enforcement of the
contract; (e) requiring consideration of the
materiality of a breach and the consequences of the
breach to the party seeking enforcement; (f) requiring
consideration of the impracticability or impossibility
of performance at the time of attempted enforcement;
(g) affording defenses based upon the unconscionability
of the enforcing party's conduct after the parties have
entered into the contract; and
(3) the effect of other generally applicable rules of law
that: (a) limit or affect the enforcement of
II-1
<PAGE> 35
provisions of a contract that purport to require waiver of the
obligations of good faith, fair dealing, diligence and
reasonableness; (b) provide that forum selection clauses in
contracts are not necessarily binding on the court(s) in the
forum selected; (c) limit the availability of a remedy under
certain circumstances where another remedy has been elected;
(d) limit the right of a creditor to use force or cause a
breach of the peace in enforcing rights; (e) relate to the
sale or disposition of collateral or the requirements of a
commercially reasonable sale; (f) limit the enforceability of
provisions releasing, exculpating or exempting a party from,
or requiring indemnification of a party for, liability for its
own action or inaction, to the extent the action or inaction
involves gross negligence, recklessness, willful misconduct or
unlawful conduct; (g) may, where less than all of a contract
may be unenforceable, limit the enforceability of the balance
of the contract to circumstances in which the unenforceable
portion is not an essential part of the agreed exchange; (h)
govern and afford judicial discretion regarding the
determination of damages and entitlement to attorneys' fees
and other costs; (i) may, in the absence of a waiver or
consent, discharge a guarantor to the extent that (1) action
by a creditor impairs the value of collateral securing
guaranteed debt to the detriment of the guarantor, or (2)
guaranteed debt is materially modified; (j) may permit a party
who has materially failed to render or offer performance
required by the contract to cure that failure unless (1)
permitting a cure would unreasonably hinder the aggrieved
party from making substitute arrangements for performance, or
(2) it was important in the circumstances to the aggrieved
party that performance occur by the date stated in the
contract.
B. Actual Knowledge. The phrases "actually known to me," "my
actual knowledge" or similar phrases shall mean the
conscious awareness of facts or other information by me or
by any lawyer in the KeyCorp Law Group in Cleveland, Ohio.
C. Court Orders. The term "Court Orders" shall mean judicial
administrative orders, writs, judgments, and decrees that
name the any Participating Entity, are specifically directed
to a Participating Entity or its respective property, and
are issued by a court of competent jurisdiction.
II-2
<PAGE> 36
SCHEDULE III
ASSUMPTIONS AND QUALIFICATIONS
For purposes of this opinion, I have assumed that (i) with respect to
the opinions expressed in paragraphs (ii) and (iii), each of the Bank and AFG
holds the requisite title and rights to the Receivables, (ii) the Underwriting
Agreements and the Basic Documents have been duly executed and delivered by all
parties thereto (other than the Participating Entities) and are valid and
binding upon and enforceable against such parties, subject to the General
Qualifications, (iii) there has been no mutual mistake of fact or
misunderstanding, fraud, duress, or undue influence, (iv) all statutes, judicial
and administrative decisions, and rules and regulations constituting Federal law
and the laws of the State of Ohio are generally available to lawyers practicing
in the State of Ohio and are in a format that make legal research reasonably
feasible, and (v) Court Orders and agreements to which any Participating is a
party or by which it or its properties are bound would be enforced as written.
The opinions expressed herein are limited to matters of Federal law and
the laws of the State of Ohio, without giving effect to principles of conflicts
of laws. This Opinion Letter addresses only the specific legal issues addressed
herein and does not, by implication or otherwise, address any other legal
issues, including without limitation: federal securities (except as to paragraph
(viii) of this Opinion Letter) and tax laws; state securities, "blue-sky", or
tax laws; the characterization of the transfer of the Receivables by the Bank or
AFG to Seller or by Seller to the Trust as a sale of such Receivables or a
transfer of a security interest therein, or the form, sufficiency or other legal
requirements for such sale or transfer of a security interest (including the
attachment and perfection thereof); laws, rules, and regulations of
municipalities or other political subdivisions of the State of Ohio; and federal
and state laws (such as ERISA and RICO) that in my reasonable judgment do not
relate to the opinions expressed herein.
III-1
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
KEY CONSUMER ACCEPTANCE CORPORATION
1) The name of the corporation is Key Consumer Acceptance Corporation.
2) The address of its registered office in the State of Delaware is:
Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at
such address is The Corporation Trust Company.
3) The nature of the business or purposes to be conducted or promoted by
the Corporation is to engage exclusively in the following business and
financial activities:
(a) to purchase or otherwise acquire from certain direct and
indirect subsidiaries of KeyCorp (collectively, the "AFFILIATE
SELLERS") or trusts formed by one or more Affiliate Seller
(the "AFFILIATE TRUSTS"), and to hold, sell, transfer or
pledge or otherwise exercise ownership rights with respect to
(i) motor vehicle retail installment sale contracts and motor
vehicle loans and leases, whether such contracts, and loans or
leases constitute accounts, chattel paper, instruments or
general intangibles, and including rights to payment of any
interest, finance charges or fees and any other rights with
respect thereto (the "RECEIVABLES"), (ii) security interests
in the vehicles financed by the Receivables (the "FINANCED
VEHICLES") and any accessions thereto; (iii) the rights to
proceeds with respect to the Receivables from claims on
certain insurance policies covering the Financed Vehicles and
any rights of an Affiliate Seller or Affiliate Trust in any
rebates of premiums and other amounts relating to certain
insurance policies and other items financed under the
Receivables; (iv) any property that shall have secured a
Receivable; (v) any rights of an Affiliate Seller with respect
to any agreement under which such Affiliate Seller has
acquired Receivables originated by or through a motor vehicle
dealer; (vi) any rights of an Affiliate Seller or Affiliate
Trust in any documents or instruments relating to the
Receivables; and (vii) any and all proceeds of the foregoing
(the property described in clauses (ii) through (vii) above
being called "RELATED ASSETS");
(b) to enter into any agreement providing for the sale, transfer
or pledge of the Receivables and Related Assets and to issue
and sell one or more series of bonds, notes, certificates or
other securities secured primarily by or evidencing beneficial
ownership interests in the Receivables and Related Assets;
(c) to use the proceeds of the sale of bonds, notes, certificates
or other securities or the proceeds of the sale of the
Receivables and Related Assets to acquire Receivables and
Related Assets;
/1
<PAGE> 2
(d) to act as settlor or depositor of trusts or other entities (a
"TRUST") formed to issue bonds, notes, certificates or other
securities secured by or evidencing beneficial ownership
interests in the Receivables and Related Assets;
(e) to acquire, own, hold, transfer, assign, pledge and otherwise
deal with bonds, notes, certificates and other securities
issued by a Trust or pursuant to an indenture or similar
agreement to which such a Trust is a party;
(f) for federal, state or local tax purposes, to serve as general
partner of any Trust;
(g) to enter into any agreement relating to any Receivables or
Related Assets that provides for the administration, service
and collection of amounts due on such Receivables and Related
Assets;
(h) to establish any reserve account, spread account or other
credit enhancement for the benefit of any bond, note,
certificate or other security issued by any Trust or under any
related indenture and to otherwise invest any proceeds from
Receivables and Related Assets and any other income as
determined by the Company's board of directors;
(i) to issue capital stock as provided for herein; and
(j) to engage in any lawful act or activity and to exercise any
powers permitted to corporations organized under the General
Corporation Law of the State of Delaware that are incidental
to and necessary, suitable or convenient for the
accomplishment of the purposes specified in CLAUSES (a)
through
(i) above.
4) The total number of shares of stock which the corporation shall have
authority to issue is One Thousand Five Hundred (1500) common shares;
all of such shares shall be without par value.
5) The name of and mailing address of the sole incorporator is: J. M.
Golem, KeyCorp, 127 Public Square, 2nd Floor, Cleveland, Ohio
44114-1306.
THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purposes of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this certificate,
hereby declaring and certifying that this is my act and deed and the
facts herein stated are true, and accordingly have hereunto set my hand
this 12th day of September 1996.
/s/ J.M. Golem
----------------------------------
J. M. Golem
Sole Incorporator
/2
<PAGE> 1
EXHIBIT 3.2
-----------
The following Bylaws were adopted by the Sole Incorporator of Key
Consumer Acceptance Corporation as of September 17, 1996.
BYLAWS OF
KEY CONSUMER ACCEPTANCE CORPORATION
ARTICLE I
MEETING OF SHAREHOLDERS
-----------------------
SECTION 1. ANNUAL MEETING. The annual meeting of shareholders for the election
of Directors, and the transaction of whatever other business may properly come
before the meeting, shall be held at the principal office of the Corporation, or
such other place authorized by the Board of Directors or the Chairman of the
Board, on the first Monday of June of each year, or such other date authorized
by the Board of Directors or the Chairman of the Board. If, for any cause, the
election of Directors is not held on that day, the Board of Directors shall
order the election to be held on some subsequent day, as soon thereafter as
practicable, according to the provisions of law, and notice thereof shall be
given in the manner herein provided for the annual meeting.
SECTION 2. SPECIAL MEETINGS. Except as otherwise specifically provided by
statute, special meetings of the shareholders may be called for any purpose at
any time by the Chairman of the Board, the President, the Board of Directors, or
by any shareholder or shareholders owning, in the aggregate, not less than
twenty-five per cent (25%) of the stock of the Corporation.
SECTION 3. NOTICE OF MEETINGS. Unless otherwise provided by law, these Bylaws,
or the Articles of Incorporation, a notice of the time, place, and purpose of
every annual meeting and every special meeting of the shareholders shall be
given by first-class mail, postage prepaid, mailed not less than seven days nor
more than sixty days prior to the date of such meeting, to each shareholder of
record at such shareholder's address as shown upon the books of the Corporation.
The attendance of any shareholder at a shareholder meeting without protesting,
prior to or at the commencement of the meeting, the lack of proper notice, shall
be deemed a waiver by such shareholder of notice of such meeting.
SECTION 4. PROXIES. Shareholders may vote at any meeting of the shareholders by
proxies duly authorized in writing. Proxies shall be valid only for one meeting,
to be specified therein, and any adjournments of such meeting, and only for a
period of eleven months. Proxies shall be dated and shall be filed in the
Corporation's records. The person appointed as proxy need not be a shareholder.
Unless the writing appointing a proxy otherwise provides, the presence at a
meeting of
/1
<PAGE> 2
the person who appointed a proxy shall not operate to revoke the appointment.
Notice to the Corporation, in writing or in open meeting, of the revocation of
the appointment of a proxy shall not affect any vote or act previously taken or
authorized by such proxy.
SECTION 5. QUORUM; ADJOURNMENT. Except as may otherwise be provided by law, at
any meeting of the shareholders, the holders of shares entitling them to
exercise a majority of the voting power of the Corporation present in person or
by proxy shall constitute a quorum for such meeting; provided, however, that no
action required by law to be authorized or taken by a designated proportion of
the shares may be authorized or taken by a lesser proportion; provided, further,
that, if a quorum is not present, the holders of a majority of the voting shares
represented thereat may adjourn such meeting or any adjournment thereof. If any
meeting is adjourned, notice of such adjournment need not be given if the time
and place to which such meeting is adjourned are fixed and announced at such
meeting.
SECTION 6. VOTING POWER; CUMULATIVE VOTING. In voting on issues at meetings of
shareholders, except on the election of Directors, each shareholder shall be
entitled to one vote for each share of stock held. A majority of votes cast
shall decide each issue submitted to the shareholders at any meeting, except in
cases where by law or by the Articles of Incorporation a larger vote is
required. In all elections of Directors, each shareholder shall have the right
to vote the number of shares owned by such shareholder for as many persons as
there are Directors to be elected, or to cumulate such shares and give one
candidate as many votes as the number of Directors multiplied by the number of
such shareholder's shares shall equal, or to distribute them on the same
principle among as many candidates as such shareholder chooses.
SECTION 7. RECORD OF SHAREHOLDERS AND VOTES. At any meeting of the shareholders,
a record showing the names and addresses of shareholders present and the number
of shares of stock held by each, the names of shareholders represented by proxy
and the number of shares held by each, and the names of the proxies shall be
made. This record also shall show the number of shares voted on each action
taken, including the number of shares voted for each candidate for the Board of
Directors. This record shall be included in the minute book of the Corporation.
SECTION 8. APPROVAL AND RATIFICATION OF ACTS OF OFFICERS AND DIRECTORS. Except
as otherwise provided by the Articles of Incorporation or by law, any contract,
act, or transaction, prospective or past, of the Corporation, the Board of
Directors, or any director or officer, may be approved or ratified by the
affirmative vote in person or by proxy of the holders of record of a majority of
the shares held by persons not interested in the contract, act, or transaction
and entitled to vote in the election of directors (without regard to voting
powers which may thereafter exist upon a default, failure, or other
contingency), which approval or ratification shall be as valid and binding as
though affirmatively voted for or consented to by every shareholder of the
Corporation.
ARTICLE II
BOARD OF DIRECTORS
------------------
/2
<PAGE> 3
SECTION 1. AUTHORITY. The Board of Directors shall have power to manage and
administer the business and affairs of the Corporation. Except as expressly
limited by law, all corporate powers of the Corporation shall be vested in and
exercised by or under the authority of the Board of Directors.
SECTION 2. NUMBER. The Board of Directors shall consist of such number of
members (not less, however, than three or, when all of the shares of the
Corporation are owned of record by one or two shareholders, not less than the
number of shareholders) as the Board of Directors may determine. Unless so
determined by the Board of Directors, the number shall be three. Whenever the
Board of Directors shall have so determined the number, that number shall be
deemed the authorized number of members of the Board of Directors until the
number shall again be changed by the Board of Directors.
SECTION 3. ELECTION OF DIRECTORS; VACANCIES. The Directors shall be elected at
each annual meeting of shareholders or at a special meeting called for the
purpose of electing Directors. Any vacancy or vacancies occurring in the Board
of Directors, including vacancies created by an increase in the numbers of
Directors, may be filled by appointment by the remaining Directors, even if less
than a majority of the whole authorized number of directors, at any regular or
special meeting of the Board, and any Director or Directors so appointed shall
hold office until the next election.
SECTION 4. TERM OF OFFICE; RESIGNATIONS. Directors shall hold office until the
next annual meeting of shareholders or until their successors are elected and
have qualified, or until their earlier resignation, removal from office, or
death. Any Director may resign at any time by oral statement to that effect made
at a meeting of the Board of Directors, or in a writing to that effect delivered
to the Secretary or an Assistant Secretary of the Corporation; such resignation
shall take effect immediately or at such other time as the Director may specify
at such meeting or in such writing. At a meeting of shareholders called
expressly for that purpose, any director or the entire Board of Directors may be
removed, with or without cause, by a vote of the holders of a majority of the
shares then entitled to vote at an election of directors. If permitted by law,
the majority of the Board of Directors may remove a director for cause.
SECTION 5. ORGANIZATION MEETING. Following the annual meeting of shareholders,
the Directors-elect shall hold an organization meeting for the purpose of
appointing officers and transacting such other business as properly may come
before the meeting. Such organization meeting shall be held on the day of the
election or as soon thereafter as practicable. Notice of such meeting need not
be given if held on the day of the election.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of Directors may be
held at such time and place authorized by the Board of Directors, the Chairman
of the Board, or in such person's absence, a Vice Chairman of the Board. Unless
otherwise indicated in a notice of a regular meeting, the Board of Directors may
transact any business at such regular meetings.
SECTION 7. SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by the Chairman of the Board, by the President, any Vice President, or at
the request of two or more
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<PAGE> 4
Directors. Notice of special meetings, stating the time and place thereof, and
whether telephone or similar communications equipment will be utilized, shall be
given in person or by mailing, telephoning, or telegraphing such notice at least
two days prior to the meeting; provided, however, that attendance of any
Director at such meeting without protesting, prior to or at the commencement of
the meeting, the lack of proper notice, shall be deemed a waiver by such
Director of notice of such meeting. Notice of a meeting may be waived in writing
or by telegram either before or after such meeting. Unless otherwise indicated
in the notice of the meeting, any business may be transacted at such meeting.
SECTION 8. QUORUM; ADJOURNMENT. A quorum of the Board of Directors shall consist
of a majority of the Directors then in office; provided that a majority of the
Directors then present at a meeting duly held, whether or not a quorum is
present, may adjourn such meeting from time to time. If any meeting is
adjourned, notice of such adjournment need not be given if the time and place to
which such meeting is adjourned are fixed and announced at such meeting. At each
meeting of the Board of Directors at which a quorum is present, all issues shall
be determined by a majority vote of those present except as otherwise expressly
provided in these Bylaws or by law. A Director cannot vote or otherwise act by
proxy at a meeting of the Board of Directors.
ARTICLE III
OFFICERS
--------
SECTION 1. ELECTION AND DESIGNATION OF OFFICERS. The Board of Directors shall
elect or appoint a Chairman of the Board, a President, one or more Vice
Presidents, a Secretary, a Treasurer, and such other officers as the Board may
deem necessary. The Chairman of the Board shall be a member of the Board of
Directors. The Board of Directors may delegate the authority to appoint and
dismiss officers to officers of the Corporation or to a committee composed of
such officers. Any two or more offices may be held by the same person, but no
officer shall execute, acknowledge, or verify any instrument in more than one
capacity if the instrument is required to be executed, acknowledged, or verified
by two or more officers. The Board of Directors shall approve the compensation
of Directors and officers, except that the Board of Directors may delegate to a
committee of the Board of Directors, or to officers of the Corporation,
authority for approving Directors' and officers' compensation.
SECTION 2. TERM OF OFFICE; VACANCIES. The officers of the Corporation shall hold
office until their successors are elected or appointed and qualified, except in
the case of resignation, dismissal or removal from office, or death. The Board
of Directors may dismiss or remove any officer at any time, with or without
cause, by a majority vote of the Directors then in office, without prejudice to
the contract rights of such officer; an election or appointment of an officer
shall not of itself create any contract rights. Any vacancy in any office may be
filled in the manner provided herein for the election or appointment of office.
The Board of Directors is not required to annually elect or appoint officers.
/4
<PAGE> 5
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at all
meetings of shareholders and the Board of Directors. He also shall serve the
Corporation in such capacity and perform such other duties as may be assigned to
him, from time to time, by the Board of Directors. In the absence of, or at the
direction of, the Chairman of the Board, the President, or such other Director
designated by the Chairman of the Board, shall preside at a meeting of the
shareholders or the Board of Directors, as the case maybe.
SECTION 4. PRESIDENT. The President shall have general executive powers over the
management and business of the Corporation, subject to the direction of the
Board of Directors and the Chairman of the Board.
SECTION 5. VICE PRESIDENTS. Each Vice President shall have such powers and
duties as may be assigned to him by the Board of Directors or as otherwise
provided for herein; the Board of Directors may authorize one of the Vice
Presidents to perform the duties of the President in the President's absence or
if the President is unable to act.
SECTION 6. SECRETARY. The Secretary shall be Secretary to the Board of Directors
and of the Corporation. The Secretary shall give or provide for the giving of
all notices required by law or these Bylaws to be given, shall be custodian of
the corporate seal, records, documents, and papers of the Corporation, shall
keep accurate minutes of all meetings covered by these Bylaws, and shall perform
such other duties as may be assigned from time to time by the Board of
Directors.
SECTION 7. TREASURER. The Treasurer shall perform the duties indicated by such
title and shall have custody of corporate funds and securities and keep full and
accurate accounts of receipts and disbursements on the Corporation's books. The
Treasurer shall disburse the funds of the Corporation as is necessary and
authorized and shall be prepared to account for all such transactions and for
the financial condition of the Corporation to the Chairman of the Board and the
Board of Directors.
SECTION 8. OTHER OFFICERS. Other officers shall have such powers and duties as
may be assigned by the Board of Directors.
SECTION 9. DELEGATION OF DUTIES. The Board of Directors is authorized to
delegate the assignment of the duties of any officer, to control the action of
the officers, and to require the performance of duties in addition to those
mentioned herein, to any other officer.
ARTICLE IV
COMMITTEES
----------
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may appoint an Executive
Committee which shall consist of the Chairman of the Board and not less than two
other Directors. Each member of the Board of Directors who is not a member of
the Committee shall be an alternate and, at the request of the officer who is to
preside at the meeting, may serve in the place of any regular
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<PAGE> 6
member who is unable to attend a committee meeting for any reason. The Chairman
of the Board shall preside at all meetings of the Committee; if such officer is
absent, a Vice Chairman shall preside. If none of the foregoing persons is
available, the non-officer Director members of the Executive Committee shall
select a Director, who need not be an officer, to preside.
SECTION 2. POWERS OF EXECUTIVE COMMITTEE. The Executive Committee shall have and
may exercise, as far as permitted by law, all the powers and authority of the
Board of Directors and other committees of the Board of Directors between
meetings of such Board or such committees. At each meeting of the Board of
Directors, the minutes of all previous meetings of the Executive Committee not
theretofore submitted to the Board shall be presented for review and
ratification by the Board. Any action of the Board disapproving any prior action
of the Executive Committee shall not affect the rights of third parties dealing
with the Corporation, if such rights exist by virtue of action of the Executive
Committee within the scope of the corporate powers of the Corporation.
SECTION 3. OTHER COMMITTEES. The Board of Directors may, by resolutions adopted
by a majority of the full Board, establish one or more other committees; each
committee shall consist of three or more members of the Board of Directors
which, to the extent provided in such resolution or resolutions or in these
Bylaws, shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation and may have the power
to authorize the seal of the Corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or names as may be
stated in these Bylaws or as may be determined from time to time by resolution
adopted by the Board of Directors. The Board of Directors may designate one or
more Directors as alternate members of any committee, who may serve in the place
of any regular member who is unable to attend a committee meeting for any
reason. Each committee shall keep regular minutes of its meetings and present
such minutes for review to the Board of Directors.
SECTION 4. NOTICE OF MEETINGS. Meetings of the Board committees shall be held at
the principal office of the Corporation or at such other place as may be
designated in the notice of the meeting at any time upon call by the Chairman of
the Board, the Vice Chairman of the Board, the President, or the Chairman of the
Committee. Notice of each such meeting shall be given to each member of the
Committee in person or by mailing, telephoning, or telegraphing such notice at
least two days prior to the meeting; provided, however, that attendance by any
Director at such meeting, without protesting prior to or at the commencement of
such meeting, the lack of proper notice shall be deemed a waiver by such
Director of the notice of such meeting. Notice of the meeting may be waived in
writing or by telegram by any member either before or after such meeting. Unless
otherwise indicated in the notice of the meeting, any business may be transacted
at such meeting.
ARTICLE V
RECORD DATES
------------
The Board of Directors may fix, or authorize the Chairman of the Board or the
President to fix, a record date for any lawful purpose. The record date for the
purpose of the determination of the
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<PAGE> 7
shareholders who are entitled to receive notice of or to vote at a meeting of
shareholders shall continue to be the record date for all adjournments of such
meeting. The Board of Directors may close the share transfer books against
transfer of shares during the whole or any part of the period provided for in
this Article, including the date of the meeting of shareholders and the period
ending with the date, if any, to which the meeting is adjourned.
ARTICLE VI
CERTIFICATES FOR SHARES
-----------------------
SECTION 1. FORM OF CERTIFICATES AND SIGNATURES. Each holder of shares shall be
entitled to one or more certificates signed by the Chairman of the Board, the
President or a Vice President, and by the Secretary, an Assistant Secretary, the
Treasurer, or an Assistant Treasurer. The signature of any of such officers of
the Corporation may be a facsimile, engraved, stamped, or printed. In case any
such officer whose legal or facsimile signature has been placed upon such
certificate ceases to be such officer before the certificate is delivered, such
certificate nevertheless shall be effective in all respects when delivered.
SECTION 2. TRANSFER OF SHARES. Shares of the Corporation shall be transferable
upon the books of the Corporation by the holders thereof, in person, or by a
duly authorized attorney, upon surrender and cancellation of certificates for a
like number of shares of the same class, with duly executed assignment and power
of transfer endorsed thereon or attached thereto, and with such proof of the
authenticity of such signatures to such certificates and power of transfer as
the Corporation or its agents may reasonably require.
SECTION 3. CORPORATE SEAL. The following is an impression of the seal adopted by
the Board of Directors of the Corporation.
(to be inserted)
Any officer shall have authority to affix the corporate seal to any document
requiring such seal and to attest the same. Failure to affix the seal to any
instrument executed on behalf of the Corporation shall not affect the validity
of such instrument unless such action is required by law.
ARTICLE VII
MISCELLANEOUS
-------------
SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall be the calendar
year.
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<PAGE> 8
SECTION 2. DEFINITIONS. The word "person" wherever used in these Bylaws shall be
taken to mean and include individuals, partnerships, associations, and
corporations when the text so requires. "Vice President", as used in these
Bylaws, shall include Vice Chairman and such titles as Senior Executive Vice
President, Executive Vice President, and Senior Vice President. Words of the
singular number shall be taken to include the plural and those of the plural
number shall be taken to include the singular whenever appropriate. Nouns and
pronouns of the masculine gender shall include the feminine whenever
appropriate.
SECTION 3. EXECUTION OF INSTRUMENTS. The Chief Executive Officer may from time
to time prescribe in writing the authority of the officers, employees, and
agents of the Corporation with respect to the making, execution, and delivery in
the name and on behalf of the Corporation of documents and instruments in
writing necessary to the transaction of its business, whether in a fiduciary
capacity or otherwise, and with respect to the approval orally, or by conduct
other than signing of agreements, of transactions in the name and on behalf of
the Corporation necessary to the carrying out of the business of the
Corporation; provided, however, that if the Chief Executive Officer fails to
take such action, the Board of Directors shall, by resolution, establish such
authorities in writing. Where any such resolution or any such writing has been
certified by the Secretary or an Assistant Secretary as to its full force and
effect, any instrument executed or transaction effected in conformity with such
resolution or such writing may be relied upon by any person. Authority granted
to officers, employees, and agents of the Corporation, pursuant to this Section
3 shall apply to all documents, instruments, and conduct relating to any entity
for which the Corporation is a successor in interest, whether by merger or
otherwise.
SECTION 4. USE OF COMMUNICATIONS EQUIPMENT AT MEETINGS. Members of the Board of
Directors may participate in regular or special meetings of the Board of
Directors, and members of committees appointed by the Board of Directors may
participate in regular or special meetings of those committees, through use of
conference telephone or similar communications equipment, as long as all members
participating in such meeting can hear one another.
SECTION 5. ACTION WITHOUT A MEETING. Any action which may be taken at a meeting
of the Corporation's shareholders, Board of Directors, or committee of the Board
of Directors, may be taken without a meeting by the unanimous vote of approval
of, and in a writing or writings signed by, all of the Corporation's
shareholders, Directors, or committee members, respectively, entitled to notice
of such meeting; such writing or writings shall be included in the minute book
of the Corporation.
SECTION 6. WAIVERS OF NOTICE. Any shareholder or Director may waive the giving
of any notice required to be given to him under these Bylaws.
SECTION 7. TELEGRAM. Any action required or permitted to be taken hereunder by
telegram may be taken by telex, fax, or similar communication equipment.
/8
<PAGE> 9
SECTION 8. RECORDS. The Articles of Incorporation, these Bylaws, and the
proceedings of all meetings of the shareholders, the Board of Directors, and
committees of the Board, shall be recorded in appropriate minute books provided
for that purpose. The minutes of each meeting shall be signed by the Secretary,
an Assistant Secretary, or other officer appointed to act as secretary of the
meeting.
ARTICLE VIII
INDEMNIFICATION
---------------
SECTION 1. INDEMNIFICATION. The Corporation shall indemnify, to the full extent
permitted or authorized by the Delaware General Corporation Law as it may from
time to time be amended, any person made or threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative, by reason of the fact that he is or
was a director, officer, or employee of the Corporation, or is or was serving at
the request of the Corporation as a director, trustee, officer, or employee of
another corporation, bank, partnership, joint venture, trust, or other
enterprise; in the case of a person serving at the request of the Corporation,
such request shall be evidenced by a resolution of the Board of Directors or a
duly-authorized committee thereof or by a writing executed by an officer of the
Corporation pursuant to a resolution of the Board of Directors or a
duly-authorized committee thereof. In the case of a merger into this Corporation
of a constituent corporation which, if its separate existence had continued,
would have been required to indemnify directors, officers, or employees in
specified situations prior to the merger, any person who served as a director,
officer, or employee of the constituent corporation, or served at the request of
the constituent corporation as a director, trustee, officer, or employee of
another corporation, bank, partnership, joint venture, trust, or other
enterprise, shall be entitled to indemnification by this Corporation (as the
surviving corporation)_for acts, omissions, or other events or occurrences prior
to the merger to the same extent he would have been entitled to indemnification
by the constituent corporation if its separate existence had continued. The
indemnification provided by this Article VIII shall not be deemed exclusive of
any other rights to which any person seeking indemnification may be entitled by
law or under the Articles of Incorporation of the Corporation or these Bylaws,
or any agreement, vote of shareholders or disinterested directors, or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, trustee, officer, or employee and shall inure to the benefit of
the heirs, executors, and administrators of such a person.
SECTION 2. PURCHASE OF INSURANCE. The Corporation may purchase and maintain
insurance or furnish similar protection, including but not limited to trust
funds, letters of credit, or self-insurance on behalf of or for any person who
is or was a director, officer, employee, or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, trustee, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise, against any liability asserted against him and incurred by him
in any capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against liability under the
provisions of this Article or of the Delaware General Corporation Law.
/9
<PAGE> 10
Insurance may be purchased from or maintained with a person in which the
Corporation has a financial interest.
SECTION 3. ADVANCEMENT OF EXPENSES. Expenses, including attorneys' fees,
incurred by a present or former director of the Corporation in defending an
action, suit, or proceeding referred to in Section 1 hereof brought against him
in his capacity as a director shall be paid by the Corporation as they are
incurred in advance of the final disposition of the action, suit, or proceeding
upon receipt of an undertaking by or on behalf of the director to repay such
amount if it ultimately is determined that he is not entitled to be indemnified
by the Corporation. Expenses, including attorneys' fees, incurred by a present
or former director of the Corporation in any capacity other than as a director
or by a present or former officer or employee of the Corporation in defending an
action, suit, or proceeding referred to in Section 1 hereof may be paid by the
Corporation as they are incurred in advance of the final disposition of the
action, suit, or proceeding upon receipt of an undertaking by or on behalf of
the director, officer or employee to repay such amount if it ultimately is
determined that he is not entitled to be indemnified by the Corporation.
ARTICLE IX
AMENDMENTS
----------
These Bylaws may be amended, altered, or repealed, at any regular or special
meeting of the Corporation's shareholders, by the affirmative vote of the
holders of shares entitling them to exercise a majority of the voting power on
such matter.
ARTICLE X
CORPORATE RESTRICTIONS
----------------------
The Corporation shall not, without the affirmative vote of 100% of the members
of the Board of Directors which vote of each such director shall be in writing
and given prior to such action; (a) make an assignment for the benefit of
creditors, file a petition in bankruptcy, petition or apply to any tribunal for
the appointment of a custodian, receiver or any trustee for it or for a
substantial part of its property, commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereinafter in effect,
consent or acquiesce in the filing of any such petition, application, proceeding
or appointment of or taking possession by the custodian, receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Corporation
or any substantial part of its property, or admit its inability to pay its debts
generally as they become due or authorize any of the foregoing to be done or
taken on behalf of the Corporation; or (b) dissolve or liquidate, in whole or in
part.
/10
<PAGE> 1
EXHIBIT 4.1
================================================================================
KEY AUTO FINANCE TRUST 199_-_
Class A-1 _____% Asset Backed Notes
Class A-2 _____% Asset Backed Notes
----------------------------
INDENTURE
Dated as of ________, 199_
----------------------------
as Indenture Trustee
================================================================================
<PAGE> 2
<TABLE>
<CAPTION>
CROSS REFERENCE TABLE(1)
TIA Indenture
Section Section
<S> <C> <C>
310 (a) (1)................................................................. 6.11
(a) (2)................................................................. 6.11
(a) (3)................................................................. 6.10
(a) (4)................................................................. N.A.(2)
(a) (5)................................................................. 6.11
(b) .................................................................. 6.8; 6.11
(c) .................................................................. N.A.
311 (a) .................................................................. 6.12
(b) .................................................................. 6.12
(c) .................................................................. N.A.
312 (a) .................................................................. 7.1
(b) .................................................................. 7.2
(c) .................................................................. 7.2
(d) .................................................................. 7.4
313 (a) .................................................................. 7.4
(b) (1)................................................................. 7.4
(b) (2)................................................................. 11.5
(c) .................................................................. 7.4
(d) .................................................................. 7.3
314 (a) .................................................................. 11.15
(b) .................................................................. 11.1
(c) (1)................................................................. 11.1
(c) (2)................................................................. 11.1
(c) (3)................................................................. 11.1
(d) .................................................................. 11.1
(e) .................................................................. 11.1
(f) .................................................................. 11.1
315 (a) .................................................................. 6.1
(b) .................................................................. 6.5; 11.5
(c) .................................................................. 6.1
(d) .................................................................. 6.1
(e) .................................................................. 5.13
316 (a) (last sentence)..................................................... 2.7
(a) (1) (A)............................................................. 5.11
- ---------------
<FN>
1 Note: This Cross Reference Table shall not, for any purpose, be deemed to
be part of this Indenture.
2 N.A. means Not Applicable.
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
(a) (1) (B)............................................................. 5.12
(a) (2)................................................................. N.A.
(b) .................................................................. 5.7
(c) .................................................................. N.A.
317 (a) (1)................................................................. 5.3
(a) (2)................................................................. 5.3
(b) .................................................................. 3.3
318 (a) .................................................................. 11.7
</TABLE>
<PAGE> 4
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.................................................. 2
SECTION 1.1 Definitions...................................................................... 2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act................................ 2
SECTION 1.3 Other Interpretive Provisions.................................................... 3
ARTICLE II THE NOTES.................................................................................. 3
SECTION 2.1 Form ....................................................................... 3
SECTION 2.2 Execution, Authentication and Delivery........................................... 4
SECTION 2.3 Temporary Notes.................................................................. 4
SECTION 2.4 Registration of Transfer and Exchange............................................ 5
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes....................................... 6
SECTION 2.6 Persons Deemed Owner............................................................. 7
SECTION 2.7 Payment of Principal and Interest................................................ 7
SECTION 2.8 Cancellation..................................................................... 8
SECTION 2.9 Release of Collateral............................................................ 9
SECTION 2.10 Book-Entry Notes................................................................ 9
SECTION 2.11 Notices to Clearing Agency...................................................... 10
SECTION 2.12 Definitive Notes................................................................ 10
SECTION 2.13 Authenticating Agents.................................................................... 11
SECTION 2.14 Tax Treatment............................................................................ 11
ARTICLE III COVENANTS................................................................................. 12
SECTION 3.1 Payment of Principal and Interest................................................ 12
SECTION 3.2 Maintenance of Office or Agency.................................................. 12
SECTION 3.3 Money for Payments To Be Held in Trust........................................... 12
SECTION 3.4 Existence ....................................................................... 14
SECTION 3.5 Protection of Trust Estate....................................................... 14
SECTION 3.6 Opinions as to Trust Estate...................................................... 15
SECTION 3.7 Performance of Obligations; Servicing of Receivables............................. 15
SECTION 3.8 Negative Covenants............................................................... 18
SECTION 3.9 Annual Statement as to Compliance................................................ 18
SECTION 3.10 Issuer May Consolidate, Etc..................................................... 19
SECTION 3.11 Successor or Transferee......................................................... 21
SECTION 3.12 No Other Business............................................................... 21
SECTION 3.13 No Borrowing.................................................................... 21
SECTION 3.14 Servicer's Obligations.......................................................... 21
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SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities............................... 21
SECTION 3.16 Capital Expenditures............................................................ 21
SECTION 3.17 Restricted Payments............................................................. 22
SECTION 3.18 Notice of Events of Default..................................................... 22
SECTION 3.19 Further Instruments and Acts.................................................... 22
SECTION 3.20 Removal of Administrator........................................................ 22
ARTICLE IV SATISFACTION AND DISCHARGE................................................................. 22
SECTION 4.1 Satisfaction and Discharge of Indenture.......................................... 22
SECTION 4.2 Application of Trust Money....................................................... 24
SECTION 4.3 Repayment of Moneys Held by Paying Agent......................................... 24
ARTICLE V REMEDIES.................................................................................... 24
SECTION 5.1 Events of Default................................................................ 24
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment............................... 26
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee...................................................... 26
SECTION 5.4 Remedies; Priorities............................................................. 29
SECTION 5.5 Optional Preservation of the Receivables......................................... 30
SECTION 5.6 Limitation of Suits.............................................................. 30
SECTION 5.7 Unconditional Rights of Noteholders To Receive
Principal and Interest................................................. 31
SECTION 5.8 Restoration of Rights and Remedies............................................... 32
SECTION 5.9 Rights and Remedies Cumulative................................................... 32
SECTION 5.10 Delay or Omission Not a Waiver.................................................. 32
SECTION 5.11 Control by Noteholders.......................................................... 32
SECTION 5.12 Waiver of Past Defaults......................................................... 33
SECTION 5.13 Undertaking for Costs........................................................... 33
SECTION 5.14 Waiver of Stay or Extension Laws................................................ 34
SECTION 5.15 Action on Notes................................................................. 34
SECTION 5.16 Performance and Enforcement of Certain Obligations.............................. 34
ARTICLE VI INDENTURE TRUSTEE.......................................................................... 35
SECTION 6.1 Duties of Indenture Trustee...................................................... 35
SECTION 6.2 Rights of Indenture Trustee...................................................... 36
SECTION 6.3 Individual Rights of Indenture Trustee........................................... 37
SECTION 6.4 Indenture Trustee's Disclaimer................................................... 37
SECTION 6.5 Notice of Defaults............................................................... 37
SECTION 6.6 Reports by Indenture Trustee to Holders.......................................... 37
SECTION 6.7 Compensation and Indemnity....................................................... 38
SECTION 6.8 Replacement of Indenture Trustee................................................. 38
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SECTION 6.9 Successor Indenture Trustee by Merger............................................ 39
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee...................................................... 40
SECTION 6.11 Eligibility; Disqualification................................................... 41
SECTION 6.12 Preferential Collection of Claims Against Issuer................................ 41
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS............................................................ 42
SECTION 7.1 Issuer to Furnish Indenture Trustee Names and
Addresses of Noteholders............................................... 42
SECTION 7.2 Preservation of Information; Communications to
Noteholders............................................................ 42
SECTION 7.3 Reports by Issuer................................................................ 42
SECTION 7.4 Reports by Indenture Trustee..................................................... 43
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES..................................................... 43
SECTION 8.1 Collection of Money.............................................................. 43
SECTION 8.2 Trust Accounts................................................................... 43
SECTION 8.3 General Provisions Regarding Accounts............................................ 44
SECTION 8.4 Release of Trust Estate.......................................................... 45
SECTION 8.5 Opinion of Counsel............................................................... 46
ARTICLE IX SUPPLEMENTAL INDENTURES.................................................................... 46
SECTION 9.1 Supplemental Indentures Without Consent of
Noteholders............................................................ 46
SECTION 9.2 Supplemental Indentures with Consent of Noteholders.............................. 48
SECTION 9.3 Execution of Supplemental Indentures............................................. 50
SECTION 9.4 Effect of Supplemental Indenture................................................. 50
SECTION 9.5 Conformity With Trust Indenture Act.............................................. 50
SECTION 9.6 Reference in Notes to Supplemental Indentures.................................... 50
ARTICLE X REDEMPTION OF NOTES......................................................................... 51
SECTION 10.1 Redemption...................................................................... 51
SECTION 10.2 Form of Redemption Notice....................................................... 51
SECTION 10.3 Notes Payable on Redemption Date................................................ 52
ARTICLE XI MISCELLANEOUS.............................................................................. 52
SECTION 11.1 Compliance Certificates and Opinions, etc....................................... 52
SECTION 11.2 Form of Documents Delivered to Indenture Trustee................................ 54
SECTION 11.3 Acts of Noteholders............................................................. 55
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies............................................................... 56
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SECTION 11.5 Notices to Noteholders; Waiver.................................................. 56
SECTION 11.6 Alternate Payment and Notice Provisions......................................... 57
SECTION 11.7 Conflict with Trust Indenture Act............................................... 57
SECTION 11.8 Effect of Headings and Table of Contents........................................ 58
SECTION 11.9 Successors and Assigns.......................................................... 58
SECTION 11.10 Separability................................................................... 58
SECTION 11.11 Benefits of Indenture.......................................................... 58
SECTION 11.12 Legal Holidays................................................................. 58
SECTION 11.13 GOVERNING LAW.................................................................. 58
SECTION 11.14 Counterparts................................................................... 58
SECTION 11.15 Recording of Indenture......................................................... 59
SECTION 11.16 Trust Obligation............................................................... 59
SECTION 11.17 No Petition.................................................................... 59
SECTION 11.18 Inspection..................................................................... 59
</TABLE>
Exhibit A Schedule of Receivables
Exhibit B Form of Sale and Servicing Agreement
Exhibit C Form of Note Depository Agreement
Exhibit D Form of Class A-1 Note
Exhibit E Form of Class A-2 Note
(iv)
<PAGE> 8
INDENTURE dated as of __________, 199__, between KEY AUTO FINANCE TRUST
199_-_, a Delaware business trust ("Issuer"), and _____________________________,
a ____________________, solely as trustee and not in its individual capacity
("Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of Issuer's Class A-1 _______%
Asset Backed Notes (the "Class A-1 Notes"), and Class A-2 ____% Asset Backed
Notes (the "Class A-2 Notes" and, together with the Class A-1 Notes, the
"Notes"):
GRANTING CLAUSE
Issuer hereby Grants to Indenture Trustee at the Closing Date, as
Indenture Trustee for the benefit of the Holders of the Notes, all of Issuer's
right, title and interest in and to (a) the Receivables, and all moneys received
thereon [on or] after the Cutoff Date; (b) the security interests in the
Financed Vehicles granted by Obligors pursuant to the Receivables and any other
interest of Issuer in the Financed Vehicles and any other property that shall
secure the Receivables; (c) any proceeds with respect to (i) any Receivable
repurchased by a Dealer, pursuant to a Dealer Agreement, as a result of a breach
of a representation or warranty in the related Dealer Agreement, (ii) a default
by an Obligor resulting in the repossession of the Financed Vehicle, or (iii)
any Dealer Recourse and other rights of Affiliates under Dealer Agreements; (d)
any proceeds with respect to the Receivables from claims on any Insurance
Policies covering Financed Vehicles or Obligors or from claims under any
lender's single interest insurance policy naming any Seller Affiliate as an
insured; (e) rebates of premiums and other amounts relating to any Insurance
Policies and rebates of other items, such as extended warranties financed under
the Receivables, in each case, to the extent Servicer would, in accordance with
its customary practices, apply such amounts to the Principal Balance of the
related Receivable; (f) any instrument or document relating to the Receivables;
(g) all the Seller's rights under the Purchase Agreements, including the right
of the Seller to cause an Affiliate to repurchase Receivables from the Seller;
(h) the security interests in the Receivables and other assets granted by each
Seller Affiliate to the Issuer under the Affiliate Security Agreement and all
rights of the Issuer thereunder; (i) all funds on deposit from time to time in
the Trust Accounts and in all investments and proceeds thereof (including the
Reserve Account Property but excluding all investment income thereon); (j) the
Issuer's rights under the Sale and Servicing Agreement; and (k) all present and
future claims, demands, causes and choses in action in respect of any or all of
the foregoing and all payments on or under and all proceeds of every kind and
nature whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion,
<PAGE> 9
voluntary or involuntary, into cash or other liquid property, all cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing (collectively, the
"Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction except as set
forth herein, and to secure compliance with the provisions of this Indenture,
all as provided in this Indenture.
Indenture Trustee, as Indenture Trustee on behalf of the Holders of the
Notes, acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that the
interests of the Holders of the Notes may be adequately and effectively
protected.
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.
SECTION 1.1 Definitions. Capitalized terms are used in this Indenture
as defined in Appendix X to the Sale and Servicing Agreement dated as of
____________, 199_, among Key Consumer Acceptance Corporation, as Seller, the
Issuer and Key Bank USA, National Association, as Servicer.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means Indenture Trustee.
"obligor" on the indenture securities means Issuer and any other
obligor on the indenture securities.
2
<PAGE> 10
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.3 Other Interpretive Provisions. All terms defined in this
Indenture shall have the defined meanings when used in any certificate or other
document delivered pursuant hereto unless otherwise defined therein. For
purposes of this Indenture and all such certificates and other documents, unless
the context otherwise requires: (a) accounting terms not otherwise defined in
this Indenture, and accounting terms partly defined in this Indenture to the
extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles; (b) the words "hereof," "herein" and
"hereunder" and words of similar import refer to this Indenture as a whole and
not to any particular provision of this Indenture; (c) references to any
Article, Section, Schedule or Exhibit are references to Articles, Sections,
Schedules and Exhibits in or to this Indenture and references to any paragraph,
subsection, clause or other subdivision within any Section or definition refer
to such paragraph, subsection, clause or other subdivision of such Section or
definition; (d) the term "including" means "including without limitation"; (e)
except as otherwise expressly provided herein, references to any law or
regulation refer to that law or regulation as amended from time to time and
include any successor law or regulation; (f) references to any Person include
that Person's successors and assigns; and (g) headings are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
ARTICLE II THE NOTES.
SECTION 2.1 Form. The Class A-1 Notes and the Class A-2 Notes, in each
case together with Indenture Trustee's certificate of authentication, shall be
in substantially the forms set forth in Exhibits D and E, respectively, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution of the Notes. Any portion of the text of
any Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
3
<PAGE> 11
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibits D and E are part of the terms of this Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The Notes shall be
executed on behalf of Issuer by any of its Authorized Officers. The signature of
any such Authorized Officer on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of Issuer shall bind Issuer, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Notes or did not hold such offices at
the date of such Notes.
Indenture Trustee shall upon Issuer Order authenticate and deliver
Class A-1 Notes for original issue in an aggregate principal amount of
$____________ and Class A-2 Notes for original issue in the aggregate principal
amount of _________________. The aggregate principal amount of Class A-1 Notes
and Class A-2 Notes outstanding at any time may not exceed such amounts except
as provided in Section 2.5.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples thereof (except for one Note of each class which may be
issued in a denomination other than an integral multiple of $1,000).
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by Indenture Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.3 Temporary Notes. Pending the preparation of Definitive
Notes, Issuer may execute, and upon receipt of an Issuer Order, Indenture
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the Definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, Issuer will cause Definitive Notes to be
prepared without unreasonable delay. After the preparation of Definitive Notes,
the temporary Notes shall be exchangeable for Definitive Notes upon surrender
4
<PAGE> 12
of the temporary Notes at the office or agency of Issuer to be maintained as
provided in Section 3.2, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes, Issuer shall execute and
Indenture Trustee shall authenticate and deliver in exchange therefor a like
principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes.
SECTION 2.4 Registration of Transfer and Exchange. Issuer shall cause
to be kept a register (the "Note Register") in which, subject to such reasonable
regulations as it may prescribe, Issuer shall provide for the registration of
Notes and the registration of transfers of Notes. Indenture Trustee shall
initially be "Note Registrar" for the purpose of registering Notes and transfers
of Notes as herein provided. Upon any resignation of any Note Registrar, Issuer
shall promptly appoint a successor or, if it elects not to make such an
appointment, assume the duties of Note Registrar.
If a Person other than Indenture Trustee is appointed by Issuer as Note
Registrar, Issuer will give Indenture Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and Indenture Trustee shall have the right to
inspect the Note Register at all reasonable times and to obtain copies thereof,
and Indenture Trustee shall have the right to conclusively rely upon a
certificate executed on behalf of Note Registrar by an Executive Officer thereof
as to the names and addresses of the Holders of the Notes and the principal
amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of Issuer to be maintained as provided in Section 3.2, if the
requirements of Section 8-401(1) of the UCC are met Issuer shall execute and
upon its written request Indenture Trustee shall authenticate and the Noteholder
shall obtain from Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes, in any authorized denominations, of the same
class and a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any authorized denominations, of the same class and a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, if the requirements of
Section 8-401(1) of the UCC are met Issuer shall execute and upon its written
request Indenture Trustee shall authenticate and the Noteholder shall obtain
from Indenture Trustee, the Notes which the Noteholder making the exchange is
entitled to receive.
5
<PAGE> 13
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of Issuer, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Notes surrendered upon such
registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to Note Registrar duly executed by,
the Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of Note Registrar which requirements include membership or
participation in a Securities Transfer Agents Medallion Program ("Stamp") or
such other "signature guarantee program" as may be determined by Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as Indenture Trustee
may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
The preceding provisions of this section notwithstanding, Issuer shall
not be required to make and Note Registrar need not register transfers or
exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to Indenture Trustee, or Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to Indenture Trustee such security or
indemnity as may be required by it to hold Issuer and Indenture Trustee
harmless, then, in the absence of notice to Issuer, Note Registrar or Indenture
Trustee that such Note has been acquired by a bona fide purchaser, and provided
that the requirements of Section 8-405 of the UCC are met, Issuer shall execute
and upon its written request Indenture Trustee shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Note, a replacement Note; provided that if any such destroyed, lost or stolen
Note, but not a mutilated Note, shall have become or within seven days shall be
due and payable, or shall have been called for redemption, instead of issuing a
replacement Note, Issuer may upon delivery of the security or indemnity herein
required pay such destroyed, lost or stolen Note when so due or payable or upon
the Redemption Date without surrender
6
<PAGE> 14
thereof. If, after the delivery of such replacement Note or payment of a
destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, Issuer and
Indenture Trustee shall be entitled to recover such replacement Note (or such
payment) from the Person to whom it was delivered or any Person taking such
replacement Note from such Person to whom such replacement Note was delivered or
any assignee of such Person, except a bona fide purchaser, and shall be entitled
to recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by Issuer or Indenture Trustee in
connection therewith.
Upon the issuance of any replacement Note under this Section, Issuer
may require the payment by the Holder of such Note of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other reasonable expenses (including the fees and expenses of Indenture
Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, Issuer, Indenture Trustee and any agent of
Issuer or Indenture Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
neither Issuer, Indenture Trustee nor any agent of Issuer or Indenture Trustee
shall be affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest. (a) The Notes shall
accrue interest as provided in the forms of the Class A-1 Note and the Class A-2
Note, set forth in Exhibits D and E, respectively, and such interest shall be
payable on each Distribution Date as specified therein. Any installment of
interest or principal, if any, payable on any Note which is punctually paid or
duly
7
<PAGE> 15
provided for by Issuer on the applicable Distribution Date shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is registered
on the Record Date, by check mailed first-class, postage prepaid, to such
Person's address as it appears on the Note Register on such Record Date, except
that, unless Definitive Notes have been issued pursuant to Section 2.12, with
respect to Notes registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payment will be made
by wire transfer in immediately available funds to the account designated by
such nominee and except for the final installment of principal payable with
respect to such Note on a Distribution Date or on the Final Scheduled
Distribution Date (and except for the Redemption Price for any Note called for
redemption pursuant to Section 10.1(a)) which shall be payable as provided
below. The funds represented by any such checks returned undelivered shall be
held in accordance with Section 3.3.
(b) The principal of each Note shall be payable on each Distribution
Date as provided in the forms of the Class A-1 Note and the Class A-2 Note, set
forth in Exhibits D and E, respectively. Notwithstanding the foregoing, the
entire unpaid principal amount of the Notes shall be due and payable, if not
previously paid, on the date on which an Event of Default shall have occurred
and be continuing, if Indenture Trustee or the Holders of the Notes representing
not less than a majority of the Outstanding Amount of the Notes have declared
the Notes to be immediately due and payable in the manner provided in Section
5.2 and, in such event, all principal payments on each class of Notes shall be
made pro rata to the Noteholders of such class entitled thereto. Indenture
Trustee shall notify the Person in whose name a Note is registered at the close
of business on the Record Date preceding the Distribution Date on which Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed or transmitted by facsimile prior to
such final Distribution Date and shall specify that such final installment will
be payable only upon presentation and surrender of such Note and shall specify
the place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.2.
SECTION 2.8 Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than Indenture Trustee, be delivered to Indenture Trustee and shall
be promptly cancelled by Indenture Trustee. Issuer may at any time deliver to
Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which Issuer may have acquired in any manner whatsoever, and
all Notes so delivered shall be promptly cancelled by Indenture Trustee. No
Notes shall be authenticated in lieu of or in exchange for any Notes cancelled
as
8
<PAGE> 16
provided in this Section, except as expressly permitted by this Indenture. All
cancelled Notes may be held or disposed of by Indenture Trustee in accordance
with its standard retention or disposal policy as in effect at the time unless
Issuer shall direct by an Issuer Order that they be destroyed or returned to it;
provided that such Issuer Order is timely and the Notes have not been previously
disposed of by Indenture Trustee.
SECTION 2.9 Release of Collateral. Subject to Section 11.1, Indenture
Trustee shall release property from the lien of this Indenture only upon receipt
of an Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates. If
the Commission shall issue an exemptive order under TIA Section 304(d) modifying
Owner Trustee's obligations under TIA Sections 314(c) and 314(d)(1), subject to
Section 11.1 and the terms of the Basic Documents, Indenture Trustee shall
release property from the lien of this Indenture in accordance with the
conditions and procedures set forth in such exemptive order.
SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of typewritten Notes representing the Book-Entry Notes, to
be delivered to _____________________, as agent for The Depository Trust
Company, the initial Clearing Agency, by, or on behalf of, Issuer. Such Notes
shall initially be registered on the Note Register in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Note Owner will receive a
Definitive Note representing such Note Owner's interest in such Note, except as
provided in Section 2.12. Unless and until definitive, fully registered Notes
(the "Definitive Notes") have been issued to Note Owners pursuant to Section
2.12:
(a) the provisions of this Section shall be in full force and
effect;
(b) Note Registrar and Indenture Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and
the giving of instructions or directions hereunder) as the sole Holder
of the Notes, and shall have no obligation to the Note Owners;
(c) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this
Section shall control;
9
<PAGE> 17
(d) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law
and agreements between such Note Owners and the Clearing Agency and/or
the Clearing Agency Participants or Persons acting through Clearing
Agency Participants. Pursuant to the Note Depository Agreement, unless
and until Definitive Notes are issued pursuant to Section 2.12, the
initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit payments of
principal of and interest on the Notes to such Clearing Agency
Participants; and
(e) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Clearing Agency shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect
from Note Owners and/or Clearing Agency Participants or Persons acting
through Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in
the Notes and has delivered such instructions to Indenture Trustee.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.12, Indenture Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing Agency, and shall
have no obligation to the Note Owners.
SECTION 2.12 Definitive Notes. If (a) Seller advises Indenture Trustee
in writing that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities with respect to the Notes, and Seller is unable
to locate a qualified successor, (b) Seller at its option advises Indenture
Trustee in writing that it elects to terminate the book-entry system through the
Clearing Agency or (c) after the occurrence of an Event of Default, Note Owners
representing beneficial interests aggregating at least a majority of the
Outstanding Amount of the Notes advise Indenture Trustee through the Clearing
Agency in writing that the continuation of a book entry system through the
Clearing Agency is no longer in the best interests of the Note Owners, then the
Clearing Agency shall notify all Note Owners and Indenture Trustee of the
occurrence of any such event and of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to Indenture Trustee of the
typewritten Note or Notes representing the Book-Entry Notes by the Clearing
Agency, accompanied by registration instructions, Issuer shall execute and
Indenture Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the
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Clearing Agency. None of Issuer, Note Registrar or Indenture Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Notes, Indenture Trustee shall recognize the Holders of the
Definitive Notes as Noteholders.
SECTION 2.13 Authenticating Agents. (a) The Indenture Trustee may
appoint one or more Persons (each, an "Authenticating Agent") with power to act
on its behalf and subject to its direction in the authentication of Notes in
connection with issuance, transfers and exchanges under Sections 2.2, 2.3, 2.4
and 2.5, as fully to all intents and purposes as though each such Authenticating
Agent had been expressly authorized by those Sections to authenticate such
Notes. For all purposes of this Indenture, the authentication of Notes by an
Authenticating Agent pursuant to this Section shall be deemed to be the
authentication of Notes "by the Indenture Trustee."
(b) Any corporation into which any Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of any Authenticating Agent, shall be the successor
of such Authenticating Agent hereunder, without the execution or filing of any
further act on the part of the parties hereto or such Authenticating Agent or
such successor corporation.
(c) Any Authenticating Agent may at any time resign by giving written
notice of resignation to Indenture Trustee and Owner Trustee. Indenture Trustee
may at any time terminate the agency of any Authenticating Agent by giving
written notice of termination to such Authenticating Agent and Owner Trustee.
Upon receiving such notice of resignation or upon such a termination, Indenture
Trustee may appoint a successor Authenticating Agent and shall give written
notice of any such appointment to Owner Trustee.
(d) The Administrator agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services. The provisions of
Sections 2.8 and 6.4 shall be applicable to any Authenticating Agent.
SECTION 2.14 Tax Treatment. Issuer has entered into this Indenture, and
the Notes shall be issued, with the intention that, for federal, state and local
income and franchise tax purposes, the Notes shall qualify as indebtedness of
Issuer secured by the Trust Estate. Issuer, by entering into this Indenture, and
each Noteholder, by its acceptance of a Note (and each Note Owner by its
acceptance of an interest in the applicable Book-Entry Note), agree to treat the
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Notes for federal, state and local income and franchise tax purposes as
indebtedness of Issuer.
ARTICLE III COVENANTS.
SECTION 3.1 Payment of Principal and Interest. Issuer will duly and
punctually pay the principal of and interest on the Notes in accordance with the
terms of the Notes and this Indenture. Without limiting the foregoing, subject
to Section 8.2(c), Issuer will cause to be distributed all amounts on deposit in
the Note Distribution Account on a Distribution Date deposited therein pursuant
to the Sale and Servicing Agreement (i) in the Class A-1 Noteholders' Interest
Distributable Amount, to Class A-1 Noteholders and (ii) in the Class A-2
Noteholders' Interest Distributable Amount, to Class A-2 Noteholders. Amounts
properly withheld under the Code by any Person from a payment to any Noteholder
of interest and/or principal shall be considered as having been paid by Issuer
to such Noteholder for all purposes of this Indenture.
SECTION 3.2 Maintenance of Office or Agency. Issuer will maintain in
the Borough of Manhattan, The City of New York, an office or agency where Notes
may be surrendered for registration of transfer or exchange, and where notices
and demands to or upon Issuer in respect of the Notes and this Indenture may be
served. Issuer hereby initially appoints Indenture Trustee to serve as its agent
for the foregoing purposes. Issuer will give prompt written notice to Indenture
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time Issuer shall fail to maintain any such office or
agency or shall fail to furnish Indenture Trustee with the address thereof, such
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and Issuer hereby appoints Indenture Trustee as its agent to receive all
such surrenders, notices and demands.
SECTION 3.3 Money for Payments To Be Held in Trust. As provided in
Section 8.2, all payments of amounts due and payable with respect to any Notes
that are to be made from amounts withdrawn from the Collection Account and the
Note Distribution Account pursuant to Section 8.2(c) shall be made on behalf of
Issuer by Indenture Trustee or by another Paying Agent, and no amounts so
withdrawn from the Collection Account and the Note Distribution Account for
payments of Notes shall be paid over to Issuer except as provided in this
Section.
On or before each Distribution Date and Redemption Date, Issuer shall
deposit or cause to be deposited in the Note Distribution Account an aggregate
sum sufficient to pay the amounts then becoming due under the Notes, such sum to
be held in trust for the benefit of the Persons entitled thereto and (unless the
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Paying Agent is Indenture Trustee) shall promptly notify Indenture Trustee of
its action or failure so to act.
Issuer will cause each Paying Agent other than Indenture Trustee to
execute and deliver to Indenture Trustee an instrument in which such Paying
Agent shall agree with Indenture Trustee (and if Indenture Trustee acts as
Paying Agent, it hereby so agrees), subject to the provisions of this Section,
that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give Indenture Trustee notice of any default by Issuer
(or any other obligor upon the Notes) of which it has actual knowledge
in the making of any payment required to be made with respect to the
Notes;
(iii) at any time during the continuance of any such default,
upon the written request of Indenture Trustee, forthwith pay to
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
Indenture Trustee all sums held by it in trust for the payment of Notes
if at any time it ceases to meet the standards required to be met by a
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by Indenture Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such a
payment by any Paying Agent to Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Subject to applicable laws with respect to the escheat of funds, any
money held by Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after
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such amount has become due and payable shall be discharged from such trust and
be paid to Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to Issuer for payment
thereof (but only to the extent of the amounts so paid to Issuer), and all
liability of Indenture Trustee or such Paying Agent with respect to such trust
money shall thereupon cease; provided that Indenture Trustee or such Paying
Agent, before being required to make any such repayment, shall at the expense of
Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in The City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to Issuer. Indenture Trustee shall also adopt and employ, at the
expense of Issuer, any other reasonable means of notification of such repayment
(including, but not limited to, mailing notice of such repayment to Holders
whose Notes have been called but have not been surrendered for redemption or
whose right to or interest in moneys due and payable but not claimed is
determinable from the records of Indenture Trustee or of any Paying Agent, at
the last address of record for each such Holder).
SECTION 3.4 Existence. Except as otherwise permitted by the provisions
of Section 3.10, Issuer will keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware (unless
it becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other state or of the United States of America, in which case Issuer
will keep in full effect its existence, rights and franchises under the laws of
such other jurisdiction) and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Trust Estate.
SECTION 3.5 Protection of Trust Estate. Issuer will from time to time
prepare (or shall cause to be prepared), execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:
(a) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively
the purposes hereof;
(b) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
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(c) enforce any of the Collateral; or
(d) preserve and defend title to the Trust Estate and the
rights of Indenture Trustee and the Noteholders in such Trust Estate
against the claims of all persons and parties.
Issuer hereby designates Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by Issuer pursuant to this Section.
SECTION 3.6 Opinions as to Trust Estate. (a) On the Closing Date,
Issuer shall furnish to Indenture Trustee an Opinion of Counsel either stating
that, in the opinion of such counsel, such action has been taken with respect to
the recording and filing of this Indenture, any indentures supplemental hereto,
and any other requisite documents, and with respect to the execution and filing
of any financing statements and continuation statements, as are necessary to
perfect and make effective the lien and security interest of this Indenture and
reciting the details of such action, or stating that, in the opinion of such
counsel, no such action is necessary to make such lien and security interest
effective.
(b) Within 120 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than three months after
the Cutoff Date, Issuer shall furnish to Indenture Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and with respect to the execution and filing of any financing statements and
continuation statements as are necessary to maintain the lien and security
interest created by this Indenture and reciting the details of such action or
stating that in the opinion of such counsel no such action is necessary to
maintain such lien and security interest. Such Opinion of Counsel shall also
describe the recording, filing, rerecording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
that will, in the opinion of such counsel, be required to maintain the lien and
security interest of this Indenture until January 30 in the following calendar
year.
SECTION 3.7 Performance of Obligations; Servicing of Receivables. (a)
Issuer will not take any action and will use its best efforts not to permit any
action to be taken by others that would release any Person from any of such
Person's material covenants or obligations under any instrument or agreement
included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness
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of, any such instrument or agreement, except as ordered by any bankruptcy or
other court or as expressly provided in this Indenture, the Basic Documents or
such other instrument or agreement.
(b) Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a Person
identified to Indenture Trustee in an Officer's Certificate of Issuer shall be
deemed to be action taken by Issuer. Initially, Issuer has contracted with
Servicer and the Administrator to assist Issuer in performing its duties under
this Indenture.
(c) Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, the Basic Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to preparing (or causing to prepared) and filing (or causing to be
filed) all UCC financing statements and continuation statements required to be
filed by the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, Issuer shall not waive, amend,
modify, supplement or terminate any Basic Document or any provision thereof
without the consent of Indenture Trustee or the Holders of at least a majority
of the Outstanding Amount of the Notes.
(d) If Issuer shall have knowledge of the occurrence of a Servicer
Termination Event under the Sale and Servicing Agreement, Issuer shall promptly
notify Indenture Trustee and the Rating Agencies thereof in accordance with
Section 11.4, and shall specify in such notice the action, if any, Issuer is
taking in respect of such default. If a Servicer Termination Event shall arise
from the failure of Servicer to perform any of its duties or obligations under
the Sale and Servicing Agreement with respect to the Receivables, Issuer shall
take all reasonable steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of termination
to Servicer of Servicer's rights and powers pursuant to Section 8.1 of the Sale
and Servicing Agreement, Issuer shall appoint a successor servicer (the
"Successor Servicer"), and such Successor Servicer shall accept its appointment
by a written assumption in a form acceptable to Indenture Trustee. In the event
that a Successor Servicer has not been appointed and accepted its appointment at
the time when Servicer ceases to act as Servicer, Indenture Trustee without
further action shall automatically be appointed the Successor Servicer.
Indenture Trustee may resign as Servicer by giving written notice of such
resignation to Issuer and in such event will be released from such duties and
obligations, such release not to be effective until the date a new servicer
enters into a servicing agreement with
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Issuer as provided below. Upon delivery of any such notice to Issuer, Issuer
shall obtain a new servicer as the Successor Servicer under the Sale and
Servicing Agreement. Any Successor Servicer other than Indenture Trustee shall
(i) be an established financial institution having a net worth of not less than
$50,000,000 and whose regular business includes the servicing of motor vehicle
loans and (ii) enter into a servicing agreement with Issuer having substantially
the same provisions as the provisions of the Sale and Servicing Agreement
applicable to Servicer. If within 30 days after the delivery of the notice
referred to above, Issuer shall not have obtained such a new servicer, Indenture
Trustee may appoint, or may petition a court of competent jurisdiction to
appoint, a Successor Servicer. In connection with any such appointment,
Indenture Trustee may make such arrangements for the compensation of such
successor as it and such successor shall agree, subject to the limitations set
forth below and in the Sale and Servicing Agreement, and in accordance with
Section 8.2 of the Sale and Servicing Agreement, Issuer shall enter into an
agreement with such successor for the servicing of the Receivables (such
agreement to be in form and substance satisfactory to Indenture Trustee). If
Indenture Trustee shall succeed to Servicer's duties as servicer of the
Receivables as provided herein, it shall do so in its individual capacity and
not in its capacity as Indenture Trustee and, accordingly, the provisions of
Article VI shall be inapplicable to Indenture Trustee in its duties as the
successor to Servicer and the servicing of the Receivables. In case Indenture
Trustee shall become successor to Servicer under the Sale and Servicing
Agreement, Indenture Trustee shall be entitled to appoint as Servicer any one of
its Affiliates, or delegate any of its responsibilities as Servicer to agents,
subject to the terms of the Sale and Servicing Agreement, provided that such
appointment or delegation shall not affect or alter in any way the liability of
Indenture Trustee as a successor for the performance of the duties and
obligations of Servicer in accordance with the terms hereof.
(f) Upon any termination of Servicer's rights and powers pursuant to
the Sale and Servicing Agreement, Issuer shall promptly notify Indenture
Trustee. As soon as a Successor Servicer (other than Indenture Trustee) is
appointed, Issuer shall notify Indenture Trustee of such appointment, specifying
in such notice the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to Indenture Trustee under this Indenture or the rights of Indenture
Trustee hereunder, Issuer agrees that, unless such action is specifically
permitted hereunder or under the Basic Documents, it will not, without the prior
written consent of Indenture Trustee or the Holders of at least a majority in
Outstanding Amount of the Notes, amend, modify, waive, supplement, terminate or
surrender, or agree to any amendment, modification, supplement, termination,
waiver or surrender of, the terms of any Collateral or the Basic Documents, or
waive timely
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performance or observance by Servicer or Seller under the Sale and Servicing
Agreement; provided that no such amendment shall (i) except for amendments and
modifications of the Receivables permitted under the Sale and Servicing
Agreement, increase or reduce in any manner the amount of, or accelerate or
delay the timing of, distributions that are required to be made for the benefit
of the Noteholders, or (ii) reduce the aforesaid percentage of the Notes which
are required to consent to any such amendment, without the consent of the
Holders of all the Outstanding Notes. If any such amendment, modification,
supplement or waiver shall be so consented to by Indenture Trustee or such
Holders, Issuer agrees, promptly following a request by Indenture Trustee to do
so, to execute and deliver, in its own name and at its own expense, such
agreements, instruments, consents and other documents as Indenture Trustee may
deem necessary or appropriate in the circumstances.
SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding,
Issuer shall not:
(a) except as expressly permitted by this Indenture or the
Basic Documents, sell, transfer, exchange or otherwise dispose of any
of the properties or assets of Issuer, including those included in the
Trust Estate, unless directed to do so by Indenture Trustee;
(b) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust
Estate;
(c) dissolve or liquidate in whole or in part; or
(d) (i) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations with respect to
the Notes under this Indenture except as may be expressly permitted
hereby, (ii) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture)
to be created on or extend to or otherwise arise upon or burden the
Trust Estate or any part thereof or any interest therein or the
proceeds thereof (other than tax liens, mechanics' liens and other
liens that arise by operation of law, in each case on a Financed
Vehicle and arising solely as a result of an action or omission of the
related Obligor) or (iii) permit the lien of this Indenture not to
constitute a valid first priority (other than with
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respect to any such tax, mechanics' or other lien) security interest in
the Trust Estate.
SECTION 3.9 Annual Statement as to Compliance. Issuer will deliver to
Indenture Trustee, within 120 days after the end of each fiscal year of Issuer
(commencing 120 days after the fiscal year ended _________, 199__), and
otherwise in compliance with the requirements of TIA Section 314(a)(4) an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that:
(a) a review of the activities of Issuer during such year and
of performance under this Indenture has been made under such Authorized
Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based
on such review, Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a
default in the compliance of any such condition or covenant, specifying
each such default known to such Authorized Officer and the nature and
status thereof.
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms. (a)
Issuer shall not consolidate or merge with or into any other Person, unless
(i) the Person (if other than Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any state and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to Indenture Trustee, in form satisfactory to Indenture
Trustee, the due and punctual payment of the principal of and interest
on all Notes and the performance or observance of every agreement and
covenant of this Indenture on the part of Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to Indenture Trustee) to the effect
that such
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transaction will not have any material adverse tax consequence to the
Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) Issuer shall have delivered to Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
(b) Except as expressly contemplated by the Basic Documents, Issuer
shall not convey or transfer all or substantially all of its properties or
assets, including those included in the Trust Estate, to any Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of Issuer the conveyance or transfer of which is
hereby restricted shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America
or any state, (B) expressly assume, by an indenture supplemental
hereto, executed and delivered to Indenture Trustee, in form
satisfactory to Indenture Trustee, the due and punctual payment of the
principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the
part of Issuer to be performed or observed, all as provided herein, (C)
expressly agree by means of such supplemental indenture that all right,
title and interest so conveyed or transferred shall be subject and
subordinate to the rights of Holders of the Notes, (D) unless otherwise
provided in such supplemental indenture, expressly agree to indemnify,
defend and hold harmless Issuer against and from any loss, liability or
expense arising under or related to this Indenture and the Notes and
(E) expressly agree by means of such supplemental indenture that such
Person (or if a group of persons, then one specified Person) shall
prepare (or cause to be prepared) and make all filings with the
Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
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(iv) Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to Indenture Trustee) to the effect
that such transaction will not have any material adverse tax
consequence to the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) Issuer shall have delivered to Indenture Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
SECTION 3.11 Successor or Transferee. (a) Upon any consolidation or
merger of Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than Issuer) shall succeed to,
and be substituted for, and may exercise every right and power of, Issuer under
this Indenture with the same effect as if such Person had been named as Issuer
herein.
(b) Upon a conveyance or transfer of all the assets and properties of
Issuer pursuant to Section 3.10(b), Key Auto Finance Trust 199_-_ will be
released from every covenant and agreement of this Indenture to be observed or
performed on the part of Issuer with respect to the Notes immediately upon the
delivery of written notice to Indenture Trustee stating that Key Auto Finance
Trust 199_-_ is to be so released.
SECTION 3.12 No Other Business. Issuer shall not engage in any business
other than financing, purchasing, owning, selling and managing the Receivables
in the manner contemplated by this Indenture and the Basic Documents and
activities incidental thereto.
SECTION 3.13 No Borrowing. Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
SECTION 3.14 Servicer's Obligations. Issuer shall cause Servicer to
comply with the Sale and Servicing Agreement, including Sections 4.9, 4.10 and
4.11 thereof.
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Sale and Servicing Agreement or this Indenture,
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Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.16 Capital Expenditures. Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17 Restricted Payments. Issuer shall not, directly or
indirectly, (a) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to Owner Trustee or any owner of a beneficial interest in Issuer or
otherwise with respect to any ownership or equity interest or security in or of
Issuer or to Servicer or Administrator, (b) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(c) set aside or otherwise segregate any amounts for any such purpose; provided
that Issuer may make, or cause to be made, (i) distributions to Servicer,
Administrator, Owner Trustee, Indenture Trustee and the Certificateholders as
permitted by, and to the extent funds are available for such purpose under, the
Sale and Servicing Agreement or Trust Agreement and (ii) distributions to the
Indenture Trustee pursuant to Section 2(a)(ii) of the Administration Agreement.
Issuer will not, directly or indirectly, make payments to or distributions from
the Collection Account except in accordance with this Indenture and the Basic
Documents.
SECTION 3.18 Notice of Events of Default. Issuer agrees to give
Indenture Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and each Event of Servicing Termination or default on the part
of Seller of its obligations under the Sale and Servicing Agreement.
SECTION 3.19 Further Instruments and Acts. Upon request of Indenture
Trustee, Issuer will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 3.20 Removal of Administrator. For so long as any Notes are
Outstanding, the Issuer shall not remove the Administrator without cause unless
the Rating Agency Condition shall have been satisfied in connection therewith.
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ARTICLE IV SATISFACTION AND DISCHARGE.
SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (a)
rights of registration of transfer and exchange, (b) substitution of mutilated,
destroyed, lost or stolen Notes, (c) rights of Noteholders to receive payments
of principal thereof and interest thereon, (d) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12, 3.13 and 3.18, (e) the rights, obligations and immunities of
Indenture Trustee hereunder (including the rights of Indenture Trustee under
Section 6.7 and the obligations of Indenture Trustee under Section 4.2) and (f)
the rights of Noteholders as beneficiaries hereof with respect to the property
so deposited with Indenture Trustee payable to all or any of them, and Indenture
Trustee, on demand of and at the expense of Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when
(i) either
(A) all Notes theretofore authenticated and delivered
(other than (1) Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section 2.5
and (2) Notes for which payment money has theretofore been
deposited in trust or segregated and held in trust by Issuer
and thereafter repaid to Issuer or discharged from such trust,
as provided in Section 3.3) have been delivered to Indenture
Trustee for cancellation; or
(B) all Notes not theretofore delivered to Indenture
Trustee for cancellation
(1) have become due and payable,
(2) will become due and payable at the Final
Scheduled Distribution Date within one year, or
(3) are to be called for redemption within
one year under arrangements satisfactory to Indenture
Trustee for the giving of notice of redemption by
Indenture Trustee in the name, and at the expense, of
Issuer,
and Issuer, in the case of clauses (1), (2) or (3), has
irrevocably deposited or caused to be irrevocably deposited
with Indenture Trustee cash or direct obligations of or
obligations guaranteed by the United States of America (which
will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount
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sufficient to pay and discharge the entire indebtedness on
such Notes not theretofore delivered to Indenture Trustee for
cancellation when due to the Final Scheduled Distribution Date
or Redemption Date (if Notes shall have been called for
redemption pursuant to Section 10.1(a)), as the case may be;
(ii) Issuer has paid or caused to be paid all other sums
payable hereunder by Issuer;
(iii) Issuer has delivered to Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or
Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of Section
11.1(a) and each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have
been complied with; and
(iv) Issuer has delivered to the Indenture Trustee an Opinion
of Counsel to the effect that the satisfaction and discharge of the
Notes pursuant to this Section will not cause any Noteholder to be
treated as having sold or exchanged any of its Notes for purposes of
Section 1001 of the Code.
SECTION 4.2 Application of Trust Money. All moneys deposited with
Indenture Trustee pursuant to Section 4.1 shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as Indenture Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with Indenture Trustee, of all sums due
and to become due thereon for principal and interest; but such moneys need not
be segregated from other funds except to the extent required herein or in the
Sale and Servicing Agreement or required by law.
SECTION 4.3 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
Issuer, be paid to Indenture Trustee to be held and applied according to Section
3.3 and thereupon such Paying Agent shall be released from all further liability
with respect to such moneys.
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ARTICLE V REMEDIES.
SECTION 5.1 Events of Default. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest on any Note when
the same becomes due and payable, and such default shall continue for a
period of five days;
(b) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable;
(c) default in the observance or performance of any material
covenant or agreement of Issuer made in this Indenture (other than a
covenant or agreement, a default in the observance or performance of
which is elsewhere in this Section specifically dealt with), or any
representation or warranty of Issuer made in this Indenture or in any
certificate or other writing delivered pursuant hereto or in connection
herewith proving to have been incorrect in any material respect as of
the time when the same shall have been made, and such default shall
continue or not be cured, or the circumstance or condition in respect
of which such misrepresentation or warranty was incorrect shall not
have been eliminated or otherwise cured, for a period of 30 days (or
for such longer period, not in excess of 90 days, as may be reasonably
necessary to remedy such default; provided that such default is capable
of remedy within 90 days or less and Servicer on behalf of Owner
Trustee delivers an Officer's Certificate to Indenture Trustee to the
effect that Issuer has commenced, or will promptly commence and
diligently pursue, all reasonable efforts to remedy such default) after
there shall have been given, by registered or certified mail, to Issuer
by Indenture Trustee or to Issuer and Indenture Trustee by the Holders
of at least 25% of the Outstanding Amount of the Notes, a written
notice specifying such default or incorrect representation or warranty
and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder;
(d) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of Issuer or any
substantial part of the Trust Estate in an involuntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee,
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sequestrator or similar official of Issuer or for any substantial part
of the Trust Estate, or ordering the winding-up or liquidation of
Issuer's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(e) the commencement by Issuer of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by Issuer to the entry of an
order for relief in an involuntary case under any such law, or the
consent by Issuer to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of Issuer or for any substantial part of the Trust
Estate, or the making by Issuer of any general assignment for the
benefit of creditors, or the failure by Issuer generally to pay its
debts as such debts become due, or the taking of action by Issuer in
furtherance of any of the foregoing.
Issuer shall deliver to Indenture Trustee, within five days after the
occurrence thereof, written notice in the form of an Officer's Certificate of
any event which with the giving of notice and the lapse of time would become an
Event of Default under clause (c), its status and what action Issuer is taking
or proposes to take with respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such case
Indenture Trustee or the Holders of Notes representing not less than a majority
of the Outstanding Amount of the Notes may declare all the Notes to be
immediately due and payable, by a notice in writing to Issuer (and to Indenture
Trustee if given by Noteholders), and upon any such declaration the unpaid
principal amount of such Notes, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by Indenture Trustee as hereinafter in this Article V provided, the
Holders of Notes representing a majority of the Outstanding Amount of the Notes,
by written notice to Issuer and Indenture Trustee, may rescind and annul such
declaration and its consequences if:
(a) Issuer has paid or deposited with Indenture Trustee a sum
sufficient to pay
(i) all payments of principal of and interest on all
Notes and all other amounts that would then be due hereunder
or upon
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such Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(ii) all sums paid or advanced by Indenture Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of Indenture Trustee and its agents
and counsel; and
(b) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. (a) Issuer covenants that if (i) default is made in the
payment of any interest on any Note when the same becomes due and payable, and
such default continues for a period of five days, or (ii) default is made in the
payment of the principal of or any installment of the principal of any Note when
the same becomes due and payable, Issuer will, upon demand of Indenture Trustee,
pay to it, for the benefit of the Holders of the Notes, the whole amount then
due and payable on such Notes for principal and interest, with interest upon the
overdue principal, and, to the extent payment at such rate of interest shall be
legally enforceable, upon overdue installments of interest, at the rate
specified in Section 2.7 and in addition thereto such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of Indenture
Trustee and its agents and counsel.
(b) In case Issuer shall fail forthwith to pay such amounts upon such
demand, Indenture Trustee, in its own name and as trustee of an express trust,
may institute a proceeding for the collection of the sums so due and unpaid, and
may prosecute such proceeding to judgment or final decree, and may enforce the
same against Issuer or other obligor upon such Notes and collect in the manner
provided by law out of the property of Issuer or other obligor upon such Notes,
wherever situated, the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, Indenture Trustee
may, as more particularly provided in Section 5.4, in its discretion, proceed to
protect and enforce its rights and the rights of the Noteholders, by such
appropriate proceedings as Indenture Trustee shall deem most effective to
protect and enforce any such rights, whether for the specific enforcement of any
covenant
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or agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right vested
in Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, proceedings under Title 11 of the United States Code or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of Issuer or its property or such other obligor or Person, or
in case of any other comparable judicial proceedings relative to Issuer or other
obligor upon the Notes, or to the creditors or property of Issuer or such other
obligor, Indenture Trustee, irrespective of whether the principal of any Notes
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether Indenture Trustee shall have made any
demand pursuant to the provisions of this Section, shall be entitled and
empowered, by intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the Notes and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of Indenture Trustee (including any claim
for reasonable compensation to Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and counsel,
and for reimbursement of all expenses and liabilities incurred, and all
advances made, by Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence, bad faith or willful
misconduct) and of the Noteholders allowed in such proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or person performing similar functions in any such
proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of Indenture
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of Indenture Trustee or the Holders of Notes allowed in any judicial
proceedings relative to Issuer, its creditors and its property;
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and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to Indenture Trustee, and, in the event that Indenture Trustee shall
consent to the making of payments directly to such Noteholders, to pay to
Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to Indenture Trustee, each predecessor Indenture Trustee and their
respective agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by Indenture Trustee and each predecessor
Indenture Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize Indenture Trustee to vote in respect of the claim of any Noteholder in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
proceedings relative thereto, and any such action or proceedings instituted by
Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of Indenture Trustee, each predecessor Indenture
Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Holders of the Notes.
(g) In any proceedings brought by Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which Indenture Trustee shall be a party), Indenture Trustee shall be held to
represent all the Holders of the Notes, and it shall not be necessary to make
any Noteholder a party to any such proceedings.
SECTION 5.4 Remedies; Priorities. (a) If an Event of Default shall have
occurred and be continuing, Indenture Trustee may do one or more of the
following (subject to Section 5.5):
(i) institute proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from Issuer and any other obligor upon such Notes moneys adjudged due;
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(ii) institute proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights
and remedies of Indenture Trustee and the Holders of the Notes; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided that Indenture Trustee may not sell or otherwise liquidate the Trust
Estate following an Event of Default, other than an Event of Default described
in Section 5.1(a) or (b), unless (A) the Holders of 100% of the Outstanding
Amount of the Notes and Certificates consent thereto, (B) the proceeds of such
sale or liquidation distributable to the Noteholders and Certificateholders are
sufficient to discharge in full all amounts then due and unpaid upon such Notes
and Certificates for principal and interest or (C) Indenture Trustee determines
that the Trust Estate will not continue to provide sufficient funds for the
payment of principal of and interest on the Notes as they would have become due
if the Notes had not been declared due and payable, and Indenture Trustee
obtains the consent of Holders of 66-2/3% of the Outstanding Amount of the
Notes. In determining such sufficiency or insufficiency with respect to clause
(B) and (C), Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
(b) If Indenture Trustee collects any money or property pursuant to
this Article V, it shall pay out such money or property (and other amounts
including amounts held on deposit in the Reserve Account) held as Collateral for
the benefit of the Noteholders in the following order:
FIRST: to Indenture Trustee for amounts due under Section 6.7;
SECOND: to Servicer for due and unpaid Servicing Fees;
THIRD: to Noteholders for amounts due and unpaid on the Notes
for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for interest;
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FOURTH: to Noteholders for amounts due and unpaid on the Notes
for principal, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal;
and
FIFTH: to Issuer for distribution to the Certificateholders.
Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least 15 days before such
record date, Issuer shall mail to each Noteholder and Indenture Trustee a notice
that states the record date, the payment date and the amount to be paid.
SECTION 5.5 Optional Preservation of the Receivables. If the Notes have
been declared to be due and payable under Section 5.2 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, Indenture Trustee may, but need not, elect to maintain possession of
the Trust Estate. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and Indenture Trustee shall take such desire into account
when determining whether or not to maintain possession of the Trust Estate. In
determining whether to maintain possession of the Trust Estate, Indenture
Trustee may, but need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
SECTION 5.6 Limitation of Suits. No Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(a) such Holder has previously given written notice to
Indenture Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% of the Outstanding Amount
of the Notes have made written request to Indenture Trustee to
institute such proceeding in respect of such Event of Default in its
own name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered to Indenture Trustee
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in complying with such request;
(d) Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
proceedings; and
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(e) no direction inconsistent with such written request has
been given to Indenture Trustee during such 60-day period by the
Holders of a majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.8 Restoration of Rights and Remedies. If Indenture Trustee or
any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to Indenture Trustee or to such
Noteholder, then and in every such case Issuer, Indenture Trustee and the
Noteholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of Indenture Trustee and the Noteholders shall continue
as though no such Proceeding had been instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
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hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of
Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to Indenture Trustee or to the Noteholders may be exercised from time to time,
and as often as may be deemed expedient, by Indenture Trustee or by the
Noteholders, as the case may be.
SECTION 5.11 Control by Noteholders. The Holders of a majority of the
Outstanding Amount of the Notes shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
Indenture Trustee; provided that
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) subject to the express terms of Section 5.4, any direction
to Indenture Trustee to sell or liquidate the Trust Estate shall be by
the Holders of Notes representing not less than 100% of the Outstanding
Amount of the Notes;
(c) if the conditions set forth in Section 5.5 have been
satisfied and Indenture Trustee elects to retain the Trust Estate
pursuant to such Section, then any direction to Indenture Trustee by
Holders of Notes representing less than 100% of the Outstanding Amount
of the Notes to sell or liquidate the Trust Estate shall be of no force
and effect;
(d) Indenture Trustee may take any other action deemed proper
by Indenture Trustee that is not inconsistent with such direction; and
(e) such direction shall be in writing;
provided, further, that, subject to Section 6.1, Indenture Trustee need not take
any action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the
Holders
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of Notes of not less than a majority of the Outstanding Amount of the Notes may
waive any past Default or Event of Default and its consequences except a Default
(a) in payment of principal of or interest on any of the Notes or (b) in respect
of a covenant or provision hereof which cannot be modified or amended without
the consent of the Holder of each Note. In the case of any such waiver, Issuer,
Indenture Trustee and the Holders of the Notes shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13 Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder for
the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. Issuer covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or
plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
Issuer (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to Indenture Trustee,
but will suffer and permit the execution of every such power as though no such
law had been enacted.
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SECTION 5.15 Action on Notes. Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of Indenture Trustee or the Noteholders shall be impaired by the recovery of any
judgment by Indenture Trustee against Issuer or by the levy of any execution
under such judgment upon any portion of the Trust Estate or upon any of the
assets of Issuer.
SECTION 5.16 Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from Indenture Trustee to do so and at
Administrator's expense, Issuer agrees to take all such lawful action as
Indenture Trustee may request to compel or secure the performance and observance
by Seller and Servicer, as applicable, of each of their obligations to Issuer
under or in connection with the Sale and Servicing Agreement or by the Seller or
any Seller Affiliate, as applicable, of each of their obligations under or in
connection with each Purchase Agreement, in each case, in accordance with the
terms thereof, and to exercise any and all rights, remedies, powers and
privileges lawfully available to Issuer under or in connection with the Sale and
Servicing Agreement and each Purchase Agreement, as the case may be, to the
extent and in the manner directed by Indenture Trustee, including the
transmission of notices of default on the part of Seller, Servicer or applicable
Seller Affiliate thereunder and the institution of legal or administrative
actions or proceedings to compel or secure performance by Seller or Servicer of
each of their obligations under the Sale and Servicing Agreement or by the
Seller or any Seller Affiliate, as applicable, of each of their obligations
under or in connection with each Purchase Agreement.
(b) If an Event of Default has occurred and is continuing, Indenture
Trustee may, and, at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of the Holders of 66-2/3%
of the Outstanding Amount of the Notes shall, exercise all rights, remedies,
powers, privileges and claims of Issuer against Seller or Servicer under or in
connection with the Sale and Servicing Agreement, or against the Seller or
Seller Affiliate under the applicable Purchase Agreement, including the right or
power to take any action to compel or secure performance or observance by
Seller, Servicer or applicable Seller Affiliate of each of their obligations to
Issuer thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement or any Purchase
Agreement, as applicable, and any right of Issuer to take such action shall be
suspended.
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ARTICLE VI INDENTURE TRUSTEE.
SECTION 6.1 Duties of Indenture Trustee. (a) If an Event of Default has
occurred and is continuing, of which a Responsible Officer of Indenture Trustee
has actual knowledge, Indenture Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against Indenture Trustee; and
(ii) in the absence of bad faith on its part, Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to Indenture Trustee and conforming to the
requirements of this Indenture; however, Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is
proved that Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11.
(d) Indenture Trustee shall not be liable for interest on any money
received by it except as Indenture Trustee may agree in writing with Issuer.
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(e) Money held in trust by Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(f) No provision of this Indenture shall require Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or indemnity satisfactory to it against such risk or liability is
not assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to Indenture Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(h) Indenture Trustee shall take all actions required to be taken by
the Indenture Trustee under the Sale and Servicing Agreement.
SECTION 6.2 Rights of Indenture Trustee. (a) Indenture Trustee may
conclusively rely on any document believed by it to be genuine and to have been
signed or presented by the proper person. Indenture Trustee need not investigate
any fact or matter stated in the document.
(b) Before Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. Indenture Trustee
shall not be liable for any action it takes, suffers or omits to take in good
faith in reliance on the Officer's Certificate or Opinion of Counsel.
(c) Indenture Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, Key Consumer Acceptance Corporation, Key Bank USA, or any other
such agent, attorney, custodian or nominee appointed with due care by it
hereunder. Indenture Trustee shall have no duty to monitor the performance of
Issuer.
(d) Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, that Indenture Trustee's conduct does not constitute
wilful misconduct, negligence or bad faith.
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(e) Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
SECTION 6.3 Individual Rights of Indenture Trustee. Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However,
Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4 Indenture Trustee's Disclaimer. Indenture Trustee shall not
be responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, shall not be accountable for Issuer's use of the
proceeds from the Notes, and shall not be responsible for any statement of
Issuer in the Indenture or in any document issued in connection with the sale of
the Notes or in the Notes other than Indenture Trustee's certificate of
authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing
and if it is either actually known or written notice of the existence thereof
has been delivered to a Responsible Officer of Indenture Trustee, Indenture
Trustee shall mail to each Noteholder notice of the Default within 90 days after
such knowledge or notice occurs. Except in the case of a Default in payment of
principal of or interest on any Note (including payments pursuant to the
mandatory redemption provisions of such Note), Indenture Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of Noteholders.
SECTION 6.6 Reports by Indenture Trustee to Holders. Indenture Trustee
shall deliver to each Noteholder such information as may be reasonably required
to enable such Holder to prepare its Federal and state income tax returns.
SECTION 6.7 Compensation and Indemnity. The compensation and
reimbursement of expenses of Indenture Trustee shall be governed by the
Administration Agreement. In addition, Issuer shall reimburse any expenses
incurred by the Indenture Trustee in pursuing remedies pursuant to Section 5.4.
Issuer has caused Administrator to agree to indemnify Indenture Trustee and its
officers, directors, employees and agents against any and all loss, liability or
expense (including attorneys' fees and expenses) incurred by it in connection
with the acceptance or the administration of this trust and the performance of
its duties hereunder. Neither Issuer nor Administrator need reimburse any
expense or
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indemnify against any loss, liability or expense incurred by Indenture Trustee
through Indenture Trustee's own wilful misconduct, negligence or bad faith or to
the extent arising from the breach by the Indenture Trustee of any of its
representations and warranties and covenants set forth herein.
Issuer's payment obligations to Indenture Trustee pursuant to this
Section and the Administration Agreement referenced in the preceding paragraph
shall survive the discharge of this Indenture subject to a satisfaction of the
Rating Agency Condition. When Indenture Trustee incurs expenses after the
occurrence of a Default specified in Section 5.1(d) or (e) with respect to
Issuer, the expenses are intended to constitute expenses of administration under
Title 11 of the United States Code or any other applicable Federal or state
bankruptcy, insolvency or similar law.
SECTION 6.8 Replacement of Indenture Trustee. Indenture Trustee may
resign at any time by so notifying Issuer. The Holders of a majority in
Outstanding Amount of the Notes may remove Indenture Trustee by so notifying
Indenture Trustee and may appoint a successor Indenture Trustee. Issuer shall
remove Indenture Trustee if:
(a) Indenture Trustee fails to comply with Section 6.11;
(b) Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of
Indenture Trustee or its property; or
(d) Indenture Trustee otherwise becomes incapable of acting.
If Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (Indenture Trustee in such event
being referred to herein as the retiring Indenture Trustee), Issuer shall
promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of Indenture Trustee under this Indenture subject to satisfaction of the Rating
Agency Condition. The successor Indenture Trustee shall mail a notice of its
succession to Noteholders. The retiring Indenture Trustee shall promptly
transfer all property held by it as Indenture Trustee to the successor Indenture
Trustee.
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If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, Issuer or the Holders of a majority in Outstanding Amount of
the Notes may petition any court of competent jurisdiction for the appointment
of a successor Indenture Trustee.
If Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of Indenture
Trustee and the appointment of a successor Indenture Trustee.
Any resignation or removal of Indenture Trustee and appointment of a
Successor Indenture Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to this Section 6.8 and payment of all fees and
expenses owed to the outgoing Indenture Trustee.
Notwithstanding the resignation or removal of Indenture Trustee
pursuant to this Section, Issuer's and Administrator's obligations under Section
6.7 shall continue for the benefit of the retiring Indenture Trustee.
Indenture Trustee shall not be liable for the acts or omissions of any
successor Indenture Trustee.
SECTION 6.9 Successor Indenture Trustee by Merger. If Indenture Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Indenture Trustee. Indenture Trustee shall
provide the Rating Agencies and the Administrator prior written notice of any
such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to Indenture Trustee may authenticate such Notes
either in the name of any predecessor hereunder or in the name of the successor
to Indenture Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Notes or in this Indenture provided that
the certificate of Indenture Trustee shall have.
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SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee. (a) Notwithstanding any other provisions of this Indenture, at any
time, after delivering written notice to the Administrator, for the purpose of
meeting any legal requirement of any jurisdiction in which any part of Issuer
may at the time be located, Indenture Trustee shall have the power and may
execute and deliver all instruments to appoint one or more Persons to act as a
co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Noteholders, such title to the Trust, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as Indenture Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.11 and no notice to Noteholders of the appointment of any co-trustee or
separate trustee shall be required under Section 6.8.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon Indenture Trustee shall be conferred or imposed upon and
exercised or performed by Indenture 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 Indenture
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 Indenture Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to Issuer or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder, including acts
or omissions of predecessor or successor trustees; and
(iii) Indenture Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to Indenture 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
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of this Article VI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with Indenture Trustee or
separately, as may be provided therein, subject to all the provisions of this
Indenture, specifically including every provision of this Indenture relating to
the conduct of, affecting the liability of, or affording protection to,
Indenture Trustee. Every such instrument shall be filed with Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
Indenture Trustee its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall invest in and be
exercised by Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.11 Eligibility; Disqualification. Indenture Trustee shall at
all times satisfy the requirements of TIA Section 310(a). Indenture Trustee
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition and shall have a long
term debt rating of investment grade or better by the Rating Agencies or shall
otherwise be acceptable to the Rating Agencies. Indenture Trustee shall comply
with TIA Section 310(b), including the optional provision permitted by the
second sentence of TIA Section 310(b)(9); provided that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities of Issuer are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer.
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS.
SECTION 7.1 Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders. Issuer will furnish or cause to be furnished to Indenture Trustee
(a) not more than five days after the earlier of (i) each Record Date and (ii)
three months after the last Record Date, a list, in such form as Indenture
Trustee may reasonably require, of the names and addresses of the Holders as of
such Record Date, (b) at such other times as Indenture Trustee may request in
writing, within 30 days after receipt by Issuer of any such request, a list of
similar form and
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content as of a date not more than 10 days prior to the time such list is
furnished; provided that so long as (i) Indenture Trustee is Note Registrar, or
(ii) the Notes are Book-Entry Notes, no such list shall be required to be
furnished.
SECTION 7.2 Preservation of Information; Communications to Noteholders.
(a) Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders contained in the most recent
list furnished to Indenture Trustee as provided in Section 7.1 and the names and
addresses of Holders received by Indenture Trustee in its capacity as Note
Registrar. Indenture Trustee may destroy any list furnished to it as provided in
such Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes. Upon receipt by the Indenture Trustee of any request by three or more
Noteholders or by one or more Noteholders of Notes evidencing not less than 25%
of the Outstanding Amount of Notes to receive a copy of the current list of
Noteholders (whether or not made pursuant to TIA Section 312(b)), the Indenture
Trustee shall promptly notify the Administrator thereof by providing to the
Administrator a copy of such request and a copy of the list of Noteholders
produced in response thereto.
(c) Issuer, Indenture Trustee and Note Registrar shall have the
protection of TIA Section 312(c).
SECTION 7.3 Reports by Issuer. (a) Issuer shall:
(i) file with Indenture Trustee, within 15 days after Issuer
is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which Issuer may be
required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act;
(ii) file with Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by Issuer with the conditions and covenants of
this Indenture as may be required from time to time by such rules and
regulations; and
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(iii) supply to Indenture Trustee (and Indenture Trustee shall
transmit by mail to all Noteholders described in TIA Section 313(c))
such summaries of any information, documents and reports required to be
filed by Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a)
as may be required by rules and regulations prescribed from time to
time by the Commission.
(b) Unless Issuer otherwise determines, the fiscal year of Issuer shall
end on December 31 of each year.
SECTION 7.4 Reports by Indenture Trustee. If required by TIA Section
313(a), within 60 days after each March 31, beginning with March 31, 199__,
Indenture Trustee shall mail to each Noteholder as required by TIA Section
313(c) a brief report dated as of such date that complies with TIA Section
313(a). Indenture Trustee also shall comply with TIA Section 313(b)(1). A copy
of each report at the time of its mailing to Noteholders shall be filed by
Indenture Trustee with the Commission and each stock exchange, if any, on
which the Notes are listed. Issuer shall notify Indenture Trustee if and when
the Notes are listed on any stock exchange.
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES.
SECTION 8.1 Collection of Money. Except as otherwise expressly provided
herein, Indenture Trustee may demand payment or delivery of, and shall receive
and collect, directly and without intervention or assistance of any fiscal agent
or other intermediary, all money and other property payable to or receivable by
Indenture Trustee pursuant to this Indenture. Indenture Trustee shall apply all
such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Trust Estate, Indenture Trustee may take such action as may be appropriate to
enforce such payment or performance, including the institution and prosecution
of appropriate proceedings. Any such action shall be without prejudice to any
right to claim a Default or Event of Default under this Indenture and any right
to proceed thereafter as provided in Article V.
SECTION 8.2 Trust Accounts. (a) On or prior to the Closing Date, Issuer
shall cause Servicer to establish, in the name of Indenture Trustee, for the
benefit of the Noteholders and the Certificateholders, the Trust Accounts as
provided in Section 5.1 of the Sale and Servicing Agreement.
(b) On or before each Distribution Date, the Total Distribution Amount
with respect to the preceding Collection Period will be deposited in the
Collection Account as provided in Section 5.2 of the Sale and Servicing
Agreement. On or
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before each Distribution Date, the Noteholders' Distributable Amount with
respect to the preceding Collection Period will be transferred from the
Collection Account and/or the Reserve Account to the Note Distribution Account
as provided in Sections 5.1 and 5.5 of the Sale and Servicing Agreement.
(c) On each Distribution Date and Redemption Date, Indenture Trustee
shall distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes for principal and interest in the following amounts and in the
following order of priority (except as otherwise provided in Section 5.4(b)):
(i) accrued and unpaid interest on the Notes (A) in the Class
A-1 Noteholders' Interest Distributable Amount, to the Class A-1
Noteholders, and (B) in the Class A-2 Noteholders' Interest
Distributable Amount, to the Class A-2 Noteholders, provided that if
there are not sufficient funds in the Note Distribution Account to pay
the entire amount of accrued and unpaid interest then due on the Notes
for the related Distribution Date, the amount in the Note Distribution
Account shall be applied to the payment of such interest on each class
of the Notes pro rata on the basis of the total amount of such interest
due on such class of Notes for such Distribution Date;
(ii) payment of principal to the Holders of the Class A-1
Notes until the Outstanding Amount of the Class A-1 Notes is reduced to
zero provided that if there are not sufficient funds in the Note
Distribution Account to pay in full the principal amount of the
outstanding Class A-1 Notes, the amounts in the Note Distribution
Account shall be applied to the payment of principal on the Class A-1
Notes on a pro rata basis; and
(iii) payment of principal to the Holders of the Class A-2
Notes until the Outstanding Amount of the Class A-2 Notes is reduced to
zero provided that if there are not sufficient funds in the Note
Distribution Account to pay in full the principal amount of the
outstanding Class A-2 Notes, the amounts in the Note Distribution
Account shall be applied to the payment of principal on the Class A-2
Notes on a pro rata basis.
SECTION 8.3 General Provisions Regarding Accounts. (a) So long as no
Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Trust Accounts shall be invested in Eligible
Investments and reinvested by Indenture Trustee upon Issuer Order, subject to
the provisions of Section 5.1(b) of the Sale and Servicing Agreement. In
accordance with Section 5.1(b) of the Sale and Servicing Agreement, on each
Distribution Date, all interest and other investment income (net of losses and
investment
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expenses) on funds on deposit in the Trust Accounts shall be distributed to the
Seller by the Indenture Trustee. Issuer will not direct Indenture Trustee to
make any investment of any funds or to sell any investment held in any of the
Trust Accounts unless the security interest Granted and perfected in such
account will continue to be perfected in such investment or the proceeds of such
sale, in either case without any further action by any Person, and, in
connection with any direction to Indenture Trustee to make any such investment
or sale, if requested by Indenture Trustee, Issuer shall deliver to Indenture
Trustee an Opinion of Counsel, acceptable to Indenture Trustee, to such effect.
(b) Subject to Section 6.1(c), Indenture Trustee shall not in any way
be held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to Indenture Trustee's failure to make payments on such
Eligible Investments issued by Indenture Trustee, in its commercial capacity as
principal obligor and not as trustee, in accordance with their terms.
(c) If (i) Issuer shall have failed to give investment directions for
any funds on deposit in the Trust Accounts to Indenture Trustee by 11:00 a.m.
Eastern Time (or such other time as may be agreed by Issuer and Indenture
Trustee) on any Business Day; (ii) a Default or Event of Default shall have
occurred and be continuing with respect to the Notes but the Notes shall not
have been declared due and payable pursuant to Section 5.2, or (iii) if such
Notes shall have been declared due and payable following an Event of Default,
amounts collected or receivable from the Trust Estate are being applied in
accordance with Section 5.5 as if there had not been such a declaration; then
Indenture Trustee shall, to the fullest extent practicable, invest and reinvest
funds in the Trust Accounts in one or more Eligible Investments. Indenture
Trustee shall not be liable for losses in respect of such investments in
Eligible Investments that comply with the requirements of the Basic Documents.
SECTION 8.4 Release of Trust Estate. (a) Subject to the payment of its
fees and expenses pursuant to Section 6.7, Indenture Trustee may, and when
required by the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, or convey Indenture Trustee's
interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by Indenture Trustee as provided in this Article VIII shall
be bound to ascertain Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) Indenture Trustee shall, at such time as there are no Notes
outstanding and all sums due Indenture Trustee pursuant to Section 6.7 have been
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paid, release any remaining portion of the Trust Estate that secured the Notes
from the lien of this Indenture and release to Issuer or any other Person
entitled thereto any funds then on deposit in the Trust Accounts. Indenture
Trustee shall release property from the lien of this Indenture pursuant to this
Section 8.4(b) only upon receipt of an Issuer Request accompanied by an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1)
meeting the applicable requirements of Section 11.1.
Each Noteholder or Note Owner, by its acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, acknowledges that from
time to time the Indenture Trustee shall release the lien of this Indenture on
any Receivable to be sold to (i) Seller in accordance with Section 3.3 of the
Sale and Servicing Agreement and (ii) to Servicer in accordance with Section 4.7
of the Sale and Servicing Agreement.
SECTION 8.5 Opinion of Counsel. Indenture Trustee shall receive at
least seven days' notice when requested by Issuer to take any action pursuant to
Section 8.4(a), accompanied by copies of any instruments involved, and Indenture
Trustee may also require as a condition to such action, an Opinion of Counsel,
in form and substance satisfactory to Indenture Trustee, stating the legal
effect of any such action, outlining the steps required to complete the same,
and concluding that all conditions precedent to the taking of such action have
been complied with and such action will not materially and adversely impair the
security for the Notes or the rights of the Noteholders in contravention of the
provisions of this Indenture; provided that such Opinion of Counsel shall not be
required to express an opinion as to the fair value of the Trust Estate. Counsel
rendering any such opinion may rely, without independent investigation, on the
accuracy and validity of any certificate or other instrument delivered to
Indenture Trustee in connection with any such action.
ARTICLE IX SUPPLEMENTAL INDENTURES.
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders. (a)
Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies by Issuer, as evidenced to Indenture Trustee, Issuer and
Indenture Trustee, when authorized by an Issuer Order, at any time and from time
to time, may enter into one or more indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as in force at the date of
the execution thereof), in form satisfactory to Indenture Trustee, for any of
the following purposes:
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(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to Issuer, and the
assumption by any such successor of the covenants of Issuer herein and
in the Notes contained;
(iii) to add to the covenants of Issuer, for the benefit of
the Holders of the Notes, or to surrender any right or power herein
conferred upon Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not materially and adversely
affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI;
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA; or
(viii) (A) to add, modify, or eliminate such provisions of the
Indenture as may be necessary or advisable in order to enable all or a
portion of Issuer to qualify as, and to permit an election to be made
to cause all or a portion of Issuer to be treated as a "financial
asset securitization investment trust" as described in the provisions
of
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the "Small Business Job Protection Act of 1996," or to enable all or a
portion of the Issuer to qualify and an election to be made for
similar treatment under such comparable subsequent federal income tax
provisions as may ultimately be enacted into law, and (B) in
connection with any such election, to modify or eliminate existing
provisions set forth in this Indenture relating to the intended
federal income tax treatment of the Notes or Certificates and Issuer
in the absence of the election; it being a condition to any such
amendment that each Rating Agency will have notified the Indenture
Trustee in writing that the amendment will not result in a reduction
or withdrawal of the rating of any outstanding Notes or Certificates
with respect to which it is a Rating Agency; and
(ix) to add, modify or eliminate such provisions as may be
necessary or advisable in order to enable (a) the transfer to Issuer
of all or any portion of the Receivables to be derecognized under GAAP
by Seller to Issuer, (b) Issuer to avoid becoming a member of Seller's
consolidated group under GAAP or (c) the Seller, any Seller Affiliate
or any of other Affiliates to otherwise comply with or obtain more
favorable treatment under any law or regulation or any accounting
rule or principle; it being a condition to any such amendment that
each Rating Agency will have notified the Indenture Trustee in writing
that the amendment will not result in a reduction or withdrawal of the
rating of any outstanding Notes or Certificates with respect to which
it is a Rating Agency.
Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) Issuer and Indenture Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Notes but with prior
notice to the Rating Agencies by Issuer, as evidenced to Indenture Trustee,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided that such action shall not,
as evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Noteholder.
SECTION 9.2 Supplemental Indentures with Consent of Noteholders. Issuer
and Indenture Trustee, when authorized by an Issuer Order, also may, with prior
notice to the Rating Agencies and with the consent of the Holders of not less
than a majority of the Outstanding Amount of the Notes, by Act of such Holders
delivered to Issuer and Indenture Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provision of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Notes, or change any place
of payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article V, to
the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or
after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or
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certain defaults hereunder and their consequences provided for in this
Indenture;
(iii) modify or alter the provisions of the proviso as to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Notes required to direct Indenture Trustee to direct Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.4;
(v) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified
or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Distribution Date
(including the calculation of any of the individual components of such
calculation) or to affect the rights of the Holders of Notes to the
benefit of any provisions for the mandatory redemption of the Notes
contained herein; or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein
or in the Basic Documents, terminate the lien of this Indenture on any
property at any time subject hereto or deprive the Holder of any Note
of the security provided by the lien of this Indenture.
Indenture Trustee may determine whether or not any Notes would be
affected by any supplemental indenture and any such determination shall be
conclusive upon the Holders of all Notes, whether theretofore or thereafter
authenticated and delivered hereunder. Indenture Trustee shall not be liable for
any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by Issuer and Indenture Trustee of any
supplemental indenture pursuant to this Section, Indenture Trustee shall mail to
the Holders of the Notes to which such amendment or supplemental indenture
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relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of Indenture Trustee to mail such notice, or
any defect therein, shall not, however, in any way impair or affect the validity
of any such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, Indenture Trustee shall be entitled to receive, and subject
to Sections 6.1 and 6.2, shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects Indenture
Trustee's own rights, duties, liabilities or immunities under this Indenture or
otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of
Indenture Trustee, Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5 Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by Indenture Trustee shall,
bear a notation in form approved by Indenture Trustee as to any matter provided
for in such supplemental indenture. If Issuer or Indenture Trustee shall so
determine, new Notes so modified as to conform, in the opinion of Indenture
Trustee and Issuer, to any such supplemental indenture may be prepared and
executed by Issuer and authenticated and delivered by Indenture Trustee in
exchange for Outstanding Notes.
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ARTICLE X REDEMPTION OF NOTES.
SECTION 10.1 Redemption. (a) The Class A-2 Notes are subject to
redemption in whole, but not in part, at the direction of Seller or Servicer
pursuant to Section 9.1(a) of the Sale and Servicing Agreement, on any
Distribution Date on which Seller or Servicer exercises its option to purchase
the Trust Estate pursuant to said Section 9.1(a), for a purchase price equal to
the Redemption Price; provided that Issuer has available funds sufficient to pay
the Redemption Price. Servicer or Issuer shall furnish the Rating Agencies
notice of such redemption. If the Class A-2 Notes are to be redeemed pursuant to
this Section 10.1(a), Servicer or Issuer shall furnish notice of such election
to Indenture Trustee not later than 25 days prior to the Redemption Date and
Issuer shall deposit with Indenture Trustee in the Note Distribution Account the
Redemption Price of the Class A-2 Notes to be redeemed whereupon all such Class
A-2 Notes shall be due and payable on the Redemption Date upon the furnishing of
a notice complying with Section 10.2 to each Holder of the Class A-2 Notes.
(b) If the assets of Issuer are sold pursuant to Section 9.2
of the Trust Agreement, all amounts on deposit in the Note Distribution
Account shall be paid to the Noteholders up to the Outstanding Amount
of the Notes and all accrued and unpaid interest thereon. If amounts
are to be paid to Noteholders pursuant to this Section 10.1(b),
Servicer or Issuer shall, to the extent practicable, furnish notice of
such event to Indenture Trustee not later than 25 days prior to the
Redemption Date whereupon all such amounts shall be payable on the
Redemption Date.
SECTION 10.2 Form of Redemption Notice. (a) Notice of redemption under
Section 10.1(a) shall be given by Indenture Trustee by facsimile or by
first-class mail, postage prepaid, transmitted or mailed prior to the applicable
Redemption Date to each Holder of Class A-2 Notes, as of the close of business
on the Record Date preceding the applicable Redemption Date, at such Holder's
address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to
such Redemption Date is not applicable and that payments shall
be made only upon presentation and surrender of such Class A-2
Notes and
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the place where such Class A-2 Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or
agency of Issuer to be maintained as provided in Section 3.2);
and
(iv) that interest on the Class A-2 Notes shall cease
to accrue on the Redemption Date.
Notice of redemption of the Class A-2 Notes shall be given by Indenture
Trustee in the name and at the expense of Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Class A-2 Note shall not
impair or affect the validity of the redemption of any other Class A-2 Note.
(b) Prior notice of redemption under Section 10.1(b) is not
required to be given to Noteholders.
SECTION 10.3 Notes Payable on Redemption Date. The Class A-2 Notes to
be redeemed shall, following notice of redemption as required by Section 10.2
(in the case of redemption pursuant to Section 10.1(a)), on the Redemption Date
become due and payable at the Redemption Price and (unless Issuer shall default
in the payment of the Redemption Price) no interest shall accrue on the
Redemption Price for any period after the date to which accrued interest is
calculated for purposes of calculating the Redemption Price.
ARTICLE XI MISCELLANEOUS.
SECTION 11.1 Compliance Certificates and Opinions, etc. (a) Upon any
application or request by Issuer to Indenture Trustee to take any action under
any provision of this Indenture, Issuer shall furnish to Indenture Trustee (i)
an Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
(ii) an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and (iii) (if required by
the TIA) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section, except that, in the case of
any such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
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(i) a statement that each signatory of such
certificate or opinion has read or has caused to be read such
covenant or condition and the definitions herein relating
thereto;
(ii) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination or
investigation as is necessary to enable such signatory to
express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether, in the opinion of
each such signatory such condition or covenant has been
complied with.
(b) (i) Prior to the deposit of any Collateral or
other property or securities with Indenture Trustee that is to
be made the basis for the release of any property or
securities subject to the lien of this Indenture, Issuer
shall, in addition to any obligation imposed in Section
11.1(a) or elsewhere in this Indenture, furnish to Indenture
Trustee an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair
value (within 90 days of such deposit) to Issuer of the
Collateral or other property or securities to be so deposited.
(ii) Whenever Issuer is required to furnish to
Indenture Trustee an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters
described in clause (i), Issuer shall also deliver to
Indenture Trustee an Independent Certificate as to the same
matters, if the fair value to Issuer of the securities to be
so deposited and of all other such securities made the basis
of any such withdrawal or release since the commencement of
the then-current fiscal year of Issuer, as set forth in the
certificates delivered pursuant to clause (i) and this clause
(ii), is 10% or more of the Outstanding Amount of the Notes,
but such a certificate need not be furnished with respect to
any securities so deposited, if the fair value thereof to
Issuer as set forth in the related Officer's Certificate is
less than $25,000 or less than one percent of the Outstanding
Amount of the Notes.
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(iii) Other than with respect to the release of any
Purchased Receivables or Defaulted Receivables, whenever any
property or securities are to be released from the lien of
this Indenture, Issuer shall also furnish to Indenture Trustee
an Officer's Certificate certifying or stating the opinion of
each person signing such certificate as to the fair value
(within 90 days of such release) of the property or securities
proposed to be released and stating that in the opinion of
such person the proposed release will not impair the security
under this Indenture in contravention of the provisions
hereof.
(iv) Whenever Issuer is required to furnish to
Indenture Trustee an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters
described in clause (iii), Issuer shall also furnish to
Indenture Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of
all other property other than Purchased Receivables and
Defaulted Receivables, or securities released from the lien of
this Indenture since the commencement of the then current
calendar year, as set forth in the certificates required by
clause (iii) and this clause (iv), equals 10% or more of the
Outstanding Amount of the Notes, but such certificate need not
be furnished in the case of any release of property or
securities if the fair value thereof as set forth in the
related Officer's Certificate is less than $25,000 or less
than one percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.9 or any other
provision of this Section, Issuer may (A) collect, liquidate,
sell or otherwise dispose of Receivables as and to the extent
permitted or required by the Basic Documents and (B) make cash
payments out of the Trust Accounts as and to the extent
permitted or required by the Basic Documents.
SECTION 11.2 Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
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Any certificate or opinion of an Authorized Officer of Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his or her certificate or opinion is
based are erroneous. Any such certificate of an Authorized Officer or Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of
Servicer, Seller, Administrator or Issuer, stating that the information with
respect to such factual matters is in the possession of Servicer, Seller,
Administrator or Issuer, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to Indenture Trustee, it is provided that Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of Issuer's compliance with any term hereof, it is intended that the
truth and accuracy, at the time of the granting of such application or at the
effective date of such certificate or report (as the case may be), of the facts
and opinions stated in such document shall in such case be conditions precedent
to the right of Issuer to have such application granted or to the sufficiency of
such certificate or report. The foregoing shall not, however, be construed to
affect Indenture Trustee's right to rely upon the truth and accuracy of any
statement or opinion contained in any such document as provided in Article VI.
SECTION 11.3 Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to Indenture Trustee, and, where it is
hereby expressly required, to Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.1)
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conclusive in favor of Indenture Trustee and Issuer, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any person of any
such instrument or writing may be proved in any customary manner of
Indenture Trustee.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind
the Holder of every Note issued upon the registration thereof or in
exchange therefor or in lieu thereof, in respect of anything done,
omitted or suffered to be done by Indenture Trustee or Issuer in
reliance thereon, whether or not notation of such action is made upon
such Note.
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
to be made upon, given or furnished to or filed with:
(a) Indenture Trustee by any Noteholder, Administrator or
Issuer shall be sufficient for every purpose hereunder if personally
delivered, delivered by overnight courier or mailed certified mail,
return receipt requested and shall be deemed to have been duly given
upon receipt to Indenture Trustee at its Corporate Trust Office, or
(b) Issuer by Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if personally delivered,
delivered by overnight courier or mailed certified mail, return receipt
requested and shall be deemed to have been duly given upon receipt to
Issuer addressed to: Key Auto Finance Trust 199_-_, in care of Key
Tower, 127 Public Square, Cleveland, Ohio, 44114-1306 Attention:
____________________, with a copy to Administrator at Key Tower, 127
Public Square, Cleveland, Ohio 44114-1306, Attention: ______________,
or at any other address previously furnished in writing to Indenture
Trustee by Issuer or Administrator. Issuer shall promptly transmit any
notice received by it from the Noteholders to Indenture Trustee.
Notices required to be given to the Rating Agencies by Issuer,
Indenture Trustee or Owner Trustee shall be in writing, personally delivered,
delivered by overnight courier or mailed certified mail, return receipt
requested to (i) in the
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case of Moody's, at the following address: Moody's Investors Service, Inc., 99
Church Street, New York, New York 10004, (ii) in the case of S&P, at the
following address: Standard & Poor's Ratings Services, 26 Broadway (15th Floor),
New York, New York 10004, Attention of Asset Backed Surveillance Department; and
(iii) in the case of Fitch, at the following address: Fitch Investors Service,
L.P., One State Street Plaza, New York, New York 10004 or as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties.
SECTION 11.5 Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with Indenture Trustee
but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to Indenture Trustee shall be deemed to be
a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.6 Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, Issuer may enter into any agreement with any Holder of a Note
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providing for a method of payment, or notice by Indenture Trustee or any Paying
Agent to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices, provided that such methods are
reasonable and consented to by Indenture Trustee (which consent shall not be
unreasonably withheld). Issuer will furnish to the trustee a copy of each such
agreement and Indenture Trustee will cause payments to be made and notices to be
given in accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of Indenture Trustee in this
Indenture shall bind its successors.
SECTION 11.10 Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.11 Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other person with an ownership interest in any part
of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 11.12 Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
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effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14 Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to Indenture Trustee or any other counsel reasonably
acceptable to Indenture Trustee) to the effect that such recording is necessary
either for the protection of the Noteholders or any other person secured
hereunder or for the enforcement of any right or remedy granted to Indenture
Trustee under this Indenture.
SECTION 11.16 Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of Issuer, Seller, Servicer, Owner
Trustee or Indenture Trustee on the Notes or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) Seller, Servicer, Indenture Trustee or Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in Issuer or (iii)
any partner, owner, beneficiary, agent, officer, director, employee or agent of
Seller, Servicer, Indenture Trustee or Owner Trustee in its individual capacity,
any holder of a beneficial interest in Issuer, Seller, Servicer, Owner Trustee
or Indenture Trustee or of any successor or assign of Seller, Servicer,
Indenture Trustee or Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that Indenture
Trustee and Owner Trustee have no such obligations in their individual capacity)
and except that any such partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity. For all purposes of this Indenture, in the performance of any
duties or obligations of Issuer hereunder, Owner Trustee shall be subject to,
and entitled to the benefits of, the terms and provisions of Article VI, VII and
VIII of the Trust Agreement.
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SECTION 11.17 No Petition. Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against Seller or Issuer, or join in
any institution against Seller or Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, this Indenture or any of the Basic
Documents.
SECTION 11.18 Inspection. Issuer agrees that, on reasonable prior
notice, it will permit any representative of Indenture Trustee, during Issuer's
normal business hours, to examine all the books of account, records, reports,
and other papers of Issuer, to make copies and extracts therefrom, to cause such
books to be audited by Independent certified public accountants, and to discuss
Issuer's affairs, finances and accounts with Issuer's officers, employees, and
independent certified public accountants, all at such reasonable times and as
often as may be reasonably requested. Indenture Trustee shall and shall cause
its representatives to hold in confidence all such information except to the
extent disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that Indenture
Trustee may reasonably determine that such disclosure is consistent with its
obligations hereunder.
61
<PAGE> 69
IN WITNESS WHEREOF, Issuer and Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
KEY AUTO FINANCE TRUST 199_-_,
By: ,
------------------------------------
not in its individual capacity but
solely as Owner Trustee,
By:
----------------------------------
Name:
Title:
----------------------------,
not in its individual capacity
but solely as Indenture Trustee,
By:
--------------------------------------
Name:
Title:
62
<PAGE> 70
EXHIBIT A
SCHEDULE OF RECEIVABLES
Delivered on Disk to Indenture Trustee
63
<PAGE> 71
EXHIBIT B
FORM OF SALE AND SERVICING AGREEMENT
64
<PAGE> 72
EXHIBIT C
FORM OF NOTE DEPOSITORY AGREEMENT
65
<PAGE> 73
EXHIBIT D
FORM OF A-1 NOTES
REGISTERED $____________3
No. R-___ CUSIP NO. _____________
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
KEY AUTO FINANCE TRUST 199_-_
_____% CLASS A-1 ASSET BACKED NOTES
Key Auto Finance Trust 199_-_, a trust organized and existing under the
laws of the State of Delaware (including any successor, the "Issuer"), for value
received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of __________________ DOLLARS ($___________), partially payable on
each Distribution Date in an amount equal to the result obtained by multiplying
(i) a fraction the numerator of which is the initial principal amount of this
Note and the denominator of which is the aggregate initial principal amount of
the Class A-1 Notes (the "Fraction") by (ii) the aggregate amount, if any,
payable from the Note Distribution Account in respect of principal on the A-1
Notes pursuant to Section 3.1 of the Indenture; provided that the entire unpaid
principal amount of this Note shall be due and payable on the earlier of the
Final Scheduled Distribution Date for the Class A-1 Notes and the
- --------
(3)Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
66
<PAGE> 74
Redemption Date, if any, pursuant to Section 10.1 of the Indenture. The Issuer
will pay interest on this Note on each Distribution Date until the principal of
this Note is paid or made available for payment, in an amount equal to the
product of the Class A-1 Noteholders' Interest Distributable Amount for the
related Distribution Date multiplied by the Fraction subject to certain
limitations contained in Section 3.1 and Section 8.2 of the Indenture. Such
principal of and interest on this Note shall be paid in the manner specified in
the Indenture.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture referred to on the reverse hereof, or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: _____________, 199__
KEY AUTO FINANCE TRUST 199_-_
By: _____________________________,
not in its individual capacity
but solely as Owner Trustee under the
Trust Agreement
By:______________________________
Name:_________________________
Title:________________________
67
<PAGE> 75
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ______________, 199__
------------------------------,
not in its individual capacity,
but solely as Indenture Trustee
By:
---------------------------
Authorized Signatory
68
<PAGE> 76
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ______% Class A-1 Asset Backed Notes (herein called the "A-1
Notes" or the "Notes"), all issued under an Indenture dated as of __________,
199__ (such Indenture, as supplemented or amended, is herein called the
"Indenture"), between the Issuer and _____________________, not in its
individual capacity but solely as trustee (the "Indenture Trustee"), which term
includes any successor Indenture Trustee under the Indenture, to which Indenture
and all indentures supplemental thereto reference is hereby made for a statement
of the respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are not otherwise defined herein and
that are defined in the Indenture shall have the meanings assigned to them in or
pursuant to the Indenture.
The Notes and the Class A-2 Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
The Issuer shall pay interest on overdue installments of interest at
the Class A-1 Interest Rate to the extent lawful.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of Issuer, Seller, Servicer, Owner Trustee or Indenture Trustee on the Notes or
under this Indenture or any certificate or other writing delivered in connection
herewith or therewith, against (i) Seller, Servicer, Indenture Trustee or Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of Seller, Servicer, Indenture Trustee or Owner Trustee in its
individual capacity, any holder of a beneficial interest in Issuer, Seller,
Servicer, Owner Trustee or Indenture Trustee or of any successor or assign of
Seller, Servicer, Indenture Trustee or Owner Trustee in its individual capacity,
except as any such Person may have expressly agreed (it being understood that
Indenture Trustee and Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
It is the intent of the Seller, the Servicer, the Noteholders and the
Note Owners that, for purposes of Federal and State income tax and any other tax
<PAGE> 77
measured in whole or in part by income, the Notes will qualify as indebtedness
of the Issuer. The Noteholders, by acceptance of a Note, agree to treat, and to
take no action inconsistent with the treatment of, the Notes for such tax
purposes as indebtedness of the Issuer.
Each Noteholder or Note Owner, by acceptance of a Note, or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that they
will not at any time institute against Seller or Issuer, or join in any
institution against Seller or Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, this Indenture or any of the Basic
Documents.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither _________________, in its individual
capacity, any owner of a beneficial interest in the Issuer, nor any of their
respective partners, beneficiaries, agents, officers, directors, employees,
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal of or interest on, or performance
of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Owner Trustee for the sole purposes of binding the interests of the Owner
Trustee in the assets of the Issuer. The Holder of this Note by the acceptance
hereof agrees that, except as expressly provided in the Basic Documents, in the
case of an Event of Default under the Indenture, the Holder shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
provided that nothing contained herein shall be taken to prevent recourse to,
and enforcement against, the assets of the Issuer for any and all liabilities,
obligations and undertakings contained in the Indenture or in this Note.
2
<PAGE> 78
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
- -------------------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto _______________________________
- -------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: _____________ _______________________________ */
Signature Guaranteed:
----------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Note Registrar, which
requirements include membership or
participation in STAMP or such other
"signature guarantee program" as may be
determined by the Note Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
- -------------------------
*/ NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in
every particular without alteration, enlargement or any change
whatsoever.
<PAGE> 79
EXHIBIT E
FORM OF A-2 NOTES
REGISTERED $____________4
No. R-___ CUSIP NO. _____________
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
KEY AUTO FINANCE TRUST 199_-_
_____% CLASS A-2 ASSET BACKED NOTES
Key Auto Finance Trust 199_-_, a trust organized and existing under the
laws of the State of Delaware (including any successor, the "Issuer"), for value
received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of __________________ DOLLARS ($___________), partially payable on
each Distribution Date in an amount equal to the result obtained by multiplying
(i) a fraction the numerator of which is the initial principal amount of this
Note and the denominator of which is the aggregate initial principal amount of
the Class A-2 Notes ("the Fraction") by (ii) the aggregate amount, if any,
payable from the Note Distribution Account in respect of principal on the A-2
Notes pursuant to Section 3.1 of the Indenture; provided that the entire unpaid
principal amount of this Note shall be due and payable on the earlier of the
Final Scheduled Distribution Date for the Class A-2 Notes and the
- ----------------
4Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
<PAGE> 80
Redemption Date, if any, pursuant to Section 10.1 of the Indenture. No payments
of principal of the A-2 Notes will be made until the principal of the A-1 Notes
has been paid in full. The Issuer will pay interest on this Note on each
Distribution Date until the principal of this Note is paid or made available for
payment in an amount equal to the product of the Class A-2 Noteholders' Interest
distributable Amount for the related Transfer Date multiplied by the Fraction,
subject to certain limitations contained in Section 3.1 and Section 8.2 of the
Indenture. Such principal of and interest on this Note shall be paid in the
manner specified in the Indenture.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture referred to on the reverse hereof, or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: _____________, 199__
KEY AUTO FINANCE TRUST 199_-_
By: _____________________________,
not in its individual capacity
but solely as Owner Trustee under the
Trust Agreement
By:______________________________
Name:_________________________
Title:________________________
2
<PAGE> 81
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ______________, 199__
-----------------------------,
not in its individual capacity,
but solely as Indenture Trustee
By:
----------------------------
Authorized Signatory
3
<PAGE> 82
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ______% Class A-2 Asset Backed Notes (herein called the "A-2
Notes" or the "Notes"), all issued under an Indenture dated as of __________,
199__ (such Indenture, as supplemented or amended, is herein called the
"Indenture"), between the Issuer and _____________________, not in its
individual capacity but solely as trustee (the "Indenture Trustee"), which term
includes any successor Indenture Trustee under the Indenture, to which Indenture
and all indentures supplemental thereto reference is hereby made for a statement
of the respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are not otherwise defined herein and
that are defined in the Indenture shall have the meanings assigned to them in or
pursuant to the Indenture.
The Notes and the Class A-1 Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
The Issuer shall pay interest on overdue installments of interest at
the Class A-2 Interest Rate to the extent lawful.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of Issuer, Seller, Servicer, Owner Trustee or Indenture Trustee on the Notes or
under this Indenture or any certificate or other writing delivered in connection
herewith or therewith, against (i) Seller, Servicer, Indenture Trustee or Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of Seller, Servicer, Indenture Trustee or Owner Trustee in its
individual capacity, any holder of a beneficial interest in Issuer, Seller,
Servicer, Owner Trustee or Indenture Trustee or of any successor or assign of
Seller, Servicer, Indenture Trustee or Owner Trustee in its individual capacity,
except as any such Person may have expressly agreed (it being understood that
Indenture Trustee and Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
It is the intent of the Seller, the Servicer, the Noteholders and the
Note Owners that, for purposes of Federal and State income tax and any other tax
<PAGE> 83
measured in whole or in part by income, the Notes will qualify as indebtedness
of the Issuer. The Noteholders, by acceptance of a Note, agree to treat, and to
take no action inconsistent with the treatment of, the Notes for such tax
purposes as indebtedness of the Issuer.
Each Noteholder or Note Owner, by acceptance of a Note, or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that they
will not at any time institute against Seller or Issuer, or join in any
institution against Seller or Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, this Indenture or any of the Basic
Documents.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither ________________________, in its
individual capacity, any owner of a beneficial interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees, successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Owner Trustee for the sole purposes of binding the interests of the Owner
Trustee in the assets of the Issuer. The Holder of this Note by the acceptance
hereof agrees that, except as expressly provided in the Basic Documents, in the
case of an Event of Default under the Indenture, the Holder shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
provided that nothing contained herein shall be taken to prevent recourse to,
and enforcement against, the assets of the Issuer for any and all liabilities,
obligations and undertakings contained in the Indenture or in this Note.
2
<PAGE> 84
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
- --------------------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto _______________________________
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: */
------------- -------------------------------
Signature Guaranteed:
----------------------------------------
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Note Registrar, which
requirements include membership or
participation in STAMP or such other
"signature guarantee program" as may be
determined by the Note Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
- -------------------------
*/ NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in
every particular without alteration, enlargement or any change
whatsoever.
<PAGE> 1
EXHIBIT 4.2
================================================================================
KEY AUTO FINANCE TRUST 199_-_
TRUST AGREEMENT
between
KEY CONSUMER ACCEPTANCE CORPORATION
and
-----------------------------,
as Owner Trustee
Dated as of _______, 199_
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS................................................................................. 1
SECTION 1.1. Capitalized Terms............................................................... 1
SECTION 1.2. Other Interpretive Provisions................................................... 1
ARTICLE II ORGANIZATION............................................................................... 1
SECTION 2.1. Name............................................................................ 1
SECTION 2.2. Office.......................................................................... 2
SECTION 2.3. Purposes and Powers............................................................. 2
SECTION 2.4. Appointment of Owner Trustee.................................................... 2
SECTION 2.5. Initial Capital Contribution of Trust Estate.................................... 3
SECTION 2.6. Declaration of Trust............................................................ 3
SECTION 2.7. Organizational Expenses; Liabilities of the Holders............................. 3
SECTION 2.8. Title to Issuer Property........................................................ 3
SECTION 2.9. Situs of Issuer................................................................. 3
SECTION 2.10. Representations and Warranties of Depositor.................................... 4
SECTION 2.11. Federal Income Tax Allocations................................................. 5
ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS..................................................... 6
SECTION 3.1. Initial Ownership............................................................... 6
SECTION 3.2. The Certificates................................................................ 6
SECTION 3.3. Authentication of Certificates.................................................. 7
SECTION 3.4. Registration of Transfer and Exchange of Certificates........................... 7
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates............................... 8
SECTION 3.6. Persons Deemed Certificateholders............................................... 8
SECTION 3.7. Access to List of Certificateholders' Names and
Addresses...................................................................... 9
SECTION 3.8. Maintenance of Office or Agency................................................. 9
SECTION 3.9. Appointment of Paying Agent..................................................... 9
SECTION 3.10. [Reserved]..................................................................... 10
SECTION 3.11. Book-Entry Certificates........................................................ 10
SECTION 3.12. Notices to Clearing Agency..................................................... 11
SECTION 3.13. Definitive Certificates........................................................ 11
ARTICLE IV ACTIONS BY OWNER TRUSTEE................................................................... 12
SECTION 4.1. Prior Notice to Owners with Respect to Certain Matters.......................... 12
SECTION 4.2. Action by Certificateholders with Respect to Certain
Matters........................................................................ 13
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy......................... 13
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
SECTION 4.4. Restrictions on Certificateholders' Power....................................... 13
SECTION 4.5. Majority Control................................................................ 13
ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES.................................................. 14
SECTION 5.1. Establishment of Certificate Distribution Account............................... 14
SECTION 5.2. Application of Funds in Certificate Distribution
Account........................................................................ 14
SECTION 5.3. Method of Payment............................................................... 15
SECTION 5.4. No Segregation of Monies; No Interest........................................... 15
SECTION 5.5. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and Others.................... 15
SECTION 5.6. Signature on Returns; Tax Matters Partner....................................... 16
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE...................................................... 16
SECTION 6.1. General Authority............................................................... 16
SECTION 6.2. General Duties.................................................................. 16
SECTION 6.3. Action upon Instruction......................................................... 17
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions................................................................... 18
SECTION 6.5. No Action Except under Specified Documents or
Instructions................................................................... 18
SECTION 6.6. Restrictions.................................................................... 18
ARTICLE VII CONCERNING OWNER TRUSTEE.................................................................. 19
SECTION 7.1. Acceptance of Trusts and Duties................................................. 19
SECTION 7.2. Furnishing of Documents......................................................... 20
SECTION 7.3. Representations and Warranties.................................................. 20
SECTION 7.4. Reliance; Advice of Counsel..................................................... 21
SECTION 7.5. Not Acting in Individual Capacity............................................... 22
SECTION 7.6. Owner Trustee Not Liable for Certificates or
Receivables.................................................................... 22
SECTION 7.7. Owner Trustee May Own Certificates and Notes.................................... 22
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE............................................................ 22
SECTION 8.1. Owner Trustee's Fees and Expenses............................................... 22
SECTION 8.2. Indemnification................................................................. 23
SECTION 8.3. Payments to Owner Trustee....................................................... 23
ARTICLE IX TERMINATION OF TRUST AGREEMENT............................................................. 24
SECTION 9.1. Termination of Trust Agreement.................................................. 24
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL
OWNER TRUSTEES............................................................... 25
SECTION 10.1. Eligibility Requirements for Owner Trustee..................................... 25
SECTION 10.2. Resignation or Removal of Owner Trustee........................................ 25
SECTION 10.3. Successor Owner Trustee........................................................ 26
SECTION 10.4. Merger or Consolidation of Owner Trustee....................................... 27
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.................................. 27
ARTICLE XI MISCELLANEOUS.............................................................................. 28
SECTION 11.1. Supplements and Amendments..................................................... 28
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders............................................................. 30
SECTION 11.3. Limitations on Rights of Others................................................ 31
SECTION 11.4. Notices........................................................................ 31
SECTION 11.5. Severability................................................................... 31
SECTION 11.6. Separate Counterparts.......................................................... 31
SECTION 11.7. Successors and Assigns......................................................... 32
SECTION 11.8. No Petition.................................................................... 32
SECTION 11.9. No Recourse.................................................................... 32
SECTION 11.10. Headings...................................................................... 32
SECTION 11.11. GOVERNING LAW................................................................. 32
SECTION 11.12. Certificate Transfer Restrictions............................................. 32
</TABLE>
-iii-
<PAGE> 5
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
Exhibit C Form of Certificate Depository Agreement
-iv-
<PAGE> 6
TRUST AGREEMENT dated as of ________, 199_ between KEY CONSUMER
ACCEPTANCE CORPORATION, a Delaware corporation, as Depositor, and
______________________, a Delaware banking corporation, as Owner Trustee.
ARTICLE I DEFINITIONS.
SECTION 1.1. Capitalized Terms. Capitalized terms are used in this
Agreement as defined in Appendix X to the Sale and Servicing Agreement among the
trust established by this Agreement, Key Consumer Acceptance Corporation, as
Seller, and Key Bank USA, National Association, as Servicer, dated as of
________, 199_, as the same may be amended and supplemented from time to time.
SECTION 1.2. Other Interpretive Provisions. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document delivered pursuant hereto unless otherwise defined therein. For
purposes of this Agreement and all such certificates and other documents, unless
the context otherwise requires: (a) accounting terms not otherwise defined in
this Agreement, and accounting terms partly defined in this Agreement to the
extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles; (b) terms defined in Article 9 of the
UCC as in effect in the State of Delaware and not otherwise defined in this
Agreement are used as defined in that Article; (c) the words "hereof," "herein"
and "hereunder" and words of similar import refer to this Agreement as a whole
and not to any particular provision of this Agreement; (d) references to any
Article, Section, Schedule or Exhibit are references to Articles, Sections,
Schedules and Exhibits in or to this Agreement, and references to any paragraph,
subsection, clause or other subdivision within any Section or definition refer
to such paragraph, subsection, clause or other subdivision of such Section or
definition; (e) the term "including" means "including without limitation"; (f)
references to any law or regulation refer to that law or regulation as amended
from time to time and include any successor law or regulation; (g) references to
any Person include that Person's successors and assigns; and (h) headings are
for purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
ARTICLE II ORGANIZATION.
SECTION 2.1. Name. The trust created hereby shall be known as "KEY AUTO
FINANCE TRUST 199_-_", in which name Owner Trustee may conduct the business of
such trust, make and execute contracts and other instruments on behalf of such
trust and sue and be sued.
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SECTION 2.2. Office. The office of Issuer shall be in care of Owner
Trustee at the Corporate Trust Office or at such other address as Owner Trustee
may designate by written notice to the Certificateholders and Depositor.
SECTION 2.3. Purposes and Powers. The purpose of Issuer is, and Issuer
shall have the power and authority, to engage in the following activities:
(a) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement, and to sell, transfer and
exchange the Notes and the Certificates and to pay interest on and
principal of the Notes and distributions on the Certificates;
(b) to acquire the property and assets set forth in the Sale
and Servicing Agreement from the Depositor pursuant to the terms
thereof, to make deposits to and withdrawals from the Reserve Account
and to pay the organizational, start-up and transactional expenses of
Issuer;
(c) to assign, grant, transfer, pledge, mortgage and convey
the Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Certificateholders pursuant to the terms of the Sale
and Servicing Agreement any portion of the Trust Estate released from
the Lien of, and remitted to Issuer pursuant to, the Indenture;
(d) to enter into and perform its obligations under the Basic
Documents to which it is a party;
(e) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(f) subject to compliance with the Basic Documents, to engage
in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Certificateholders and the Noteholders.
Issuer is hereby authorized to engage in the foregoing activities. Issuer shall
not engage in any activity other than in connection with the foregoing or other
than as required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.4. Appointment of Owner Trustee. Depositor hereby appoints
Owner Trustee as trustee of Issuer effective as of the date hereof, to have all
the rights, powers and duties set forth herein.
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SECTION 2.5. Initial Capital Contribution of Trust Estate. Depositor
hereby sells, assigns, transfers, conveys and sets over to Owner Trustee, as of
the date hereof, the sum of $1. Owner Trustee hereby acknowledges receipt in
trust from Depositor, as of the date hereof, of the foregoing contribution,
which shall constitute the initial Owner Trust Estate and shall be deposited in
the Certificate Distribution Account.
SECTION 2.6. Declaration of Trust. Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificateholders, subject to
the obligations of Issuer under the Basic Documents. It is the intention of the
parties hereto that Issuer constitute a business trust under the Business Trust
Statute and that this Agreement constitute the governing instrument of such
business trust. It is the intention of the parties hereto that, solely for
income and franchise tax purposes, Issuer shall be treated as a partnership, the
partners of such partnership being the Certificateholders, (including the
Depositor, as general partner) and the Notes constituting indebtedness of the
partnership. The parties agree that, unless otherwise required by appropriate
tax authorities, Issuer will file or cause to be filed annual or other necessary
returns, reports and other forms consistent with the characterization of Issuer
as a partnership for such tax purposes. Effective as of the date hereof, Owner
Trustee shall have all rights, powers and duties set forth herein and, to the
extent not inconsistent herewith, in the Business Trust Statute with respect to
accomplishing the purposes of Issuer. Owner Trustee shall file the Certificate
of Trust with the Secretary of State of Delaware.
SECTION 2.7. Organizational Expenses; Liabilities of the Holders. (a)
Depositor shall pay organizational expenses of Issuer as they may arise or
shall, upon the request of Owner Trustee, promptly reimburse Owner Trustee for
any such expenses paid by Owner Trustee.
(b) No Holder or Owner shall have any personal liability
for any liability or obligation of the Trust.
SECTION 2.8. Title to Issuer Property. Legal title to all the Owner
Trust Estate shall be vested at all times in Issuer as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
SECTION 2.9. Situs of Issuer. Issuer will be located and administered
in the State of Delaware. All bank accounts maintained by Owner Trustee on
behalf of Issuer shall be located in the State of Delaware or the State of New
York.
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Payments will be received by Issuer only in Delaware or New York, and payments
will be made by Issuer only from Delaware or New York. The only office of Issuer
will be at the Corporate Trust Office in Delaware.
SECTION 2.10. Representations and Warranties of Depositor. Depositor
hereby represents and warrants to Owner Trustee that:
(a) Depositor is duly organized and validly existing as a
Delaware corporation with power and authority to own its properties and
to conduct its business as such properties are currently owned and such
business is presently conducted.
(b) Depositor is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such
qualifications, licenses and approvals, except where the failure to
have such qualifications, licenses and approvals would not have a
material adverse effect on the Depositor.
(c) Depositor has the corporate power and authority to execute
and deliver this Agreement and to carry out its terms; Depositor has
full power and authority to sell and assign the property to be sold and
assigned to and deposited with Issuer and Depositor has duly authorized
such sale and assignment and deposit to Issuer by all necessary
corporate action; and the execution, delivery and performance of this
Agreement has been duly authorized by Depositor by all necessary
corporate action.
(d) This Agreement constitutes a legal, valid, and binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation and other similar laws and to general equitable principles.
(e) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or by-laws of Depositor, or any
material indenture, agreement or other instrument to which Depositor is
a party or by which it is bound; nor result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms
of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the best
of Depositor's knowledge, any order, rule
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or regulation applicable to Depositor of any court or of any Federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Depositor or its properties.
(f) There are no proceedings or investigations pending or, to
the Depositor's best knowledge, threatened before any court, regulatory
body, administrative agency or other governmental instrumentality
having jurisdiction over the Depositor or its properties: (i) asserting
the invalidity of this Agreement, the Indenture, any of the other Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any of
the transactions contemplated by this Agreement, the Indenture or any
of the other Basic Documents, (iii) seeking any determination or ruling
that might materially and adversely affect the performance by the
Depositor or its obligations under, or the validity or enforceability
of, this Agreement or (iv) which might adversely affect the federal
income tax attributes, or applicable state tax franchise or income tax
attributes, of the Notes and the Certificates.
SECTION 2.11. Federal Income Tax Allocations. The Certificateholders
acknowledge that it is their intent and that they understand that it is the
intent of Depositor and Servicer that, for the purposes of federal income, state
and local income and franchise taxes and any other income taxes, Issuer will be
treated as a partnership and the Certificateholders (including Depositor) will
be treated as partners in that partnership (except, in the case of any state
tax, where the Depositor or the Servicer in good faith determines that
treatment of the Issuer as other than a partnership is required by applicable
state law). Depositor and the other Certificateholders by acceptance of a
Certificate agree to such treatment and agree to take no action inconsistent
with such treatment. For purposes of federal income, state and local income and
franchise tax and any other income taxes each month:
(a) amounts paid to Certificateholders pursuant to Section
5.2(a)(i) shall be treated as "guaranteed payments" within the meaning
of Section 707(c) of the Code;
(b) to the extent that the characterization provided for in
paragraph (a) of this Section is not respected, gross ordinary income
of Issuer for such month as determined for federal income tax purposes
shall be allocated among the Certificateholders as of the first Record
Date following the end of such month, in proportion to their ownership
of principal amount of the Certificates on such date, in an amount up
to the sum of (i) the Certificateholders' Monthly Interest
Distributable Amount for such month, (ii) interest on the excess, if
any, of the Certificateholders' Interest Distributable Amount for the
preceding Distribution Date over the amount in respect of interest at
the Certificate Rate that is actually deposited in the Certificate
Distribution Account on
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such preceding Distribution Date, to the extent permitted by law, at
the Certificate Rate from such preceding Distribution Date through the
current Distribution Date, and (iii) the portion of the market discount
on the Receivables accrued during such month that is allocable to the
excess of the initial aggregate principal amount of the Certificates
over their initial aggregate issue price; and
(c) thereafter all remaining net income of Issuer for such
month as determined for federal income tax purposes (and each item of
income, gain, credit, loss or deduction entering into the computation
thereof) shall be allocated to Depositor, to the extent thereof;
If the gross ordinary income of Issuer for any month is insufficient for the
allocations described in clause (b), subsequent gross ordinary income shall
first be allocated to make up such shortfall before being allocated as provided
in clause (c). Net losses of Issuer, if any, for any month as determined for
Federal income tax purposes (and each item of income, gain, loss, credit and
deduction entering into the computation thereof) shall be allocated to Depositor
to the extent Depositor is reasonably expected as determined by Servicer to bear
the economic burden of such net losses, then net losses shall be allocated among
the Certificateholders as of the first Record Date following the end of such
month in proportion to their ownership of principal amount of Certificates on
such Record Date until the principal balance of the Certificates is reduced to
zero. Depositor is authorized to modify the allocations in this paragraph if
necessary or appropriate, in its sole discretion, for the allocations to fairly
reflect the economic income, gain or loss to Depositor, the Certificateholders,
or as otherwise required by the Code.
ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS.
SECTION 3.1. Initial Ownership. Upon the formation of Issuer by the
contribution by Depositor pursuant to Section 2.5 and until the issuance of the
Certificates, Depositor shall be the sole beneficiary of the Trust.
SECTION 3.2. The Certificates. The Certificates shall be issued in
denominations of $1,000 and integral multiples thereof; provided that one
Certificate may be issued that includes any residual portion of the initial
Certificate Balance in a denomination other than an integral multiple of $1,000.
The Certificates shall be executed on behalf of Issuer by manual or facsimile
signature of an authorized officer of Owner Trustee. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of Issuer,
shall be validly issued and entitled to the benefit of this Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior
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to the authentication and delivery of such Certificates or did not hold such
offices at the date of authentication and delivery of such Certificates. A
transferee of a Certificate shall become a Certificateholder, and shall be
entitled to the rights and subject to the obligations of a Certificateholder
hereunder, upon due registration of such Certificate in such transferee's name
pursuant to Section 3.4.
SECTION 3.3. Authentication of Certificates. Concurrently with the
initial sale of the Receivables to Issuer pursuant to the Sale and Servicing
Agreement, Owner Trustee shall cause the Certificates in an aggregate principal
amount equal to the initial Certificate Balance to be executed on behalf of
Issuer, authenticated and delivered to or upon the written order of Depositor,
signed by its chairman of the board, its president, its chief financial officer,
its chief accounting officer, any vice president, its secretary, any assistant
secretary, its treasurer or any assistant treasurer, without further corporate
action by Depositor, in authorized denominations. No Certificate shall entitle
its Holder to any benefit under this Agreement, or be valid for any purpose,
unless there shall appear on such Certificate a certificate of authentication
substantially in the form set forth in Exhibit A, executed by Owner Trustee or
_________________________, as Owner Trustee's authentication agent, by manual
signature; such authentication shall constitute conclusive evidence that such
Certificate shall have been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
SECTION 3.4. Registration of Transfer and Exchange of Certificates.
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.8, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, Owner Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. Owner Trustee shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.8, Owner Trustee shall
execute, authenticate and deliver (or shall cause ________________________ as
its authenticating agent to authenticate and deliver), in the name of the
designated transferee or transferees, one or more new Certificates in authorized
denominations of a like class and aggregate face amount dated the date of
authentication by Owner Trustee or any authenticating agent. At the option of a
Holder, Certificates may be exchanged for other Certificates of the same class
in authorized denominations of a like aggregate amount upon surrender of the
Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.8.
Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
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satisfactory to Owner Trustee and Certificate Registrar duly executed by the
Certificateholder or his attorney duly authorized in writing, with such
signature guaranteed by a member firm of the New York Stock Exchange or a
commercial bank or trust company. Each Certificate surrendered for registration
of transfer or exchange shall be canceled and subsequently disposed of by Owner
Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but Owner Trustee or Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The preceding provisions of this Section 3.4 notwithstanding, Owner
Trustee shall not make and the Certificate Registrar need not register any
transfer or exchange of Certificates for a period of fifteen (15) days preceding
any Distribution Date for any payment with respect to the Certificates.
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to Certificate Registrar, or if
Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to Certificate Registrar and Owner Trustee such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Certificate shall have been acquired by a bona fide purchaser, Owner
Trustee on behalf of Issuer shall execute and Owner Trustee, or
_____________________, as Owner Trustee's authenticating agent, shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like class, tenor
and denomination. In connection with the issuance of any new Certificate under
this Section, Owner Trustee or Certificate Registrar may require the payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute conclusive evidence of an ownership interest in
Issuer, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
SECTION 3.6. Persons Deemed Certificateholders. Every Person by virtue
of becoming a Certificateholder or Owner in accordance with this Agreement shall
be deemed to be bound by the terms of this Agreement. Prior to due presentation
of a Certificate for registration of transfer, Owner Trustee or Certificate
Registrar may treat the Person in whose name any Certificate shall be registered
in the Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.2 and for all other purposes
whatsoever, and neither Owner Trustee nor Certificate Registrar shall be bound
by any notice to the contrary.
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SECTION 3.7. Access to List of Certificateholders' Names and Addresses.
Owner Trustee shall furnish or cause to be furnished to Servicer, Depositor or
Indenture Trustee, within 15 days after receipt by Owner Trustee of a request
therefor from Servicer, Depositor or Indenture Trustee in writing, a list, in
such form as Servicer, Depositor or Indenture Trustee may reasonably require, of
the names and addresses of the Certificateholders as of the most recent Record
Date. If three or more Holders of Certificates, or one or more Holders of
Certificates evidencing not less than 25% of the Certificate Balance, apply in
writing to Owner Trustee, and such application states that the applicants desire
to communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates and such application is accompanied by
a copy of the communication that such applicants propose to transmit, then Owner
Trustee shall, within five Business Days after the receipt of such application,
afford such applicants access during normal business hours to the current list
of Certificateholders. Each Holder, by receiving and holding a Certificate,
shall be deemed to have agreed not to hold Depositor, Certificate Registrar or
Owner Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 3.8. Maintenance of Office or Agency. Owner Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon Owner Trustee in
respect of the Certificates and the Basic Documents may be served. Owner Trustee
initially designates ____________________, ________________, New York, New York
________, as its principal corporate trust office for such purposes. Owner
Trustee shall give prompt written notice to Depositor and to the
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 3.9. Appointment of Paying Agent. Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.2 and shall report the amounts of such distributions to
Owner Trustee. Any Paying Agent shall have the revocable power to withdraw funds
from the Certificate Distribution Account for the purpose of making the
distributions referred to above. Owner Trustee may revoke such power and remove
Paying Agent if Owner Trustee determines in its sole discretion that Paying
Agent shall have failed to perform its obligations under this Agreement in any
material respect. Paying Agent shall initially be ___________________, and any
co-paying agent chosen by _____________________, and acceptable to Owner
Trustee. Paying Agent shall be permitted to resign upon 30 days' written notice
to Owner Trustee and Servicer. In the event that ___________________ shall no
longer be Paying Agent, Owner Trustee shall appoint a successor to act as Paying
Agent (which shall be a bank or trust company). Owner Trustee shall
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cause such successor Paying Agent or any additional Paying Agent appointed by
Owner Trustee to execute and deliver to Owner Trustee an instrument in which
such successor Paying Agent or additional Paying Agent shall agree with Owner
Trustee that as Paying Agent, such successor Paying Agent or additional Paying
Agent will hold all sums, if any, held by it for payment to the
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders. Paying Agent
shall return all unclaimed funds to Owner Trustee and upon removal of a Paying
Agent such Paying Agent shall also return all funds in its possession to Owner
Trustee. The provisions of Sections 7.1, 7.3, 7.4 and 8.1 shall apply to Owner
Trustee also in its role as Paying Agent, for so long as Owner Trustee shall act
as Paying Agent and, to the extent applicable, to any other paying agent
appointed hereunder. Any reference in this Agreement to Paying Agent shall
include any co-paying agent unless the context requires otherwise.
SECTION 3.10. [Reserved]
SECTION 3.11. Book-Entry Certificates. The Certificates, upon original
issuance, will be issued in the form of a typewritten Certificate or
Certificates representing Book-Entry Certificates, to be delivered to The
Depository Trust Company, the initial Clearing Agency, by or on behalf of
Issuer. Such Book-Entry Certificate or Certificates shall initially be
registered on the Certificate Register in the name of Cede & Co., the nominee
of the initial Clearing Agency, and no beneficial owner will receive a
Definitive Certificate representing such beneficial owner's interest in such
Certificate, except as provided in Section 3.13. Unless and until Definitive
Certificates have been issued to beneficial owners pursuant to Section 3.13:
(a) the provisions of this Section shall be in full force and
effect;
(b) Certificate Registrar, each Paying Agent and Owner Trustee
shall be entitled to deal with the Clearing Agency for all purposes of
this Agreement relating to the Book-Entry Certificates (including the
payment of principal of and interest on the Book-Entry Certificates and
the giving of instructions or directions to Owners of Book-Entry
Certificates) as the sole Holder of Book-Entry Certificates and shall
have no obligations to Owners thereof;
(c) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this
Section shall control;
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(d) the rights of Owners of the Book-Entry Certificates shall
be exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Owners and the
Clearing Agency and/or Clearing Agency Participants or Persons acting
through Clearing Agency Participants. Pursuant to the Certificate
Depository Agreement, unless and until Definitive Certificates are
issued pursuant to Section 3.13, the initial Clearing Agency will make
book-entry transfers among Clearing Agency Participants and receive and
transmit payments of principal of and interest on the Book-Entry
Certificates to such Clearing Agency Participants; and
(e) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Holders of Certificates
evidencing a specified percentage of the Certificate Balance, the
Clearing Agency shall be deemed to represent such percentage only to
the extent that it has received instructions to such effect from Owners
and/or Clearing Agency Participants or Persons acting through Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Book-Entry Certificates
and has delivered such instructions to Owner Trustee.
SECTION 3.12. Notices to Clearing Agency. Whenever a notice or other
communication to Owners is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Owners pursuant to Section
3.13, Owner Trustee and each Paying Agent shall give all such notices and
communications specified herein to be given to Owners to the Clearing Agency,
and shall have no obligations to Owners.
SECTION 3.13. Definitive Certificates. If (a) Servicer advises Owner
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities with respect to the Certificates, and
Servicer is unable to locate a qualified successor, (b) Servicer at its option
advises Owner Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency or (c) after the occurrence of an Event of
Default, Owners of Certificates representing beneficial interests aggregating at
least a majority of the Certificate Balance advise the Clearing Agency and Owner
Trustee in writing that the continuation of a book-entry system through the
Clearing Agency is no longer in the best interest of Owners of Certificates,
then the Clearing Agency shall notify all Owners and Owner Trustee of the
occurrence of any such event and of the availability of the Definitive
Certificates to Owners requesting the same. Upon surrender to Owner Trustee of
the typewritten Certificate or Certificates representing the Book Entry
Certificates by the Clearing Agency, accompanied by registration instructions,
Owner Trustee shall execute and authenticate, or cause to be authenticated, the
Definitive Certificates in accordance with the
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instructions of the Clearing Agency. Neither Certificate Registrar nor Owner
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates, Owner Trustee and each Paying
Agent shall recognize the Holders of the Definitive Certificates as
Certificateholders. The Definitive Certificates shall be printed, lithographed
or engraved or may be produced in any other manner as is reasonably acceptable
to Owner Trustee, as evidenced by its execution thereof.
ARTICLE IV ACTIONS BY OWNER TRUSTEE.
SECTION 4.1. Prior Notice to Owners with Respect to Certain Matters.
With respect to the following matters, Owner Trustee shall not take action
unless at least 30 days before the taking of such action, Owner Trustee shall
have notified the Certificateholders in writing of the proposed action and the
Certificateholders shall not have notified Owner Trustee in writing prior to the
30th day after such notice is given that such Certificateholders have withheld
consent or provided alternative direction:
(a) the initiation of any material claim or lawsuit by Issuer
(except claims or lawsuits brought in connection with the collection of
the Receivables) and the compromise of any material action, claim or
lawsuit brought by or against Issuer (except with respect to the
aforementioned claims or lawsuits for collection of the Receivables);
(b) the election by Issuer to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed
under the Business Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is not required
and such amendment materially adversely affects the interest of the
Certificateholders;
(e) the amendment, change or modification of the Sale and
Servicing Agreement or the Administration Agreement, except to cure any
ambiguity or defect or to amend or supplement any provision in a manner
that would not materially adversely affect the interests of the
Certificateholders; or
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(f) the appointment pursuant to the Indenture of a successor
Indenture Trustee or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee or Certificate Registrar
of its obligations under the Indenture or this Agreement, as
applicable.
Owner Trustee shall notify the Certificateholders in writing of any appointment
of a successor Paying Agent or Certificate Registrar within five Business Days
thereof.
SECTION 4.2. Action by Certificateholders with Respect to Certain
Matters. Owner Trustee shall not have the power, except upon the direction of
the Certificateholders, to (a) remove Servicer under the Sale and Servicing
Agreement pursuant to Section 8.1 thereof, (b) except as expressly provided in
the Basic Documents, sell the Receivables after the termination of the
Indenture, (c) remove the Administrator under the Administration Agreement
pursuant to Section 9 thereof or (d) appoint a successor Administrator pursuant
to Section 9 of the Administration Agreement. Owner Trustee shall take the
actions referred to in the preceding sentence only upon written instructions
signed by the Certificateholders.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.
Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to Issuer until the Outstanding Amount of all the Notes has
been reduced to zero and without the unanimous prior approval of all
Certificateholders and the delivery to Owner Trustee by each such
Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that Issuer is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power. The
Certificateholders shall not direct Owner Trustee to take or refrain from taking
any action if such action or inaction would be contrary to any obligation of
Issuer or Owner Trustee under this Agreement or any of the Basic Documents or
would be contrary to Section 2.3 nor shall Owner Trustee be obligated to follow
any such direction, if given.
SECTION 4.5. Majority Control. Except as expressly provided herein, any
action that may be taken by the Certificateholders under this Agreement may be
taken by the Holders of Certificates evidencing not less than a majority of the
Certificate Balance. Except as expressly provided herein, any written notice of
the Certificateholders delivered pursuant to this Agreement shall be effective
if signed by Holders of Certificates evidencing not less than a majority of the
Certificate Balance at the time of the delivery of such notice.
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ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES.
SECTION 5.1. Establishment of Certificate Distribution Account. Owner
Trustee, for the benefit of the Certificateholders, shall establish and maintain
in the name of Issuer an Eligible Deposit Account (the "Certificate Distribution
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholders. Except as otherwise
provided herein, the Certificate Distribution Account shall be under the sole
dominion and control of Owner Trustee for the benefit of the Certificateholders.
SECTION 5.2. Application of Funds in Certificate Distribution Account.
(a) On each Distribution Date, Owner Trustee will, based on the information
contained in Servicer's Report delivered on the related Determination Date
pursuant to Section 4.9 of the Sale and Servicing Agreement, distribute to
Certificateholders, to the extent of the funds available, amounts deposited in
the Certificate Distribution Account pursuant to Section 5.5 of the Sale and
Servicing Agreement on such Distribution Date in the following order of
priority:
(i) first, to the Certificateholders, on a pro rata
basis, an amount equal to the Certificateholders' Interest
Distributable Amount; and
(ii) second, to the Certificateholders, on a pro rata
basis, an amount equal to the Certificateholders' Principal
Distributable Amount.
(b) On each Distribution Date, Owner Trustee shall send, or
cause to be sent, to each Certificateholder the statement provided to
Owner Trustee by Servicer pursuant to Section 5.6 of the Sale and
Servicing Agreement on such Distribution Date.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Certificateholder, such
tax shall reduce the amount otherwise distributable to the
Certificateholder in accordance with this Section. Owner Trustee is
hereby authorized and directed to retain from amounts otherwise
distributable to the Certificateholders sufficient funds for the
payment of any tax that is legally owed by Issuer (but such
authorization shall not prevent Owner Trustee from contesting any such
tax in appropriate proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The amount
of any withholding tax imposed with respect to a Certificateholder
shall be treated as cash distributed to such Certificateholder at the
time it is withheld by Issuer and remitted to the appropriate taxing
authority. If there is a possibility
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that withholding tax is payable with respect to a distribution (such as
a distribution to a non-United States Certificateholder), Owner Trustee
may in its sole discretion withhold such amounts in accordance with
this clause (c). In the event that an Owner wishes to apply for a
refund of any such withholding tax, Owner Trustee shall reasonably
cooperate with such Certificateholder in making such claim so long as
such Certificateholder agrees to reimburse Owner Trustee for any
out-of-pocket expenses incurred.
SECTION 5.3. Method of Payment. Subject to Section 9.1(c),
distributions required to be made to Certificateholders on any Distribution Date
shall be made to each Certificateholder of record on the preceding Record Date
either by wire transfer, in immediately available funds, to the account of such
Holder at a bank or other entity having appropriate facilities therefor, if (a)
such Certificateholder shall have provided to Certificate Registrar appropriate
written instructions at least five Business Days prior to such Distribution Date
and such Holder's Certificates in the aggregate evidence an amount of not less
than $1,000,000 or (b) such Certificateholder is the Depositor, or an Affiliate
thereof, or, if not, by check mailed to such Certificateholder at the address of
such Holder appearing in the Certificate Register; provided that, unless
Definitive Certificates have been issued pursuant to Section 3.13, with respect
to Certificates registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), distributions will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Notwithstanding the foregoing, the final
distribution in respect of any Certificate (whether on the Final Scheduled
Distribution Date or otherwise) will be payable only upon presentation and
surrender of such Certificate at the office or agency maintained for that
purpose by Owner Trustee pursuant to Section 3.8.
SECTION 5.4. No Segregation of Monies; No Interest. Subject to Sections
5.1 and 5.2, monies received by Owner Trustee or any Paying Agent hereunder need
not be segregated in any manner except to the extent required by law or the
Indenture or the Sale and Servicing Agreement and may be deposited under such
general conditions as may be prescribed by law, and neither Owner Trustee nor
any Paying Agent shall be liable for any interest thereon.
SECTION 5.5. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Owner Trustee shall
(a) maintain (or cause to be maintained) the books of Issuer on a calendar year
basis on the accrual method of accounting, (b) deliver (or cause to be
delivered) to each Certificateholder, as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1) to enable each Certificateholder to prepare its Federal and state
income tax returns, (c) prepare and file such tax returns relating to Issuer
(including a
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partnership information return, Form 1065), and make such elections as may from
time to time be required or appropriate under any applicable state or Federal
statute or rule or regulation thereunder so as to maintain the Trust's
characterization as a partnership for Federal income tax purposes, (d) cause
such tax returns to be signed in the manner required by law and (e) collect or
cause to be collected any withholding tax as described in and in accordance with
Section 5.2(c) with respect to income or distributions to Certificateholders.
Owner Trustee shall cooperate with the Depositor in making all elections
pursuant to this Section as directed in writing by the Depositor. Owner Trustee
shall elect under Section 1278 of the Code to include in income currently any
market discount that accrues with respect to the Receivables. Owner Trustee
shall not make the election provided under Section 754 of the Code.
SECTION 5.6. Signature on Returns; Tax Matters Partner. (a)
Notwithstanding the provisions of Section 5.5, Depositor shall sign on behalf of
Issuer the tax returns of Issuer, unless applicable law requires Owner Trustee
to sign such documents, in which case such documents shall be signed by Owner
Trustee at the written direction of Depositor.
(b) Depositor shall be the "tax matters partner" of Issuer
pursuant to the Code.
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE.
SECTION 6.1. General Authority. Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which Issuer is named as
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which Issuer is named as a party and any
amendment thereto, in each case, in such form as Depositor shall approve, as
evidenced conclusively by Owner Trustee's execution thereof, and on behalf of
Issuer at the written direction of Depositor, to direct Indenture Trustee to
authenticate and deliver Class A-1 Notes in the aggregate principal amount of
$___________, and Class A-2 Notes in the aggregate principal amount of
$___________. In addition to the foregoing, Owner Trustee is authorized, but
shall not be obligated, to take all actions required of Issuer pursuant to the
Basic Documents. Owner Trustee is further authorized from time to time to take
such action as Servicer or Administrator recommends or directs in writing with
respect to the Basic Documents, except to the extent that this Agreement
expressly requires the consent of Certificateholders for such action.
SECTION 6.2. General Duties. It shall be the duty of Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the other Basic Documents and to administer
Issuer in the interest of Owners, subject to the Basic Documents and in
accordance with
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the provisions of this Agreement. Notwithstanding the foregoing, Owner Trustee
shall be deemed to have discharged its duties and responsibilities hereunder and
under the Basic Documents to the extent Administrator has agreed in the
Administration Agreement to perform any act or to discharge any duty of Owner
Trustee or Issuer hereunder or under any Basic Document, and Owner Trustee shall
not be liable for the default or failure of Administrator to carry out its
obligations under the Administration Agreement. Except as expressly provided in
the Basic Documents, the Owner Trustee shall have no obligation to administer,
service or collect the Receivables or to maintain, monitor or otherwise
supervise the administration, servicing or collection of the Receivables.
SECTION 6.3. Action upon Instruction. (a) Subject to Article IV, the
Certificateholders may, by written instruction, direct Owner Trustee in the
management of Issuer. Such direction may be exercised at any time by written
instruction of the Certificateholders pursuant to Article IV.
(b) Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if Owner Trustee shall have
obtained an Opinion of Counsel to the effect that such action is likely
to result in liability on the part of Owner Trustee or is contrary to
the terms hereof or of any Basic Document or is otherwise contrary to
law and a copy of such opinion has been provided to Seller and
Servicer.
(c) Whenever Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of
this Agreement or any Basic Document or is unsure as to the application
of any provision of this Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that
this Agreement permits any determination by Owner Trustee or is silent
or is incomplete as to the course of action that Owner Trustee is
required to take with respect to a particular set of facts, Owner
Trustee shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Certificateholders
requesting instruction as to the course of action to be adopted or
application of such provision, and to the extent Owner Trustee acts or
refrains from acting in good faith in accordance with any written
instruction of the Certificateholders received, Owner Trustee shall not
be liable on account of such action or inaction to any Person. If Owner
Trustee shall not have received appropriate instruction within ten days
of such notice (or within such shorter period of time as reasonably may
be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the
Basic Documents, as it shall deem to be in the best interests of the
Certificate-
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holders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions. Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which Owner Trustee is a party, except as expressly provided by the terms of
this Agreement or in any document or written instruction received by Owner
Trustee pursuant to Section 6.3; and no implied duties or obligations shall be
read into this Agreement or any Basic Document against Owner Trustee. Owner
Trustee shall have no responsibility for filing any financing or continuation
statement in any public office at any time or to otherwise perfect or maintain
the perfection of any security interest or lien granted to it hereunder or to
prepare or file any Commission filing for Issuer or to record this Agreement or
any Basic Document. Owner Trustee nevertheless agrees that it will, at its own
cost and expense, promptly take all action as may be necessary to discharge any
Liens on any part of the Owner Trust Estate that result from actions by, or
claims against, Owner Trustee that are not related to the ownership or the
administration of the Owner Trust Estate.
SECTION 6.5. No Action Except under Specified Documents or
Instructions. Owner Trustee shall not manage, control, use, sell, dispose of or
otherwise deal with any part of the Owner Trust Estate except (i) in accordance
with the powers granted to and the authority conferred upon Owner Trustee
pursuant to this Agreement, (ii) in accordance with the Basic Documents and
(iii) in accordance with any document or instruction delivered to Owner Trustee
pursuant to Section 6.3.
SECTION 6.6. Restrictions. Owner Trustee shall not take any action (a)
that is inconsistent with the purposes of Issuer set forth in Section 2.3 or (b)
that, to the actual knowledge of Owner Trustee, would (i) affect the treatment
of the Notes as indebtedness for federal income or state income or franchise tax
purposes, (ii) be deemed to cause a taxable exchange of the Notes for federal
income or state income or franchise tax purposes or (iii) cause Issuer or any
portion thereof to be taxable as an association or publicly traded partnership
taxable as a corporation for federal income or state income or franchise tax
purposes. The Certificateholders shall not direct Owner Trustee to take action
that would violate the provisions of this Section.
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ARTICLE VII CONCERNING OWNER TRUSTEE.
SECTION 7.1. Acceptance of Trusts and Duties. Owner Trustee accepts the
trusts hereby created and agrees to perform its duties hereunder with respect to
such trusts but only upon the terms of this Agreement. Owner Trustee also agrees
to disburse all moneys actually received by it constituting part of the Owner
Trust Estate upon the terms of the Basic Documents and this Agreement. Owner
Trustee shall not be answerable or accountable hereunder or under any Basic
Document under any circumstances, except (i) for its own willful misconduct, bad
faith or negligence or (ii) in the case of the inaccuracy of any representation
or warranty contained in Section 7.3 expressly made by Owner Trustee. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(a) Owner Trustee shall not be liable for any error of
judgment made by a Responsible Officer of Owner Trustee;
(b) Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the
instructions of Depositor, Servicer, Administrator or any
Certificateholder;
(c) no provision of this Agreement or any Basic Document shall
require Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any Basic Document if Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured or provided to it;
(d) under no circumstances shall Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes or amounts
distributable on the Certificates;
(e) Owner Trustee shall not be responsible for or in respect
of the validity or sufficiency of this Agreement or for the due
execution hereof by Depositor or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for
or in respect of the validity or sufficiency of the Basic Documents,
other than the certificate of authentication on the Certificates, and
Owner Trustee shall in no event assume or incur any liability, duty or
obligation to any Noteholder or to any Certificateholder, other than as
expressly provided for herein and in the Basic Documents;
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(f) Owner Trustee shall not be liable for the default or
misconduct of Indenture Trustee, Servicer or Administrator under any of
the Basic Documents or otherwise and Owner Trustee shall have no
obligation or liability to perform the obligations of Issuer under this
Agreement or the Basic Documents that are required to be performed by
Indenture Trustee under the Indenture, Servicer under the Sale and
Servicing Agreement or Administrator under the Administration
Agreement; and
(g) Owner Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any Basic Document, at
the request, order or direction of any of the Certificateholders,
unless such Certificateholders have offered to Owner Trustee security
or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by Owner Trustee therein or thereby.
The right of Owner Trustee to perform any discretionary act enumerated
in this Agreement or in any Basic Document shall not be construed as a
duty, and Owner Trustee shall not be answerable for other than its
negligence, bad faith or willful misconduct in the performance of any
such act.
SECTION 7.2. Furnishing of Documents. Owner Trustee shall furnish to
the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to Owner Trustee under
the Basic Documents.
SECTION 7.3. Representations and Warranties. Owner Trustee hereby
represents and warrants to Depositor, for the benefit of the Certificateholders,
that:
(a) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware and
having an office within the State of Delaware. It has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(c) This Agreement constitutes a legal, valid and binding
obligation of Owner Trustee, enforceable against Owner Trustee in
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accordance with its respective terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation and other similar laws affecting enforcement
of the rights of creditors of banks generally and to equitable
limitations on the availability of specific remedies.
(d) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of Owner Trustee or
any judgment or order binding on it, or constitute any default under
its charter documents or by-laws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound.
SECTION 7.4. Reliance; Advice of Counsel. (a) Owner Trustee shall incur
no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. Owner Trustee may accept a certified copy of a
resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein,
Owner Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer, secretary or other
authorized officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this
Agreement or the Basic Documents, Owner Trustee (i) may act directly or
through its agents or attorneys pursuant to agreements entered into
with any of them, but Owner Trustee shall not be liable for the conduct
or misconduct of such agents or attorneys selected with reasonable care
and (ii) may consult with counsel, accountants and other skilled
persons knowledgeable in the relevant area to be selected with
reasonable care and employed by it. Owner Trustee shall not be liable
for anything done, suffered or omitted in good faith by it in
accordance with the written opinion or advice of any such counsel,
accountants or other such persons and not contrary to this Agreement or
any Basic Document.
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SECTION 7.5. Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created ____________________
acts solely as Owner Trustee hereunder and not in its individual capacity and
all Persons having any claim against Owner Trustee by reason of the transactions
contemplated by this Agreement or any Basic Document shall look only to the
Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Certificates or Receivables.
The recitals contained herein and in the Certificates (other than the signature
and countersignature of Owner Trustee on the Certificates) shall be taken as the
statements of Depositor, and Owner Trustee assumes no responsibility for the
correctness thereof. Owner Trustee makes no representations as to the validity
or sufficiency of this Agreement, of any Basic Document or of the Certificates
(other than the signature and countersignature of Owner Trustee on the
Certificates) or the Notes, or of any Receivable or related documents. Owner
Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity and enforceability of any Receivable, or the
perfection and priority of any security interest created by any Receivable in
any Financed Vehicle or the maintenance of any such perfection and priority, or
for or with respect to the sufficiency of the Owner Trust Estate or its ability
to generate the payments to be distributed to Certificateholders under this
Agreement or the Noteholders under the Indenture, including: the existence,
condition and ownership of any Financed Vehicle; the existence and
enforceability of any insurance thereon; the existence and contents of any
Receivable on any computer or other record thereof; the validity of the
assignment of any Receivable to Issuer or of any intervening assignment; the
completeness of any Receivable; the performance or enforcement of any
Receivable; the compliance by Depositor or Servicer with any warranty or
representation made under any Basic Document or in any related document or the
accuracy of any such warranty or representation or any action of Indenture
Trustee, Administrator or Servicer or any subservicer taken in the name of Owner
Trustee.
SECTION 7.7. Owner Trustee May Own Certificates and Notes. Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates or Notes and may deal with Depositor, Indenture Trustee,
Administrator and Servicer in banking transactions with the same rights as it
would have if it were not Owner Trustee.
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE.
SECTION 8.1. Owner Trustee's Fees and Expenses. Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon in writing before the date hereof between Depositor and
Owner Trustee, and Owner Trustee shall be entitled to be reimbursed by
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Depositor for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as Owner Trustee may employ in connection with the exercise
and performance of its rights and its duties hereunder.
SECTION 8.2. Indemnification. Depositor shall be liable as primary
obligor for, and shall indemnify Owner Trustee and its successors, assigns,
agents and servants (collectively, the "Indemnified Parties") from and against,
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against Owner Trustee or any Indemnified Party in any way relating to
or arising out of this Agreement, the Basic Documents, the Owner Trust Estate,
the administration of the Owner Trust Estate or the action or inaction of Owner
Trustee hereunder, except only that Depositor shall not be liable for or
required to indemnify Owner Trustee from and against Expenses arising or
resulting from any of the matters described in the third sentence of Section
7.1. The indemnities contained in this Section shall survive the resignation or
termination of Owner Trustee or the termination of this Agreement. If any suit,
action, proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against any Indemnified Party in
respect of which indemnity may be sought pursuant to this Section, such
Indemnified Party shall promptly notify Depositor in writing, and Depositor upon
request of the Indemnified Party, shall retain counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party and any others
Depositor may designate in such proceeding and shall pay the reasonable fees and
expenses of such counsel related to such proceeding. Depositor shall not be
liable for any settlement of any claim or proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, Depositor agrees to indemnify any Indemnified Party
from and against any loss or liability by reason of such settlement or judgment.
Depositor shall not, without the prior written consent of the Indemnified Party,
effect any settlement of any pending or threatened proceeding in respect of
which any Indemnified Party is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Party from all liability
on claims that are the subject matter of such proceeding.
SECTION 8.3. Payments to Owner Trustee. Any amounts paid to Owner
Trustee pursuant to this Article VIII shall be deemed not to be a part of the
Owner Trust Estate immediately after such payment.
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ARTICLE IX TERMINATION OF TRUST AGREEMENT.
SECTION 9.1. Termination of Trust Agreement. (a) This Agreement (other
than Article VIII) and Issuer shall terminate and be of no further force or
effect, upon the final distribution by Owner Trustee of all moneys or other
property or proceeds of the Owner Trust Estate in accordance with the terms of
the Indenture, the Sale and Servicing Agreement and Article V. The bankruptcy,
liquidation, dissolution, death or incapacity of any Certificateholder or Owner
shall not (x) operate to terminate this Agreement or Issuer, nor (y) entitle
such Certificateholder's or Owner's legal representatives or heirs to claim an
accounting or to take any action or proceeding in any court for a partition or
winding up of all or any part of Issuer or Owner Trust Estate nor (z) otherwise
affect the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in clause (a), neither Depositor nor
any Certificateholder shall be entitled to revoke or terminate the
Trust.
(c) Notice of any termination of Issuer, specifying the
Distribution Date upon which the Certificateholders shall surrender
their Certificates to Paying Agent for payment of the final
distribution and cancellation, shall be given by Owner Trustee by
letter to Certificateholders mailed within five Business Days of
receipt of notice of such termination from Servicer given pursuant to
Section 9.1(c) of the Sale and Servicing Agreement, stating (i) the
Distribution Date upon or with respect to which final payment of the
Certificates shall be made upon presentation and surrender of the
Certificates at the office of Paying Agent therein designated, (ii) the
amount of any such final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the
Certificates at the office of Paying Agent therein specified. Owner
Trustee shall give such notice to Certificate Registrar (if other than
Owner Trustee) and Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of the
Certificates, Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date
pursuant to Section 5.2.
If all of the Certificateholders shall not surrender their Certificates
for cancellation within six months after the date specified in the above
mentioned written notice, Owner Trustee shall give a second written notice to
the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, Owner Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their
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Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement. Any funds remaining in
Issuer after exhaustion of such remedies shall be distributed, subject to
applicable escheat laws, by Owner Trustee to Depositor.
(d) Upon the winding up of Issuer and its termination, Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance
with the provisions of Section 3810 of the Business Trust Statute.
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL
OWNER TRUSTEES.
SECTION 10.1. Eligibility Requirements for Owner Trustee. Owner Trustee
shall at all times be a corporation (i) authorized to exercise corporate trust
powers, (ii) having a combined capital and surplus of at least $50,000,000 and
(iii) subject to supervision or examination by Federal or state authorities. If
such corporation shall publish reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time Owner Trustee shall cease to be eligible in accordance with the
provisions of this Section, Owner Trustee shall resign immediately in the manner
and with the effect specified in Section 10.2. In addition, at all times Owner
Trustee or a co-trustee shall be a person that satisfies the requirements of
Section 3807(a) of the Business Trust Statute (the "Delaware Trustee").
SECTION 10.2. Resignation or Removal of Owner Trustee. Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to Administrator. Upon receiving such notice of
resignation, Administrator shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Owner Trustee and one copy to the successor Owner
Trustee. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee; provided,
however, that such right to appoint or to petition for the appointment of any
such successor shall in no event relieve the resigning Owner Trustee from any
obligations otherwise imposed on it under the Basic Documents until such
successor has in fact assumed such appointment.
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If at any time Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.1 and shall fail to resign after written
request therefor by Administrator, or if at any time Owner Trustee shall be
legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver
of Owner Trustee or of its property shall be appointed, or any public officer
shall take charge or control of Owner Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then Administrator
may remove Owner Trustee. If Administrator shall remove Owner Trustee under the
authority of the immediately preceding sentence, Administrator shall promptly
appoint a successor Owner Trustee by written instrument, in duplicate, one copy
of which instrument shall be delivered to the outgoing Owner Trustee so removed
and one copy to the successor Owner Trustee and payment of all fees owed to the
outgoing Owner Trustee.
Any resignation or removal of Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all fees and expenses owed to
the outgoing Owner Trustee and the filing of a certificate of amendment to the
Certificate of Trust if required by the Business Trust Statute. Administrator
shall provide notice of such resignation or removal of Owner Trustee to each of
the Rating Agencies.
SECTION 10.3. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to
Administrator and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and Administrator and the predecessor Owner Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, Administrator shall mail notice of the successor of such Owner
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Trustee to all Certificateholders, Trustee, the Noteholders and the Rating
Agencies. If Administrator shall fail to mail such notice within 10 days after
acceptance of appointment by the successor Owner Trustee, the successor Owner
Trustee shall cause such notice to be mailed at the expense of Administrator.
SECTION 10.4. Merger or Consolidation of Owner Trustee. Any corporation
into which Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of Owner
Trustee, shall, 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, be the successor of Owner Trustee hereunder; provided that such
corporation shall be eligible pursuant to Section 10.1; and provided further
that Owner Trustee shall mail notice of such merger or consolidation to the
Rating Agencies not less than fifteen days prior to the effective date thereof.
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Financed Vehicle may at the time be located,
Administrator and Owner Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
Owner Trustee to act as co-trustee, jointly with Owner Trustee, or separate
trustee or separate trustees, of all or any part of the Owner Trust Estate, and
to vest in such Person, in such capacity, such title to Issuer, or any part
thereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as Administrator and Owner Trustee may
consider necessary or desirable. If Administrator shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, Owner
Trustee alone shall have the power to make such appointment. If Delaware Trustee
shall become incapable of acting, resign or be removed, unless Owner Trustee is
qualified to act as Delaware Trustee, a successor co-trustee shall promptly be
appointed in the manner specified in this Section 10.5 to act as Delaware
Trustee. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon Owner Trustee shall be conferred
upon and
27
<PAGE> 33
exercised or performed by Owner Trustee and such separate
trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act
separately without Owner Trustee joining in such act), except
to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, Owner Trustee
shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and
obligations (including the holding of title to Issuer or any
portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee,
but solely at the direction of Owner Trustee;
(ii) no trustee under this Agreement shall be
personally liable by reason of any act or omission of any
other trustee under this Agreement; and
(iii) Administrator and Owner Trustee acting jointly
may at any time accept the resignation of or remove any
separate trustee or co-trustee.
Any notice, request or other writing given to Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with Owner Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, Owner Trustee. Each
such instrument shall be filed with Owner Trustee and a copy thereof given to
Administrator.
Any separate trustee or co-trustee may at any time appoint Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by Owner
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
ARTICLE XI MISCELLANEOUS.
SECTION 11.1. Supplements and Amendments. (a) This Agreement may
be amended by Depositor and Owner Trustee, with prior written notice to the
28
<PAGE> 34
Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders:
(i) to cure any ambiguity or defect, to correct or
supplement any provisions in this Agreement or for the purpose
of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of
modifying in any manner the rights of the Noteholders or the
Certificateholders; provided that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder or
Certificateholder;
(ii) (A) to add, modify or eliminate such provisions
as may be necessary or advisable in order to enable all or a
portion of Issuer to qualify as, and to permit an election to
be made to cause all or a portion of Issuer to be treated as,
a "financial asset securitization investment trust" as
described in the provisions of the "Small Business Job
Protection Act of 1996," or to enable all or a portion of the
Issuer to qualify and an election to be made for similar
treatment under such comparable subsequent federal income tax
provisions as may ultimately be enacted into law, and (B) in
connection with any such election, to modify or eliminate
existing provisions set forth in this Agreement relating to
the intended federal income tax treatment of the Notes or
Certificates and Issuer in the absence of the election; it
being a condition to any such amendment that each Rating
Agency shall have notified the Depositor, the Servicer,
Indenture Trustee and the Owner Trustee in writing that the
amendment will not result in a reduction or withdrawal of the
rating of any outstanding Notes or Certificates with respect
to which it is a Rating Agency; and
(iii) to add, modify or eliminate such provisions as
may be necessary or advisable in order to enable (a) the
transfer to Issuer of all or any portion of the Receivables to
be derecognized under GAAP by Depositor to Issuer, (b) Issuer
to avoid becoming a member of Seller's consolidated group
under GAAP or (c) the Depositor, any Seller Affiliate or any
of their Affiliates to otherwise comply with or obtain more
favorable treatment under any law or regulation or any
accounting rule or principle; it being a condition to any such
amendment that each Rating Agency shall have notified the
Depositor, the Servicer, Indenture Trustee and the Owner
Trustee in writing that the amendment will not result in a
reduction or withdrawal of the rating of any outstanding Notes
or Certificates with respect to which it is a Rating Agency.
29
<PAGE> 35
(b) This Agreement may also be amended from time to time by Depositor
and Owner Trustee, with prior written notice to the Rating Agencies, with the
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and, to the extent affected thereby, the consent
of the Holders of Certificates evidencing not less than a majority of the
Certificate Balance for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided that no such amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Receivables or distributions that shall be required to be made for the benefit
of the Noteholders or the Certificateholders or (b) reduce the aforesaid
percentage of the Outstanding Amount of the Notes and the Certificate Balance
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Notes and Holders of all outstanding Certificates.
(c) Promptly after the execution of any such amendment or consent,
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, Indenture Trustee and each of
the Rating Agencies.
(d) It shall not be necessary for the consent of Certificateholders,
the Noteholders or Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent, where required, shall approve the substance thereof. The manner
of obtaining such consents (and any other consents of Certificateholders
provided for in this Agreement or in any other Basic Document) and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as Owner Trustee may prescribe.
(e) Promptly after the execution of any amendment to the Certificate of
Trust, Owner Trustee shall cause the filing of such amendment with the Secretary
of State.
(f) Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, Owner Trustee shall be entitled to receive and rely upon
an Opinion of Counsel stating that the execution of such amendment is authorized
or permitted by this Agreement and that all conditions precedent to the
execution and delivery of such amendment have been satisfied. Owner Trustee may,
but shall not be obligated to, enter into any such amendment which affects Owner
Trustee's own rights, duties or immunities under this Agreement or otherwise.
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of
30
<PAGE> 36
the Owner Trust Estate. The Certificateholders shall be entitled to receive
distributions with respect to their undivided ownership interest therein only in
accordance with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title or interest of the Certificateholders to and in
their ownership interest in the Owner Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
SECTION 11.3. Limitations on Rights of Others. Except for Section 2.7,
the provisions of this Agreement are solely for the benefit of Owner Trustee,
Issuer, Depositor, Administrator, Certificateholders, Servicer and, to the
extent expressly provided herein, Indenture Trustee and the Noteholders, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 11.4. Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed certified mail, return receipt requested and shall be deemed to have
been duly given upon receipt, if to Owner Trustee, addressed to the Corporate
Trust Office; if to Depositor, addressed to _____________________________,
Attention: ___________; or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid,
at the address of such Holder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION 11.5. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.6. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
31
<PAGE> 37
SECTION 11.7. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, Depositor,
Owner Trustee and its successors and each Certificateholder and its successors
and permitted assigns, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by a Certificateholder shall bind
the successors and assigns of such Certificateholder.
SECTION 11.8. No Petition. Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder or Certificate Owner, by accepting a Certificate, and Trustee
and each Noteholder or Note Owner by accepting the benefits of this Agreement,
hereby covenants and agrees that they will not at any time institute against
Depositor, or join in any institution against Depositor of any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Certificates, the Notes, this
Agreement or any of the Basic Documents.
SECTION 11.9. No Recourse. Each Certificateholder or Certificate Owner
by accepting a Certificate acknowledges that such Certificateholder's or
Certificate Owner's Certificates represent beneficial interests in Issuer only
and do not represent interests in or obligations of Seller, Servicer,
Administrator, Depositor, Owner Trustee, Indenture Trustee or any Affiliate
thereof and no recourse may be had against such parties or their assets, except
as may be expressly set forth or contemplated in this Agreement, the
Certificates or the Basic Documents.
SECTION 11.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.12. Certificate Transfer Restrictions. The Certificates may
not be acquired by or for the account of or with assets of (i) an employee
benefit plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA")) that is subject to the provisions of Title 1 of
ERISA, (ii) a plan described in Section 4975(e)(1) of the Code, or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity
32
<PAGE> 38
(each, a "Benefit Plan"). By accepting and holding a Certificate, the Holder
thereof shall be deemed to have represented and warranted that it is not a
Benefit Plan and is not purchasing Certificates on behalf of a Benefit Plan.
SECTION 11.13. Servicer. Servicer is authorized to execute on behalf of
Issuer all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of Issuer to prepare, file or deliver pursuant
to the Basic Documents. Upon written request, Owner Trustee shall execute and
deliver to Servicer a power of attorney appointing Servicer as Issuer's agent
and attorney-in-fact to execute all such documents, reports, filings,
instruments, certificates and opinions.
33
<PAGE> 39
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized as of
the day and year first above written.
---------------------------,
as Owner Trustee
By:
------------------------------
Name:
Title:
KEY CONSUMER ACCEPTANCE
CORPORATION, as Depositor
By:
------------------------------
Name:
Title:
34
<PAGE> 40
EXHIBIT A
NUMBER $
R- CUSIP NO. _________
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE IN INSTALLMENTS AS
SET FORTH IN THE TRUST AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF THIS
CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.]
KEY AUTO FINANCE TRUST 199_-_
____% ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in certain distributions of Issuer,
as defined below, the property of which includes a pool of Motor Vehicle Loans
sold to Issuer by Key Consumer Acceptance Corporation.
(THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF KEY
CONSUMER ACCEPTANCE CORPORATION OR ANY OF ITS AFFILIATES, EXCEPT TO THE EXTENT
DESCRIBED BELOW.)
THIS CERTIFIES THAT is the registered owner of DOLLARS
nonassessable, fully-paid, beneficial ownership interest in certain
distributions of KEY AUTO FINANCE TRUST 199_-_ ("Issuer") formed by Key Consumer
Acceptance Corporation, a Delaware corporation ("Seller"). This Certificate has
a Certificate Rate of ____% per annum.
Exhibit A, Page 1
<PAGE> 41
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
- -------------- -------------------------
or
as Owner Trustee as Owner Trustee
By ___________________
Authenticating Agent
By______________________
Issuer was created pursuant to a Trust Agreement dated as of ________,
199_ (the "Trust Agreement"), between Seller and _______________________, as
owner trustee ("Owner Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not otherwise defined
herein, the capitalized terms used herein have the meanings assigned to them in
Appendix X to the Sale and Servicing Agreement among Issuer, Key Consumer
Acceptance Corporation, as Seller, and Key Bank USA, National Association, as
Servicer, dated as of _______ 199_, as the same may be amended or supplemented
from time to time.
This Certificate is one of the duly authorized Certificates designated
as "____% Asset Backed Certificates" (herein called the "Certificates"). Also
issued under the Indenture dated as of ________, 199_, between Issuer and
__________, as indenture trustee, are two classes of Notes designated as "Class
A-1 ______% Asset Backed Notes" (the "Class A-1 Notes"), and "Class A-2 ____%
Asset Backed Notes (the "Class A-2 Notes" and, together with the Class A-1
Notes, the "Notes"). This Certificate is issued under and is subject to the
terms, provisions and conditions of the Trust Agreement, to which Trust
Agreement the holder of this Certificate by virtue of the acceptance hereof
assents and by which such holder is bound.
The holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Sale and Servicing Agreement, the
Indenture and the Trust Agreement, as applicable.
It is the intent of Seller, Servicer, Depositor and Certificateholders
that, for purposes of Federal income taxes, Issuer will be treated as a
partnership and the Certificateholders (including Depositor) will be treated as
partners in that partnership. Depositor and the other Certificateholders by
acceptance of a
Exhibit A, Page 2
<PAGE> 42
Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Certificates for such tax purposes as partnership interests in
the Trust.
Each Certificateholder and Certificate Owner, by its acceptance of a
Certificate, covenants and agrees that such Certificateholder and Certificate
Owner will not at any time institute against Depositor, or join in any
institution against Depositor of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Certificates, the Notes, the Trust Agreement or any
of the Basic Documents.
The Certificates do not represent an obligation of, or an interest in,
Seller, Servicer, Administrator, Depositor, Owner Trustee or any Affiliates of
any of them and no recourse may be had against such parties or their assets,
except as may be expressly set forth or contemplated herein or in the Trust
Agreement, the Indenture or the Basic Documents.
The Certificates may not be acquired by or for the account of or with
the assets of (a) an employee benefit plan (as defined in Section 3(3) of ERISA)
that is subject to the provisions of Title 1 of ERISA, (b) a plan described in
Section 4975(e)(1) of the Code or (c) any entity whose underlying assets include
plan assets by reason of a plan's investment in the entity (each, a "Benefit
Plan"). By accepting and holding this Certificate, the Holder hereof shall be
deemed to have represented and warranted that it is not a Benefit Plan and is
not purchasing on behalf of a Benefit Plan.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of Owner Trustee, by manual signature, this
Certificate shall not entitle the holder hereof to any benefit under the Trust
Agreement or the Sale and Servicing Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Exhibit A, Page 3
<PAGE> 43
IN WITNESS WHEREOF, Owner Trustee, on behalf of Issuer and not in its
individual capacity, has caused this Certificate to be duly executed.
KEY AUTO FINANCE TRUST 199_-_
By: ____________________________,
not in its individual capacity,
but solely as Owner Trustee
Dated: By: ____________________________
Exhibit A, Page 4
<PAGE> 44
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip
code, of assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________________________ Attorney to transfer
said Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
---------------------*
Signature Guaranteed:
---------------------*
- ----------------------
* NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by a member firm of
the New York Stock Exchange or a commercial bank or trust company.
Exhibit A, Page 5
<PAGE> 45
EXHIBIT B
[FORM OF]
CERTIFICATE OF TRUST OF
KEY AUTO FINANCE TRUST 199_-_
THIS Certificate of Trust of Key Auto Finance Trust 199_-_ (the
"Trust"), dated as of _______, 199_, is being duly executed and filed by
_____________________, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, Section 3801
et seq.).
1. Name. The name of the business trust formed hereby is KEY
AUTO FINANCE TRUST 199_-_.
2. Delaware Trustee. The name and business address of the trustee
of the Trust resident in the State of Delaware is __________________.
3. This Certificate of Trust will be effective ________, 199_.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the
Trust, have executed this Certificate of Trust as of the date first above
written.
___________________________, not in its
individual capacity, but solely as owner
trustee of the Trust.
By:________________________________
Name:
Title:
Exhibit B, Page 1
<PAGE> 46
EXHIBIT C
CERTIFICATE DEPOSITORY AGREEMENT
Exhibit B, Page 2
<PAGE> 1
Exhibit 4.3
================================================================================
KEY CONSUMER ACCEPTANCE CORPORATION
Seller,
KEY BANK USA, NATIONAL ASSOCIATION
Servicer
and
_________________ BANK
Trustee
on behalf of the Holders
-------------------------------
POOLING AND SERVICING AGREEMENT
-------------------------------
Dated as of _______ __, 199
KEY AUTO FINANCE TRUST 199 -
____% Asset Backed Certificates, Class A
____% Asset Backed Certificates, Class B
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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<TABLE>
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<S> <C>
ARTICLE I. DEFINITIONS......................................................................................... 1
Section 1.1. Definitions.............................................................................. 1
Section 1.2. Other Interpretative Provisions.......................................................... 20
Section 1.3. Calculations............................................................................. 20
Section 1.4. References............................................................................... 21
Section 1.5. Action by or Consent of Holders.......................................................... 21
ARTICLE II. THE TRUST PROPERTY................................................................................. 21
Section 2.1. Conveyance of Trust Property............................................................. 21
Section 2.2. Representations and Warranties as to Each Receivable..................................... 21
Section 2.3. Representations and Warranties as to the Receivables
in the Aggregate and Actions of Seller............................................ 25
Section 2.4. Repurchase upon Breach................................................................... 26
Section 2.5. Custodian of Receivable Files............................................................ 26
ARTICLE III. ADMINISTRATION AND SERVICING OF TRUST
PROPERTY............................................................................. 29
Section 3.1. Duties of Servicer....................................................................... 29
Section 3.2. Collection of Receivable Payments........................................................ 31
Section 3.3. Realization upon Receivables............................................................. 31
Section 3.4. Physical Damage Insurance................................................................ 32
Section 3.5. Maintenance of Security Interests in Financed Vehicles................................... 33
Section 3.6. Covenants of Servicer.................................................................... 33
Section 3.7. Purchase by Servicer upon Breach......................................................... 34
Section 3.8. Servicing Compensation................................................................... 34
Section 3.9. Servicer's Report........................................................................ 35
Section 3.10. Annual Statement as to Compliance........................................................ 35
Section 3.11. Independent Certified Public Accountants' Report......................................... 36
Section 3.12. Access to Certain Documentation and Information Regarding
Receivables....................................................................... 36
Section 3.13. Reports to the Commission................................................................ 36
Section 3.14. Reports to the Rating Agency............................................................. 37
ARTICLE IV. DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO HOLDERS................................................................ 37
Section 4.1. Establishment of Accounts................................................................ 37
Section 4.2. Collections.............................................................................. 38
Section 4.3. [RESERVED]............................................................................... 39
Section 4.4. Additional Deposits; Net Deposits........................................................ 39
</TABLE>
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<TABLE>
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Section 4.5. Distributions............................................................................ 40
Section 4.6. Reserve Account.......................................................................... 42
ARTICLE V. THE CERTIFICATES.................................................................................... 47
Section 5.1. The Certificates......................................................................... 47
Section 5.2. Authentication of Certificates........................................................... 48
Section 5.3. Registration of Transfer and Exchange of Certificates.................................... 48
Section 5.4. Mutilated, Destroyed, Lost or Stolen Certificates........................................ 49
Section 5.5. Persons Deemed Owners.................................................................... 49
Section 5.6. Access to List of Holders' Names and Addresses........................................... 49
Section 5.7. Maintenance of Office or Agency.......................................................... 50
Section 5.8. Book Entry Certificates.................................................................. 50
Section 5.9. Notices to Clearing Agency............................................................... 51
Section 5.10. Definitive Certificates.................................................................. 51
ARTICLE VI. SELLER............................................................................................. 52
Section 6.1. Representations and Warranties of Seller................................................. 52
Section 6.2. Liability of Seller; Indemnities......................................................... 54
Section 6.3. Merger or Consolidation of Seller........................................................ 55
Section 6.4. Limitation on Liability of Seller and Others............................................. 55
Section 6.5. Seller May Own Certificates.............................................................. 56
ARTICLE VII. SERVICER.......................................................................................... 56
Section 7.1. Representations and Warranties of Servicer............................................... 56
Section 7.2. Liability of Servicer; Indemnities....................................................... 58
Section 7.3. Merger or Consolidation of Servicer...................................................... 59
Section 7.4. Limitation on Liability of Servicer and Others........................................... 59
Section 7.5. Servicer Not to Resign................................................................... 60
Section 7.6. Servicer May Own Certificates............................................................ 60
ARTICLE VIII. SERVICING TERMINATION............................................................................ 60
Section 8.1. Servicer Termination Events.............................................................. 60
Section 8.2. Trustee to Act; Appointment of Successor Servicer........................................ 62
Section 8.3. Effect of Servicing Transfer............................................................. 63
Section 8.4. Notification to Holders.................................................................. 64
Section 8.5. Waiver of Past Servicer Termination Events............................................... 64
Section 8.6. Transfer of Accounts..................................................................... 65
</TABLE>
<PAGE> 4
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<TABLE>
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<S> <C>
ARTICLE IX. TRUSTEE............................................................................................ 65
Section 9.1. Acceptance by Trustee.................................................................... 65
Section 9.2. Duties of Trustee........................................................................ 65
Section 9.3. Trustee's Certificate.................................................................... 67
Section 9.4. Trustee's Assignment of Purchased Receivables............................................ 67
Section 9.5. Certain Matters Affecting Trustee........................................................ 67
Section 9.6. Trustee Not Liable for Certificates or Receivables....................................... 69
Section 9.7. Trustee May Own Certificates............................................................. 71
Section 9.8. Trustee's Fees and Expenses.............................................................. 71
Section 9.9. Eligibility Requirements for Trustee..................................................... 71
Section 9.10. Resignation or Removal of Trustee....................................................... 72
Section 9.11. Successor Trustee....................................................................... 73
Section 9.12. Merger or Consolidation of Trustee...................................................... 73
Section 9.13. Appointment of Co-Trustee or Separate Trustee........................................... 74
Section 9.14. Representations and Warranties of Trustee............................................... 75
Section 9.15. Reports by Trustee...................................................................... 76
Section 9.16. Tax Returns............................................................................. 76
Section 9.17. Trustee May Enforce Claims Without Possession of
Certificates...................................................................... 77
ARTICLE X. TERMINATION......................................................................................... 77
Section 10.1. Termination of the Trust................................................................ 77
Section 10.2. Optional Purchase of All Receivables.................................................... 78
ARTICLE XI. MISCELLANEOUS PROVISIONS........................................................................... 78
Section 11.1. Amendment............................................................................... 78
Section 11.2. Protection of Title to Trust............................................................ 80
Section 11.3. Limitation on Rights of Holders......................................................... 82
Section 11.4. Governing Law........................................................................... 83
Section 11.5. Notices................................................................................. 83
Section 11.6. Severability of Provisions.............................................................. 83
Section 11.7. Assignment.............................................................................. 83
Section 11.8. Certificates Nonassessable and Fully Paid............................................... 84
Section 11.9. Intention of Parties.................................................................... 84
Section 11.10. Counterparts........................................................................... 84
</TABLE>
<PAGE> 5
SCHEDULE
SCHEDULE A LOCATION OF RECEIVABLE FILES
EXHIBITS
EXHIBIT A FORM OF Class A CERTIFICATE
EXHIBIT B FORM OF Class B CERTIFICATE
EXHIBIT C FORM OF SERVICER'S REPORT
<PAGE> 6
POOLING AND SERVICING AGREEMENT dated as of _______ __, 199 , between
KEY CONSUMER ACCEPTANCE CORPORATION, a Delaware corporation, as Seller, KEY BANK
USA, NATIONAL ASSOCIATION, a national banking association, as Servicer, and
___________ BANK, a _____________ corporation, as trustee hereunder.
In consideration of the premises and of the mutual agreements herein
contained, and other good and valuable consideration, the receipt of which is
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I. DEFINITIONS.
Section 1.1. Definitions. Whenever used in this Agreement, the
following capitalized words and phrases, unless the context otherwise requires,
have the following meanings:
"Accounts" means collectively the Collection Account, the Class A
Distribution Account, the Class B Distribution Account and the Payahead Account.
"Account Property" means all amounts and investments held from time to
time in any Account or the Reserve Account, as the case may be (whether in the
form of deposit accounts, instruments, certificated securities, book entry
securities, uncertificated securities or otherwise), and all proceeds of the
foregoing.
"Actuarial Receivable" means a Receivable that provides for (i)
amortization of the loan over a series of fixed level payment monthly
installments and (ii) each monthly installment, including the monthly
installment representing the final payment on the Receivable, to consist of an
amount of interest equal to 1/12 of the Contract Rate of the loan multiplied by
the unpaid principal balance of the loan, and an amount of principal equal to
the remainder of the monthly installment.
"Acquired Receivable" means a Receivable acquired by a Seller Affiliate
through a bulk purchase of Receivables or the acquisition of a financial
institution that owned the Receivable.
"Additional Servicing" means, for each Distribution Date, an amount
equal to the lesser of (i) the amount by which (A) the aggregate amount of the
Servicing Fee for such Distribution Date and all prior Distribution Dates
exceeds (B) the aggregate amount of Additional Servicing paid to the Servicer on
all prior
<PAGE> 7
Distribution Dates and (ii) the amount, if any, by which (A) the sum of
Available Interest and Available Principal for such Distribution Date exceed (B)
the sum, without duplication of (x) the Servicing Fee paid on such Distribution
Date with respect to the related Collection Period and any accrued and unpaid
Servicing Fee for prior Collection Periods, (y) all amounts required to be
distributed to the Holders on such Distribution Date and (z) the amount, if any,
deposited in the Reserve Account on such Distribution Date.
"Affiliate" means, with respect to any specified Person, any other
Person controlling, controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. A Person shall not be
deemed to be an Affiliate of any specified Person solely because such other
Person has the contractual right or obligation to manage such specified Person
or act as servicer with respect to the financial assets of such specified Person
unless such other Person controls the specified Person through equity ownership
or otherwise.
"Agreement" means this Pooling and Servicing Agreement, including its
schedules and exhibits, as amended, modified or supplemented from time to time.
"Authorized Officer" means any officer within the Corporate Trust
Office of Trustee, including any vice president, assistant vice president,
secretary, assistant secretary or any other officer of Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Available Interest" means, for any Distribution Date, the sum of the
following amounts for the related Collection Period: (a) that portion of the
Collections on the Receivables received during the such Collection Period that
is allocable to interest in accordance with Servicer's customary servicing
procedures, (b) all Liquidation Proceeds received during the related Collection
Period and (c) the Purchase Amounts, to the extent allocable to accrued
interest, of all Receivables that are purchased by Seller or Servicer as of the
last day of the related Collection Period. "Available Interest" for any
Distribution Date shall exclude all payments and proceeds of any Receivables the
Purchase Amount of which has been distributed on a prior Distribution Date.
2
<PAGE> 8
"Available Principal" means, for any Distribution Date the sum of the
following amounts with respect to the related Collection Period: (a) that
portion of all Collections on the Receivables received during such Collection
Period that is allocable to principal in accordance with Servicer's customary
servicing procedures; and (b) the Purchase Amounts, to the extent attributable
to principal, of all Receivables purchased by Seller or Servicer as of the last
day of the related Collection Period. "Available Principal" on any Distribution
Date shall exclude all payments and proceeds of any Receivables the Purchase
Amount of which has been distributed on a prior Distribution Date.
"Available Reserve Amount" is defined in Section 4.6.
"Book Entry Certificate" means beneficial interests in the definitive
Certificates described in Section 5.8, the ownership of which shall be
evidenced, and transfers of which shall be made, through book entries by a
Clearing Agency as described in Section 5.8.
"Business Day" means a day that is not a Saturday or a Sunday and that
in the States of New York, Illinois, Ohio and the State in which the Corporate
Trust Office is located is neither a legal holiday nor a day on which banking
institutions are authorized by law, regulation or executive order to be closed.
"Certificate" means any Class A Certificate or Class B Certificate.
"Certificate Owner" means, with respect to a Book Entry Certificate,
the Person who is the owner of such Book Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules, regulations and procedures of such Clearing Agency).
"Certificate Register" means the register maintained by Trustee for the
registration of Certificates and of transfers and exchanges of Certificates as
provided in Section 5.3.
"Class A Certificate" means a certificate executed by Trustee on behalf
of the Trust and authenticated by Trustee substantially in the form of Exhibit
A.
"Class A Certificate Balance" means, at any time, the Original Class A
Certificate Balance, as reduced by all amounts allocable to principal on the
Class A Certificates distributed to Class A Holders prior to such time.
"Class A Certificate Rate" means ____% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
3
<PAGE> 9
"Class A Distribution Account" means the account established,
maintained and designated as the "Class A Distribution Account" pursuant to
Section 4.1.
"Class A Holder" means the Person in whose name a Class A Certificate
is registered in the Certificate Register, except that, solely for the purpose
of giving any consent, request or waiver pursuant to this Agreement, the
interest evidenced by any Class A Certificate registered in the name of Seller,
Servicer, or any Person actually known to an Authorized Officer of Trustee to be
an Affiliate of Seller or Servicer, shall not be taken into account in
determining whether the requisite percentage necessary to effect any such
consent, request or waiver shall have been obtained.
"Class A Interest Carryover Shortfall" means, (a) with respect to the
initial Distribution Date, zero, and (b) with respect to any other Distribution
Date, the excess of Class A Monthly Interest for the preceding Distribution Date
and any outstanding Class A Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that is actually
deposited in the Class A Distribution Account on such preceding Distribution
Date, plus 30 days of interest on such excess, to the extent permitted by law,
in an amount equal to the product of one-twelfth multiplied by the Class A
Certificate Rate multiplied by the amount of such excess.
"Class A Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of (a) the Class A Monthly Interest for such
Distribution Date and (b) the Class A Interest Carryover Shortfall for such
Distribution Date.
"Class A Monthly Interest" means, for any Distribution Date, an amount
equal to one-twelfth (or the actual number of days from and including the
Closing Date to but excluding __________________, 199_ divided by 360, for the
initial Distribution Date) of the Class A Certificate Rate multiplied by the
Class A Certificate Balance as of the close of business on the immediately
preceding Distribution Date, after giving effect to all payments of principal to
the Class A Certificates on or prior to such Distribution Date (or, in the case
of the first Distribution Date, the Original Class A Certificate Balance).
"Class A Monthly Principal" means, with respect to any Distribution
Date, the Class A Percentage of Available Principal for such Distribution Date
plus the Class A Percentage of Realized Losses with respect to the related
Collection Period.
"Class A Percentage" means ____%.
4
<PAGE> 10
"Class A Pool Factor" means, with respect to any Distribution Date, the
Class A Certificate Balance as of the close of business on such Distribution
Date (after giving effect to any payments to be made on such Distribution Date)
divided by the Original Class A Certificate Balance, expressed as a seven-digit
decimal.
"Class A Principal Carryover Shortfall" means, as of the close of
business on any Distribution Date, the excess of Class A Monthly Principal for
such Distribution Date and any outstanding Class A Principal Carryover Shortfall
from the preceding Distribution Date over the amount in respect of principal
that is actually deposited in the Class A Distribution Account on such
Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of Class A Monthly Principal for such Distribution
Date and, in the case of any Distribution Date other than the initial
Distribution Date, the Class A Principal Carryover Shortfall as of the close of
business on the preceding Distribution Date; provided that the Class A Principal
Distributable Amount shall not exceed the Class A Certificate Balance prior to
such Distribution Date. In addition, on the Final Scheduled Distribution Date,
the Class A Principal Distributable Amount shall include, to the extent not
included under the preceding sentence, the amount that is necessary (after
giving effect to the other amounts to be deposited in the Class A Distribution
Account on such Distribution Date and allocable to principal) to reduce the
Class A Certificate Balance to zero.
"Class B Certificate" means a certificate executed by Trustee on behalf
of the Trust and authenticated by Trustee substantially in the form of Exhibit
B.
"Class B Certificate Balance" means, at any time, the Original Class B
Certificate Balance, as reduced by all amounts allocable to principal on the
Class B Certificates distributed to Class B Holders prior to such time.
"Class B Certificate Owner" means, with respect to a Book Entry
Certificate representing a beneficial interest in the Class B Certificates, the
Person who is the owner of such Book Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant in accordance
with the rules, regulations and procedures of such Clearing Agency).
"Class B Certificate Rate" means ____% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
5
<PAGE> 11
"Class B Distribution Account" means the account established,
maintained and designated as the "Class B Distribution Account" pursuant to
Section 4.1.
"Class B Holder" means the Person in whose name a Class B Certificate
is registered in the Certificate Register, except that, solely for the purpose
of giving any consent, request or waiver pursuant to this Agreement, the
interest evidenced by any Class B Certificate registered in the name of Seller,
Servicer, or any Person actually known to an Authorized Officer of Trustee to be
an Affiliate of Seller or Servicer, shall not be taken into account in
determining whether the requisite percentage necessary to effect any such
consent, request or waiver shall have been obtained.
"Class B Interest Carryover Shortfall" means, (a) with respect to the
initial Distribution Date, zero, and (b) with respect to any other Distribution
Date, the excess of Class B Monthly Interest for the preceding Distribution Date
and any outstanding Class B Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that is actually
deposited in the Class B Distribution Account on such preceding Distribution
Date, plus 30 days of interest on such excess, to the extent permitted by law,
in an amount equal to the product of one-twelfth multiplied by the Class B
Certificate Rate multiplied by the amount of such excess.
"Class B Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of (a) the Class B Monthly Interest for such
Distribution Date and (b) the Class B Interest Carryover Shortfall for such
Distribution Date.
"Class B Monthly Interest" means, for any Distribution Date, an amount
equal to one-twelfth (or the actual number of days from and including the
Closing Date to but excluding __________________, 199_ divided by 360, for the
initial Distribution Date) of the Class B Certificate Rate multiplied by the
Class B Certificate Balance as of the close of business on the immediately
preceding Distribution Date, after giving effect to all payments of principal to
the Class B Certificates on or prior to such Distribution Date (or, in the case
of the first Distribution Date, the Certificate Balance on the Closing Date).
"Class B Monthly Principal" means, with respect to any Distribution
Date, the Class B Percentage of Available Principal for such Distribution Date
plus the Class B Percentage of Realized Losses with respect to the related
Collection Period.
"Class B Percentage" means ___%.
6
<PAGE> 12
"Class B Pool Factor" means, with respect to any Distribution Date, the
Class B Certificate Balance as of the close of business on such Distribution
Date (after giving effect to any payments to be made on such Distribution Date)
divided by the Original Class B Certificate Balance, expressed as a seven-digit
decimal.
"Class B Principal Carryover Shortfall" means, as of the close of
business on any Distribution Date, the excess of Class B Monthly Principal for
such Distribution Date and any outstanding Class B Principal Carryover Shortfall
from the preceding Distribution Date over the amount in respect of principal
that is actually deposited in the Class B Distribution Account on such
Distribution Date.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of Class B Monthly Principal for such Distribution
Date and, in the case of any Distribution Date other than the initial
Distribution Date, the Class B Principal Carryover Shortfall as of the close of
business on the preceding Distribution Date; provided that the Class B Principal
Distributable Amount shall not exceed the Class B Certificate Balance prior to
such Distribution Date. In addition, on the Final Scheduled Distribution Date,
the Class B Principal Distributable Amount shall include, to the extent not
included under the preceding sentence, the amount that is necessary (after
giving effect to the other amounts to be deposited in the Class B Distribution
Account on such Distribution Date and allocable to principal) to reduce the
Class B Certificate Balance to zero.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act, as amended.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers of securities deposited with the Clearing
Agency.
"Closing Date" means the date of the initial issuance of the
Certificates hereunder.
"Code" means the Internal Revenue Code of 1986 and the Treasury
Regulations promulgated thereunder.
"Collection Account" means the segregated account or accounts
established, maintained and designated as the "Collection Account" pursuant to
Section 4.1.
7
<PAGE> 13
"Collection Period" means, (a) in the case of the initial Collection
Period, the period from [but not including] the Cutoff Date to and including
___________ __, 199_ and (b) thereafter, each calendar month during the term of
this Pooling and Servicing Agreement. With respect to any Determination Date,
Deposit Date or Distribution Date, the "related Collection Period" means the
Collection Period preceding the month in which such Determination Date, Deposit
Date or Distribution Date occurs.
"Collections" means all collections on the Receivables and any proceeds
from Insurance Policies and lender's single interest insurance policies.
"Commission" means the Securities and Exchange Commission.
"Contract Rate" means, with respect to a Receivable, the rate per annum
of interest charged on the outstanding principal balance of such Receivable.
"Corporate Trust Office" means the principal office of Trustee at which
at any particular time its corporate trust business shall be administered, which
office at date of execution of this Agreement is located at ______________,
Attention: _____________, Telephone: ___________, Facsimile: _______________ or
at such other address as Trustee may designate from time to time by notice to
the Holders, Seller and Servicer, or the principal corporate trust office of any
successor Trustee (the address of which the successor Trustee will notify the
Holders, Seller and Servicer).
"Custodian" means Servicer in its capacity as agent of the Trustee, as
custodian of the Receivable Files and any Seller Affiliate acting as agent for
Servicer for the purpose of maintaining custody of the Receivables Files.
"Cutoff Date" means the [opening] of business on ______ __, 199 .
"Cutoff Date Principal Balance" means, with respect to any Receivable,
the Initial Principal Balance of such Receivable minus the sum of the portion of
all payments received under such Receivable from or on behalf of the related
Obligor on or prior to the Cutoff Date and allocable to principal in accordance
with the terms of the Receivable.
"Dealer" means, with respect to any Receivable, the seller of the
related Financed Vehicle.
"Dealer Agreement" means an agreement between an Originator and a
Dealer pursuant to which such Originator acquires Motor Vehicle Loans from the
Dealer or gives such Dealer the right to induce persons to apply to such
8
<PAGE> 14
Originator for loans in connection with the retail sale of Motor Vehicles by
such Dealer.
"Dealer Recourse" means, with respect to any Dealer, any rights and
remedies against such Dealer under the related Dealer Agreement (other than with
respect to any breach of representation or warranty thereunder) with respect to
credit losses on a Receivable secured by a Financed Vehicle sold by such Dealer.
"Defaulted Receivable" means, with respect to any Collection Period, a
Receivable (other than a Purchased Receivable) which Servicer has determined to
charge off during such Collection Period in accordance with its customary
servicing practices; provided that any Receivable which Seller or Servicer is
obligated to repurchase or purchase shall be deemed to have become a Defaulted
Receivable during a Collection Period if Seller or Servicer fails to deposit the
related Purchase Amount on the related Deposit Date when due.
"Definitive Certificates" is defined in Section 5.8.
"Delivery" when used with respect to Account Property means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(l)(i) of
the UCC and are susceptible of physical delivery, transfer thereof to
Trustee or its nominee or custodian by physical delivery to Trustee or
its nominee or custodian endorsed to, or registered in the name of,
Trustee or its nominee or custodian or endorsed in blank, and, with
respect to a "certificated security" (as defined in Section 8-102 of
the UCC) transfer thereof (i) by delivery of such certificated security
endorsed to, or registered in the name of, Trustee or its nominee or
custodian or endorsed in blank to a "financial intermediary" (as
defined in Section 8-313 of the UCC) and the making by such financial
intermediary of entries on its books and records identifying such
certificated securities as belonging to Trustee or its nominee or
custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by Trustee
or its nominee or custodian, or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102(3) of the UCC) and the making
by such clearing corporation of appropriate entries on its books
reducing the appropriate securities account of the transferor and
increasing the appropriate securities account of a financial
intermediary by the amount of such certificated security, the
identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated
9
<PAGE> 15
securities by such clearing corporation or a "custodian bank" (as
defined in Section 8-102(4) of the UCC) or the nominee of either
subject to the clearing corporation's exclusive control, the sending of
a confirmation by the financial intermediary of the purchase by Trustee
or its nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying
such certificated securities as belonging to Trustee or its nominee or
custodian (all of the foregoing, "Physical Property"), and, in any
event, any such Physical Property in registered form shall be in the
name of Trustee or its nominee or custodian; and such additional or
alternative procedures as may hereafter become appropriate to effect
the complete transfer of ownership of any such Account Property to
Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any securities issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
National Mortgage Association that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations, the following procedures, all in accordance with
applicable law, including applicable Federal regulations and Articles 8
and 9 of the UCC: book-entry registration of such Account Property to
an appropriate book-entry account maintained with a Federal Reserve
Bank by a financial intermediary which is also a "depository" pursuant
to applicable Federal regulations and issuance by such financial
intermediary of a deposit advice or other written confirmation of such
book-entry registration to Trustee or its nominee or custodian of the
purchase by Trustee or its nominee or custodian of such book-entry
securities; the making by such financial intermediary of entries in its
books and records identifying such book entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations as
belonging to Trustee or its nominee or custodian and indicating that
such custodian holds such Account Property solely as agent for Trustee
or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete
transfer of ownership of any such Account Property to Trustee or its
nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the
sending of a confirmation by the financial intermediary of the purchase
by Trustee or its nominee or custodian of such uncertificated security,
the making by
10
<PAGE> 16
such financial intermediary of entries on its books and records
identifying such uncertificated certificates as belonging to Trustee or
its nominee or custodian.
"Deposit Date" means, with respect to any Collection Period, the
Business Day preceding the related Distribution Date.
"Depository Agreement" means the agreement among Seller, Servicer,
Trustee and the initial Clearing Agency, dated the Closing Date.
"Determination Date" with respect to any Collection Period, means the
tenth day of the calendar month following such Collection Period (or, if the
tenth day is not a Business Day, the next succeeding Business Day).
"Direct Loan" means motor vehicle promissory notes and security
agreements executed by an Obligor in favor of a motor vehicle lender.
"Distribution Date" means the __ day of each month (or, if the __ day
is not a Business Day, the next succeeding Business Day), commencing _______ __,
199 .
"Dollar" and the sign "$" mean lawful money of the United States.
"Eligible Deposit Account" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as the
long-term unsecured debt of such depository institution shall have a credit
rating from each Rating Agency in one of its generic rating categories which
signifies investment grade. Any such accounts (other than the Reserve Account)
may be maintained with Key Bank USA, National Association, or any of its
Affiliates, if such accounts meet the requirements described in clause (a) of
the preceding sentence.
"Eligible Institution" means a depository institution (which may be
Servicer or any Affiliate of Servicer or Trustee) organized under the laws of
the United States of America or any one of the states thereof or the District
of Columbia (or any domestic branch of a foreign bank), which (a) has (i)
either a long-term senior unsecured debt rating of AA or a short-term senior
unsecured debt or certificate of deposit rating of A-1+ or better by S&P and
(ii) (A) a short-term senior unsecured debt rating of A-l or better by S&P and
(B) a short-term senior unsecured debt rating of P-1 or better by Moody's, or
any other long-term, short-term or certificate of deposit
11
<PAGE> 17
rating acceptable to the Rating Agencies and (b) whose deposits are insured by
the Federal Deposit Insurance Corporation. If so qualified, Servicer, any
Affiliate of Servicer or Trustee may be considered an Eligible Institution.
"Eligible Investments" shall mean any one or more of the following
types of investments:
(a) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution (including any Affiliate of Seller,
Trustee or any Affiliate of the Trustee) or trust company incorporated
under the laws of the United States of America or any state thereof or
the District of Columbia (or any domestic branch of a foreign bank) and
subject to supervision and examination by Federal or state banking or
depository institution authorities (including depository receipts
issued by any such institution or trust company as custodian with
respect to any obligation referred to in clause (a) above or a portion
of such obligation for the benefit of the holders of such depository
receipts); provided that at the time of the investment or contractual
commitment to invest therein (which shall be deemed to be made again
each time funds are reinvested following each Distribution Date), the
commercial paper or other short-term senior unsecured debt obligations
(other than such obligations the rating of which is based on the credit
of a Person other than such depository institution or trust company) of
such depository institution or trust company shall have a credit rating
from S&P of A-1+ and from Moody's of P-1;
(c) commercial paper (including commercial paper of any
Affiliate of Seller) having, at the time of the investment or
contractual commitment to invest therein, a rating from S&P of A-1+ and
from Moody's of P-1;
(d) investments in money market funds (including funds for
which Trustee or any of its Affiliates or any of Seller's Affiliates is
investment manager or advisor) having a rating from S&P of AAA-m or
AAAm-G and from Moody's of Aaa;
(e) bankers' acceptances issued by any depository institution
or trust company referred to in clause (b) above;
12
<PAGE> 18
(f) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) referred to in clause (b) above;
and
(g) any other investment with respect to which each Rating
Agency has provided written notice that such investment would not cause
such Rating Agency to downgrade or withdraw its then current rating on
the Class A Certificates or the Class B Certificates.
"Eligible Servicer" means a Person which, at the time of its
appointment as Servicer, (a) has a net worth of not less than $50,000,000, (b)
is servicing a portfolio of motor vehicle retail installment sales contracts
and/or motor vehicle loans, (c) is legally qualified, and has the capacity, to
service the Receivables, (d) has demonstrated the ability to service a portfolio
of motor vehicle loans similar to the Receivables professionally and competently
in accordance with standards of skill and care that are consistent with prudent
industry standards, and (e) is qualified and entitled to use pursuant to a
license or other written agreement, and agrees to maintain the confidentiality
of, the software which Servicer uses in connection with performing its duties
and responsibilities under this Agreement or obtains rights to use, or develops
at its own expense, software which is adequate to perform its duties and
responsibilities under this Agreement.
"ERISA" means the Employment Retirement Income Security Act of 1974.
"Exchange Act" means the Securities Exchange Act of 1934.
"Final Scheduled Distribution Date" means the _________ ____
Distribution Date.
"Final Scheduled Maturity Date" means the last day of the Collection
Period immediately preceding the Collection Period during which the Final
Scheduled Distribution Date falls.
"Financed Vehicle" means, with respect to a Receivable, the Motor
Vehicle, together with all accessories and accessions thereto, securing or
purporting to secure the indebtedness under such Receivable.
"Fitch" means Fitch Investors Service, L.P., or its successor.
"GAAP" is defined in Section 11.1(c).
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"Holder" means the Person in whose name a Certificate is registered in
the Certificate Register, except that, solely for the purpose of giving any
consent, request or waiver pursuant to this Agreement, the interest evidenced by
any Certificate registered in the name of Seller, Servicer or any Person
actually known to an Authorized Officer of Trustee to be an Affiliate of Seller
or Servicer, shall not be taken into account in determining whether the
requisite percentage necessary to effect any such consent, request or waiver
shall have been obtained.
"Initial Principal Balance" means, in respect of a Receivable, the
amount advanced under the Receivable toward the purchase price of the Financed
Vehicle and related costs, including accessories, service and warranty
contracts, insurance premiums, other items customarily financed as part of
retail motor vehicle loans and/or retail installment sales contracts and other
fees charged by a Seller Affiliate or Dealer and included in the amount to be
financed, the total of which is shown as the initial principal balance in the
note and security agreement or retail installment sale contract evidencing and
securing such Receivable.
"Insurance Policies" means, all credit life and disability insurance
policies maintained by the Obligors and all Physical Damage Insurance Policies.
"Key Bank" means, Key Bank USA, National Association, a national
banking association.
"KeyCorp" means, KeyCorp, an Ohio corporation.
"Lien" means a security interest, lien, charge, pledge, preference,
participation interest or encumbrance of any kind, other than liens for taxes
not yet due and payable, mechanics' or materialmen's liens and other liens for
work, labor or materials, and any other liens that may attach by operation of
law.
"Liquidation Proceeds" means, with respect to any Receivable which has
become a Defaulted Receivable, (a) insurance proceeds received by Servicer with
respect to the Insurance Policies, (b) amounts received by Servicer in
connection with such Defaulted Receivable pursuant to the exercise of rights
under that Receivable and (c) the monies collected by Servicer (from whatever
source, including proceeds of a sale of a Financed Vehicle or a deficiency
balance recovered after the charge-off of the related Receivable or as a result
of any Dealer Recourse) on such Defaulted Receivable net of any expenses
incurred by
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Servicer in connection therewith and any payments required by law to be remitted
to the Obligor.
"Majority Holders" means Holders of Certificates evidencing not less
than a majority of the aggregate outstanding principal balance of the Class A
Certificates and the Class B Certificates taken together as a single class.
"Minimum Specified Reserve Balance" with respect to any Distribution
Date means the lesser of (i) $__________ and (ii) the aggregate outstanding
Class A Certificate Balance and Class B Certificate Balance (after giving effect
to any distributions on the Certificates on such Distribution Date).
"Moody's" means Moody's Investors Service, Inc.
"Motor Vehicle" means a new or used automobile or light duty truck.
"Motor Vehicle Loan" means a Direct Loan or retail installment sales
contract secured by a Motor Vehicle originated by a Seller Affiliate or another
financial institution.
"Obligor" means, with respect to a Receivable, the borrower or co-
borrowers under the related Receivable and any co-signer of the Receivable or
other Person who owes or may be primarily or secondarily liable for payments
under such Receivable.
"Officer's Certificate" means a certificate signed by the chairman, the
president, any vice president or the treasurer of Seller or Servicer, as the
case may be, and delivered to Trustee.
"Opinion of Counsel" means a written opinion of counsel (who may be an
employee of Seller or Servicer or any of their Affiliates) reasonably acceptable
in form to Trustee.
"Original Certificate Balance" means the sum of the Original Class A
Certificate Balance and the Original Class B Certificate Balance.
"Original Class A Certificate Balance" means $______________.
"Original Class B Certificate Balance" means $_______________.
"Original Pool Balance" means the Pool Balance as of the Cutoff Date.
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"Originator" means, with respect to any Direct Loan or retail
installment sales contract, the Seller Affiliate that was the lender with
respect to such Direct Loan or that acquired such Direct Loan or retail
installment sales contract from a Dealer or other Person.
"Payaheads" means early payments by or on behalf of Obligors on
Precomputed Receivables which, in accordance with the Servicer's customary
practices, do not constitute scheduled payments or full prepayments and are
applied to principal and interest in a subsequent period.
"Payahead Account" means the account designated as such, established
and maintained pursuant to Section 4.1.
"Person" means a legal person, including any individual, corporation,
estate, partnership, limited liability company, joint venture, association,
joint stock company, trust, unincorporated organization, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Physical Damage Insurance Policy" means a theft and physical damage
insurance policy maintained by the Obligor under a Receivable, providing
coverage against loss or damage to or theft of the related Financed Vehicle.
"Pool Balance" means, at any time, the aggregate Principal Balance of
the Receivables (excluding Defaulted Receivables) at such time.
"Pool Factor" means, with respect to any Collection Period, the Pool
Balance as of the last day of such Collection Period divided by the Original
Pool Balance, expressed as a seven-digit decimal.
"Precomputed Receivable" means (i) an Actuarial Receivable, (ii) a Rule
of 78's Receivable or (iii) a Sum of Periodic Balances Receivable.
"Principal Balance" means, as of any time, for any Receivable, the
principal balance of such Receivable under the terms of the Receivable
determined in accordance with the Servicer's customary practices.
"Purchase Agreement" means each Purchase Agreement dated as of ________
__, 199__ by and between a Seller Affiliate and the Seller, as amended, restated
or otherwise modified from time to time.
"Purchase Amount" of any Receivable means, with respect to any Deposit
Date, an amount equal to the sum of (a) the outstanding Principal Balance of
such Receivable as of the last day of the preceding Collection Period and (b)
the
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amount of accrued and unpaid interest on such Principal Balance at the related
Contract Rate from the date a payment was last made by or on behalf of the
Obligor through and including the last day of such preceding Collection Period,
in each case after giving effect to the receipt of monies collected on such
Receivable in such preceding Collection Period.
"Purchased Receivable" means, at any time, a Motor Vehicle Loan
included in the Schedule of Receivables as to which payment of the Purchase
Amount has previously been made by Seller or Servicer pursuant to this
Agreement.
"Rating Agencies" means Moody's, S&P and Fitch.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' prior notice thereof (or such
shorter period as shall be acceptable to the Rating Agencies) and that none
of the Rating Agencies shall have notified Seller, Servicer or Trustee in
writing that such action will, in and of itself, result in a reduction or
withdrawal of the then current rating on the Class A Certificates or the Class B
Certificates.
"Realized Losses" means, for any Collection Period, the aggregate
Principal Balances of any Receivables that became Defaulted Receivables during
such Collection Period.
"Receivable" means each Motor Vehicle Loan described in the Schedule of
Receivables, but excluding (i) Defaulted Receivables to the extent the Principal
Balances thereof have been deposited in the Collection Account and (ii) any
Purchased Receivables.
"Receivable File" is defined in Section 2.5.
"Record Date" means, subject to Section 1.4, with respect to any
Distribution Date, the last day of the related Collection Period.
"Related Agreements" means the Certificates, the Depository Agreement
and the underwriting agreement between Seller and the underwriter(s) of the
Certificates. The Related Agreements to be executed by any party are referred to
herein as "such party's Related Agreements", "its Related Agreements" or by a
similar expression.
"Required Rating" means a rating with respect to short term deposit
obligations of at least P-1 by Moody's and at least A-1 by S&P.
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"Reserve Account" means the account established, maintained and
designated as the "Reserve Account" pursuant to Section 4.6.
"Reserve Account Initial Deposit" means cash or Eligible Investments
having a value of at least $___________.
"Reserve Account Property" is defined in Section 4.6.
"Rule of 78's Receivable" means a Receivable that provides for the
payment by the Obligor of a specified total amount of payments, payable in equal
monthly installments on each due date, which total represents the principal
amount financed and add-on interest in an amount calculated at the stated
Contract Rate for the term of the Receivable and allocated to each monthly
payment based upon a fraction, the numerator of which is the number of payments
scheduled to have been made prior to the due date for such monthly payments on
such Receivable and the denominator of which is the sum of all such numbers of
payments to be made until the maturity of such Receivable.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"Schedule of Receivables" means, with respect to the Motor Vehicle
Loans to be conveyed to Seller by each Seller Affiliate and to Trustee by
Seller, the list identifying such retail Motor Vehicle Loans delivered to
Trustee on the Closing Date.
"Securities Intermediary" is defined in Section 4.6 of this Agreement.
"Seller" means Key Consumer Acceptance Corporation, in its capacity as
seller of the Receivables to the Trust under this Agreement, or any successor
pursuant to Section 6.3.
"Seller Affiliate" means each Affiliate of the Seller that is
transferring Receivables to Seller for purposes of sale to the Trust.
"Servicer" means Key Bank USA, National Association, in its capacity as
servicer of the Receivables under this Agreement, any successor pursuant to
Section 7.3 or any successor Servicer appointed and acting pursuant to Section
8.2.
"Servicer Termination Event" means an event specified in Section 8.1.
"Servicer's Report" is defined in Section 3.9.
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"Servicing Fee" means, with respect to any Distribution Date, an amount
equal to the product of (a) one-twelfth of the Servicing Fee Rate, multiplied by
(b) the Pool Balance as of the beginning of the first day of the preceding
Collection Period.
"Servicing Fee Rate" shall be ___% per annum, calculated on the basis
of a 360-day year consisting of twelve 30-day months.
"Servicing Officer" means any individual involved in, or responsible
for, the administration and servicing of the Receivables, whose name appears on
a list of servicing officers attached to an Officer's Certificate furnished to
Trustee by Servicer, as such list may be amended from time to time by Servicer
in writing.
"Simple Interest Method" means the method of allocating a fixed level
payment monthly installments between principal and interest, pursuant to which
such installment is allocated first to accrued and unpaid interest at the
Contract Rate on the unpaid principal balance and the remainder of such
installment is allocable to principal.
"Simple Interest Receivable" means any Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Specified Reserve Account Balance" means, for any Distribution Date,
the greater of (a) ___% of the sum of the Class A Certificate Balance plus the
Class B Certificate Balance on such Distribution Date (after giving effect to
all payments on the Certificates to be made on or prior to such Distribution
Date), and (b) the Minimum Specified Reserve Balance as of such Distribution
Date.
"Sum of Periodic Balances Receivable" means a Receivable that provides
for the payment by the Obligor of a specified total amount of payments, payable
in equal monthly installments on each due date, which total represents the
principal amount financed and add-on interest in an amount calculated at the
stated Contract Rate for the term of the Receivable and allocated to each
monthly payment based upon a fraction, the numerator of which is the principal
balance of such Receivable immediately prior to the due date for such monthly
payment and the denominator of which is the sum of all principal balances for
each monthly payment to be made until the maturity of such Receivable.
"Supplemental Servicing Fee" is defined in Section 3.8.
"Trust" means the trust created by this Agreement, which shall be known
as Key Auto Finance Trust 199_-_.
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"Trustee" means ____________ Bank, a __________ corporation, as Trustee
under this Agreement and any successor Trustee appointed and acting pursuant to
this Agreement.
"Trust Property" means:
(a) all right, title and interest of Seller in and to the
Receivables, and all moneys received thereon [on or] after the Cutoff
Date;
(b) all right, title and interest of Seller in the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of Seller in the Financed Vehicles
and any other property that shall secure the Receivables;
(c) the interest of Seller in any proceeds with respect to the
Receivables from claims on any Insurance Policies covering Financed
Vehicles or the Obligors or from claims under any lender's single
interest insurance policy naming any Seller Affiliate as an insured;
(d) rebates of premiums relating to Insurance Policies and
rebates of other items such as extended warranties financed under the
Receivables, in each case, to the extent the Servicer would, in
accordance with its customary practices, apply such amounts to the
Principal Balance of the related Receivable;
(e) the interest of Seller in any proceeds from (i) any
Receivable repurchased by a Dealer, pursuant to a Dealer Agreement, as
a result of a breach of representation or warranty in the related
Dealer Agreement, (ii) a default by an Obligor resulting in the
repossession of the Financed Vehicle under the applicable Motor Vehicle
Loan or (iii) any Dealer Recourse or other rights relating to the
Receivables under Dealer Agreements;
(f) all right, title and interest in all funds on deposit from
time to time in the Collection Account, the Payahead Account, the Class
A Distribution Account and the Class B Distribution Account (including
the Account Property related thereto) and in all investments and
proceeds thereof (but excluding all investment income thereon);
(g) all right, title and interest of Seller under each
Purchase Agreement, including the right of Seller to cause a Seller
Affiliate to repurchase Receivables from Seller;
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(h) all right, title and interest of Seller in any instrument
or document relating to the Receivables; and
(i) the proceeds of any and all of the foregoing.
Notwithstanding anything to the contrary contained herein, the Trust
Property shall not include, and the Trust shall not have any right to,
the Reserve Account or any funds actually or deemed to be deposited in
such account or any investments therein.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
Section 1.2. Other Interpretative Provisions. For purposes of this
Agreement, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly defined in this
Agreement to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles; (b) terms defined in
Article 9 of the UCC as in effect in the relevant jurisdiction and not otherwise
defined in this Agreement are used as defined in that Article; (c) the words
"hereof," "herein" and "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular provision of this Agreement; (d)
references to any Article, Section, Schedule, Appendix or Exhibit are references
to Articles, Sections, Schedules, Appendices and Exhibits in or to this
Agreement and references to any paragraph, subsection, clause or other
subdivision within any Section or definition refer to such paragraph,
subsection, clause or other subdivision of such Section or definition; (e) the
term "including" means "including without limitation"; (f) except as otherwise
expressly provided herein, references to any law or regulation refer to that law
or regulation as amended from time to time and include any successor law or
regulation; (g) references to any Person include that Person's successors and
assigns; and (h) headings are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
Section 1.3. Calculations. All calculations of the amount of interest
accrued on the Certificates during any Collection Period and all calculations of
the amount of the Servicing Fee payable with respect to a Collection Period
shall be made on the basis of a 360-day year consisting of twelve 30-day months.
Section 1.4. References. All references to the Record Date prior to the
first Record Date in the life of the Trust shall be to the Closing Date. All
references to the first day of a Collection Period shall refer to the opening of
business on such day. All references to the last day of a Collection Period
shall
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refer to the close of business on such day. All references herein to the close
of business means the close of business, Cleveland, Ohio time.
Section 1.5. Action by or Consent of Holders. Whenever any provision of
this Agreement refers to action to be taken, or consented to, by Holders, such
provision shall be deemed to refer to Holders of record as of the Record Date
immediately preceding the date on which such action is to be taken, or consented
to, by Holders.
ARTICLE II. THE TRUST PROPERTY.
Section 2.1. Conveyance of Trust Property. In consideration of
Trustee's delivery to Seller or its designee of authenticated Certificates, in
authorized denominations, in an aggregate amount equal to the Original
Certificate Balance, Seller hereby sells, transfers, assigns and conveys to
Trustee, upon the terms and conditions hereof, in trust for the benefit of the
Holders, the Trust Property, without recourse (except to the extent of Seller's
obligations under this Agreement and the Related Agreements). The sale,
transfer, assignment, setting over and conveyance made hereunder shall not
constitute and is not intended to result in an assumption by Trustee, any Holder
or any Certificate Owner of any obligation of any Seller Affiliates to the
Obligors, the Dealers or any other Person in connection with the Receivables and
the other Trust Property or any agreement, document or instrument related
thereto.
Section 2.2. Representations and Warranties as to Each Receivable.
Seller hereby makes the following representations and warranties as to each
Receivable conveyed by it to the Trust hereunder on which Trustee shall rely in
accepting the Trust Property in trust and authenticating the Certificates.
Unless otherwise indicated, such representations and warranties shall speak as
of the Closing Date, but shall survive the sale, transfer and assignment of the
Receivables and the other Trust Property to the Trust.
(a) Characteristics of Receivables. The Receivable has been
fully and properly executed by the parties thereto and (i) is a Direct
Loan made by an Originator or has been originated by a Dealer in the
ordinary course of such Dealer's business and has been purchased by an
Originator, in either case, in the ordinary course of such Originator's
business and in accordance with such Originator's underwriting
standards to finance the retail sale by a Dealer of the related
Financed Vehicle or has otherwise been acquired by a Seller Affiliate,
(ii) the Originator of which has underwriting standards that require
physical damage insurance to be maintained on the related Financed
Vehicle, (iii) is secured by a valid, subsisting, binding and
enforceable first priority security interest in favor
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of a Seller Affiliate in the Financed Vehicle (subject to
administrative delays and clerical errors on the part of the applicable
government agency and to any statutory or other lien arising by
operation of law after the Closing Date which is prior to such security
interest), which security interest is assignable together with such
Receivable, and has been so assigned to Seller, and subsequently
assigned by Seller to Trustee, (iv) contains customary and enforceable
provisions such that the rights and remedies of the holder thereof are
adequate for realization against the collateral of the benefits of the
security, (v) provided, at origination, for level monthly payments
(provided that the amount of the last payment may be different), which
fully amortize the Initial Principal Balance over the original term,
(vi) provides for interest at the Contract Rate specified in the
Schedule of Receivables, (vii) was originated in the United States, and
(viii) constitutes "chattel paper" as defined in the UCC.
(b) Individual Characteristics. The Receivables have the
following individual characteristics as of the Cutoff Date: (i) each
Receivable is secured by a Motor Vehicle; (ii) each Receivable has a
Contract Rate of at least ____% and not more than ____%; (iii) each
Receivable had a remaining number of scheduled payments, as of the
Cutoff Date, of not less than ____ and not more than ____; (iv) each
Receivable had an initial Principal Balance of not less than
$__________ and not more than $__________; (v) no Receivable was more
than 30 days past due as of the Cutoff Date; (vi) no Financed Vehicle
had been repossessed as of the Cutoff Date; (vii) no Receivable is
subject to a force placed Physical Damage Insurance Policy on the
related Financed Vehicle; [(viii) each Receivable is a Simple Interest
Receivable;] and (ix) the Dealer of the Financed Vehicle has no
participation in, or other right to receive, any proceeds of the
Receivable. The Receivables were selected using selection procedures
that were not intended by any Seller Affiliate or Seller to be adverse
to the Holders.
(c) Schedule of Receivables. The information with respect to
each Receivable set forth in the Schedule of Receivables, including
(without limitation) the identity and address of the Obligor, account
number, the Initial Principal Balance, the maturity date and the
Contract Rate, was true and correct in all material respects as of the
close of business on the Cutoff Date.
(d) Compliance with Law. The Receivable complied at the time
it was originated or made, and will comply as of the Closing Date, in
all material respects with all requirements of applicable federal,
state and local laws, and regulations thereunder, including, to the
extent applicable,
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usury laws, the Federal Truth in Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting
Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act,
the Fair Debt Collection Practices Act, Federal Reserve Board
Regulations B and Z and any other consumer credit, consumer protection,
equal opportunity and disclosure laws.
(e) Binding Obligation. The Receivable constitutes the
genuine, legal, valid and binding payment obligation in writing of the
Obligor, enforceable in all material respects by the holder thereof in
accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally, and the Receivable is not
subject to any right of rescission, setoff, counterclaim or defense,
including the defense of usury.
(f) Lien in Force. Neither Seller nor any Seller Affiliate has
taken any action which would have the effect of releasing the related
Financed Vehicle from the Lien granted by the Receivable in whole or in
part.
(g) No Amendment or Waiver. No material provision of the
Receivable has been amended, waived, altered or modified in any
respect, except such waivers as would be permitted under this
Agreement, and no amendment, waiver, alteration or modification causes
such Receivable not to conform to the other representations or
warranties contained in this Section.
(h) No Liens. Neither Seller nor any Seller Affiliate has
received notice of any Liens or claims, including Liens for work,
labor, materials or unpaid state or federal taxes, relating to the
Financed Vehicle securing the Receivable, that are or may be prior to
or equal to the Lien granted by the Receivable.
(i) No Default. Except for payment delinquencies continuing
for a period of not more than 30 days as of the Cutoff Date, to the
knowledge of Seller, no default, breach, violation or event permitting
acceleration under the terms of the Receivable exists and no continuing
condition that with notice or lapse of time, or both, would constitute
a default, breach, violation or event permitting acceleration under the
terms of the Receivable has arisen.
(j) Insurance. The Receivable requires the Obligor to insure
the Financed Vehicle under a Physical Damage Insurance Policy, pay the
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premiums for such insurance and keep such insurance in full force and
effect.
(k) Good Title. It is the intention of Seller that the
transfer and assignment herein contemplated constitute a sale of the
Receivables from Seller to the Trust and that the beneficial interest
in and title to the Receivables not be part of Seller's estate in the
event of the filing of a bankruptcy petition by or against Seller under
any bankruptcy law. No Receivable has been sold, transferred, assigned,
or pledged by Seller to any Person other than the Trust. Immediately
prior to the transfer and assignment herein contemplated, Seller had
good and marketable title to the Receivable free and clear of any Lien
and had full right and power to transfer and assign the Receivable to
the Trust and immediately upon the transfer and assignment of the
Receivable to the Trust, the Trust shall have good and marketable title
to the Receivable, free and clear of any Lien; and the Trust's interest
in the Receivable resulting from the transfer has been perfected under
the UCC.
(l) Obligations. Each Seller Affiliate has duly fulfilled all
obligations on its part to be fulfilled under, or in connection with,
the Receivable.
(m) Possession. There is only one original executed
Receivable, and immediately prior to the Closing Date, the applicable
Seller Affiliate will have possession of such original executed
Receivable.
(n) No Government Obligor. The Obligor on the Receivable is
not the United States of America or any state thereof or any local
government, or any agency, department, political subdivision or
instrumentality of the United States of America or any state thereof or
any local government.
(o) Marking Records. By the Closing Date, Seller shall have
caused the portions of Seller's and each Seller Affiliate's electronic
master record of Motor Vehicle Loans relating to the Receivables to be
clearly and unambiguously marked to show that the Receivable is owned
by Trustee in accordance with the terms of this Agreement.
(p) No Assignment. As of the Closing Date, Seller shall not
have taken any action to convey any right to any Person that would
result in such Person having a right to payments received under the
Insurance Policies or Dealer Agreements, or payments due under the
Receivable, that is senior to, or equal with, that of Trustee.
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(q) Lawful Assignment. The Receivable has not been originated
in, and is not subject to the laws of, any jurisdiction under which the
sale, transfer or assignment of such Receivable hereunder or pursuant
to transfers of the Certificates are unlawful, void or voidable.
Neither Seller nor any Seller Affiliate has entered into any agreement
with any Obligor that prohibits, restricts or conditions the assignment
of any portion of the Receivables.
(r) Dealer Agreements. A Dealer Agreement for each Receivable
is in effect whereby the Dealer warrants title to the Motor Vehicle and
indemnifies the Seller Affiliate that is a party to such Dealer
Agreement against the unenforceability of each Receivable sold
thereunder, and the rights of such Seller Affiliate thereunder, with
regard to the Receivable sold hereunder, have been validly assigned to
and are enforceable against the Dealer by the Seller and then to and by
the Trustee, along with any Dealer Recourse.
(s) Composition of Receivable. No Receivable has a Principal
Balance which includes capitalized interest or late charges.
(t) Database File. The information included with respect to
each Receivable in the database file delivered pursuant to Section
3.9(b) is accurate and complete in all material respects.
Section 2.3. Representations and Warranties as to the Receivables in
the Aggregate. Seller hereby makes the following representations and warranties
as to the Receivables conveyed by it to the Trust hereunder on which Trustee
shall rely in accepting the Trust Property in trust and authenticating the
Certificates. Unless otherwise indicated, such representations and warranties
shall speak as of the Closing Date, but shall survive the sale, transfer and
assignment of the Receivables and the other Trust Property to the Trust.
(a) Amounts. The Original Pool Balance was $_____________.
(b) Aggregate Characteristics. The Receivables had the
following characteristics in the aggregate as of the Cutoff Date: (i)
approximately ____% of the Original Pool Balance was attributable to
loans for purchases of new Financed Vehicles, and approximately _____%
of the Original Pool Balance was attributable to loans for purchases of
used Financed Vehicles; (ii) approximately _____%, _____%, _____% and
____% of the Original Pool Balance was attributable to Receivables the
mailing addresses of the Obligors with respect to which are located in
the States of ___________, ___________, ___________, and _____________,
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respectively, and no other state accounts for more than 5% of the
Original Pool Balance; (iii) the weighted average Contract Rate of the
Receivables was _____%; (iv) there are ________ Receivables being
conveyed by Seller to the Trust; (v) the average Cutoff Date Principal
Balance of the Receivables was $__________; and (vi) the weighted
average original term and weighted average remaining term of the
Receivables were _____ months and ___ months, respectively.
Section 2.4. Repurchase upon Breach. Seller, Servicer or Trustee, as
the case may be, shall inform the other parties to this Agreement promptly, in
writing, upon the discovery of any breach or failure to be true of the
representations or warranties made by Seller in Section 2.2, provided that the
failure to give such notice shall not affect any obligation of Seller. If the
breach or failure shall not have been cured by the last day of the Collection
Period which includes the 60th day (or if Seller elects, the 30th day) after the
date on which Seller becomes aware of, or receives written notice from Trustee
or Servicer of, such breach or failure, and such breach or failure materially
and adversely affects the interests of Trustee and the Holders in any
Receivable, Seller shall repurchase each such affected Receivable from Trustee
as of such last day of such Collection Period at a purchase price equal to the
Purchase Amount for such Receivable as of such last day of such Collection
Period. Notwithstanding the foregoing, any such breach or failure with respect
to the representations and warranties contained in Section 2.2 will not be
deemed to have such a material and adverse effect with respect to a Receivable
if the facts resulting in such breach or failure do not affect the ability of
the Trust to receive and retain payment in full on such Receivable. In
consideration of the repurchase of a Receivable hereunder, Seller shall remit
the Purchase Amount of such Receivable, no later than the close of business on
the next Deposit Date, in the manner specified in Section 4.4. The sole remedy
of the Trust, Trustee or the Holders with respect to a breach or failure to be
true of the representations or warranties made by Seller pursuant to Section
2.2 shall be to require Seller to repurchase Receivables pursuant to this
Section.
Section 2.5. Custodian of Receivable Files. (a) Custody. To assure
uniform quality in servicing the Receivables and to reduce administrative costs,
Trustee, upon the execution and delivery of this Agreement, revocably appoints
the Custodian, as agent, and the Custodian accepts such appointment, to act as
agent on behalf of Trustee to maintain custody of the following documents or
instruments, which are hereby constructively delivered to Trustee with respect
to each Receivable (collectively, a "Receivable File"):
(i) the fully executed original of the Receivable;
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(ii) any documents customarily delivered to or held by Seller
or Servicer evidencing the existence of any Physical Damage Insurance
Policies;
(iii) the original credit application, fully executed by the
Obligor;
(iv) the original certificate of title, or such other
documents as the applicable Seller Affiliate, as appropriate, keeps on
file, in accordance with its customary procedures, evidencing the
security interest of such Seller Affiliate in the Financed Vehicle;
(v) originals or true copies of all documents, instruments or
writings relating to extensions, amendments or waivers of the
Receivable; and
(vi) any and all other documents or electronic records that
Seller, any Seller Affiliate or Servicer, as the case may be, keeps on
file, in accordance with its customary procedures, relating to the
Receivable, any Insurance Policies, the Obligor or the Financed
Vehicle.
(b) Safekeeping. Servicer, in its capacity as Custodian, shall hold the
Receivable Files as agent on behalf of Trustee for the benefit of all present
and future Holders, and maintain such accurate and complete accounts, records
and computer systems pertaining to each Receivable as shall enable Servicer and
Trustee to comply with the terms and provisions of this Agreement applicable to
them. In performing its duties as Custodian hereunder, the Custodian shall act
with reasonable care, exercising the degree of skill, attention and care that
Custodian exercises with respect to receivable files relating to other similar
motor vehicle loans owned and/or serviced by the Custodian and that is
consistent with industry standards. In accordance with its customary practice
with respect to its retail installment sale contracts, Custodian shall conduct,
or cause to be conducted, periodic audits of the Receivable Files held by it
under this Agreement, and of the related accounts, records, and computer
systems, and shall maintain the Receivable Files in such a manner as shall
enable Trustee to verify, if Trustee so elects, the accuracy of the record
keeping of Custodian. Custodian shall promptly report to Trustee any failure on
its part to hold the Receivable Files and maintain its accounts, records and
computer systems as herein provided, and promptly take appropriate action to
remedy any such failure. The Custodian hereby acknowledges receipt of the
Receivable File for each Receivable listed on the Schedule of Receivables.
Nothing herein shall be deemed to require Trustee to verify the accuracy of the
record keeping of the Custodian.
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(c) Maintenance of and Access to Records. The Custodian shall maintain
each Receivable File at the location specified in Schedule A to this Agreement,
or at such other office of the Custodian within the United States (or, in the
case of any successor Custodian, within the State in which its principal place
of business is located) as shall be specified to Trustee by 30 days' prior
written notice. Upon Trustee's reasonable request, the Custodian shall make
available to Trustee or its agents (or, when requested in writing by Trustee, to
its attorneys or auditors) the Receivable Files and the related accounts,
records and computer systems maintained by the Custodian at such times during
the normal business hours of the Custodian for purposes of inspecting, auditing
or making copies or abstracts of the same.
(d) Release of Documents. Upon written instructions from Trustee,
Custodian shall release any document in the Receivable Files to Trustee or its
agent or designee, as the case may be, at such place or places as Trustee may
designate, as soon thereafter as is practicable. Any document so released shall
be handled by Trustee with due care and returned to the Custodian for
safekeeping as soon as Trustee or its agent or designee, as the case may be,
shall have no further need therefor.
(e) Title to Receivables. The Custodian agrees that, in respect of any
Receivable File held by the Custodian hereunder, the Custodian will not at any
time have or in any way attempt to assert any interest in such Receivable File
or the related Receivable, other than solely for the purpose of collecting or
enforcing the Receivable for the benefit of the Trust and that the entire
equitable interest in such Receivable and the related Receivable File shall at
all times be vested in the Trust.
(f) Instructions; Authority to Act. The Custodian shall be deemed to
have received proper instructions with respect to the Receivable Files upon its
receipt of written instructions signed by an Authorized Officer of Trustee. A
certified copy of excerpts of certain resolutions of the Board of Directors of
Trustee shall constitute conclusive evidence of the authority of any such
Authorized Officer to act and shall be considered in full force and effect until
receipt by the Custodian of written notice to the contrary given by Trustee.
(g) Custodian's Indemnification. Custodian shall indemnify and hold
harmless Trustee, its officers, directors, employees and agents and the Holders
from and against any and all liabilities, obligations, losses, compensatory
damages, payments, costs or expenses (including legal fees if any) of any kind
whatsoever that may be imposed on, incurred or asserted against Trustee or the
Holders as the result of any act or omission of Custodian relating to the
maintenance and custody of the Receivable Files; provided that the Custodian
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shall not be liable hereunder to the extent that such liabilities, obligations,
losses, compensatory damages, payments, costs or expenses result from the
willful misfeasance, bad faith or negligence of Trustee. Indemnification under
this Section 2.5(g) shall include reasonable fees and expenses of counsel and
expenses of litigation and shall survive termination of this Agreement and the
resignation or removal of Trustee. If Custodian shall have made any indemnity
payments to Trustee pursuant to this Section and Trustee thereafter shall
collect any of such amounts from Persons other than Custodian, Trustee shall
immediately upon receipt thereof repay such amounts to Custodian, without
interest.
(h) Effective Period and Termination. Servicer's appointment as
Custodian shall become effective as of the Cutoff Date and shall continue in
full force and effect until terminated pursuant to this subsection (h). If
Servicer shall resign as Servicer in accordance with Section 7.5 or if all of
the rights and obligations of Servicer shall have been terminated under Section
8.1, the appointment of Servicer as Custodian hereunder may be terminated by
Trustee or by the Majority Holders, in the same manner as Trustee or such
Holders may terminate the rights and obligations of Servicer under Section 8.1.
Trustee may terminate Servicer's appointment as Custodian hereunder at any time
with cause, or with 30 days' prior written notice without cause, upon written
notification to Servicer. As soon as practicable after any termination of such
appointment Servicer shall deliver, or cause to be delivered, the Receivable
Files to Trustee, Trustee's agent or Trustee's designee at such place or places
as Trustee may reasonably designate. Notwithstanding any termination of Servicer
as Custodian hereunder (other than in connection with a termination resulting
from the termination of Servicer, as such, pursuant to Section 8.1), from and
after the date of such termination, and for so long as Servicer is acting as
such pursuant to this Agreement, Trustee shall provide, or cause the successor
Custodian to provide, access to the Receivable Files to Servicer, at such times
as Servicer shall reasonably request, for the purpose of carrying out its duties
and responsibilities with respect to the servicing of the Receivables hereunder.
(i) Delegation. Custodian may, at any time without notice or consent,
delegate any or all of its duties to any Seller Affiliate; provided that no such
delegation shall relieve Custodian of its responsibility with respect to such
duties and Custodian shall remain obligated and liable to Trustee and the
Holders for its duties hereunder as if Custodian alone were performing such
duties.
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ARTICLE III. ADMINISTRATION AND SERVICING OF TRUST
PROPERTY.
Section 3.1. Duties of Servicer. (a) Servicer is hereby authorized to
act as agent for the Trust and in such capacity shall manage, service,
administer and make collections on the Receivables (other than Purchased
Receivables), and perform the other actions required by Servicer under this
Agreement, with reasonable care. Without limiting the standard set forth in the
preceding sentence, Servicer shall use a degree of skill, attention and care
that is not less than Servicer exercises with respect to comparable Motor
Vehicle Loans that it services for itself or others and that is consistent with
prudent industry standards. Servicer's duties shall include the collection and
posting of all payments, responding to inquiries by Obligors on the Receivables,
or by federal, state or local governmental authorities, investigating
delinquencies, sending payment coupons or monthly invoices to Obligors,
reporting required tax information to Obligors, accounting for Collections,
monitoring the status of Physical Damage Insurance Policies with respect to the
Financed Vehicles as provided in Section 3.4(a), furnishing monthly and annual
statements to Trustee with respect to distributions, providing collection and
repossession services in the event of Obligor default and performing the other
duties specified herein. Servicer shall also administer and enforce all rights
and responsibilities of the holder of the Receivables provided for in the
Physical Damage Insurance Policies as provided in Section 3.4(b) and the Dealer
Agreements. Without limiting the generality of the foregoing, Servicer is hereby
authorized and empowered by Trustee to execute and deliver, on behalf of itself,
the Trust, Trustee and the Holders, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables or to the Financed
Vehicles, all in accordance with this Agreement; provided that notwithstanding
the foregoing, Servicer shall not, except pursuant to an order from a court of
competent jurisdiction, release an Obligor from payment of any unpaid amount
under any Receivable or waive the right to collect the unpaid balance of any
Receivable from the Obligor, except in connection with a de minimis deficiency
which Servicer would not attempt to collect in accordance with its customary
procedures. If Servicer shall commence a legal proceeding to enforce a
Receivable, Trustee shall thereupon be deemed to have automatically assigned
such Receivable to Servicer, which assignment shall be solely for purposes of
collection. Trustee shall furnish Servicer with any powers of attorney and other
documents or instruments necessary or appropriate to enable Servicer to carry
out its servicing and administrative duties hereunder.
(b) Servicer may, at any time without notice (except that Servicer
shall give written notice to each Rating Agency of any delegation outside the
ordinary course of business of the substantial portion of its servicing
business) or consent,
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delegate (i) any or all duties under this Agreement to any Person more than 50%
of the voting securities of which are owned, directly or indirectly, by KeyCorp,
so long as Key Bank USA acts as Servicer, or (ii) specific duties to
subcontractors who are in the business of performing such duties; provided that
no such delegation shall relieve Servicer of its responsibility with respect to
such duties and Servicer shall remain obligated and liable to Trustee and the
Holders for servicing and administering the Receivables in accordance with this
Agreement as if Servicer alone were performing such duties.
Section 3.2. Collection of Receivable Payments. (a) Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables as and when the same shall become due, and
otherwise act with respect to the Receivables, the Physical Damage Insurance
Policies, the Dealer Agreements and the other Trust Property in such manner as
will, in the reasonable judgment of Servicer, maximize the amount to be received
by the Trust with respect thereto, in accordance with the standard of care
required by Section 3.1. Servicer shall be entitled to amend or modify any
Receivable in accordance with its customary procedures if Servicer believes in
good faith that such amendment or modification is in the best interests of the
Trust; provided that Servicer may not, unless ordered by a court of competent
jurisdiction or otherwise required by applicable law, (i) extend a Receivable
beyond the Final Scheduled Maturity Date, or (ii) reduce the Principal Balance
or Contract Rate of any Receivable. If Servicer fails to comply with the
provisions of the preceding sentence, Servicer shall be required to purchase the
Receivable or Receivables affected thereby, for the Purchase Amount, in the
manner specified in Section 4.7 as of the close of business for the Collection
Period in which such failure occurs. Servicer may, in its discretion (in
accordance with its customary standards, policies and procedures), waive any
prepayment charge, late payment charge, extension fee or any other fee that may
be collected in the ordinary course of servicing a Receivable.
(b) If in the course of collecting payments under the Receivables,
Servicer determines to set off any obligation of Servicer to an Obligor against
an amount payable by the Obligor with respect to such Receivable, Servicer shall
deposit the amount so set off in the Collection Account, no later than the close
of business on the Deposit Date for the Collection Period in which the set-off
occurs. All references herein to payments or Liquidation Proceeds collected by
Servicer shall include amounts set-off by Servicer.
Section 3.3. Realization upon Receivables. On behalf of the Trust,
Servicer shall charge off a Receivable as a Defaulted Receivable in accordance
with its customary standards (and, in no event later than ___ days after a
Receivable shall have become delinquent) and shall use reasonable efforts to
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repossess and liquidate the Financed Vehicle securing any Defaulted Receivable
as soon as feasible after default, in accordance with the standard of care
required by Section 3.1. In taking such action, Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of Motor Vehicle Loans, and as are otherwise
consistent with the standard of care required under Section 3.1, which shall
include exercising any rights under the Dealer Agreements and selling the
Financed Vehicle at public or private sale. Servicer shall be entitled to
recover all reasonable expenses incurred by it in the course of repossessing and
liquidating a Financed Vehicle into cash proceeds or pursuing any deficiency
claim against the related Obligor, but only out of the cash proceeds of such
Financed Vehicle or any deficiency obtained from the Obligor. The foregoing
shall be subject to the provision that, in any case in which a Financed Vehicle
shall have suffered damage, Servicer shall not expend funds in connection with
the repair or the repossession of such Financed Vehicle unless it shall
determine in its discretion that such repair and/or repossession will increase
the Liquidation Proceeds of the related Receivable by an amount equal to or
greater than the amount of such expenses.
If Servicer elects to commence a legal proceeding to enforce a Dealer
Agreement, the act of commencement shall be deemed to be an automatic assignment
from Trustee to Servicer of the rights under such Dealer Agreement. If, however,
in any enforcement suit or legal proceeding, it is held that Servicer may not
enforce a Dealer Agreement on the grounds that it is not a real party in
interest or a Person entitled to enforce the Dealer Agreement, Trustee, on
behalf of the Trust, at Servicer's expense, or Seller, at Servicer's expense,
shall take such steps as Servicer deems necessary to enforce the Dealer
Agreement, including bringing suit in its name or the names of the Holders.
Section 3.4. Physical Damage Insurance. (a) The Receivables require
that each Financed Vehicle be insured under a Physical Damage Insurance Policy.
Servicer shall monitor or cause to be monitored, the status of such physical
damage insurance coverage to the extent consistent with its customary servicing
procedures. If Servicer shall determine that an Obligor has failed to obtain or
maintain a Physical Damage Insurance Policy covering the related Financed
Vehicle, Servicer shall use its reasonable efforts to enforce the rights of the
holder of the Receivable under the Receivable to require the Obligor to obtain
such physical damage insurance, provided that Servicer shall not be required to
take such actions if there is in place a lender's single interest policy with
respect to the related Financed Vehicle that complies with Servicer's customary
requirements. It is understood that Servicer will not "force-place" any Physical
Damage Insurance Policy on any Financed Vehicle.
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(b) Servicer may sue to enforce or collect upon the Physical Damage
Insurance Policies, in its own name, if possible, or as agent for the Trust. If
Servicer elects to commence a legal proceeding to enforce a Physical Damage
Insurance Policy, the act of commencement shall be deemed to be an automatic
assignment of the rights of the Trust under such Physical Damage Insurance
Policy to Servicer for purposes of collection only. If, however, in any
enforcement suit or legal proceeding it is held that Servicer may not enforce a
Physical Damage Insurance Policy on the grounds that it is not a real party in
interest or a holder entitled to enforce the Physical Damage Insurance Policy,
Trustee, on behalf of the Trust, at Servicer's expense, or Seller, at Servicer's
expense, shall take such steps as Servicer deems necessary to enforce such
Physical Damage Insurance Policy, including bringing suit in its name or the
name of Trustee for the benefit of the Holders. Servicer shall make all claims
and enforce its rights under any lender's single interest insurance policy (to
the extent such claims or rights relate to Receivables) for the benefit of the
Trust and shall treat as Collections all related proceeds of such policies.
Section 3.5. Maintenance of Security Interests in Financed Vehicles.
Servicer, in accordance with the standard of care required under Section 3.1,
shall take such reasonable steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle for
the benefit of the Trust. Trustee, on behalf of the Trust, hereby authorizes
Servicer, and Servicer hereby agrees, to take such reasonable steps as are
necessary to re- perfect such security interest on behalf of the Trust in the
event Servicer receives notice of the relocation of a Financed Vehicle. If there
has been a Servicer Termination Event, upon the request of Trustee, Seller and
Servicer, at their expense, shall promptly and duly execute and deliver such
documents and instruments, and take such other reasonable actions as may be
necessary, as evidenced by an Opinion of Counsel delivered to Trustee to perfect
the Trust's interest in the Trust Property against all other Persons, including
the delivery of the Receivables and the Receivable Files to Trustee, its agent,
or its designee, the endorsement and delivery of the Physical Damage Insurance
Policies or the notification of the insurers thereunder, the execution of
transfer instruments, and the endorsement to Trustee and the delivery of the
certificates of title to the Financed Vehicles to the appropriate department or
departments of motor vehicles (or other appropriate governmental agency).
Section 3.6. Covenants of Servicer. Servicer makes the following
covenants on which Trustee relies in accepting the Trust Property in trust and
in executing and authenticating the Certificates:
(a) Security Interest to Remain in Force. Servicer shall not
release any Financed Vehicle from the security interest granted by the
related
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Receivable in whole or in part, except upon payment in full of the
Receivable or as otherwise contemplated herein.
(b) No Impairment. Servicer shall not impair in any material
respect the rights of the Holders in the Receivables, the Dealer
Agreements or the Physical Damage Insurance Policies or, subject to
clause (c), otherwise amend or alter the terms thereof if, as a result
of such amendment or alteration, the interests of the Trust and the
Holders hereunder would be materially adversely affected.
(c) Amendments. Servicer shall not amend or otherwise modify
any Receivable (including the grant of any extension thereunder),
except in accordance with Section 3.2.
Section 3.7. Purchase by Servicer upon Breach. Seller, Servicer or
Trustee, as the case may be, shall inform the other parties promptly, in
writing, upon the discovery of any breach by Servicer of its covenants under
Section 3.5 or 3.6; provided that the failure to give such notice shall not
affect any obligation of Servicer. Unless the breach shall have been cured by
the last day of the Collection Period which includes the 60th day (or the 30th
day, if Servicer so elects) after the date on which Servicer becomes aware of,
or receives written notice of, such breach, and such breach or failure
materially and adversely affects the interests of Trustee and the Holders in any
Receivable, Servicer shall purchase such Receivable from Trustee as of the last
day of the Collection Period at a purchase price equal to the Purchase Amount
for such Receivable as of the last day of such Collection Period; provided that
in the case of a breach of the covenant contained in Section 3.6(c), Servicer
shall be obligated to purchase the affected Receivable or Receivables on the
Deposit Date immediately succeeding the Collection Period during which Servicer
becomes aware of, or receives written notice of, such breach. In consideration
of the purchase of a Receivable hereunder, Servicer shall remit the Purchase
Amount of such Receivable in the manner specified in Section 5.4. The sole
remedy of the Trust, Trustee or the Holders against Servicer with respect to a
breach pursuant to Section 3.5 or 3.6 shall be to require Servicer to repurchase
Receivables pursuant to this Section.
Section 3.8. Servicing Compensation. The servicing fee for (a) the
________ 199__ Distribution Date shall equal $__________ and (b) for each
Distribution Date thereafter shall equal the product of (i) one-twelfth, (ii)
the Servicing Fee Rate and (iii) the Pool Balance as of the opening of business
on the first day of the related Collection Period (the "Servicing Fee").
Servicer shall also be entitled to retain any late fees, extension fees,
prepayment charges (including, in the case of any Rule of 78's Receivable or Sum
of Periodic Balances Receivable that is prepaid in full, amounts received in
excess of the outstanding
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Principal Balance of such Receivable and accrued interest thereon calculated as
if such Receivable were an Actuarial Receivable) and certain non-sufficient
funds charges and other administrative fees or similar charges allowed by
applicable law with respect to Receivables collected (from whatever source) on
the Receivables and shall be paid any interest earned on deposits in the
Accounts (the "Supplemental Servicing Fee"). It is understood and agreed that
Available Interest or Available Principal shall not include any amounts retained
by Servicer which constitute Supplemental Servicing Fees. The Servicing Fee in
respect of a Collection Period (together with any portion of the Servicing Fee
that remains unpaid from prior Distribution Dates), if the Rating Agency
Condition is satisfied, may be paid at the beginning of such Collection Period
out of Collections for such Collection Period. As provided in Section 4.5, as
additional compensation, Servicer shall be entitled to receive on each
Distribution Date, any Additional Servicing for such Distribution Date.
Section 3.9. Servicer's Report. (a) On each Determination Date,
Servicer shall deliver to Trustee, each Paying Agent and Seller, with a copy to
the Rating Agencies, a Servicer's Report substantially in the form of Exhibit C
(a "Servicer's Report") containing, among other things, (i) all information
necessary to make the deposits, transfers and distributions required by Sections
4.4, 4.5 and 4.6, (ii) all information necessary for sending statements to
Holders pursuant to Section 4.7, (iii) all information necessary to prepare the
certificate described in Section 9.3, (iv) all information necessary to
determine if there has been a Servicer Termination Event under Section 8.1, and
(v) all information necessary to reconcile all deposits to, and withdrawals
from, the Collection Account for such Distribution Date and the related
Collection Period. Servicer also shall separately identify (by account number of
the Receivable as it appears in the Schedule of Receivables) to Trustee in a
written notice or a list in computer readable form the Receivables to be
repurchased by Seller or to be purchased by Servicer, as the case may be, on the
related Deposit Date, and each Receivable which became a Defaulted Receivable
during the related Collection Period.
(b) Servicer shall provide Trustee with a database file for the
Receivables at or prior to the Closing Date (but with information as of the
close of business on the Cutoff Date).
Section 3.10. Annual Statement as to Compliance. (a) Servicer shall
deliver to Trustee and each Rating Agency, on or before ________________ of each
year, beginning on _______________, 199_, an Officer's Certificate, dated as of
_______________ of such year, stating that (i) a review of the activities of
Servicer during the preceding 12-month period (or, in the case of the first such
report, during the period from the Closing Date to _________, 199 ) and of its
performance under this Agreement has been made under such officer's
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supervision and (ii) to the best of such officer's knowledge, based on such
review, Servicer has fulfilled all its obligations in all material respects
under this Agreement throughout such year, or, if there exists any uncured
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof.
(b) Servicer shall deliver to Trustee and each Rating Agency, promptly
after having obtained knowledge thereof, but in no event later than five
Business Days thereafter, written notice in an Officer's Certificate of any
event which constitutes, or with the giving of notice or lapse of time or both,
would become, a Servicer Termination Event under Section 8.1.
Section 3.11. Annual Independent Certified Public Accountants' Report.
The Servicer shall cause a firm of independent certified public accountants (who
may also render other services to the Servicer or Seller), to deliver to Seller,
Trustee and each Rating Agency within 120 days following the end of each fiscal
year of the Servicer, a report to the effect that such firm has examined the
Servicer's assertion that it has complied with the minimum servicing standards
set forth in the Mortgage Banker's Association of America's Uniform Single
Attestation Program for Mortgage Bankers ("USAP") for the previous twelve
months ended June 30, and that such examination (1) included test relating to
the servicing or administration of the Receivables in accordance with the
requirements of the USAP, to the extent the procedures in such program apply to
the servicing or administration of the Receivables and (2) except as described
in the report, disclosed no exceptions or errors in the records relating to the
servicing or administration of the Receivables that, in the firm's opinion,
paragraph six of such program requires such firm to report.
Such report will also indicate that the firm is independent of Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants.
Section 3.12. Access to Certain Documentation and Information Regarding
Receivables. Servicer shall provide Trustee and the Holders with access to the
Receivable Files (in the case of the Holders, only in such cases where it shall
be required by applicable statutes or regulations to give access to such
documentation as demonstrated by evidence satisfactory to Servicer in its
reasonable judgment). Such access shall be afforded without charge, but only
upon reasonable request and during normal business hours at the offices of
Servicer. Nothing in this Section shall affect the obligation of Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Obligors, and the failure of Servicer to provide access to information as a
result of such obligation shall not constitute a breach of this Section. Any
Holder, by its acceptance of a Certificate,
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shall be deemed to have agreed to keep any information obtained by it pursuant
to this Section confidential and not to use such information for any other
purpose, except as required by applicable law.
Section 3.13. Reports to the Commission. Servicer shall, on behalf of
the Trust, cause to be filed with the Commission any periodic reports required
to be filed under the provisions of the Exchange Act, and the rules and
regulations of the Commission thereunder. Seller shall, at its expense,
cooperate in any reasonable request made by Servicer in connection with such
filings.
Section 3.14. Reports to the Rating Agency. Servicer shall deliver to
each Rating Agency a copy of all reports or notices furnished or delivered
pursuant to this Article and a copy of any amendments, supplements or
modifications to this Agreement and any other information reasonably requested
by such Rating Agency to monitor this transaction.
Section 3.15. Servicer Expenses. Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees and disbursements of the Trustee, independent accountants, taxes imposed on
Servicer and expenses incurred in connection with distributions and reports to
Holders.
ARTICLE IV. DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO HOLDERS.
Section 4.1. Establishment of Accounts. (a) Trustee, on behalf of the
Trust and for the benefit of the Holders, shall establish and maintain in the
name of Trustee one or more segregated Eligible Deposit Accounts (collectively,
the "Collection Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Holders. Trustee, on
behalf of the Trust and for the benefit of the Class A Holders, shall establish
and maintain in the name of Trustee an Eligible Deposit Account (the "Class A
Distribution Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Class A Holders. Trustee, on
behalf of the Trust and for the benefit of the Class B Holders, shall establish
and maintain in the name of Trustee an Eligible Deposit Account (the "Class B
Distribution Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Class B Holders. Trustee on
behalf of the Trust and for the benefit of the Holders, shall establish and
maintain in the name of Trustee an Eligible Deposit Account (the "Payahead
Account"), bearing a designation clearly indicating that the funds therein are
held for the benefit of the Holders. The Collection Account, the Class A
Distribution Account, the Class B
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Distribution Account, and the Payahead Account shall be initially established
and maintained with the trust department of Trustee.
(b) Funds on deposit in the Collection Account, the Class A
Distribution Account, the Class B Distribution Account, and the Payahead Account
shall be invested by Trustee in Eligible Investments selected by Servicer
(pursuant to standing instructions or otherwise) and confirmed in writing by
Servicer to Trustee; provided that, it is understood and agreed that neither
Servicer nor Trustee shall be liable for any loss arising from such investment
in Eligible Investments. All such Eligible Investments shall be held by Trustee
for the benefit of the beneficiaries of the applicable Account; provided that on
each Distribution Date all interest and other investment income (net of losses
and investment expenses) on funds on deposit therein shall be withdrawn from the
Accounts at the written direction of Servicer and shall be paid to Servicer and
shall not be available or otherwise subject to any claims or rights of the
Holders. Other than as permitted by each Rating Agency, funds on deposit in the
Accounts with respect to any Collection Period or Distribution Date shall be
invested only in Eligible Investments that, except for money market funds, will
mature so that such funds will be available at the close of business on the
related Deposit Date. Funds deposited in an Account on a Deposit Date which
immediately precedes a Distribution Date upon the maturity of any Eligible
Investments are not required to be (but may be) invested overnight. No Eligible
Investment with a stated maturity shall be disposed of prior to that maturity
unless a default occurs with respect to that Eligible Investment and Servicer
directs Trustee in writing to dispose of it.
(c) Trustee shall possess all right, title and interest in all funds on
deposit from time to time in the Accounts and in all proceeds thereof (excluding
all income thereon) and all such funds, investments and proceeds shall be part
of the Trust Property. The Accounts shall be under the sole dominion and the
exclusive custody and control of Trustee, and Trustee shall have sole signature
authority with respect thereto. If, at any time, any of the Accounts ceases to
be an Eligible Deposit Account, Trustee (or Servicer on its behalf) shall within
10 Business Days (or such longer period as to which each Rating Agency may
consent) establish a new Account as an Eligible Deposit Account and shall
transfer any cash and/or any investments that are in the existing Account which
is no longer an Eligible Deposit Account to such new Account.
Section 4.2. Collections. (a) Subject to the provisions of the
succeeding sentence and of subsections (b) and (c), Servicer shall remit to the
Collection Account all payments (other than amounts constituting Supplemental
Servicing Fees) by or on behalf of the Obligors on the Receivables, including
all Liquidation Proceeds received by Servicer during any Collection Period, as
soon
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as practicable, but in no event after the close of business on the second
Business Day, after receipt thereof. Subject to the provisions of subsections
(b) and (c), on the Closing Date, Servicer shall deposit in the Collection
Account all payments by or on behalf of the Obligors on the Receivables received
by Servicer after the Cutoff Date and on or prior to the second Business Day
immediately preceding the Closing Date.
(b) Notwithstanding the provisions of subsection (a), if Key Bank is
the Servicer and (i) Servicer shall have the Required Rating or (ii) Trustee
otherwise shall have received written notice from each of the Rating Agencies
that the then outstanding rating on the Class A Certificates and the Class B
Certificates would not be lowered or withdrawn as a result, Servicer may deposit
all amounts referred to in subsection (a) for any Collection Period into the
Collection Account not later than the close of business on the Deposit Date with
respect to such Collection Period; provided that if (x) a Servicer Termination
Event has occurred and is continuing, (y) Servicer has been terminated as such
pursuant to Section 8.1 or (z) Servicer ceases to have the Required Rating,
Servicer shall deposit such amounts (including any amounts then being held by
Servicer) into the Collection Account as provided in Section 4.2(a).
Notwithstanding the foregoing, the provisions of the proviso to the preceding
sentence shall not be applicable to a successor Servicer solely by reason of the
occurrence of an event specified in clauses (x), (y) and (z) of such proviso
with respect to the outgoing Servicer. Pending the deposit of the amounts
referred to in subsection (a) into the Collection Account, such amounts may be
employed by Servicer at its own risk and for its own benefit and need not be
segregated from Servicer's own funds. Any losses resulting from Servicer's
actions shall be borne exclusively by the Servicer. Servicer shall promptly
notify Trustee in writing if it shall obtain or lose the Required Rating.
(c) Notwithstanding the provisions of subsections (a) and (b), Servicer
may retain, or will be entitled to be reimbursed, from amounts otherwise payable
into, or on deposit in, the Collection Account with respect to a Collection
Period any amounts previously deposited in the Collection Account but later
determined to have resulted from mistaken deposits or postings or checks
returned for insufficient funds, in each case, with respect to which Servicer
has not been previously reimbursed hereunder. The amount to be retained or
reimbursed hereunder shall not be included in Collections with respect to the
related Distribution Date.
(d) With respect to each Precomputed Receivable, collections and
payments by or on behalf of an Obligor (other than any amounts constituting
Supplemental Servicing Fees) for each Collection Period shall be applied to the
scheduled payment on such Precomputed Receivable for such Collection Period.
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To the extent such collections and payments on a Precomputed Receivable during a
Collection Period exceed the scheduled payment on such Precomputed Receivable
and are insufficient to prepay the Precomputed Receivable in full, collections
shall be treated as Payaheads until such later Collection Period as such
Payaheads may be transferred to the Collection Account and applied either to the
scheduled payments due or to prepay the Precomputed Receivable in full in
accordance with Section 4.5.
Section 4.3. [Reserved].
Section 4.4. Additional Deposits; Net Deposits. (a) On or prior to each
Deposit Date, Seller or Servicer, as the case may be, shall remit to the
Collection Account, in next-day or immediately available funds, the aggregate
Purchase Amounts of the Receivables to be purchased by it under an obligation
that arose during the preceding Collection Period pursuant to Section 2.4, 3.7
or 10.2, respectively.
(b) Servicer may make the remittances to be made by it pursuant to this
Article IV net of amounts to be distributed to it pursuant to Section 4.5 (but
subject to the priorities set forth therein), for so long as (i) no Servicer
Termination Event has occurred and is continuing and (ii) Servicer has not been
terminated as such pursuant to Section 8.1; provided that Servicer shall account
for all of such amounts in the related Servicer's Report as if such amounts were
deposited and distributed separately; and provided that, if an error is made by
Servicer in calculating the amount to be deposited or retained by it and a
shortfall in the amount deposited in the Collection Account results, Servicer
shall make a payment of the deficiency to the Collection Account, immediately
upon becoming aware, or receiving notice from Trustee, of such error.
Section 4.5. Distributions. (a) On each Determination Date, Servicer
shall calculate all amounts required to determine the amounts to be deposited on
the related Distribution Date in the Class A Distribution Account and the Class
B Distribution Account which calculations shall be set forth in the Servicer's
Report delivered to Trustee on or before such Determination Date.
(b) On or before each Distribution Date, Servicer shall instruct
Trustee in writing (based on the information contained in Servicer's Report
delivered on the related Determination Date pursuant to Section 3.9) to, and the
Trustee shall:
(i) withdraw from the Payahead Account and deposit in the
Collection Account, in immediately available funds, (x) with respect to
each Precomputed Receivable for which the payments made by or on behalf
of the Obligor for the related Collection Period are less than the
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scheduled payment for the related Collection Period, the amount of
Payaheads, if any, made with respect to such Receivable which, when
added to the amount of such payments, is equal to the amount of such
scheduled payment, (y) with respect to each Precomputed Receivable for
which prepayments insufficient to prepay the Receivable in full have
been made by or on behalf of the Obligor for the related Collection
Period, the amount of Payaheads, if any, made with respect to such
Receivable which, when added to the amount of such prepayments, is
equal to an amount sufficient to prepay such Receivable in full, and
(z) the amount of all Payaheads, if any, made with respect to any
Purchased Receivable; and
(ii) withdraw from the Collection Account and deposit in the
Payahead Account (or receive from the Servicer, which will remit to the
Trustee for deposit in the Payahead Account, as the case may be), in
immediately available funds, the aggregate amount of collections on
Precomputed Receivables treated as Payaheads pursuant to Section 4.2
for the Collection Period related to such Distribution Date.
(c) On each Distribution Date, based on the related Servicer's Report,
Trustee will make the following deposits and distributions from the Collection
Account by [_______] a.m. (_______________, _________ time), to the extent of
the sum of Available Interest and any Available Reserve Amount (and, in the case
of shortfalls in the Class A Interest Distributable Amount occurring under
clause (ii), the Class B Percentage of Available Principal to the extent of such
shortfalls), in the following priority:
(i) to Servicer, any unpaid Servicing Fee for the related
Collection Period and all unpaid Servicing Fees from prior Collection
Periods;
(ii) to the Class A Distribution Account, the Class A Interest
Distributable Amount for such Distribution Date; and
(iii) to the Class B Distribution Account, the Class B
Interest Distributable Amount for such Distribution Date.
On each Distribution Date, based on the related Servicer's Report, Trustee will
make the following deposits and distributions, to the extent of the portion of
Available Principal, Available Interest and Available Reserve Amount remaining
after the application of clauses (i), (ii) and (iii), in the following priority:
(iv) to the Class A Distribution Account, the Class A
Principal Distributable Amount for such Distribution Date;
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(v) to the Class B Distribution Account, the Class B Principal
Distributable Amount for such Distribution Date;
(vi) to the Reserve Account, any amounts remaining, until the
amount on deposit in the Reserve Account equals the Specified Reserve
Account Balance;
(vii) to the Servicer, the Additional Servicing for such
Distribution Date; and
(viii) to Seller, any amounts remaining.
(d) On each Distribution Date, all amounts on deposit in the Class A
Distribution Account will be distributed to the Class A Holders (determined as
of the related Record Date) by Trustee and all amounts on deposit in the Class B
Distribution Account will be distributed to the Class B Holders (determined as
of the related Record Date) by Trustee. Except as provided in Section 10.1,
payments under this paragraph shall be made to the Holders by check mailed by
Trustee to each Holder's respective address of record (or, in the case of
Certificates registered in the name of a Clearing Agency, or its nominee, by
wire transfer of immediately available funds). To the extent that Trustee is
required to wire funds to the Holders from the Class A Distribution Account or
the Class B Distribution Account, as applicable, it shall request the bank
maintaining the Class A Distribution Account or the Class B Distribution
Account, as applicable, to make a wire transfer of the amount to be distributed
and the bank maintaining the Class A Distribution Account or the Class B
Distribution Account, as applicable, shall promptly deliver to Trustee a
confirmation of such wire transfer. To the extent that Trustee is required to
make payments to Holders by check hereunder, it shall request the bank
maintaining the Class A Distribution Account or the Class B Distribution
Account, as applicable, to provide it with a supply of checks to make such
payments. The bank shall, if a request is made by Trustee for a wire transfer by
[ ] A.M. ( , time) on any Distribution Date, wire such funds in accordance with
such instructions by [ ] A.M. ( , time) on such Distribution Date, and it will
otherwise act in compliance with the provisions of this paragraph and the other
provisions of this Agreement applicable to it as the bank maintaining the Class
A Distribution Account or the Class B Distribution Account, as applicable.
Servicer shall take all necessary action (including requiring an agreement to
such effect) to ensure that any bank maintaining the Class A Distribution
Account or the Class B Distribution Account, as applicable, agrees to comply,
and complies, with the provisions of this paragraph and the other provisions of
this Agreement applicable to it as the bank maintaining the Class A Distribution
Account or the Class B Distribution Account, as applicable.
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Section 4.6. Reserve Account. (a) Seller shall establish and maintain
in the name of the Trustee an Eligible Deposit Account (the "Reserve Account").
The Reserve Account and any amounts therein shall not be property of the Trust,
but shall be pledged to and held for the benefit of the Trustee, as secured
party. The Reserve Account shall be initially established and maintained with
the Trustee (the "Securities Intermediary"). On the Closing Date, Seller shall
deposit or cause to be deposited in the Reserve Account an amount equal to the
Reserve Account Initial Deposit.
(b) In order to provide for the prompt payment to the Holders and
Servicer and to assure availability of the amounts maintained in the Reserve
Account:
(i) Seller, on behalf of itself and its successors and
assigns, and solely for the purpose of providing for payment of the
distributions provided for in Section 4.5, hereby grants a security
interest in and pledges to Trustee and its successors and assigns for
the benefit of the Holders, all of its right, title and interest in and
to the Reserve Account, subject, however, to the limitations set forth
in this Agreement, and all proceeds of the foregoing, including all
securities, investments, general intangibles, financial assets and
investment property from time to time credited to and any security
entitlement to the Reserve Account; and
(ii) Seller hereby grants a security interest in and pledges
to Trustee and its successors and assigns for the benefit of the
Holders, the Reserve Account Deposit and all proceeds thereof, and
solely for the purpose of providing for payment of the distributions
provided for in Section 4.5, (all of the foregoing, subject to the
limitations set forth in this Section, the "Reserve Account
Property").
to have and to hold all the aforesaid property, rights and privileges unto
Trustee, its successors and assigns, in trust for the uses and purposes, and
subject to the terms and provisions, set forth in this Section. Trustee hereby
acknowledges such transfer and accepts the trust hereunder and shall hold and
distribute the Reserve Account Property in accordance with the terms and
provisions of this Section.
(c) Trustee shall, at the written direction of Seller, direct the
Securities Intermediary to invest funds on deposit in the Reserve Account in
Eligible Investments selected by Seller and confirmed in writing by Seller to
Trustee; provided that it is understood and agreed that none of Trustee,
Securities Intermediary or Seller shall be liable for any loss arising from such
investment in Eligible Investments. Funds on deposit in the Reserve Account
shall be invested in Eligible Investments that will mature so that all such
funds will be
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available at the close of business on each Deposit Date; provided that to the
extent permitted by the Rating Agencies following written request by Seller,
funds on deposit in the Reserve Account may be invested in Eligible Investments
that mature later than the next Deposit Date. Funds deposited in the Reserve
Account on a Deposit Date upon the maturity of any Eligible Investments are not
required to be (but may be) invested overnight. Seller will treat the funds,
Eligible Investments and other assets in the Reserve Account as its own for
Federal, state and local income tax and franchise tax purposes and will report
on its tax returns all income, gain and loss from the Reserve Account.
(d) The Securities Intermediary hereby expressly agrees with the
Trustee that: (i) all matters relating to the Reserve Account shall be governed
by the laws of the State of ______________; (ii) all Eligible Investments held
by the Securities Intermediary on behalf of the Trustee in the Reserve Account
shall be treated as "financial assets" (as defined in Article 8 of the
______________ Uniform Commercial Code; (iii) the Securities Intermediary will
treat the Trustee as entitled to exercise the rights comprising the financial
assets credited to the Reserve Account; [(iv) the financial assets credited to
the Reserve Account shall not be registered in the name of, payable to the order
of, or specially indorsed to the Trustee;] and (v) the Securities Intermediary
will not agree to comply with entitlement orders originated by any person with
respect to the financial assets held in the Reserve Account other than the
Trustee.
(e) On each Distribution Date, any amounts on deposit in the Collection
Account with respect to the preceding Collection Period after payments to
Servicer, the Class A Distribution Account and the Class B Distribution Account
have been made will be deposited into the Reserve Account until the amount of
the Reserve Account is equal to the Specified Reserve Account Balance.
(f) The Reserve Account shall be under the sole custody and control of
Trustee. If, at any time, the Reserve Account ceases to be an Eligible Deposit
Account, Trustee shall within 10 Business Days (or such longer period, not to
exceed 30 calendar days, as to which each Rating Agency may consent) establish a
new Reserve Account as an Eligible Deposit Account and shall transfer any cash
and/or any investments that are in the existing account which is no longer an
Eligible Deposit Account to such new Reserve Account.
(g) On each Distribution Date, the amount available in the Reserve
Account (the "Available Reserve Amount") will equal the lesser of (i) the amount
on deposit in the Reserve Account (exclusive of investment earnings) and (ii)
the Specified Reserve Account Balance. On each Deposit Date, Trustee will
withdraw funds from the Reserve Account to the extent that (A) the sum of the
amounts required to be distributed to Holders and the accrued and unpaid
Servicing Fees
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payable to Servicer on such Distribution Date exceeds (B) the amount on deposit
in the Collection Account with respect to the preceding Collection Period (net
of net investment income). The aggregate amount to be withdrawn from the Reserve
Account on any Deposit Date shall not exceed the Available Reserve Amount with
respect to the related Distribution Date. Trustee will deposit the proceeds of
such withdrawal into the Collection Account on or before such Distribution Date
with respect to which such withdrawal was made.
(h) Amounts on deposit in the Reserve Account will be released to
Seller on each Distribution Date to the extent that the amount credited to the
Reserve Account would exceed the Specified Reserve Account Balance. Upon any
distribution to Seller of amounts from the Reserve Account, the Holders will not
have any rights in, or claims to, such amounts. Amounts distributed to Seller
from the Reserve Account in accordance with this Section shall not be available
under any circumstances to the Trust, Trustee or the Holders and Seller shall in
no event thereafter be required to refund any such distributed amounts.
(i) With respect to the Reserve Account Property, Seller, and Trustee
agree that the Reserve Account Deposit and all other funds and Reserve Account
Property shall be delivered to Trustee for credit to the Reserve Account. In
addition:
(i) any Reserve Account Property that constitutes Physical
Property shall be delivered to Trustee in accordance with paragraph (a)
of the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by Trustee or a financial intermediary (as such
term is defined in Section 8-313(4) of the UCC) acting solely for
Trustee;
(ii) any Reserve Account Property that is a book entry
security held through the Federal Reserve System pursuant to Federal
book-entry regulations shall be delivered in accordance with paragraph
(b) of the definition of "Delivery" and shall be maintained by Trustee
pending maturity or disposition, through continued book entry
registration of such Reserve Account Property as described in such
paragraph; and
(iii) any Reserve Account Property that is an "uncertificated security"
under Article 8 of the UCC and that is not governed by clause (ii)
above shall be delivered to Trustee in accordance with paragraph (c) of
the definition of "Delivery" and shall be maintained by Trustee pending
maturity or disposition, through continued registration of Trustee's
(or its nominee's) ownership of such security.
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Effective upon the crediting of any Reserve Account Property to the Reserve
Account, Trustee shall be deemed to have represented that it has purchased such
Reserve Account Property for value, in good faith and without notice of any
adverse claim thereto.
(j) Seller (and any successor to Seller in accordance with Section 6.3)
and Servicer agree to take or cause to be taken such further actions, to
execute, deliver and file or cause to be executed, delivered and filed such
further documents and instruments (including any UCC financing statements or
this Agreement) as may be determined to be necessary, in an Opinion of Counsel
to Seller delivered to Trustee in order to perfect the interests created by this
Section 4.6 and otherwise fully to effectuate the purposes, terms and conditions
of this Section 4.6. Seller (and any successor to Seller in accordance with
Section 6.3) and Servicer shall:
(i) promptly execute, deliver and file any financing
statements, amendments, continuation statements, assignments,
certificates and other documents with respect to such interests and
perform all such other acts as may be necessary in order to perfect or
to maintain the perfection of Trustee's security interest; and
(ii) make the necessary filings of financing statements or
amendments thereto within five days after the occurrence of any of the
following: (A) any change in their respective names or any trade names,
(B) any change in the location of their respective chief executive
offices or principal places of business and (C) any merger or
consolidation or other change in their respective identities or
corporate structures; and shall promptly notify Trustee of any such
filings.
(k) Investment earnings attributable to the Reserve Account Property
and proceeds therefrom shall be held by Trustee for the benefit of Seller.
Investment earnings attributable to the Reserve Account Property shall not be
available to pay the distributions provided for in Section 4.5 and shall not
otherwise be subject to any claims or rights of the Holders or Servicer. Trustee
shall cause all investment earnings attributable to the Reserve Account to be
distributed on each Distribution Date to Seller.
(l) Seller may at any time, without consent of Holders, sell, transfer,
convey or assign in any manner its rights to and interests in distributions from
the Reserve Account provided that (i) the Rating Agencies confirm in writing
that such action will not result in a reduction or withdrawal of the rating of
the Class A Certificates or the Class B Certificates, (ii) Seller provides to
Trustee an Opinion of Counsel from independent counsel that such action will not
cause
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Trust to be classified as an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes and (iii) such
transferee or assignee agrees in writing to take positions for federal income
tax purposes consistent with the federal income tax positions agreed to be taken
by Seller.
Section 4.7. Statements to Holders. On each Distribution Date, Servicer
shall provide to Trustee (with a copy to each Rating Agency) written
instructions for Trustee to forward to each Holder of record a statement setting
forth at least the following information as to the Certificates to the extent
applicable:
(a) the amount of the distribution allocable to principal on the Class
A Certificates and the Class B Certificates;
(b) the amount of the distribution allocable to interest on the Class A
Certificates and the Class B Certificates;
(c) the amount of the Servicing Fee paid to Servicer with respect to
the related Collection Period;
(d) the Class A Certificate Balance, the Class A Pool Factor, the Class
B Certificate Balance and the Class B Pool Factor as of such Distribution Date,
after giving effect to payments allocated to principal reported under clause
(a);
(e) the Pool Balance as of the close of business on the last day of the
preceding Collection Period;
(f) the amount of Defaulted Receivables and Liquidation Proceeds, if
any, for such Collection Period;
(g) the aggregate Purchase Amount of Receivables repurchased by Seller
or purchased by Servicer with respect to the related Collection Period;
(h) the Class A Interest Carryover Shortfall, the Class B Interest
Carryover Shortfall, the Class A Principal Carryover Shortfall and the Class B
Principal Carryover Shortfall, if any, in each case as applicable to each of the
Class A Certificates and the Class B Certificates, and the change in such
amounts from the preceding statement;
(i) the balance of the Reserve Account on such Distribution Date, after
giving effect to changes therein on such Distribution Date;
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(j) the Specified Reserve Account Balance as of the close of business
on such Distribution Date; and
(k) the number, and aggregate principal amount outstanding, of
Receivables past due 31-60, 61-90 and over 90 days.
Each amount set forth pursuant to clauses (a), (b) and (c) shall be expressed in
the aggregate and as a dollar amount per $1,000 of original denomination of a
Certificate.
Within a reasonable period of time after the end of each calendar year,
but not later than the latest date permitted by law, Servicer shall furnish a
report to the Trust and Trustee shall furnish, or cause to be furnished, to each
Person who at any time during such calendar year shall have been a Holder, a
statement based upon such report as to the sum of the amounts determined in
clauses (a) and (b) above for such calendar year, or, in the event such Person
shall have been a Holder during a portion of such calendar year, for the
applicable portion of such year, and such other information as is available to
Servicer as Servicer deems necessary or desirable to enable the Holders to
prepare their federal income tax returns. The obligation of the Trustee set
forth in this paragraph shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided pursuant to any
requirement of the Code.
ARTICLE V. THE CERTIFICATES.
Section 5.1. The Certificates. Trustee shall, upon written order or
request signed in the name of Seller by one of its officers authorized to do so
and delivered to an Authorized Officer of Trustee, execute on behalf of the
Trust, authenticate and deliver the Certificates to or upon the order of Seller
in the aggregate principal amount and denominations as set forth in such written
order or request. The Certificates shall be issuable in denominations of $1,000
and integral multiples thereof; provided that one Class A Certificate and one
Class B Certificate may be issued in a denomination that represents the residual
amount of the Original Class A Certificate Balance and the Original Class B
Certificate Balance, respectively. Upon initial issuance, the Class A
Certificates and the Class B Certificates shall be in the form of Exhibit A and
Exhibit B, respectively, which are incorporated by reference herein, and shall
be issued as provided in Section 5.8, in an aggregate amount equal to the
Original Class A Certificate Balance and the Original Class B Certificate
Balance, respectively. The Certificates shall be executed by Trustee on behalf
of the Trust by manual or facsimile signature of an Authorized Officer of
Trustee under Trustee's seal imprinted thereon and attested by the manual or
facsimile signature of an Authorized Officer of Trustee. Certificates bearing
the manual or facsimile
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signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust, shall be valid and
binding obligations of the Trust, notwithstanding that such individuals shall
have ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such Certificates.
Section 5.2. Authentication of Certificates. No Certificate shall
entitle the Holder thereof to any benefit under this Agreement, or shall be
valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication, substantially in the form set forth in the form
of Certificates attached hereto as Exhibit A and Exhibit B, executed by Trustee
by manual signature. Such authentication shall constitute conclusive evidence,
and the only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
Section 5.3. Registration of Transfer and Exchange of Certificates.
Trustee shall maintain, or cause to be maintained, at the office or agency to be
maintained by it in accordance with Section 5.7, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. Upon surrender for registration of transfer of
any Class A Certificate or Class B Certificate at such office or agency, Trustee
shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Class A Certificates or Class B
Certificates, as the case may be, in authorized denominations of a like
aggregate amount. At the option of a Holder, Class A Certificates or Class B
Certificates may be exchanged for other Class A Certificates or Class B
Certificates, as the case may be, of authorized denominations of a like
aggregate amount at the office or agency maintained by Trustee in accordance
with Section 5.7. Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
duly executed by the Holder and in a form satisfactory to Trustee. No service
charge shall be made for any registration of transfer or exchange of
Certificates, but Trustee may require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer
or exchange of Certificates. All Certificates surrendered for registration of
transfer or exchange shall be cancelled and disposed of in accordance with the
customary procedures of Trustee.
The Class B Certificates and any beneficial interest in such Class B
Certificates may not be acquired (a) with the assets of an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (b) by a plan described in Section 4975(e)(1) of the Code or (c) by
any entity whose underlying assets include plan assets by reason of a plan's
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investment in the entity. By accepting and holding a Class B Certificate or
interest therein, the Holder thereof or Class B Certificate Owner thereof shall
be deemed to have represented and warranted that it is not subject to the
foregoing limitation.
The preceding provisions of this Section 5.3 notwithstanding, Trustee
shall not make and need not register any transfer or exchange of Certificates
for a period of fifteen (15) days preceding any Distribution Date for any
payment with respect to the Certificates.
Section 5.4. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Class A Certificate or Class B Certificate shall be surrendered to
Trustee, or if Trustee shall receive evidence to its satisfaction of the
destruction, loss or theft of any Class A Certificate or Class B Certificate and
(b) there shall be delivered to Trustee such security or indemnity as may be
required to save Trustee harmless, then in the absence of notice that such Class
A Certificate or Class B Certificate shall have been acquired by a bona fide
purchaser, Trustee shall execute, authenticate and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Class A Certificate or
Class B Certificate, a new Class A Certificate or Class B Certificate of like
tenor and denomination. In connection with the issuance of any new Certificate
under this Section 5.4, Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
herewith. Any replacement Certificate issued pursuant to this Section 5.4 shall
constitute conclusive evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
Section 5.5. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, Trustee may treat the Person in whose
name any Certificate shall be registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 4.5 and for all other
purposes, and Trustee shall not be bound by any notice to the contrary.
Section 5.6. Access to List of Holders' Names and Addresses. Trustee
shall furnish or cause to be furnished to Servicer, within fifteen days after
receipt by Trustee of a request therefor from Servicer in writing, in such form
as Servicer may reasonably require, a list of the names and addresses of the
Holders as of the most recent Record Date. If Definitive Certificates have been
issued, Trustee, upon written request of (a) three or more Holders or (b) one or
more Holders evidencing not less than 25% of the aggregate outstanding principal
balance of the Certificates, will, within five Business Days after the receipt
of such request, afford such Holders access during normal business hours to the
most current list of Holders for purposes of communicating with other Holders
with respect to their rights under the Agreement. Each Holder, by receiving and
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holding a Certificate, shall be deemed to have agreed not to hold Seller,
Servicer or Trustee accountable by reason of the disclosure of such Holder's
name and address, regardless of the source from which such information was
derived.
Section 5.7. Maintenance of Office or Agency. Trustee shall maintain,
or cause to be maintained, at its expense, in _______________, an office or
agency where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon Trustee in respect of the
Certificates and this Agreement may be served. Trustee initially designates its
office located at _______________________ for such purposes. Trustee shall give
prompt written notice to Servicer and to Holders of any change in the location
of any such office or agency.
Section 5.8. Book Entry Certificates. Upon original issuance, the Class
A Certificates and the Class B Certificates, other than the Class A Certificate
representing the residual amount of the Original Class A Certificate Balance and
the Class B Certificate representing the residual amount of the Original Class B
Certificate Balance, which shall be issued upon the written order of Seller,
shall be issued in the form of one or more typewritten Certificates representing
the Book Entry Certificates, to be delivered to the initial Clearing Agency, by,
or on behalf of, Seller. Such Certificates shall initially be registered on the
Certificate Register in the name of CEDE & Co., the nominee of the initial
Clearing Agency, and no Certificate Owner will receive a Definitive Certificate
representing such Certificate Owner's interest in the Class A Certificates or
the Class B Certificates, as the case may be, except as provided in Section
5.10. Unless and until definitive, fully registered Certificates ("Definitive
Certificates") have been issued to the Holders pursuant to Section 5.10:
(a) the provisions of this Section 5.8 shall be in full force
and effect;
(b) Seller, Servicer and Trustee may deal with the Clearing
Agency for all purposes (including the making of distributions on the
Certificates and the taking of actions by the Holders) as the
authorized representative of the Certificate Owners;
(c) to the extent that the provisions of this Section 5.8
conflict with any other provisions of this Agreement, the provisions of
this Section 5.8 shall control;
(d) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law, the rules, regulations and procedures of the Clearing Agency
and
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agreements between such Certificate Owners and the Clearing Agency and
all references in this Agreement to actions by Holders shall refer to
actions taken by the Clearing Agency upon instructions from the
Clearing Agency Participants, and all references in this Agreement to
distributions, notices, reports and statements to Holders shall refer
to distributions, notices, reports and statements to the Clearing
Agency or its nominee, as registered holder of the Certificates, as the
case may be, for distribution to Certificate Owners in accordance with
the rules, regulations and procedures of the Clearing Agency; and
(e) pursuant to the Depository Agreement, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal and
interest on the Certificates to the Clearing Agency Participants, for
distribution by such Clearing Agency Participants to the Certificate
Owners or their nominees.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Holders of Certificates
evidencing specified percentages of the aggregate outstanding principal balance
of such Certificates, such direction or consent may be given by Certificate
Owners having interests in the requisite percentage, acting through the Clearing
Agency.
Section 5.9. Notices to Clearing Agency. Whenever notice or other
communication to the Holders is required under this Agreement unless and until
Definitive Certificates shall have been issued to Certificate Owners pursuant to
Section 5.10, Trustee shall give all such notices and communications specified
herein to be given to Holders to the Clearing Agency.
Section 5.10. Definitive Certificates. If (a) (i) Seller advises
Trustee in writing that the Clearing Agency is no longer willing or able
properly to discharge its responsibilities under the Depository Agreement and
(ii) Trustee or Seller is unable to locate a qualified successor, (b) Seller, at
its option, advises Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency or (c) after the occurrence of a
Servicer Termination Event, Certificate Owners representing in the aggregate not
less than a majority of the aggregate outstanding principal balance of the
Certificates, advise Trustee and the Clearing Agency through the Clearing Agency
Participants in writing that the continuation of a book-entry system through the
Clearing Agency is no longer in the Certificate Owners' best interests, Trustee
shall notify the Clearing Agency which shall be responsible to notify the
Certificate Owners of the occurrence of any such event and of the availability
of Definitive Certificates to Certificate
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Owners requesting the same. Upon surrender to Trustee by the Clearing Agency of
the Certificates registered in the name of the nominee of the Clearing Agency,
accompanied by re-registration instructions from the Clearing Agency for
registration, Trustee shall execute, on behalf of the Trust, authenticate and
deliver Definitive Certificates in accordance with such instructions. Seller
shall arrange for, and will bear all costs of, the printing and issuance of such
Definitive Certificates. Neither Seller, Servicer nor Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates, Trustee shall recognize the Holders of the Definitive
Certificates as Holders hereunder.
ARTICLE VI. SELLER.
Section 6.1. Representations and Warranties of Seller. Seller makes the
following representations and warranties, on which Trustee relies in accepting
the Receivables and the other Trust Property in trust and executing and
authenticating the Certificates. Such representations are made as of the
execution and delivery of this Agreement, but shall survive the sale, transfer
and assignment of the Receivables and the other Trust Property to the Trust.
(a) Organization and Good Standing. Seller has been duly
organized and is validly existing as a Delaware corporation in good
standing under the laws of the State of Delaware, with the power and
authority to own its properties and to conduct its business as such
properties are presently owned and such business is presently conducted
and had at all relevant times, and has, full power, authority and legal
right to acquire, own and sell the Receivables and the other Trust
Property.
(b) Power and Authority. Seller has the power, authority and
legal right to execute and deliver this Agreement and the Related
Agreements to which it is a party and to carry out their respective
terms and to sell and assign the property to be sold and assigned to
and deposited with Trustee as Trust Property; and the execution,
delivery and performance of this Agreement and the Related Agreements
to which it is a party have been duly authorized by Seller by all
necessary corporate action.
(c) No Consent Required. No approval, authorization, consent,
license or other order or action of, or filing or registration with,
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement or the
Related Agreements to which it is a party or the consummation of the
transactions contemplated hereby or thereby, other than (i) as may be
required under
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the blue sky or securities laws of any State or the Securities Act of
1933, as amended, and (ii) the filing of UCC financing statements.
(d) Valid Sale; Binding Obligation. Seller intends this
Agreement to effect a valid sale, transfer, and assignment of the
Receivables and the other Trust Property conveyed by Seller to the
Trust hereunder, enforceable against creditors of and purchasers from
Seller; and each of this Agreement and the Related Agreements to which
it is a party constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its respective
terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, conservatorship, receivership, liquidation
and other similar laws affecting enforcement of the rights of creditors
generally and to equitable limitations on the availability of specific
remedies.
(e) No Violation. The execution, delivery and performance by
Seller of this Agreement and the Related Agreements to which it is a
party and the consummation of the transactions contemplated hereby and
thereby will not conflict with, result in any material breach of any of
the terms and provisions of, constitute (with or without notice or
lapse of time) a material default under or result in the creation or
imposition of any Lien upon any of its material properties pursuant to
the terms of, (i) the certificate of incorporation or bylaws of Seller,
(ii) any material indenture, contract, lease, mortgage, deed of trust
or other instrument or agreement to which Seller is a party or by which
Seller is bound, or (iii) any law, order, rule or regulation applicable
to Seller of any federal or state regulatory body, any court,
administrative agency, or other governmental instrumentality having
jurisdiction over Seller.
(f) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of Seller, threatened, before any court,
regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over Seller or its
properties: (i) asserting the invalidity of this Agreement or any
Related Agreement, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions
contemplated by this Agreement or any Related Agreement, (iii) seeking
any determination or ruling that might materially and adversely affect
the performance by Seller of its obligations under, or the validity or
enforceability of, this Agreement or any Related Agreement or (iv) that
may materially and adversely affect the federal or state income,
excise, franchise or similar tax attributes of the Certificates.
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(g) Chief Executive Office. The chief executive office of
Seller is Key Tower, 127 Public Square, Cleveland, Ohio 44114-1306.
Section 6.2. Liability of Seller; Indemnities. (a) Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by Seller under this Agreement and shall have no other obligations or
liabilities hereunder.
(b) Seller shall indemnify, defend and hold harmless Trustee, the Trust
and the Holders from and against any taxes that may at any time be asserted
against Trustee, its directors, officers, employees and agents, the Trust or a
Holder with respect to, and on the date of, the sale, transfer and assignment of
the Trust Property to the Trust or the issuance and original sale of the
Certificates, including any sales, gross receipts, general corporation, tangible
personal property, privilege or license taxes (but not including any taxes
asserted with respect to Federal or other income taxes arising out of
transactions contemplated by this Agreement and the other Related Agreements)
and costs and expenses in defending against the same.
(c) Seller shall indemnify, defend and hold harmless Trustee, its
directors, officers, employees and agents, the Trust and the Holders from and
against any and all costs, expenses, losses, claims, damages and liabilities to
the extent arising out of, or imposed upon such Person through or as a result of
(i) Seller's willful misfeasance, bad faith or gross negligence (other than
errors in judgment) in the performance of its duties under this Agreement.
(d) Seller shall indemnify, defend and hold harmless Trustee, its
directors, officers, employees and agents, the Trust and the Holders from and
against any loss, liability or expense incurred by reason of the violation by
Seller of federal or state securities laws in connection with the registration
or the sale of the Certificates or in connection with any application relating
to the Certificates under any state securities laws.
(e) Seller shall indemnify, defend and hold harmless Trustee, its
directors, officers, employees and agents, the Trust and the Holders from and
against any loss, liability or expense imposed upon, or incurred by, Trustee,
the Trust or the Holders as the result of the failure of any Receivable conveyed
by it to the Trust hereunder, or the sale of the related Financed Vehicle, to
comply with all requirements of applicable law.
(f) Seller shall be liable as primary obligor for, and shall indemnify,
defend and hold harmless Trustee and its respective officers, directors,
employees and agents from and against any and all costs, expenses, losses,
claims, damages
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and liabilities arising out of, or incurred in connection with the acceptance or
performance of the trusts and duties set forth herein, except to the extent that
such cost, expense, loss, claim, damage or liability: (i) shall be due to the
willful misfeasance, bad faith or negligence (except for errors in judgment) of
Trustee, or (ii) shall arise from the breach by Trustee of any of its
representations and warranties or covenants set forth herein. Such liability
shall survive the termination of the Trust and removal or resignation of the
Trustee.
(g) Seller shall pay any and all taxes levied or assessed upon the
Trust or upon all or any part of the Trust Estate other than those taxes
expressly excluded from Seller's responsibilities pursuant to the parentheticals
in paragraph (a) above.
(h) Indemnification under this Section 6.2 shall include reasonable
fees and expenses of counsel and expenses of litigation and shall survive
termination of this Agreement and the resignation or removal of Trustee. If
Seller shall have made any indemnity payments pursuant to this Section and the
Person to or on behalf of whom such payments are made thereafter shall collect
any of such amounts from others, such Person shall promptly repay such amounts
to Seller, without interest.
Section 6.3. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which Seller may be merged or
consolidated, (b) that may result from any merger, conversion or consolidation
to which Seller is a party, or (c) that may succeed by purchase and assumption
to all or substantially all of the business of Seller, where Seller in any of
the foregoing cases is not the surviving entity, which corporation or other
entity shall execute an agreement of assumption to perform every obligation of
Seller under this Agreement, shall be the successor to Seller hereunder without
the execution or filing of any document or any further act by any of the parties
to this Agreement; provided that (x) Servicer shall have delivered to Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such merger,
conversion, consolidation or succession and such agreement of assumption comply
with this Section, and (y) Servicer shall have delivered to Trustee an Opinion
of Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of Trustee in the Receivables, and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to fully preserve and protect such interest. Seller shall
promptly inform Trustee and each Rating Agency of any such merger, conversion,
consolidation or purchase and assumption, where Seller is not the surviving
entity.
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Section 6.4. Limitation on Liability of Seller and Others. Seller and
any director or officer or employee or agent of Seller may rely in good faith on
the advice of counsel or on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement or any Related Agreement (provided that such reliance shall not limit
in any way Seller's obligations under Section 3.2). Seller shall not be under
any obligation to appear in, prosecute or defend any legal action that shall
not be incidental to its obligations under this Agreement, and that in its
opinion may involve it in any expense or liability.
Section 6.5. Seller May Own Certificates. Seller, and any Affiliate of
Seller, may in its individual or any other capacity become the owner or pledgee
of Certificates with the same rights as it would have if it were not Seller or
an Affiliate thereof, except as otherwise provided in the definition of
"Holder", "Class A Holder" and "Class B Holder" in Section 1.1. Certificates so
owned by or pledged to Seller or any such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority or distinction as among all of the Certificates, except as
otherwise provided in the definitions of "Class A Holder" and "Class B Holder".
ARTICLE VII. SERVICER.
Section 7.1. Representations and Warranties of Servicer. Servicer makes
the following representations and warranties on which Trustee relies in
accepting the Receivables and the other Trust Property in trust and in
authenticating the Certificates. These representations are made as of the
Closing Date, but shall survive the sale, transfer and assignment of the
Receivables and the other Trust Property to the Trust.
(a) Organization and Good Standing. Servicer has been duly organized
and is validly existing as a national banking association in good standing under
the laws of the United States, with the power and authority to own its
properties and to conduct its business as such properties are presently owned
and such business is presently conducted, and had at all relevant times, and
shall have, the power, authority and legal right to service the Receivables and
the other Trust Property.
(b) Due Qualification. Servicer shall be duly qualified to do business
as a foreign corporation in good standing, and shall have obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such qualifications.
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(c) Power and Authority. Servicer has the power, authority and legal
right to execute and deliver this Agreement and the Related Agreements to which
it is a party and to carry out their respective terms; and the execution,
delivery and performance of this Agreement and the Related Agreements to which
it is a party have been duly authorized by Servicer by all necessary corporate
action.
(d) No Consent Required. No approval, authorization, consent, license
or other order or action of, or filing or registration with, any governmental
authority, bureau or agency is required in connection with the execution,
delivery or performance of this Agreement, the Related Agreements to which it is
a party or the consummation of the transactions contemplated hereby or thereby,
other than the filing of UCC financing statements.
(e) Binding Obligation. Each of this Agreement and the Related
Agreements to which it is a party constitutes a legal, valid and binding
obligation of Servicer, enforceable against Servicer in accordance with its
respective terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, conservatorship, receivership, liquidation and other
similar laws affecting enforcement of the rights of creditors of banks generally
and to equitable limitations on the availability of specific remedies.
(f) No Violation. The execution, delivery and performance by Servicer
of this Agreement and the Related Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby will not
conflict with, result in any material breach of any of the terms and provisions
of, constitute (with or without notice or lapse of time) a material default
under, or result in the creation or disposition of any Lien upon any of its
material properties pursuant to the terms of, (i) the articles of association or
bylaws of Servicer, (ii) any material indenture, contract, lease, mortgage, deed
of trust or other instrument or agreement to which Servicer is a party or by
which Servicer is bound, or (iii) any law, order, rule or regulation applicable
to Servicer of any federal or state regulatory body, any court, administrative
agency, or other governmental instrumentality having jurisdiction over Servicer.
(g) No Proceedings. There are no proceedings or investigations pending,
or, to Servicer's knowledge, threatened, before any court, regulatory body,
administrative agency, or tribunal or other governmental instrumentality having
jurisdiction over Servicer or its properties: (i) asserting the invalidity of
this Agreement, any Related 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 or any Related Agreement,
(iii) seeking any determination or ruling that might materially and adversely
affect the performance by Servicer of its obligations under, or the validity or
enforceability
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of, this Agreement, any Related Agreement or the Certificates, or (iv) that may
materially and adversely affect the federal or state income, excise, franchise
or similar tax attributes of the Certificates.
Section 7.2. Indemnities of Servicer. (a) Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by Servicer under this Agreement.
(b) Servicer shall indemnify, defend and hold harmless Trustee, Seller,
the Holders and any of the officers, directors, employees and agents of Trustee
or Seller from any and all costs, expenses, losses, claims, damages and
liabilities (including reasonable attorneys' fees and expenses) to the extent
arising out of, or imposed upon any such Person through, the gross negligence,
willful misfeasance or bad faith (other than errors in judgment) of Servicer in
the performance of its obligations and duties under this Agreement or in the
performance of the obligations and duties of any subservicer under any
subservicing agreement.
(c) Servicer shall indemnify, defend and hold harmless Trustee and its
officers, directors, employees and agents from and against any taxes that may at
any time be asserted against any such Person with respect to the transactions
contemplated in this Agreement or in the other Related Agreements, including any
sales, gross receipts, general corporation, tangible or intangible personal
property, privilege, or license taxes, or any taxes of any kind which may be
asserted (but not including any Federal or other income taxes arising out of
transactions contemplated by this Agreement and the other Related Agreements)
against the Trust, and costs and expenses in defending against the same.
(d) Servicer shall indemnify, defend and hold harmless Trustee, Seller
and the Holders or any of the officers, directors, employees and agents of
Trustee or Seller from any and all costs, expenses, losses, claims, damages and
liabilities (including reasonable attorneys' fees and expenses) to the extent
arising out of or imposed upon any such Person as a result of any compensation
payable to any subcustodian or subservicer (including any fees payable in
connection with the release of any Receivable File from the custody of such
subservicer or in connection with the termination of the servicing activities of
such subservicer with respect to any Receivable) whether pursuant to the terms
of any subservicing agreement or otherwise.
(e) Servicer shall indemnify, defend and hold harmless Trustee, Seller
and the Holders or any of the directors, officers, employees and agents of
Trustee and Seller from and against any and all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel and expenses of
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litigation, arising out of or resulting from the use, ownership, or operation by
Servicer or any Affiliate thereof of any Financed Vehicle.
Indemnification under this Section shall survive the resignation or removal of
Trustee and the termination of this Agreement and shall include reasonable fees
and expenses of counsel and other expenses of litigation. If Servicer shall have
made any indemnity payments pursuant to this Section and the Person to or on
behalf of whom such payments are made thereafter shall collect any of such
amounts from others, such Person shall promptly repay such amounts to Servicer,
without interest.
Section 7.3. Merger or Consolidation of or Assumption of the
Obligations of Servicer. Any corporation or other entity (a) into which
Servicer may be merged or consolidated, (b) that may result from any merger,
conversion, or consolidation to which Servicer is a party, (c) that may succeed
by purchase and assumption to all or substantially all of the business of
Servicer or (d) 50% of the voting stock of which is owned directly or
indirectly by KeyCorp, where, in the case of clauses (a), (b) and (c), Servicer
is not the surviving entity, which corporation or other entity in any of the
foregoing cases shall execute an agreement of assumption to perform every
obligation of Servicer under this Agreement, shall be the successor to Servicer
under this Agreement without any further act on the part of any of the parties
to this Agreement; provided that, unless Key Bank USA is the surviving party to
such transaction (x) Servicer shall have delivered to Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such merger,
conversion, consolidation or succession and such agreement of assumption comply
with this Section, and (y) Servicer shall have delivered to Trustee an Opinion
of Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of Trustee in the Receivables, and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to fully preserve and protect such interest. Servicer shall
promptly inform Trustee and each Rating Agency of any such merger, conversion,
consolidation or purchase and assumption where Servicer is not the surviving
entity.
Section 7.4. Limitation on Liability of Servicer and Others. Neither
Servicer nor any of its directors, officers, employees or agents shall be under
any liability to the Trust or the Holders, except as provided under this
Agreement, for any action taken or for refraining from the taking of any action
by Servicer or any subservicer pursuant to this Agreement or for errors in
judgment; provided that this provision shall not protect Servicer or any such
Person against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
(except for errors in judgment) or by reason of reckless disregard of
obligations and duties under this
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Agreement. Servicer or any subservicer and any of their respective directors,
officers, employees or agents may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any matters
arising under this Agreement.
Except as provided in this Agreement, Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that shall be
incidental to its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability;
provided that Servicer may (but shall not be required to) undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and the Related Agreements to protect the interests of the Holders
under this Agreement and the Related Agreements. In such event, the legal
expense and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Servicer.
Section 7.5. Key Bank USA Not To Resign as Servicer. Subject to the
provisions of Section 7.3, Key Bank USA hereby agrees not to resign from the
obligations and duties hereby imposed on it as Servicer under this Agreement
except upon determination that the performance of its duties hereunder shall no
longer be permissible under applicable law or if such resignation is required by
regulatory authorities. Notice of any such determination permitting the
resignation of Key Bank USA as Servicer shall be communicated to Trustee at the
earliest practicable time (and, if such communication is not in writing, shall
be confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to Trustee concurrently with or promptly after such notice. No such
resignation shall become effective until the earlier of Trustee or a successor
Servicer having assumed the responsibilities and obligations of the resigning
Servicer in accordance with Section 8.2 or the date upon which any regulatory
authority requires such resignation.
Section 7.6. Servicer May Own Certificates. Servicer, and any Affiliate
of Servicer, may, in its individual or any other capacity, become the owner or
pledgee of Certificates with the same rights as it would have if it were not
Servicer or an Affiliate thereof, except as otherwise provided in the definition
of "Holder", "Class A Holder" and "Class B Holder" in Section 1.1. Certificates
so owned by or pledged to Servicer or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority or distinction as among all of the Certificates, except as
otherwise provided in the definitions of "Class A Holder" and "Class B Holder".
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Section 7.7. Existence. Subject to the provisions of Section 7.3,
during the term of this Agreement, Key Bank USA will keep in full force and
effect its existence, rights and franchises as a national banking association
under the laws of the jurisdiction of its organization.
ARTICLE VIII. SERVICING TERMINATION.
Section 8.1. Servicer Termination Events. (a) Any one of the following
events shall constitute a "Servicer Termination Event":
(i) any failure by Servicer to deliver to Trustee a Servicer's
Report for any Collection Period, which failure shall continue beyond
the related Deposit Date;
(ii) any failure by Servicer (or, for so long as Servicer is
an Affiliate of Seller, Seller) to deliver to any Account or the
Reserve Account any payment or deposit required to be so delivered or
paid under the terms of the Certificates and this Agreement, or to
direct Trustee to make any required distribution from any Account or
the Reserve Account, which failure shall continue unremedied for a
period of five Business Days after written notice is received from the
Trustee by Servicer or after discovery of such failure by Servicer (or,
in the case of a payment or deposit to be made no later than a Deposit
Date immediately preceding a Distribution Date, the failure to make
such payment or deposit by such Distribution Date);
(iii) any failure on the part of Servicer (or, for so long as
Servicer is an Affiliate of Seller, Seller) duly to observe or to
perform in any material respect any other covenants or agreements set
forth in the Certificates or in this Agreement, which failure shall (A)
materially and adversely affect the rights of Holders (which
determination shall be made without regard to whether funds are
available to the Holders pursuant to the Reserve Account) and (B)
continue unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied,
shall have been given (1) to Servicer (or, for so long as Servicer is
an affiliate of Seller, Seller) by Trustee, or (2) to Trustee and
Servicer by the Holders of Certificates representing not less than 25%
of the outstanding principal amount of the Certificates (or for such
longer period, not in excess of 120 days, as may be reasonably
necessary to remedy such default; provided that such default is capable
of remedy within 120 days and Servicer delivers an Officer's
Certificate to Trustee to such effect and to the effect that Servicer
has commenced or will
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promptly commence, and will diligently pursue, all reasonable efforts
to remedy such default);
(iv) the entry of a decree or order by a court or agency or
supervisory authority of competent jurisdiction for the appointment of
a conservator, receiver, liquidator or trustee for Servicer, Seller,
any Seller Affiliate, or any of their respective successors, in any
bankruptcy, receivership, conservatorship, insolvency or similar
proceedings, or for the winding up or liquidation of its affairs, and
any such decree or order continues unstayed and in effect for a period
of 60 consecutive days; or
(v) the consent by Servicer, Seller, any Seller Affiliate, or
any of their respective successors, to the appointment of a
conservator, receiver, liquidator or trustee in any bankruptcy,
receivership, conservatorship, insolvency or similar proceedings of or
relating to such Person or relating to substantially all of its
property, the admission in writing by such Person of its inability to
pay its debts generally as they become due, the filing by such Person
of a petition to take advantage of any applicable bankruptcy,
receivership, conservatorship, insolvency or similar statute, the
making by such Person of an assignment for the benefit of its creditors
or the voluntary suspension by such Person of payment of its
obligations.
Upon the occurrence of any Servicer Termination Event, and so long as a Servicer
Termination Event shall not have been remedied, either Trustee, or the Majority
Holders, by notice then given in writing to Servicer, may terminate all of the
rights and obligations of Servicer (other than the obligations set forth in
Section 7.2) under this Agreement. On or after the receipt by Servicer of such
written notice, all authority and power of Servicer under this Agreement,
whether with respect to the Certificates or the Trust Property or otherwise,
shall pass to and be vested in Trustee or such successor Servicer as may be
appointed under Section 8.2 pursuant to this Section 8.1; and thereupon Trustee
shall be authorized and empowered to execute and deliver, on behalf of Servicer,
as attorney-in-fact or otherwise, any and all documents and other instruments,
and to do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement of the Receivable Files or the Physical Damage
Insurance Policies, the certificates of title to the Financed Vehicles, or
otherwise. Servicer shall cooperate with Trustee or any successor Servicer in
effecting the termination of its responsibilities and rights as Servicer under
this Agreement, including the transfer to Trustee or any successor Servicer for
administration of all cash amounts that are at the time held by Servicer for
deposit, shall have been deposited by Servicer in the Collection Account, or
thereafter shall be received with respect to a Receivable, all Receivable Files
and all information or
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documents that Trustee or such successor Servicer may require. In addition,
Servicer shall transfer its electronic records relating to the Receivables to
the successor Servicer in such electronic form as the successor Servicer may
reasonably request and shall transfer to the successor Servicer all other
records, correspondence and documents necessary for the continued servicing of
the Receivables in the manner and at such times as the successor Servicer shall
reasonably request. All reasonable out-of-pocket costs and expenses incurred by
the successor Servicer in connection with the transfer of servicing shall be
paid by the predecessor Servicer upon presentation of reasonable documentation
of such costs and expenses.
(b) If any of the foregoing Servicer Termination Events occur, Trustee
shall have no obligation to notify Holders or any other Person of such
occurrence prior to the continuance of such event through the end of any cure
period specified in Section 8.1(a).
Section 8.2. Trustee to Act; Appointment of Successor Servicer. Upon
Servicer's resignation pursuant to Section 7.5 or upon Servicer's receipt of
notice of termination as Servicer pursuant to Section 8.1, Trustee shall be the
successor in all respects to Servicer in its capacity as Servicer under this
Agreement, and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on Servicer by the terms and provisions of
this Agreement, except that Trustee, when acting as successor Servicer, shall
not be obligated to purchase Receivables pursuant to Section 3.7 unless the
obligation to repurchase arose after the date of the notice of termination given
to Servicer pursuant to Section 8.1, and neither Trustee nor any successor
Servicer shall be liable for any acts or omissions of the terminated Servicer or
for any breach by such Servicer of any of its representations or warranties
contained herein or in any related documents or agreements. As compensation
therefor, Trustee shall be entitled to the same Servicing Fees (whether payable
out of the Collection Account or otherwise) and Supplemental Servicing Fees as
Servicer would have been entitled to under this Agreement if no such notice of
termination or resignation had been given. Notwithstanding the above, Trustee
may appoint, or petition a court of competent jurisdiction to appoint, an
Eligible Servicer as the successor to the terminated Servicer under this
Agreement; provided that Trustee shall continue to be the successor to Servicer
until another successor Servicer shall have assumed the responsibilities and
obligations of Servicer. In connection with such appointment, Trustee may make
such arrangements for the compensation of such successor Servicer out of
payments on Receivables as it and such successor shall agree, which shall in no
event be greater than the Servicing Fees and Supplemental Servicing Fees payable
to Key Bank as Servicer hereunder. Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. No Servicer shall resign or be
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relieved of its duties under this Agreement until a newly appointed Servicer
shall have assumed the responsibilities and obligations of the terminated
Servicer under this Agreement.
Section 8.3. Effect of Servicing Transfer. (a) After the transfer of
servicing hereunder, Trustee or successor Servicer shall notify Obligors to make
directly to the successor Servicer payments that are due under the Receivables
after the effective date of such transfer.
(b) Except as provided in Sections 7.2 and 9.8 after the transfer of
servicing hereunder, the predecessor Servicer shall have no further obligations
with respect to the management, administration, servicing, custody or collection
of the Receivables and the successor Servicer shall have all of such
obligations, except that the predecessor Servicer will transmit or cause to be
transmitted directly to the successor Servicer for its own account, promptly on
receipt and in the same form in which received, any amounts held by the
predecessor Servicer (properly endorsed where required for the successor
Servicer to collect any such items) received as payments upon or otherwise in
connection with the Receivables and the predecessor Servicer shall continue to
cooperate with the successor Servicer by providing information and in the
enforcement of the Dealer Agreements and the Physical Damage Insurance Policies.
(c) A transfer of servicing hereunder shall not affect the rights and
duties of the parties hereunder (including the obligations and indemnities of
Seller pursuant to Sections 2.4, 3.3, 6.1 and 6.2 or, with respect to
obligations and indemnities arising prior to, or concurrently with, a transfer
of servicing hereunder, the predecessor Servicer pursuant to Section 3.7, 7.1 or
7.2) other than those relating to the management, administration, servicing,
custody or collection of the Receivables and the other Trust Property. The
successor Servicer shall, upon its appointment pursuant to Section 8.2 and as
part of its duties and responsibilities under this Agreement, promptly take all
action it deems necessary or appropriate so that the predecessor Servicer (in
whatever capacity) is paid or reimbursed all amounts it is entitled to receive
under this Agreement on each Distribution Date subsequent to the date on which
it is terminated as Servicer hereunder. Without limiting the generality of the
foregoing, the predecessor Servicer will be entitled to receive all accrued and
unpaid Servicing Fees and Supplemental Servicing Fees through and including the
effective date of the termination of the predecessor Servicer.
(d) Any successor Servicer shall provide Seller with access to the
Receivable Files and to the successor Servicer's records (whether written or
automated) with respect to the Receivable Files. Such access shall be afforded
without charge, but only upon reasonable request and during normal business
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hours at the offices of the successor Servicer. Nothing in this Section shall
affect the obligation of the successor Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors, and the failure of
Servicer to provide access to information as a result of such obligation shall
not constitute a breach of this Section.
Section 8.4. Notification to Holders. Upon any notice of a Servicer
Termination Event or upon any termination of, or appointment of a successor to,
Servicer pursuant to this Article VIII, Trustee shall give prompt written notice
thereof to Holders at their respective addresses of record, and to each Rating
Agency.
Section 8.5. Waiver of Past Servicer Termination Events. The Majority
Holders may, on behalf of all Holders of Certificates, waive any Servicer
Termination Event hereunder and its consequences, except an event resulting from
the failure to make any required deposits or payments to the Collection Account
in accordance with this Agreement. Upon any such waiver of a past Servicer
Termination Event, such event shall cease to exist and shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other event or impair any right arising therefrom, except
to the extent expressly so waived.
Section 8.6. Transfer of Accounts. Notwithstanding the provisions of
Section 8.1, if any of the Accounts or the Reserve Account is maintained with
Servicer or an Affiliate of Servicer and a Servicer Termination Event shall
occur and be continuing, Servicer shall promptly, and in any event within five
Business Days, give notice to Trustee of such Servicer Termination Event, and
Trustee, within ____ days after the receipt of such notice, shall establish new
Eligible Deposit Accounts conforming with the requirements of this Agreement and
promptly shall transfer all funds in any such Accounts or the Reserve Account to
such new Eligible Deposit Accounts.
ARTICLE IX. TRUSTEE.
Section 9.1. Acceptance by Trustee. Trustee hereby acknowledges its
acceptance of all right, title and interest in and to the Receivables and the
other Trust Property conveyed by Seller pursuant to this Agreement and hereby
declares that Trustee holds and shall hold such right, title and interest, upon
the trust set forth in this Agreement.
Section 9.2. Duties of Trustee. (a) Trustee, both prior to and after
the curing of a Servicer Termination Event, undertakes to perform only such
duties as are specifically set forth in this Agreement and no implied covenants
or
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obligations shall be read into this Agreement against Trustee. If a Servicer
Termination Event, of which an Authorized Officer of Trustee has actual
knowledge, shall have occurred and shall not have been cured (the appointment of
a successor Servicer (including Trustee) to constitute a cure for the purposes
of this Article), Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and shall use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs; provided that if Trustee assumes the duties of
Servicer pursuant to Section 8.2, Trustee in performing such duties shall use
the degree of skill and attention required by Section 3.1.
(b) Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders, or other instruments furnished to Trustee
that are required specifically to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they conform to the
requirements of this Agreement.
(c) No provision of this Agreement shall be construed to relieve
Trustee from liability for its own negligent action, its own negligent failure
to act, its own willful misfeasance or its own bad faith; provided that:
(i) Prior to the occurrence of a Servicer Termination Event,
and after the curing of all such Servicer Termination Events that may
have occurred, the duties and obligations of Trustee shall be
determined solely by the express provisions of this Agreement, Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against
Trustee, the permissible right of Trustee (solely in its capacity as
such) to do things enumerated in this Agreement shall not be construed
as a duty and, in the absence of bad faith on the part of Trustee, or
manifest error, Trustee (solely in its capacity as such) may
conclusively rely on the truth of the statements and the correctness of
the opinions expressed in any certificates or opinions furnished to
Trustee and conforming to the requirements of this Agreement;
(ii) Trustee shall not be personally liable for an error of
judgment made in good faith by an officer of Trustee, unless it shall
be proved that Trustee shall have been negligent in performing its
duties in accordance with the terms of this Agreement; and
(iii) Trustee shall not be personally liable with respect to
any action taken, suffered, or omitted to be taken in good faith in
accordance
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with the direction of the Majority Holders, as set forth in Section
8.1, relating to the time, method and place of conducting any
proceeding or any remedy available to Trustee, or exercising any trust
or power conferred upon Trustee, under this Agreement.
(d) Except for the willful misfeasance, bad faith or negligence of
Trustee, Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or indemnity
satisfactory to it against such risk or liability shall not be reasonably
assured to it, and none of the provisions contained in this Agreement shall in
any event require Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of Servicer under this Agreement except
during such time, if any, as Trustee shall be the successor to, and be vested
with the rights, duties, powers and privileges of, Servicer in accordance with
the terms of this Agreement.
(e) Except for actions expressly authorized by this Agreement, Trustee
shall take no action reasonably likely to impair the security interests created
or existing under any Receivable or Financed Vehicle or to impair the value of
any Receivable or Financed Vehicle.
(f) Trustee shall have no power to vary the corpus of the Trust
including (i) accepting any substitute obligation for a Receivable initially
assigned to Trustee under this Agreement, (ii) adding any other investment,
obligation or security, or (iii) withdrawing any Receivable, except for a
withdrawal permitted under this Agreement.
Section 9.3. Trustee's Certificate. As soon as practicable after each
Deposit Date on which Receivables shall be assigned to Seller pursuant to
Section 2.4 or 10.2 or to Servicer pursuant to Section 3.7, as applicable,
Trustee shall execute a certificate, prepared by Servicer, including its date
and the date of the Agreement, and accompanied by a copy of Servicer's Report
for the related Collection Period. Trustee's certificate shall operate, as of
such Deposit Date, as an assignment pursuant to Section 9.4.
Section 9.4. Trustee's Assignment of Purchased Receivables. With
respect to all Receivables repurchased by Seller pursuant to Section 2.4 or
Section 10.2, or purchased by Servicer pursuant to Section 3.7 or Section 10.2,
Trustee shall assign, without recourse, representation or warranty, to Seller
or Servicer, as the case may be, all of Trustee's right, title and interest in
and to such Receivables, and all security and documents and all other Trust
Property conveyed pursuant to Section 2.1 with respect to such Receivables. Such
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assignment shall be a sale and assignment outright, and not for security. If, in
any enforcement suit or legal proceeding, it is held that Seller or Servicer, as
the case may be, may not enforce any such Receivable on the ground that it shall
not be a real party in interest or a holder entitled to enforce the Receivable,
Trustee shall, at the expense of Seller or Servicer, as the case may be, take
such steps as Seller or Servicer, as the case may be, deems necessary to enforce
the Receivable, including bringing suit in Trustee's name or the names of the
Holders.
Section 9.5. Certain Matters Affecting Trustee. Except as otherwise
provided in Section 9.2:
(a) Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon, any resolution, certificate of
auditors or accountants or any other certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, appraisal, bond, note or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party
or parties.
(b) Trustee may consult with counsel knowledgeable in the area
and any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
under this Agreement in good faith and in accordance with such written
Opinion of Counsel a copy of which shall be provided to Seller and
Servicer.
(c) Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or in relation to
this Agreement, at the request, order or direction of any of the
Holders pursuant to the provisions of this Agreement, unless such
Holders shall have offered to Trustee security or indemnity
satisfactory to Trustee against the costs, expenses, and liabilities
that may be incurred therein or thereby. Nothing contained in this
Agreement, however, shall relieve Trustee of the obligations, upon the
occurrence of a Servicer Termination Event that is not timely cured or
waived pursuant to Section 8.5, to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of
care and skill in their exercise as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs; provided
that if Trustee assumes the duties of Servicer pursuant to Section 8.2,
Trustee in performing such duties shall use the degree of skill and
attention required by Section 3.1.
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(d) Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion, rights or powers conferred upon it
by this Agreement.
(e) Prior to the occurrence of a Servicer Termination Event
and after the curing of all Servicer Termination Events that may have
occurred, Trustee shall not be bound to make any investigation into the
facts of any matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, direction,
order, approval, bond, note or other paper or document, unless
requested in writing so to do by the Majority Holders; provided that if
the payment within a reasonable time to Trustee of the costs, expenses,
or liabilities likely to be incurred by it in the making of an
investigation requested by the Holders is, in the opinion of Trustee,
not reasonably assured to Trustee by the security afforded to it by the
terms of this Agreement, Trustee may require indemnity satisfactory to
it against such cost, expense, or liability as a condition to so
proceeding. The reasonable expense of every such examination shall be
paid by Servicer, or, if paid by Trustee, shall be reimbursed by
Servicer upon demand. Nothing in this clause (e) shall affect the
obligation of Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors; provided further,
that Trustee shall be entitled to make such further inquiry or
investigation into such facts or matter as it may reasonably see fit,
and if Trustee shall determine to make such further inquiry or
investigation it shall be entitled to examine the books and records of
Servicer or Seller, personally or by agent or attorney, at the sole
cost and expense of Servicer or Seller, as the case may be.
(f) Trustee may execute any of the trusts or powers hereunder
or perform any duties under this Agreement either directly or by or
through agents, attorneys, nominees or a custodian, and shall not be
liable for the acts of such agents, attorney, nominees or custodians
except for (i) acts of ____________ or any successor agent carrying out
Trustee's obligations with respect to the preparation of Servicer
Reports and (ii) acts of any other agent, attorney, nominee or
custodian if (A) Trustee has not acted with due care in their
appointment or (B) Seller has not consented to their appointment.
(g) Trustee shall not be required to make any initial or
periodic examination of any documents or records related to the
Receivables or Financed Vehicles for the purpose of establishing the
presence or absence
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of defects, the compliance by Seller with its representations and
warranties or for any other purpose.
(h) Trustee shall not be construed to be a guarantor of the
performance of Servicer, nor shall Trustee have any duty to monitor the
performance of Servicer other than as expressly stated in this
Agreement.
(i) Trustee shall not be required to take notice or be deemed
to have notice of any Servicer Termination Event hereunder, except a
Servicer Termination Event under Section 8.1(a)(i) or (ii), unless
Trustee shall be specifically notified in writing of such Servicer
Termination Event by Servicer, Seller or any Holder. All notices or
other instruments required by this Agreement to be delivered to Trustee
shall be delivered at the Corporate Trust Office and, in the absence of
such notice so delivered, Trustee may conclusively assume there is no
Servicer Termination Event except as aforesaid.
Section 9.6. Trustee Not Liable for Certificates or Receivables.
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the Certificates (other than the certificate of authentication on
the Certificates). Except as expressly provided herein, Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than Trustee's execution of, and the certificate of
authentication on, the Certificates), or of any Receivable or related document,
or for the validity of the execution by Seller and Servicer of this Agreement or
of any supplements hereto or instruments of further assurance, or for the
sufficiency of the Trust Property hereunder, and Trustee shall not be bound to
ascertain or inquire as to the performance or observance of any covenants,
conditions or agreements on the part of Seller or Servicer under this Agreement
except as herein set forth; but Trustee may require Seller or Servicer to
provide full information and advice as to the performance of the aforesaid
covenants, condition and agreements. Trustee (solely in its capacity as such)
shall have no obligation to perform any of the duties of Seller or Servicer,
except as explicitly set forth in this Agreement. Trustee shall have no
liability in connection with compliance of Servicer or Seller with statutory or
regulatory requirements to the Receivables. Trustee shall not make or be deemed
to have made any representations or warranties with respect to the Receivables
or the validity or sufficiency of any assignment of the Receivables to the Trust
or Trustee. Trustee (solely in its capacity as such) shall at no time have any
responsibility or liability for, or with respect to, the legality, validity or
enforceability of any security interest in any Financed Vehicle or (prior to the
time, if any, that Servicer is terminated as custodian hereunder) any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, the efficacy of the Trust or
its ability to generate
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funds sufficient to provide for the payments to be distributed to Holders under
this Agreement, the existence, condition, location, and ownership of any
Financed Vehicle, the existence and enforceability of the Insurance Policies,
the existence and contents of any Receivable or any computer or other record
thereof, the validity of the assignment of any Receivable to the Trust or of any
intervening assignment, the completeness of any Receivable, the performance or
enforcement of any Receivable, the compliance by Seller with any warranty or
representation made under this Agreement or in any related document and the
accuracy, of any such warranty or representation, prior to Trustee's receipt of
notice or other discovery of any noncompliance therewith or any breach thereof,
any investment of monies by Servicer or any loss resulting therefrom (it being
understood that Trustee shall remain responsible for any Trust Property that it
may hold), the acts or omissions of Seller, Servicer, or any Obligor, any action
of Servicer taken in the name of Trustee, or any action by Trustee taken at the
instruction, of Servicer (provided that such instruction is not in express
violation of the terms and provisions of this Agreement); provided that the
foregoing shall not relieve Trustee of its obligation to perform its duties
under this Agreement. Except with respect to a claim based on the failure of
Trustee to perform its duties under this Agreement (whether in its capacity as
Trustee or as successor Servicer) or based on Trustee's willful misconduct,
negligence, or bad faith, or based on Trustee's breach of a representation and
warranty contained in Section 9.14, no recourse shall be had to Trustee (whether
in its individual capacity or as Trustee) for any claim based on any provision
of this Agreement, the Certificates, or any Receivable or assignment thereof
against Trustee in its individual capacity; Trustee shall not have any personal
obligation, liability, or duty whatsoever to any Holder or any other Person with
respect to any such claim. Trustee shall not be accountable for the use or
application by Seller of the proceeds of such Certificates, or for the use or
application of any funds paid to Servicer in respect of the Receivables prior to
the time such amounts are deposited in the Collection Account (whether or not
the Collection Account is maintained with Trustee). Trustee shall have no
liability for any losses from the investment or reinvestment in Eligible
Investments made in accordance with Section 4.1.
Section 9.7. Trustee May Own Certificates. Trustee in its individual or
any other capacity may become the owner or pledgee of Certificates with the same
rights as it would have if it were not Trustee.
Section 9.8. Trustee's Fees and Expenses. Servicer agrees to pay to
Trustee, and Trustee shall be entitled to, reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts created by this Agreement and in the exercise and performance of any
of the powers and duties under this Agreement as Trustee, and Servicer shall pay
or
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reimburse Trustee upon its request for all reasonable expenses (including
expenses incurred in connection with notices or other communications to
Holders), disbursements and advances (including the reasonable compensation and
the reasonable expenses and disbursements of its counsel and of all persons not
regularly in its employ) incurred or made by Trustee in accordance with any of
the provisions of this Agreement (including the reasonable fees and expenses of
its agents, any co-trustee and counsel) or in defense of any action brought
against it in connection with this Agreement except any such expense,
disbursement or advance as may arise from its negligence, willful misfeasance,
or bad faith. Servicer's covenant to pay the expenses, disbursements and
advances provided for in the preceding sentence shall survive the termination of
this Agreement.
Section 9.9. Eligibility Requirements for Trustee. Trustee shall at all
times be organized and doing business under the banking laws of the United
States or of any state thereof, shall be authorized under such laws to exercise
corporate trust powers, shall have a consolidated net worth of at least
$50,000,000 and shall be subject to supervision or examination by federal or
state banking authorities. If Trustee shall publish reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section 9.9,
the consolidated net worth of such Trustee shall be deemed to be its
consolidated capital and surplus as set forth in its most recent consolidated
report of condition so published. In case at any time Trustee shall cease to be
eligible in accordance with the provisions of this Section 9.9, Trustee shall
resign immediately in the manner and with the effect specified in Section 9.10.
Section 9.10. Resignation or Removal of Trustee. (a) Trustee may at any
time resign and be discharged from the trusts hereby created by giving 30 days'
prior written notice thereof to Servicer. Upon receiving such notice of
resignation, Servicer shall promptly appoint a successor Trustee, by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor Trustee. If no successor Trustee
shall have been so appointed and have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee;
provided, however, that such right to appoint or to petition for the appointment
of any such successor shall in no event relieve the resigning Trustee from any
obligations otherwise imposed on it under this Agreement and the Related
Agreements until such successor has in fact assumed such appointment.
(b) If at any time Trustee shall cease to be eligible in accordance
with the provisions of Section 9.9 and shall fail to resign after written
request therefor by Servicer, or if at any time Trustee shall be legally unable
to act, or shall be
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adjudged bankrupt or insolvent, or a receiver, conservator or liquidator of
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then Servicer may remove Trustee.
If Trustee is removed under the authority of the immediately preceding sentence,
Servicer shall promptly appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to Trustee so
removed, the successor Trustee, the Holders at their respective addresses of
record and the Rating Agencies.
(c) Any resignation or removal of Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.10 shall
not become effective until acceptance of appointment by the successor Trustee
pursuant to Section 9.11.
(d) The respective obligations of Seller and Servicer described in this
Agreement shall survive the removal or resignation of Trustee as provided in
this Agreement.
Section 9.11. Successor Trustee. (a) Any successor Trustee appointed
pursuant to Section 9.10 shall execute, acknowledge, and deliver to Servicer and
to its predecessor Trustee an instrument accepting such appointment under this
Agreement, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become fully vested with all rights, powers, duties, and
obligations of its predecessor under this Agreement, with like effect as if
originally named as Trustee. The predecessor Trustee shall deliver to the
successor Trustee all documents and statements held by it under this Agreement,
and Servicer and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trustee all such rights,
powers, duties, and obligations.
(b) No successor Trustee shall accept appointment as provided in this
Section 9.11 unless at the time of such acceptance such successor Trustee shall
be eligible pursuant to Section 9.9.
(c) Upon acceptance of appointment by a successor Trustee pursuant to
this Section 9.11, Servicer shall mail notice of such acceptance by the
successor Trustee under this Agreement to all Holders at their respective
addresses of record and to the Rating Agencies. If Servicer shall fail to mail
such notice within 10 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of Servicer.
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(d) No predecessor Trustee shall be liable for the acts or omissions of
any successor Trustee.
Section 9.12. Merger or Consolidation of or Assumption of Obligations
of Trustee. Any corporation or banking association which is eligible to be a
successor Trustee under Section 9.9 (a) into which Trustee may be merged or
consolidated, (b) that may result from any merger, conversion or consolidation
to which Trustee shall be a party, or (c) that may succeed by purchase and
assumption to the business of Trustee, where Trustee is not the surviving
entity, which corporation or banking association executes an agreement of
assumption to perform every obligation of Trustee under this Agreement, shall be
the successor of Trustee hereunder, without the execution or filing of any
instrument or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. Trustee shall promptly notify Servicer
and each Rating Agency of any such merger, conversion, consolidation or purchase
and assumption where Trustee is not the surviving entity.
Section 9.13. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Property or any Financed Vehicle may at the time be located,
Servicer and Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by Trustee to
act as co-trustee, jointly with Trustee, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person, in such
capacity and for the benefit of the Holders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section 9.13, such
powers, duties, obligations, rights, and trusts as Servicer and Trustee may
consider necessary or desirable. If Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
case a Servicer Termination Event shall have occurred and be continuing, Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee under this Agreement shall be required to meet the terms of eligibility
as a successor trustee pursuant to Section 9.9 and no notice to Holders of the
appointment of any co-trustee or separate trustee shall be required pursuant to
Section 9.11. Notwithstanding the appointment of a co-trustee or separate
trustee hereunder, Trustee shall not be relieved of any of its obligations under
this Agreement.
(b) Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred or
imposed upon Trustee shall be conferred upon and exercised or performed
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by Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized
to act separately without Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular
act or acts are to be performed (whether as Trustee under this
Agreement or as successor to Servicer under this Agreement), Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties, and obligations (including the
holding of title to the Trust Property or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of Trustee.
(ii) No trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement.
(iii) Servicer and Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and in particular
to the provisions of this Article. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with Trustee
or separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, Trustee.
Each such instrument shall be filed with Trustee and a copy thereof given to
Servicer.
(d) Any separate trustee or co-trustee may, at any time, appoint
Trustee its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee. Trustee shall promptly notify Servicer and each Rating Agency
of any appointment made pursuant to this Section 9.13.
Section 9.14. Representations and Warranties of Trustee. Trustee makes
the following representations and warranties on which Seller, Servicer, and
Holders may rely:
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(a) Organization and Good Standing. Trustee is a banking
corporation duly organized, validly existing, and in good standing
under the laws of ______________.
(b) Power and Authority. Trustee has full power, authority and
legal right to execute, deliver, and perform this Agreement and the
Related Agreements and has taken all necessary action to authorize the
execution, delivery, and performance by it of this Agreement and the
Related Agreements to which it is a party.
(c) Enforceability. This Agreement and the Related Agreements
to which it is a party have been duly executed and delivered by Trustee
and this Agreement and such Related Agreements constitute legal, valid
and binding obligations of Trustee enforceable against Trustee in
accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting
the enforcement of creditors' rights generally and except as such
enforceability may be limited by equitable limitations on the
availability of specific remedies.
(d) No Consent Required. No approval, authorization, consent,
license or other order or action of, or filing or registration with,
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance by Trustee of this
Agreement, the Related Agreements or the consummation of the
transactions contemplated hereby or thereby.
(e) No Violation. The execution, delivery and performance by
Trustee of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby will
not conflict with, result in any breach of the terms and provisions of,
constitute (with or without notice or lapse of time) a default under,
or result in the creation or disposition of any Lien upon any of its
properties pursuant to the terms of, (i) the articles of association or
by-laws of Trustee, (ii) any indenture, contract, lease, mortgage, deed
of trust or other instrument or agreement to which Trustee is a party
or by which Trustee is bound or to which any of its properties are
subject, or (iii) any law, order, rule or regulation applicable to
Trustee or its properties of any federal or state regulatory body, any
court, administrative agency or other governmental instrumentality
having jurisdiction over Trustee or any of its properties.
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Section 9.15. Reports by Trustee. Trustee shall provide to any Holder
or Certificate Owner who so requests in writing (addressed to the Corporate
Trust Office) a copy of any Servicer's Report, the annual statement described in
Section 3.10, and the annual accountant's examination described in Section 3.11.
Trustee may require any Holder or Certificate Owner requesting such report to
pay a reasonable sum to cover the cost of Trustee's complying with such request.
Section 9.16. Tax Returns. Servicer shall prepare or shall cause to be
prepared any tax returns on Form 1065 (or other applicable form) required to be
filed by the Trust and shall remit such returns to Trustee for signature at
least five days before such returns are due to be filed. Trustee, upon request,
will furnish Servicer with all such information actually known to an Authorized
Officer of Trustee as may be reasonably required in connection with the
preparation of all tax returns of the Trust, and shall, upon request, execute
such returns. Servicer shall prepare the tax returns of the Trust in accordance
with the Code and any regulations (including, to the extent applicable by their
terms, proposed regulations) thereunder.
Section 9.17. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by Trustee without the possession of
any of the Certificates or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by Trustee shall be brought in its
own name as trustee. Any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
Trustee, its agents and counsel, be for the ratable benefit of the Holders in
respect of which such judgment has been obtained.
ARTICLE X. TERMINATION.
Section 10.1. Termination of the Trust. (a) The Trust, and the
respective obligations and responsibilities of Seller, Servicer and Trustee
hereunder, shall terminate (except as otherwise expressly provided herein) upon
the earliest of: (i) the Distribution Date next succeeding the purchase by
either Seller or Servicer at its respective option, pursuant to Section 10.2, of
the Receivables (other than Defaulted Receivables) remaining in the Trust, (ii)
the payment to Holders of all amounts required to be paid to them pursuant to
this Agreement or (iii) the Distribution Date next succeeding the month which is
six months after the maturity or the liquidation of the last Receivable held in
the Trust and the disposition of any amounts received upon liquidation of any
property remaining in the Trust; provided that in no event shall the Trust
created by this Agreement continue beyond the expiration of 21 years from the
death of the last survivor of the descendants living on the date of this
Agreement of Rose Kennedy of the
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Commonwealth of Massachusetts. Servicer shall promptly notify Trustee of any
prospective termination pursuant to this Section 10.1.
(b) Notice of any termination, specifying the Distribution Date upon
which the Holders may surrender the Certificates to Trustee for payment of the
final distribution and cancellation, shall be given promptly by Trustee by
letter to Holders of record and the Rating Agencies mailed not earlier than the
15th day and not later than the 25th day of the month next preceding the
specified Distribution Date stating the amount of any such final payment and
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of Trustee therein specified. Upon presentation and
surrender of the Certificates, Trustee shall cause to be distributed to Holders
amounts distributable on such Distribution Date pursuant to Section 4.5. Amounts
remaining in the Trust after distribution, or after setting aside all funds
required for distribution, to the Holders shall be distributed to Seller.
(c) In the event that all of the Holders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above-mentioned written notice, Trustee shall give a second written notice to
the remaining Holders to surrender their Certificates for cancellation and
receive the final distribution with respect thereto. Trustee shall after giving
such notice to deliver or cause to be delivered to Servicer the Certificate
Register. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, Servicer may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Holders concerning surrender of their Certificates, and the cost thereof shall
be paid out of the funds and other assets that shall remain subject to this
Agreement. Any funds remaining in the Trust after exhaustion of such remedies
shall be distributed by Trustee to Seller.
Section 10.2. Optional Purchase of All Receivables. If the Pool Factor
shall be .0500000 or less as of the last day of any Collection Period, Seller
and Servicer shall each have the option to purchase the remaining Trust Property
on any Distribution Date occurring in a subsequent Collection Period. To
exercise such option, Seller or Servicer, as applicable, shall deposit the
aggregate Purchase Amount for the remaining Receivables (other than Defaulted
Receivables) into the Collection Account on the Deposit Date occurring in the
month in which such repurchase is to be effected. The payment shall be made in
the manner specified in Section 4.4, and shall be distributed pursuant to
Section 4.5. Upon such payment Seller or Servicer, as applicable, shall succeed
to and own all interests in and to the Trust Property (subject to the rights of
the Holders to receive a final distribution on the related Distribution Date).
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ARTICLE XI. MISCELLANEOUS PROVISIONS.
Section 11.1. Amendment. (a) This Agreement may be amended by Seller,
Servicer and Trustee, without the consent of any of the Holders, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or modifying in any manner the rights of the
Holders; provided that such action shall not, as evidenced by an Opinion of
Counsel to Seller delivered to Trustee, materially and adversely affect the
interests of any Holder.
(b) This Agreement may be amended by Seller, Servicer and Trustee
without the consent of any of the Holders (i) to add, modify or eliminate such
provisions as may be necessary or advisable in order to enable all or a portion
of the Trust to qualify as, and to permit an election to be made to cause all or
a portion of the Trust to be treated as, a "financial asset securitization
investment trust" as described in the provisions of the "Small Business Job
Protection Act of 1996," or to enable all or a portion of the Trust to qualify
and an election to be made for similar treatment under such comparable
subsequent federal income tax provisions as may ultimately be enacted into law,
and (ii) in connection with any such election, to modify or eliminate existing
provisions set forth in this Agreement relating to the intended federal income
tax treatment of the Certificates and the Trust in the absence of the election;
it being a condition to any such amendment that each Rating Agency will have
notified the Seller, the Servicer and the Trustee in writing that the amendment
will not result in a reduction or withdrawal of the rating of any outstanding
Certificates with respect to which it is a Rating Agency.
(c) This Agreement may be amended by Seller, Servicer and Trustee
without the consent of any of the Holders to add, modify or eliminate such
provisions as may be necessary or advisable in order to enable (i) the transfer
to the Trust of all or any portion of the Receivables to be derecognized under
generally accepted accounting principles ("GAAP") by Seller to the Trust, (ii)
the Trust to avoid becoming a member of Seller's consolidated group under GAAP;
or (iii) the Seller, any Seller Affiliate or any of other Affiliates to
otherwise comply with or obtain more favorable treatment under any law or
regulation or any accounting rule or principle; it being a condition to any such
amendment that each Rating Agency will have notified the Seller, the Servicer
and the Trustee in writing that the amendment will not result in a reduction or
withdrawal of the rating of any outstanding Certificates with respect to which
it is a Rating Agency.
(d) This Agreement may also be amended from time to time by Seller,
Servicer and Trustee, with the consent of the Majority Holders, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
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provisions of this Agreement, or of modifying in any manner the rights of the
Holders; provided that no such amendment shall (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that shall be required to be made on
any Certificate without the consent of all adversely affected Holders, (ii)
reduce the percentage of the aggregate outstanding principal balance of the
Certificates, the Holders of which are required to consent to any such
amendment, without the consent of all Holders, (iii) materially and adversely
affect the interests of either the Class A Holders or the Class B Holders
without the consent of the Holders of Class A Certificates or Class B
Certificates, as the case may be, evidencing not less than a majority of the
aggregate outstanding principal balance of the Class A Certificates or the Class
B Certificates, as the case may be, or (iv) cause either Rating Agency to
downgrade or withdraw its rating of the Class A Certificates or the Class B
Certificates without the consent of Holders of Class A Certificates or Class B
Certificates, as the case may be, evidencing more than 66 2/3% of the aggregate
outstanding principal balance of the Class A Certificates or the Class B
Certificates, as the case may be. Promptly after the execution of any such
amendment or consent, Trustee shall furnish written notification of the
substance of such amendment or consent to each Holder.
(e) It shall not be necessary for the consent of Holders pursuant to
this Section 11.1 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Holders shall be subject to such
reasonable requirements as Trustee may prescribe.
(f) Notice of any amendment of this Agreement shall be sent by Servicer
to each Rating Agency, at such address as such Rating Agency may from time to
time specify in writing.
(g) In connection with any amendment pursuant to this Section 11.1
Trustee shall be entitled to receive an Opinion of Counsel to the effect that
such amendment is authorized or permitted by the Agreement.
Section 11.2. Protection of Title to Trust Property. (a) Servicer shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of the
Holders and Trustee under this Agreement in the Trust Property and in the
proceeds thereof. Servicer shall deliver (or cause to be delivered) to Trustee
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing. If Servicer fails to perform
its obligations under this
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subsection, Trustee may (but shall not be obligated to) do so, at the expense of
Servicer.
(b) Neither Seller nor Servicer shall change its name, identity or
corporate structure in any manner that would, could or might make any financing
statement or continuation statement filed by Servicer in accordance with
subsection (a) misleading within the meaning of the UCC, unless it shall have
given Trustee at least 60 days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) Seller and Servicer shall give Trustee at least 60 days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement. Seller and Servicer shall at all
times maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each), and (ii) reconciliation between
payments or recoveries on (or with respect to) each Receivable and the amounts
from time to time deposited in the Collection Account in respect of such
Receivable.
(e) Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to Trustee,
Servicer's master computer records (including archives) that shall refer to a
Receivable indicate clearly that such Receivable is owned by the Trust.
Indication of the Trust's ownership of a Receivable shall be deleted from or
modified on Servicer's computer systems when, and only when, the Receivable
shall be paid or shall become a Purchased Receivable.
(f) If at any time Seller, any Seller Affiliate or Servicer shall
propose to sell, grant a security interest in or otherwise transfer any interest
in motor vehicle loans and/or retail installment sales contracts to any
prospective purchaser, lender or other transferee, Seller or Servicer, as the
case may be, shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Trust.
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(g) Upon request, Servicer, at its expense, shall furnish to Trustee,
within thirty days, a list of all Receivables then held as part of the Trust,
together with a reconciliation of such list to each Schedule of Receivables and
to each of Servicer's Reports furnished pursuant to Section 3.9 indicating
removal of Receivables from the Trust.
(h) Servicer shall deliver to Trustee upon the Closing Date, and upon
the execution and delivery of each amendment, if any, of this Agreement an
Opinion of Counsel to Servicer either (i) stating that, in the opinion of such
counsel, no filings or other action, other than the filings required in the
appropriate filing offices as described in such opinion, are necessary to
perfect and maintain (A) the security interest of Trustee in the Financed
Vehicles, subject to the exceptions stated therein, and (B) the interest of
Trustee in the Receivables and the proceeds thereof against third parties,
subject to the exceptions stated therein, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) stating that, in the opinion of such counsel, no such action
shall be necessary to perfect or complete the perfected status of such interest.
(i) Servicer shall permit Trustee and its agents, at the expense of
Trustee (except after a Servicer Termination Event, in which case such cost will
be at the expense of Servicer), at any time to inspect, audit and make copies of
and abstracts from Servicer's records regarding any Receivables then or
previously included in the Trust.
Section 11.3. Limitation on Rights of Holders. (a) The death or
incapacity of any Holder shall not operate to terminate this Agreement or the
Trust, or entitle the Holder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust, or otherwise affect the rights,
obligations and liabilities of the parties to this Agreement or any of them.
(b) No Holder shall have any right to vote (except as expressly
provided herein) or in any manner otherwise control the operation and management
of the Trust or the obligations of the parties to this Agreement, nor shall
anything set forth in this Agreement, or contained in the terms of the
Certificates, be construed so as to constitute the Holders as partners or
members of an association; nor shall any Holder be under any liability to any
third party by reason of any action taken pursuant to any provision of this
Agreement.
(c) No Holder shall have any right by virtue or by availing itself of
any provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder
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previously shall have given to Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless, with respect to the
Class A Certificates, Class A Holders evidencing not less than a majority of the
aggregate outstanding principal balance of the Class A Certificates or, with
respect to the Class B Certificates, Class B Holders evidencing not less than a
majority of the aggregate outstanding principal balance of the Class B
Certificates, shall have made written request upon Trustee to institute such
action, suit or proceeding in its own name as Trustee under the Agreement and
shall have offered to Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or thereby,
and Trustee, for __ days after its receipt of such notice, request and offer of
indemnity satisfactory to it, shall have neglected or refused to institute any
such action, suit or proceeding; no one or more Holders of Certificates shall
have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner provided in this Agreement and
for the equal, ratable and common benefit of all Class A Holders or Class B
Holders, as the case may be. For the protection and enforcement of the
provisions of this Section 11.3, each Holder and Trustee shall be entitled to
such relief as can be given either at law or in equity.
Section 11.4. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS; EXCEPT THAT
THE GRANT OF A SECURITY INTEREST IN THE RESERVE ACCOUNT PROPERTY AND THE
PERFECTION, EFFECT OF PERFECTION, AND PRIORITY OF SUCH SECURITY INTEREST SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF ___________________.
Section 11.5. Notices. All demands, notices, and communications under
this Agreement shall be in writing, personally delivered, or sent by telecopier,
overnight mail or mailed by certified mail, return receipt requested, and shall
be deemed to have been duly given upon receipt (a) in the case of Seller to Key
Consumer Acceptance Corporation, Key Tower, 127 Public Square, Cleveland, Ohio
44114-1306, Attention: ______________ (b) in the case of Servicer, to Key Bank
USA, N.A., Key Tower, 127 Public Square, Cleveland, Ohio 44114-1306, Attention:
_______________; (c) in the case of Trustee, at the Corporate Trust Office,
facsimile number: _____________, (d) in the case of Moody's Investors Service,
Inc., at the following address: Moody's Investors Service, Inc.,
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ABS Monitoring Department, 99 Church Street, New York, New York 10007, facsimile
number: (212) 553-3850, (e) in the case of Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., at the following address: Standard
& Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., 25
Broadway, 20th Floor, New York, New York 10004, Attention: Asset Backed
Surveillance Department, facsimile number: (212) 208-0030, and (f) in the case
of Fitch, to _____________________. Any notice required or permitted to be
mailed to a Holder shall be given by first class mail, postage prepaid, at the
address of record of such Holder. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Holder shall receive such notice.
Section 11.6. Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement, and shall in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Certificates or the rights of the
Holders thereof.
Section 11.7. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 2.5, 3.1, 6.3 and 7.3, this
Agreement may not be assigned by Seller or Servicer. This Agreement may not be
assigned by Trustee except as provided by Sections 9.10 through 9.13.
Section 11.8. Certificates Nonassessable and Fully Paid. The interests
represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever, and, upon authentication
thereof by Trustee pursuant to Section 5.1, each Certificate shall be deemed
fully paid.
Section 11.9. Intention of Parties. (a) The execution and delivery of
this Agreement shall constitute an acknowledgment by Seller and Trustee, on
behalf of the Holders, that it is intended that the assignment and transfer
herein contemplated constitute a sale and assignment outright, and not for
security, of the Receivables and the other Trust Property, conveying good title
thereto free and clear of any liens, from Seller to the Trust, and that the
Receivables and the other Trust Property shall not be a part of Seller's estate
in the event of the insolvency, receivership, conservatorship or the occurrence
of another similar event, of, or with respect to, Seller. In the event that such
conveyance is determined to be made as security for a loan made by the Trust or
the Holders to the Seller, the parties intend that Seller shall have granted to
Trustee a security interest in all of Seller's right, title and interest in and
to the Trust Property
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conveyed to the Trust pursuant to Section 2.1, and that this Agreement shall
constitute a security agreement under applicable law.
(b) The execution and delivery of this Agreement shall constitute an
acknowledgment by Seller and Trustee on behalf of the Holders that they intend
that the Trust be classified (for Federal tax purposes) as a grantor trust under
Subpart E, Part I of Subchapter J of the Internal Revenue Code of which the
Holders are owners, rather than as an association taxable as a corporation. The
powers granted and obligations undertaken in this Agreement shall be construed
so as to further such intent.
Section 11.10. Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
Section 11.11. Further Assurances. Seller and Servicer agree to do and
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by Trustee more fully to effect the
purposes of this Agreement, including without limitation, the execution of any
financing statements or continuation statements relating to the Receivables for
filing under the provisions of the UCC of any applicable jurisdiction.
Section 11.12. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Trustee or the Holders, any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges therein provided are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
KEY CONSUMER ACCEPTANCE
CORPORATION, Seller
By:
-----------------------------------
Name:
Title:
KEY BANK USA, NATIONAL
ASSOCIATION, Servicer
By:
----------------------------------
Name:
Title:
________________ BANK,
Trustee
By:
----------------------------------
Name:
Title:
<PAGE> 94
SCHEDULE A
LOCATION OF RECEIVABLE FILES
[Key Bank USA, National Association]
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FORM OF CLASS A CERTIFICATE
---------------------------
EXHIBIT A
KEY AUTO FINANCE TRUST 199_-_
____% ASSET BACKED CERTIFICATE, CLASS A
Evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of fixed rate simple interest retail motor
vehicle loans and/or retail installment sales contracts (the "Receivables")
secured by the new and used automobiles and light duty trucks financed thereby
(the "Financed Vehicles") and sold to the Trust by Key Consumer Acceptance
Corporation.
THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED INTEREST IN THE TRUST AND
DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF KEY CONSUMER ACCEPTANCE
CORPORATION, KEY BANK USA, NATIONAL ASSOCIATION, ANY OTHER KEYCORP BANK, KEYCORP
OR ANY OF THEIR AFFILIATES. THIS CERTIFICATE AND THE RECEIVABLES ARE NOT
DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NUMBER CUSIP _____________________
- -----------------
$--------------------------
Original Certificate Amount
Exhibit A, Page 1
<PAGE> 96
THIS CERTIFIES THAT ____________________ is the registered owner of a
______________ dollars, nonassessable, fully paid, fractional undivided interest
in Key Auto Finance Trust 199_-_ (the "Trust") formed pursuant to a Pooling and
Servicing Agreement dated as of ______ __, 199_ (the "Agreement") among Key
Consumer Acceptance Corporation (the "Seller"), Key Bank USA, National
Association (the "Servicer") and ___________ Bank, a ____________ corporation,
as trustee (the "Trustee").
To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Certificates designated as "____% Asset Backed
Certificates, Class A" (herein called the "Class A Certificates"). Also issued
under the Agreement are Certificates designated as "____% Asset Backed
Certificates, Class B (the "Class B Certificates"). The Class A Certificates and
the Class B Certificates are hereinafter collectively called the "Certificates."
This Certificate is issued under and is subject to the terms, provisions, and
conditions of the Agreement, to which the Holder of this Certificate by virtue
of the acceptance hereof assents and by which such Holder is bound. The Trust
Property includes (as more fully described in the Agreement) a pool of
Receivables, certain monies received under the Receivables after _______ __,
199_ (the "Cutoff Date"), security interests in the Financed Vehicles, and
proceeds of the foregoing.
Subject to the terms and conditions of the Agreement (including the
availability of funds for distributions) and until the obligations created by
the Agreement shall have terminated in accordance therewith, there will be
distributed, but only from funds on deposit in the Class A Distribution Account,
on the __th day of each month or, if such __th day is not a Business Day, the
next succeeding Business Day (each such date, a "Distribution Date"), commencing
_______ __, 199_, to the Person in whose name this Certificate is registered at
the close of business on the last day of the preceding Collection Period (the
"Record Date"), such Holder's fractional undivided interest in the amounts to be
distributed to Class A Holders pursuant to the Agreement on such Distribution
Date.
Distributions on this Certificate will be made by Trustee by check
mailed to the Holder of record at its address as it appears in the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation hereon, except that with respect to a Certificate registered in
the name of a Clearing Agency or its nominee, distributions will be made by wire
transfer of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by Trustee of the pendency of such
distribution and only
Exhibit A, Page 2
<PAGE> 97
upon presentation and surrender of this Certificate at the office or agency
maintained for that purpose by Trustee.
This Certificate does not purport to summarize the Agreement and
reference is hereby made to the Agreement for information with respect to the
rights, benefits, obligations and duties evidenced thereby.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of Trustee, by manual signature, this
Certificate shall not entitle the holder hereof to any benefit under the
Agreement or be valid for any purpose.
Each Holder, by its acceptance of a Certificate or a beneficial
interest in a Certificate, acknowledges and agrees that they intend that the
Trust be classified (for Federal tax purposes) as a grantor trust under Subpart
E, Part I of Subchapter J of the Internal Revenue Code of which the Holders are
owners, rather than as an association taxable as a corporation.
Exhibit A, Page 3
<PAGE> 98
IN WITNESS WHEREOF, Trustee, on behalf of the Trust, and not in its
individual capacity, has caused this Certificate to be duly executed.
KEY AUTO FINANCE TRUST 199_-_
By: __________________ BANK,
as Trustee
By:
-------------------------------------
Authorized Officer
DATED:
[SEAL]
ATTEST:
----------------------------------------
Authorized Officer
Trustee's Certificate of
Authentication:
This is one of the Class A Certificates referred to in
the within-mentioned Agreement.
____________________ BANK,
as Trustee
By:
-------------------------------
Authorized Officer
Exhibit A, Page 4
<PAGE> 99
FORM OF CLASS B CERTIFICATE
---------------------------
EXHIBIT B
KEY AUTO FINANCE TRUST 199_-_
____% ASSET BACKED CERTIFICATE, CLASS B
Evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of fixed rate simple interest retail motor
vehicle loans and/or retail installment sales contracts (the "Receivables")
secured by the new and used automobiles and light duty trucks financed thereby
(the "Financed Vehicles") and sold to the Trust by Key Consumer Acceptance
Corporation.
THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED INTEREST IN THE TRUST AND
DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF KEY CONSUMER ACCEPTANCE
CORPORATION, KEY BANK USA, NATIONAL ASSOCIATION, ANY OTHER KEYCORP BANK, KEYCORP
OR ANY OF THEIR AFFILIATES. THIS CERTIFICATE AND THE RECEIVABLES ARE NOT
DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NUMBER CUSIP _____________________
- -----------------
$--------------------------
Original Certificate Amount
Exhibit B, Page 1
<PAGE> 100
THIS CERTIFIES THAT ____________________ is the registered owner of a
______________ dollars, nonassessable, fully paid, fractional undivided interest
in the Key Auto Finance Trust 199_-_ (the "Trust") formed pursuant to a Pooling
and Servicing Agreement dated as of ______ __, 199_ (the "Agreement") among Key
Consumer Acceptance Corporation, a Delaware corporation (the "Seller"), Key Bank
USA, National Association (the "Servicer") and ____________ Bank, a ___________
corporation, as trustee (the "Trustee").
To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Certificates designated as "____% Asset Backed
Certificates, Class B" (herein called the "Class B Certificates"). Also issued
under the Agreement are Certificates designated as ____% Asset Backed
Certificates, Class A (the "Class A Certificates"). The Class A Certificates and
the Class B Certificates are hereinafter collectively called the "Certificates."
This Certificate is issued under and is subject to the terms, provisions, and
conditions of the Agreement, to which the Holder of this Certificate by virtue
of the acceptance hereof assents and by which such Holder is bound. The Trust
Property includes (as more fully described in the Agreement) a pool of
Receivables, certain monies received under the Receivables after _______ __,
199_ (the "Cutoff Date"), security interests in the Financed Vehicles, and
proceeds of the foregoing. The rights of the Holder of the Class B Certificates
are subordinated to the rights of the Holders of the Class A Certificates to the
extent set forth in the Agreement.
Subject to the terms and conditions of the Agreement (including the
availability of funds for distributions and the subordination of the Class B
Certificates) and until the obligations created by the Agreement shall have
terminated in accordance therewith, there will be distributed, but only from
funds on deposit in the Class B Distribution Account, on the __th day of each
month or, if such __th day is not a Business Day, the next succeeding Business
Day (each such date, a "Distribution Date"), commencing ______ __, 199_, to the
Person in whose name this Certificate is registered at the close of business on
the last day of the preceding Collection Period (the "Record Date"), such
Holder's fractional undivided interest in the amounts to be distributed to Class
B Holders pursuant to the Agreement on such Distribution Date.
Distributions on this Certificate will be made by Trustee by check
mailed to the Holder of record at its address as it appears in the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation hereon, except that with respect to a Certificate registered in
the name of a Clearing Agency or its nominee, distributions will be made by wire
transfer of immediately available funds. Except as otherwise provided in the
Agreement
Exhibit B, Page 2
<PAGE> 101
and notwithstanding the above, the final distribution on this Certificate will
be made after due notice by Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
maintained for that purpose by Trustee.
This Certificate does not purport to summarize the Agreement and
reference is hereby made to the Agreement for information with respect to the
rights, benefits, obligations and duties evidenced thereby.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of Trustee, by manual signature, this
Certificate shall not entitle the holder hereof to any benefit under the
Agreement or be valid for any purpose.
Each Holder, by its acceptance of a Certificate or a beneficial
interest in a Certificate, acknowledges and agrees that they intend that the
Trust be classified (for Federal tax purposes) as a grantor trust under Subpart
E, Part I of Subchapter J of the Internal Revenue Code of which the Holders are
owners, rather than as an association taxable as a corporation.
Exhibit B, Page 3
<PAGE> 102
IN WITNESS WHEREOF, Trustee, on behalf of the Trust, and not in its
individual capacity, has caused this Certificate to be duly executed.
KEY AUTO FINANCE TRUST 199_-_
By: _________________ BANK,
as Trustee
By:
------------------------------------
Authorized Officer
DATED:
[SEAL]
ATTEST:
-----------------------------------
Authorized Officer
Trustee's Certificate of
Authentication:
This is one of the Class B Certificates referred to in
the within-mentioned Agreement.
__________________ BANK,
as Trustee
By:___________________________________
Authorized Officer
Exhibit B, Page 4
<PAGE> 103
EXHIBIT C
Form of Servicer's Report
<PAGE> 1
Exhibit 5.1
[Key Bank USA, National Association letterhead]
December 31, 1996
Key Consumer Acceptance Corporation
127 Public Square
Cleveland, Ohio 44114-1306
Re: Key Consumer Acceptance Corporation Registration
Statement on Form S-3 (No. 333-12431)
------------------------------------------------
Ladies and Gentlemen:
As General Counsel to Key Bank USA, National Association, I have acted
as counsel to Key Consumer Acceptance Corporation, a Delaware corporation (the
"Company"), in connection with the above-referenced Registration Statement
(together with the exhibits and any amendments thereto, the "Registration
Statement") filed by the Company with the Securities and Exchange Commission in
connection with the registration by the Company of Asset Backed Notes and Asset
Backed Certificates (the "Notes" and "Certificates" and each, "Securities")) to
be sold from time to time in one or more series in amounts to be determined at
the time of sale and to be set forth in one or more Supplements (each, a
"Prospectus Supplement") to the Prospectus (the "Prospectus") included in the
Registration Statement.
I am familiar with the proceedings to date in connection with the
proposed issuance and sale of the Notes and Certificates, and in order to
express my opinion hereinafter stated I have examined and relied upon the
Registration Statement and, in each case as filed with the Registration
Statement, the forms of Pooling and Servicing Agreement, Trust Agreement, Sale
and Servicing Agreement, Indenture, Notes, Certificates and Certificate of Trust
to be filed pursuant to the Delaware Business Trust Act (the "Operative
Agreements"). Terms used herein without definition have the meanings given to
such terms in the Registration Statement. I have also examined such statutes,
corporate records and other instruments as I have deemed necessary for the
purposes of this opinion.
Based on and subject to the foregoing, I am of the opinion that, with
respect to the Certificates and/or Notes of any series, when: (a) the
Registration Statement becomes effective pursuant to the provisions of the
Securities Act of 1933, as amended, (b) the amount, price, interest rate and
other principal terms of such Securities have been fixed by or pursuant to
<PAGE> 2
Key Consumer Acceptance Corporation
December 31, 1996
Page 2
authorization of the Board of Directors of the Company, (c) the Operative
Documents relating to such series have each been duly completed, authorized,
executed and delivered by the parties thereto substantially in the form filed as
an exhibit to the Registration Statement reflecting the terms established as
described above, (d) in the case of any Trust that issued Notes (i) the
Certificate of Trust for the related Trust has been duly executed by the Owner
Trustee and timely filed with the Secretary of State of Delaware and (ii) the
related Indenture has been duly qualified under the Trust Indenture Act of 1939,
as amended, (e) such Securities have been duly executed and issued by the
related Trust and authenticated by the Owner Trustee or the Trustee, as
applicable, and sold by the Company or by the Trust, at the direction of the
Company, as applicable, and (f) payment of the agreed consideration for such
Securities shall have been received by the Trust, all in accordance with the
terms and conditions of the related Operative Documents and a definitive
purchase, underwriting or similar agreement with respect to such Securities and
in the manner described in the Registration Statement: (i) such Certificates
will have been duly authorized by all necessary action of the Trust and will be
legally issued, fully paid and nonassessable (except to the extent any
Certificate retained by the Company is assessable pursuant to the Trust
Agreement) and (ii) such Notes will have been duly authorized by all necessary
action of the Trust and will be legally issued and binding obligations of the
Trust and entitled to the benefits afforded by the related Indenture.
This opinion letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of
Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage, and other
limitations, all as more particularly described in the Accord, and this opinion
letter should be read in conjunction therewith.
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the use
of my name therein.
Very truly yours,
/s/ Forrest F. Stanley, Esq.
Forrest F. Stanley, Esq.
General Counsel
<PAGE> 1
EXHIBIT 8.1
[THOMPSON HINE & FLORY LLP LETTERHEAD]
January 6, 1997
Key Consumer Acceptance Corporation
Key Tower
127 Public Square
Cleveland, Ohio 44114-1306
Re: Key Consumer Acceptance Corporation Registration
Statement on Form S-3 (No. 333-12431)
Ladies and Gentlemen:
We have acted as special tax counsel for Key Consumer Acceptance
Corporation, a Delaware corporation (the "Seller"), in connection with the
above-referenced Registration Statement (together with the exhibits and any
amendments thereto, the "Registration Statement"), filed by the Seller with the
Securities and Exchange Commission in connection with the registration by the
Seller of Asset Backed Notes (the "Notes") and Asset Backed Certificates (the
"Certificates") to be sold from time to time in one or more series in amounts to
be determined at the time of sale and to be set forth in one or more Supplements
(each, a "Prospectus Supplement") to the Prospectus (the "Prospectus") included
in the Registration Statement.
We are familiar with the proceedings to date in connection with the
proposed issuance and sale of the Notes and Certificates and in order to express
our opinion hereinafter stated, (a) we have examined copies of the forms of (i)
the Pooling and Servicing Agreement, (ii) the Trust Agreement, (iii) the Sale
and Servicing Agreement, (iv) the Indenture, and (v) the Notes and Certificates
filed as exhibits to the Registration Statement (collectively the "Operative
Documents") and (b) we have examined such other records and documents and such
matters of law, and we have satisfied ourselves as to such matters of fact, as
we have considered relevant for purposes of this opinion.
The opinions set forth in this letter concerning federal income tax are
based upon the applicable provisions of the Internal Revenue Code of 1986, as
amended, Treasury regulations promulgated and proposed thereunder, current
positions of the Internal Revenue Service (the "IRS") contained in published
Revenue Rulings and Revenue Procedures, current administrative positions of the
IRS and existing judicial decisions. The opinions set forth in this letter
concerning Ohio personal income tax and corporation franchise tax are based upon
applicable provisions of the Ohio Revised Code, Ohio Administrative Code,
Opinion of the Ohio Attorney General, and existing judicial decisions. This
opinion is subject to the explanations and qualifications set forth under the
caption
<PAGE> 2
Key Consumer Acceptance Corporation
January 6, 1997
Page 2
"Federal Income Tax Consequences" in the Prospectus and the Prospectus
Supplements which constitute a part of the Registration Statement.
Based on the foregoing and assuming that the Operative Documents are
executed and delivered in substantially the form we have examined, we hereby
confirm our opinion with respect to the Federal income tax characterization of
the Certificates and Notes and the Federal income tax treatment of the issuance
of the Certificates and Notes set forth under the caption "Federal Income Tax
Consequences" in the Prospectus and each Prospectus Supplement, and our opinion
with respect to the Ohio corporation franchise tax characterization of the
Notes set forth under the caption "State Tax Consequences" in the Form of
Owner Trust Prospectus Supplement, subject to the limitations expressed
therein. Moreover, we are of the opinion that the statements set forth in the
Prospectus and the Prospectus Supplements under the headings "Summary of Terms
- -- Tax Status," "Summary of Terms -- ERISA Considerations," "Federal Income Tax
Consequences" and "ERISA Considerations" are a fair and accurate summary of the
material tax and ERISA consequences of the issuance and holding of the Notes
and the Certificates. There can be no assurance, however, that the tax
conclusions presented therein will not be successfully challenged by the IRS,
or significantly altered by new legislation, changes in IRS positions or
judicial decisions, any of which challenges or alterations may be applied
retroactively with respect to completed transactions.
We note that the Prospectus does not relate to a specific transaction.
Accordingly, the above-referenced description of federal income tax consequences
may, under certain circumstances, require modification in the context of an
actual transaction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the Prospectus and
Prospectus Supplements under the caption "Federal Income Tax Consequences" and
"Legal Opinions" and in the Form of Owner Trust Prospectus Supplement under the
caption "State Tax Consequences."
Very truly yours,
THOMPSON HINE & FLORY LLP
/s/ Thompson, Hine & Flory LLP
<PAGE> 1
Exhibit 99.1
================================================================================
SALE AND SERVICING
AGREEMENT
between
KEY AUTO FINANCE TRUST 199_-_
as
Issuer
KEY CONSUMER ACCEPTANCE CORPORATION,
as
Seller
KEY BANK USA, NATIONAL ASSOCIATION,
as Servicer
----------------------------------------
as Indenture Trustee
Dated as of __________, 199__
================================================================================
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS......................................................................................... 1
SECTION 1.1. Definitions............................................................................. 1
SECTION 1.2. Other Interpretive Provisions........................................................... 1
ARTICLE II. CONVEYANCE OF RECEIVABLES.......................................................................... 2
SECTION 2.1. Conveyance of Receivables............................................................... 2
ARTICLE III. THE RECEIVABLES................................................................................... 3
SECTION 3.1. Representations and Warranties as to Each Receivable.................................... 3
SECTION 3.2. Representations and Warranties as to the Receivables in the
Aggregate............................................................................ 7
SECTION 3.3. Repurchase upon Breach.................................................................. 7
SECTION 3.4. Custodian of Receivable Files........................................................... 8
ARTICLE IV. ADMINISTRATION AND SERVICING OF RECEIVABLES........................................................ 12
SECTION 4.1. Duties of Servicer...................................................................... 12
SECTION 4.2. Collection of Receivable Payments....................................................... 13
SECTION 4.3. Realization upon Receivables............................................................ 13
SECTION 4.4. Physical Damage Insurance............................................................... 14
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles.................................. 15
SECTION 4.6. Covenants of Servicer................................................................... 16
SECTION 4.7. Purchase by Servicer upon Breach........................................................ 16
SECTION 4.8. Servicing Fee........................................................................... 16
SECTION 4.9. Servicer's Report....................................................................... 17
SECTION 4.10. Annual Statement as to Compliance; Notice of Default................................... 17
SECTION 4.11. Annual Independent Certified Public Accountants' Report................................ 18
SECTION 4.12. Access to Certain Documentation and Information Regarding
Receivables......................................................................... 18
SECTION 4.13. Reports to the Commission.............................................................. 19
SECTION 4.14. Reports to the Rating Agency........................................................... 19
SECTION 4.15. Servicer Expenses...................................................................... 19
ARTICLE V. DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND
NOTEHOLDERS........................................................................................ 19
SECTION 5.1. Establishment of Trust Accounts......................................................... 19
SECTION 5.2. Collections............................................................................. 22
SECTION 5.3. [Reserved].............................................................................. 23
SECTION 5.4. Additional Deposits..................................................................... 23
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
SECTION 5.5. Distributions........................................................................... 23
SECTION 5.6. Statements to Certificateholders and Noteholders........................................ 25
SECTION 5.7. Net Deposits............................................................................ 27
SECTION 5.8. Reserve Account......................................................................... 27
ARTICLE VI. SELLER............................................................................................. 31
SECTION 6.1. Representations of Seller............................................................... 31
SECTION 6.2. Continued Existence..................................................................... 32
SECTION 6.3. Liability of Seller; Indemnities........................................................ 33
SECTION 6.4. Merger or Consolidation of, or Assumption of the Obligations
of, Seller........................................................................... 34
SECTION 6.5. Limitation on Liability of Seller and Others............................................ 35
SECTION 6.6. Seller May Own Certificates or Notes.................................................... 35
ARTICLE VII. SERVICER.......................................................................................... 35
SECTION 7.1. Representations of Servicer............................................................. 35
SECTION 7.2. Indemnities of Servicer................................................................. 37
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations
of, Servicer......................................................................... 38
SECTION 7.4. Limitation on Liability of Servicer and Others.......................................... 39
SECTION 7.5. Key Bank USA Not To Resign as Servicer.................................................. 39
SECTION 7.6. Existence............................................................................... 40
SECTION 7.7. Servicer May Own Notes or Certificates.................................................. 40
ARTICLE VIII. SERVICER TERMINATION EVENTS...................................................................... 40
SECTION 8.1. Servicer Termination Event.............................................................. 40
SECTION 8.2. Appointment of Successor................................................................ 42
SECTION 8.3. Payment of Servicing Fee................................................................ 43
SECTION 8.4. Notification to Noteholders and Certificateholders...................................... 43
SECTION 8.5. Waiver of Past Defaults................................................................. 43
ARTICLE IX. TERMINATION........................................................................................ 44
SECTION 9.1. Optional Purchase of All Receivables.................................................... 44
ARTICLE X. MISCELLANEOUS PROVISIONS............................................................................ 45
SECTION 10.1. Amendment.............................................................................. 45
SECTION 10.2. Protection of Title to Trust Property.................................................. 47
SECTION 10.3. Notices................................................................................ 50
SECTION 10.4. Assignment............................................................................. 50
SECTION 10.5. Limitations on Rights of Others........................................................ 50
SECTION 10.6. Severability........................................................................... 51
SECTION 10.7. Separate Counterparts.................................................................. 51
SECTION 10.8. Headings............................................................................... 51
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
SECTION 10.9. Governing Law.......................................................................... 51
SECTION 10.10. Assignment to Indenture Trustee....................................................... 51
SECTION 10.11. Nonpetition Covenant.................................................................. 51
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture Trustee........................ 52
SECTION 10.13. Further Assurances.................................................................... 52
SECTION 10.14. No Waiver; Cumulative Remedies........................................................ 52
</TABLE>
iii
<PAGE> 5
SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location of Receivables
EXHIBITS
Exhibit A - Form of Monthly Certificateholder Statement
Exhibit B - Form of Monthly Noteholder Statement
Exhibit C - Form of Servicer's Report
APPENDIX
Appendix X - Definitions
iv
<PAGE> 6
SALE AND SERVICING AGREEMENT dated as of ________, 199__ (this
"Agreement") among KEY AUTO FINANCE TRUST 199__-__, a Delaware business trust
("Issuer"), KEY CONSUMER ACCEPTANCE CORPORATION, a Delaware corporation (in its
capacity as seller, "Seller"), and KEY BANK USA, NATIONAL ASSOCIATION, (in its
capacity as servicer, "Servicer") and _________________________________, a
_______________ (in its capacity as indenture trustee, "Indenture Trustee").
WHEREAS, Issuer desires to purchase from Seller a portfolio of
receivables arising in connection with Motor Vehicle Loans purchased or
originated by the Seller Affiliates and sold to Seller under the Purchase
Agreements;
WHEREAS, Seller is willing to sell such receivables to Issuer; and
WHEREAS, Servicer is willing to service such receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS.
SECTION 1.1. Definitions. Capitalized terms are used in this Agreement
as defined in Appendix X to this Agreement.
SECTION 1.2. Other Interpretive Provisions. For purposes of this
Agreement, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly defined in this
Agreement to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles; (b) terms defined in
Article 9 of the UCC as in effect in the relevant jurisdiction and not otherwise
defined in this Agreement are used as defined in that Article; (c) the words
"hereof," "herein" and "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular provision of this Agreement; (d)
references to any Article, Section, Schedule, Appendix or Exhibit are references
to Articles, Sections, Schedules, Appendices and Exhibits in or to this
Agreement and references to any paragraph, subsection, clause or other
subdivision within any Section or definition refer to such paragraph,
subsection, clause or other subdivision of such Section or definition; (e) the
term "including" means "including without limitation"; (f) except as otherwise
expressly provided herein, references to any law or regulation refer to that law
or regulation as amended from time to time and include any successor law or
regulation; (g) references to any Person include that Person's successors and
assigns; and (h) headings are for
<PAGE> 7
purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
ARTICLE II. CONVEYANCE OF RECEIVABLES.
SECTION 2.1. Conveyance of Receivables. In consideration of Issuer's
delivery to, or upon the order of, Seller of Notes and Certificates, in
aggregate principal amounts equal to the initial principal amount of the Notes
and the initial Certificate Balance, respectively, Seller does hereby sell,
transfer, assign, set over and otherwise convey to Issuer, without recourse,
subject to the obligations herein (collectively, the "Trust Property"):
(a) all right, title and interest of Seller in and to the Receivables,
and all moneys received thereon [on or] after the Cutoff Date;
(b) all right, title and interest of Seller in the security interests
in the Financed Vehicles granted by Obligors pursuant to the Receivables and any
other interest of Seller in the Financed Vehicles and any other property that
shall secure the Receivables;
(c) the interest of Seller in any proceeds with respect to the
Receivables from claims on any Insurance Policies covering Financed Vehicles or
the Obligors or from claims under any lender's single interest insurance policy
naming any Seller Affiliate as an insured;
(d) rebates of premiums relating to Insurance Policies and rebates of
other items such as extended warranties financed under the Receivables, in each
case, to the extent the Servicer would, in accordance with its customary
practices, apply such amounts to the Principal Balance of the related
Receivable;
(e) the interest of Seller in any proceeds from (i) any Receivable
repurchased by a Dealer, pursuant to a Dealer Agreement, as a result of a breach
of representation or warranty in the related Dealer Agreement, (ii) a default by
an Obligor resulting in the repossession of the Financed Vehicle under the
applicable Motor Vehicle Loan or (iii) any Dealer Recourse or other rights
relating to the Receivables under Dealer Agreements;
(f) all right, title and interest in all funds on deposit from time to
time in the Certificate Distribution Account and the Trust Accounts, and in all
investments and proceeds thereof (but excluding all investment income thereon);
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(g) all right, title and interest of Seller under each Purchase
Agreement, including the right of Seller to cause a Seller Affiliate to
repurchase Receivables from Seller;
(h) all right, title and interest of Seller in any instrument or
document relating to the Receivables; and
(i) the proceeds of any and all of the foregoing.
The sale, transfer, assignment, setting over and conveyance made
hereunder shall not constitute and is not intended to result in an assumption by
Issuer of any obligation of any Seller Affiliates to the Obligors, the Dealers
or any other Person in connection with the Receivables and the other assets and
properties conveyed hereunder or any agreement, document or instrument related
thereto.
ARTICLE III. THE RECEIVABLES.
SECTION 3.1. Representations and Warranties as to Each Receivable.
Seller hereby makes the following representations and warranties as to each
Receivable conveyed by it to Issuer hereunder on which Issuer shall rely in
acquiring the Receivables. Unless otherwise indicated, such representations and
warranties shall speak as of the Closing Date, but shall survive the sale,
transfer and assignment of the Receivables to Issuer and the pledge thereof to
Indenture Trustee pursuant to the Indenture.
(a) Characteristics of Receivables. The Receivable has been fully and
properly executed by the parties thereto and (i) is a Direct Loan made by an
Originator or has been originated by a Dealer in the ordinary course of such
Dealer's business and has been purchased by an Originator, in either case, in
the ordinary course of such Originator's business and in accordance with such
Originator's underwriting standards to finance the retail sale by a Dealer of
the related Financed Vehicle or has otherwise been acquired by a Seller
Affiliate, (ii) the Originator of which has underwriting standards that require
physical damage insurance to be maintained on the related Financed Vehicle,
(iii) is secured by a valid, subsisting, binding and enforceable first priority
security interest in favor of a Seller Affiliate in the Financed Vehicle
(subject to administrative delays and clerical errors on the part of the
applicable government agency and to any statutory or other lien arising by
operation of law after the Closing Date which is prior to such security
interest), which security interest is assignable together with such Receivable,
and has been so assigned to Seller, and subsequently assigned by Seller to
Issuer, (iv) contains customary and enforceable provisions such that the rights
and remedies of the holder thereof are adequate for realization
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against the collateral of the benefits of the security, (v) provided, at
origination, for level monthly payments (provided that the amount of the last
payment may be different), which fully amortize the Initial Principal Balance
over the original term, (vi) provides for interest at the Contract Rate
specified in the Schedule of Receivables, (vii) was originated in the United
States and (viii) constitutes "chattel paper" as defined in the UCC.
(b) Individual Characteristics. The Receivables have the following
individual characteristics as of the Cutoff Date; (i) each Receivable is secured
by a Motor Vehicle; (ii) each Receivable has a Contract Rate of at least ____%
and not more than ____%; (iii) each Receivable had a remaining number of
scheduled payments, as of the Cutoff Date, of not less than ____ and not more
than ____; (iv) each Receivable had an Initial Principal Balance of not less
than $__________ and not more than $__________; (v) no Receivable was more than
30 days past due as of the Cutoff Date; (vi) no Financed Vehicle had been
repossessed as of the Cutoff Date; (vii) no Receivable is subject to a force
placed Physical Damage Insurance Policy on the related Financed Vehicle; [(viii)
each Receivable is a Simple Interest Receivable;] and (ix) the Dealer of the
Financed Vehicle has no participation in, or other right to receive, any
proceeds of the Receivable. The Receivables were selected using selection
procedures that were not intended by any Seller Affiliate or Seller to be
adverse to the Holders.
(c) Schedule of Receivables. The information with respect to each
Receivable set forth in the Schedule of Receivables, including (without
limitation) the identity and address of the Obligor, account number, the Initial
Principal Balance, the maturity date and the Contract Rate, was true and correct
in all material respects as of the close of business on the Cutoff Date.
(d) Compliance with Law. The Receivable complied at the time it was
originated or made, and will comply as of the Closing Date, in all material
respects with all requirements of applicable federal, state and local laws, and
regulations thereunder, including, to the extent applicable, usury laws, the
Federal Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Federal Trade Commission Act,
the Magnuson-Moss Warranty Act, the Fair Debt Collection Practices Act, Federal
Reserve Board Regulations B and Z and any other consumer credit, consumer
protection, equal opportunity and disclosure laws.
(e) Binding Obligation. The Receivable constitutes the genuine, legal,
valid and binding payment obligation in writing of the Obligor, enforceable in
all material respects by the holder thereof in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, or other
similar laws affecting the enforcement of creditors' rights generally, and the
Receivable is not subject
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to any right of rescission, setoff, counterclaim or defense, including the
defense of usury.
(f) Lien in Force. Neither Seller nor any Seller Affiliate has taken
any action which would have the effect of releasing the related Financed Vehicle
from the Lien granted by the Receivable in whole or in part.
(g) No Amendment or Waiver. No material provision of the Receivable has
been amended, waived, altered or modified in any respect, except such waivers as
would be permitted under this Agreement, and no amendment, waiver, alteration or
modification causes such Receivable not to conform to the other representations
or warranties contained in this Section.
(h) No Liens. Neither Seller nor any Seller Affiliate has received
notice of any Liens or claims, including Liens for work, labor, materials or
unpaid state or federal taxes, relating to the Financed Vehicle securing the
Receivable, that are or may be prior to or equal to the Lien granted by the
Receivable.
(i) No Default. Except for payment delinquencies continuing for a
period of not more than 30 days as of the Cutoff Date, to the knowledge of
Seller, no default, breach, violation or event permitting acceleration under the
terms of the Receivable exists and no continuing condition that with notice or
lapse of time, or both, would constitute a default, breach, violation or event
permitting acceleration under the terms of the Receivable has arisen.
(j) Insurance. The Receivable requires the Obligor to insure the
Financed Vehicle under a Physical Damage Insurance Policy, pay the premiums for
such insurance and keep such insurance in full force and effect.
(k) Good Title. It is the intention of Seller that the transfer and
assignment herein contemplated constitute a sale of the Receivables from Seller
to Issuer and that the beneficial interest in and title to the Receivables not
be part of Seller's estate in the event of the filing of a bankruptcy petition
by or against Seller under any bankruptcy law. No Receivable has been sold,
transferred, assigned, or pledged by Seller to any Person other than Issuer.
Immediately prior to the transfer and assignment herein contemplated, Seller had
good and marketable title to the Receivable free and clear of any Lien and had
full right and power to transfer and assign the Receivable to Issuer and
immediately upon the transfer and assignment of the Receivable to Issuer, Issuer
shall have good and marketable title to the Receivable, free and clear of any
Lien; and Issuer's interest in the Receivable resulting from the transfer has
been perfected under the UCC.
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(l) Obligations. Each Seller Affiliate has duly fulfilled all
material obligations on its part to be fulfilled under, or in connection with,
the Receivable.
(m) Possession. There is only one original executed Receivable, and
immediately prior to the Closing Date, the applicable Seller Affiliate will have
possession of such original executed Receivable.
(n) No Government Obligor. The Obligor on the Receivable is not the
United States of America or any state thereof or any local government, or any
agency, department, political subdivision or instrumentality of the United
States of America or any state thereof or any local government.
(o) Marking Records. By the Closing Date, Seller shall have caused the
portions of Seller's and each Seller Affiliate's electronic master record of
Motor Vehicle Loans relating to the Receivables to be clearly and unambiguously
marked to show that the Receivable is owned by Issuer in accordance with the
terms of this Agreement.
(p) No Assignment. As of the Closing Date, Seller shall not have taken
any action to convey any right to any Person that would result in such Person
having a right to payments received under the Insurance Policies or Dealer
Agreements, or payments due under the Receivable, that is senior to, or equal
with, that of Issuer.
(q) Lawful Assignment. The Receivable has not been originated in, and
is not subject to the laws of, any jurisdiction under which the sale, transfer
or assignment of such Receivable hereunder or pursuant to transfers of the Notes
or Certificates are unlawful, void or voidable. Neither Seller nor any Seller
Affiliate has entered into any agreement with any Obligor that prohibits,
restricts or conditions the assignment of any portion of the Receivables.
(r) Dealer Agreements. A Dealer Agreement for each Receivable is in
effect whereby the Dealer warrants title to the Motor Vehicle and indemnifies
the Seller Affiliate that is a party to said Dealer Agreement against the
unenforceability of each Receivable sold thereunder, and the rights of such
Seller Affiliate thereunder, with regard to the Receivable sold hereunder, have
been validly assigned to and are enforceable against the Dealer by the Seller
and then to and by the Issuer, along with any Dealer Recourse.
(s) Composition of Receivable. No Receivable has a Principal Balance
which includes capitalized interest or late charges.
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(t) Database File. The information included with respect to each
Receivable in the database file delivered pursuant to Section 4.9(b) is accurate
and complete in all material respects.
SECTION 3.2. Representations and Warranties as to the Receivables in
the Aggregate. Seller hereby makes the following representations and warranties
as to the Receivables conveyed by it to Issuer hereunder on which Issuer shall
rely in acquiring the Receivables. Unless otherwise indicated, such
representations and warranties shall speak as of the Closing Date, but shall
survive the sale, transfer and assignment of the Receivables to Issuer and the
pledge thereof to Indenture Trustee pursuant to the Indenture.
(a) Amounts. The Original Pool Balance was $_____________.
(b) Aggregate Characteristics. The Receivables had the following
characteristics in the aggregate as of the Cutoff Date: (i) approximately _____%
of the Original Pool Balance was attributable to loans for purchases of new
Financed Vehicles, and approximately ______% of the Original Pool Balance was
attributable to loans for purchases of used Financed Vehicles; (ii)
approximately _____% of the Original Pool Balance was attributable to
Receivables the mailing addresses of the Obligors with respect to which are
located in the State of __________________ and __% of the Original Pool Balance
was attributable to Receivables the mailing addresses of the Obligors with
respect to which are located in the State of __________, _____% in the State of
________, _____% in the State of __________, _____% in the State of ____________
and _____% in the State of __________, and no other state accounts for more than
5% of the Original Pool Balance; (iii) the weighted average Contract Rate of the
Receivables was _____%; (iv) there are ____ Receivables being conveyed by Seller
to Issuer; (v) the average Cutoff Date Principal Balance of the Receivables was
$____________; and (vi) the weighted average original term and weighted average
remaining term of the Receivables were ___ months and ___ months, respectively.
SECTION 3.3. Repurchase upon Breach. Seller, Servicer, Indenture
Trustee or Owner Trustee, as the case may be, shall inform the other parties to
this Agreement promptly, in writing, upon the discovery of any breach or failure
to be true of the representations or warranties made by Seller in Section 3.1,
provided that the failure to give such notice shall not affect any obligation of
Seller. If the breach or failure shall not have been cured by the last day of
the Collection Period which includes the 60th day (or if Seller elects, the 30th
day) after the date on which Seller becomes aware of, or receives written notice
from Owner Trustee, Indenture Trustee or Servicer of, such breach or failure,
and such breach or failure materially and adversely affects the interests of
Issuer and the Holders in any Receivable, Seller shall repurchase each such
affected Receivable
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from Issuer as of such last day of such Collection Period at a purchase price
equal to the Purchase Amount for such Receivable as of such last day of such
Collection Period. Notwithstanding the foregoing, any such breach or failure
with respect to the representations and warranties contained in Section 3.1 will
not be deemed to have such a material and adverse effect with respect to a
Receivable if the facts resulting in such breach or failure do not affect the
ability of Issuer to receive and retain payment in full on such Receivable. In
consideration of the repurchase of a Receivable hereunder, Seller shall remit
the Purchase Amount of such Receivable, no later than the close of business on
the next Deposit Date, in the manner specified in Section 5.4. The sole remedy
of Issuer, the Owner Trustee, the Indenture Trustee or the Holders with respect
to a breach or failure to be true of the representations or warranties made by
Seller pursuant to Section 3.1 shall be to require Seller to repurchase
Receivables pursuant to this Section.
SECTION 3.4. Custodian of Receivable Files. (a) Custody. To assure
uniform quality in servicing the Receivables and to reduce administrative costs,
Issuer, upon the execution and delivery of this Agreement, revocably appoints
Custodian, as agent, and Custodian accepts such appointment, to act as agent on
behalf of Issuer to maintain custody of the following documents or instruments,
which are hereby constructively delivered to Issuer with respect to each
Receivable (collectively, a "Receivable File"):
(i) the fully executed original of the Receivable;
(ii) any documents customarily delivered to or held by Seller
or Servicer evidencing the existence of any Physical Damage Insurance
Policies;
(iii) the original credit application, fully executed by the
Obligor;
(iv) the original certificate of title, or such other
documents as the applicable Seller Affiliate, as appropriate, keeps on
file, in accordance with its customary procedures, evidencing the
security interest of such Seller Affiliate in the Financed Vehicle;
(v) originals or true copies of all documents, instruments or
writings relating to extensions, amendments or waivers of the
Receivable; and
(vi) any and all other documents or electronic records that
Seller, any Seller Affiliate or Servicer, as the case may be, keeps on
file, in
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accordance with its customary procedures, relating to the Receivable,
any Insurance Policies, the Obligor or the Financed Vehicle.
(b) Safekeeping. Servicer, in its capacity as Custodian, shall hold the
Receivable Files as agent on behalf of Issuer and maintain such accurate and
complete accounts, records and computer systems pertaining to each Receivable as
shall enable Servicer and Issuer to comply with the terms and provisions of this
Agreement applicable to them. In performing its duties as Custodian hereunder,
Custodian shall act with reasonable care, exercising the degree of skill,
attention and care that Custodian exercises with respect to receivable files
relating to other similar motor vehicle loans owned and/or serviced by Custodian
and that is consistent with industry standards. In accordance with its customary
practice with respect to its retail installment sale contracts, Custodian shall
conduct, or cause to be conducted, periodic audits of the Receivable Files held
by it under this Agreement, and of the related accounts, records, and computer
systems, and shall maintain the Receivable Files in such a manner as shall
enable Owner Trustee to verify, if Owner Trustee so elects, the accuracy of the
record keeping of Custodian. Custodian shall promptly report to Owner Trustee
any failure on its part to hold the Receivable Files and maintain its accounts,
records and computer systems as herein provided, and promptly take appropriate
action to remedy any such failure. Custodian hereby acknowledges receipt of the
Receivable File for each Receivable listed on the Schedule of Receivables.
Nothing herein shall be deemed to require Issuer, Owner Trustee or Indenture
Trustee to verify the accuracy of the record keeping of the Custodian.
(c) Maintenance of and Access to Records. Custodian shall maintain each
Receivable File at the location specified in Schedule B to this Agreement, or at
such other office of Custodian within the United States (or, in the case of any
successor Custodian, within the State in which its principal place of business
is located) as shall be specified to Issuer by 30 days' prior written notice. At
the reasonable direction of the Owner Trustee, Custodian shall make available to
Owner Trustee, Indenture Trustee and their respective agents (or, when requested
in writing by Owner Trustee or Indenture Trustee, their respective attorneys or
auditors) the Receivable Files and the related accounts, records and computer
systems maintained by Custodian at such times during the normal business hours
of Custodian for purposes of inspecting, auditing or making copies of abstracts
of the same.
(d) Release of Documents. Upon written instructions from Indenture
Trustee (or, if no Notes are then Outstanding, Owner Trustee), Custodian shall
release any document in the Receivable Files to Indenture Trustee or Owner
Trustee or its respective agent or designee, as the case may be, at such place
or places as Indenture Trustee or Owner Trustee may designate, as soon
thereafter
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as is practicable. Any document so released shall be handled by Indenture
Trustee or Owner Trustee with due care and returned to Custodian for safekeeping
as soon as Indenture Trustee or Owner Trustee or its respective agent or
designee, as the case may be, shall have no further need therefor.
(e) Title to Receivables. Custodian agrees that, in respect of any
Receivable File held by Custodian hereunder, Custodian will not at any time have
or in any way attempt to assert any interest in such Receivable File or the
related Receivable, other than solely for the purpose of collecting or enforcing
the Receivable for the benefit of Issuer and that the entire equitable interest
in such Receivable and the related Receivable File shall at all times be vested
in Issuer.
(f) Instructions; Authority to Act. Custodian shall be deemed to have
received proper instructions with respect to the Receivable Files upon its
receipt of written instructions signed by an Authorized Officer of Indenture
Trustee or Owner Trustee, as applicable. A certified copy of excerpts of certain
resolutions of the Board of Directors of Indenture Trustee or Owner Trustee, as
applicable, shall constitute conclusive evidence of the authority of any such
Authorized Officer to act and shall be considered in full force and effect until
receipt by Custodian of written notice to the contrary given by Indenture
Trustee or Owner Trustee, as applicable.
(g) Custodian's Indemnification. Custodian shall indemnify and hold
harmless Issuer, Owner Trustee and Indenture Trustee, and each of their
respective officers, directors, employees and agents and the Holders from and
against any and all liabilities, obligations, losses, compensatory damages,
payments, costs or expenses (including legal fees if any) of any kind whatsoever
that may be imposed on, incurred or asserted against Issuer, Owner Trustee,
Indenture Trustee or the Holders as the result of any act or omission of
Custodian relating to the maintenance and custody of the Receivable Files;
provided that Custodian shall not be liable hereunder to the extent that such
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses result from the willful misfeasance, bad faith or negligence of Owner
Trustee or Indenture Trustee. Indemnification under this subsection (g) shall
include reasonable fees and expenses of counsel and expenses of litigation and
shall survive termination of this Agreement and the resignation or removal of
Owner Trustee or Indenture Trustee, as the case may be. If Custodian shall have
made any indemnity payments to Owner Trustee or Indenture Trustee pursuant to
this Section and Owner Trustee or Indenture Trustee thereafter shall collect any
of such amounts from Persons other than Custodian, Owner Trustee or Indenture
Trustee, Trustee shall immediately upon receipt thereof repay such amounts to
Custodian, without interest.
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(h) Effective Period and Termination. Servicer's appointment as
Custodian shall become effective as of the Cutoff Date and shall continue in
full force and effect until terminated pursuant to this subsection (h). If
Servicer shall resign as Servicer in accordance with Section 7.5 or if all of
the rights and obligations of Servicer shall have been terminated under Section
8.1, the appointment of Servicer as Custodian hereunder may be terminated by the
Owner Trustee or Indenture Trustee or by the Holders of Notes evidencing not
less than 50% of the aggregate Outstanding Amount of the Notes (or, if no Notes
are then Outstanding, the Holders of Certificates representing not less than 50%
of the Certificate Balance), in each case in the same manner as Owner Trustee or
Indenture Trustee or such Holders may terminate the rights and obligations of
Servicer under Section 8.1. The Indenture Trustee, at the direction of Holders
of Notes evidencing not less than 50% of the aggregate Outstanding Amount of the
Notes, or, if no Notes are then Outstanding, the Owner Trustee at the direction
of Holders of Certificates evidencing not less than 50% of the Certificate
Balance, may terminate Servicer's appointment as Custodian hereunder at any time
with cause, or with 30 days' prior written notice without cause. As soon as
practicable after any termination of such appointment Servicer shall deliver, or
cause to be delivered, the Receivable Files to Indenture Trustee or Owner
Trustee, as applicable, or its respective agent or designee at such place or
places as Indenture Trustee or Owner Trustee, as applicable, may reasonably
designate. Notwithstanding any termination of Servicer as Custodian hereunder
(other than in connection with a termination resulting from the termination of
Servicer, as such, pursuant to Section 8.1), from and after the date of such
termination, and for so long as Servicer is acting as such pursuant to this
Agreement, Indenture Trustee or Owner Trustee, as applicable, shall provide, or
cause the successor Custodian to provide, access to the Receivable Files to
Servicer, at such times as Servicer shall reasonably request, for the purpose of
carrying out its duties and responsibilities with respect to the servicing of
the Receivables hereunder.
(i) Delegation. Custodian may, at any time without notice or consent,
delegate any or all of its duties under the Basic Documents to any Seller
Affiliate; provided that no such delegation shall relieve Custodian of its
responsibility with respect to such duties and Custodian shall remain obligated
and liable to Issuer and the Holders for its duties hereunder as if Custodian
alone were performing such duties.
ARTICLE IV. ADMINISTRATION AND SERVICING OF RECEIVABLES.
SECTION 4.1. Duties of Servicer. (a) Servicer is hereby authorized to
act as agent for Issuer and in such capacity shall manage, service, administer
and make collections on the Receivables (other than Purchased Receivables), and
perform the other actions required by Servicer under this Agreement, with
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reasonable care. Without limiting the standard set forth in the preceding
sentence, Servicer shall use a degree of skill, attention and care that is not
less than Servicer exercises with respect to comparable Motor Vehicle Loans that
it services for itself or others and that is consistent with prudent industry
standards. Servicer's duties shall include the collection and posting of all
payments, responding to inquiries by Obligors on the Receivables, or by federal,
state or local governmental authorities, investigating delinquencies, sending
payment coupons or monthly invoices to Obligors, reporting required tax
information to Obligors, accounting for Collections, monitoring the status of
Physical Damage Insurance Policies with respect to the Financed Vehicles as
provided in Section 4.4(a), furnishing monthly and annual statements to Owner
Trustee and Indenture Trustee with respect to distributions, providing
collection and repossession services in the event of Obligor default and
performing the other duties specified herein.
In accordance with its customary servicing procedures, Servicer shall
also administer and enforce all rights and responsibilities of the holder of the
Receivables provided for in the Physical Damage Insurance Policies as provided
in Section 4.4 and the Dealer Agreements. Without limiting the generality of
the foregoing, Servicer is hereby authorized and empowered by Issuer to execute
and deliver, on behalf of itself, Indenture Trustee, Issuer, Owner Trustee and
the Holders, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Receivables or to the Financed Vehicles, all in accordance with
this Agreement; provided that notwithstanding the foregoing, Servicer shall not,
except pursuant to an order from a court of competent jurisdiction, release an
Obligor from payment of any unpaid amount under any Receivable or waive the
right to collect the unpaid balance of any Receivable from the Obligor, except
in connection with a de minimis deficiency which Servicer would not attempt to
collect in accordance with its customary procedures. If Servicer shall commence
a legal proceeding to enforce a Receivable, Issuer shall thereupon be deemed to
have automatically assigned such Receivable to Servicer, which assignment shall
be solely for purposes of collection.
Owner Trustee shall furnish Servicer with any powers of attorney and
other documents or instruments necessary or appropriate to enable Servicer to
carry out its servicing and administrative duties hereunder.
(b) Servicer may, at any time without notice (except that Servicer
shall give written notice to each Rating Agency of any delegation outside the
ordinary course of business of the substantial portion of its servicing
business) or consent, delegate (i) any or all duties under this Agreement to any
Person more than 50% of the voting securities of which are owned, directly or
indirectly, by KeyCorp,
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an Ohio corporation, so long as Key Bank USA acts as Servicer, or (ii) specific
duties to sub-contractors who are in the business of performing such duties;
provided that no such delegation shall relieve Servicer of its responsibility
with respect to such duties and Servicer shall remain obligated and liable to
Issuer and the Holders for servicing and administering the Receivables in
accordance with this Agreement as if Servicer alone were performing such duties.
SECTION 4.2. Collection of Receivable Payments. (a) Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables as and when the same shall become due, and
otherwise act with respect to the Receivables, the Physical Damage Insurance
Policies, the Dealer Agreements and related property in such manner as will, in
the reasonable judgment of Servicer, maximize the amount to be received by
Issuer with respect thereto, in accordance with the standard of care required by
Section 4.1. Servicer shall be entitled to amend or modify any Receivable in
accordance with its customary procedures if Servicer believes in good faith that
such amendment or modification is in Issuer's best interests; provided that
Servicer may not, unless ordered by a court of competent jurisdiction or
otherwise required by applicable law, (i) extend a Receivable beyond the Final
Scheduled Maturity Date or (ii) reduce the Principal Balance or Contract Rate of
any Receivable. If Servicer fails to comply with the provisions of the preceding
sentence, Servicer shall be required to purchase the Receivable or Receivables
affected thereby, for the Purchase Amount, in the manner specified in Section
4.7 as of the close of the Collection Period in which such failure occurs.
Servicer may, in its discretion (in accordance with its customary standards,
policies and procedures), waive any prepayment charge, late payment charge,
extension fee or any other fee that may be collected in the ordinary course of
servicing a Receivable.
(b) If in the course of collecting payments under the Receivables,
Servicer determines to set off any obligation of Servicer to an Obligor against
an amount payable by the Obligor with respect to such Receivable, Servicer shall
deposit the amount so set off in the Collection Account, no later than the close
of business on the Deposit Date for the Collection Period in which the set-off
occurs. All references herein to payments or Liquidation Proceeds collected by
Servicer shall include amounts set-off by Servicer.
SECTION 4.3. Realization upon Receivables. On behalf of Issuer,
Servicer shall charge off a Receivable as a Defaulted Receivable in accordance
with its customary standards (and, in no event later than ___ days after a
Receivable shall have become delinquent) and shall use reasonable efforts to
repossess and liquidate the Financed Vehicle securing any Defaulted Receivable
as soon as feasible after default, in accordance with the standard of care
required
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by Section 4.1. In taking such action, Servicer shall follow such customary and
usual practices and procedures as it shall deem necessary or advisable in its
servicing of Motor Vehicle Loans, and as are otherwise consistent with the
standard of care required under Section 4.1, which shall include exercising any
rights under the Dealer Agreements and selling the Financed Vehicle at public or
private sale. Servicer shall be entitled to recover all reasonable expenses
incurred by it in the course of repossessing and liquidating a Financed Vehicle
into cash proceeds or pursuing any deficiency claim against the related Obligor,
but only out of the cash proceeds of such Financed Vehicle or any deficiency
obtained from the Obligor. The foregoing shall be subject to the provision that,
in any case in which a Financed Vehicle shall have suffered damage, Servicer
shall not expend funds in connection with the repair or the repossession of such
Financed Vehicle unless it shall determine in its discretion that such repair
and/or repossession will increase the Liquidation Proceeds of the related
Receivable by an amount equal to or greater than the amount of such expenses.
If Servicer elects to commence a legal proceeding to enforce a Dealer
Agreement, the act of commencement shall be deemed to be an automatic assignment
from Issuer to Servicer of the rights under such Dealer Agreement. If, however,
in any enforcement suit or legal proceeding, it is held that Servicer may not
enforce a Dealer Agreement on the grounds that it is not a real party in
interest or a Person entitled to enforce the Dealer Agreement, Owner Trustee, on
behalf of Issuer, at Servicer's expense, or Seller, at Servicer's expense, shall
take such steps as Servicer deems necessary to enforce the Dealer Agreement,
including bringing suit in Issuer's name or the name of Owner Trustee or
Indenture Trustee.
SECTION 4.4. Physical Damage Insurance. (a) The Receivables require
that each Financed Vehicle be insured under a Physical Damage Insurance Policy.
Servicer shall monitor or cause to be monitored, the status of such physical
damage insurance coverage to the extent consistent with its customary servicing
procedures. If Servicer shall determine that an Obligor has failed to obtain or
maintain a Physical Damage Insurance Policy covering the related Financed
Vehicle, Servicer shall use reasonable efforts in accordance with its customary
servicing procedures to enforce the rights of the holder of the Receivable
under the Receivable to require the Obligor to obtain such physical damage
insurance, provided that Servicer shall not be required to take such actions if
there is in place a lender's single interest policy with respect to the related
Financed Vehicle that complies with Servicer's customary requirements. It is
understood that Servicer will not "force-place" any Physical Damage Insurance
Policy on any Financed Vehicle.
(b) Servicer may sue to enforce or collect upon the Physical Damage
Insurance Policies, in its own name, if possible, or as agent for Issuer. If
Servicer
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elects to commence a legal proceeding to enforce a Physical Damage Insurance
Policy, the act of commencement shall be deemed to be an automatic assignment of
the rights of Issuer under such Physical Damage Insurance Policy to Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that Servicer may not enforce a Physical Damage Insurance
Policy on the grounds that it is not a real party in interest or a holder
entitled to enforce the Physical Damage Insurance Policy, Owner Trustee, on
behalf of Issuer, at Servicer's expense, or Seller, at Servicer's expense, shall
take such steps as Servicer deems necessary to enforce such Physical Damage
Insurance Policy, including bringing suit in Issuer's name or the name of Owner
Trustee or Indenture Trustee. Servicer shall make all claims and enforce its
rights under any lender's single interest insurance policy (to the extent such
claims or rights relate to Receivables) for the benefit of the Issuer and shall
treat as Collections all related proceeds of such policies.
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles.
Servicer, in accordance with the standard of care required under Section 4.1,
shall take such reasonable steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle for
the benefit of Issuer. Issuer hereby authorizes Servicer, and Servicer hereby
agrees, to take such reasonable steps as are necessary to re-perfect such
security interest on behalf of Issuer in the event Servicer receives notice of
the relocation of a Financed Vehicle. If there has been a Servicer Termination
Event, upon the request of Owner Trustee, Seller and Servicer, at their expense,
shall promptly and duly execute and deliver such documents and instruments, and
take such other reasonable actions as may be necessary, as evidenced by an
Opinion of Counsel delivered to Issuer, Owner Trustee and Indenture Trustee to
perfect Issuer's and Indenture Trustee's interest in the Trust Property against
all other Persons, including the delivery of the Receivables and the Receivable
Files to Indenture Trustee (or Owner Trustee if no Notes are then Outstanding)
its agent or designee, the endorsement and delivery of the Physical Damage
Insurance Policies or the notification of the insurers thereunder, the execution
of transfer instruments, and the endorsement to Indenture Trustee (or Owner
Trustee if no Notes are then Outstanding) and the delivery of the certificates
of title to the Financed Vehicles to the appropriate department or departments
of motor vehicles (or other appropriate governmental agency).
SECTION 4.6. Covenants of Servicer. Servicer makes the following
covenants on which Issuer relies in acquiring the Receivables:
(a) Security Interest to Remain in Force. Servicer shall not release
any Financed Vehicle from the security interest granted by the related
Receivable in
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whole or in part, except upon payment in full of the Receivable or as otherwise
contemplated herein.
(b) No Impairment. Servicer shall not impair in any material respect
the rights of the Holders in the Receivables, the Dealer Agreements or the
Physical Damage Insurance Policies or, subject to clause (c), otherwise amend or
alter the terms thereof if, as a result of such amendment or alteration, the
interests of Issuer and the Holders hereunder would be materially adversely
affected.
(c) Amendments. Servicer shall not amend or otherwise modify any
Receivable (including the grant of any extension thereunder), except in
accordance with Section 4.2.
SECTION 4.7. Purchase by Servicer upon Breach. Seller, Servicer,
Indenture Trustee or Owner Trustee, as the case may be, shall inform the other
parties promptly, in writing, upon the discovery of any breach by Servicer of
its covenants under Section 4.5 or 4.6; provided that the failure to give such
notice shall not affect any obligation of Servicer. Unless the breach shall have
been cured by the last day of the Collection Period which includes the 60th day
(or the 30th day, if Servicer so elects) after the date on which Servicer
becomes aware of, or receives written notice of, such breach, and such breach or
failure materially and adversely affects the interests of Issuer and the Holders
in any Receivable, Servicer shall purchase such Receivable from Issuer as of the
last day of the Collection Period at a purchase price equal to the Purchase
Amount for such Receivable as of the last day of such Collection Period;
provided that in the case of a breach of the covenant contained in Section
4.6(c), Servicer shall be obligated to purchase the affected Receivable or
Receivables on the Deposit Date immediately succeeding the Collection Period
during which Servicer becomes aware of, or receives written notice of, such
breach. In consideration of the purchase of a Receivable hereunder, Servicer
shall remit the Purchase Amount of such Receivable in the manner specified in
Section 5.4. The sole remedy of Issuer, Owner Trustee, Indenture Trustee or the
Holders against Servicer with respect to a breach pursuant to Section 4.5 or 4.6
shall be to require Servicer to repurchase Receivables pursuant to this Section.
SECTION 4.8. Servicing Fee. The servicing fee for (a) the ________
199__ Distribution Date shall equal $__________ and (b) for each Distribution
Date thereafter shall equal the product of (i) one-twelfth, (ii) the Servicing
Fee Rate and (iii) the Pool Balance as of the opening of business on the first
day of the related Collection Period (the "Servicing Fee"). Servicer shall also
be entitled to retain any late fees, extension fees, prepayment charges
(including, in the case of any Rule of 78's Receivable or Sum of Periodic
Balances Receivable that is prepaid in full, amounts received in excess of the
outstanding Principal Balance
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of such Receivable and accrued interest thereon calculated as if such Receivable
were an Actuarial Receivable) and certain non-sufficient funds charges and other
administrative fees or similar charges allowed by applicable law with respect to
Receivables collected (from whatever source) on the Receivables and shall be
paid any interest earned on deposits in the Trust Accounts and the Certificate
Distribution Account (the "Supplemental Servicing Fee"). It is understood and
agreed that Available Interest or Available Principal shall not include any
amounts retained by Servicer which constitute Supplemental Servicing Fees. The
Servicing Fee in respect of a Collection Period (together with any portion of
the Servicing Fee that remains unpaid from prior Distribution Dates), if the
Rating Agency Condition is satisfied, may be paid at the beginning of such
Collection Period out of Collections for such Collection Period. As provided in
Section 5.5(c), as additional compensation, Servicer shall be entitled to
receive on each Distribution Date, any Additional Servicing for such
Distribution Date.
SECTION 4.9. Servicer's Report. (a) On each Determination Date,
Servicer shall deliver to Owner Trustee, Indenture Trustee, each Paying Agent
and Seller, with a copy to the Rating Agencies, a Servicer's Report
substantially in the form of Exhibit A, containing all information necessary to
make the transfers and distributions pursuant to Sections 5.4, 5.5 and 5.8 for
the Collection Period preceding the date of such Servicer's Report together with
all information necessary for the Owner Trustee to send statements to
Certificateholders pursuant to Section 5.6 and Indenture Trustee to send
statements to Noteholders pursuant to the Indenture and Section 5.6 of this
Agreement. Receivables to be purchased by Servicer or to be repurchased by
Seller shall be identified by Servicer by account number with respect to such
Receivable (as specified in the Schedule of Receivables).
(b) Servicer shall provide Indenture Trustee with a database file for
the Receivables at or prior to the Closing Date (but with information as of the
close of business on the Cutoff Date).
SECTION 4.10. Annual Statement as to Compliance; Notice of Default. (a)
Servicer shall deliver to Owner Trustee, Indenture Trustee and each Rating
Agency, on or before ____________________ of each year beginning on
____________, 199__, an Officer's Certificate, dated as of ______________ of
such year, stating that (i) a review of the activities of Servicer during the
preceding 12-month period (or, in the case of the first such report, during the
period from the Closing Date to ____________, 199__) and of its performance
under this Agreement has been made under such officer's supervision and (ii) to
the best of such officer's knowledge, based on such review, Servicer has
fulfilled all its obligations in all material respects under this Agreement
throughout such year or, if there exists any uncured default in the fulfillment
of any such
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obligation, specifying each such default known to such officer and the nature
and status thereof. A copy of such certificate and the report referred to in
Section 4.11 may be obtained by any Certificateholder by a request in writing to
Owner Trustee addressed to the Corporate Trust Office or by any Noteholder by a
request in writing to Indenture Trustee addressed to the Corporate Trust Office.
Upon the telephone request of Owner Trustee, Indenture Trustee will promptly
furnish Owner Trustee a list of Noteholders as of the date specified by Owner
Trustee.
(b) Servicer shall deliver to Owner Trustee, Indenture Trustee and the
Rating Agencies, promptly after having obtained knowledge thereof, but in no
event later than five (5) Business Days thereafter, written notice in an
Officer's Certificate of any event which constitutes, or with the giving of
notice or lapse of time, or both, would become a Servicer Termination Event
under Section 8.1.
SECTION 4.11. Annual Independent Certified Public Accountants' Report.
The Servicer shall cause a firm of independent certified public accountants (who
may also render other services to the Servicer or Seller) to deliver to the
Seller, Owner Trustee, Indenture Trustee and each Rating Agency within 120 days
following the end of each fiscal year of the Servicer, a report to the effect
that such firm has examined the Servicer's assertion that it has complied with
the minimum servicing standards set forth in the Mortgage Banker's Association
of America's Uniform Single Attestation Program for Mortgage Bankers ("USAP")
for the twelve months ended June 30, and that such examination (1) included
test relating to the servicing or administration of the Receivables in
accordance with the requirements of the USAP, to the extent the procedures in
such program apply to the servicing or administration of the Receivables and (2)
except as described in the report, disclosed no exceptions or errors in the
records relating to the servicing or administration of the Receivables that, in
the firm's opinion, paragraph six of such program requires such firm to report.
Such report will also indicate that the firm is independent of Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants.
SECTION 4.12. Access to Certain Documentation and Information Regarding
Receivables. Servicer shall provide to the Certificateholders, Noteholders, Bank
Regulatory Authorities, and the supervisory agents and examiners of Bank
Regulatory Authorities access to the Receivable Files in such cases where the
Certificateholders, Noteholders or Bank Regulatory Authorities shall be required
by applicable statutes or regulations to review such documentation as
demonstrated by evidence satisfactory to Servicer in its
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reasonable judgment. Access shall be afforded without charge, but only upon
reasonable request and during the normal business hours at the respective
offices of Servicer. Nothing in this Section shall affect the obligation of
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors and the failure of Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section. Any Holder, by its acceptance of a Certificate or Note, as applicable,
shall be deemed to have agreed to keep any information obtained by it pursuant
to this Section confidential and not to use such information for any other
purpose, except as required by applicable law.
SECTION 4.13. Reports to the Commission. Servicer shall, on behalf of
the Issuer, cause to be filed with the Commission any periodic reports required
to be filed under the provisions of the Exchange Act, and the rules and
regulations of the Commission thereunder. Seller shall, at its expense,
cooperate in any reasonable request made by Servicer in connection with such
filings.
SECTION 4.14. Reports to the Rating Agency. Servicer shall deliver to
each Rating Agency a copy of all reports or notices furnished or delivered
pursuant to this Article and a copy of any amendments, supplements or
modifications to this Agreement and any other information reasonably requested
by such Rating Agency to monitor this transaction.
SECTION 4.15. Servicer Expenses. Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees and disbursements of the Owner Trustee, Trustee, independent accountants,
taxes imposed on Servicer and expenses incurred in connection with distributions
and reports to Certificateholders and Noteholders.
ARTICLE V. DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND
NOTEHOLDERS.
SECTION 5.1. Establishment of Trust Accounts. (a) Servicer shall cause
to be established:
(i) For the benefit of the Noteholders and the
Certificateholders, in the name of Indenture Trustee, an Eligible
Deposit Account (the "Collection Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Noteholders and the Certificateholders.
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(ii) For the benefit of the Noteholders, in the name of
Indenture Trustee, an Eligible Deposit Account (the "Note Distribution
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Noteholders.
(iii) For the benefit of the Noteholders and the
Certificateholders, in the name of Indenture Trustee, an Eligible
Deposit Account (the "Payahead Account"), bearing a designation clearly
indicating that the funds therein are held for the benefit of the
Noteholders and the Certificateholders.
(b) Funds on deposit in the Collection Account, the Note Distribution
Account, the Payahead Account and the Reserve Account (collectively the "Trust
Accounts") and the Certificate Distribution Account shall be invested by
Indenture Trustee with respect to the Trust Accounts and by Owner Trustee with
respect to the Certificate Distribution Account (or any custodian with respect
to funds on deposit in any such account) in Eligible Investments selected in
writing by Servicer (pursuant to standing instructions or otherwise); provided
that it is understood and agreed that neither Servicer, Indenture Trustee nor
Owner Trustee shall be liable for any loss arising from such investment in
Eligible Investments. All such Eligible Investments shall be held by or on
behalf of Indenture Trustee or Owner Trustee, as applicable, for the benefit of
the Noteholders and the Certificateholders or the Noteholders or the
Certificateholders, as applicable; provided that on each Distribution Date all
interest and other investment income (net of losses and investment expenses) on
funds on deposit in the Trust Accounts or Certificate Distribution Account shall
be distributed to Seller and shall not be available to pay the distributions
provided for in Section 5.5 and shall not otherwise be subject to any claims or
rights of Holders. Other than as permitted by the Rating Agencies, funds on
deposit in the Trust Accounts and the Certificate Distribution Account shall be
invested in Eligible Investments that will mature so that such funds will be
available at the close of business on the Deposit Date preceding the next
Distribution Date. No Eligible Investment shall be sold or otherwise disposed of
prior to its scheduled maturity unless a default occurs with respect to such
Eligible Investment and Servicer directs Indenture Trustee in writing to dispose
of such Eligible Investment. Funds deposited in a Trust Account or the
Certificate Distribution Account on a Deposit Date which immediately precedes a
Distribution Date upon the maturity of any Eligible Investments are not required
to be (but are permitted to be) invested overnight.
(c) Indenture Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Trust Accounts and in all proceeds
thereof (excluding investment income thereon) and all such funds, investments
and proceeds shall be part of the Owner Trust Estate. Except as otherwise
provided
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herein, the Trust Accounts shall be under the sole dominion and control of
Indenture Trustee for the benefit of the Noteholders and the Certificateholders;
provided, however, the Indenture Trustee shall not be charged with any
obligation for the benefit of the Certificateholders except as provided by the
terms of this Agreement. If, at any time, any of the Trust Accounts or the
Certificate Distribution Account ceases to be an Eligible Deposit Account,
Indenture Trustee (or Servicer on its behalf) or Owner Trustee, as applicable,
shall within 10 Business Days (or such longer period as to which each Rating
Agency may consent) establish a new Trust Account or Certificate Distribution
Account, as applicable, as an Eligible Deposit Account and shall transfer any
cash and/or any investments to such new Trust Account or new Certificate
Distribution Account, as applicable. In connection with the foregoing, Servicer
agrees that, in the event that any of the Trust Accounts are not accounts with
Indenture Trustee, Servicer shall notify Indenture Trustee in writing promptly
upon any of such Trust Accounts ceasing to be an Eligible Deposit Account.
(d) With respect to the Trust Account Property and the Certificate
Distribution Account, each of Indenture Trustee and Owner Trustee agrees, by its
respective acceptance hereof, that:
(i) any Trust Account Property or any property in the
Certificate Distribution Account that is held in deposit accounts shall
be held solely in the Eligible Deposit Accounts and, except as
otherwise provided herein, each such Eligible Deposit Account shall be
subject to the exclusive custody and control of Indenture Trustee with
respect to the Trust Accounts and the Owner Trustee with respect to the
Certificate Distribution Account, and Indenture Trustee or Owner
Trustee, as applicable, shall have sole signature authority with
respect thereto;
(ii) any Trust Account Property or Certificate Account
Property that constitutes Physical Property shall be delivered to
Indenture Trustee or Owner Trustee, respectively, in accordance with
paragraph (a) of the definition of "Delivery" and shall be held,
pending maturity or disposition, solely by Indenture Trustee or Owner
Trustee, as applicable, or a financial intermediary (as such term is
defined in Section 8-313(4) of the UCC) acting solely for Indenture
Trustee or Owner Trustee, as applicable;
(iii) any Trust Account Property or Certificate Account
Property that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations shall be delivered in
accordance with paragraph (b) of the definition of "Delivery" and shall
be maintained by Indenture Trustee or Owner Trustee, as applicable,
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pending maturity or disposition, through continued book-entry
registration of such Trust Account Property or Certificate Account
Property as described in such paragraph; and
(iv) any Trust Account Property or Certificate Account
Property that is an "uncertificated security" under Article 8 of the
UCC and that is not governed by clause (iii) above shall be delivered
to Indenture Trustee or Owner Trustee, as applicable, in accordance
with paragraph (c) of the definition of "Delivery" and shall be
maintained by Indenture Trustee or Owner Trustee, as applicable,
pending maturity or disposition, through continued registration of
Indenture Trustee's (or its nominee's) or Owner Trustee's (or its
nominee's) ownership of such security.
Effective upon Delivery of any Trust Account Property, or Certificate Account
Property, Indenture Trustee, or Owner Trustee, as applicable, shall be deemed to
have represented that it has purchased such Trust Account Property or
Certificate Account Property, as applicable, for value, in good faith and
without notice of any adverse claim thereto.
SECTION 5.2. Collections. (a) Servicer shall remit within two Business
Days of receipt thereof to the Collection Account all payments by or on behalf
of the Obligors with respect to the Receivables (other than any amounts
constituting Supplemental Servicing Fees) and all Liquidation Proceeds, both as
collected during the Collection Period. Notwithstanding the foregoing, if Key
Bank USA is the Servicer and (i) shall have the Required Rating or (ii)
Indenture Trustee otherwise shall have received written notice from each of the
Rating Agencies that the then outstanding rating on the Notes or the
Certificates would not be lowered or withdrawn as a result, Servicer may deposit
all amounts referred to above for any Collection Period into the Collection
Account not later than the close of business on the Deposit Date with respect to
such Collection Period; provided that (i) if a Servicer Termination Event has
occurred and is continuing, (ii) Servicer has been terminated as such pursuant
to Section 8.1 or (iii) Servicer ceases to have the Required Rating, Servicer
shall deposit such amounts (including any amounts then being held by Servicer)
into the Collection Account as provided in the preceding sentence. For purposes
of this Article V the phrase "payments by or on behalf of Obligors" shall mean
payments made with respect to the Receivables by Persons other than Servicer,
Seller or any Seller Affiliate.
(b) With respect to each Receivable (other than a Purchased Receivable
or a Precomputed Receivable), collections and payments by or on behalf of the
Obligor (other than any amounts constituting Supplemental Servicing Fees) for
each Collection Period shall be applied to interest and principal in accordance
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with the Simple Interest Method, as applied by Servicer. Any excess shall be
applied to prepay the Receivable. All Liquidation Proceeds shall be treated as
Interest Collections.
(c) With respect to each Precomputed Receivable, collections and
payments by or on behalf of an Obligor (other than any amounts constituting
Supplemental Servicing Fees) for each Collection Period shall be applied to the
scheduled payments due on such Precomputed Receivable for such Collection
Period. To the extent such collections and payments on a Precomputed Receivable
during a Collection Period exceed the scheduled payment on such Precomputed
Receivable and are insufficient to prepay the Precomputed Receivable in full,
collections shall be treated as Payaheads until such later Collection Period as
such Payaheads may be transferred to the Collection Account and applied either
to the scheduled payments due or to prepay the Precomputed Receivable in full in
accordance with Section 5.5.
SECTION 5.3. [Reserved].
SECTION 5.4. Additional Deposits. Servicer and Seller shall deposit or
cause to be deposited in the Collection Account the aggregate Purchase Amounts
with respect to Purchased Receivables and Seller or Servicer shall deposit
therein all amounts, if any, to be paid under Section 9.1. All such deposits
shall be made not later than the Deposit Date following the end of the related
Collection Period.
SECTION 5.5. Distributions. (a) On each Determination Date, Servicer
shall calculate all amounts required to determine the amounts to be deposited on
the related Distribution Date from the Reserve Account and the Payahead Account
into the Collection Account and from the Collection Account into the Note
Distribution Account, the Certificate Distribution Account and the Payahead
Account.
(b) On or before each Distribution Date, Servicer shall instruct
Indenture Trustee in writing (based on the information contained in Servicer's
Report delivered on the related Determination Date pursuant to Section 4.9) to,
and the Indenture Trustee shall:
(i) withdraw from the Payahead Account and deposit in the
Collection Account, in immediately available funds, (x) with respect to
each Precomputed Receivable for which the payments made by or on behalf
of the Obligor for the related Collection Period are less than the
scheduled payment for the related Collection Period, the amount of
Payaheads, if any, made with respect to such Receivable which, when
added to the amount of such payments, is equal to the amount of such
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scheduled payment, (y) with respect to each Precomputed Receivable for
which prepayments insufficient to prepay the Receivable in full have
been made by or on behalf of the Obligor for the related Collection
Period, the amount of Payaheads, if any, made with respect to such
Receivable which, when added to the amount of such prepayments, is
equal to an amount sufficient to prepay such Receivable in full, and
(z) the amount of all Payaheads, if any, made with respect to any
Purchased Receivable;
(ii) withdraw from the Collection Account and deposit in the
Payahead Account (or receive from the Servicer, which will remit to the
Indenture Trustee for deposit in the Payahead Account, as the case may
be), in immediately available funds, the aggregate amount of
collections on Precomputed Receivables treated as Payaheads pursuant to
Section 5.2 for the Collection Period related to such Distribution
Date; and
(iii) withdraw from the Reserve Account and deposit in the
Collection Account the Reserve Account Transfer Amount for such
Distribution Date.
(c) Subject to the last paragraph of this Section 5.5(c), on each
Distribution Date, Servicer shall instruct Indenture Trustee in writing (based
on the information contained in the Servicer's Report delivered on the related
Determination Date pursuant to Section 4.9) to make, and Indenture Trustee shall
make, the following deposits and distributions from the Collection Account for
deposit in the applicable account by 11:00 a.m. (New York time), to the extent
of the Total Distribution Amount, in the following order of priority:
(i) to Servicer, from the Total Distribution Amount, the
Servicing Fee for the related Collection Period and all accrued and
unpaid Servicing Fees for prior Collection Periods;
[(ii) to the Administrator, from the Total Distribution Amount
remaining after the application of clause (i), an amount equal to the
sum of (x) $_____ on account of its monthly fee, plus (y) all such fees
that are accrued and unpaid from prior Collection Periods;]
(iii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (i) and
clause (ii), the Noteholders' Interest Distributable Amount;
(iv) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (i)
through clause (iii), the Noteholders' Principal Distributable Amount;
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(v) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clause (i) through clause (iv), the
Certificateholders' Interest Distributable Amount;
(vi) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (i) through (v), the
Certificateholders' Principal Distributable Amount;
(vii) to the Reserve Account, from the Total Distribution
Amount remaining after the application of clauses (i) through (vi),
until the amount on deposit in the Reserve Account equals the Specified
Reserve Account Balance; and
(viii) to the Servicer, the Additional Servicing for such
Distribution Date; and
(ix) to Seller, any amounts remaining.
Notwithstanding the foregoing, following the occurrence and during the
continuation of an Event of Default which has resulted in an acceleration of the
Notes, the Total Distribution Amount remaining after the application of clauses
(i) and (ii) above will be deposited in the Note Distribution Account to the
extent necessary to reduce the principal amount of all the Notes to zero, and
the Certificateholders will not receive any distributions until the principal
amount and accrued interest on the Notes have been paid in full. In the event
that the Collection Account is maintained with an institution other than
Indenture Trustee, Indenture Trustee shall instruct and cause such institution
to make all deposits and distributions pursuant to this Section 5.5(c) on the
related Deposit Date.
(d) Indenture Trustee shall continue to perform its duties under this
Agreement after the Outstanding Amount of the Notes has been reduced to zero and
the Indenture has been discharged in accordance with its terms. The protections,
immunities and standard of care afforded the Indenture Trustee under the
Indenture shall apply to the performance of its duties hereunder.
SECTION 5.6. Statements to Certificateholders and Noteholders. On each
Determination Date, Servicer shall provide to Indenture Trustee (with a copy to
each Rating Agency) written instructions for Indenture Trustee to forward to
each Noteholder of record, to each Paying Agent, if any, and to Owner Trustee
for Owner Trustee to forward to each Certificateholder of record, a
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statement substantially in the form of Exhibit A setting forth at least the
following information as to the Notes and the Certificates to the extent
applicable:
(a) the amount of such distribution allocable to principal of each
class of Notes and to the Certificate Balance of the Certificates;
(b) the amount of such distribution allocable to interest on or with
respect to each class of Notes and to the Certificates;
(c) the Pool Balance as of the close of business on the last day of the
preceding Collection Period;
(d) the aggregate outstanding principal balance of each class of the
Notes, the Note Pool Factor for each such class, the Certificate Balance and the
Certificate Pool Factor after giving effect to payments allocated to principal
reported under clause (a) above;
(e) the amount of the Servicing Fee paid to Servicer with respect to
the related Collection Period and with respect to previously accrued and unpaid
Servicing Fees;
(f) the amount of the aggregate Realized Losses, if any, for such
Collection Period;
(g) the Reserve Account Transfer Amount, if any, for such Distribution
Date, the Specified Reserve Account Balance for such Distribution Date, the
amount distributed to Seller from the Reserve Account on such Distribution Date,
and the balance of the Reserve Account (if any) on such Distribution Date, after
giving effect to changes therein on such Distribution Date;
(h) the Noteholders' Interest Carryover Shortfall, the
Certificateholders' Interest Carryover Shortfall, the Noteholders' Principal
Carryover Shortfall, and the Certificateholders' Principal Carryover Shortfall,
if any, in each case as applicable to each class of Securities, and the change
in such amounts from the preceding statement;
(i) the aggregate Purchase Amounts paid by Seller or Servicer with
respect to the related Collection Period; and
(j) the number, and aggregate principal amount outstanding, of
Receivables past due 31-60, 61-90 and over 90 days.
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Each amount set forth pursuant to paragraph (a), (b), (e) or (h) above shall be
expressed as a dollar amount per $1,000 of the initial principal balance of the
Notes (or class thereof) or the initial Certificate Balance, as applicable.
SECTION 5.7. Net Deposits. As an administrative convenience, unless
Servicer is required to remit collections within two Business Days of receipt
thereof, Servicer will be permitted to make the deposit of Collections and
Purchase Amounts for or with respect to the Collection Period net of
distributions to be made to Servicer with respect to the Collection Period.
Servicer, however, will account to Owner Trustee, Indenture Trustee, the
Noteholders and the Certificateholders as if all deposits, distributions and
transfers were made individually.
SECTION 5.8. Reserve Account. (a) Seller shall establish and maintain
in the name of the Indenture Trustee, as agent for the Issuer, the Noteholders
and Certificateholders, an Eligible Deposit Account (the "Reserve Account").
The Reserve Account shall be initially established and maintained with the
Indenture Trustee (the "Securities Intermediary"). On the Closing Date, Seller
shall deposit or cause to be deposited in the Reserve Account an amount
equal to the Reserve Account Deposit.
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(b) Indenture Trustee shall, at the written direction of Servicer,
direct the Securities Intermediary to invest funds on deposit in the Reserve
Account in Eligible Investments selected by Servicer and confirmed in writing
by Servicer to Indenture Trustee; provided that it is understood and agreed
that none of Indenture Trustee, Securities Intermediary or Issuer shall be
liable for any loss arising from such investment in Eligible Investments. Funds
on deposit in the Reserve Account shall be invested in Eligible Investments
that will mature so that all such funds will be available at the close of
business on each Deposit Date; provided that to the extent permitted by the
Rating Agencies following written request by Servicer, funds on deposit in the
Reserve Account may be invested in Eligible Investments that mature later than
the next Deposit Date. Funds deposited in the Reserve Account on a Deposit Date
upon the maturity of any Eligible Investments are not required to be (but may
be) invested overnight.
[(c) The Securities Intermediary hereby expressly agrees with the
Indenture Trustee that: (i) all matters relating to the Reserve Account shall be
governed by the laws of the State of ______________; (ii) all Eligible
Investments held by the Securities Intermediary on behalf of the Indenture
Trustee in the Reserve Account shall be treated as "financial assets" (as
defined in Article 8 of the ______________ Uniform Commercial Code; (iii) the
Securities Intermediary will treat the Indenture Trustee as entitled to exercise
the rights comprising the financial assets credited to the Reserve Account;
[(iv) the financial assets credited to the Reserve Account shall not be
registered in the name of, payable to the order of, or specially indorsed to the
Indenture Trustee;] and (v) the Securities Intermediary will not agree to comply
with entitlement orders originated by any person with respect to the financial
assets held in the Reserve Account other than the Indenture Trustee.]
(d) The Reserve Account shall be under the sole custody and control of
Indenture Trustee. If, at any time, the Reserve Account ceases to be an Eligible
Deposit Account, Indenture Trustee shall within 10 Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency may
consent) establish a new Reserve Account as an Eligible Deposit Account and
shall transfer any cash and/or any investments that are in the existing account
which is no longer an Eligible Deposit Account to such new Reserve Account.
(e) Amounts on deposit in the Reserve Account will be released to
Seller on each Distribution Date to the extent that the amount credited to the
Reserve
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Account would exceed the Specified Reserve Account Balance. Upon any
distribution to Seller of amounts from the Reserve Account, the Holders will not
have any rights in, or claims to, such amounts. Amounts distributed to Seller
from the Reserve Account in accordance with this Section shall not be available
under any circumstances to Issuer, Owner Trustee, Indenture Trustee or the
Holders and Seller shall in no event thereafter be required to refund any such
distributed amounts.
(f) With respect to the Reserve Account Property, Seller, Issuer,
Indenture Trustee and Owner Trustee agree that the Reserve Account Deposit and
all other funds and Reserve Account Property shall be delivered to Indenture
Trustee for credit to the Reserve Account. In addition:
(i) any Reserve Account Property that constitutes Physical
Property shall be delivered to Indenture Trustee in accordance with
paragraph (a) of the definition of "Delivery" and shall be held,
pending maturity or disposition, solely by Indenture Trustee or a
financial intermediary (as such term is defined in Section 8-313(4) of
the UCC) acting solely for Indenture Trustee or Owner Trustee, as
applicable;
(ii) any Reserve Account Property that is a book entry
security held through the Federal Reserve System pursuant to Federal
book-entry regulations shall be delivered in accordance with paragraph
(b) of the definition of "Delivery" and shall be maintained by
Indenture Trustee pending maturity or disposition, through continued
book entry registration of such Reserve Account Property as described
in such paragraph; and
(iii) any Reserve Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause
(ii) above shall be delivered to Indenture Trustee in accordance with
paragraph (c) of the definition of "Delivery" and shall be maintained
by Indenture Trustee pending maturity or disposition, through continued
registration of Indenture Trustee's (or its nominee's) ownership of
such security.
Effective upon the crediting of any Reserve Account Property to the Reserve
Account, Indenture Trustee shall be deemed to have represented that it has
purchased such Reserve Account Property for value, in good faith and without
notice of any adverse claim thereto.
(g) Issuer and Servicer agree to take or cause to be taken such further
actions, to execute, deliver and file or cause to be executed, delivered and
filed such further
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documents and instruments (including any UCC financing statements or this
Agreement) as may be determined to be necessary, in an Opinion of Counsel to
Issuer delivered to Owner Trustee and Indenture Trustee in order to perfect the
interests created by this Section 5.8 and otherwise fully to effectuate the
purposes, terms and conditions of this Section 5.8. Issuer and Servicer shall:
(1) promptly execute, deliver and file any financing
statements, amendments, continuation statements, assignments,
certificates and other documents with respect to such interests and
perform all such other acts as may be necessary in order to perfect or
to maintain the perfection of Indenture Trustee's security interest;
and
(2) make the necessary filings of financing statements or
amendments thereto within five days after the occurrence of any of the
following: (1) any change in their respective names or any trade names,
(2) any change in the location of their respective chief executive
offices or principal places of business and (3) any merger or
consolidation or other change in their respective identities or
corporate structures; and shall promptly notify Owner Trustee and
Indenture Trustee of any such filings.
(h) Investment earnings attributable to the Reserve Account Property
and proceeds therefrom shall be held by Indenture Trustee for the benefit of
Seller. Investment earnings attributable to the Reserve Account Property shall
not be available to pay the distributions provided for in Section 5.5 and shall
not otherwise be subject to any claims or rights of the Holders or Servicer.
Indenture Trustee shall cause all investment earnings attributable to the
Reserve Account to be distributed on each Distribution Date to Seller.
(i) Seller may at any time, without consent of Holders, sell, transfer,
convey or assign in any manner its rights to and interests in distributions from
the Reserve Account provided that (i) the Rating Agencies confirm in writing
that such action will not result in a reduction or withdrawal of the rating of
any class of Notes or Certificates, (ii) Seller provides to Owner Trustee and
Indenture Trustee an Opinion of Counsel from independent counsel that such
action will not cause Issuer to be classified as an association (or publicly
traded partnership) taxable as a corporation for federal income tax purposes
and (iii) such transferee or assignee agrees in writing to take positions for
federal income tax purposes consistent with the federal income tax positions
agreed to be taken by Seller.
ARTICLE VI. SELLER.
SECTION 6.1. Representations of Seller. Seller makes the following
representations on which Issuer is deemed to have relied in acquiring the
Receivables and the other properties and rights included in the Owner Trust
Estate. The representations speak as of the execution and delivery of this
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Agreement and shall survive the sale of the Receivables to Issuer and the pledge
thereof to Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. Seller has been duly organized and
is validly existing as a Delaware corporation in good standing under the laws of
the State of Delaware, with the power and authority to own its properties and to
conduct its business as such properties are presently owned and such business is
presently conducted and had at all relevant times, and has, full power,
authority and legal right to acquire, own and sell the Receivables and the other
properties and rights included in the Owner Trust Estate assigned to Issuer
pursuant to Article II.
(b) Power and Authority. Seller has the power, authority and legal
right to execute and deliver this Agreement and the Basic Documents to which it
is a party and to carry out their respective terms and to sell and assign the
property to be sold and assigned to and deposited with Issuer as the Owner Trust
Estate; and the execution, delivery and performance of this Agreement and the
Basic Documents to which it is a party have been duly authorized by Seller by
all necessary corporate action.
(c) No Consent Required. No approval, authorization, consent, license
or other order or action of, or filing or registration with, any governmental
authority, bureau or agency is required in connection with the execution,
delivery or performance of this Agreement or the Basic Documents to which it is
a party or the consummation of the transactions contemplated hereby or thereby,
other than (i) as may be required under the blue sky or securities laws of any
State or the Securities Act of 1933, as amended, and (ii) the filing of UCC
financing statements.
(d) Valid Sale; Binding Obligation. Seller intends this Agreement to
effect a valid sale, transfer, and assignment of the Receivables and the other
properties and rights included in the Owner Trust Estate conveyed by Seller to
Issuer hereunder, enforceable against creditors of and purchasers from Seller;
and each of this Agreement and the Basic Documents to which it is a party
constitutes a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its respective terms, subject, as to enforceability,
to applicable bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation and other similar laws affecting enforcement of the
rights of creditors generally and to equitable limitations on the availability
of specific remedies.
(e) No Violation. The execution, delivery and performance by Seller of
this Agreement and the Basic Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby will not
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conflict with, result in any material breach of any of the terms and provisions
of, constitute (with or without notice or lapse of time) a material default
under or result in the creation or imposition of any Lien upon any of its
material properties pursuant to the terms of, (i) the certificate of
incorporation or bylaws of Seller, (ii) any material indenture, contract, lease,
mortgage, deed of trust or other instrument or agreement to which Seller is a
party or by which Seller is bound, or (iii) any law, order, rule or regulation
applicable to Seller of any federal or state regulatory body, any court,
administrative agency, or other governmental instrumentality having jurisdiction
over Seller.
(f) No Proceedings. There are no proceedings or investigations pending,
or, to the knowledge of Seller, threatened, before any court, regulatory body,
administrative agency, or other tribunal or governmental instrumentality having
jurisdiction over Seller or its properties: (i) asserting the invalidity of this
Agreement, any other Basic Document, the Notes or the Certificates, (ii) seeking
to prevent the issuance of the Notes or Certificates or the consummation of any
of the transactions contemplated by this Agreement or any other Basic Document,
(iii) seeking any determination or ruling that might materially and adversely
affect the performance by Seller of its obligations under, or the validity or
enforceability of, this Agreement, any other Basic Document, the Notes or the
Certificates, to the extent applicable, or (iv) that may materially and
adversely affect the federal or state income, excise franchise or similar tax
attributes of the Certificates.
(g) Chief Executive Office. The chief executive office of Seller is Key
Tower, 127 Public Square, Cleveland, Ohio 44114-1306.
SECTION 6.2. Continued Existence. During the term of this Agreement,
subject to Section 6.4, Seller will keep in full force and effect its existence,
rights and franchises as a corporation organized under the laws of the State of
Delaware and will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, the Basic Documents and each
other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby.
SECTION 6.3. Liability of Seller; Indemnities. Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by Seller under this Agreement.
(a) Seller shall indemnify, defend and hold harmless Issuer, Owner
Trustee and Indenture Trustee and their respective officers, directors,
employees and agents from and against any taxes that may at any time be asserted
against
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any such Person with respect to, and on the date of, the sale of the Receivables
to Issuer or the issuance and original sale of the Notes and Certificates,
including any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of all indemnified
Persons other than Issuer, not including any taxes asserted with respect to
Federal or other income taxes arising out of transactions contemplated by this
Agreement and the other Basic Documents) and costs and expenses in defending
against the same.
(b) Seller shall indemnify, defend and hold harmless Issuer, Owner
Trustee, Indenture Trustee, the Certificateholders and the Noteholders and the
officers, directors, employees and agents of Issuer, Owner Trustee and Indenture
Trustee from and against any and all costs, expenses, losses, claims, damages
and liabilities to the extent arising out of, or imposed upon such Person
through or as a result of (i) Seller's willful misfeasance, bad faith or gross
negligence (other than errors in judgment) in the performance of its duties
under this Agreement, or by reason of reckless disregard of its obligations and
duties under this Agreement, (ii) Seller's violation of Federal or state
securities laws in connection with the offering and sale of the Notes and
the Certificates or in connection with any application relating to the Notes or
Certificates under any state securities laws and (iii) the failure of any
Receivable conveyed by it to Issuer hereunder, or the sale of the related
Financed Vehicle, to comply with all requirements of applicable law.
(c) Seller shall be liable as primary obligor for, and shall indemnify,
defend and hold harmless Owner Trustee, Indenture Trustee and their respective
officers, directors, employees and agents from and against any and all costs,
expenses, losses, claims, damages and liabilities arising out of, or incurred in
connection with, the acceptance or performance of the trusts and duties set
forth herein and in the Trust Agreement, in the case of Owner Trustee, and
herein and in the Indenture, in the case of Indenture Trustee, except to the
extent that such cost, expense, loss, claim, damage or liability: (i) in the
case of Owner Trustee, shall be due to the willful misfeasance, bad faith or
negligence (except for errors in judgment) of Owner Trustee, or, in the case of
Indenture Trustee, shall be due to the willful misfeasance, bad faith or
negligence of Indenture Trustee; (ii) in the case of Owner Trustee, shall arise
from the breach by Owner Trustee of any of its representations and warranties or
covenants set forth in the Trust Agreement or any other Basic Document; or (iii)
in the case of Indenture Trustee, shall arise from the breach by Indenture
Trustee of any of its representations, warranties or covenants set forth in the
Indenture. Such liability shall survive the termination of Issuer, the
discharge of the Notes and Certificates and removal or resignation of such
Indenture Trustee.
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(d) Seller shall pay any and all taxes levied or assessed upon the
Issuer or upon all or any part of the Owner Trust Estate.
Indemnification under this Section shall survive the resignation or removal of
Owner Trustee or Indenture Trustee and the termination of this Agreement or the
Indenture or the Trust Agreement, as applicable, and shall include reasonable
fees and expenses of counsel and other expenses of litigation. If Seller shall
have made any indemnity payments pursuant to this Section and the Person to or
on behalf of whom such payments are made thereafter shall collect any of such
amounts from others, such Person shall promptly repay such amounts to Seller,
without interest.
SECTION 6.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which
Seller shall be a party or (c) which may succeed to the properties and assets of
Seller substantially as a whole, shall be the successor to Seller without the
execution or filing of any document or any further act by any of the parties to
this Agreement; provided that Seller hereby covenants that it will not
consummate any of the foregoing transactions except upon satisfaction of the
following: (i) the surviving Seller if other than Key Consumer Acceptance
Corporation, executes an agreement of assumption to perform every obligation of
Seller under this Agreement, (ii) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 3.1 or 6.1
shall have been breached, (iii) Seller shall have delivered to Owner Trustee and
Indenture Trustee an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been complied
with, and that the Rating Agency Condition shall have been satisfied with
respect to such transaction, (iv) the surviving Seller shall have a consolidated
net worth at least equal to that of the predecessor Seller, (v) such transaction
will not result in a material adverse federal or state tax consequence to
Issuer, the Noteholders or the Certificateholders and (vi) unless Key Consumer
Acceptance Corporation is the surviving entity, Seller shall have delivered to
Owner Trustee and Indenture Trustee an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of Owner Trustee and
Indenture Trustee, respectively, in the Receivables and reciting the details of
such filings, or (B) stating that, in the
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opinion of such counsel, no such action shall be necessary to preserve and
protect such interests.
SECTION 6.5. Limitation on Liability of Seller and Others. Seller and
any director or officer or employee or agent of Seller may rely in good faith on
the advice of counsel or on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising under any
Basic Document (provided that such reliance shall not limit in any way Seller's
obligations under Section 3.2). Seller shall not be under any obligation to
appear in, prosecute or defend any legal action that shall not be incidental to
its obligations under this Agreement, and that in its opinion may involve it in
any expense or liability.
SECTION 6.6. Seller May Own Certificates or Notes. Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates or Notes with the same rights as it would have if it
were not Seller or an Affiliate thereof, except as expressly provided herein or
in any Basic Document. Except as set forth herein or in the other Basic
Documents, Notes and Certificates so owned by or pledged to Seller or any such
Affiliate shall have an equal and proportionate benefit under the provisions of
this Agreement and the other Basic Documents, without preference, priority, or
distinction as among all of the Notes and Certificates.
ARTICLE VII. SERVICER.
SECTION 7.1. Representations of Servicer. Servicer makes the following
representations on which Issuer is deemed to have relied in acquiring the
Receivables and the other properties and rights included in the Owner Trust
Estate. The representations speak as of the execution and delivery of the
Agreement and shall survive the sale, transfer and assignment of the Receivables
to Issuer and the pledge thereof to Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. Servicer has been duly organized
and is validly existing as a national banking association in good standing under
the laws of the United States, with the power and authority to own its
properties and to conduct its business as such properties are presently owned
and such business is presently conducted, and had at all relevant times, and
shall have, the power, authority and legal right to service the Receivables and
the other properties and rights included in the Owner Trust Estate.
(b) Due Qualification. Servicer shall be duly qualified to do business
as a foreign corporation in good standing, and shall have obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
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property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such qualifications.
(c) Power and Authority. Servicer has the power, authority and legal
right to execute and deliver this Agreement and the Basic Documents to which it
is a party and to carry out their respective terms; and the execution, delivery
and performance of this Agreement and the Basic Documents to which it is a party
have been duly authorized by Servicer by all necessary corporate action.
(d) No Consent Required. No approval, authorization, consent, license
or other order or action of, or filing or registration with, any governmental
authority, bureau or agency is required in connection with the execution,
delivery or performance of this Agreement, the Basic Documents to which it is a
party or the consummation of the transactions contemplated hereby or thereby,
other than the filing of UCC financing statements.
(e) Binding Obligation. Each of this Agreement and the Basic Documents
to which it is a party constitutes a legal, valid and binding obligation of
Servicer, enforceable against Servicer in accordance with its respective terms,
subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation and other similar
laws affecting enforcement of the rights of creditors of banks generally and to
equitable limitations on the availability of specific remedies.
(f) No Violation. The execution, delivery and performance by Servicer
of this Agreement and the Basic Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby will not
conflict with, result in any material breach of any of the terms and provisions
of, constitute (with or without notice or lapse of time) a material default
under, or result in the creation or disposition of any Lien upon any of its
material properties pursuant to the terms of, (i) the articles of association or
bylaws of Servicer, (ii) any material indenture, contract, lease, mortgage, deed
of trust or other instrument or agreement to which Servicer is a party or by
which Servicer is bound, or (iii) any law, order, rule or regulation applicable
to Servicer of any federal or state regulatory body, any court, administrative
agency, or other governmental instrumentality having jurisdiction over Servicer.
(g) No Proceedings. There are no proceedings or investigations pending,
or, to Servicer's knowledge, threatened, before any court, regulatory body,
administrative agency, or tribunal or other governmental instrumentality having
jurisdiction over Servicer or its properties: (i) asserting the invalidity of
this Agreement, any other Basic Document, the Notes or the Certificates, (ii)
seeking to prevent the issuance of the Certificates or the Notes or the
consummation of
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any of the transactions contemplated by this Agreement or any other Basic
Document, (iii) seeking any determination or ruling that might materially and
adversely affect the performance by Servicer of its obligations under, or the
validity or enforceability of, this Agreement, any other Basic Document, the
Notes or the Certificates, to the extent applicable, or (iv) that may materially
and adversely affect the federal or state income, excise, franchise or similar
tax attributes of the Certificates.
SECTION 7.2. Indemnities of Servicer. (a) Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by Servicer under this Agreement.
(b) Servicer shall indemnify, defend and hold harmless Issuer, Owner
Trustee, Indenture Trustee, Seller, the Certificateholders and the Noteholders
and any of the officers, directors, employees and agents of Issuer, Owner
Trustee, Indenture Trustee or Seller from any and all costs, expenses, losses,
claims, damages and liabilities (including reasonable attorneys' fees and
expenses) to the extent arising out of, or imposed upon any such Person through,
the gross negligence, willful misfeasance or bad faith (other than errors in
judgment) of Servicer in the performance of its obligations and duties under
this Agreement or in the performance of the obligations and duties of any
subservicer under any subservicing agreement.
(c) Servicer shall indemnify, defend and hold harmless Issuer, Owner
Trustee, and Indenture Trustee and their respective officers, directors,
employees and agents from and against any taxes that may at any time be asserted
against any such Person with respect to the transactions contemplated in this
Agreement or in the other Basic Documents, including any sales, gross receipts,
general corporation, tangible or intangible personal property, privilege, or
license taxes, or any taxes of any kind which may be asserted (but, in the case
of all indemnified Persons other than Issuer, not including any Federal or
other income taxes arising out of transactions contemplated by this Agreement
and the other Basic Documents) against the Issuer, and costs and expenses in
defending against the same.
(d) Servicer shall indemnify, defend and hold harmless Issuer, Owner
Trustee, Indenture Trustee, Seller, Certificateholders and the Noteholders or
any of the officers, directors, employees and agents of Issuer, Owner Trustee,
Indenture Trustee or Seller from any and all costs, expenses, losses, claims,
damages and liabilities (including reasonable attorneys' fees and expenses) to
the extent arising out of or imposed upon any such Person as a result of any
compensation payable to any subcustodian or subservicer (including any fees
payable in connection with the release of any Receivable File from the custody
of such subservicer or in connection with the termination of the servicing
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activities of such subservicer with respect to any Receivable) whether pursuant
to the terms of any subservicing agreement or otherwise.
(e) Servicer shall indemnify, defend and hold harmless Issuer, Owner
Trustee, Indenture Trustee, Seller, the Certificateholders and the Noteholders
or any of the directors, officers, employees and agents of Issuer, Owner
Trustee, Indenture Trustee and Seller from and against any and all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel and expenses of litigation, arising out of or resulting from
the use, ownership, or operation of any Financed Vehicle.
Indemnification under this Section shall survive the resignation or removal of
Owner Trustee or Indenture Trustee and the termination of this Agreement or the
Indenture or the Trust Agreement, as applicable, and shall include reasonable
fees and expenses of counsel and other expenses of litigation. If Servicer shall
have made any indemnity payments pursuant to this Section and the Person to or
on behalf of whom such payments are made thereafter shall collect any of such
amounts from others, such Person shall promptly repay such amounts to Servicer,
without interest.
SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person (a) into which Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which
Servicer shall be a party, (c) which may succeed to the properties and assets of
Servicer, substantially as a whole, or (d) 50% of the voting stock of which is
owned directly or indirectly by KeyCorp, may become the successor to Servicer;
provided that, unless Key Bank USA is the surviving party to such transaction,
Servicer hereby covenants that it will not consummate any of the foregoing
transactions except upon satisfaction of the following: (i) the surviving
Servicer if other than Key Bank USA, executes an agreement of assumption to
perform every obligation of Servicer under this Agreement, (ii) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Section 7.1 shall have been breached and no Servicer Termination
Event, and no event that, after notice or lapse of time, or both, would become
a Servicer Termination Event shall have occurred and be continuing, (iii)
Servicer shall have delivered to Owner Trustee and Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply
with this Section and that all conditions precedent, if any, provided for in
this Agreement relating to such transaction have been complied with, and that
the Rating Agency Condition shall have been satisfied with respect to such
transaction, (iv) the surviving Servicer shall have a consolidated net worth at
least equal to that of the predecessor Servicer, and (v) such transaction will
not result in a material adverse Federal or state tax consequence to Issuer,
the Noteholders or the Certificateholders.
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SECTION 7.4. Limitation on Liability of Servicer and Others. Neither
Servicer nor any of its directors, officers, employees or agents shall be under
any liability to Issuer, the Noteholders or the Certificateholders, except as
provided under this Agreement, for any action taken or for refraining from the
taking of any action by Servicer or any subservicer pursuant to this Agreement
or for errors in judgment; provided that this provision shall not protect
Servicer or any such person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties (except for errors in judgment) or by reason of reckless
disregard of obligations and duties under this Agreement. Servicer or any
subservicer and any of their respective directors, officers, employees or agents
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising under this Agreement.
Except as provided in this Agreement, Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that shall be
incidental to its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability;
provided that Servicer, may (but shall not be required to) undertake any
reasonable action that it may deem necessary or desirable in respect of the
Basic Documents to protect the interests of the Certificateholders under this
Agreement and the Noteholders under the Indenture. In such event, the legal
expense and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Servicer.
SECTION 7.5. Key Bank USA Not To Resign as Servicer. Subject to the
provisions of Section 7.3, Key Bank USA hereby agrees not to resign from the
obligations and duties hereby imposed on it as Servicer under this Agreement
except upon determination that the performance of its duties hereunder shall no
longer be permissible under applicable law or if such resignation is required by
regulatory authorities. Notice of any such determination permitting the
resignation of Key Bank USA as Servicer shall be communicated to Owner Trustee
and Indenture Trustee at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion of
Counsel to such effect delivered to Owner Trustee and Indenture Trustee
concurrently with or promptly after such notice. No such resignation shall
become effective until the earlier of Indenture Trustee, Owner Trustee or a
Successor Servicer having assumed the responsibilities and obligations of the
resigning Servicer in accordance with Section 8.2 or the date upon which any
regulatory authority requires such resignation.
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SECTION 7.6. Existence. Subject to the provisions of Section 7.3,
during the term of this Agreement, Key Bank USA will keep in full force and
effect its existence, rights and franchises as a national banking association
under the laws of the jurisdiction of its organization.
SECTION 7.7. Servicer May Own Notes or Certificates. The Servicer, and
any Affiliate of the Servicer, may, in its individual or any other capacity,
become the owner or pledgee of Notes or Certificates with the same rights as it
would have if it were not the Servicer or an Affiliate thereof, except as
expressly provided herein or in any Basic Document. Except as set forth herein
or in the other Basic Documents, Notes and Certificates so owned by or pledged
to Servicer or any such Affiliate shall have an equal and proportionate benefit
under the provisions of this Agreement and the other Basic Documents, without
preference, priority, or distinction as among all of the Notes and Certificates.
ARTICLE VIII. SERVICER TERMINATION EVENTS.
SECTION 8.1. Servicer Termination Event. If any one of the following
events (a "Servicer Termination Event") shall occur and be continuing:
(a) any failure by Servicer to deliver to Indenture Trustee and Owner
Trustee the Servicer's Report in accordance with Section 4.9, or any failure by
Servicer or Seller to deliver to Indenture Trustee or Owner Trustee for deposit
in any of the Trust Accounts or the Certificate Distribution Account any
required payment or to direct Indenture Trustee or Owner Trustee to make any
required distributions therefrom that shall continue unremedied for a period of
five Business Days after written notice of such failure is received by Servicer
from Owner Trustee or Indenture Trustee or after discovery of such failure by an
Authorized Officer of Servicer; or
(b) failure on the part of Servicer or Seller duly to observe or to
perform in any material respect any other covenants or agreements of Servicer or
Seller, as applicable, set forth in this Agreement or any other Basic Document
to which it is a party, which failure shall (i) materially and adversely affect
the rights of either the Certificateholders or Noteholders and (ii) continue
unremedied for a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given (A) to
Servicer by Owner Trustee or Indenture Trustee or (B) to Servicer and to Owner
Trustee and Indenture Trustee by the Holders of Notes evidencing not less than
25% of the Outstanding Amount of the Notes or Holders of Certificates evidencing
not less than 25% of the outstanding Certificate Balance, as applicable (or for
such longer period, not in excess of 120 days, as may be reasonably necessary to
remedy such default; provided that such default is capable of remedy within 120
days and Servicer
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delivers an Officer's Certificate to Owner Trustee and Indenture Trustee to such
effect and to the effect that Servicer or Seller, as applicable, has commenced
or will promptly commence, and will diligently pursue, all reasonable efforts to
remedy such default); or
(c) an Insolvency Event occurs with respect to Servicer, Seller, any
Seller Affiliate or any of their respective successors;
then, and in each and every case, so long as any Servicer Termination Event
shall not have been remedied, either Indenture Trustee, or the Holders of Notes
evidencing greater than 50% of the Outstanding Amount of the Notes (or, if no
Notes are then Outstanding, either the Owner Trustee or the Holders of
Certificates evidencing greater than 50% of the Certificate Balance), by notice
then given in writing to Servicer (and to Owner Trustee or Indenture Trustee, as
applicable, if given by the Holders) may terminate all the rights and
obligations (other than the obligations set forth in Section 7.2) of Servicer
under this Agreement. On or after the receipt by Servicer of such written
notice, all authority and power of Servicer under this Agreement, whether with
respect to the Notes, the Certificates or the Receivables or otherwise, shall,
without further action, pass to and be vested in Indenture Trustee or such
Successor Servicer as may be appointed under Section 8.2; and, without
limitation, Indenture Trustee and Owner Trustee are hereby authorized and
empowered to execute and deliver, on behalf of the predecessor Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the Successor Servicer, Indenture
Trustee and Owner Trustee in effecting the termination of the responsibilities
and rights of the predecessor Servicer under this Agreement, including the
transfer to the Successor Servicer for administration by it of all cash amounts
that shall at the time be held by the predecessor Servicer for deposit, or shall
thereafter be received by it with respect to a Receivable. Servicer shall
promptly transfer its electronic records relating to the Receivables to the
Successor Servicer in such electronic form as the Successor Servicer may
reasonably request and shall promptly transfer to the Successor Servicer all
other records, correspondence and documents necessary for the continued
servicing of the Receivables in the manner and at such times as the Successor
Servicer shall reasonably request. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Receivable Files
to the Successor Servicer and amending this Agreement to reflect such succession
as Servicer pursuant to this Section shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses. Upon
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receipt of notice of the occurrence of a Servicer Termination Event, Owner
Trustee shall give notice thereof to the Rating Agencies.
SECTION 8.2. Appointment of Successor. (a) Upon Servicer's receipt of
notice of termination, pursuant to Section 8.1 or Servicer's resignation (if
and to the extent permitted in accordance with the terms of this Agreement, the
predecessor Servicer shall continue to perform its functions as Servicer under
this Agreement, in the case of termination, only until the date specified in
such termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of resignation,
until the earlier of (i) the date 45 days from the delivery to Owner Trustee
and Indenture Trustee of written notice of such resignation (or written
confirmation of such notice) in accordance with the terms of this Agreement and
(ii) the date upon which the predecessor Servicer shall become unable to act as
Servicer, as specified in the notice of resignation and accompanying Opinion of
Counsel. In the event of Servicer's termination or resignation hereunder,
Issuer shall appoint a Successor Servicer, and the Successor Servicer shall
accept its appointment by a written assumption in form acceptable to Owner
Trustee and Trustee. In the event that a Successor Servicer has not been
appointed at the time when the predecessor Servicer has ceased to act as
Servicer in accordance with this Section, Indenture Trustee without further
action shall automatically be appointed the Successor Servicer and Indenture
Trustee shall be entitled to the Servicing Fee. Notwithstanding the above,
Indenture Trustee shall, if it shall be unwilling or unable so to act, appoint
or petition a court of competent jurisdiction to appoint, any established
institution, having a net worth of not less than $50,000,000 and whose regular
business shall include the servicing of motor vehicle receivables, as the
successor to Servicer under this Agreement; provided, that the appointment of
any such Successor Servicer will not result in the withdrawal or reduction of
the outstanding rating assigned to the Certificates or Notes by any Rating
Agency.
(b) Upon appointment, the Successor Servicer (including Indenture
Trustee acting as Successor Servicer) shall be the successor in all respects to
the predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities arising thereafter relating thereto placed on the
predecessor Servicer and shall be entitled to the Servicing Fee and all the
rights granted to the predecessor Servicer by the terms and provisions of this
Agreement. No Successor Servicer shall be liable for any acts or omissions of
any predecessor Servicer.
(c) A transfer of servicing hereunder shall not affect the rights and
duties of the parties hereunder (including the obligations and indemnities of
Seller
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pursuant to Sections 3.3, 4.3, 6.1 and 6.3 or, with respect to obligations and
indemnities arising prior to, or concurrently with, a transfer of servicing
hereunder, the predecessor Servicer pursuant to Section 4.7, 7.1 or 7.2) other
than those relating to the management, administration, servicing, custody or
collection of the Receivables and the other rights and properties included in
the Owner Trust Estate. The Successor Servicer shall, upon its appointment
pursuant to Section 8.2 and as part of its duties and responsibilities under
this Agreement, promptly take all action it deems necessary or appropriate so
that the predecessor Servicer (in whatever capacity) is paid or reimbursed all
amounts it is entitled to receive under this Agreement on each Distribution Date
subsequent to the date on which it is terminated as Servicer hereunder. Without
limiting the generality of the foregoing, the predecessor Servicer will be
entitled to receive all accrued and unpaid Servicing Fees through and including
the effective date of the termination of the predecessor Servicer.
SECTION 8.3. Payment of Servicing Fee. If Servicer shall be replaced,
the predecessor Servicer shall be entitled to receive any accrued and unpaid
Servicing Fees through the date of the Successor Servicer's acceptance hereunder
and any Supplemental Servicing Fees accrued and unpaid or received prior to such
date, in each case, in accordance with Section 4.8.
SECTION 8.4. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, Servicer pursuant to this
Article VIII, Owner Trustee shall give prompt written notice thereof to
Certificateholders and Indenture Trustee shall give prompt written notice
thereof to Noteholders subject to the Rating Agency Condition.
SECTION 8.5. Waiver of Past Defaults. The Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes (or the Holders
of Certificates evidencing not less than a majority of the outstanding
Certificate Balance, as applicable, in the case of any default which does not
adversely affect Indenture Trustee or the Noteholders) may, on behalf of all
Noteholders and Certificateholders, waive in writing any default by Servicer in
the performance of its obligations hereunder and its consequences, except a
default in making any required deposits to any of the Trust Accounts in
accordance with this Agreement. Upon any such waiver of a past default, such
default shall cease to exist, and any Servicer Termination Event arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto.
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ARTICLE IX. TERMINATION.
SECTION 9.1. Optional Purchase of All Receivables. (a) On the last day
of any Collection Period immediately preceding a Determination Date as of which
the then outstanding Pool Balance is 5% or less of the Original Pool Balance,
Seller and Servicer shall each have the option to purchase the Owner Trust
Estate, other than the Trust Accounts, and the Certificate Distribution Account
and any funds or investments therein. To exercise such option, Seller or
Servicer, as applicable, shall deposit pursuant to Section 5.4 in the Collection
Account an amount which, when added to the amounts on deposit in the Collection
Account for such Distribution Date, equals the sum of (a) the unpaid principal
amount of the then outstanding Class A-2 Notes, plus accrued and unpaid interest
thereon, plus (b) the Certificate Balance plus accrued and unpaid interest
thereon. The Class A-2 Notes and the Certificates will be redeemed concurrently
therewith.
(b) Upon any sale of the assets of Issuer pursuant to Section 9.2 of
the Trust Agreement, Servicer shall instruct Indenture Trustee in writing to
deposit the proceeds from such sale after all payments and reserves therefrom
(including the expenses of such sale) have been made (the "Insolvency Proceeds")
in the Collection Account. On the Distribution Date on which the Insolvency
Proceeds are deposited in the Collection Account (or, if such proceeds are not
so deposited on a Distribution Date, on the Distribution Date immediately
following such deposit), Servicer shall instruct Indenture Trustee in writing to
make, and Indenture Trustee shall make, the following deposits and distributions
(after the application on such Distribution Date of the Total Distribution
Amount pursuant to Section 5.5) from the Insolvency Proceeds and any funds
remaining on deposit in the Reserve Account (including the proceeds of any sale
of investments therein):
(i) to the Note Distribution Account, any portion of the
Noteholders' Interest Distributable Amount not otherwise deposited into
the Note Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the outstanding
principal balance of the Notes (after giving effect to the reduction in
the outstanding principal balance of the Notes to result from the
deposits made in the Note Distribution Account on such Distribution
Date);
(iii) to Owner Trustee for deposit in the Certificate
Distribution Account, any portion of the Certificateholders' Interest
Distributable Amount not otherwise deposited into the Certificate
Distribution Account on such Distribution Date; and
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(iv) to Owner Trustee for deposit in the Certificate
Distribution Account, the Certificate Balance and any
Certificateholders' Principal Carryover Shortfall (after giving effect
to the reduction in the Certificate Balance to result from the deposits
made in the Certificate Distribution
Account on such Distribution Date).
Any Insolvency Proceeds remaining after the deposits described above shall be
paid to Seller.
(c) Notice of any termination of Issuer shall be given by Servicer to
Owner Trustee, Indenture Trustee and the Rating Agencies as soon as practicable
after Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder.
ARTICLE X. MISCELLANEOUS PROVISIONS.
SECTION 10.1. Amendment. (a) This Agreement may be amended by
Seller, Servicer, Owner Trustee and Indenture Trustee (which consent may not
be unreasonably withheld), but without the consent of any of the Noteholders or
the Certificateholders:
(i) to cure any ambiguity or defect, to correct or supplement
any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions in this Agreement or of modifying in any manner the rights
of the Noteholders or the Certificateholders; provided that such action
shall not, as evidenced by an Opinion of Counsel delivered to Owner
Trustee and Indenture Trustee, adversely affect in any material respect
the interests of any Noteholder or Certificateholder;
(ii) (A) to add, modify or eliminate such provisions as may be
necessary or advisable in order to enable all or a portion of Issuer to
qualify as, and to permit an election to be made to cause all or a
portion of Issuer to be treated as, a "financial asset securitization
investment trust" as described in the provisions of the "Small Business
Job Protection Act of 1996," or to enable all or a portion of the Trust
to qualify and an election to be made for similar treatment under such
comparable subsequent federal income tax provisions as may ultimately
be enacted into law, and (B) in connection with any such election, to
modify or eliminate existing provisions set forth in this Agreement
relating to the
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intended federal income tax treatment of the Notes or Certificates and
Issuer in the absence of the election; it being a condition to any such
amendment that each Rating Agency will have notified the Seller, the
Servicer, the Indenture Trustee and the Owner Trustee in writing that
the amendment will not result in a reduction or withdrawal of the
rating of any outstanding Notes or Certificates with respect to which
it is a Rating Agency; and
(iii) to add, modify or eliminate such provisions as may be
necessary or advisable in order to enable (a) the transfer to Issuer of
all or any portion of the Receivables to be derecognized under
generally accepted accounting principles ("GAAP") by Seller to Issuer,
(b) Issuer to avoid becoming a member of Seller's consolidated group
under GAAP or (c) the Seller, any Seller Affiliate or any of other
Affiliates to otherwise comply with or obtain more favorable treatment
under any law or regulation or any accounting rule or principle; it
being a condition to any such amendment that each Rating Agency will
have notified the Seller, the Servicer, the Indenture Trustee and the
Owner Trustee in writing that the amendment will not result in a
reduction or withdrawal of the rating of any outstanding Notes or
Certificates with respect to which it is a Rating Agency.
(b) This Agreement may also be amended from time to time by Seller,
Servicer, Owner Trustee and Indenture Trustee, with the consent of the Holders
of Notes evidencing not less than a majority of the Outstanding Amount of the
Notes and the consent of the Holders of Certificates evidencing not less than a
majority of the Certificate Balance for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided that no such amendment shall (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that shall be required
to be made for the benefit of the Noteholders or the Certificateholders or (ii)
reduce the aforesaid percentage of the Outstanding Amount of the Notes and the
Certificate Balance, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Notes and
the Holders of all the outstanding Certificates of each class affected thereby.
(c) Prior to the execution of any such amendment or consent, Servicer
shall furnish written notification of the substance of such amendment or consent
to each Rating Agency. Promptly after the execution of any such amendment or
consent, Servicer shall furnish written notification of the substance of such
amendment or consent to each Noteholder and Certificateholder.
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(d) It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
(e) Prior to the execution of any amendment to this Agreement, Owner
Trustee and Indenture Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and that all conditions precedent to the execution
and delivery of such amendment have been satisfied and the Opinion of Counsel
referred to in Section 10.2(i)(1) has been delivered. Owner Trustee and
Indenture Trustee may, but shall not be obligated to, enter into any such
amendment which affects Owner Trustee's or Indenture Trustee's, as applicable,
own rights, duties or immunities under this Agreement or otherwise.
SECTION 10.2. Protection of Title to Trust Property. (a) Seller shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of Issuer
and the interests of Indenture Trustee in the Receivables and the proceeds
thereof. Seller shall deliver (or cause to be delivered) to Owner Trustee and
Indenture Trustee file-stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing.
(b) Neither Seller nor Servicer shall change its name, identity or
corporate structure in any manner that would, could or might make any financing
statement or continuation statement filed in accordance with paragraph (a) above
seriously misleading within the meaning of ss. 9-402(7) of the UCC, unless it
shall have given Owner Trustee and Indenture Trustee at least five days' prior
written notice thereof and shall have promptly filed appropriate amendments to
all previously filed financing statements or continuation statements.
(c) Each of Seller and Servicer shall have an obligation to give Owner
Trustee and Indenture Trustee at least 60 days' prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement and shall promptly file any such amendment or new financing
statement. Servicer shall at all times maintain each office from which it shall
service Receivables, and its principal executive office, within the United
States of America.
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(d) Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with respect to) each Receivable and the amounts
from time to time deposited in the Collection Account in respect of such
Receivable.
(e) Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, Servicer's
master computer records (including any backup archives) that refer to a
Receivable shall indicate clearly the interest of Issuer and Indenture Trustee
in such Receivable and that such Receivable is owned by Issuer and has been
pledged to Indenture Trustee pursuant to the Indenture. Indication of Issuer's
and Indenture Trustee's interest in a Receivable shall be deleted from or
modified on Servicer's computer systems when, and only when, the related
Receivable shall have been paid in full or repurchased by Seller or purchased by
Servicer.
(f) If at any time Seller or Servicer shall propose to sell, grant a
security interest in or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, Servicer
shall give to such prospective purchaser, lender or other transferee computer
tapes, records or printouts (including any restored from backup archives) that,
if they shall refer in any manner whatsoever to any Receivable, shall indicate
clearly that such Receivable has been sold and is owned by Issuer and has been
pledged to Indenture Trustee.
(g) Servicer shall permit Indenture Trustee, Owner Trustee and their
respective agents at any time during normal business hours to inspect, audit and
make copies of and abstracts from Servicer's records regarding any Receivable.
(h) Upon request at any time Owner Trustee or Indenture Trustee shall
have reasonable grounds to believe that such request is necessary in connection
with the performance of its duties under this Agreement or any of the Basic
Documents, Servicer shall furnish to Owner Trustee or to Indenture Trustee,
within thirty Business Days, a list of all Receivables (by contract number and
name of Obligor) then owned by Issuer, together with a reconciliation of such
list to the Schedule of Receivables and to each of Servicer's Reports furnished
before such request indicating removal of Receivables from Issuer.
(i) Servicer shall deliver to Owner Trustee and Indenture Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto, an Opinion of Counsel either
(A) stating
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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 Issuer and Indenture
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given,
or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest; and
(2) within 120 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 120-day period, either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of Issuer and Indenture Trustee in the Receivables, and
reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve
and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) Seller shall, to the extent required by applicable law, cause the
Certificates and the Notes to be registered with the Commission pursuant to
Section 12(b) or Section 12(g) of the Exchange Act within the time periods
specified in such sections.
SECTION 10.3. Notices. All demands, notices and communications upon or
to Seller, Servicer, Owner Trustee, Indenture Trustee or the Rating Agencies
under this Agreement shall be in writing, personally delivered, sent by
overnight courier or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt (a) in the case of Seller,
to Key Consumer Acceptance Corporation, Key Tower, 127 Public Square, Cleveland,
Ohio 44114-1306, Attention: ______________ (b) in the case of Servicer, to Key
Bank USA, Key Tower, 127 Public Square, Cleveland, Ohio 44114-1306,
Attention: _______________, (c) in the case of Issuer or Owner Trustee, at the
Corporate Trust Office, (d) in the case of Indenture Trustee, at the Corporate
Trust Office, (e) in the case of Moody's, to Moody's Investors Service, Inc., to
99 Church Street, New York, New York 10004, Attention of Asset Backed Securities
Group, (f) in the case of Standard & Poor's, to Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., 26 Broadway
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(15th Floor), New York, New York 10004, Attention of Asset Backed Surveillance
Department, and (g) in the case of Fitch, to ________________. Any notice
required or permitted to be mailed to a Noteholder or Certificateholder shall be
given by first class mail, postage prepaid, at the address of such Person as
shown in the Note Register or the Certificate Register, as applicable. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the Noteholder or
Certificateholder shall receive such notice.
SECTION 10.4. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 3.4, 4.1, 6.4 and 7.3 and as
provided in the provisions of this Agreement concerning the resignation of
Servicer, this Agreement may not be assigned by Seller or Servicer without the
prior written consent of the Owner Trustee, Indenture Trustee, the Noteholders
of Notes evidencing not less than 66 2/3% of Outstanding Amount of the Notes and
the Certificateholders evidencing not less than 66 2/3% of the outstanding
Certificate Balance.
SECTION 10.5. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of Seller, Servicer, Issuer, Owner Trustee
and for the benefit of the Certificateholders (including Seller), Indenture
Trustee and the Noteholders, as third-party beneficiaries, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Owner Trust Estate
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 10.6. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not create or render unenforceable
such provision in any other jurisdiction.
SECTION 10.7. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.8. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
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SECTION 10.9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS[; EXCEPT THAT
THE GRANT OF A SECURITY INTEREST IN THE RESERVE ACCOUNT PROPERTY AND THE
PERFECTION, EFFECT OF PERFECTION, AND PRIORITY OF SUCH SECURITY INTEREST SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF ___________________.]
SECTION 10.10. Assignment to Indenture Trustee. Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by Issuer to Indenture Trustee pursuant to the Indenture for
the benefit of the Noteholders of all right, title and interest of Issuer in, to
and under the Receivables and/or the assignment of any or all of Issuer's rights
and obligations hereunder to Indenture Trustee.
SECTION 10.11. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, Servicer and Seller shall not, prior to the date
which is one year and one day after the termination of this Agreement with
respect to Issuer, acquiesce, petition or otherwise invoke or cause Issuer to
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against Issuer under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of Issuer
or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of Issuer.
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by _______________ not in its individual
capacity but solely in its capacity as Owner Trustee of Issuer and in no event
shall ________________ in its individual capacity or, except as expressly
provided in the Trust Agreement, as Owner Trustee have any liability for the
representations, warranties, covenants, agreements or other obligations of
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of Issuer. For all purposes of this Agreement, in the performance of its duties
or obligations hereunder or in the performance of any duties or obligations of
Issuer hereunder, Owner Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
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(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by _________________ not in its individual capacity
but solely as Indenture Trustee and in no event shall __________________ have
any liability for the representations, warranties, covenants, agreements or
other obligations of Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of Issuer.
SECTION 10.13. Further Assurances. Seller and the Servicer agree to do
and perform, from time to time, any and all acts and to execute any and all
further instruments required or reasonably requested by Owner Trustee or
Indenture Trustee more fully to effect the purposes of this Agreement,
including, without limitation, the execution of any financing statements or
continuation statements relating to the Receivables for filing under the
provisions of the UCC of any applicable jurisdiction.
SECTION 10.14. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Owner Trustee, Indenture Trustee,
the Noteholders or the Certificateholders, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges therein provided are
cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
52
<PAGE> 58
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and year first above written.
KEY AUTO FINANCE TRUST 199_-_
By:
By:
---------------------------------------
Name:
Title:
KEY CONSUMER ACCEPTANCE
CORPORATION, Seller
By:
---------------------------------------
Name:
Title:
KEY BANK USA, NATIONAL ASSOCIATION,
Servicer,
By:
---------------------------------------
Name:
Title:
____________________________, not in its
individual capacity but solely as
Indenture Trustee,
By:
-------------------------
Name:
Title:
____________________________, not in its
individual capacity but solely as
Owner Trustee,
By:
-------------------------
Name:
Title:
53
<PAGE> 59
SCHEDULE A
Delivered on Disk to Trustee and Owner Trustee
<PAGE> 60
SCHEDULE B
Location of Receivables Files
The Receivables sold by each Seller Affiliate to Seller and sold by Seller to
Issuer are located at the offices of such Seller Affiliate listed below.
Key Bank USA, National Association
[address]
AutoFinance Group, Inc.
[address]
<PAGE> 61
EXHIBIT A
Form of Servicer's Report
<PAGE> 62
MB&P DRAFT; 1/5/97
APPENDIX X
DEFINITIONS
"Act" is defined in Section 11.3(a) of the Indenture.
"Actuarial Receivable" means a Receivable that provides for (i)
amortization of the loan over a series of fixed level payment monthly
installments and (ii) each monthly installment, including the monthly
installment representing the final payment on the Receivable, to consist of an
amount of interest equal to 1/12 of the Contract Rate of the loan multiplied by
the unpaid principal balance of the loan, and an amount of principal equal to
the remainder of the monthly installment.
"Additional Servicing" means, for each Distribution Date, an amount
equal to the lesser of (i) the amount by which (A) the aggregate amount of the
Servicing Fee for such Distribution Date and all prior Distribution Dates
exceeds (B) the aggregate amount of Additional Servicing paid to the Servicer on
all prior Distribution Dates and (ii) the amount, if any, by which (A) the sum
of Available Interest and Available Principal for such Distribution Date exceed
(B) the sum, without duplication of (w) the Servicing Fee paid on such
Distribution Date with respect to the related Collection Period and any accrued
and unpaid Servicing Fee for prior Collection Periods, [(x) all amounts paid on
such Distribution Date to the Administrator pursuant to Section 5.5(c)(ii) of
the Sale and Servicing Agreement], (y) all amounts required to be distributed to
the Noteholders and the Certificateholders on such Distribution Date, and (z)
the amount, if any, deposited in the Reserve Account on such Distribution Date.
"Administration Agreement" means the Administration Agreement among Key
Bank USA, National Association, as Administrator, Key Auto Finance Trust 199_
- -__, as Issuer, and _____________, as Indenture Trustee, as the same may be
amended and supplemented from time to time.
"Administration Fee" is defined in Section 4 of the Administration
Agreement.
"Administrator" means Key Bank USA, National Association and each
successor Administrator.
Appendix X, Page 1
<PAGE> 63
"Affiliate" means, with respect to any specified Person, any other
Person controlling, controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. A Person shall not be
deemed to be an Affiliate of any specified Person solely because such other
Person has the contractual right or obligation to manage such specified Person
or act as servicer with respect to the financial assets of such specified Person
unless such other Person controls the specified Person through equity ownership
or otherwise.
"Affiliate Security Agreement" means the agreement dated as of
_________________, 199_ between Key Bank USA, National Association, and Issuer
under which Key Bank USA, National Association, grants a security interest
in its Receivables and certain other property described therein to Issuer.
"Authenticating Agent" is defined in Section 2.13 of the Indenture.
"Authorized Officer" means, with respect to Issuer and Servicer, any
officer of Owner Trustee or Servicer, as applicable, who is authorized to act
for Owner Trustee or Servicer, as applicable, in matters relating to Issuer and
who is identified on the list of Authorized Officers delivered by each of Owner
Trustee and Servicer to Indenture Trustee on the Closing Date (as such list may
be modified or supplemented from time to time thereafter).
"Available Interest" means, for any Distribution Date, the sum of the
following amounts for the related Collection Period: (a) that portion of the
Collections on the Receivables received during such Collection Period that is
allocable to interest in accordance with Servicer's customary servicing
procedures, (b) all Liquidation Proceeds received during the related Collection
Period and (c) the Purchase Amounts, to the extent allocable to accrued
interest, of all Receivables that are purchased by Seller or Servicer as of the
last day of the related Collection Period. "Available Interest" for any
Distribution Date shall exclude all payments and proceeds of any Receivables the
Purchase Amount of which has been distributed on a prior Distribution Date.
"Available Principal" means, for any Distribution Date, the sum of the
following amounts with respect to the related Collection Period: (a) that
portion of all Collections on the Receivables received during such Collection
Period that is allocable to principal in accordance with Servicer's customary
servicing procedures; and (b) the Purchase Amounts, to the extent attributable
to principal, of all Receivables purchased by Seller or Servicer as of the last
day of the related Collection Period. "Available Principal" on any Distribution
Date shall exclude
Appendix X, Page 2
<PAGE> 64
all payments and proceeds of any Receivables the Purchase Amount of which has
been distributed on a prior Distribution Date.
"Bank Regulatory Authorities" means the Federal Reserve Board, the
Federal Deposit Insurance Corporation and Office of the Comptroller of
Currency.
"Basic Documents" means the Certificate of Trust, each Purchase
Agreement, the Affiliate Security Agreement, the Indenture, the Depository
Agreements, the Sale and Servicing Agreement, the Trust Agreement, the
Administration Agreement, the Notes, the Certificates and other documents and
certificates delivered in connection therewith.
"Benefit Plan" is defined in Section 11.12 of the Trust Agreement.
"Book Entry Certificate" means a beneficial interest in the
Certificates, ownership of which shall be evidenced and transfers of which
shall be made through book entries by a Clearing Agency as described in
Section 3.11 of the Trust Agreement.
"Book Entry Note" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.10 of the Indenture.
"Business Day" means a day that is not a Saturday or a Sunday and that
in the States of New York, Illinois, Ohio and the State in which the Corporate
Trust Office is located is neither a legal holiday nor a day on which banking
institutions are authorized by law, regulation or executive order to be closed.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq.
"Certificate" means a certificate evidencing the beneficial interest of
a Certificateholder in the Trust, substantially in the form of Exhibit A to the
Trust Agreement.
"Certificate Account Property" means the Certificate Distribution
Account, all amounts and investments held from time to time therein (whether in
the form of deposit account, Physical Property, book entry securities,
uncertificated securities or otherwise), and all proceeds of the foregoing.
"Certificate Balance" equals, initially, $__________ and, thereafter,
equals the initial Certificate Balance, reduced by all amounts allocable to
principal previously distributed to Certificateholders.
Appendix X, Page 3
<PAGE> 65
"Certificate Depository Agreement" means the agreement among the Trust,
Owner Trustee, Servicer and The Depository Trust Company, as the initial
Clearing Agency, dated as of the Closing Date, relating to the Certificates,
substantially in the form attached as Exhibit C to the Trust Agreement, as the
same may be amended and supplemented from time to time.
"Certificate Distribution Account" is defined in Section 5.1 of the
Trust Agreement.
"Certificate of Trust" means the Certificate of Trust in the form of
Exhibit B to the Trust Agreement to be filed for Issuer pursuant to the Business
Trust Statute.
"Certificate Pool Factor" as of the close of business on a Distribution
Date means a seven-digit decimal figure equal to the Certificate Balance (after
giving effect to distributions made on such date) divided by the initial
Certificate Balance. The Certificate Pool Factor will be 1.0000000 as of the
Cutoff Date; thereafter, the Certificate Pool Factor will decline to reflect
reductions in the Certificate Balance.
"Certificate Rate" means ____% per annum (computed on the basis of a
360-day year of twelve 30 day months).
"Certificate Register" and "Certificate Registrar" means the register
mentioned and the registrar appointed pursuant to Section 3.4 of the Trust
Agreement.
"Certificateholder" means the Person in whose name a Certificate is
registered on the Certificate Register.
"Certificateholders' Interest Carryover Shortfall" means, for any
Distribution Date, the excess of the Certificateholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such preceding Distribution
Date, over the amount in respect of interest at the Certificate Rate that is
actually deposited in the Certificate Distribution Account on such preceding
Distribution Date, plus interest on such excess, to the extent permitted by law,
in an amount equal to the product of one-twelfth multiplied by the Certificate
Rate multiplied by the amount of such excess.
"Certificateholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
Appendix X, Page 4
<PAGE> 66
"Certificateholders' Monthly Interest Distributable Amount" means, for
any Distribution Date, an amount equal to one-twelfth (or the actual number of
days from and including the Closing Date to but excluding __________________,
199_ divided by 360, for the initial Distribution Date) of the Certificate Rate
multiplied by the Certificate Balance as of the close of business on the
immediately preceding Distribution Date, after giving effect to all payments of
principal to the Certificateholders on or prior to such Distribution Date (or,
in the case of the first Distribution Date, the Certificate Balance on the
Closing Date).
"Certificateholders' Monthly Principal Distributable Amount" means, for
any Distribution Date, the Certificateholders' Percentage of the Principal
Distribution Amount or, for any Distribution Date on or after the Distribution
Date on which the outstanding principal balance of the Class A-2 Notes is
reduced to zero, 100% of the Principal Distribution Amount (less any amount
required on the first such Distribution Date to reduce the outstanding principal
balance of the Class A-2 Notes to zero, which shall be deposited into the Note
Distribution Account).
"Certificateholders' Percentage" means 100% minus the Noteholders'
Percentage.
"Certificateholders' Principal Carryover Shortfall" means, as of the
close of business on any Distribution Date, the excess of the
Certificateholders' Monthly Principal Distributable Amount and any outstanding
Certificateholders' Principal Carryover Shortfall from the preceding
Distribution Date, over the amount in respect of principal that is actually
deposited in the Certificate Distribution Account on such current Distribution
Date.
"Certificateholders' Principal Distributable Amount" means, for any
Distribution Date, the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and the Certificateholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; provided that the Certificateholders' Principal Distributable Amount shall
not exceed the Certificate Balance. In addition, on the Final Scheduled
Distribution Date for the Certificates, the Certificateholders Principal
Distributable Amount will include, to the extent not included under the
preceding sentence, the amount that is necessary (after giving effect to the
other amounts to be deposited in the Certificate Distribution Account on such
Distribution Date and allocable to principal) to reduce the Certificate Balance
to zero.
"Class A-1 Interest Rate" means ______% per annum.
"Class A-1 Noteholders' Interest Carryover Shortfall" means, for any
Distribution Date, the excess of the Class A-1 Noteholders' Monthly Interest
Appendix X, Page 5
<PAGE> 67
Distributable Amount for the preceding Distribution Date and any outstanding
Class A-1 Noteholders' Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest on the Class A-1 Notes
that was actually paid to holders of the Class A-1 Notes on the preceding
Distribution Date, plus interest on the amount of interest due but not paid to
Holders of the Class A-1 Notes on the preceding Distribution Date, to the extent
permitted by law, in an amount equal to the product of (i) the quotient of the
number of days elapsed in the related Interest Period divided by 360 multiplied
by (ii) the Class A-1 Interest Rate multiplied by (iii) the amount of such
interest due but not paid in respect of the Class A-1 Notes.
"Class A-1 Noteholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of (a) the Class A-1 Noteholders' Monthly Interest
Distributable Amount and (b) the Class A-1 Noteholders' Interest Carryover
Shortfall, in each case for such Distribution Date.
"Class A-1 Noteholders' Monthly Interest Distributable Amount" means,
for any Distribution Date, the product of (i) the quotient of the number of days
elapsed during the related Interest Period divided by 360 multiplied by (ii) the
Class A-1 Interest Rate multiplied by (iii) the Outstanding Amount of the Class
A-1 Notes on the immediately preceding Distribution Date after giving effect to
all payments of principal to the Holders of the Class A-1 Notes on or prior to
such Distribution Date (or, in the case of the first Distribution Date, the
Outstanding Amount of the Class A-1 Notes on the Closing Date).
"Class A-1 Notes" means the Class A-1 _____% Asset Backed Notes,
substantially in the form of Exhibit D to the Indenture.
"Class A-2 Interest Rate" means _____% per annum.
"Class A-2 Noteholders' Interest Carryover Shortfall" means, for any
Distribution Date, the excess of the Class A-2 Noteholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Class A-2 Noteholders' Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest on the Class A-2 Notes
that was actually paid to holders of the Class A-2 Notes on the preceding
Distribution Date, plus interest on the amount of interest due but not paid to
Holders of the Class A-2 Notes on the preceding Distribution Date, to the extent
permitted by law, in an amount equal to the product of one-twelfth multiplied by
the Class A-2 Interest Rate multiplied by the amount of such interest due but
not paid in respect of the Class A-2 Notes.
"Class A-2 Noteholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of (a) the Class A-2 Noteholders' Monthly Interest
Appendix X, Page 6
<PAGE> 68
Distributable Amount and (b) the Class A-2 Noteholders' Interest Carryover
Shortfall, in each case for such Distribution Date.
"Class A-2 Noteholders' Monthly Interest Distributable Amount" means,
for any Distribution Date, the product of one-twelfth (or, in the case of the
first Distribution Date the actual number of days elapsed from and including the
Closing Date to but excluding _________________, 199_ divided by 360) multiplied
by the Class A-2 Interest Rate multiplied by the Outstanding Amount of the Class
A-2 Notes on the immediately preceding Distribution Date after giving effect to
all payments of principal to the Holders of the Class A-2 Notes on or prior to
such immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Outstanding Amount of the Class A-2 Notes on the Closing
Date).
"Class A-2 Notes" means the Class A-2 ____% Asset Backed Notes,
substantially in the form of Exhibit E to the Indenture.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means _____ __, 199_.
"Code" means the Internal Revenue Code of 1986 and Treasury Regulations
promulgated thereunder.
"Collateral" is defined in the Granting Clause of the Indenture.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.1 of the Sale and Servicing Agreement.
"Collection Period" means, (a) in the case of the initial Collection
Period, the period from [but not including] the Cutoff Date to and including
___________ __, 199_ and (b) thereafter, each calendar month during the term of
the Sale and Servicing Agreement. With respect to any Determination Date,
Deposit Date or Distribution Date, the "related Collection Period" means the
Collection Period preceding the month in which such Determination Date, Deposit
Date or Distribution Date occurs.
Appendix X, Page 7
<PAGE> 69
"Collections" means all collections on the Receivables and any proceeds
from Insurance Policies and lender's single interest insurance policies.
"Commission" means the Securities and Exchange Commission.
"Contract Rate" means, with respect to a Receivable, the rate per annum
of interest charged on the outstanding principal balance of such Receivable.
"Corporate Trust Office" means:
(a) as used in the Indenture, or otherwise with respect to
Indenture Trustee, the principal office of Indenture Trustee at which
at any particular time its corporate trust business shall be
administered which office at date of the execution of the Indenture is
located at ____________________________, Attention: ________________
Telephone: _____________; Facsimile: _______________ or at such other
address as Indenture Trustee may designate from time to time by notice
to the Noteholders, Servicer and Issuer, or the principal corporate
trust office of any successor Indenture Trustee (the address of which
the successor Indenture Trustee will notify the Noteholders and
Issuer); and
(b) as used in the Trust Agreement, or otherwise with respect
to Owner Trustee, the principal corporate trust office of Owner Trustee
located at _____________; or at such other address as Owner Trustee may
designate by notice to the Certificateholders and Depositor, or the
principal corporate trust office of any successor Owner Trustee (the
address of which the successor owner trustee will notify the
Certificateholders and Depositor).
"Custodian" means Servicer in its capacity as agent of Issuer, as
custodian of the Receivable Files and any Seller Affiliate acting as agent for
Servicer for the purpose of maintaining custody of the Receivables Files.
"Cutoff Date" means the close of business on __________, 199_.
"Cutoff Date Principal Balance" means, with respect to any Receivable,
the Initial Principal Balance of such Receivable minus the sum of the portion of
all payments received under such Receivable from or on behalf of the related
Obligor on or prior to the Cutoff Date and allocable to principal in accordance
with the terms of the Receivable.
"Dealer" means, with respect to any Receivable, the seller of the
related Financed Vehicle.
Appendix X, Page 8
<PAGE> 70
"Dealer Agreement" means an agreement between an Originator and a
Dealer pursuant to which such Originator acquires Motor Vehicle Loans from the
Dealer or gives such Dealer the right to induce persons to apply to such
Originator for loans in connection with the retail sale of Motor Vehicles by
such Dealer.
"Dealer Recourse" means, with respect to any Dealer, any rights and
remedies against such Dealer under the related Dealer Agreement (other than with
respect to any breach of representation or warranty thereunder) with respect to
credit losses on a Receivable secured by a Financed Vehicle sold by such Dealer.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Defaulted Receivable" means, with respect to any Collection Period, a
Receivable (other than a Purchased Receivable) which Servicer has determined to
charge off during such Collection Period in accordance with its customary
servicing practices; provided that any Receivable which Seller or Servicer is
obligated to repurchase or purchase shall be deemed to have become a Defaulted
Receivable during a Collection Period if Seller or Servicer fails to deposit the
related Purchase Amount on the related Deposit Date when due.
"Definitive Notes" is defined in Section 2.10 of the Indenture.
"Definitive Certificates" means either or both (as the context
requires) of (a) Certificates issued in certificated, fully registered form as
provided in Section 3.11 of the Trust Agreement and (b) Certificates issued in
certificated, fully registered form as provided in Section 3.13 of the Trust
Agreement.
"Delaware Trustee" is defined in Section 10.1 of the Trust Agreement.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(l)(i) of
the UCC and are susceptible of physical delivery, transfer thereof to
Indenture Trustee or its nominee or custodian by physical delivery to
Indenture Trustee or its nominee or custodian endorsed to, or
registered in the name of, Indenture Trustee or its nominee or
custodian or endorsed in blank, and, with respect to a "certificated
security" (as defined in Section 8-102 of the UCC) transfer thereof (i)
by delivery of such certificated security endorsed to, or registered in
the name of, Indenture Trustee or its nominee or custodian or endorsed
in blank to a financial intermediary (as defined in
Appendix X, Page 9
<PAGE> 71
Section 8-313 of the UCC) and the making by such "financial
intermediary" of entries on its books and records identifying such
certificated securities as belonging to Indenture Trustee or its
nominee or custodian and the sending by such financial intermediary of
a confirmation of the purchase of such certificated security by
Indenture Trustee or its nominee or custodian, or (ii) by delivery
thereof to a "clearing corporation" (as defined in Section 8-102(3) of
the UCC) and the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities account of the
transferor and increasing the appropriate securities account of a
financial intermediary by the amount of such certificated security, the
identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in Section 8-
102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by Indenture Trustee or its
nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying
such certificated securities as belonging to Indenture Trustee or its
nominee or custodian (all of the foregoing, "Physical Property"), and,
in any event, any such Physical Property in registered form shall be in
the name of Indenture Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Trust Account Property to Indenture Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or
the interpretation thereof;
(b) with respect to any securities issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
National Mortgage Association that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations, the following procedures, all in accordance with
applicable law, including applicable Federal regulations and Articles 8
and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal
Reserve Bank by a financial intermediary which is also a "depository"
pursuant to applicable Federal regulations and issuance by such
financial intermediary of a deposit advice or other written
confirmation of such book-entry registration to Indenture Trustee or
its nominee or custodian of the purchase by Indenture Trustee or its
nominee or custodian of such book-entry securities; the making by such
financial intermediary of entries in its books and records identifying
such book entry security held through the Federal Reserve System
pursuant to Federal book-entry regulations as belonging to Indenture
Appendix X, Page 10
<PAGE> 72
Trustee or its nominee or custodian and indicating that such custodian
holds such Trust Account Property solely as agent for Indenture Trustee
or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete
transfer of ownership of any such Trust Account Property to Indenture
Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is
an uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the
sending of a confirmation by the financial intermediary of the purchase
by Indenture Trustee or its nominee or custodian of such uncertificated
security, the making by such financial intermediary of entries on its
books and records identifying such uncertificated certificates as
belonging to Indenture Trustee or its nominee or custodian.
"Deposit Date" means, with respect to any Collection Period, the
Business Day preceding the related Distribution Date.
"Depositor" means Seller in its capacity as Depositor under the Trust
Agreement.
"Depository Agreements" mean the Certificate Depository Agreement and
the Note Depository Agreement.
"Determination Date" with respect to any Collection Period, means the
tenth day of the calendar month following such Collection Period (or, if the
tenth day is not a Business Day, the next succeeding Business Day).
"Direct Loan" means motor vehicle promissory notes and security
agreements executed by an Obligor in favor of a motor vehicle lender.
"Distribution Date" means the 15th day of each month (or, if the 15th
day is not a Business Day, the next succeeding Business Day), commencing
___________ __, 199_.
"Dollar" and the sign "$" mean lawful money of the United States.
"Eligible Deposit Account" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or
Appendix X, Page 11
<PAGE> 73
any domestic branch of a foreign bank), having corporate trust powers and acting
as trustee for funds deposited in such account, so long as the long-term
unsecured debt of such depository institution shall have a credit rating from
each Rating Agency in one of its generic rating categories which signifies
investment grade. Any such accounts (other than the Reserve Account) may be
maintained with Key Bank USA, National Association, or any of its Affiliates, if
such accounts meet the requirements described in clause (a) of the preceding
sentence.
"Eligible Institution" means a depository institution (which may be
Servicer (or any Affiliate of Servicer) Owner Trustee or Indenture Trustee)
organized under the laws of the United States of America or any one of the
states thereof or the District of Columbia (or any domestic branch of a foreign
bank), (a) which has (i) either a long-term senior unsecured debt rating of AA
or a short-term senior unsecured debt or certificate of deposit rating of A-1+
or better by Standard & Poor's and (ii)(A) a short-term senior unsecured debt
rating of A-l or better by Standard & Poor's and (B) a short-term senior
unsecured debt rating of P-1 or better by Moody's, or any other long-term,
short-term or certificate of deposit rating acceptable to the Rating Agencies
and (b) whose deposits are insured by the Federal Deposit Insurance
Corporation. If so qualified, Servicer, any Affiliate of Servicer, Owner
Trustee, Servicer or Indenture Trustee may be considered an Eligible
Institution.
"Eligible Investments" shall mean any one or more of the following
types of investments:
(a) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution (including any Affiliate of Seller,
Indenture Trustee, Owner Trustee or any Affiliate of Indenture Trustee
or Owner Trustee) or trust company incorporated under the laws of the
United States of America or any state thereof or the District of
Columbia (or any domestic branch of a foreign bank) and subject to
supervision and examination by Federal or state banking or depository
institution authorities (including depository receipts issued by any
such institution or trust company as custodian with respect to any
obligation referred to in clause (a) above or a portion of such
obligation for the benefit of the holders of such depository receipts);
provided that at the time of the investment or contractual commitment
to invest therein (which shall be deemed to be made again each time
funds are reinvested following each Distribution Date), the commercial
paper or other short-term senior unsecured debt obligations (other than
such obligations the rating of which is based on the credit of a Person
other than such depository institution or trust company) of such
depository institution or trust company shall have
Appendix X, Page 12
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a credit rating from Standard & Poor's of A-1+ and from Moody's of P-1;
(c) commercial paper (including commercial paper of any
Affiliate of Seller) having, at the time of the investment or
contractual commitment to invest therein, a rating from Standard &
Poor's of A-1+ and from Moody's of P-1;
(d) investments in money market funds (including funds for
which Indenture Trustee or Owner Trustee or any of their respective
Affiliates or any of Seller's Affiliates is investment manager or
advisor) having a rating from Standard & Poor's of AAA-m or AAAm-G and
from Moody's of Aaa;
(e) bankers' acceptances issued by any depository institution
or trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) referred to in clause (b) above;
and
(g) any other investment with respect to which each Rating
Agency has provided written notice that such investment would not cause
such Rating Agency to downgrade or withdraw its then current rating of
any class of Notes or the Certificates.
"ERISA" is defined in Section 11.12 of the Trust Agreement.
"Event of Default" is defined in Section 5.1 of the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief
Accounting Officer, President, Executive Vice President, any Vice President, the
Secretary or the Treasurer of such corporation; and with respect to any
partnership, any general partner thereof.
"Expenses" is defined in Section 8.2 of the Trust Agreement.
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"Final Scheduled Distribution Date" means for (a) the Class A-1 Notes,
the ______________ Distribution Date, (b) the Class A-2 Notes, the _____________
Distribution Date and (c) the Certificates, the ______________ Distribution
Date.
"Final Scheduled Maturity Date" means the last day of the Collection
Period immediately preceding the Final Scheduled Distribution Date for the
Certificates.
"Financed Vehicle" means a new or used automobile or light duty truck,
together with all accessions thereto, securing an Obligor's indebtedness under
the respective Receivable.
"Fitch" means Fitch Investors Service, L.P., or its successor.
"GAAP" is defined in Section 10.1 of the Sale and Servicing Agreement.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to the Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto. Other forms of the verb "to Grant"
shall have correlative meanings.
"Holder" means, as the context may require, a Certificateholder or a
Noteholder or both.
"Indemnified Parties" is defined in Section 8.2 of the Trust Agreement.
"Indenture" means the Indenture dated as of _________ __, 199__,
between Issuer and Indenture Trustee, as the same may be amended and
supplemented from time to time.
"Indenture Trustee" means __________________________, not in its
individual capacity but as trustee under the Indenture, or any successor trustee
under the Indenture.
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"Independent" means, when used with respect to any specified Person,
that the person (a) is in fact independent of Issuer, any other obligor upon the
Notes, Seller and any Affiliate of any of the foregoing persons, (b) does not
have any direct financial interest or any material indirect financial interest
(other than less than 5% of the outstanding amount of any publicly traded
security) in Issuer, any such other obligor, Seller or any Affiliate of any of
the foregoing Persons and (c) is not connected with Issuer, any such other
obligor, Seller or any Affiliate of any of the foregoing Persons as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Indenture, made by an Independent appraiser or other expert appointed by an
Issuer Order and approved by Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the definition
of "Independent" in the Indenture and that the signer is Independent within the
meaning thereof.
"Initial Principal Balance" means, in respect of a Receivable, the
amount advanced under the Receivable toward the purchase price of the Financed
Vehicle and related costs, including accessories, service and warranty
contracts, insurance premiums, other items customarily financed as part of
retail motor vehicle loans and/or retail installment sales contracts and other
fees charged by a Seller Affiliate or the applicable Dealer and included in the
amount to be financed, the total of which is shown as the initial principal
balance in the note and security agreement or retail installment sale contract
evidencing and securing such Receivable.
"Insolvency Event" means, for a specified Person, (a) the filing of a
decree or order for relief by a court having jurisdiction in the premises in
respect of such Person or any substantial part of its property in an involuntary
case under any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver (including any
receiver appointed under the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended), liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its property, or ordering the winding-up or liquidation of such Person's
affairs, and such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or (b) the commencement by such Person of a
voluntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by such Person to
the entry of an order for relief in an involuntary case under any such law, or
the consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its
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property, or the making by such Person of any general assignment for the benefit
of creditors, or the failure by such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in furtherance of any
of the foregoing.
"Insolvency Proceeds" is defined in Section 9.1(b) of the Sale and
Servicing Agreement.
"Insurance Policies" means, all credit life and disability insurance
policies maintained by the Obligors and all Physical Damage Insurance Policies.
"Interest Period" means, with respect to any specified Distribution
Date, the period from and including the Closing Date (in the case of the first
Distribution Date) and thereafter from and including the preceding Distribution
Date to but excluding such specified Distribution Date.
"Interest Rate" means, with respect to the (a) Class A-1 Notes, the
Class A-1 Interest Rate and (b) Class A-2 Notes, the Class A-2 Interest Rate.
"Issuer" means Key Auto Finance Trust 199_-_.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of Issuer by any one of its Authorized Officers and delivered
to Indenture Trustee.
"Key Bank USA" means, Key Bank USA, National Association, a national
banking association.
"Lien" means a security interest, lien, charge, pledge, preference,
participation interest or encumbrance of any kind, other than liens for taxes
not yet due and payable, mechanics' or materialmen's liens and other liens for
work, labor or materials, and any other liens that may attach by operation of
law.
"Liquidation Proceeds" means, with respect to any Receivable that has
become a Defaulted Receivable, (a) insurance proceeds received by Servicer with
respect to the Insurance Policies, (b) amounts received by Servicer in
connection with such Defaulted Receivable pursuant to the exercise of rights
under that Receivable and (c) the monies collected by Servicer (from whatever
source, including proceeds of a sale of a Financed Vehicle, a deficiency balance
recovered after the charge-off of the related Receivable or as a result of any
Dealer Recourse) on such Defaulted Receivable net of any expenses incurred by
Servicer in connection therewith and any payments required by law to be remitted
to the Obligor.
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"Minimum Specified Reserve Balance" with respect to any Distribution
Date means the lesser of (i) $__________ and (ii) the aggregate outstanding
principal amount of the Notes and the Certificate Balance (after giving effect
to any distributions on the Notes and Certificates on such Distribution Date).
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Motor Vehicle" means a new or used automobile or light duty truck.
"Motor Vehicle Loan" means a Direct Loan or retail installment sales
contract secured by a Motor Vehicle originated by a Seller Affiliate or another
financial institution.
"Note" means a Class A-1 Note or Class A-2 Note.
"Note Depository Agreement" means the agreement among Issuer, Servicer
and The Depository Trust Company, as the initial Clearing Agency, dated as of
the Closing Date, relating to the Notes, as the same may be amended or
supplemented from time to time.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1 of the Sale and Servicing
Agreement.
"Noteholder" means the Person in whose name a Note is registered on the
Note Register.
"Note Owner" means, with respect to a Book-Entry Note, the person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Note Pool Factor" for each class of Notes as of the close of business
on a Distribution Date means a seven-digit decimal figure equal to the
outstanding principal balance of such class of Notes divided by the original
outstanding principal balance of such class of Notes. The Note Pool Factor for
each class of Notes will be 1.0000000 as of the Cutoff Date; thereafter, the
Note Pool Factor for each class of Notes will decline to reflect reductions in
the outstanding principal balance of such class of Notes.
"Noteholders' Distributable Amount" means, for any Distribution Date,
the sum of the Noteholders' Principal Distributable Amount and the Noteholders'
Interest Distributable Amount.
Appendix X, Page 17
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"Noteholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of (a) the Class A-1 Noteholders' Interest
Distributable Amount and (b) the Class A-2 Noteholders' Interest Distributable
Amount for such Distribution Date.
"Noteholders' Monthly Principal Distributable Amount" means, for any
Distribution Date, the Noteholders' Percentage of the Principal Distribution
Amount.
"Noteholders' Percentage" means 100% until the point in time at which
the Class A-1 Notes and Class A-2 Notes have been paid in full and zero
thereafter.
"Noteholders' Principal Carryover Shortfall" means, as of the close of
business on any specified Distribution Date, the excess of the Noteholders'
Monthly Principal Distributable Amount for such Distribution Date and any
outstanding Noteholders' Principal Carryover Shortfall from the Distribution
Date preceding the specified Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account on the
specified Distribution Date.
"Noteholders' Principal Distributable Amount" means, for any
Distribution Date, the sum of the Noteholder's Monthly Principal Distributable
Amount for such Distribution Date and the Noteholders' Principal Carryover
Shortfall as of the close of business on the preceding Distribution Date;
provided that the Noteholders' Principal Distributable Amount shall not exceed
the aggregate outstanding principal balance of the Notes. In addition, on the
Final Scheduled Distribution Date of each class of Notes, the principal required
to be deposited in the Note Distribution Account will include the amount
necessary (after giving effect to the other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to principal) to be
paid to Noteholders of such class to reduce the Outstanding Amount of such class
of Notes to zero.
"Note Register" and "Note Registrar" are defined in Section 2.4 of the
Indenture.
"Obligor" means, with respect to a Receivable, the borrower or co-
borrowers under the related Receivable and any co-signer of the Receivable or
other Person who owes or may be primarily or secondarily liable for payments
under such Receivable.
"Officer's Certificate" means: (a) for purposes of the Indenture, a
certificate signed by any Authorized Officer of Issuer, under the circumstances
described in, and otherwise complying with, the applicable requirements of
Appendix X, Page 18
<PAGE> 80
Section 11.1 and TIA Section 314, and delivered to Indenture Trustee; and (b)
otherwise, a certificate signed by the chairman, the president, any vice
president or the treasurer of Seller or Servicer, as the case may be, and
delivered to Indenture Trustee. Unless otherwise specified, any reference in the
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in the Indenture, be employees of or
counsel to Issuer and who shall be satisfactory to Issuer, Owner Trustee or
Indenture Trustee, as applicable, and which opinion or opinions shall be
addressed to Issuer, Owner Trustee, or Indenture Trustee, as applicable and
shall be in form and substance satisfactory to the Issuer, Owner Trustee, and
Indenture Trustee, as applicable.
"Original Pool Balance" means the Pool Balance as of the Cutoff Date,
which is $_____________.
"Originator" means, with respect to any Direct Loan or retail
installment sales contract, the Seller Affiliate that was the lender with
respect to such Direct Loan or that acquired such Direct Loan or retail
installment sales contract from a Dealer or other Person.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under the Indenture except:
(a) Notes theretofore canceled by Note Registrar or delivered
to Note Registrar for cancellation;
(b) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to the Indenture or provision
therefor, satisfactory to Indenture Trustee); and
(c) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to the Indenture unless proof
satisfactory to Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided that in determining whether the Holders of the requisite Outstanding
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document, Notes owned
Appendix X, Page 19
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by Issuer, any other obligor upon the Notes, Seller or any Affiliate of any of
the foregoing Persons shall be disregarded and deemed not to be Outstanding,
except that, in determining whether Indenture Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent
or waiver, only Notes that a Responsible Officer of Indenture Trustee either
actually knows to be so owned or has received written notice thereof shall be so
disregarded. Notes so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of Indenture
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not Issuer, any other obligor upon the Notes, Seller or any Affiliate
of any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes,
or class of Notes, as applicable, Outstanding at the date of determination.
"Owner" means each Person who is the beneficial owner of a Book Entry
Certificate as reflected in the records of the Clearing Agency or if a Clearing
Agency Participant is not the Owner, then as reflected in records of a Person
maintaining an account with such Clearing Agency (directly or indirectly, in
accordance with the rules of such Clearing Agency).
"Owner Trust Estate" means all right, title and interest of Issuer in
and to the property and rights assigned to Issuer pursuant to Article II of the
Sale and Servicing Agreement, all funds on deposit from time to time in the
Trust Accounts and the Certificate Distribution Account and all other property
of Issuer from time to time, including any rights of Owner Trustee and Issuer
pursuant to the Sale and Servicing Agreement.
"Owner Trustee" means ___________________, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
the Trust Agreement, and any successor Owner Trustee hereunder.
"Payaheads" means early payments by or on behalf of Obligors on
Precomputed Receivables which, in accordance with the Servicer's customary
practices, do not constitute scheduled payments or full prepayments and are
applied to principal and interest in a subsequent period.
"Payahead Account" means the account designated as such, established
and maintained pursuant to Section 5.1 of the Sale and Servicing Agreement.
"Paying Agent" means: (a) when used in the Indenture or otherwise with
respect to the Notes, Indenture Trustee or any other Person that meets the
eligibility standards for Indenture Trustee specified in Section 6.11 of the
Indenture and is authorized by Issuer to make the payments to and distributions
Appendix X, Page 20
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from the Collection Account and the Note Distribution Account, including payment
of principal of or interest on the Notes on behalf of Issuer; and (b) when used
in the Trust Agreement or otherwise with respect to the Certificates, Owner
Trustee or any other paying agent or co-paying agent appointed pursuant to
Section 3.9 of the Trust Agreement.
"Person" means a legal person, including any individual, corporation,
estate, partnership, limited liability company, joint venture, association,
joint stock company, trust, unincorporated organization, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Physical Damage Insurance Policy" means a theft and physical damage
insurance policy maintained by the Obligor under a Receivable, providing
coverage against loss or damage to or theft of the related Financed Vehicle.
"Physical Property" is defined in the definition of "Delivery" above.
"Pool Balance" means, at any time, the aggregate Principal Balance of
the Receivables (excluding Purchased Receivables and Defaulted Receivables) at
such time.
"Precomputed Receivable" means (i) an Actuarial Receivable, (ii) a Rule
of 78's Receivable or (iii) a Sum of Periodic Balances Receivable.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Principal Balance" means, as of any time, for any Receivable, the
principal balance of such Receivable under the terms of the Receivable
determined in accordance with the Servicer's customary practices.
"Principal Distribution Amount" means, for any Distribution Date, the
sum of (a) the Available Principal for such Distribution Date, and (b) the
aggregate amount of Realized Losses for the related Collection Period.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
Appendix X, Page 21
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"Purchase Agreement" means each agreement dated as of _________ __,
199__ between a Seller Affiliate and Seller under which such Seller Affiliate
sells Receivables to Seller.
"Purchase Amount" of any Receivable means, with respect to any Deposit
Date, an amount equal to the sum of (a) the outstanding Principal Balance of
such Receivable as of the last day of the preceding Collection Period and (b)
the amount of accrued and unpaid interest on such Principal Balance at the
related Contract Rate from the date a payment was last made by or on behalf of
the Obligor through and including the last day of such preceding Collection
Period, in each case after giving effect to the receipt of monies collected on
such Receivable in such preceding Collection Period.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by Servicer pursuant to Section
4.7 of the Sale and Servicing Agreement or repurchased by Seller pursuant to
Section 3.3 of the Sale and Servicing Agreement.
"Rating Agencies" means Moody's, Standard & Poor's and Fitch.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' prior notice thereof (or such
shorter period as shall be acceptable to the Rating Agencies) and that neither
of the Rating Agencies shall have notified Seller, Servicer, Owner Trustee or
Indenture Trustee in writing that such action will, in and of itself, result in
a reduction or withdrawal of the then current rating of any class of Notes, or
the Certificates.
"Realized Losses" means, for any Collection Period, the aggregate
Principal Balances of any Receivables that became Defaulted Receivables during
such Collection Period.
"Receivable" means each Motor Vehicle Loan described in the Schedule of
Receivables, but excluding (i) Defaulted Receivables to the extent the Principal
Balances thereof have been deposited in the Collection Account and (ii) any
Purchased Receivables.
"Receivable Files" is defined in Section 3.4 of the Sale and Servicing
Agreement.
"Record Date" means, with respect to any Distribution Date or
Redemption Date, the close of business on the day immediately preceding such
Distribution Date or Redemption Date; or, if Definitive Notes or Definitive
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Certificates have been issued, the last day of the month preceding such
Distribution Date.
"Redemption Date" means in the case of a redemption of the Notes
pursuant to Section 10.1(a) of the Indenture or a payment to Noteholders
pursuant to Section 10.1(b) of the Indenture, the Distribution Date specified by
Servicer or Issuer pursuant to such Section 10.1(a) or (b).
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) of the Indenture, an amount equal to the unpaid
principal amount of the then outstanding Class A-2 Notes plus accrued and unpaid
interest thereon to but excluding the Redemption Date, (b) in the case of a
payment made to Noteholders pursuant to Section 10.1(b) of the Indenture, the
amount on deposit in the Note Distribution Account, but not in excess of the
amount specified in clause (a) or (c) in the case of a redemption of the
Certificates pursuant to Section 9.3(a) of the Trust Agreement, an amount equal
to the Certificate Balance of the Certificates plus accrued interest thereon but
excluding such Redemption Date.
"Required Rating" means a rating with respect to short term deposit
obligations of at least P-1 by Moody's and at least A-1 by Standard & Poor's.
"Reserve Account" means the account designated as such, established and
maintained pursuant to Section 5.8 of the Sale and Servicing Agreement.
"Reserve Account Deposit" means an amount equal to $__________.
"Reserve Account Property" means the Reserve Account, the Reserve
Account Deposit and all proceeds of the Reserve Account and the Reserve Account
Deposit, including all securities, investments, general intangibles, financial
assets and investment property from time to time credited to and any security
entitlement to the Reserve Account.
"Reserve Account Transfer Amount" means, with respect to any
Distribution Date, an amount equal to the lesser of (a) the amount of cash or
other immediately available funds on deposit in the Reserve Account on such
Distribution Date (before giving effect to any withdrawals therefrom relating to
such Distribution Date) or (b) the amount, if any, by which (i) the sum of the
Servicing Fee for the related Collection Period and all accrued and unpaid
Servicing Fees for prior Collection Periods, [the Administration Fee for such
Collection Period,] the Noteholders' Interest Distributable Amount, the
Certificateholders' Interest Distributable Amount, the Noteholders' Principal
Distributable Amount and the Certificateholders' Principal Distributable Amount
for such Distribution Date exceeds (ii) the sum of the Available Interest and
the Available Principal for such Distribution Date.
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"Responsible Officer" means, with respect to Indenture Trustee, any
officer within the Corporate Trust Office of Indenture Trustee, including any
Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary, or any other officer of Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"Rule of 78's Receivable" means a Receivable that provides for the
payment by the Obligor of a specified total amount of payments, payable in equal
monthly installments on each due date, which total represents the principal
amount financed and add-on interest in an amount calculated at the stated
Contract Rate for the term of the Receivable and allocated to each monthly
payment based upon a fraction, the numerator of which is the number of payments
scheduled to have been made prior to the due date for such monthly payment on
such Receivable and the denominator of which is the sum of all such numbers of
payments to be made until the maturity of such Receivable.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
among Issuer, Indenture Trustee, Key Bank USA, as Servicer, and Key Consumer
Acceptance Corporation, as Seller, dated as of ________, 199_, as the same may
be amended and supplemented from time to time.
"Schedule of Receivables" means, with respect to the Motor Vehicle
Loans to be conveyed to Seller by each Seller Affiliate and to Issuer by Seller,
the list identifying such Motor Vehicle Loans delivered to Indenture Trustee at
the Closing.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Securities Intermediary" is defined in Section 5.8 of the Sale and
Servicing Agreement.
"Seller" means Key Consumer Acceptance Corporation, a Delaware
corporation, and any successor pursuant to Section 6.4 of the Sale and
Servicing Agreement.
"Seller Affiliate" means each Affiliate of the Seller that has sold
Receivables to the Seller.
"Servicer" means Key Bank USA and each Successor Servicer.
"Servicer Termination Event" means an event specified in Section 8.1 of
the Sale and Servicing Agreement.
Appendix X, Page 24
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"Servicer's Report" means a report of Servicer delivered pursuant to
Section 4.9 of the Sale and Servicing Agreement, substantially in the form of
Exhibit C to that agreement.
"Servicing Fee" is defined in Section 4.8 of the Sale and Servicing
Agreement.
"Servicing Fee Rate" means [1.00]% per annum.
"Simple Interest Method" means the method of allocating a fixed level
payment monthly installments between principal and interest, pursuant to which
such payment is allocated first to accrued and unpaid interest at the Contract
Rate on the unpaid principal balance and the remainder of such payment is
allocable to principal.
"Simple Interest Receivable" means any Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Specified Reserve Account Balance" means, for any Distribution Date,
the greater of (a) ___% of the sum of the aggregate outstanding principal amount
of each class of Notes plus the outstanding Certificate Balance on such
Distribution Date (after giving effect to all payments on the Notes and
distributions with respect to the Certificates to be made on or prior to such
Distribution Date), and (b) the Minimum Specified Reserve Balance as of such
Distribution Date.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., or its successor.
"State" means any one of the 50 states of the United States of America
or the District of Columbia.
"Successor Servicer" is defined in Section 3.7(e) of the Indenture.
"Sum of Periodic Balances Receivable" means a Receivable that provides
for the payment by the Obligor of a specified total amount of payments, payable
in equal monthly installments on each due date, which total represents the
principal amount financed and add-on interest in an amount calculated at the
stated Contract Rate for the term of the Receivable and allocated to each
monthly payment based upon a fraction, the numerator of which is the principal
balance of such Receivable immediately prior to the due date for such monthly
payment and the denominator of which is the sum of all principal balances for
each monthly payment to be made until the maturity of such Receivable.
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"Supplemental Servicing Fee" is defined in Section 4.8 of the Sale and
Servicing Agreement.
"Total Distribution Amount" means, for each Distribution Date, the sum
of (a) the Available Interest, (b) the Available Principal and (c) the Reserve
Account Transfer Amount, in each case in respect of such Distribution Date.
"Treasury Regulations" means regulations, including proposed or
temporary regulations, promulgated under the Code.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" is defined in Section 5.1 of the Sale and Servicing
Agreement.
"Trust Agreement" means the Trust Agreement dated as of _______ __,
199__, between Seller and Owner Trustee, as the same may be amended and
supplemented from time to time.
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
the Indenture for the benefit of the Noteholders (including all property and
interests Granted to Indenture Trustee), including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as
in force on the date hereof, unless otherwise specifically provided.
"Trust Property" shall have the meaning set forth in Section 2.1 of the
Sale and Servicing Agreement.
"UCC" means the Uniform Commercial Code, as in effect in the relevant
jurisdiction.
Appendix X, Page 26
<PAGE> 1
Exhibit 99.2
ADMINISTRATION AGREEMENT
This ADMINISTRATION AGREEMENT, dated as of __________ ___, 199_ (as
from time to time amended, supplemented or otherwise modified and in effect,
this "Agreement"), is by and among KEY AUTO FINANCE TRUST 199_-_, a Delaware
business trust (the "Issuer"), KEY BANK USA, NATIONAL ASSOCIATION, a national
banking association, as administrator (the "Administrator"), and ____________, a
___________ banking corporation, not in its individual capacity but solely as
Indenture Trustee (the "Indenture Trustee").
WHEREAS, the Issuer is issuing the Notes pursuant to the Indenture and
the Certificates pursuant to the Trust Agreement and has entered into certain
agreements in connection therewith, including (i) the Sale and Servicing
Agreement, (ii) the Depository Agreements, and (iii) the Indenture (the Sale and
Servicing Agreement, the Depository Agreements and the Indenture being referred
to hereinafter collectively as the "Related Agreements");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain duties of the Issuer and the Owner Trustee under
the Related Agreements and to provide such additional services consistent with
the terms of this Agreement and the Related Agreements as the Issuer and the
Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
1. Definitions and Usage. Except as otherwise specified herein or as
the context may otherwise require, capitalized terms used but not otherwise
defined herein are defined in Appendix X to the Sale and Servicing Agreement,
which also contains rules as to usage that shall be applicable herein.
2. Duties of the Administrator. (a) Duties with Respect to the
Indenture and the Depository Agreements. (i) The Administrator agrees to perform
all its duties as Administrator and the duties of the Issuer under the
Depository Agreements. In addition, the Administrator
<PAGE> 2
shall consult with the Owner Trustee regarding the duties of the Issuer under
the Indenture and the Depository Agreements. The Administrator shall monitor the
performance of the Issuer and shall advise the Owner Trustee when action is
necessary to comply with the Issuer's duties under the Indenture and the
Depository Agreements. The Administrator shall prepare for execution by the
Issuer, or shall cause the preparation by appropriate persons of, all such
documents, reports, filings, instruments, certificates and opinions that it
shall be the duty of the Issuer to prepare, file or deliver pursuant to the
Indenture and the Depository Agreements. In furtherance of the foregoing, the
Administrator shall take all appropriate action that is the duty of the Issuer
to take pursuant to the Indenture including, without limitation, such of the
foregoing as are required with respect to the following matters under the
Indenture (references are to sections of the Indenture):
(A) the duty to cause the Note Register to
be kept and to give the Indenture Trustee notice of
any appointment of a new Note Registrar and the
location, or change in location, of the Note Register
(Section 2.4);
(B) the preparation of or obtaining of the
documents and instruments required for authentication
of the Notes and delivery of the same to the
Indenture Trustee (Section 2.2);
(C) the preparation, obtaining or filing of
the instruments, opinions and certificates and other
documents required for the release of property from
the lien of the Indenture (Section 2.9);
(D) the preparation of Definitive Notes in
accordance with the instructions of the Clearing
Agency (Section 2.12);
(E) the maintenance of an office in the
Borough of Manhattan, City of New York, for
registration of transfer or exchange of Notes
(Section 3.2);
(F) the duty to cause newly appointed Note
Paying Agents, if any, to deliver to the Indenture
Trustee the instrument specified in the Indenture
regarding funds held in trust (Section 3.3);
(G) the direction to the Indenture Trustee
to deposit monies with Note Paying Agents, if any,
other than the Indenture Trustee (Section 3.3);
(H) the obtaining and preservation of the
Issuer's qualification to do business in each
jurisdiction in which such qualification is or shall
be necessary to protect the validity and
enforceability of the Indenture, the
-2-
<PAGE> 3
Notes, the Collateral and each other instrument or
agreement included in the Trust Estate (Section 3.4);
(I) the preparation of all supplements and
amendments to the Indenture and all financing
statements, continuation statements, instruments of
further assurance and other instruments and the
taking of such other action as is necessary or
advisable to protect the Trust Estate (Section 3.5);
(J) the delivery of the Opinion of Counsel
on the Closing Date and the annual delivery of
Opinions of Counsel as to the Trust Estate, and the
annual delivery of the Officer's Certificate and
certain other statements as to compliance with the
Indenture (Sections 3.6 and 3.9);
(K) the identification to the Indenture
Trustee in an Officer's Certificate of any Person
with whom the Issuer has contracted to perform its
duties under the Indenture (Section 3.7(b));
(L) the notification of the Indenture
Trustee and the Rating Agencies of an Event of
Servicing Termination under the Sale and Servicing
Agreement and, if such Event of Servicing Termination
arises from the failure of the Servicer to perform
any of its duties under the Sale and Servicing
Agreement with respect to the Receivables, the taking
of all reasonable steps available to remedy such
failure (Section 3.7(d));
(M) the preparation and obtaining of
documents and instruments required for the transfer
by the Issuer of its properties or assets (Section
3.10(b));
(N) the duty to cause the Servicer to comply
with Sections 4.9, 4.10, 4.11, 4.12 and 5.5 of the
Sale and Servicing Agreement (Section 3.14);
(O) the delivery of written notice to the
Indenture Trustee and the Rating Agencies of each
Event of Default under the Indenture and each default
by the Servicer or the Seller under the Sale and
Servicing Agreement (Section 3.18);
(P) the monitoring of the Issuer's
obligations as to the satisfaction and discharge of
the Indenture and the preparation of an Officer's
Certificate and the obtaining of the Opinions of
Counsel and the Independent Certificate relating
thereto (Section 4.1);
-3-
<PAGE> 4
(Q) the monitoring of the Issuer's
obligations as to the satisfaction, discharge and
defeasance of the Notes and the preparation of an
Officer's Certificate and the obtaining of an opinion
of a nationally recognized firm of independent
certified public accountants, a written confirmation
thereof and the Opinions of Counsel relating thereto
(Section 4.1);
(R) the preparation and delivery of an
Officer's Certificate to the Indenture Trustee after
the occurrence of any event which with the giving of
notice and the lapse of time would become an Event of
Default under Section 5.1(c) of the Indenture, its
status and what action the Issuer is taking or
proposes to take with respect thereto (Section 5.1);
(S) the compliance with any written
directive of the Indenture Trustee with respect to
the sale of the Trust Estate at one or more public or
private sales called and conducted in any manner
permitted by law if an Event of Default shall have
occurred and be continuing (Section 5.4);
(T) the preparation and delivery of notice
to Noteholders of the removal of the Indenture
Trustee and the appointment of a successor Indenture
Trustee (Section 6.8);
(U) the preparation of any written
instruments required to confirm more fully the
authority of any co-trustee or separate trustee and
any written instruments necessary in connection with
the resignation or removal of any co-trustee or
separate trustee (Sections 6.8 and 6.10);
(V) the furnishing of the Indenture Trustee
with the names and addresses of Noteholders during
any period when the Indenture Trustee is not the Note
Registrar (Section 7.1);
(W) the preparation and, after execution by
the Issuer, the filing with the Commission, any
applicable state agencies and the Indenture Trustee
of documents required to be filed on a periodic basis
with, and summaries thereof as may be required by
rules and regulations prescribed by, the Commission
and any applicable state agencies and the
transmission of such summaries, as necessary, to the
Noteholders (Section 7.3);
(X) the preparation and delivery of Issuer
Orders, Officer's Certificates and Opinions of
Counsel and all other actions necessary with respect
to investment and reinvestment, to the extent
permitted, of funds in such accounts (Sections 8.2
and 8.3);
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<PAGE> 5
(Y) the preparation of an Issuer Request and
Officer's Certificate and the obtaining of an Opinion
of Counsel and Independent Certificates, if
necessary, for the release of the Trust Estate
(Sections 8.4 and 8.5);
(Z) the preparation of Issuer Orders and
the obtaining of Opinions of Counsel with respect to
the execution of supplemental indentures and the
mailing to the Noteholders of notices with respect to
such supplemental indentures (Sections 9.1, 9.2 and
9.3);
(AA) the execution and delivery of new Notes
conforming to any supplemental indenture (Section
9.6);
(BB) the notification of Noteholders of
redemption of the Notes or duty to cause the
Indenture Trustee to provide such notification
(Section 10.2);
(CC) the preparation and delivery of all
Officer's Certificates and the obtaining of Opinions
of Counsel and Independent Certificates with respect
to any requests by the Issuer to the Indenture
Trustee to take any action under the Indenture
(Section 11.1(a));
(DD) the preparation and delivery of
Officer's Certificates and the obtaining of
Independent Certificates, if necessary, for the
release of property from the lien of the Indenture
(Section 11.1(b));
(EE) the notification of the Rating
Agencies, upon the failure of the Indenture Trustee
to give such notification, of the information
required pursuant to Section 11.4 of the Indenture
(Section 11.4);
(FF) the preparation and delivery to
Noteholders and the Indenture Trustee of any
agreements with respect to alternate payment and
notice provisions (Section 11.6); and
(GG) the recording of the Indenture, if
applicable (Section 11.15).
(ii) The Administrator will:
(A) pay the Indenture Trustee from time to
time reasonable compensation for all services
rendered by the Indenture Trustee under the Indenture
(which compensation shall not be limited by any
provision of law in regard to the compensation of a
trustee of an express trust); and
-5-
<PAGE> 6
(B) except as otherwise expressly provided
in the Indenture, reimburse the Indenture Trustee
upon its request for all reasonable expenses,
disbursements and advances incurred or made by the
Indenture Trustee in accordance with any provision of
the Indenture (including the reasonable compensation,
expenses and disbursements of its agents and
counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or
bad faith.
(b) Additional Duties. (i) In addition to the duties of the
Administrator set forth above, the Administrator shall perform such
calculations and shall prepare or shall cause the preparation by other
appropriate persons of, and shall execute on behalf of the Issuer or
the Owner Trustee, all such documents, reports, filings, instruments,
certificates and opinions that it shall be the duty of the Issuer or
the Owner Trustee to prepare, file or deliver pursuant to the Related
Agreements, and at the request of the Owner Trustee shall take all
appropriate action that it is the duty of the Issuer or the Owner
Trustee to take pursuant to the Related Agreements. Subject to Section
5 of this Agreement, and in accordance with the directions of the Owner
Trustee, the Administrator shall administer, perform or supervise the
performance of such other activities in connection with the Collateral
(including the Related Agreements) as are not covered by any of the
foregoing provisions and as are expressly requested by the Owner
Trustee and are reasonably within the capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or
the Related Agreements to the contrary, the Administrator
shall be responsible for promptly notifying the Owner Trustee
in the event that any withholding tax is imposed on the
Issuer's payments (or allocations of income) to a
Certificateholder as contemplated in Section 5.2(c) of the
Trust Agreement. Any such notice shall specify the amount of
any withholding tax required to be withheld by the Owner
Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or
the Related Agreements to the contrary, the Administrator
shall be responsible for performance of the duties of the
Trust or the Owner Trustee set forth in Section 5.5(a), (b),
(c), (d) and (e) and Section 5.6(a) of the Trust Agreement
with respect to, among other things, accounting and reports to
Certificateholders.
(iv) The Administrator will provide prior to
__________ ___, 199_, a certificate of an Authorized Officer
in form and substance satisfactory to the Owner Trustee as to
whether any tax withholding is then required and, if required,
the procedures to be followed with respect thereto to comply
with the requirements of the Code. The Administrator shall be
required to update the letter in each instance that any
additional tax withholding is subsequently required or any
previously required tax withholding shall no longer be
required.
-6-
<PAGE> 7
(v) The Administrator shall perform the duties of the
Administrator specified in Section 10.2 of the Trust Agreement
required to be performed in connection with the resignation or
removal of the Owner Trustee, and any other duties expressly
required to be performed by the Administrator pursuant to the
Trust Agreement.
(vi) In carrying out the foregoing duties or any of
its other obligations under this Agreement, the Administrator
may enter into transactions or otherwise deal with any of its
Affiliates; provided, however, that the terms of any such
transactions or dealings shall be in accordance with any
directions received from the Issuer and shall be, in the
Administrator's opinion, no less favorable to the Issuer than
would be available from unaffiliated parties.
(c) Non-Ministerial Matters. (i) With respect to matters that
in the reasonable judgment of the Administrator are non-ministerial,
the Administrator shall not take any action unless within a reasonable
time before the taking of such action, the Administrator shall have
notified the Owner Trustee of the proposed action and the Owner Trustee
shall not have withheld consent or provided an alternative direction.
For the purpose of the preceding sentence, "non-ministerial matters"
shall include, without limitation:
(A) the amendment of or any supplement to
the Indenture;
(B) the initiation of any claim or lawsuit
by the Issuer and the compromise of any action, claim
or lawsuit brought by or against the Issuer (other
than in connection with the collection of the
Receivables or Permitted Investments);
(C) the amendment, change or modification of
the Related Agreements;
(D) the appointment of successor Note
Registrars, successor Note Paying Agents and
successor Indenture Trustees pursuant to the
Indenture or the appointment of successor
Administrators or Successor Servicers, or the consent
to the assignment by the Note Registrar, Note Paying
Agent or Indenture Trustee of its obligations under
the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and
shall not, (x) make any payments to the Noteholders under the
Related Agreements, (y) sell the Trust Estate pursuant
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<PAGE> 8
to Section 5.4 of the Indenture or (z) take any other action
that the Issuer directs the Administrator not to take on its
behalf.
3. Records. The Administrator shall maintain appropriate books of
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer and the
Seller at any time during normal business hours.
4. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and, as reimbursement for its
expenses related thereto, the Administrator shall be entitled to $_____ annually
which shall be solely an obligation of the Seller.
5. Additional Information To Be Furnished to the Issuer. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
6. Independence of the Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Administrator shall
have no authority to act for or represent the Issuer or the Owner Trustee in any
way and shall not otherwise be deemed an agent of the Issuer or the Owner
Trustee.
7. No Joint Venture. Nothing contained in this Agreement (i) shall
constitute the Administrator and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
8. Other Activities of Administrator. Nothing herein shall prevent the
Administrator or its Affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other person or entity even though such person or entity may engage in business
activities similar to those of the Issuer, the Owner Trustee or the Indenture
Trustee.
9. Term of Agreement; Resignation and Removal of Administrator. (a)
This Agreement shall continue in force until the dissolution of the Issuer, upon
which event this Agreement shall automatically terminate.
(b) Subject to Sections 9(e) and 9(f), the Administrator may
resign its duties hereunder by providing the Issuer with at least sixty
(60) days' prior written notice.
-8-
<PAGE> 9
(c) Subject to Sections 9(e) and 9(f), the Issuer may remove
the Administrator without cause by providing the Administrator with at
least sixty (60) days' prior written notice.
(d) Subject to Sections 9(e) and 9(f), at the sole option of
the Issuer, the Administrator may be removed immediately upon written
notice of termination from the Issuer to the Administrator if any of
the following events shall occur:
(i) the Administrator shall default in the
performance of any of its duties under this Agreement and,
after notice of such default, shall not cure such default
within ten (10) days (or, if such default cannot be cured in
such time, shall not give within ten (10) days such assurance
of cure as shall be reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises
shall enter a decree or order for relief, and such decree or
order shall not have been vacated within sixty (60) days, in
respect of the Administrator in any involuntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect or appoint a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official
for the Administrator or any substantial part of its property
or order the winding-up or liquidation of its affairs; or
(iii) the Administrator shall commence a voluntary
case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, shall consent to the
entry of an order for relief in an involuntary case under any
such law, shall consent to the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator or
similar official for the Administrator or any substantial part
of its property, shall consent to the taking of possession by
any such official of any substantial part of its property,
shall make any general assignment for the benefit of creditors
or shall fail generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified
in clauses (ii) or (iii) of this Section 9(d) shall occur, it shall
give written notice thereof to the Issuer and the Trustee within seven
(7) days after the happening of such event.
(e) No resignation or removal of the Administrator pursuant to
this Section 9 shall be effective until (i) a successor Administrator
shall have been appointed by the Issuer and (ii) such successor
Administrator shall have agreed in writing to be bound by the terms of
this Agreement in the same manner as the Administrator is bound
hereunder.
-9-
<PAGE> 10
(f) The appointment of any successor Administrator shall be
effective only after satisfaction of the Rating Agency Condition with
respect to the proposed appointment.
(g) Subject to Sections 9(e) and 9(f), the Administrator
acknowledges that upon the appointment of a successor Servicer pursuant
to the Sale and Servicing Agreement, the Administrator shall
immediately resign and such successor Servicer shall automatically
become the Administrator under this Agreement.
10. Action upon Termination, Resignation or Removal. Promptly upon the
effective date of termination of this Agreement pursuant to Section 9(a) or the
resignation or removal of the Administrator pursuant to Section 9(b) or (c),
respectively, the Administrator shall be entitled to be paid all fees and
reimbursable expenses accruing to it to the date of such termination,
resignation or removal. The Administrator shall forthwith upon such termination
pursuant to Section 9(a) deliver to the Issuer all property and documents of or
relating to the Collateral then in the custody of the Administrator. In the
event of the resignation or removal of the Administrator pursuant to Section
9(b) or (c), respectively, the Administrator shall cooperate with the Issuer and
take all reasonable steps requested to assist the Issuer in making an orderly
transfer of the duties of the Administrator.
11. Notices. Any notice, report or other communication given hereunder
shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to:
Key Auto Finance Trust 199_-_
__________________________________
__________________________________
__________________________________
Attention: ______________________
Telephone: ______________________
Telecopy: _______________________
(b) if to the Administrator, to:
Key Bank USA, National Association
Key Tower
127 Public Square
Cleveland, Ohio 44114
Attention: _______________________
Telephone: ______________________
-10-
<PAGE> 11
Telecopy: _______________________
(c) If to the Indenture Trustee, to:
-----------------------------------
-----------------------------------
Attention: _______________________
Telephone: ______________________
Telecopy: _______________________
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above.
12. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, the Administrator
and the Indenture Trustee, with the written consent of the Owner Trustee,
without the consent of the Noteholders and the Certificateholders, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Noteholders or Certificateholders; provided that, unless the Rating Agency
Condition shall have been satisfied, such amendment will not, as set forth in
an Opinion of Counsel satisfactory to the Indenture Trustee and the Owner
Trustee, materially and adversely affect the interest of any Noteholder or
Certificateholder. This Agreement may also be amended by the Issuer, the
Administrator and the Indenture Trustee with the written consent of the Owner
Trustee and the Noteholders of Notes evidencing not less than a majority of the
Notes Outstanding and the Certificateholders of Certificates evidencing not less
than a majority of the Certificate Balance for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of Noteholders or the
Certificateholders; provided, however, that no such amendment may (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that are required to be
made for the benefit of the Noteholders or Certificateholders or (ii) reduce the
aforesaid percentage of the Noteholders and Certificateholders which are
required to consent to any such amendment, without the consent of the
Noteholders of all the Notes Outstanding and Certificateholders of Certificates
evidencing all the Certificate Balance. Notwithstanding the foregoing, the
Administrator may not amend this Agreement without the consent of the Seller,
which permission shall not be unreasonably withheld.
13. Successors and Assigns. This Agreement may not be assigned by the
Administrator unless such assignment is previously consented to in writing by
the Issuer and the Owner Trustee and subject to the satisfaction of the Rating
Agency Condition in respect thereof. An assignment with such consent and
satisfaction, if accepted by the assignee, shall bind the
-11-
<PAGE> 12
assignee hereunder in the same manner as the Administrator is bound hereunder.
Notwithstanding the foregoing, this Agreement may be assigned by the
Administrator without the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor (by merger, consolidation
or purchase of assets) to the Administrator; provided that such successor
organization executes and delivers to the Issuer, the Owner Trustee and the
Indenture Trustee an agreement in which such corporation or other organization
agrees to be bound hereunder by the terms of said assignment in the same manner
as the Administrator is bound hereunder. Subject to the foregoing, this
Agreement shall bind any successors or assigns of the parties hereto.
14. Governing Law. This agreement shall be construed in accordance with
the laws of the State of New York, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
15. Headings. The Section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
16. Counterparts. This Agreement may be executed in counterparts, each
of which when so executed shall be an original, but all of which together shall
constitute but one and the same agreement.
17. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
18. Not Applicable to Key Bank USA in Other Capacities. Nothing in this
Agreement shall affect any right or obligation Key Bank USA may have in any
other capacity.
19. Limitation of Liability of Owner Trustee and Indenture Trustee. (a)
Notwithstanding anything contained herein to the contrary, this instrument has
been countersigned by [Owner Trustee] not in its individual capacity but solely
in the capacity as Owner Trustee of the Issuer and in no event shall [Owner
Trustee] in its individual capacity or any beneficial owner of the Issuer have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder, as to all of which recourse shall be
had solely to the assets of the Issuer. For all purposes of this Agreement, in
the performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles VI, VII and VIII of the Trust Agreement.
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<PAGE> 13
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by [Indenture Trustee] not in its
individual capacity but solely as Indenture Trustee and in no event
shall [Indenture Trustee] have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.
20. Third-Party Beneficiary. The Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
21. Nonpetition Covenants. (a) Notwithstanding any prior termination of
this Agreement, the Seller, the Administrator, the Owner Trustee and the
Indenture Trustee shall not, prior to the date which is one year and one day
after the termination of this Agreement with respect to the Issuer, acquiesce,
petition or otherwise invoke or cause the Issuer to invoke the process of any
court or government authority for the purpose of commencing or sustaining a
case against the Issuer under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Issuer.
(b) Notwithstanding any prior termination of this Agreement,
the Issuer, the Administrator, the Owner Trustee and the Indenture
Trustee shall not, prior to the date which is one year and one day
after the termination of this Agreement with respect to the Seller,
acquiesce, petition or otherwise invoke or cause the Seller to invoke
the process of any court or government authority for the purpose of
commencing or sustaining a case against the Seller under any federal or
state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Seller or any substantial part of their respective
property, or ordering the winding up or liquidation of the affairs of
the Seller.
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<PAGE> 14
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
Key Auto Finance Trust 199_-_
By: _____________, not in its individual
capacity but solely as Owner Trustee
By:
------------------------------------------
Name:
Title:
_________________, not in its individual
capacity but solely as Indenture Trustee
By:
------------------------------------------
Name:
Title:
Key Bank USA, National Association, as
Administrator
By:
------------------------------------------
Name:
Title:
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<PAGE> 1
EXHIBIT 99.3
================================================================================
PURCHASE AGREEMENT
BETWEEN
[NAME OF SELLER AFFILIATE]
AS
SELLER
AND
KEY CONSUMER ACCEPTANCE CORPORATION
AS
PURCHASER
DATED AS OF ___________, 199__
================================================================================
<PAGE> 2
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (as from time to time amended, supplemented or
otherwise modified and in effect, this "Agreement") is made as of this ___th day
of ___________, 199__ by and between [NAME OF SELLER AFFILIATE], a national
banking association (the "Seller"), and KEY CONSUMER ACCEPTANCE CORPORATION, a
Delaware corporation (the "Purchaser").
WHEREAS, in the regular course of its business, Seller purchases or
originates Motor Vehicle Loans secured by new and used automobiles and light
trucks from motor vehicle dealers;
WHEREAS, Purchaser desires to purchase from Seller a portfolio of Motor
Vehicle Loans arising in connection with Motor Vehicle Loans purchased by the
Seller from Dealers or originated by Seller; and
WHEREAS, Seller is willing to sell such Motor Vehicle Loans to
Purchaser.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms are used in this Agreement
as defined in Appendix X to the Sale and Servicing Agreement among the Key Auto
Finance Trust 199__-__, as issuer, the Purchaser, as seller, and Key Bank USA,
National Association, as servicer, except that references in Appendix X to the
"Seller" shall be deemed to be references to Purchaser hereunder and references
to a "Seller Affiliate" shall be deemed to be references to the Seller
hereunder.
SECTION 1.2. Other Interpretive Provisions. For purposes of this
Agreement, unless the context otherwise requires: (a) accounting terms not
otherwise defined in this Agreement, and accounting terms partly defined in this
Agreement to the extent not defined, shall have the respective meanings given to
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them under generally accepted accounting principles; (b) terms defined in
Article 9 of the UCC and not otherwise defined in this Agreement are used as
defined in that Article; (c) the words "hereof," "herein" and "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular provision of this Agreement; (d) references to any Article, Section,
Schedule or Exhibit are references to Articles, Sections, Schedules and Exhibits
in or to this Agreement and references to any paragraph, subsection, clause or
other subdivision within any Section or definition refer to such paragraph,
subsection, clause or other subdivision of such Section or definition; (e) the
term "including" means "including without limitation"; (f) except as otherwise
expressly provided herein, references to any law or regulation refer to that law
or regulation as amended from time to time and include any successor law or
regulation; (g) references to any Person include that Person's successors and
assigns; and (h) headings are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
SECTION 2.1. Purchase and Sale of Receivables.
Effective as of the Closing Date and immediately prior to the
transactions pursuant to the Indenture, the Sale and Servicing Agreement and the
Trust Agreement, Seller does hereby sell, transfer, assign, set over and
otherwise convey to Purchaser, without recourse (subject to the obligations
herein) (the "Seller Assets"):
(i) all right, title and interest of Seller in and to the
Receivables, and all moneys received thereon [on or] after the Cutoff
Date;
(ii) all right, title and interest of Seller in the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of Seller in the Financed Vehicles
and any other property that shall secure the Receivables;
(iii) the interest of Seller in any proceeds with respect to
the Receivables from claims on any Insurance Policies covering Financed
Vehicles or the Obligors or from claims under any lender's single
interest insurance policy naming the Seller as an insured;
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(iv) rebates of premiums relating to Insurance Policies and
rebates of other items such as extended warranties financed under the
Receivables, in each case, to the extent the Servicer would, in
accordance with its customary practices, apply such amounts to the
Principal Balance of the related Receivable;
(v) the interest of Seller in any proceeds from (i) any
Receivable repurchased by a Dealer, pursuant to a Dealer Agreement, as
a result of a breach of representation or warranty in the related
Dealer Agreement, (ii) a default by an Obligor resulting in the
repossession of the Financed Vehicle under the applicable Motor Vehicle
Loan or (iii) any Dealer Recourse or other rights relating to the
Receivables under Dealer Agreements;
(vi) all right, title and interest of Seller in any instrument
or document relating to the Receivables; and
(vii) the proceeds of any and all of the foregoing.
The sale, transfer, assignment, setting over and conveyance made
hereunder shall not constitute and is not intended to result in an assumption by
Purchaser of any obligation of Seller to the Obligors, the Dealers or any other
Person in connection with the Receivables and the other assets and properties
conveyed hereunder or any agreement, document or instrument related thereto.
SECTION 2.2. Receivables Purchase Price. In consideration for the Seller Assets,
Purchaser shall, on the Closing Date, pay to Seller the Receivables Purchase
Price. The "Receivables Purchase Price" shall be an amount equal to 100% of the
sum of the following amounts: (i) the aggregate principal balance of the
Seller's Receivables as of the Cutoff Date; (ii) accrued interest on such
Receivables from the last payment date on the Receivables prior to Cutoff Date
and to and including the day immediately preceding the Closing Date; and (iii)
[insert appropriate adjustments]. The Receivables Purchase Price shall be paid
by __________________ same day funds.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of Seller.
Seller hereby makes the following representations and warranties upon
which Purchaser may rely. Such representations are made as of the execution and
delivery of this Agreement, but shall survive the sale, transfer and assignment
of the Receivables to Purchaser.
(a) Organization and Good Standing. Seller has been duly
organized and is validly existing as ______________________ in good
standing under the laws of _____________________, with the power and
authority to own its properties and to conduct its business as such
properties are presently owned and such business is presently conducted
and had at all relevant times, and has, power, authority and legal
right to acquire, own and sell the Seller Assets pursuant to Article
II.
(b) Power and Authority. Seller has the power, authority and
legal right to execute and deliver this Agreement and to carry out its
terms and to sell and assign the Seller Assets; and the execution,
delivery and performance of this Agreement has been duly authorized by
Seller by all necessary corporate action.
(c) No Consent Required. No approval, authorization, consent,
license or other order or action of, or filing or registration with,
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby or thereby, other
than the filing of UCC financing statements.
(d) Valid Sale; Binding Obligation. Seller intends this
Agreement to effect a valid sale, transfer, and assignment of the
Receivables and the other properties and rights included in the Seller
Assets conveyed by Seller to Purchaser hereunder, enforceable against
creditors of and purchasers from Seller; and this Agreement constitutes
a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation and other similar laws affecting enforcement
of the rights of
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creditors generally and to equitable limitations on the availability of
specific remedies.
(e) No Violation. The execution, delivery and performance by
Seller of this Agreement and the consummation of the transactions
contemplated hereby will not conflict with, result in any material
breach of any of the terms and provisions of, constitute (with or
without notice or lapse of time) a material default under or result in
the creation or imposition of any Lien upon any of its material
properties pursuant to the terms of, (i) the _____________ or bylaws of
Seller, (ii) any material indenture, contract, lease, mortgage, deed of
trust or other instrument or agreement to which Seller is a party or by
which Seller is bound, or (iii) any law, order, rule or regulation
applicable to Seller of any federal or state regulatory body, any
court, administrative agency, or other governmental instrumentality
having jurisdiction over Seller.
(f) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of Seller, threatened, before any court,
regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over Seller or its
properties: (i) asserting the invalidity of this Agreement or the
transactions contemplated herein, (ii) seeking to prevent the
consummation of any of the transactions by this Agreement, (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by Seller of its obligations under, or the
validity or enforceability of, this Agreement or the transactions
contemplated herein, or (iv) that may materially and adversely affect
this Agreement or the transactions contemplated hereby.
(g) Chief Executive Office. The chief executive office of
Seller is set forth in Exhibit A attached hereto.
SECTION 3.2. Representations and Warranties as to Each Receivable.
Seller hereby makes the following representations and warranties as to
each Receivable conveyed by it to Purchaser hereunder on which Purchaser shall
rely in acquiring the Receivables. Unless otherwise indicated, such
representations and warranties shall speak as of the Closing Date, but shall
survive the sale, transfer and assignment of the Receivables to Purchaser
hereunder, the sale, transfer and assignment of the Receivables to Issuer under
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the Sale and Servicing Agreement, and the pledge thereof to Indenture Trustee
pursuant to the Indenture.
(a) Characteristics of Receivables. The Receivable has been
fully and properly executed by the parties thereto and (i) is a Direct
Loan made by an Originator or has been originated by a Dealer in the
ordinary course of such Dealer's business and has been purchased by an
Originator, in either case, in the ordinary course of such Originator's
business and accordance with such Originator's underwriting standards
to finance the retail sale by a Dealer of the related Financed Vehicle
or has otherwise been acquired by the Seller, (ii) the Originator of
which has underwriting standards that require physical damage insurance
to be maintained on the related Financed Vehicle, (iii) is secured by a
valid, subsisting, binding and enforceable first priority security
interest in favor of the Seller in the Financed Vehicle (subject to
administrative delays and clerical errors on the part of the applicable
government agency and to any statutory or other lien arising by
operation of law after the Closing Date which is prior to such security
interest), which security interest is assignable together with such
Receivable, and has been so assigned to Purchaser, and subsequently
assigned by Purchaser to the Issuer, (iv) contains customary and
enforceable provisions such that the rights and remedies of the holder
thereof are adequate for realization against the collateral of the
benefits of the security, (v) provided, at origination, for level
monthly payments (provided that the amount of the last payment may be
different), which fully amortize the Initial Principal Balance over the
original term, (vi) provides for interest at the Contract Rate
specified in the Schedule of Receivables, (vii) was originated in the
United States and (viii) constitutes "chattel paper" as defined in the
UCC.
(b) Individual Characteristics. The Receivables have the
following individual characteristics as of the Cutoff Date; (i) each
Receivable is secured by either a Motor Vehicle; (ii) each Receivable
has a Contract Rate of at least ____% and not more than ____%; (iii)
each Receivable had a remaining number of scheduled payments, as of the
Cutoff Date, of not less than ____ and not more than ____; (iv) each
Receivable had an Initial Principal Balance of not less than
$__________ and not more than $__________; (v) no Receivable was more
than 30 days past due as of the Cutoff Date; (vi) no Financed Vehicle
had been repossessed as of the Cutoff Date; (vii) no Receivable is
subject to a force placed Physical Damage Insurance Policy on the
related Financed Vehicle; [(viii) each Receivable is a Simple Interest
Receivable;] and (ix) the Dealer of the Financed Vehicle has no
participation in, or other right to receive, any proceeds of the
Receivable. The Receivables were selected
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using selection procedures that were not intended by Seller to be
adverse to the Purchaser.
(c) Schedule of Receivables. The information with respect to
each Receivable set forth in the Schedule of Receivables, including
(without limitation) the identity and address of the Obligor, account
number, the Initial Principal Balance, the maturity date and the
Contract Rate, was true and correct in all material respects as of the
close of business on the Cutoff Date.
(d) Compliance with Law. The Receivable complied at the time
it was originated or made, and will comply as of the Closing Date, in
all material respects with all requirements of applicable federal,
state and local laws, and regulations thereunder, including, to the
extent applicable, usury laws, the Federal Truth in Lending Act, the
Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair
Credit Reporting Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, the Fair Debt Collection Practices Act,
Federal Reserve Board Regulations B and Z and any other consumer
credit, consumer protection, equal opportunity and disclosure laws.
(e) Binding Obligation. The Receivable constitutes the
genuine, legal, valid and binding payment obligation in writing of the
Obligor, enforceable in all material respects by the holder thereof in
accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally, and the Receivable is not
subject to any right of rescission, setoff, counterclaim or defense,
including the defense of usury.
(f) Lien in Force. Seller has not taken any action which would
have the effect of releasing the related Financed Vehicle from the Lien
granted by the Receivable in whole or in part.
(g) No Amendment or Waiver. No material provision of the
Receivable has been amended, waived, altered or modified in any
respect, except such waivers as would be permitted under this
Agreement, and no amendment, waiver, alteration or modification causes
such Receivable not to conform to the other representations or
warranties contained in this Section.
(h) No Liens. Seller has not received notice of any Liens or
claims, including Liens for work, labor, materials or unpaid state or
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federal taxes, relating to the Financed Vehicle securing the
Receivable, that are or may be prior to or equal to the Lien granted by
the Receivable.
(i) No Default. Except for payment delinquencies continuing
for a period of not more than 30 days as of the Cutoff Date, to the
knowledge of Seller, no default, breach, violation or event permitting
acceleration under the terms of the Receivable exists and no continuing
condition that with notice or lapse of time, or both, would constitute
a default, breach, violation or event permitting acceleration under the
terms of the Receivable has arisen.
(j) Insurance. The Receivable requires the Obligor to insure
the Financed Vehicle under a Physical Damage Insurance Policy, pay the
premiums for such insurance and keep such insurance in full force and
effect.
(k) Good Title. It is the intention of Seller that the
transfer and assignment herein contemplated constitute a sale of the
Receivables from Seller to Purchaser and that the beneficial interest
in and title to the Receivables not be part of Seller's estate in the
event of the filing of a bankruptcy petition or insolvency proceeding
by or against Seller under any bankruptcy or insolvency law. No
Receivable has been sold, transferred, assigned, or pledged by Seller
to any Person other than Purchaser. Immediately prior to the transfer
and assignment herein contemplated, Seller had good and marketable
title to the Receivable free and clear of any Lien and had full right
and power to transfer and assign the Receivable to Purchaser and
immediately upon the transfer and assignment of the Receivable to
Purchaser, Purchaser shall have good and marketable title to the
Receivable, free and clear of any Lien; and Purchaser's interest in the
Receivable resulting from the transfer has been perfected under the
UCC.
(l) Obligations. Seller has duly fulfilled all obligations on
its part to be fulfilled under, or in connection with, the Receivable.
(m) Possession. There is only one original executed
Receivable, and immediately prior to the Closing Date, the Seller will
have possession of such original executed Receivable.
(n) No Government Obligor. The Obligor on the Receivable is
not the United States of America or any state thereof or any local
government, or any agency, department, political subdivision or
instrumentality of the United States of America or any state thereof or
any local government.
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(o) Marking Records. By the Closing Date, Seller shall have
caused the portions of Seller's electronic master record of Motor
Vehicle Loans relating to the Receivables to be clearly and
unambiguously marked to show that the Receivable is owned by Purchaser
in accordance with the terms of this Agreement.
(p) No Assignment. As of the Closing Date, Seller shall not
have taken any action to convey any right to any Person that would
result in such Person having a right to payments received under the
Insurance Policies or Dealer Agreements, or payments due under the
Receivable, that is senior to, or equal with, that of Purchaser.
(q) Lawful Assignment. The Receivable has not been originated
in, and is not subject to the laws of, any jurisdiction under which the
sale, transfer or assignment of such Receivable hereunder or pursuant
to transfers of the Notes or Certificates are unlawful, void or
voidable. Seller has not entered into any agreement with any Obligor
that prohibits, restricts or conditions the assignment of any portion
of the Receivables.
(r) Dealer Agreements. A Dealer Agreement for each Receivable
is in effect whereby the Dealer warrants title to the Motor Vehicle and
indemnifies the Seller against the unenforceability of each Receivable
sold thereunder, and the rights of Seller thereunder, with regard to
the Receivable sold hereunder, have been validly assigned to and are
enforceable against the Dealer by the Purchaser, along with any Dealer
Recourse.
(s) Composition of Receivable. No Receivable has a Principal
Balance which includes capitalized interest or late charges.
(t) Database File. The information included with respect to
each Receivable in the database file delivered pursuant to Section
4.9(b) of the Sale and Servicing Agreement is accurate and complete in
all material respects.
SECTION 3.3. Repurchase upon Breach. Seller or Purchaser, as the
case may be, shall inform the other party to this Agreement promptly, in
writing, upon the discovery of any breach or failure to be true of the
representations or warranties made by Seller in Section 3.2; provided that the
failure to give such notice shall not affect any obligation of Seller. If the
breach or failure shall not have been cured by the last day of the Collection
Period which includes the 60th
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day (or if Seller elects, the 30th day) after the date on which Seller becomes
aware of, or receives written notice from Purchaser of, such breach or failure,
and such breach or failure materially and adversely affects the interests of
Issuer and the Holders in any Receivable. Seller shall repurchase each such
Receivable from Purchaser as of such last day of such Collection Period at a
purchase price equal to the Purchase Amount for such Receivable as of such last
day of such Collection Period. Notwithstanding the foregoing, any such breach or
failure with respect to the representations and warranties contained in Section
3.2 will not be deemed to have such a material and adverse effect with respect
to a Receivable if the facts resulting in such breach or failure do not affect
the ability of Issuer to receive and retain payment in full on such Receivable.
In consideration of the purchase of a Receivable hereunder, Seller shall (unless
otherwise directed by Purchaser in writing) deposit the Purchase Amount of such
Receivable, no later than the close of business on the next Deposit Date, in the
Collection Account. The sole remedy of Purchaser with respect to a breach or
failure to be true of the warranties made by Seller pursuant to Section 3.2
shall be to require Seller to repurchase Receivables pursuant to this Section.
ARTICLE IV
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser as follows:
SECTION 4.1. Protection of Title to Seller Assets.(6) (a) Seller shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of
Purchaser, Owner Trustee and Indenture Trustee in the Receivables and the
proceeds thereof. Seller shall deliver (or cause to be delivered) to Purchaser
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) Seller shall not change its name, identity or corporate structure
in any manner that would, could or might make any financing statement or
continuation statement filed in accordance with paragraph (a) above seriously
misleading within the meaning of ss. 9-402(7) of the UCC, unless it shall have
given Purchaser, Owner Trustee and Indenture Trustee at least five days' prior
written notice thereof and shall have promptly filed appropriate amendments to
all previously filed financing statements or continuation statements.
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6 Conforms to SSA section 10.2.
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(c) Seller shall give Purchaser, Owner Trustee and Indenture Trustee at
least 60 days' prior written notice of any relocation of its principal executive
office if, as a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall promptly file
any such amendment or new financing statement.
(d) Seller shall maintain its computer systems relating to installment
loan recordkeeping so that, from and after the time of sale under this Agreement
of its Receivables, Seller's master computer records (including any backup
archives) that refer to a Receivable shall indicate clearly the interest of
Purchaser, Issuer and Indenture Trustee in such Receivable and that such
Receivable has been sold to Purchaser and by Purchaser to Issuer and is owned by
Issuer and has been pledged to Indenture Trustee pursuant to the Indenture.
Indication of Purchaser's, Issuer's and Indenture Trustee's interest in a
Receivable shall be deleted from or modified on Seller's computer systems when,
and only when, the related Receivable shall have been paid in full or
repurchased by Seller or purchased by Servicer.
(e) If at any time Seller shall propose to sell, grant a security
interest in or otherwise transfer any interest in automotive receivables to any
prospective purchaser, lender or other transferee, Seller shall give to such
prospective purchaser, lender or other transferee computer tapes, records or
printouts (including any restored from backup archives) that, if they shall
refer in any manner whatsoever to any Receivable, shall indicate clearly that
such Receivable has been sold to Purchaser and then sold by Purchaser to Issuer
and pledged to Indenture Trustee.
(f) Seller shall permit Purchaser, Owner Trustee and Indenture Trustee
and its agents at any time during normal business hours to inspect, audit and
make copies of and abstracts from Seller's records regarding any Receivable.
(g) Upon request at any time Purchaser, Owner Trustee or Indenture
Trustee shall have reasonable grounds to believe that such request is necessary
in connection with the performance of its duties under this Agreement, Seller
shall furnish to Purchaser, within thirty (30) Business Days, a list of all
Receivables (by contract number and name of Obligor) conveyed to Purchaser
hereunder and then owned by Issuer, together with a reconciliation of such list
to the Schedule of Receivables and to each of Servicer's Reports furnished
before such request indicating removal of Receivables from Issuer.
(h) Seller shall deliver or cause to be delivered to Purchaser, Owner
Trustee and Indenture Trustee:
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(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto, an Opinion of Counsel either
(A) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of
Purchaser in the Receivables, and reciting the details of such filings
or referring to prior Opinions of Counsel in which such details are
given, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest; and
(2) within 120 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 120-day period, either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of Purchaser in the Receivables, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such
details are given, or (B) stating that, in the opinion of such counsel,
no such action shall be necessary to preserve and protect such
interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
SECTION 4.2. Liability of Seller; Indemnities.(7) Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by Seller under this Agreement.
(a) Seller shall indemnify, defend and hold harmless
Purchaser, Issuer, Owner Trustee and Indenture Trustee and their
respective officers, directors, employees and agents from and against
any taxes that may at any time be asserted against any such Person with
respect to, and on the date of, the sale of the Receivables to
Purchaser, including any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes (but, not
including any taxes asserted with respect to Federal or other income
taxes arising out of this Agreement and the other Basic Documents) and
costs and expenses in defending against the same.
(b) Seller shall indemnify, defend and hold harmless
Purchaser, Issuer, Owner Trustee, Indenture Trustee, the
Certificateholders, the
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7 Conforms to SSA section 6.3.
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Noteholders and the officers, directors, employees and agents of
Purchaser, Issuer, Owner Trustee and Indenture Trustee from and against
any and all costs, expenses, losses, claims, damages and liabilities to
the extent arising out of, or imposed upon such Person through or as a
result of (i) Seller's willful misfeasance, bad faith or gross
negligence in the performance of its duties under this Agreement, and
(ii) the failure of any Receivable conveyed by it to Purchaser
hereunder, or the sale of the related Financed Vehicle, to comply with
all requirements of applicable law.
(c) Seller shall be liable as primary obligor for, and shall
indemnify, defend and hold harmless Purchaser and its officers,
directors, employees and agents from and against any and all costs,
expenses, losses, claims, damages and liabilities arising out of, or
incurred in connection with, the acceptance or performance of the
duties set forth herein, except to the extent that such cost, expense,
loss, claim, damage or liability shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of
Purchaser.
Indemnification under this Section shall survive the termination of this
Agreement and shall include reasonable fees and expenses of counsel and other
expenses of litigation. If Seller shall have made any indemnity payments
pursuant to this Section and the Person to or on behalf of whom such payments
are made thereafter shall collect any of such amounts from others, such Person
shall promptly repay such amounts to Seller, without interest.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Obligations of Seller. The obligations of Seller under
this Agreement shall not be affected by reason of any invalidity, illegality or
irregularity of any Receivable.
SECTION 5.2. Seller's Assignment of Purchased Receivables. With respect
to all Receivables repurchased by Seller pursuant to this Agreement, Purchaser
shall assign, without recourse, representation or warranty, to Seller all
Purchaser's right, title and interest in and to such Receivables, and all
security and documents relating thereto.
SECTION 5.3. Subsequent Transfer to Issuer and Indenture Trustee.
Seller acknowledges that:
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(a) Purchaser will, pursuant to the Sale and Servicing
Agreement, sell the Receivables to Issuer and assign its rights under
this Agreement to the Owner Trustee for the benefit of the Noteholders
and the Certificateholders, and that the representations and warranties
contained in this Agreement and the rights of Purchaser under Section
3.3 hereof are intended to benefit Issuer, the Owner Trustee, the
Noteholders and the Certificateholders. Seller hereby consents to such
sale and assignment.
(b) Issuer will, pursuant to the Indenture, pledge the
Receivables and its rights under this Agreement to the Indenture
Trustee for the benefit of the Noteholders, and that the
representations and warranties contained in this Agreement and the
rights of Purchaser under this Agreement, including under Section 3.3
are intended to benefit the Indenture Trustee and the Noteholders.
Seller hereby consents to such pledge.
SECTION 5.4. Amendment. (a) This Agreement may be amended by
Seller and the Purchaser, with the consent of the Servicer, Owner Trustee and
Indenture Trustee (which consent may not be unreasonably withheld), but without
the consent of any of the Noteholders or the Certificateholders:
(i) to cure any ambiguity or defect, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement;
provided that such action shall not, as evidenced by an Opinion of Counsel
delivered to Purchaser, Owner Trustee and Indenture Trustee, adversely affect in
any material respect the interests of any Noteholder or Certificateholder;
(ii) to enable all or a portion of Issuer to qualify as a partnership
for federal income tax purposes under applicable regulations on the
classification of entities as partnerships or corporations under the Code
adopted as final regulations, and to the extent such regulations eliminate or
modify the need therefor, to modify or eliminate such provisions relating to the
intended availability of partnership treatment of Issuer for federal income tax
purposes; it being a condition to any such amendment that each Rating Agency
shall have notified the Seller, the Servicer, the Indenture Trustee and the
Owner Trustee in writing that the amendment will not result in a reduction or
withdrawal of the rating of any outstanding Notes or Certificates with respect
to which it is a Rating Agency;
(iii) (A) to add, modify or eliminate such provisions as may be
necessary or advisable in order to enable all or a portion of Issuer to qualify
as, and to
PURCHASE AGREEMENT
14
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permit an election to be made to cause all or a portion of Issuer to be treated
as, a "financial asset securitization investment trust" as described in the
provisions of the "Small Business Job Protection Act of 1996," or to enable all
or a portion of the Issuer to qualify and an election to be made for similar
treatment under such comparable subsequent federal income tax provisions as may
ultimately be enacted into law, and (B) in connection with any such election, to
modify or eliminate existing provisions set forth in this Agreement relating to
the intended federal income tax treatment of the Notes or Certificates and
Issuer in the absence of the election; it being a condition to any such
amendment that each Rating Agency shall have notified the Seller, Purchaser, the
Servicer, Indenture Trustee and the Owner Trustee in writing that the amendment
will not result in a reduction or withdrawal of the rating of any outstanding
Notes or Certificates with respect to which it is a Rating Agency; and
(iv) to add, modify or eliminate such provisions as may be necessary
or advisable in order to enable (a) the transfer to Issuer of all or any portion
of the Receivables to be derecognized under GAAP by Purchaser to Issuer, (b)
Issuer to avoid becoming a member of Purchaser's consolidated group under GAAP
or (c) the Seller or Purchaser, or any of their Affiliates to otherwise comply
with or obtain more favorable treatment under any law or regulation or any
accounting rule or principle; it being a condition to any such amendment that
each Rating Agency shall have notified the Seller, Purchaser, the Servicer,
Indenture Trustee and the Owner Trustee in writing that the amendment will not
result in a reduction or withdrawal of the rating of any outstanding Notes or
Certificates with respect to which it is a Rating Agency.
(b) This Agreement may also be amended from time to time by Seller and
Purchaser, with the consent of the Servicer, Owner Trustee and Indenture
Trustee, the consent of the Holders of Notes evidencing not less than a majority
of the Outstanding Amount of the Notes and the consent of the Holders of
Certificates evidencing not less than a majority of the Certificate Balance for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement; provided that no such amendment shall
(i) increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Receivables or distributions that shall be
required to be made for the benefit of the Noteholders or the Certificateholders
or (ii) reduce the aforesaid percentage of the Outstanding Amount of the Notes
and the Certificate Balance, the Holders of which are required to consent to any
such amendment, without the consent of the Holders of all the outstanding Notes
and the Holders of all the outstanding Certificates of each class affected
thereby.
(c) Prior to the execution of any such amendment or consent, Purchaser
shall furnish written notification of the substance of such amendment
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15
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or consent to each Rating Agency. Promptly after the execution of any such
amendment or consent, Purchaser shall furnish written notification the substance
of such amendment or consent to each Noteholder, Certificateholder and Owner
Trustee and Indenture Trustee.
(d) It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
(e) Prior to the execution of any amendment to this Agreement,
Purchaser, Owner Trustee and Indenture Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied and the Opinion
of Counsel referred to in Section 4.1(h)(i) has been delivered. Purchaser, Owner
Trustee and Indenture Trustee may, but shall not be obligated to, enter into any
such amendment which affects Purchaser's, Owner Trustee's or Indenture
Trustee's, as applicable, own rights, duties or immunities under this Agreement
or otherwise.
SECTION 5.5. Waivers. No failure or delay on the part of Purchaser in
exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other or further exercise thereof or the exercise
of any other power, right or remedy.
SECTION 5.6. Notices. All demands, notices and communications pursuant
to this Agreement to either party shall be in writing, personally delivered, or
sent by telecopier, overnight mail or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt at the
address set forth in Exhibit A attached hereto or at such other address as may
be designated by it by notice to the other party.
SECTION 5.7. Costs and Expenses. Seller will pay all expenses incident
to the performance of its obligations under this Agreement and Purchaser agrees
to pay expenses incident to the performance of its obligations under this
Agreement and all expenses in connection with the perfection as against third
parties of Purchaser's right, title and interest in and to the Receivables.
SECTION 5.8. Representations to Seller. The respective agreements,
representations, warranties and other statements by Seller and Purchaser set
forth
PURCHASE AGREEMENT
16
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in or made pursuant to this Agreement shall remain in full force and effect and
will survive the Closing Date.
SECTION 5.9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 5.10. Counterparts. This Agreement may be executed in two or
more counterparts and by different parties on separate counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
[SIGNATURE PAGES FOLLOW]
PURCHASE AGREEMENT
17
<PAGE> 19
IN WITNESS WHEREOF, the parties hereby have caused this Purchase
Agreement to be executed by their respective officers thereunto duly authorized
as of the date and year first above written.
[NAME OF SELLER AFFILIATE]
By:
---------------------------------------
Name:
Title:
KEY CONSUMER ACCEPTANCE
CORPORATION
By:
---------------------------------------
Name:
Title:
<PAGE> 20
EXHIBIT A
LOCATION OF SELLER AND PURCHASER
[NAME OF SELLER AFFILIATE]
KEY CONSUMER ACCEPTANCE CORPORATION
Address for Notice:
Key Tower
127 Public Square
Cleveland, Ohio 44114-1306
<PAGE> 21
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
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<CAPTION>
<S> <C>
SECTION 1.1. Definitions..................................................................... 1
SECTION 1.2. Other Interpretive Provisions................................................... 1
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
SECTION 2.1. Purchase and Sale of Receivables................................................ 2
SECTION 2.2. Receivables Purchase Price...................................................... 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of Seller........................................ 4
SECTION 3.2. Representations and Warranties as to Each Receivable............................ 5
SECTION 3.3. Repurchase upon Breach.......................................................... 9
ARTICLE IV
COVENANTS OF SELLER
SECTION 4.1. Protection of Title to Seller Assets............................................ 10
SECTION 4.2. Liability of Seller; Indemnities................................................ 12
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Obligations of Seller........................................................... 13
SECTION 5.2. Seller's Assignment of Purchased Receivables.................................... 13
SECTION 5.3. Subsequent Transfer to Issuer and Indenture Trustee............................. 14
SECTION 5.4. Amendment....................................................................... 14
SECTION 5.5. Waivers......................................................................... 16
SECTION 5.6. Notices......................................................................... 16
SECTION 5.7. Costs and Expenses.............................................................. 16
SECTION 5.8. Representations to Seller....................................................... 17
SECTION 5.9. Governing Law................................................................... 17
SECTION 5.10. Counterparts.................................................................... 17
</TABLE>
