<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1996
REGISTRATION NO. 333-_________
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------------
WORLD OMNI VEHICLE LEASE
1996-1 OWNER TRUST
(Issuer of the Notes)
WORLD OMNI AUTO LEASING, INC.
(Originator of the Trust described herein)
(Exact name of Registrant as specified in its charter)
------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 7515 65-0704308
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of incorporation Classification Code Number) Identification No.)
</TABLE>
------------------------------------
120 NORTHWEST 12TH AVENUE
DEERFIELD BEACH, FLORIDA 33442
(954) 429-2200
(Address, including zip code, and telephone
number, including area code, of
Originator's principal executive
offices)
------------------------------------
A. TUCKER ALLEN
120 NORTHWEST 12TH AVENUE
DEERFIELD BEACH, FLORIDA 33442
(954) 429-2200
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
------------------------------------
Copies to:
C. THOMAS KUNZ, ESQ. DALE W. LUM, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP BROWN & WOOD LLP
919 THIRD AVENUE 555 CALIFORNIA STREET
NEW YORK, NEW YORK 10022 SAN FRANCISCO, CALIFORNIA 94104
------------------------------------
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
Proposed Proposed
Maximum Maximum
Title of Securities Amount Being Offering Price Aggregate Amount of
Being Registered Registered Per Unit (1) Offering Price (1) Registration Fee
===================================================================================================================================
<S> <C> <C> <C> <C>
Lease Asset Backed Notes $1,000,000 100% $1,000,000 $303.03
- -----------------------------------------------------------------------------------------------------------------------------------
Series 1996-1 SUBI(2) (3) (3) (3) (3)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL............................... $1,000,000 $ 1,000,000 $1,000,000 $303.03
===================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) The Series 1996-1 SUBI issued by World Omni LT represents a beneficial
interest in the 1996-1 SUBI Assets (including the Series 1996-1
Contracts and the Series 1996-1 Leased Vehicles). The 1996-1 SUBI is
not being offered to investors hereunder, but will be pledged to the
Indenture Trustee (subject to the Master Lease) to secure the payment
of interest on and principal of the Notes.
(3) Not applicable.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE> 2
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 NOVEMBER 12, 1996
PRELIMINARY PROSPECTUS
$----------
WORLD OMNI VEHICLE LEASE 1996-1 OWNER TRUST
LEASE ASSET BACKED NOTES
WORLD OMNI AUTO LEASING, INC.
(SELLER)
WORLD OMNI FINANCIAL CORP.
(SERVICER)
-----------------------------------------------------
The Lease Asset Backed Notes (the "Notes") will be issued by World Omni
Vehicle Lease 1996-1 Owner Trust (the "Trust" or the "Issuer") pursuant to an
Indenture (the "Indenture") between First Bank National Association, as
Indenture Trustee, and the Issuer. The Trust will be formed pursuant to a Trust
Agreement between World Omni Auto Leasing, Inc. (in its capacity as Seller, the
"Seller" and in its capacity as Lessee, the "Lessee") and PNC Bank, Delaware, as
owner trustee (the "Owner Trustee"). The property of the Trust will consist of a
Special Unit of Beneficial Interest (the "1996-1 SUBI"), which will evidence a
beneficial interest in certain specified assets of World Omni LT, an Alabama
trust (the "Origination Trust"), monies on deposit in the Reserve Fund, the
Residual Value Support Account and in certain other accounts and certain other
assets, as described more fully under "Property of The Issuer". The assets of
the Origination Trust (the "Origination Trust Assets") will consist of retail
closed-end lease contracts assigned to the Origination Trust by dealers in the
World Omni Financial Corp. ("World Omni") network of dealers, the automobiles
and light duty trucks relating thereto and payments made under certain insurance
policies relating to such lease contracts, the related lessees and such leased
vehicles and certain other assets, as more fully described under "The
Origination Trust--Property of the Origination Trust". World Omni will service
the lease contracts included in the Origination Trust Assets.
(Cover continued on next page)
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE NOTES, SEE "RISK FACTORS" BEGINNING ON PAGE
25 HEREIN.
-----------------------------------------------------
THE NOTES WILL REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND WILL NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF WORLD OMNI AUTO LEASING,
INC., WORLD OMNI FINANCIAL CORP. OR ANY OF THEIR
RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===================================================================================================================================
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions(2) the Seller (1)(3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Lease Asset Backed Note................. % % %
- -----------------------------------------------------------------------------------------------------------------------------------
Total....................................... $ $ $
===================================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, calculated at the Note Rate from the
date of initial issuance.
(2) The Seller and World Omni have agreed to indemnify the Underwriter
against certain liabilities under
the Securities Act of 1933. See "Underwriting".
(3) Before deducting expenses payable by the Seller estimated to be
$___________.
-----------------------------------------------------
The Notes are offered by the Underwriter when, as and if issued by the
Issuer, delivered to and accepted by the Underwriter and subject to its right to
reject orders in whole or in part. It is expected that delivery of the Notes in
book-entry form, will be made through the facilities of The Depository Trust
Company, Cedel Bank, societe anonyme and the Euroclear System, on or about
_________ ___, 1996, against payment in immediately available funds.
MERRILL LYNCH & CO.
-----------------------------------
The date of this Prospectus is ______________, 1996.
<PAGE> 3
(Cover continued from previous page)
The 1996-1 SUBI will evidence a beneficial interest in a specified
portion of the Origination Trust Assets, including certain lease contracts (the
"Series 1996-1 Contracts"), the automobiles and light duty trucks relating to
the Series 1996-1 Contracts certain monies due under or payable in respect of
the Series 1996-1 Contracts and leased vehicles on or after November 1, 1996,
payments made under certain insurance policies relating to the Series 1996-1
Contracts, the related lessees and such leased vehicles and certain other
Origination Trust Assets, as more fully described under "The Issuer--The 1996-1
SUBI" (collectively, the "1996-1 SUBI Assets"). The 1996-1 SUBI will not
evidence a direct interest in the 1996-1 SUBI Assets, nor will it represent a
beneficial interest in all of the Origination Trust Assets. Payments made on or
in respect of the Origination Trust Assets not represented by the 1996-1 SUBI
will not be available to make payments on the Notes. For further information
regarding the Trust, the 1996-1 SUBI and the Origination Trust, see "The Trust
and the SUBI" and "The Origination Trust".
The Issuer will enter into the Master Lease with the Seller pursuant to
which the Seller will be entitled to the benefits of the 1996-1 SUBI for a
period of [ ] months beginning December __, 1996 (the "Closing Date"), in
exchange for the payment by the Seller of periodic rental payments. These
payments will be applied by the Issuer, together with other amounts payable on
the 1996-1 SUBI, to pay interest on and principal of the Notes when due, and to
make distributions to holders of the beneficial interests in the Issuer (the
"Certificates"). The Issuer will have the benefit of the Master Lease Reserve
Account established by the Lessee to secure the Lessee's payment obligations
under the Master Lease. As outlined above and as more fully described herein,
the sources of payments on the Notes will be limited to the amounts payable to
the Issuer under the Master Lease, amounts received on the 1996-1 SUBI after the
termination of the Master Lease, amounts received upon sale of Series 1996-1
Leased Vehicles, early termination of the Master Lease with respect to
particular Series 1996-1 Leased Vehicles, proceeds from the exercise of the
Purchase Option of the 1996-1 SUBI and the amounts available from time to time
in the Reserve Fund and the Residual Value Support Account.
Interest on the Notes will accrue at the fixed per annum interest rate
specified above and generally will be payable monthly, commencing January 15,
1997 or, if any such day is not a business day, on the next succeeding business
day (each, a "Payment Date"). Principal of the Notes will be payable on each
Payment Date to the extent described herein. Any rental payments paid on the
Master Lease and not paid to the Noteholders or deposited in the Residual Value
Support Account or the Reserve Fund on any Payment Date while the Notes are
outstanding generally will be distributed to Certificateholders. The Stated
Maturity of the Notes will be the Payment Date. However, payment in full of the
Notes could occur earlier than such date as described herein.
As more fully described under "Ratings of the Notes", it is a condition
of issuance that at least two nationally recognized statistical rating
organizations (each, a "Rating Agency") rate the Notes in its highest rating
category.
2
<PAGE> 4
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
There currently is no secondary market for the Notes and there is no
assurance that one will develop. The Underwriter expects, but will not be
obligated, to make a market in the Notes. There is no assurance that any such
market will develop, or if one does develop, that it will continue.
AVAILABLE INFORMATION
The Seller, as originator of the Trust, has filed with the Securities
and Exchange Commission (the "Commission") on behalf of the Trust, a
Registration Statement on Form S-1 (together with all amendments and exhibits
thereto, the "Registration Statement"), of which this Prospectus is a part,
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Notes being offered hereby. This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which have been omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, which is available for inspection without charge at the public
reference facilities of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and the regional offices of the Commission at
Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661-2511 and Suite 1300, Seven World Trade Center, New York, New York 10048.
Copies of such information can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission at http://www.sec.gov. The Servicer, on
behalf of the Trust, will also file or cause to be filed with the Commission
such periodic reports as are required under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations of the Commission
thereunder.
REPORTS TO NOTEHOLDERS
Unless and until Definitive Notes are issued, monthly reports
containing information concerning the 1996-1 SUBI and the transactions
contemplated hereby will be prepared by the Servicer and sent by the Indenture
Trustee on behalf of the Issuer only to Cede & Co. ("Cede"), as nominee of The
Depository Trust Company ("DTC") and registered holder of the Notes. See
"Description of the Notes--Book-Entry Registration." Such reports will not
constitute financial statements prepared in accordance with generally accepted
accounting principles. See "Note Factors and Trading Information; Reports to
Noteholders" for additional information concerning periodic reports to
Noteholders.
3
<PAGE> 5
INDEX
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
Available Information ............................................................................................. 3
Reports to Noteholders ............................................................................................ 3
Index ............................................................................................................. 4
Overview of Transaction ........................................................................................... 7
Summary ........................................................................................................... 8
Risk Factors ...................................................................................................... 25
Limited Liquidity; Absence of Secondary Market ............................................................... 25
Maturity and Prepayment Considerations ....................................................................... 25
Limited Assets ............................................................................................... 26
Limited Obligations of the Issuer and the Seller ............................................................ 26
Structural Considerations .................................................................................... 26
Two-Tiered Structure ..................................................................................... 26
Allocation of Origination Trust Liabilities .............................................................. 27
Third-Party Liens on 1996-1 SUBI Assets .................................................................. 28
Back-up Security Interest in Certain 1996-1 SUBI Assets .................................................. 28
Consumer Protection Laws ..................................................................................... 30
ERISA Liabilities ............................................................................................ 30
Vicarious Tort Liability ..................................................................................... 31
Insolvency of World Omni; Substantive Consolidation with World Omni .......................................... 32
Required Sale or Retitling of Assets in Certain Circumstances ................................................ 33
Legal Proceedings ............................................................................................ 33
The Issuer ........................................................................................................ 34
General ...................................................................................................... 34
The 1996-1 SUBI .............................................................................................. 34
Formation of the Issuer ...................................................................................... 34
Capitalization of the Issuer ................................................................................. 35
The Owner Trustee ............................................................................................ 35
Property of the Issuer ............................................................................................ 35
Sale of the 1996-1 SUBI to the Issuer ........................................................................ 36
Lease of the 1996-1 SUBI to the Seller ....................................................................... 36
Pledge of the 1996-1 SUBI to the Indenture Trustee ........................................................... 37
The Origination Trust ............................................................................................. 38
General ...................................................................................................... 38
ALFI and ALFI L.P. ........................................................................................... 38
The Origination Trustee ...................................................................................... 39
Property of the Origination Trust ............................................................................ 39
Contract Origination; Titling of Leased Vehicles ............................................................. 39
Use of Proceeds ................................................................................................... 41
The Seller ........................................................................................................ 41
World Omni ........................................................................................................ 41
General ...................................................................................................... 41
Lease Contract Underwriting Procedures ....................................................................... 43
Insurance..................................................................................................... 44
</TABLE>
4
<PAGE> 6
<TABLE>
<S> <C>
Collection, Repossession and Disposition Procedures .......................................................... 44
Delinquency, Repossession and Loss Data ...................................................................... 44
The Series 1996-1 Contracts ....................................................................................... 51
General ...................................................................................................... 51
Characteristics of the Series 1996-1 Contracts ............................................................... 53
General .................................................................................................. 53
Distribution of the Series 1996-1 Leased Vehicles by Make ................................................ 54
Distribution of the Series 1996-1 Contracts by Lease Rate ................................................ 54
Distribution of the Series 1996-1 Contracts by Maturity .................................................. 55
Distribution of the Series 1996-1 Contracts by State ..................................................... 55
Representations, Warranties and Covenants .................................................................... 55
Maturity, Prepayment and Yield Considerations ..................................................................... 57
Note Factors and Trading Information; Reports to Noteholders ...................................................... 61
Description of the Notes .......................................................................................... 61
General ...................................................................................................... 61
Sale of the 1996-1 SUBI ...................................................................................... 63
Reallocation Payments ........................................................................................ 64
Payments on the Notes ........................................................................................ 64
General .................................................................................................. 64
Payments to Noteholders .................................................................................. 64
Statements to Noteholders .................................................................................... 65
Indenture .................................................................................................... 66
Book-Entry Registration ...................................................................................... 72
Definitive Notes ............................................................................................. 75
Security for the Notes ............................................................................................ 76
General ...................................................................................................... 76
The Master Lease ............................................................................................. 77
The Accounts ................................................................................................. 79
The Collection Accounts .................................................................................. 79
The Payment Account ...................................................................................... 81
The Master Lease Reserve Account ......................................................................... 81
The Residual Value Support Account ....................................................................... 81
The Reserve Fund ......................................................................................... 81
Maintenance of the Accounts .............................................................................. 82
Permitted Investments .................................................................................... 83
The Contingent and Excess Liability Insurance Policies ....................................................... 83
Additional Document Provisions .................................................................................... 84
The Indenture ................................................................................................ 84
No Petition .............................................................................................. 84
Amendment ................................................................................................ 84
List of Noteholders ...................................................................................... 86
The Indenture Trustee .................................................................................... 86
Governing Law ............................................................................................ 87
The SUBI Trust Agreement ..................................................................................... 87
The 1996-1 SUBI, the Other SUBIs and the UTI ............................................................. 87
Special Obligations of ALFI L.P. as Beneficiary and Grantor .............................................. 88
Origination Trustee Duties and Powers; Fees and Expenses ................................................. 88
Indemnity of Origination Trustee and Trust Agents ........................................................ 90
Termination .............................................................................................. 90
</TABLE>
5
<PAGE> 7
<TABLE>
<S> <C>
No Petition .............................................................................................. 90
Amendment ................................................................................................ 90
Governing Law ............................................................................................ 91
Trustee as Third-Party Beneficiary ....................................................................... 91
The Servicing Agreement ...................................................................................... 91
General .................................................................................................. 91
Custody of Contract Documents and Certificates of Title .................................................. 91
Collections .............................................................................................. 92
Notification of Liens and Claims ......................................................................... 92
Advances ................................................................................................. 93
Security Deposits ........................................................................................ 93
Insurance on Series 1996-1 Leased Vehicles ............................................................... 93
Realization Upon Charged-off Contracts ................................................................... 94
Matured Leased Vehicle Inventory ......................................................................... 95
Records, Servicer Determinations and Reports ............................................................. 95
Evidence as to Compliance ................................................................................ 95
Compliance with ERISA .................................................................................... 96
Servicing Compensation ................................................................................... 96
Servicer Resignation and Termination ..................................................................... 97
Indemnification by the Servicer .......................................................................... 97
Events of Servicing Termination .......................................................................... 97
Rights Upon Event of Servicing Termination ............................................................... 98
No Petition .............................................................................................. 99
Amendment ................................................................................................ 99
Termination .............................................................................................. 99
Governing Law ............................................................................................ 99
Certain Legal Aspects of the Origination Trust and the 1996-1 SUBI ................................................ 99
The Origination Trust ........................................................................................ 99
The 1996-1 SUBI .............................................................................................. 100
Insolvency Related Matters ................................................................................... 100
Certain Legal Aspects of the Series 1996-1 Contracts and the Series 1996-1 Leased Vehicles ........................ 100
Back-up Security Interests ................................................................................... 100
Vicarious Tort Liability ..................................................................................... 101
Repossession of Series 1996-1 Leased Vehicles ................................................................ 102
Deficiency Judgments ......................................................................................... 102
Consumer Protection Laws ..................................................................................... 103
Other Limitations ............................................................................................ 104
Federal Income Tax Consequences ................................................................................... 104
General ...................................................................................................... 105
Waivers and Amendments ....................................................................................... 107
Information Reporting and Backup Withholding ................................................................. 107
Tax Consequences to Foreign Investors ........................................................................ 107
State Income Taxation ............................................................................................. 108
ERISA Considerations .............................................................................................. 109
Underwriting ...................................................................................................... 110
Ratings of the Notes .............................................................................................. 110
Legal Matters ..................................................................................................... 111
Index of Capitalized Terms ........................................................................................ 112
Global Clearance, Settlement and Tax Documentation Procedures ..................................................... A-1
</TABLE>
6
<PAGE> 8
[FLOW CHART]
OVERVIEW OF TRANSACTION
<PAGE> 9
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. See the Index of
Capitalized Terms for the location herein of capitalized terms.
Overview Certain motor vehicle dealers ("Dealers") in the
World Omni Financial Corp. ("World Omni") network of
dealers have assigned, and will assign, closed-end
retail automobile and light duty truck leases to
World Omni LT, an Alabama trust (the "Origination
Trust"). The Origination Trust was created in 1993 to
avoid the administrative difficulty and expense
associated with retitling leased vehicles in
connection with the financing or transfer of
beneficial ownership of automobile and light duty
truck leases. The Origination Trust has issued to
Auto Lease Finance L.P. ("ALFI L.P.") an Undivided
Trust Interest (the "UTI") representing the entire
beneficial interest in the unallocated assets of the
Origination Trust. ALFI L.P. will instruct the
trustee of the Origination Trust to allocate a
separate portfolio of leases and leased vehicles
within the Origination Trust and create a special
unit of beneficial interest (the "1996-1 SUBI")
which will represent the entire beneficial interest
in such portfolio. Upon its creation, such portfolio
will no longer be a part of the Origination Trust
Assets represented by the UTI. ALFI L.P. will sell
its interest in the 1996-1 SUBI to World Omni Auto
Leasing, Inc., a Delaware corporation and a
wholly-owned, special purpose subsidiary of World
Omni (the "Seller"), and the Seller will in turn sell
the 1996-1 SUBI to the World Omni Vehicle Lease
1996-1 Owner Trust (the "Issuer"). ALFI L.P. has
caused and from time to time in the future may cause
additional special units of beneficial interest
similar to the 1996-1 SUBI (each, an "Other SUBI") to
be created out of the UTI and sold to the Seller or
one or more other entities. Neither the Issuer nor
the Noteholders will have any interest in the UTI,
any Other SUBI or any assets of the Origination Trust
evidenced by the UTI or any Other SUBI. The Seller
intends that the transactions described in this
prospectus will result in a sale of the 1996-1 SUBI
Assets for accounting, tax and other purposes.
The Origination Trust The Origination Trust was formed by ALFI L.P., as
grantor and initial beneficiary, and VT Inc., as
trustee (the "Origination Trustee"). The sole
general partner of ALFI L.P. is Auto Lease Finance,
Inc., a Delaware corporation which is a wholly owned,
special purpose subsidiary of World Omni ("ALFI").
ALFI may not transfer its general partnership
interest in ALFI L.P. so long as any financings
involving
8
<PAGE> 10
interests in the Origination Trust (including the
transaction described herein) are outstanding. The
sole limited partner of ALFI L.P. is World Omni. VT
Inc. is an Alabama corporation and a wholly owned,
special purpose subsidiary of First Bank National
Association that was organized solely for the purpose
of acting as Origination Trustee. VT Inc. is not
affiliated with World Omni or any affiliate thereof.
For further information regarding the Origination
Trustee, see "The Origination Trust--The Origination
Trustee".
The Origination Trust Assets consist of retail
closed-end lease contracts assigned to the
Origination Trust by Dealers, the automobiles and
light duty trucks relating thereto and all proceeds
thereof and payments made under certain insurance
policies relating to such lease contracts, the
related lessees or such leased vehicles. The 1996-1
SUBI initially will evidence a beneficial interest in
a specified portion of the Origination Trust Assets,
including certain lease contracts (the "Series 1996-1
Contracts") originated by Dealers located throughout
the United States, the automobiles and light duty
trucks relating thereto (the "Series 1996-1 Leased
Vehicles"), certain monies due under or payable in
respect of the Series 1996-1 Contracts and the Series
1996-1 Leased Vehicles on or after November 1, 1996
(the "Cutoff Date"), payments made under certain
insurance policies relating to the Series 1996-1
Contracts, the related lessees (each, a "Consumer
Lessee") and the Series 1996-1 Leased Vehicles and
certain related assets and rights (collectively, the
"1996-1 SUBI Assets"). For further information
regarding the 1996-1 SUBI Assets, see "The
Issuer--The 1996-1 SUBI".
The Dealers comprising the sources for Series 1996-1
Contracts and Series 1996-1 Leased Vehicles are
members of World Omni's network of dealers.
Predominantly Toyota dealerships, these Dealers offer
automobiles and light duty trucks for lease pursuant
to World Omni-approved terms and documentation. For
further information regarding World Omni's lease
business, see "World Omni".
The 1996-1 SUBI will not evidence a direct interest
in the 1996-1 SUBI Assets, nor will it represent a
beneficial interest in any Origination Trust Assets
other than the 1996-1 SUBI Assets. Payments made on
or in respect of the Origination Trust Assets other
than the 1996-1 SUBI Assets will not be available to
make payments on the Notes. For further information
regarding the 1996-1 SUBI, see "Summary - Security
for the Notes - The 1996-1 SUBI", "The Issuer - The
1996-1 SUBI" and "The Origination Trust".
9
<PAGE> 11
The Issuer The Issuer will be formed pursuant to a Trust
Agreement to be dated as of December 1, 1996 (the
"Owner Trust Agreement"), between the Seller and
PNC Bank Delaware, as Owner Trustee (the "Owner
Trustee"). Pursuant to an Indenture to be dated as of
December __, 1996, between the Issuer and First Bank
National Association, as Indenture Trustee (the
"Indenture Trustee"), the Issuer will issue the
Notes. It is anticipated that the Certificates will
be sold by the Issuer in a private transaction to one
or more unaffiliated third parties. The property of
the Trust (the "Trust Estate") will consist pri-
marily of (i) the rights of the Issuer under the
1996-1 SUBI (subject to the rights of the Lessee
under the Master Lease), (ii) the rights of the
Issuer under the Master Lease, (iii) the rights of
the Issuer to funds on deposit from time to time in
the Issuer Collection Account, the Payment Account
and any other account or accounts established
pursuant to the Indenture (including investment
income on amounts on deposit in the Issuer Collection
Account and the Payment Account) and proceeds
thereof, (iv) the rights of the Issuer (and a pledge
of the rights of the Lessee) as holder of the 1996-1
SUBI under the Servicing Agreement and the Series
1996-1 Supplement and (v) certain other rights as
described herein and (vi) the interest of the Issuer
in the Master Lease Reserve Account. See "Property of
the Issuer."
Master Lease Pursuant to the Master Lease, the Issuer will lease
to the Lessee the rights represented by the 1996-1
SUBI in exchange for the obligation of the Seller, as
Lessee, to make certain payments (collectively, the
"Master Lease Payments") during the period that each
underlying Series 1996-1 Leased Vehicle is subject to
the Master Lease. See "Security for the Notes - The
Master Lease." The Issuer will apply such Master
Lease Payments, together with certain proceeds from
the disposition of Series 1996-1 Leased Vehicles upon
termination of the related Series 1996-1 Contracts,
to pay interest on and principal of the Notes in
accordance with their terms, and to make required
deposits in the Residual Value Support Account and
Reserve Fund. Any remaining amounts generally will be
distributed to the holders of Certificates during
the period that the Notes are outstanding. The Master
Lease will terminate with respect to each Series
1996-1 Leased Vehicle upon termination of the related
Series 1996-1 Contract and disposition of the Series
1996-1 Leased Vehicles. See "Security for the Notes
-- The Master Lease."
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<PAGE> 12
Optional Purchase Upon termination of the Master Lease on _______,
of 1996-1 SUBI provided that no Event of Default on the Master Lease
has occurred and is continuing, the Lessee will have
the option to purchase rights of the Issuer evidenced
by the 1996-1 SUBI from the Issuer (the "Purchase
Option") at a price equal to (i) $________ or (ii)
the fair market value of the 1996-1 SUBI at such
time. In the event that the Lessee elects to exercise
its purchase option, the purchase price of the SUBI
Interest will be applied on the next Payment Date to
pay the outstanding principal amount of the Notes
together with the accrued unpaid interest thereon. In
the event that the purchase price of the SUBI is not
sufficient to pay accrued interest on, and the
outstanding Principal Amount of the Notes, a draw
will be made on the Residual Value Support Account
and then, the Reserve Fund in the amount of the
shortfall. In the event that the amounts on deposit
in the Residual Value Support Account and the Reserve
Fund are insufficient to redeem the Notes in full,
the Noteholders will suffer a loss.
The Owner Trustee PNC Bank, Delaware, as Owner Trustee under the Owner
Trust Agreement.
The Indenture Trustee First Bank, National Association, as Indenture
Trustee under the Indenture.
The Seller and Lessee The Seller/Lessee is a Delaware corporation which is
a wholly owned, special purpose subsidiary of World
Omni.
World Omni World Omni is a Florida corporation that is a wholly
owned subsidiary of JM Family Enterprises, Inc., a
Delaware corporation ("JMFE"). JMFE also wholly
owns Southeast Toyota Distributors, Inc. ("SET"),
which is the exclusive distributor of Toyota
automobiles and light duty trucks in Florida, Ala-
bama, Georgia, North Carolina and South Carolina (the
"Five State Area"). As more fully described under
"World Omni", World Omni provides consumer lease and
installment contract financing to retail customers
of, and floorplan and other dealer financing to,
Dealers that are located throughout the United
States. World Omni wholly owns both ALFI and the
Seller.
Pursuant to an Amended and Restated Servicing
Agreement dated as of July 1, 1994, as amended
between World Omni and the Origination Trustee, to be
supplemented by the Series 1996-1 SUBI Servicing
Supplement dated as of December 1, 1996 among World
Omni, the Owner Trustee and the Origination Trustee
(collectively, the "Servicing Agreement"), World Omni
will act as the initial servicer of the Origination
Trust
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<PAGE> 13
Assets, including the 1996-1 SUBI Assets (in such
capacity, the "Servicer"). The Indenture Trustee will
be third party beneficiary of the Servicing
Agreement.
The Notes On the date of initial issuance of the Notes and the
Certificates (the "Closing Date") the Issuer will
issue, pursuant to the Indenture, Notes in an initial
principal amount of $_____ (the "Initial Principal
Balance").
A. Payment Dates On the fifteenth day of each month or, if such day is
not a Business Day, on the next succeeding Business
Day, beginning January 15, 1997 (each, a "Payment
Date"), payments of interest and principal on the
Notes will be made to the holders of record as of the
day immediately preceding such Payment Date or, if
Definitive Notes are issued, the last day of the
immediately preceding calendar month (each such date,
a "Record Date"). For each Payment Date, payments
will be made from amounts on deposit in the Payment
Account, which include (i) Available Funds with
respect to any Payment Date and (ii) amounts, if any,
withdrawn from Residual Value Support Account and the
Required Amount withdrawn from the Reserve Fund for
such Payment Date pursuant to the Indenture after
payment of certain expenses of the Issuer such as
periodic fees payable to the Servicer, the Indenture
Trustee and the Owner Trustee, and reimbursement of
Servicer Advances and other reimbursable servicing
expenses. See "Description of the Notes".
"Available Funds" will consist of payments made by or
on behalf of the Lessee on the Master Lease with
respect to the immediately preceding calendar month
(or, in the case of the first Payment Date, the month
of December) and all other payments made to the
Lessor as owner of the 1996-1 SUBI, including the
proceeds of the disposition to the extent collected
during such Collection Period of all Series 1996-1
Leased Vehicles with respect to which the related
Series 1996-1 Leases have terminated. See "Security
for the Notes."
B. Interest On each Payment Date, the Indenture Trustee will make
payments of interest for the related Interest
Period to the Noteholders, based on the Principal
Balance as of the immediately preceding Payment
Date (after giving effect to reductions in such
Principal Balance as of such immediately preceding
Payment Date) or, in the case of the first Payment
Date, on the Initial Principal Balance, at an annual
percentage rate equal to ___% (the "Note Rate").
Interest on the Notes will accrue for the period from
and including the Payment Date in each month to but
excluding the Payment Date in the immediately
succeeding month (or, in the case of the first
Payment Date,
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<PAGE> 14
from and including December __, 1996) (each, an
"Interest Period"). All such payments will be
calculated on the basis of a 360-day year consisting
of twelve 30-day months.
C. Principal Payments On each Payment Date, unless an Event of Default
shall have occurred on the Notes, principal will be
paid on the Notes, to the extent of amounts remaining
in the Payment Account after payment of interest on
the Notes, in an amount equal to the Principal
Payment Amount. The "Principal Payment Amount" for
any Payment Date prior to an Event of Default will
equal the sum of (i) a Scheduled Payment (as further
described under "__________") and (ii) an Accelerated
Principal Payment. The "Accelerated Principal
Payment" will consist of the sum of (x) the
Outstanding Principal Balance of each Series 1996-1
Contract with respect to which the Master Lease
terminated, as a result of a Prepayment of the
related Series 1996-1 Contract, during the related
Collection Period, (y) the Discounted Principal
Balance, as defined herein of any Series 1996-1
Contract as to which the Master Lease terminated
during the related Collection Period as a result of
any other early termination, and (z) the Outstanding
Principal Balance of each Series 1996-1 Contract as
to which the Master Lease terminated during the
related Collection Period following the Maturity of
the Series 1996-1 Contract. The Principal Payment
Amount on any Payment Date will not be less than the
amount that would cause the Principal Balance of the
Notes, after taking into account such payment, to be
no greater than [__%] of the Aggregate Net Investment
Value of the Issuer's interest in the 1996-1 SUBI as
of the close of the related Collection Period. See
______________. The rate of payment of principal on
the Notes will depend, in part, upon the rate of
Prepayments and other terminations of the Series
1996-1 Contracts. See ___________.
In the event that the portion of Available Funds
remaining after payment of certain expenses and
interest on the Notes, is insufficient to pay the
Principal Payment Amount, a draw will be made first,
on the Residual Value Support Account, to the extent
of amounts available therein, and, if amounts therein
are insufficient, on the Reserve Fund. On each
Payment Date following the occurrence and continuance
of an Event of Default under the Indenture, all
amounts received with respect to the 1996-1 SUBI
during the related Collection Period would thereafter
be applied to repayment of the Notes. In addition,
the Indenture Trustee would have the right to
exercise other remedies provided for under the
Indenture, including, under certain conditions, the
right to accelerate the maturity date of
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<PAGE> 15
the Notes and the right to cause the Series 1996-1
Leased Vehicles to be retitled.
In the event that the Seller elects to purchase the
1996-1 SUBI from the Issuer, such purchase will cause
the Notes to be redeemed in full. See "Summary --
Optional Purchase of 1996-1 SUBI." The final
scheduled Payment Date for the Notes (the "Stated
Maturity") will be the _________ Payment Date. A
"Business Day" means a day other than a Saturday or
Sunday or a day on which banking institutions in the
States of Alabama, Delaware, Florida, Illinois or New
York are authorized or obligated by law, or executive
order or government decree to be closed.
D. Registration of The Notes initially will be represented by one or
the Notes more notes registered in the name of Cede & Co.
("Cede"), as the nominee of the Depository Trust
Company ("DTC"). A person acquiring an interest in
the Notes (each, a "Note Owner") may elect to hold
his or her interest through DTC, in the United States
of America, or Cedel Bank, societe anonyme ("Cedel")
or the Euroclear system ("Euroclear") in Europe.
Transfer within DTC, Cedel or Euroclear, as the case
may be, will be in accordance with the usual rules
and operating procedures of the relevant system.
Cross-market transfers between persons holding
directly or indirectly through DTC, on the one hand,
and counterparties holding directly or indirectly
through Cedel or Euroclear, on the other, will be
effected in DTC through Citibank, N.A. or Morgan
Guaranty Trust Company of New York, the relevant
depositaries (collectively, the "Depositaries") of
Cedel or Euroclear, respectively, and each a partici-
pating member of DTC. No Note Owner will be able to
receive a definitive note representing such
person's interest, except in the limited
circumstances described under "Description of the
Notes--Definitive Notes". Unless and until de-
finitive notes are issued, Noteholders will not be
recognized as holders of record of Notes and will be
permitted to exercise the rights of such holders only
indirectly through DTC. For further information
regarding book-entry registration of the Notes, see
"Description of the Notes--General" and "--Book Entry
Registration".
Security for the
Notes The security for the Notes will consist primarily of
(i) the obligation of the Lessee to make payments
pursuant to the Master Lease (and a security interest
in the Master Lease Reserve Account pledged to secure
such obligation); (ii) subject to the rights of the
Lessee under the Master Lease, the Issuer's
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<PAGE> 16
interest in the 1996-1 SUBI, including (x) the rights
to all payments or proceeds of Series 1996-1
Contracts due or received on such Series 1996-1
Contracts or following the termination of the Master
Lease, and (y) all proceeds of the sale or other
disposition of Series 1996-1 Leased Vehicles; and
(iii) the Reserve Fund and the Residual Value Support
Account.
The Lessee's obligations to make payments under the
Master Lease will be secured by the Master Lease
Reserve Account. Amounts payable to the Issuer as
owner of the 1996-1 SUBI and pursuant to the Master
Lease (including amounts withdrawn from the Master
Lease Reserve Account to make Master Lease Payments
as defined below) will be applied to pay interest on
and principal of the Notes, to pay interest on the
WOALI Loan, and to make distributions to
Certificateholders. See "__________." The Issuer has
pledged its right to receive payments as owner and
lessor of the 1996-1 SUBI to the Indenture Trustee to
secure payment of the Notes.
A. The 1996-1 SUBI The 1996-1 SUBI will evidence a beneficial interest
in the 1996-1 SUBI Assets. The Origination Trust was
created pursuant to a Trust Agreement (the
"Origination Trust Agreement"), among ALFI L.P., as
grantor and initial beneficiary, the Origination
Trustee and First Bank National Association, as
successor trust agent (in such capacity, the "Trust
Agent"). The 1996-1 SUBI will be evidenced by a
certificate (the "1996-1 SUBI Certificate")
evidencing a 100% beneficial interest in the 1996-1
SUBI Assets that will be issued by the Origination
Trust pursuant to a supplement to the Origination
Trust Agreement to be dated as of December 1, 1996
(the "SUBI Supplement" and, together with the
Origination Trust Agreement, the "SUBI Trust
Agreement") to be entered into among the Origination
Trustee, ALFI L.P., First Bank National Association
and the Owner Trustee. The Owner Trustee and the
Indenture Trustee will each be a third party
beneficiary of the SUBI Trust Agreement.
The Origination Trust Assets evidenced by the 1996-1
SUBI will primarily include the Series 1996-1
Contracts and the Series 1996-1 Leased Vehicles. The
1996-1 SUBI will not evidence an interest in any
Origination Trust Assets other than the 1996-1 SUBI
Assets, and payments made on or in respect of all
other Origination Trust Assets will not be available
to make payments on the Notes. For more information
regarding the 1996-1 SUBI, see "The Trust and the
SUBI" and "The Origination Trust".
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<PAGE> 17
1. The Series
1996-1 Contracts The Series 1996-1 Contracts will consist of a pool of
retail closed-end lease contracts originated by
Dealers located throughout the United States, each of
which will have an original term of not more than 60
months. Each Series 1996-1 Contract will be a finance
lease for accounting purposes and will have been
written for a "capitalized cost" (which may exceed
the manufacturer's suggested retail price), plus an
implicit rate in each Lease calculated as an annual
percentage rate (the "Lease Rate") on a constant
yield basis. The Series 1996-1 Contracts will provide
for equal monthly payments (the "Monthly Payments")
such that at the end of the related Contract term
such capitalized cost will have been amortized to an
amount equal to the residual value of the related
Leased Vehicle established at the time of
origination of such Series 1996-1 Contract (the
"Residual Value"). The amount to which the
capitalized cost of a Series 1996-1 Contract has been
amortized at any point in time is referred to
herein as its "Outstanding Principal Balance".
The Series 1996-1 Contracts consist of 22,399 lease
contracts. As of the Cutoff Date, the Lease Rate of
the Series 1996-1 Contracts ranged from 2.14% to
12.65%, with a weighted average Lease Rate of 8.07%.
The aggregate of the original principal balances of
the Series 1996-1 Contracts as of their respective
dates of origination was $563,356,075. As of the
Cutoff Date, the aggregate Outstanding Principal
Balance of the Series 1996-1 Contracts was
$550,184,929 the aggregate Residual Value of the
Series 1996-1 Leased Vehicles was $352,975,282 and
the Series 1996-1 Contracts had a weighted average
original term of 40.67 months and a weighted average
remaining term to scheduled maturity of 37.88 months.
See "The Series 1996-1 Contracts" for further
information regarding the Series 1996-1 Contracts.
The Series 1996-1 Contracts were identified by the
Servicer from the Origination Trust's portfolio of
lease contracts originated by Dealers located
throughout the United States that are not evidenced
by (or reserved for allocation to) any other SUBI,
based upon the criteria specified in the SUBI Trust
Agreement and described under "The Series 1996-1
Contracts--Characteristics of the Contracts" and
"--Representations, Warranties and Covenants".
The "Aggregate Net Investment Value" as of any day
will equal the sum of (i) the Discounted Principal
Balance of all Series 1996-1 Contracts other than
Charged-off, Liquidated, Matured and Additional Loss
Contracts and (ii) the aggregate
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<PAGE> 18
Residual Value of all Series 1996-1 Leased Vehicles
to the extent that the related Series 1996-1
Contracts have reached their scheduled maturities
(each, a "Matured Contract") within the three
immediately preceding Collection Periods but which
Series 1996-1 Leased Vehicles as of the last day of
the most recent Collection Period have remained
unsold and not otherwise disposed of by the Servicer
for no more than two full Collection Periods (the
"Matured Leased Vehicle Inventory"). For purposes of
determining Aggregate Net Investment Value, all
payments made on or in respect of a Series 1996-1
Contract (or the related Series 1996-1 Leased
Vehicle) with a Lease Rate less than ___% (each, a
"Discounted Contract") will be discounted at a rate
of ___%, thereby effectively treating a portion of
the payments received in respect of the implicit
principal component of the related Series 1996-1
Contracts as if it were interest, and providing
additional credit enhancement for the benefit of the
Noteholders. The "Discounted Principal Balance" of
(i) a Discounted Series 1996-1 Contract will equal
its Outstanding Principal Balance, discounted by %,
and (ii) all Series 1996-1 Contracts other than
Discounted Series 1996-1 Contracts will equal their
respective Outstanding Principal Balances. As of the
Cutoff Date, the aggregate Discounted Principal
Balance of the Series 1996-1 Contracts and the
Aggregate Net Investment Value was $______________.
2. The Leased Vehicles The Series 1996-1 Leased Vehicles will be comprised
of automobiles and light duty trucks. As of the
times of origination of the Series 1996-1 Contracts,
the related Series 1996-1 Leased Vehicles will be
either new vehicles, dealer demonstrator vehicles
or manufacturers' program vehicles, as described
under "The Series 1996-1 Contracts--General".
The certificates of title to the Series 1996-1 Leased
Vehicles have been registered at all times in the
name of the Origination Trustee (in its capacity as
trustee of the Origination Trust). Such certificates
of title will not reflect the indirect interest of
the Issuer or of the Indenture Trustee in the Series
1996-1 Leased Vehicles by virtue of the Issuer's
ownership of the 1996-1 SUBI. Therefore, the Issuer
(and accordingly, the Indenture Trustee) does not
have perfected title to or a lien on the Leased
Vehicles; however, certain steps have been taken to
cause the Issuer to have a perfected security
interest in the 1996-1 SUBI Certificate and in the
Series 1996-1 Contracts and Contract Rights. For
further information regarding the titling of the
Series 1996-1 Leased Vehicles and the interest of the
Issuer and the Indenture Trustee therein, see "Risk
Factors--Structural Considerations" and "Certain
Legal Aspects of
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<PAGE> 19
the Series 1996-1 Contracts and the Leased
Vehicles--Back-up Security Interests".
B. The Master Lease Pursuant to the Master Lease, the Issuer will lease
the rights represented by the 1996-1 SUBI Interest to
the Lessee for a period of [__] months beginning on
December __ (but which will end earlier with respect
to particular Series 1996-1 Leased Vehicles upon the
termination of the related Series 1996-1 Contract).
During the term of the Master Lease, the Lessee will
be entitled to receive all payments made on or in
respect of the Series 1996-1 Leases, and will be
obligated to make Master Lease Payments as described
herein.
Payments under the Master Lease ("Master Lease
Payments") will be payable by the Lessee monthly in
arrears in an aggregate amount equal to the sum of
(i) the Scheduled Lease Payment and (ii) any
Termination Payments (as defined below) then or
previously due. The "Scheduled Lease Payment" will
equal the sum of (a) the amount that would be the
reduction in the Aggregate Net Investment Value of
the Series 1996-1 Contracts from the close of the
second preceding Collection Period to the close of
the related Collection Period assuming no early
terminations of Series 1996-1 Contracts and (b) the
Aggregate Net Investment Value as of __________
multiplied by the decimal equal to one-twelfth of
(x) for months _____ through _____ of the Master
Lease term, ___%; (y) for months _____ through _____
of the Master Lease term, ___% and (z) for months
_____ through _____ of the Master Lease term, ___%.
In the event of a termination of a Series 1996-1
Contract prior to its scheduled termination date,
the Lessee will be required to make a payment to the
Lessor (a "Termination Payment") in an amount equal
to the excess, if any, of (i) the Outstanding
Principal Balance (in the case of a Prepayment, or
the Discounted Principal Balance in the case of any
other early termination) of the related Series
1996-1 Lease over (ii) the amount realized by the
Issuer upon disposition of the Series 1996-1 Leased
Vehicle with respect to which such termination
occurred.
On each Deposit Date, all amounts on deposit in the
Lessee Collection Account in excess of the Master
Lease Payment made on such date will be withdrawn and
deposited in the Master Lease Reserve Account. The
Master Lease Reserve Account will secure the
obligation of the Lessee to make payments under the
Master Lease and will be drawn upon on any Deposit
Date to the extent necessary to make Master Lease
Payments.
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<PAGE> 20
The Master Lease will provide that upon the
occurrence of an event of default on the Master Lease
(a "Lease Event of Default") the Issuer or will be
entitled, at its option, to terminate the Master
Lease, and upon such termination would be entitled to
receive directly all payments made thereafter on the
Series 1996-1 Leased Vehicles. See "________________"
herein.
In connection with the execution of the Indenture,
however, the Issuer will pledge its rights under the
Master Lease to the Indenture Trustee. Pursuant to
the pledge, the Indenture Trustee will generally have
the right to control the Issuer's exercise of its
rights against the Lessee while the Notes are
outstanding. In the case of certain payment defaults
on the Master Lease for a limited period, the
Indenture Trustee will agree that, so long as an
Event of Default on the Notes has not occurred, it
will not terminate the Master Lease without the
concurrence of the Issuer.
C.The Collection Accounts "Collections" with respect to any Collection Period
will include all net collections collected or
received in respect of the Series 1996-1 Contracts
and Series 1996-1 Leased Vehicles, including Monthly
Payments, Prepayments, Matured Vehicle Proceeds,
Repossessed Vehicle Proceeds and other Liquidation
Proceeds. Within two Business Days of receipt,
Collections (other than Collections received in
November 1996), net of certain related expenses, will
be deposited into one of two Collection Accounts
maintained by the Indenture Trustee for the benefit
of the Noteholders and the Issuer.
Within two Business Days of receipt, payments made on
or in respect of the Series 1996-1 Contracts during
the related Collection Period will be deposited by
the Servicer, (i) during the term of the Master
Lease, into an account (the "Lessee Collection
Account") beneficially owned by the Lessee and
pledged to the Issuer by the Lessee to secure its
obligation to make Master Lease Payments and (ii)
following the termination of the Master Lease into an
account (the "Issuer Collection Account")
beneficially owned by the Issuer and pledged to the
Indenture Trustee to secure payment of the Notes.
Payments deposited into the Lessee Collection Account
during the term of the Master Lease will include, but
will not be limited to, Collections constituting
Monthly Payments made by the Consumer Lessees and
Monthly Payments determined by the Servicer to be due
in one or more future Collection Periods (each, a
"Payment Ahead") and Advances made by the Servicer.
Amounts deposited in the Issuer Collection Account
will include Collections constituting Prepayments,
proceeds from the disposition of Leased Vehicles
relating to Matured
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<PAGE> 21
Contracts, including payments for excess mileage and
excess wear and use ("Matured Leased Vehicle
Proceeds"), and proceeds received in connection with
the sale or other disposition of Leased Vehicles that
have been repossessed ("Repossessed Vehicle Proceeds"
and together with Matured Leased Vehicle Proceeds,
"Liquidation Proceeds"). The Servicer will be
entitled to reimbursement for expenses incurred in
connection with the realization of Matured Leased
Vehicle Proceeds ("Matured Leased Vehicle Expenses"),
Repossessed Vehicle Proceeds ("Repossessed Vehicle
Expenses"), and other Liquidation Proceeds (such
expenses, together with Matured Leased Vehicle
Expenses and Repossessed Vehicle Expenses,
"Liquidation Expenses"), either from amounts on
deposit in the Lessee Collection Account or the
Issuer Collection Account, as applicable, or as a
deduction from Matured Leased Vehicle Proceeds,
Repossessed Vehicle Proceeds or other Liquidation
Proceeds, as appropriate, available for deposit into
the Issuer Collection Account. For further details
regarding these deposits and reimbursements, see
"Security for the Notes--The Accounts--The SUBI
Collection Accounts" and "--The Residual Value
Support Account".
On the Business Day immediately preceding each
Payment Date (each, a "Deposit Date") the Servicer
will deposit Advances in the Lessee Collection
Account and will deposit in the Issuer Collection
Account Reallocation Payments by World Omni in
respect of Series 1996-1 Contracts as to which an
uncured breach of certain representations and
warranties or certain servicing covenants has
occurred. On the Deposit Date, collections on deposit
in the Lessee Collection Account and, if necessary,
amounts on deposit in the Master Lease Reserve
Account, in respect of the related Collection Period
(including amounts in the Lessee Collection Account
that previously constituted Payments Ahead but which
represent Monthly Payments due during such Collection
Period), less an amount equal to the sum of (i)
Payments Ahead with respect to one or more future
Collection Periods, and (ii) amounts paid to the
Servicer in reimbursement of outstanding Advances
will be used by the Servicer on behalf of the Lessee
(i) to pay certain expenses of the Lessee, including
the Servicing Fee, and then (ii) to make Master Lease
Payments and (iii) finally, to make required deposits
in the Master Lease Reserve Account. Pursuant to the
Indenture, Master Lease Payments will be deposited
directly in the Payment Account maintained with the
Indenture Trustee for the benefit of the Noteholders.
On each Deposit Date, all amounts on deposit in the
Issuer Collection Account will be withdrawn and
deposited pursuant
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<PAGE> 22
to certain calculations performed by the Servicer, in
the Payment Account, the Residual Value Support
Account or the Reserve Fund.
On each Deposit Date, any amount to be drawn from the
Residual Value Support Account (the "Draw Amount")
will be withdrawn therefrom and the Required Amount
will be withdrawn from the Reserve Fund and such
amounts will be deposited into the Payment Account.
All payments to Noteholders will be made from the
Payment Account. Any funds remaining in the Payment
Account on a Payment Date in respect of the related
Collection Period following the payment of amounts
required to be paid therefrom will be deposited into
the Reserve Fund until the amount on deposit therein
equals the Reserve Fund Cash Requirement, then into
the Residual Value Support Account until the amount
deposited therein equals the Support Account Deposit
Amount for such Payment Date (plus any such amounts
not previously deposited), and thereafter generally
will be used to pay accrued unpaid interest on the
WOALI Loan and then be released to the
Certificateholders. For further information regarding
these deposits and payments, see "Security for the
Notes--The Accounts--The Payment Account" and "--The
SUBI Collection Account".
D. Residual Value Support
Account On each Deposit Date, if Matured Leased Vehicle
Proceeds received during the related Collection
Period with respect to Series 1996-1 Leased Vehicles
relating to Matured Contracts that were sold or
otherwise disposed of during such Collection Period,
net of related Matured Leased Vehicle Expenses in-
curred during such Collection Period ("Net Matured
Leased Vehicle Proceeds"), exceed the aggregate
Residual Value of the related Series 1996-1 Leased
Vehicles (the "Residual Value Surplus"), then such
excess will be deposited into the Residual Value
Support Account. In addition deposits will be made
into Residual Value Support Account on each Deposit
Date in an amount equal to a fixed percentage of the
Aggregate Net Investment Value of the Series 1996-1
Contracts as of the beginning of the related
Collection Period. Such percentage will equal ____%
for months one through twelve and ____% thereafter
until the termination of the Master Lease (such
amount, the "Support Account Deposit Amount"). If
draws on the Residual Value Support Account occur,
the Issuer will not be required to deposit additional
funds therein to reinstate such draw. Investment
earnings on amounts on deposit in the Reserve Account
will be retained therein.
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<PAGE> 23
The Residual Value Support Account will be owned by
the Issuer and will be pledged to the Indenture
Trustee to secure the Notes. On each Deposit Date,
funds on deposit in the Residual Value Support
Account, if any, will be withdrawn and deposited into
the Payment Account to the extent that Available
Funds for such Payment Date are less than the
principal and interest payable to Noteholders for
such Payment Date. Such a shortfall could occur, for
example, as a result of (i) the failure of the Lessee
to make required payments under the Master Lease or
(ii) the disposition of a Series 1996-1 Leased
Vehicle following the scheduled termination of a
Contract, for an amount less than the Residual Value
thereof. For further information regarding the
Reserve Fund, see "Security for the Notes--The
Accounts--The Reserve Fund and "--The Residual Value
Support Account".
E. The Reserve Fund The Issuer will establish a Reserve Fund maintained
with the Indenture Trustee for the benefit of the
Noteholders. The Reserve Fund is designed to provide
additional funds for the benefit of the Noteholders
in the event that on any Payment Date, Available
Funds, plus the amount drawn on the Residual Value
Support Account for such Payment Date, are less than
the amount of principal and interest required to be
paid to the Noteholders on such Payment Date. The
Reserve Fund will be the property of the Issuer and
will be pledged to the Indenture Trustee to secure
the Notes.
The Reserve Fund will be funded by the Issuer with
the proceeds of a loan by the Seller made to the
Issuer (the "WOALI Loan") of $___________ (the
"Reserve Fund Cash Requirement") (which amount will
equal % the Aggregate Net Investment Value as of the
Cutoff Date). On each Payment Date, the funds in the
Reserve Fund will be supplemented by (i) income
realized on the investment of amounts on deposit in
the Reserve Fund and (ii) the deposit of monies in
respect of the related Collection Period remaining in
the Payment Account after making all payments
required to be made therefrom on such Payment Date
prior to such deposit, until the amount on deposit in
the Reserve Fund equals the Reserve Fund Cash
Requirement then in effect, calculated as described
under "Security for the Notes--The Accounts--The
Reserve Fund--The Reserve Fund Cash Requirement". On
any Payment Date, amounts on deposit in the Reserve
Fund will be included in Available Funds and applied
as described in "Description of the Notes--Payments
on the Notes--"Payment to Noteholders."
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Interest will be paid on the WOALI Loan on each
Payment Date to the extent of funds available
therefor after making required payments on the Notes
and deposits in the Residual Value Support Account
and the Reserve Fund. However, no principal payments
will be made on the WOALI Loan until the Notes have
been retired.
F. Advances On each Deposit Date the Servicer will be obligated
to make, by deposit into the Lessee Collection
Account, an advance equal to the aggregate Monthly
Payments due but not received during the related
Collection Period with respect to Series 1996-1
Contracts that are 31 days or more past due as of the
end of such Collection Period, and the Servicer may
(but shall not be required to) make such an advance
with respect to Series 1996-1 Contracts that are
one or more days, but less than 31 days, past due as
of the end of such Collection Period (each, an
"Advance"). The Servicer will not be required to make
an Advance to the extent that it determines that such
Advance may not be ultimately recoverable by the
Servicer from Net Liquidation Proceeds or otherwise.
For further information regarding Advances, see
"Additional Document Provisions--The Servicing
Agreement--Advances". All Advances made with respect
to a Series 1996-1 Contract will be reimbursed to
the Servicer out of payments on the related Series
1996-1 Contract or out of proceeds of the disposition
of the vehicle, and the Servicer's right to
reimbursement will have priority over the rights of
the Noteholders and the Owner Trustee to such
amounts.
Servicing Compensation The Servicer will be entitled to receive a monthly
fee with respect to the 1996-1 SUBI Assets allocable
to the SUBI Interest (the "Servicing Fee"), payable
on each Payment Date, equal to one-twelfth of 1% of
the Aggregate Net Investment Value as of the first
day of the related Collection Period (or, in the case
of the first Payment Date, one-twelfth of 1% of the
Aggregate Net Investment Value as of the Cutoff
Date). The Servicer also will be entitled to
additional servicing compensation in the form of,
among other things, late fees and other
administrative fees or similar charges under the
Series 1996-1 Contracts. The Servicer will also be
entitled to reimbursement for certain expenses of
insuring the Series 1996-1 Leased Vehicles (which
amount will be for the paid out of the Lessee
Collection Account during the term of the Master
Lease), and certain administrative expenses,
including the certain costs associated with the sale
of Series 1996-1 Vehicles as to which the related
Series 1996-1 Contract has terminated. See
____________. For further information regarding
Servicer
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compensation, see "Additional Document
Provisions--The Servicing Agreement--Servicing
Compensation".
Tax Status Skadden, Arps, Slate, Meagher & Flom LLP will deliver
an opinion to the effect that the Notes will be
characterized as indebtedness for federal income tax
purposes. Each Noteholder, by its acceptance of a
Note, and each Noteholder by its acquisition of an
interest in the Notes, will agree to treat the Notes
as indebtedness for federal, state and local income
tax purposes. Prospective investors are advised to
consult their own tax advisors regarding the federal
income tax consequences of the purchase, ownership
and disposition of Notes, and the tax consequences
arising under the laws of any state or other taxing
jurisdiction. For further information regarding
material federal income tax considerations with
respect to the Notes, see "Certain Income Tax
Considerations--Federal Taxation".
ERISA Considerations Subject to the considerations
discussed in "ERISA Considerations",the notes are
eligible for purchase by employee benefit plans.
Ratings It is a condition of issuance that two Rating
Agencies rate the Notes in its highest rating
category. The ratings of the Notes address the
likelihood of the payment of principal of and
interest on the Notes pursuant to their terms. For
further information concerning the ratings assigned
to the Notes, see "Ratings of the Notes".
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<PAGE> 26
RISK FACTORS
LIMITED LIQUIDITY; ABSENCE OF SECONDARY MARKET
There is currently no market for the Notes. The Underwriter expects,
but will not be obligated, to make a market in the Notes. There can be no
assurance that a secondary market for the Notes will develop or, if one does
develop, that it will provide the Noteholders with liquidity of investment or
will continue for the life of the Notes.
MATURITY AND PREPAYMENT CONSIDERATIONS
The rate of payment of principal on the Notes will depend on the rate
of payments on or in respect of the Series 1996-1 Contracts and the Series
1996-1 Leased Vehicles (including scheduled payments on and prepayments and
liquidations of the Series 1996-1 Contracts) and losses with respect thereto,
which cannot be predicted with certainty. In addition, because payments made on
or in respect of the Series 1996-1 Contracts and the Series 1996-1 Leased
Vehicles will ordinarily be paid to the Issuer under the Master Lease
distributed to Noteholders according to the timing of their receipt, the rate of
principal payments on the Notes and the yield to maturity of the Notes generally
will be directly related to the rate at which payments on or in respect of the
Series 1996-1 Contracts and the Series 1996-1 Leased Vehicles are made. The rate
of payment of principal of the Notes will be affected by the exercise or
non-exercise by the Lessee of its Purchase Option upon termination of the Master
Lease. The rate of payment of principal of the Notes may also be affected by
payment by World Omni of Reallocation Payments in respect of certain Series
1996-1 Contracts as to which an uncured breach of certain representations and
warranties or certain servicing covenants has occurred and the exercise by the
Seller of its right to purchase the 1996-1 SUBI at its option under certain
circumstances pursuant to the Master Lease, which would result in a redemption
of the Notes. A substantial increase in the rate of payments on or in respect of
the Series 1996-1 Contracts and Series 1996-1 Leased Vehicles (including
liquidations of Series 1996-1 Contracts and Prepayments) may shorten the final
maturity of and may significantly affect the yield on the Notes. See
"Description of the Notes--Termination of the Trust; Retirement of the Notes",
"The Series 1996-1 Contracts-Representations, Warranties and Covenants" and
"Additional Document Provisions--The Servicing Agreement--Collections" for
further information regarding these matters.
Each of the Series 1996-1 Contracts may be prepaid by the related
lessee without penalty in full or in part at any time upon payment of a $250
processing fee. As more fully described under "Maturity, Prepayment and Yield
Considerations", World Omni actively encourages lessees under lease contracts
with remaining terms of less than one year to either buy, trade in or refinance
the related leased vehicles prior to the scheduled maturities of such lease
contracts. As also more fully described under "Maturity, Prepayment and Yield
Considerations", World Omni estimates that over calendar years 1993, 1994 and
1995 and the first nine months of 1996, an average of approximately __% of the
number of retail automobile and light duty truck lease contracts in its
portfolio (including lease contracts owned by certain special purpose finance
subsidiaries of World Omni) with scheduled maturities during this period
terminated prior to maturity. Such early terminations primarily were due either
to voluntary prepayments or to repossession of the leased vehicles due to
default by the lessees under the related lease contracts. No assurance can be
given that the Series 1996-1 Contracts will experience the same rate of
prepayment or default or any greater or lesser rate than World
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<PAGE> 27
Omni's historical rate for the retail automobile and light duty truck lease
contracts in its portfolio (including lease contracts owned by certain special
purpose finance subsidiaries of World Omni).
For further information regarding these topics and related yield
information, see "Maturity, Prepayment and Yield Considerations".
LIMITED ASSETS
The assets of the Issuer, which have been pledged to the Indenture
Trustee to secure the payment of interest on and principal of the Notes, are
limited to the Trust Estate, including the interest in the 1996-1 SUBI held by
the Issuer subject to the Master Lease, the right to receive Master Lease
Payments from the Lessee under the Master Lease (and a security interest in the
amounts credited to the Master Lease Reserve Account to secure the payments
required under the Master Lease), the Reserve Fund and the Residual Value
Support Account. The Issuer will not have, nor is it permitted or expected to
have, any other significant assets or other sources of funds. The Notes
represent obligations of the Issuer, and are not insured or guaranteed by the
Seller, World Omni, the Owner Trustee, the Indenture Trustee or any other person
or entity. Moreover, although payment of interest on and principal of the Notes
will ultimately be dependent on the payments made on or in respect of the Series
1996-1 Contracts and the Series 1996-1 Leased Vehicles, made to the Lessee
(which in turn will use such amounts to make payments under the Master Lease) or
to the Issuer (following termination of the Master Lease), neither the Issuer
nor the Lessee has a direct ownership interest in any Series 1996-1 Contract or
Series 1996-1 Leased Vehicle. See "Structural Considerations, "The Issuer -- The
1996-1 SUBI" and "Property of the Issuer".
LIMITED OBLIGATIONS OF THE ISSUER AND THE SELLER
The Notes are solely obligations of the Issuer, and none of the Seller,
World Omni, or any of their respective affiliates is obligated to pay interest
on or principal of the Notes. The Seller's obligation to the Issuer is limited
to making Master Lease Payments as required under the Master Lease and to make
the WOALI Loan to enable the Issuer to fund the initial deposit into the Reserve
Fund. If, after application of Available Funds and the amounts on deposit in the
Residual Value Support Account and the Reserve Fund, the Issuer does not have
sufficient funds to pay the Notes, the Noteholders could incur a loss on their
investment.
STRUCTURAL CONSIDERATIONS
Two-Tiered Structure
Unlike many structured financings in which the holders of the
securities have a direct ownership interest or a perfected security interest in
the underlying assets being securitized, the Trust will not own directly the
1996-1 SUBI Assets. Instead, the Origination Trustee, acting on behalf of the
beneficiaries from time to time of the Origination Trust, will own the
Origination Trust Assets, including the 1996-1 SUBI Assets. The Indenture
Trustee, on behalf of the Noteholders, will hold a security interest (subject to
the rights of the Lessee pursuant to the Master Lease) in, and the Owner
Trustee, acting on behalf of the Certificateholders, will own, the assets of the
Issuer, the primary assets of which will be the Master Lease and the 1996-1 SUBI
Certificate evidencing a 100% beneficial interest in the 1996-1 SUBI. The 1996-1
SUBI Assets allocable to the 1996-1 SUBI will be
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<PAGE> 28
segregated from the Origination Trust Assets on the books and records of the
Origination Trustee but will remain at all times owned by the Origination
Trustee. Except under the limited circumstances described under "Risk
Factors--Structural Considerations--Allocation of Origination Trust
Liabilities," neither the Servicer nor any holders of other beneficial interests
in the Origination Trust will have rights in the 1996-1 SUBI Assets, and
payments made on or in respect of any Origination Trust Assets other than the
1996-1 SUBI Assets will not be available to make payments on the Notes or to
cover expenses of the Origination Trust allocable to the 1996-1 SUBI Assets. As
more fully described under "Risk Factors--Structural Considerations--Back-up
Security Interest in Certain 1996-1 SUBI Assets" and "The Trust and the
SUBI--The 1996-1 SUBI," the 1996-1 SUBI will not be a direct interest in the
1996-1 SUBI Assets, nor will it represent a beneficial interest in all of the
Origination Trust Assets. Beneficial ownership interests in the Series 1996-1
Contracts and Series 1996-1 Leased Vehicles, rather than direct legal ownership
thereof, will be sold in order to avoid the administrative difficulty and
expense of retitling the Series 1996-1 Leased Vehicles in the name of the
purchaser.
Allocation of Origination Trust Liabilities
Pursuant to the Origination Trust Agreement, the liabilities of the
Origination Trust, as among the holders of beneficial interests in the
Origination Trust, will be allocated to and charged against the 1996-1 SUBI
Assets, certain Origination Trust Assets ("Other SUBI Assets") allocated among
Other SUBIs or all other Origination Trust Assets other than the 1996-1 SUBI
Assets and the Other SUBI Assets (the "UTI Assets"), respectively, if
specifically incurred with respect thereto, or pro rata among the Origination
Trust Assets if incurred with respect to the Origination Trust Assets generally.
The Origination Trustee and the beneficiaries of the Origination Trust and their
assignees and pledges will be bound by the foregoing allocation.
In particular, ALFI L.P. has pledged (and may in the future pledge) the
UTI as security for obligations to third-party lenders, and has created and sold
and may in the future create and sell or pledge Other SUBIs in connection with
financings similar to the transaction described herein. Each holder or pledgee
of the UTI and any Other SUBI will be required to expressly disclaim any
interest in the 1996-1 SUBI Assets, and to fully subordinate any claims to the
1996-1 SUBI Assets in the event that this disclaimer is not given effect.
Although no assurance can be given, in the unlikely event of a bankruptcy of
ALFI L.P., the Seller believes that the 1996-1 SUBI Assets would not be treated
as part of ALFI L.P.'s bankruptcy estate and that, even if they were so treated,
the subordination by holders and pledges of the UTI and Other SUBIs should be
enforceable.
Under the foregoing allocation, any liability to third parties arising
from or in respect of a Series 1996-1 Contract or Series 1996-1 Leased Vehicle
will be borne by the holders of interests in the 1996-1 SUBI (including the
Issuer). If any such liability arises from a contract or leased vehicle that is
an Other SUBI Asset or a UTI Asset, the Origination Trust Assets (including the
1996-1 SUBI Assets) will not be subject to such liability unless such Other SUBI
Assets or UTI Assets are insufficient to pay the liability. In such event,
because there will be no other assets from which to satisfy any such liability,
to the extent that it is owed to entities other than the Origination Trustee and
the beneficiaries of the Origination Trust, the other Origination Trust Assets,
including the 1996-1 SUBI Assets, will be available to satisfy such liabilities.
Under such circumstances, investors in the Notes could incur a loss on their
investment.
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Third-Party Liens on 1996-1 SUBI Assets
Because the Owner Trustee will not own directly the 1996-1 SUBI Assets,
and since its interest therein generally will be an indirect beneficial
ownership interest, perfected liens of third-party creditors of the Origination
Trust in one or more 1996-1 SUBI Assets will take priority over the interest of
the Owner Trustee in such 1996-1 SUBI Assets. With respect to claims relating to
the 1996-1 SUBI Assets, this result is no different than would be the case if a
claim were made against the Trust and the Trust directly owned the 1996-1 SUBI
Assets. However, because the Origination Trust also will hold Other SUBI Assets
and UTI Assets, and third-party creditors of the Origination Trust will not be
bound by the allocation of liabilities described above, a general creditor of
the Origination Trust may obtain a lien on one or more 1996-1 SUBI Assets
regardless of whether its claim would be allocated to such 1996-1 SUBI Assets
under the terms of the Origination Trust Agreement. Such liens could include tax
liens arising against the Seller or the Trust, liens arising under various
federal and state criminal statutes, certain liens in favor of the Pension
Benefit Guaranty Corporation (the "PBGC"), judgment liens arising from
successful claims under federal and state consumer protection laws and Lemon
Laws with respect to leases and leased vehicles included in the Origination
Trust Assets and judgment liens arising from successful claims against the
Origination Trust arising from the operation of the leased vehicles constituting
Origination Trust Assets. See "Risk Factors--Consumer Protection Laws", "--ERISA
Liabilities" and "--Vicarious Tort Liability" for a further discussion of these
risks.
The Origination Trust Agreement provides that, to the extent that such
a third-party claim is satisfied out of one or more 1996-1 SUBI Assets rather
than Other SUBI Assets or UTI Assets, as the case may be, the Origination
Trustee will reallocate the remaining Origination Trust Assets (i.e., the Other
SUBI Assets and the UTI Assets) so that each portfolio will bear the expense of
the claim as nearly as possible as if the claim had been allocated as provided
in the Origination Trust Agreement as set forth under "Additional Document
Provisions--The SUBI Trust Agreement--The 1996-1 SUBI, the Other SUBIs and the
UTI". However, if the third-party claim exceeds the value of the portfolio or
portfolios of Origination Trust Assets to which it should be allocated,
investors in the Notes could incur a loss on their investment.
Back-up Security Interest in Certain 1996-1 SUBI Assets
The Notes will represent obligations of the Issuer. Because the primary
asset of the Issuer will be the 1996-1 SUBI, rather than the 1996-1 SUBI Assets,
the holders of the Notes will be indirectly secured by an equity interest,
rather than a security interest, in the 1996-1 SUBI Assets. Moreover, during the
term of the Master Lease, the 1996-1 SUBI will be subject to the rights of the
Lessee under the Master Lease, and accordingly, provided that the Lessee
satisfies its obligations to make payments pursuant to the Master Lease, the
Indenture Trustee will not have a direct right to payments made by Consumer
Lessees on the Series 1996-1 Contracts. Although the Indenture Trustee generally
will have a perfected security interest in the property of the Issuer, the
Indenture Trustee will not have a security interest in the 1996-1 SUBI Assets
and in no circumstances will the Indenture Trustee have a perfected security
interest in any Series 1996-1 Leased Vehicle. Accordingly, upon the occurrence
of an Event of Default, the Indenture Trustee would be limited to exercising its
rights with respect to the 1996-1 SUBI (subject to the rights of the Lessee) and
the other assets described above (including the amounts available from the
Residual Value Support Account and the Reserve Fund, but not the Master Lease
Reserve Account unless a Lease Event of Default shall have occurred). To the
extent that the exercise of such rights produces insufficient funds to make all
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required payments with respect to the Notes, Noteholders could suffer a loss of
all or part of their investment. See "Property of the Issuer" and "Description
of the Notes--Indenture."
As described under "Risk Factors--Insolvency of World Omni; Substantive
Consolidation with World Omni", the transfer of the 1996-1 SUBI by the Seller to
the Trust is intended to constitute a sale of the 1996-1 SUBI and of the
beneficial interest in the 1996-1 SUBI Assets evidenced thereby. Although deemed
highly unlikely by the Seller, theoretically it is possible that a court could
recharacterize (for accounting and general state law purposes) the sale of the
1996-1 SUBI Assets and the subsequent lease of the 1996-1 SUBI Certificate to
the Seller as a financing by the Seller secured by a pledge of the 1996-1 SUBI
Certificate, or even the underlying 1996-1 SUBI Assets, to the Issuer, rather
than as a sale. In such an event, absent prior perfection of the Issuer's
security interest in the 1996-1 SUBI Assets, the holder of a perfected lien in
one or more 1996-1 SUBI Assets would have priority over the interest of the
Issuer (and thus the Indenture Trustee on behalf of the Noteholders) in such
1996-1 SUBI Assets. Therefore, certain actions have been taken to ensure that,
were the sale of the 1996-1 SUBI Assets to the Issuer and the subsequent lease
of the 1996-1 SUBI Certificate to the Seller to be so recharacterized as a
secured loan, the Issuer (and the Indenture Trustee) would be deemed to have a
perfected security interest in the 1996-1 SUBI Certificate and in the Series
1996-1 Contracts and the Contract Rights susceptible of perfection under the
Uniform Commercial Code (the "UCC") in effect in the States of Alabama,
Delaware, Illinois and Florida. The "Contract Rights" will be comprised of all
rights relating to the Series 1996-1 Contracts and the proceeds thereof,
including but not limited to the documents evidencing such Series 1996-1
Contracts, Monthly Payments received or due on or after the Cutoff Date,
Security Deposits to the extent provided for in the Series 1996-1 Contracts and
partial prepayments, Prepayments, Liquidation Proceeds and Insurance Proceeds
(to the extent constituting proceeds of the related Series 1996-1 Contract
rather than proceeds of the related Series 1996-1 Leased Vehicle) received on or
after the related Cutoff Date.
As described above, if the sale of the 1996-1 SUBI to the Issuer and
the subsequent lease of the 1996-1 SUBI Certificate to the Seller were to be
recharacterized as a loan secured by the 1996-1 SUBI Certificate or the 1996-1
SUBI Assets, the Issuer would be deemed to have a perfected security interest in
the 1996-1 SUBI Certificate and certain of the 1996-1 SUBI Assets. The 1996-1
SUBI Certificate will constitute an "instrument" under the UCC and, by virtue of
its possession thereof, the Issuer and the Indenture Trustee would be deemed to
have a perfected security interest therein (and the 1996-1 SUBI Assets evidenced
thereby). Therefore, no UCC-1 financing statements will be filed in favor of the
Issuer and the Indenture Trustee with respect to its interest in the 1996-1 SUBI
Certificate. The Series 1996-1 Contracts will not be stamped to reflect the
Issuer's and the Indenture Trustee's indirect interest therein. On or prior to
the Closing Date, however, "protective" UCC-1 financing statements will be filed
in Alabama, Delaware, Illinois and Florida with respect to the Series 1996-1
Contracts and the Contract Rights to reflect the perfection of any security
interest that the Issuer and the Indenture Trustee would be deemed to have
therein. However, no action will be taken to perfect the lien that the Issuer
and the Indenture Trustee would be deemed to have in the Series 1996-1 Leased
Vehicles in the event of such a recharacterization. Therefore, to the extent
that a valid lien is imposed by a third party against a Series 1996-1 Leased
Vehicle, the interest of the lienholder will be superior to the unperfected
beneficial interest of the Indenture Trustee in such Series 1996-1 Leased
Vehicle. Although the Servicing Agreement will require the Servicer to contest
all such liens and cause the removal of any liens that may be imposed, if any
such liens are imposed against the Series 1996-1 Leased Vehicles, investors in
the Notes could incur a loss on their investment. For further information
relating to potential liens on the 1996-1 SUBI Assets, see "Additional Document
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Provisions--The Servicing Agreement--Notification of Liens and Claims" and
"Certain Legal Aspects of the Origination Trust and the SUBI--The 1996-1 SUBI".
As previously noted, various liens could be imposed upon all or part of
the 1996-1 SUBI Assets that, by operation of law, would take priority over the
Issuer, and consequently the Indenture Trustee's, interest therein. Such liens
would include tax liens arising against the Seller or the Issuer, mechanic's,
repairmen's, garagemen's and motor vehicle accident liens and certain liens for
personal property taxes, in each case arising with respect to a particular
Series 1996-1 Leased Vehicle, liens arising under various state and federal
criminal statutes and certain liens, more fully described under "Risk
Factors--ERISA Liabilities", in favor of the PBGC. Additionally, any perfected
security interest of the Issuer and the Indenture Trustee in all or part of the
property of the Issuer could also be subordinate to claims of any trustee in
bankruptcy or debtor-in-possession in the event of a bankruptcy of the Seller
prior to any perfection of the transfer of the assets transferred by the Seller
to the Issuer pursuant to the Indenture, as more fully described under "Risk
Factors--Insolvency of World Omni; Substantive Consolidation with World Omni".
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws, including the
federal Consumer Leasing Act of 1976 and Regulation M promulgated by the Board
of Governors of the Federal Reserve System, impose requirements on retail lease
contracts such as the Series 1996-1 Contracts. These laws apply to the
Origination Trust as the assignee and co-lessor of the Series 1996-1 Contracts
and may also apply to the Trust as owner of the 1996-1 SUBI Certificate which
represents a beneficial interest in, among other things, the Series 1996-1
Contracts. The failure by the Origination Trust to comply with such requirements
may give rise to liabilities on the part of the Origination Trust, and claims by
such parties may be subject to set-off as a result of such noncompliance. Many
States, including each of the States in the Five State Area, have adopted Lemon
Laws that provide vehicle users certain rights in respect of substandard
vehicles which may apply to one or more of the Leased Vehicles. A successful
claim under a Lemon Law could result in, among other things, the termination of
the related Contract and/or require the refunding of a portion of payments that
previously have been paid. For further information regarding consumer protection
laws, see "Certain Legal Aspects of the Series 1996-1 Contracts and the Leased
Vehicles--Consumer Protection Laws".
ERISA LIABILITIES
It is possible that the Origination Trust Assets, including the 1996-1
SUBI Assets, could become subject to liens in favor of the PBGC to satisfy
unpaid ERISA obligations of any member of an "affiliated group" that includes
World Omni, SET, JMFE and their respective affiliates. The ratings of the Notes
may be downgraded in the event of any unfunded ERISA liability of any member of
such affiliated group, as described under "Additional Document Provisions--The
Servicing Agreement--Compliance with ERISA". The ratings of the Notes address
the likelihood of the payment of principal of and interest on the Notes pursuant
to their terms, as described under "Rating of the Notes". However, the Seller
believes that the likelihood of any such liability being asserted against the
Origination Trust Assets or, if so asserted, being successfully pursued, is
remote. In particular, the Seller believes that the Origination Trust should, as
a legal matter, be treated as a distinct entity separate and apart from such
affiliated group, and not considered part of such affiliated group under ERISA's
"common control" provisions. Additionally, such affiliated group maintains only
one plan (which is neither a multi-employer or multiple employer plan) that
would subject it to a lien if the
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plan were to terminate with assets insufficient to cover its liabilities. That
plan historically has had assets that significantly exceeded its liabilities.
However, no assurance can be given that any of these conditions will continue in
the future.
VICARIOUS TORT LIABILITY
Although the Origination Trust will own the Series 1996-1 Leased
Vehicles and the Trust will have an interest therein evidenced by the 1996-1
SUBI, they will be operated by the related lessees and their respective
invitees. State laws differ as to whether anyone suffering injury to person or
property involving a leased vehicle may bring an action against the owner of the
vehicle merely by virtue of that ownership. To the extent that applicable state
law permits such an action, the Origination Trust and the Origination Trust
Assets may be subject to liability to such an injured party. However, the laws
of many States, including each of the States in the Five State Area, either do
not permit such suits, or the lessor's liability is capped at the amount of any
liability insurance that the lessee was required to, but failed to, maintain.
For further information in this regard, see "Certain Legal Aspects of the Series
1996-1 Contracts and the Series 1996-1 Leased Vehicles--Vicarious Tort
Liability". Notwithstanding the foregoing, in the event that vicarious liability
on the Origination Trust as owner of a Series 1996-1 Leased Vehicle were imposed
and the coverage provided by the Contingent and Excess Liability Insurance
Policies were insufficient to cover such a loss with respect to a Series 1996-1
Leased Vehicle or, in certain circumstances, a leased vehicle that is an Other
SUBI Asset or a UTI Asset, investors in the Notes could incur a loss on their
investment. See "Risk Factors--Structural Considerations--Allocation of
Origination Trust Liabilities", "--Third-Party Liens on 1996-1 SUBI Assets" and
"Security for the Notes--The Contingent and Excess Liability Insurance
Policies".
All of the contracts (including the Series 1996-1 Contracts) will
contain provisions requiring the lessees to maintain levels of insurance
satisfying applicable state law, and the Servicing Agreement will require the
Servicer to police compliance by the lessees therewith. In addition, in the
event that any such insurance has lapsed, has not been maintained in full force
and effect or the Servicer has failed to maintain the right to receive the
proceeds of such insurance, the Servicing Agreement will require World Omni to
pay all such amounts as would otherwise have been recoverable as Insurance
Proceeds. For further information regarding insurance matters, see "World
Omni--Insurance" and "Additional Document Provisions--The Servicing
Agreement--Insurance on Leased Vehicles".
Under Florida law, the owner of a motor vehicle that is subject to a
lease having an initial term of at least one year is exempt from liability
arising out of an accident in which the leased vehicle is involved if the lessee
is required by the lease to maintain certain specific levels of insurance, and
such insurance is maintained either by the lessee or the lessor, as further
described under "Certain Legal Aspects of the Series 1996-1 Contracts and the
Leased Vehicles--Vicarious Tort Liability". However, a court applying the law of
another jurisdiction might reach another result. Moreover, actions by third
parties might arise against the owner of a leased vehicle based on legal
theories other than negligence, such as a product defect or improper vehicle
preparation prior to the origination of the related lease contract. Even if the
Origination Trust were to be the subject of an action for damages as a result of
its ownership of a leased vehicle (including but not limited to a Series 1996-1
Leased Vehicle), however, it will be the beneficiary of the Contingent and
Excess Liability Insurance Policies with respect thereto, as more fully
described under "Security for the Certificates--The Contingent and Excess
Liability Insurance Policies". Although the Origination Trust's insurance
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coverage exceeds $10 million per claim, with an allowance for multiple claims in
any policy period, in the event that all such insurance coverage were exhausted
and damages were assessed against the Origination Trust, claims could be imposed
against the assets of the Origination Trust, including the Series 1996-1 Leased
Vehicles. If any such claims are imposed against any 1996-1 SUBI Assets or, in
certain limited circumstances, any Other SUBI Assets or UTI Assets, investors in
the Notes could incur a loss on their investment. For further information
regarding the potential for third-party claims against the Origination Trust
Assets, see "Risk Factors--Structural Considerations--Allocation of Origination
Trust Liabilities", "--Third-Party Liens on 1996-1 SUBI Assets" and "Certain
Legal Aspects of the Series 1996-1 Contracts and the Series 1996-1 Leased
Vehicles--Vicarious Tort Liability".
INSOLVENCY OF WORLD OMNI; SUBSTANTIVE CONSOLIDATION WITH WORLD OMNI
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief under the United States Bankruptcy Code or similar applicable state
laws ("Insolvency Laws") by World Omni will not result in the consolidation of
the assets and liabilities of ALFI, ALFI L.P., the Seller, the Origination Trust
or the Issuer with those of World Omni. With respect to the Seller and ALFI,
these steps include their creation as separate, special purpose finance
subsidiaries of World Omni pursuant to articles of incorporation containing
certain limitations (including the requirement that each must have at all times
at least two "independent directors" and restrictions on the nature of their
respective businesses and on their ability to commence a voluntary case or
proceeding under any Insolvency Law without the affirmative vote of at least a
majority of their respective directors, including each independent director).
With respect to ALFI L.P., these steps include its creation as separate, special
purpose limited partnerships of which ALFI, the sole general partner, pursuant
to a limited partnership agreement containing certain limitations (including
restrictions on the nature of its businesses and on its ability to commence a
voluntary case or proceeding under any Insolvency Law without the affirmative
vote of all of the directors of its general partners, including each independent
director).
Reallocation Payments made by World Omni in respect of certain Series
1996-1 Contracts as to which an uncured breach of certain representations and
warranties or certain servicing covenants has occurred, payments made by World
Omni in respect of certain insurance policies required to be obtained and
maintained by lessees pursuant to the Series 1996-1 Contracts and unreimbursed
Advances made by World Omni, as Servicer, pursuant to the Servicing Agreement,
may be recoverable by World Omni as debtor-in-possession or by a creditor or a
trustee in bankruptcy of World Omni as a preferential transfer from World Omni
if such payments were made within one year prior to the filing of a bankruptcy
case in respect of World Omni. In addition, the insolvency of World Omni could
result in the replacement of World Omni as Servicer, which could result in a
temporary interruption of payments on the Notes and an Event of Servicing
Termination under the Servicing Agreement.
Additionally, if a conservator, receiver or bankruptcy trustee were
appointed by a court of competent jurisdiction, or if certain other events
relating to the bankruptcy or insolvency of the Issuer or the Seller were to
occur (each, an "Insolvency Event"), the Owner Trustee may, and upon receipt of
written instructions from holders of Notes evidencing Voting Interests of not
less than 51% of the Notes or 51% of the Notes will, attempt to sell the 1996-1
SUBI Certificate and the other property of the Trust. The consummation of such
sale would result in an early termination of the Trust and a loss to the
Noteholders if the net proceeds of such sale were insufficient to pay in full
the principal
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balance of the Notes, together with any unreimbursed Note Principal Loss
Amounts, with accrued and unpaid interest thereon at the Note Rate.
On the Closing Date, Skadden, Arps, Slate, Meagher & Flom LLP, counsel
to ALFI, ALFI L.P., the Seller and World Omni, will render an opinion based on a
reasoned analysis of analogous case law (although there is no precedent based on
directly similar facts) that, subject to certain facts, assumptions and
qualifications specified therein, under present reported decisional authority
and statutes applicable to federal bankruptcy cases, if World Omni were to
become a debtor in a case under the Bankruptcy Code, it would not be a proper
exercise by a federal bankruptcy court of its equitable discretion to disregard
the independent forms so as to substantively consolidate the assets and
liabilities of ALFI, ALFI L.P., the Seller, the Origination Trust or the Issuer
with those of World Omni. In addition, on the Closing Date, counsel to the
Seller will render an opinion to the effect that (i) the transfer of the 1996-1
SUBI Certificate by the Seller to the Issuer constitutes a sale of the 1996-1
SUBI Certificate and the 1996-1 SUBI Assets evidenced thereby, or (ii) if such
transfer does not constitute a sale, then the Indenture creates a valid
perfected security interest, for the benefit of the Issuer and the Indenture
Trustee on behalf of the Noteholders, in the Seller's right, title and interest
in the 1996-1 SUBI Certificate. For further information regarding the risk of
insolvency, see "Certain Legal Aspects of the Origination Trust and the 1996-1
SUBI--Insolvency Related Matters".
The Origination Trust has been registered under the business trust
provisions of certain state laws, including those of Alabama and Florida. As
such, the Origination Trust may be subject to the Insolvency Laws, and claims
against the Origination Trust Assets could have priority over the beneficial
interest therein represented by the 1996-1 SUBI. In addition, claims of a third
party against the Origination Trust Assets, including the 1996-1 SUBI Assets, to
the extent such claims are not covered by insurance, would take priority over
the holders of beneficial interests in the Origination Trust, such as the
Trustee, as more fully described under "Security for the Notes--The Contingent
and Excess Liability Insurance Policies" and "Certain Legal Aspects of the
Series 1996-1 Contracts and Series 1996-1 Leased Vehicles--Vicarious Tort
Liability".
REQUIRED SALE OR RETITLING OF ASSETS IN CERTAIN CIRCUMSTANCES
If a bankruptcy or insolvency occurs with respect to the
Certificateholder, the Trust Agreement provides that the Issuer will be
dissolved (and the Master Lease will terminate) and the Indenture Trustee will
be required to sell the assets of the Issuer in a commercially reasonable manner
and on commercially reasonable terms. The proceeds from the sale of the assets
of the Issuer plus amounts on deposit in the Reserve Fund, the Residual Value
Support Account and other accounts of the Issuer will be distributed first to
Noteholders, and second to repay the WOALI Loan and any expenses, and the
remainder to the Certificateholders, and if such proceeds and amounts are not
sufficient to pay the Notes in full, the amount of principal returned to the
Noteholders would be reduced, and the Noteholders would incur a loss on their
investment. [In addition, upon the bankruptcy of [the Issuer, the
Certificateholder or WOALI] the Series 1996-1 Leased Vehicles will be
distributed from the Origination Trust and retitled at the direction of the
Issuer.] See "Additional Document Provisions--The Trust Agreement--Termination."
LEGAL PROCEEDINGS
None of ALFI, ALFI L.P. or the Seller is a party to any legal
proceeding. World Omni is a party to, and is vigorously defending, numerous
legal proceedings, all of which (except as described
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<PAGE> 35
below) it believes constitute ordinary routine litigation incidental to the
business and activities conducted by World Omni. The Origination Trustee, on
behalf of the Origination Trust, has been named as a defendant in various cases
which it believes constitute ordinary routine litigation incidental to the
business and activities conducted by the Origination Trustee as an assignee of
lease contracts and leased vehicles. As of the date of this Prospectus, World
Omni, SET, various other JMFE-related entities and various officers and
employees thereof also are defendants in a lawsuit brought by former Dealers
located in the Five State Area. In a second such case, World Omni and its
affiliated defendants obtained summary judgment in their favor dismissing all of
plaintiffs' claims and awarding attorneys' fees to World Omni. Plaintiffs have
appealed this summary judgment. These cases focus generally on or arise from
alleged vehicle allocation, sales reporting, marketing and freight charge
practices, principally by SET. While there are uncertainties as to the final
disposition of these cases, management of World Omni believes that, although an
adverse final judgment in these cases could have a material adverse effect on
its operations and financial condition, such a result will not cause any
material impairment of the ability of World Omni to perform its obligations and
its duties under the Servicing Agreement. However, there can be no assurance of
this result.
THE ISSUER
GENERAL
The Issuer and the Noteholders will have no interest in the UTI, any
Other SUBI or any assets of the Origination Trust evidenced by the UTI or any
Other SUBI. Payments made on or in respect of the Origination Trust Assets not
represented by the 1996-1 SUBI will not be available to make payments on the
Notes. For further information regarding the Origination Trust, see "The
Origination Trust."
THE 1996-1 SUBI
The 1996-1 SUBI will be issued pursuant to the SUBI Trust Agreement and
will evidence a beneficial interest in certain specified Origination Trust
Assets consisting of (i) the 1996-1 Contracts, the 1996-1 Leased Vehicles and
all proceeds or payments received or due on or after the Cutoff Date; and (ii)
all other related Origination Trust Assets, including (A) the Lessee Collection
Account and the Issuer Collection Account (B) the right to receive payments made
to World Omni, the Origination Trust or the Origination Trustee under any
insurance policy relating to the Series 1996-1 Contracts, the related lessees or
the Leased Vehicles, (C) the right to receive the proceeds of any Dealer
repurchase obligations in respect of the Series 1996-1 Contracts or Series
1996-1 Leased Vehicles, and (D) all proceeds of the foregoing (collectively, the
"1996-1 SUBI Assets"). (SUBI Trust Agreement, Sections ______________).
FORMATION OF THE ISSUER
The Issuer is a business trust formed under the laws of the State of
Delaware pursuant to the Trust Agreement solely for the purposes of the
transactions described in this Prospectus. After its formation, the Issuer will
not engage in any activity other than (i) issuing the Notes and the
Certificates, (ii) acquiring the Series 1996-1 SUBI and the other property of
the Trust Estate using the proceeds from the sale of the Notes and Certificates
to third party investors, (iii) entering into the Master Lease with the Lessee;
(iv) making payments on the Notes and distributions to Certificatehold-
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<PAGE> 36
ers, (v) assigning and pledging the Trust Estate to the Indenture Trustee, (vi)
entering into and performing its obligations under the documents to which it is
a party and (vi) engaging in other transactions, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.
CAPITALIZATION OF THE ISSUER
On the Closing Date, the Issuer will be capitalized with $______ of
Notes and $_______ representing the excess of the Aggregate Net Investment Value
over the principal amount of the Notes. In addition, WOALI will make the WOALI
Loan to the Issuer. The Issuer will sell the Certificates to third party
investors that are expected to be unaffiliated with the Seller, their respective
affiliates or the Issuer. In exchange for the sale of the Series 1996-1 SUBI,
the Issuer will pay the proceeds from the sale of the Notes and the Certificates
to the Seller. See "_____________" for a more extensive discussion of the WOALI
Loan.
The following table illustrates the capitalization of the Issuer as of
the Closing Date, as if the issuance and sale of the Notes, and the Certificates
as described above had taken place on such date:
<TABLE>
<S> <C>
Notes ............................. $
[WOALI Loan]
Certificates --
Total ......................... $
==
</TABLE>
THE OWNER TRUSTEE
PNC Bank, Delaware, a Delaware banking corporation, is the Owner
Trustee under the Owner Trust Agreement. The principal offices of the Owner
Trustee are located at Wilmington, Delaware. The Seller, WOFCO and their
affiliates may maintain normal commercial banking relationships with the Owner
Trustee and its affiliates. The fees and expenses of the Owner Trustee will be
paid by the Issuer.
PROPERTY OF THE ISSUER
After giving effect to the transactions described herein, the property
of the Issuer (the "Trust Estate") will consist of (i) the rights of the Issuer
under the Series 1996-1 SUBI (subject to the rights of the Lessee under the
Master Lease, (ii) the rights of the Issuer under the Master Lease, (iii) the
rights of the Issuer to funds on deposit from time to time in the Issuer
Collection Account, the Payment Account and any other account or accounts
established pursuant to the Indenture (including investment income on amounts on
deposit in the Issuer Collection Account and the Payment Account) and proceeds
thereof, (iv) the rights of the Issuer (and a pledge of the rights of the
Lessee) as holder of the 1996-1 SUBI Interest under the Servicing Agreement and
the Series 1996-1 Supplement, (v) the security interest of the Issuer in the
Master Lease Reserve Account and (vi) all proceeds of the foregoing. All of the
Trust Estate is pledged to the Indenture Trustee pursuant to the terms of the
Indenture.
Because the Notes are primarily secured by the Issuer's rights in the
Series 1996-1 SUBI and the Master Lease (which in turn will be paid from
payments on the Series 1996-1 Leases),
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Noteholders will be dependent on payments made on the Series 1996-1 Contracts
and proceeds received in connection with the disposition of Series 1996-1 Leased
Vehicles for payment of interest on and principal of the Notes. The Issuer will
not have a direct ownership interest in the Series 1996-1 Contracts, or a direct
ownership interest or perfected security interest in the Series 1996-1 Leased
Vehicles (which will be titled in the name of the Origination Trust), and it is
therefore possible that a claim or lien with respect to the Series 1996-1 Leased
Vehicles or on the Origination Trust could limit the amounts paid to the holders
of the Series 1996-1 SUBI to less than the amount due from the related Consumer
Lessees or realized from the disposition of Series 1996-1 Leased Vehicles. To
the extent that a claim or lien delays disposition of Series 1996-1 Leased
Vehicles or reduces the amount paid to the Issuer and the Lessee as holders of
the Series 1996-1 SUBI (which represents the beneficial interest in the Series
1996-1 Assets), Noteholders could be subject to delays in payment or losses on
their investment. See "Risk Factors--Structural Considerations," "Description of
the Notes--Master Lease Reserve Account Withdrawals and Deposits," "Series
1996-1 SUBI" and "Certain Legal Aspects of the Origination Trust and the Series
1996-1 SUBI."
The 1996-1 SUBI will not represent a direct interest in the 1996-1 SUBI
Assets, nor will it represent an interest in any Origination Trust Assets other
than the 1996-1 SUBI Assets. Payments made on or in respect of such other
Origination Trust Assets will not be available to make payments on the Notes or
to cover expenses of the Origination Trust allocable to the 1996-1 SUBI Assets.
SALE OF THE 1996-1 SUBI TO THE ISSUER
On the Closing Date, the Origination Trustee will issue the 1996-1
SUBI, which will evidence the 1996-1 SUBI Assets, to ALFI, L.P., who will sell
the 1996-1 SUBI to the Seller. The Seller will transfer and assign the 1996-1
SUBI to the Issuer pursuant to the Indenture. The Issuer will then lease the
1996-1 SUBI back to the Seller pursuant to the Master Lease and, subject to the
rights of the Lessee under the Master Lease, pledge its interest in the 1996-1
SUBI to the Indenture Trustee under the Indenture. In exchange for such sale,
the Issuer will pay to the Seller the proceeds from the sale of the Notes and
Certificates to third party investors.
LEASE OF THE 1996-1 SUBI TO THE SELLER
Immediately following the transfer of the 1996-1 SUBI to the Issuer, as
described in "--Transfer of the 1996-1 SUBI to the Issuer," the Seller and the
Issuer will enter into the Master Lease pursuant to which the Seller will lease
the Series 1996-1 SUBI during the term of the Master Lease. As Lessee, the
Seller will be entitled to receive all proceeds from the 1996-1 SUBI during the
term of the Master Lease and will be required to make Master Lease Payments to
the Issuer. See "The Issuer--Assignment to Seller."
During the term of the Master Lease, the Seller, as Lessee, will be
entitled to all Monthly Payments with respect to Series 1996-1 Contracts. All
Monthly Payments. applicable Payments Ahead and Advances will be deposited by
the Servicer in the Lessee Collection Account and will be applied on a monthly
basis to pay servicing fees and certain other reimbursable amounts to the
Servicer, and then to make Master Lease Payments. The Lessee will be obligated
to make Master Lease Payments to the Issuer for so long as the Master Lease is
in effect. Any amount remaining in the Lessee Collection Account after payment
of current expenses and the Master Lease Payment will be deposited in the Master
Lease Reserve Account. Amounts in the Master Lease Reserve Account will secure
the Lessee's obligation to make Master Lease Payments to the Issuer. The Master
Lease
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will terminate with respect to any Series 1996-1 Leased Vehicle upon the
termination of the related Series 1996-1 Contract. The Issuer, rather than the
Seller, will be entitled to receive the proceeds of disposition of Series 1996-1
Leased Vehicles. However, to the extent that the proceeds of sale of a Series
1996-1 Leased Vehicle with respect to which the related Series 1996-1 Contract
terminated prior to its scheduled termination date are less than the Outstanding
Principal Balance of such Series 1996-1 Contract, the Master Lease will obligate
the Lessee to make a Termination Payment as described below.
The Master Lease Payment with respect to any Payment Date will be
payable by the Lessee monthly in arrears in an aggregate amount equal to the sum
of (i) the Scheduled Lease Payment and (ii) any Termination Payments then or
previously due. See "Security for the Notes--The Master Lease."
Upon the occurrence of an event of default on the Master Lease (a
"Lease Event of Default") the Issuer will be entitled to terminate the Master
Lease, and upon such termination, as holder of the 1996-1 SUBI, would be
entitled to receive directly all payments made thereafter on the 1996-1 SUBI
Assets. Upon the occurrence of an event of default under the Master Lease, (i)
the Indenture Trustee as assignee of the rights of the Issuer in the Master
Lease pursuant to the pledge of the Trust Estate would be entitled (subject to
certain cure rights of the Issuer) to terminate the Master Lease and obtain the
right to receive directly, as pledgee of the Issuer, all distributions with
respect to the 1996- 1 SUBI and to apply such distributions to the payment of
Master Lease Payments (which in turn would be used to pay interest on and
principal of the Notes) and (ii) an Event of Default would occur under the
Indenture which would permit the Noteholders (subject to satisfaction of certain
procedures and certain rights of the Issuer) to accelerate the maturity of the
Notes, foreclose on the Trust Estate, and in certain circumstances cause the
sale of the Trust Estate. See "Description of the Notes--Indenture."
PLEDGE OF THE 1996-1 SUBI TO THE INDENTURE TRUSTEE
Immediately following the lease of the 1996-1 SUBI to the Lessee, the
Issuer will pledge its interest in the 1996-1 SUBI, subject to the Lessee's
rights under the Master Lease, as part of the Trust Estate pledged to the
Indenture Trustee as security for the repayment of the Notes. See "Property of
the Issuer."
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THE ORIGINATION TRUST
GENERAL
The Origination Trust is an Alabama trust formed pursuant to the
Origination Trust Agreement. The primary business purpose of the Origination
Trust is to take assignments of, and serve as record holder of title to,
substantially all of the fixed rate retail closed-end lease contracts and the
related leased vehicles originated through Dealers in the World Omni network of
dealers since November 1993. Pursuant to the Servicing Agreement, World Omni
will service the lease contracts included in the Origination Trust Assets,
including the Series 1996-1 Contracts. For further information regarding the
Origination Trust and the servicing of the Origination Trust Assets, see
"Additional Document Provisions--The SUBI Trust Agreement" and "--The Servicing
Agreement" and "Certain Legal Aspects of the Origination Trust and the SUBI--The
Origination Trust".
Except as otherwise described under "Additional Document
Provisions--The SUBI Trust Agreement", pursuant to the Origination Trust
Agreement, the Origination Trust has not and will not (i) issue interests
therein or securities thereof other than the 1996-1 SUBI Certificate, Other
SUBIs representing divided interests in Other SUBI Assets and certificates (the
"Other SUBI Certificates") representing Other SUBIs or portions thereof, and one
or more certificates (the "UTI Certificates") representing the UTI or portions
thereof; (ii) borrow money (except from World Omni) in connection with funds
used to acquire lease contracts and the related leased vehicles; (iii) make
loans; (iv) invest in or underwrite securities, other than Permitted Investments
or as otherwise permitted by the Origination Trust Agreement or the SUBI Trust
Agreement; (v) offer securities in exchange for property (other than the 1996-1
SUBI Certificate, the Other SUBI Certificates and the UTI Certificates); or (vi)
repurchase or otherwise reacquire its securities except in connection with
financing or refinancing the acquisition of lease contracts and the related
leased vehicles or as otherwise permitted by each such financing or refinancing.
(SUBI Trust Agreement, Section 5.01). The Origination Trust will not be
permitted to acquire lease contracts otherwise than through dealers in the World
Omni network of Dealers, unless such lease contracts are (in World Omni's
reasonable judgment) originated generally in accordance with World Omni's
then-current lease contract underwriting standards. (SUBI Trust Agreement,
Section 2.01). The Origination Trust Agreement will permit the Origination
Trust, in the course of its activities, to incur certain liabilities relating to
its assets other than the 1996-1 SUBI Assets, or relating to its assets
generally, and to which, in certain circumstances, the 1996-1 SUBI Assets may be
subject, as more fully described under "Risk Factors--Structural
Considerations--Allocation of Origination Trust Liabilities" and "--Third-Party
Liens on 1996-1 SUBI Assets". However, the Origination Trust Agreement will
require the holders from time to time of Other SUBI Certificates and any UTI
Certificates to waive any claim that they might otherwise have with respect to
the 1996-1 SUBI Assets and to fully subordinate any claims to the 1996-1 SUBI
Assets in the event that this waiver is not given effect. Similarly, by virtue
of holding Notes (or a beneficial interest therein) or Certificates,
Noteholders, Note Owners and Certificateholders will be deemed to have waived
any claim that they might otherwise have with respect to Other SUBI Assets and
the UTI Assets.
ALFI AND ALFI L.P.
ALFI is a wholly owned, special purpose finance subsidiary of World
Omni and was organized solely for the purpose of acting as general partner of
ALFI L.P. ALFI L.P. was organized
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solely for the purpose of being grantor and initial beneficiary of the
Origination Trust, holding the UTI and the UTI Certificate, acquiring interests
in the 1996-1 SUBI and the Other SUBIs and engaging in related transactions.
ALFI's articles of incorporation and ALFI L.P.'s limited partnership agreement
limit their respective activities to the foregoing purposes and to any
activities incidental to and necessary for such purposes. ALFI may not transfer
its general partnership interest in ALFI L.P. so long as any financings
involving interests in the Origination Trust (including the transaction
described herein) are outstanding.
THE ORIGINATION TRUSTEE
The Origination Trustee is a wholly owned, special purpose subsidiary
of First Bank National Association ("First Bank") that was organized in 1993
solely for the purpose of acting as Origination Trustee. First Bank, as Trust
Agent (the "Trust Agent"), serves as agent for the Origination Trustee to
perform certain functions of the Origination Trustee pursuant to the Origination
Trust Agreement. (Origination Trust Agreement, Section 5.03). The Origination
Trust Agreement provides that in the event that First Bank no longer can be the
Trust Agent, the designee of ALFI L.P. (who may not be ALFI L.P. or any
affiliate thereof) will have the option to purchase the stock of the Origination
Trustee for a nominal amount. If ALFI L.P.'s designee does not timely exercise
this option, then the Origination Trustee will appoint a new trust agent, and
that new trust agent (or its designee) will next have the option to purchase the
stock of the Origination Trustee. If none of these options is timely exercised,
First Bank may sell the stock of the Origination Trustee to another party.
(Origination Trust Agreement, Section 6.10).
PROPERTY OF THE ORIGINATION TRUST
The property of the Origination Trust consists of (i) fixed rate retail
closed-end lease contracts originated throughout the United States and assigned
to the Origination Trust by World Omni or Dealers since November 1993 and all
monies due from lessees thereunder; (ii) the automobiles and light duty trucks
leased pursuant thereto and all proceeds thereof; (iii) all of World Omni's
rights (but not its obligations) with respect to such lease contracts and leased
vehicles, including the right to receive proceeds of Dealer repurchase
obligations, if any; (iv) the rights to proceeds from residual value, physical
damage, credit life, disability and all other insurance policies, if any,
covering the lease contracts, the related lessees or the leased vehicles,
including, but not limited to, the Contingent and Excess Liability Insurance
Policies; (v) all security deposits with respect to such lease contracts to the
extent due to the lessor thereunder; and (vi) all proceeds of the foregoing
(collectively, the "Origination Trust Assets"). From time to time after the date
of this Prospectus, World Omni will cause Dealers to originate additional retail
closed-end lease contracts and to assign such lease contracts to the Origination
Trustee on behalf of the Origination Trust and, as described below, title the
related leased vehicles in the name of the Origination Trustee on behalf of the
Origination Trust. (Origination Trust Agreement, Section 2.01).
CONTRACT ORIGINATION; TITLING OF LEASED VEHICLES
All lease contracts originated by the Origination Trust have been, or
will be, underwritten using the underwriting criteria described under "World
Omni--Lease Contract Underwriting Procedures". In connection with the
origination of each lease contract, the Origination Trustee, on behalf of the
Origination Trust, will be listed as the owner of the related leased vehicle on
the related certificate of title. Liens will not be placed on such certificates
of title, and new certificates of title
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<PAGE> 41
will not be issued, to reflect the interest of the Indenture Trustee, as holder
of the 1996-1 SUBI Certificate, in the Series 1996-1 Leased Vehicles. The
certificates of title to the Series 1996-1 Leased Vehicles will, however,
reflect a first lien recorded in favor of Bank of America Trust Company of
Florida, N.A. or AL Holding Corp. (collectively, the "Administrative
Lienholders"). Such lien (the "Administrative Lien") will exist solely to assure
delivery of the certificates of title to the Series 1996-1 Leased Vehicles to
the Servicer. Neither of the Administrative Lienholders will have any interest
in any of the Series 1996-1 Leased Vehicles.
Pursuant to agreements between World Omni and the Dealers, each Dealer
is obligated, after origination of lease contracts and assignment thereof to the
Origination Trustee on behalf of the Origination Trust, to repurchase such lease
contracts which do not meet certain representations and warranties made by such
Dealer. These representations and warranties relate primarily to the origination
of the lease contracts and the titling of the related leased vehicles, and do
not typically relate to the creditworthiness of the related lessees or the
collectibility of such lease contracts. The Dealer agreements do not generally
provide for recourse to the Dealer for unpaid amounts in respect of a defaulted
lease contract, other than in connection with the breach of the foregoing
representations and warranties. The rights of World Omni to receive proceeds of
such Dealer repurchase obligations will constitute Origination Trust Assets (and
accordingly will constitute 1996-1 SUBI Assets to the extent they relate to the
Series 1996-1 Contracts and Series 1996-1 Leased Vehicles), although the related
Dealer agreements will not constitute Origination Trust Assets.
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USE OF PROCEEDS
The net proceeds from the sale of the Notes (i.e., the proceeds of the
public offering of the Notes minus expenses relating thereto) will be applied by
the Seller to purchase the 1996-1 SUBI Certificate from ALFI L.P.
THE SELLER
The Seller is a wholly owned, special purpose finance subsidiary of
World Omni and was incorporated under the laws of Delaware in November 1996. The
principal office of the Seller is located at 120 Northwest 12th Avenue,
Deerfield Beach, Florida 33442 and its telephone number is (954) 429-2200.
The Seller was organized solely for the purpose of acquiring interests
in the 1996-1 SUBI and Other SUBIs, selling such interests, entering into leases
as lessee of such interests, and engaging in related transactions. The
certificate of incorporation of the Seller limits its activities to the
foregoing purposes and to any activities incidental to and necessary for such
purposes.
WORLD OMNI
GENERAL
The Series 1996-1 Contracts were assigned to the Origination Trust by
Dealers. World Omni is a Florida corporation and a wholly owned subsidiary of
JMFE, which is primarily engaged, through its subsidiaries, in providing Toyota
dealerships in the Five State Area, as well as other automotive dealerships
within and outside the Five State Area, with a full range of distribution and
financial services. In January 1993, a predecessor corporation to World Omni
merged with its sister automobile leasing company, World Omni Leasing, Inc., in
connection with which the name World Omni Financial Corp. was retained. The
Seller is a wholly owned, special purpose finance subsidiary of World Omni.
In addition to the lease contract financing described below, World Omni
provides retail installment contract financing to retail customers of certain
automotive dealers and wholesale floorplan financing and capital and mortgage
loans to dealers and customers of Southeast Toyota Distributors, Inc. ("SET"),
World Omni's sister corporation, as well as to other automotive dealers within
and outside the Five State Area.
SET is the exclusive distributor of Toyota cars and light duty trucks,
parts and accessories in the Five State Area. As such, SET is the sole provider
of Toyotas to Dealers in the Five State Area. SET distributes Toyota vehicles
pursuant to a Distributor Agreement, which first was entered into in 1968 and
has been renewed through October 1999, with Toyota Motor Sales, USA, Inc.
("TMS"), a California corporation that is wholly owned by Toyota Motor
Corporation, the largest automotive company in Japan. Lexus cars, parts and
accessories are distributed in the Five State Area directly by TMS and not by
SET. SET's consolidated revenues for the years ended December 31, 1995, December
31, 1994 and December 31, 1993 were approximately $3.8 billion, approximately
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<PAGE> 43
$3.5 billion and approximately $3.0 billion, respectively. Since March 1996,
substantially all financial services provided by World Omni to, by and through
SET's Toyota Dealers in the Five State Area have been provided under the name
"Southeast Toyota Finance".
World Omni (either directly or through the Origination Trust and
certain special purpose finance subsidiaries of World Omni) owns and leases
vehicles primarily through more than 1000 Dealers located throughout the United
States. The Dealers that are the sources for the Series 1996-1 Contracts and the
Series 1996-1 Leased Vehicles are predominantly Toyota dealerships. Pursuant to
written agreements with World Omni, each Dealer offers automobiles and light
duty trucks for set lease periods pursuant to World Omni-approved terms and a
World Omni-supplied form of closed-end retail motor vehicle lease and disclosure
statement. Each Dealer is responsible for obtaining certain credit-related
information about a prospective lessee and for forwarding such information to
World Omni's central operations center in Mobile, Alabama (the "Mobile Center")
or to Southeast Toyota Finance's offices in Deerfield Beach, Florida, (the
"Deerfield Office"), as applicable. At the Mobile Center or the Deerfield
Office, each application is reviewed, evaluated and "scored" as described under
"World Omni--Lease Contract Underwriting Procedures". The results of this
computer-based evaluation are then sent to one of World Omni's purchase offices
for final review and credit evaluation. The related purchase office then advises
the Dealer if such applicant is acceptable to World Omni. If a prospective
lessee is accepted, the Dealer will prepare all necessary paperwork to sell the
vehicle from its inventory to World Omni or its designee, and to enter into a
lease contract with its customer and assign the lease contract to World Omni or,
at World Omni's direction, a different assignee. Substantially all retail lease
contracts originated by World Omni Dealers are assigned to, and the related
leased vehicles are titled in the name of, the Origination Trustee on behalf of
the Origination Trust. For further information regarding the underwriting of
lease contracts, see "World Omni--Lease Contract Underwriting Procedures".
World Omni's lease contracts are serviced primarily through the Mobile
Center, which handles collection activities, operational accounting, insurance
verification and dealer and customer inquiries for World Omni. In addition, the
Mobile Center and the Deerfield Office verify that all documents supplied by a
Dealer with respect to a lease contract conform with World Omni's requirements.
World Omni initiated operations in 1982, and as of December 31, 1995,
December 31, 1994 and December 31, 1993, World Omni and its affiliates had
approximately 156,900, 115,900 and 75,200 retail lease contracts outstanding,
respectively. Aggregate net outstanding principal balances of retail lease
contracts at such dates (including retail lease contracts that were sold but are
still being serviced by World Omni), were $2.8 billion, $1.8 billion and $1.1
billion, respectively. Of these amounts, the related leased vehicles had an
estimated aggregate residual value as of the end of their lease terms of
approximately $2.0 billion, $1.2 billion and $605 million, respectively. For the
years ended December 31, 1995, December 31, 1994 and December 31, 1993, World
Omni's consolidated gross revenues were approximately $228 million,
approximately $199 million and approximately $171 million, respectively.
The principal executive offices of World Omni are located at 120
Northwest 12th Avenue, Deerfield Beach, Florida 33442 and its telephone number
is (954) 429-2200.
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<PAGE> 44
LEASE CONTRACT UNDERWRITING PROCEDURES
World Omni has underwritten retail motor vehicle lease contracts since
February 1983. The Series 1996-1 Contracts were underwritten by the Origination
Trust through World Omni's purchase offices.
The World Omni underwriting standards are intended to evaluate a
prospective lessee's credit standing and repayment ability. Generally, a
prospective lessee is required by the Dealer to complete a credit application on
a form prepared or approved by World Omni. As part of the description of the
applicant's financial condition, the applicant is required to provide current
information enumerating, among other things, employment history, residential
status, bank account information, annual income and credit references. The
Dealer then transmits the completed application to the Mobile Center or the
Deerfield Office, as applicable. Upon receipt, all application data is entered
into a centralized computer network (owned and maintained by a division of JMFE)
that automatically obtains an independent credit bureau report and then "scores"
the application with the use of a scorecard. The scorecard enables World Omni to
review an application and establish the probability that the proposed lease
contract will be paid in accordance with its terms. The credit scores rank-order
applications according to credit risk, which is the likelihood that the account
will be delinquent or repossessed. The application also is evaluated against a
"cutoff score" established by World Omni as the minimum acceptable score to
purchase a lease contract, which is revised from time to time as changes occur
in economic conditions and World Omni's lease contract portfolio.
This numerical credit scoring system was developed by Fair, Isaac &
Company ("Fair, Isaac"), a lending and leasing consulting firm, specifically for
World Omni based upon an analysis of the historical performance of the retail
automobile and light duty truck lease and installment sale contract portfolios
of World Omni. To determine the appropriate characteristics for credit scoring,
Fair, Isaac reviewed a random sample of 10,000 retail lease contracts and 10,000
retail installment sale contracts from World Omni's portfolio. Fair, Isaac then
compiled a list of ten to twelve characteristics that cumulatively carried the
most weight in predicting historical performance and assigned point values and
weighting to each of these characteristics. The weighting system is particularly
significant because the weightings are beyond the control of a dealer and cannot
be manipulated. Fair, Isaac determined that the most accurate determinative of
the performance of a lease or installment sale contract was the credit bureau
report. Based on such historical performance, Fair, Isaac prepared two retail
credit and two lease scorecards (which differ according to the geographical
location of the dealer). Each scorecard assigns at least a 50% weighting to the
credit bureau report.
The Fair, Isaac scorecard system was implemented in the fourth quarter
of 1990 and has been used for substantially all lease contracts originated
subsequent thereto (although lessees with established credit histories with
World Omni may, in limited circumstances, be pre-approved for new leases). Prior
to that time, World Omni used a scoring model which, while not developed
specifically for it, was used in the automobile lending industry. The numerical
scoring model is intended to provide a means of analysis to assist in decision
making, but the final decision rests with World Omni's credit specialists. In
general, however, a credit specialist currently may not override the scorecard
analysis by more than 10% of all applications above the cutoff score and 15% of
applications below the cutoff score. Both the number of overrides granted by
each credit specialist and the aggregate number of overrides granted by all
credit specialists are tracked by World Omni daily in order to insure the
statistical validity of the scoring models. Detailed reporting on all aspects of
the
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<PAGE> 45
numerical scoring model is utilized to track performance of World Omni's retail
automobile and light duty truck lease contract portfolio and to enable World
Omni, with the assistance of Fair, Isaac, to fine tune the scoring model
according to statistical indications in order to continually assure the
statistical validity of the scoring models.
For the years ended December 31, 1995, December 31, 1994 and December
31, 1993, World Omni, either directly or through the Origination Trust and
certain special purpose finance subsidiaries of World Omni, on average, booked
approximately 71%, approximately 75% and approximately 68%, respectively, of all
credit applications relating to leased vehicles. These averages generally
reflect adjustments in underwriting criteria in connection with the use of the
Fair, Isaac scorecard system. Substantially all of the Series 1996-1 Contracts
were underwritten using the Fair, Isaac numerical scorecard. See "The Series
1996-1 Contracts--Characteristics of the Series 1996-1 Contracts" for further
information on the identity and characteristics of the Series 1996-1 Contracts.
After an application has been approved by a World Omni purchase office
and the prospective lessee has agreed to the terms of the related lease
contract, including an assignment of the lease contract from the Dealer to World
Omni (or, at the direction of World Omni, an assignee thereof), the Mobile
Center or the Deerfield Office, as applicable, receives from the Dealer a lease
contract package containing, among other things, the standard form lease
contract between the Dealer and the lessee, the customer's application,
applicable insurance information (company, agent and additional insured(s), with
the lessor named as loss payee) and the customer's first payment and security
deposit. The Mobile Center or the Deerfield Office, as applicable, determines
whether such package complies with its requirements. The specifics of the lease
contract are compared to the application approved by the purchasing department,
and the rate, truth-in-leasing disclosures and purchase price from the Dealer
are verified.
INSURANCE
Each lease contract requires the lessee to maintain automobile bodily
injury and property damage liability insurance which must name the dealer's
assignee (with respect to the Series 1996-1 Contracts, the Origination Trustee
on behalf of the Origination Trust) as additional insured. Each lease contract
further requires the lessee to maintain (all risks) comprehensive and collision
insurance covering damage to the leased vehicle and naming the dealer's assignee
(with respect to the Series 1996-1 Contracts, the Origination Trustee on behalf
of the Origination Trust) as loss payee. The insurance coverage is verified
independently and tracked by World Omni (through its agents) throughout the term
of the lease contract. If at any point during the term of the lease contract
World Omni cannot verify within 60 days that the required insurance is in place,
such lease contract would, by its terms, be in default and World Omni generally
would repossess the related leased vehicle.
COLLECTION, REPOSSESSION AND DISPOSITION PROCEDURES
Collection efforts are primarily performed through the Mobile Center.
These efforts are enhanced by the use of an automated dialing system.
Notwithstanding the centralization of collection efforts, repossessions continue
to be handled locally, as independent contractors are employed in connection
with repossessions. General guidelines for collection of lease contracts and
repossession of leased vehicles include the following:
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<PAGE> 46
<TABLE>
<CAPTION>
NUMBER OF
DAYS DELINQUENT ACTION
--------------- ------
<S> <C>
22-45 Telephone contact with the lessee is initiated
46-89 Telephone and/or field collections continue
60-90 The leased vehicle is normally repossessed
</TABLE>
Occasionally, situations occur in the collection process when a lessee
has become delinquent and is willing but unable to bring the related account
current (i.e., a skipped payment). In this situation, at the discretion of
collection department management, but subject to extensive guidelines, the lease
contract may be extended, provided that the lessee pays an extension fee (each,
an "Extension Fee") equal to the lesser of (i) the product of 1.15% multiplied
by the outstanding principal balance of such lease contract, and (ii) one-half
of the related monthly contract payment. In circumstances deemed appropriate by
collection department management, World Omni may reduce or waive the payment by
the lessee of an Extension Fee. However, the Servicing Agreement will require
that all Extension Fees relating to the Series 1996-1 Contracts be deposited
into the Lessee Collection Account and that a Contract may not be extended more
than five times. Moreover, no extensions of a Contract may be made for more than
five months in the aggregate or to a date later than the last day of the month
immediately preceding the month in which the Final Scheduled Payment Date
occurs, as described under "Additional Document Provisions--The Servicing
Agreement--Collections".
World Omni disposes of off-lease vehicles through several outlets,
including a Toyota "certified" program, in which vehicles are inspected and
given body work, repairs and maintenance as needed, certified as meeting the
program standards, and then sold to automobile dealers primarily in World Omni's
dealer network for retail sale; large regional automobile auctions which are
utilized for off-lease vehicle sales in addition to liquidation of repossessed
vehicles; and negotiated sales of groups of vehicles to rental companies and
fleet lessors.
DELINQUENCY, REPOSSESSION AND LOSS DATA
The following tables set forth certain delinquency, repossession and
loss data with respect to World Omni's retail automobile and light duty truck
lease contract portfolio similar to the Series 1996-1 Contracts and originated
by Dealers located throughout the United States, including (unless otherwise
indicated in such table) lease contracts assigned to the Origination Trust and
lease contracts owned by World Omni and special purpose finance subsidiaries of
World Omni, as of and for the years ended December 31, 1991 through December 31,
1995 and as of and for the nine months ended September 30, 1996.
As shown on these tables, World Omni's delinquency rates during 1993
and 1994 were generally consistent, decreasing from 1991 and 1992 largely due to
improved credit quality resulting from stricter underwriting standards
(including the implementation of a new computerized credit evaluation system and
the effects of the implementation of the Fair, Issac credit scoring system in
the fourth quarter of 1990), an improved collection system and the
implementation of centralized collection efforts through the Mobile Center.
Delinquency rates increased in 1995 as compared with 1994 due primarily to
somewhat weaker economic conditions. Delinquencies continued to trend up in
1996, consistent with recent trends in overall consumer credit and, to a lesser
extent, due to some
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<PAGE> 47
disruption in collection activity caused by the implementation of a new
collection system at the Mobile Center in 1996.
Average Net Repossession Losses per Liquidated Lease Contract were high
in 1991 mainly due to a weakened used car market, which increased loss severity.
The lower total Net Repossession Loss figures from that time through 1994 were
attributed to both lower frequency (fewer repossessions as a result of improved
credit quality and a stronger economy) and decreased severity (as the used car
market improved during this period).
[Total Net Repossession Losses increased in 1995 and through June 1996
(on an annualized basis) compared to 1994 primarily as a result of the
increasing number of lease contracts outstanding and the higher Average Net
Repossession Loss per Liquidated Lease Contract. The higher Average Net
Repossession Loss per Liquidated Lease Contract in 1995 and through June 1996 is
generally due to higher average amounts being financed, generally higher
residual values and a shortening of lease terms. In general, as lease terms
shorten, the average time until repossession declines and a higher loss per
repossession generally occurs.]
World Omni's total losses and average loss per vehicle realized on the
disposition of vehicles in connection with leases that reached scheduled
termination substantially decreased from 1991 to 1994. Management attributes
this decrease primarily to an improved used car market during the same period
and World Omni's pro-active lease termination programs implemented in 1990.
During the year ended December 31, 1995, the ratio of leased vehicles
"returned to and sold" by World Omni to leased vehicles "scheduled to terminate"
(the "Full Termination Ratio" in the table below), as well as total losses on
vehicles that reached scheduled termination and were sold (and related average
losses per vehicle sold), increased primarily as a result of special 18-month
lease programs introduced in the summer of 1993 on certain Toyota light-duty
trucks and vehicles. Vehicles leased under these special programs had higher
than normal returns at lease expiration due to a number of factors relating
particularly to these special programs. This, in turn, increased losses with
respect to these special programs for the year ending December 31, 1995.
Excluding these special programs, for the year ended December 31, 1995, World
Omni would have experienced a Full Termination Ratio of approximately 7%. World
Omni does not believe that any prior period included in the tables below was
materially affected by any similar nonrecurring event.
There are no special 18 month program leases included in the Series
1996-1 Contracts. Therefore, losses in respect of the 18 month special program
vehicles have not, and any additional losses will not, adversely affect
Noteholders.
[During the first six months of 1996, World Omni experienced higher
returns and losses on a greater portion of two year leases than in previous
years. In general, management believes that these higher returns and losses on
two year leases resulted from higher residual values that were established with
respect to the vehicles returned. Additionally, the 18 month special program
discussed above had a continued impact on losses through June 1996. These two
factors were the primary reasons for the higher Full Termination Ratio for the
first six months of 1996.]
In the spring of 1996, World Omni changed certain characteristics of
its two year lease programs such that the volume of two year leases thereafter
was significantly curtailed. There are no two year lease contracts in the Series
1996-1 Contracts. However, World Omni management expects
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<PAGE> 48
that vehicles leased under two year leases will continue to experience returns
and losses for the foreseeable future at rates higher than the total World Omni
lease portfolio.
The new and used car market has experienced growth over the last five
years, showing some weakness towards the end of 1995. This overall growth in the
new and used car market may not continue, which could negatively affect World
Omni's returns and losses in the future. As a result, losses on returned and
sold vehicles may increase and the Full Termination Ratio may increase. Based
upon prior experience however, World Omni does not believe that the effect of
these recent negative trends will materially adversely affect Noteholders or
World Omni's business. However, no assurances can be given in this regard.
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<PAGE> 49
The data presented in the following tables are for illustrative
purposes only. Delinquency, repossession and loss experience may be influenced
by a variety of economic, social, geographic and other factors. There is no
assurance that World Omni's delinquency, repossession and loss experience with
respect to its retail automobile and light duty truck lease contracts and the
related leased vehicles in the future, or the experience with respect to the
Series 1996-1 Contracts and the Series 1996-1 Leased Vehicles, will be similar
to that set forth below.
RETAIL VEHICLE LEASE CONTRACT DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
AT DECEMBER 31,
AT ---------------
SEPTEMBER 30,
1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Dollar Amount of
Lease Contracts(1) $ $2,798,830 $1,823,823 $1,039,888 $624,017 $510,518
Ending Number of
Lease Contracts 156,471 114,298 71,198 48,646 45,202
Number and Percentage of
Lease Contracts
Delinquent (2)(3)(4)
31-60 Days 1,745 1.12% 1,114 0.97% 625 0.88% 756 1.55% 1,104 2.44%
61-90 Days 118 0.08 38 0.03 27 0.04 16 0.03 92 0.20
91 Days or More --- --- 18 0.01 7 0.01 3 0.00 2 0.00 11 0.02
----- ---- ----- ---- --- ---- --- ---- ----- ----
Total 1,881 1.21% 1,159 1.01% 655 0.92% 774 1.58% 1,207 2.66%
</TABLE>
- ----------------
(1) Based on the sum of all principal amounts outstanding under lease
contracts originated by World Omni in the United States (inclusive of
the residual values of the related leased vehicles).
(2) Excludes lease contracts the related lessees of which are bankrupt or
have commenced bankruptcy proceedings. As of September 30, 1996,
approximately __ lease contracts involving bankrupt lessees were
delinquent for at least 61 days.
(3) The period of delinquency is based on the number of days payments are
contractually past due.
(4) As a percentage of the total number of lease contracts at period end.
48
<PAGE> 50
RETAIL VEHICLE LEASE CONTRACT REPOSSESSION AND LOSS EXPERIENCE
<TABLE>
<CAPTION>
AT
SEPTEMBER 30, AT DECEMBER 31,
1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Dollar Amount
of Lease Contracts(1) $2,798,830 $1,823,823 $1,039,888 $624,017 $510,518
Ending Number of
Lease Contracts 156,471 114,298 71,198 48,646 45,202
Average Lease Contracts
Outstanding 133,069 93,023 58,605 46,013 46,571
Repossessions:
Number of Repossessions 2,519 1,776 1,287 1,916 2,205
Number of Repossessions
as a Percentage of:
Lease Contracts
Outstanding (4) 1.61% 1.55% 1.81% 3.94% 4.88%
Average Lease
Contracts
Outstanding (4) 1.89% 1.91% 2.20% 4.16% 4.73%
Losses:
Average Net
Receivables
Outstanding $2,243,790 $1,426,382 $817,452 $548,852 $526,197
Net Repossession
Losses(2) $ 11,347 $ 6,283 $ 3,811 $ 5,759 $ 10,878
Average Net
Repossession Loss
per Liquidated
Lease Contract(1)(3) $ 4,505 $ 3,538 $ 2,961 $ 3,006 $ 4,933
Net Repossession
Losses as a
Percentage of
Average Net
Receivables (4) 0.51% 0.44% 0.47% 1.05% 2.07%
</TABLE>
- ---------------
(1) Based on the sum of all principal amounts outstanding under lease
contracts originated by World Omni in the United States (inclusive of
the residual values of the related leased vehicles).
(2) Includes losses on charged-off accounts, but does not include expenses
incurred to dispose of vehicles.
(3) Dollars not in thousands.
(4) Annualized.
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<PAGE> 51
RESIDUAL VALUE LOSS EXPERIENCE(1)
<TABLE>
<CAPTION>
AT
SEPTEMBER 30, AT DECEMBER 31,
1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Total Number of Leased
Vehicles Scheduled
to Terminate 25,677 14,775 17,218 15,155 13,541
Number of Leased Vehicles
Returned to and Sold
by World Omni 4,611 779 2,050 2,142 2,031
Full Termination Ratio(2) 18.0%(5) 5.3% 11.9% 14.1% 15.0%
Total Losses/(Gains) on
Vehicles that Reached
Scheduled Term(3) $ 1,893 $ (168) $ 503 $ 894 $ 2,389
Average Loss/(Gain)(4) $ 411 $ (216) $ 245 $ 417 $ 1,176
</TABLE>
- -----------------
(1) Because the terms of the retail closed-end lease contracts originated
by World Omni have gradually shifted from five years to three years
since 1991, the residual value loss experience for the periods in the
table may not be fully comparable.
(2) The ratio of line 2 over line 1 expressed as a percentage.
(3) Includes expenses incurred in disposal of vehicles returned to World
Omni in 1991. Due to system changes, figures for periods after 1991 do
not include expenses as such information was not readily available.
(4) Dollars not in thousands.
(5) The ratio for the year ended December 31, 1995 includes special program
vehicles referenced under "Delinquency, Repossession and Loss Data"
above. Excluding those vehicles, the ratio would have been 7.1%.
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<PAGE> 52
THE SERIES 1996-1 CONTRACTS
GENERAL
The Series 1996-1 Contracts will consist of a pool of 22,399 closed-end
retail lease contracts, having an aggregate Outstanding Principal Balance as of
the Cutoff Date of $550,184,929, selected from the Origination Trust's portfolio
of retail closed-end automobile and light duty truck lease contracts that are
not evidenced by or reserved for allocation to an Other SUBI. The Series 1996-1
Contracts were originated by Dealers located throughout the United States and
assigned to the Origination Trust, in accordance with the underwriting
procedures described under "World Omni--Lease Contract Underwriting Procedures".
The Series 1996-1 Contracts have been selected based upon the criteria specified
in the SUBI Trust Agreement and described under "The Series 1996- 1
Contracts--Characteristics of the Series 1996-1 Contracts--General" and
"--Representations, Warranties and Covenants". World Omni will represent and
warrant that, except as otherwise described in the immediately preceding
sentence, no adverse selection procedures were employed in selecting the Series
1996-1 Contracts for inclusion in the 1996-1 SUBI Assets and that it is not
aware of any bias in the selection of such Series 1996-1 Contracts that would
cause the delinquencies or losses on such Series 1996-1 Contracts to be worse
than other retail closed-end automobile and light duty truck lease contracts
held in the Origination Trust's portfolio; however, there can be no assurance
that the delinquencies or losses on the Series 1996-1 Contracts will not be
worse.
Each Series 1996-1 Contract will have been written for an original term
of not more than 60 months, for a "capitalized cost" (which may exceed the
manufacturer's suggested retail price), plus an implicit Lease Rate. The Series
1996-1 Contracts were written on a constant yield basis and provide for equal
Monthly Payments such that at the end of the lease term the capitalized cost has
been amortized to an amount equal to the Residual Value of the related Leased
Vehicle.
At the times of origination of the Series 1996-1 Contracts, the related
Series 1996-1 Leased Vehicles were new vehicles, dealer demonstrator vehicles
driven fewer than 6,000 miles or manufacturers' program vehicles. Manufacturers'
program vehicles are vehicles which have been sold directly by manufacturers to
rental car companies and returned to the manufacturer for resale, generally
after a period of eight to twelve months. Such vehicles generally are then
resold to dealers through an automobile auction.
All of the Series 1996-1 Contracts will be closed-end leases. Under a
"closed-end lease", at the end of its term, if the lessee does not elect to
purchase the related leased vehicle by exercise of the purchase option contained
in such lease contract, the lessee is required to return the leased vehicle to
or upon the order of the lessor, at which time the lessee will then owe only
incidental charges for excess mileage, excessive wear and use and other items as
may be due under such lease. In contrast, under an "open-end lease", the lessee
is also obligated to pay at the end of the lease term any deficit between the
fair market value of the leased vehicle at that time and the residual value
established at the time of origination of such lease.
Each lessee will be permitted to purchase the Series 1996-1 Leased
Vehicle at the end of the term of the related Series 1996-1 Contract. The
purchase price will be a fixed dollar amount equal to the Residual Value plus
any applicable taxes and all other incidental charges which may be due under the
Series 1996-1 Contract. In addition, each Series 1996-1 Contract will allow the
related lessee
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<PAGE> 53
voluntarily to terminate such series 1996-1 Contract by paying certain
miscellaneous charges and a termination amount more fully described below. In
most instances, the Series 1996-1 Contracts are not expected to run to their
full terms, as more fully described under "Risk Factors--Maturity and Prepayment
Considerations" and "Maturity, Prepayment and Yield Considerations".
Each Series 1996-1 Contract will provide that the lessor may terminate
such 1996-1 Contract and repossess the 1996-1 Leased Vehicle in the event of a
default by the Consumer Lessee. Events of default under the 1996-1 Contracts
will include, but will not be limited to, failure to make payment when due,
certain events of bankruptcy or insolvency, failure to maintain the insurance
required by such Series 1996-1 Contract, failure to maintain or repair the
Series 1996-1 Leased Vehicle as required or to comply with any other term or
condition of the 1996-1 Contract and the making of a material misrepresentation
by the lessee in the lease application. World Omni regularly tracks Consumer
Lessees' compliance with their payment and insurance obligations and monitors
the related leases for noncompliance as more fully described under "World
Omni--Insurance" and "--Collection, Repossession and Disposition Procedures".
In the forms of contract used by the Dealers to evidence the Series
1996-1 Contracts, upon early termination where the lessee is not in default and
does not exercise its option to purchase the Series 1996-1 Leased Vehicle, the
amount owed by the Consumer Lessee (the "Early Termination Charge") will be
determined by adding (i) the future Monthly Payments and any incidental charges
owing under the Series 1996-1 Contract, less unearned lease charges, (ii) the
Residual Value and (iii) a $250 processing fee, subtracting the "Realized Value"
(as described below), from the sale or other disposition of the related Series
1996-1 Leased Vehicle and applying the Security Deposit to reduce any
deficiency. In calculating the amount of unearned lease charges under clause (i)
above, the Series 1996-1 Contracts will provide that the "actuarial method" will
be used, in which monthly lease charges (including those for the month in which
the termination occurs) are earned in advance on the due dates of Monthly
Payments and Monthly Payments are deemed to have been received on their
scheduled due dates. If, instead, there is an early termination and the lessee
is in default, the amount owed by a lessee in default will be determined by
adding (i) the Early Termination Charge, (ii) payments accrued under the Series
1996-1 Contract through the date of termination, (iii) collection, repossession,
storage, preparation and sale expenses, (iv) attorneys' fees and disbursements
incurred after default (not exceeding 15% of the amount owed by the lessee) and
(v) simple interest at a 15% annual rate.
The "Realized Value" of a Series 1996-1 Leased Vehicle will be the
actual wholesale price or the wholesale price otherwise determined by World Omni
in a commercially reasonable manner. However, each Series 1996-1 Contract
provides that the lessee has the right to obtain from an independent third party
acceptable to the lessor a professional appraisal of the wholesale value of the
Series 1996-1 Leased Vehicle that could be realized at sale. This appraised
value then would be used as the wholesale value for purposes of calculating sums
due from the lessee. Although World Omni cannot predict whether any Consumer
Lessee will challenge the wholesale sale price determined by World Omni,
management of World Omni is unaware of any successful such challenge by any
lessee under its retail closed-end automobile and light duty truck lease
contracts. See "Maturity, Prepayment and Yield Considerations" for further
information relating to the relationship between payments on the Series 1996-1
Contracts and the effective yield on the Notes.
In the event of early termination of a Series 1996-1 Contract where the
lessee is in default, the amounts collected with respect to such Series 1996-1
Contract and the related Series 1996-1
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<PAGE> 54
Leased Vehicle (after deducting the costs and other sums retained by the
Servicer in connection therewith) may be less than the Outstanding Principal
Balance of such Series 1996-1 Contract, which shortfall can be due to, among
other things, the use of wholesale appraisal of a Series 1996-1 Leased Vehicle
as described above. In the event that a Series 1996-1 Contract reaches the date
on which the last Monthly Payment is due, as such date may have been extended
(the "Maturity Date"), but the related Series 1996-1 Leased Vehicle cannot be
sold or otherwise disposed of for a net amount at least equal to its Residual
Value, there may be an additional shortfall in amounts otherwise expected to be
received in respect of the SUBI Interest. In the event that any of the foregoing
shortfalls are not covered by Master Lease Payments or funds on deposit in the
Reserve Fund and the Residual Value Support Account, Net Insurance Proceeds or
Net Liquidation Proceeds, investors in the Notes could suffer a loss on their
investment.
CHARACTERISTICS OF THE SERIES 1996-1 CONTRACTS
General
The Series 1996-1 Contracts were selected by reference to several
criteria, including, as of the related Cutoff Date, that each Series 1996-1
Contract (i) is written with respect to a Series 1996-1 Leased Vehicle that was
at the time of the origination of the related lease contract a new vehicle, a
limited mileage dealer demonstrator vehicle or a manufacturers' program vehicle;
(ii) was originated in the United States after November 1, 1993; (iii) has a
Maturity Date on or after September 1, 1998 and no later than October 28, 2001;
(iv) fully amortizes to an amount equal to the Residual Value of the related
Series 1996-1 Leased Vehicle based on a fixed Lease Rate calculated on a
constant yield basis and provides for level payments over its term (except for
payment of the Residual Value); (v) was not more than 60 days past due as of the
Cutoff Date or the related Subsequent Cutoff Date, as the case may be; and (vi)
has never been extended for more than five months in the aggregate. (SUBI Trust
Agreement, Section 10.01). Appearing below is some additional information
regarding the characteristics of the Series 1996-1 Contracts:
SERIES 1996-1 CONTRACTS
<TABLE>
<CAPTION>
AVERAGE MINIMUM MAXIMUM
------- ------- -------
<S> <C> <C> <C>
Original Principal Balance $25,150.95 $ 7,060.00 $ 98,728.04
Outstanding Principal Balance(1) $24,562.92 $ 6,990.68 $ 92,889.94
Residual Value $15,758.53 $ 4,110.60 $ 61,564.80
Lease Rate(1) %(2) 8.07% 2.14% 12.65%
Seasoning (months)(1) 2.78(2) 1 14
Remaining Term (months)(1) 37.88(2) 22 59
- ----------------------------
</TABLE>
(1) As of the Cutoff Date.
(2) Weighted by Outstanding Principal Balance as of the Cutoff Date.
53
<PAGE> 55
Distribution of the Series 1996-1 Leased Vehicles by Make
As of the Cutoff Date, the composition of the Series 1996-1 Leased
Vehicles by make of vehicle was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
VEHICLE MAKE CONTRACTS CONTRACTS
- ------------ --------- ---------
<S> <C> <C>
Toyotas 13,025 58.15%
United States manufacturers 6,981 31.17
Other Japanese manufacturers 81 0.36
Other foreign manufacturers 2,312 10.32
------ ------
Total 22,399 100.00%
====== ======
</TABLE>
Distribution of the Series 1996-1 Contracts by Lease Rate
The distribution of the Series 1996-1 Contracts as of the Cutoff Date
by Lease Rate was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
INITIAL CUTOFF AGGREGATE INITIAL
DATE CUTOFF DATE
PERCENTAGE OF OUTSTANDING OUTSTANDING
NUMBER OF NUMBER OF PRINCIPAL PRINCIPAL
LEASE RATE RANGE CONTRACTS CONTRACTS BALANCE BALANCE
- ---------------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
2.00% - 2.99% 99 0.44% $ 2,075,994.06 0.38%
3.00% - 3.99% 271 1.21% 4,725,502.48 0.86%
4.00% - 4.99% 1,046 4.67% 17,420,476.13 3.17%
5.00% - 5.99% 2,107 9.41% 38,552,294.50 7.01%
6.00% - 6.99% 2,558 11.42% 49,143,681.07 8.93%
7.00% - 7.99% 2,847 12.71% 71,982,997.58 13.08%
8.00% - 8.99% 8,437 37.67% 241,137,953.42 43.83%
9.00% - 9.99% 4,067 18.16% 100,139,256.89 18.20%
10.00% - 10.99% 643 2.87% 17,225,239.54 3.13%
11.00% - 11.99% 296 1.32% 7,284,923.89 1.32%
12.00% - 12.99% 28 0.12% 496,609.44 0.09%
------ ------- --------------- -------
Total 22,399 100.00% $550,184,929.00 100.00%
====== ====== =============== ======
</TABLE>
54
<PAGE> 56
Distribution of the Series 1996-1 Contracts by Maturity
The distribution of the Series 1996-1 Contracts as of the Cutoff Date
by year of maturity was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
INITIAL CUTOFF AGGREGATE INITIAL
DATE CUTOFF DATE
PERCENTAGE OF OUTSTANDING OUTSTANDING
NUMBER OF NUMBER OF PRINCIPAL PRINCIPAL
YEAR OF MATURITY CONTRACTS CONTRACTS BALANCE BALANCE
- ---------------- --------- ------------- -------------- -----------------
<C> <C> <C> <C> <C>
1998 7 0.03% $ 268,953.65 0.05%
1999 14,006 62.53% 326,462,570.63 57.34%
2000 7,201 32.15% 185,966,675.92 33.80%
2001 1,185 5.29% 37,486,728.80 6.81%
------ ------ --------------- -----
Total 22,399 100.00% $550,184,929.00 100.00%
====== ====== =============== ======
</TABLE>
Distribution of the Series 1996-1 Contracts by State
The distribution of the Series 1996-1 Contracts as of the Cutoff Date
by State of origination, broken out for States representing 5% or more of the
number of Series 1996-1 Contracts, was as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
INITIAL CUTOFF AGGREGATE INITIAL
DATE CUTOFF DATE
PERCENTAGE OF OUTSTANDING OUTSTANDING
NUMBER OF NUMBER OF PRINCIPAL PRINCIPAL
STATE CONTRACTS CONTRACTS BALANCE BALANCE
- ----- --------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
Alabama 1,622 7.24% $ 35,793,621.95 6.51%
Florida 8,247 36.82 184,370,840.70 33.51
Georgia 3,287 14.67 73,213,866.68 13.31
New Jersey 1,248 5.57 44,019,038.21 8.00
North Carolina 4,092 18.27 89,031,548.38 16.18
All other states 5,006 17.43 123,756,013.08 22.49
------ ------ --------------- -------
Total 22,399 100.00% $550,184,929.00 100.00%
====== ====== =============== =======
</TABLE>
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Series 1996-1 Contracts and Series 1996-1 Leased Vehicles will be
described in a schedule appearing as an exhibit to the SUBI Trust Agreement (the
"Schedule of Series 1996-1 Contracts and Series 1996-1 Leased Vehicles").
55
<PAGE> 57
The Schedule of Series 1996-1 Contracts and Series 1996-1 Leased
Vehicles will identify each Series 1996-1 Contract by identification number,
will identify each Series 1996-1 Leased Vehicle by its vehicle identification
number and will set forth as to each such Series 1996-1 Contract, among other
things, its: (i) date of origination; (ii) Maturity Date; (iii) Monthly Payment;
(iv) original Outstanding Principal Balance; (v) Outstanding Principal Balance
and Discounted Principal Balance as of the Cutoff Date; and (vi) Residual Value.
(Servicing Agreement, Sections 1.01 and 10.01). In the Servicing Agreement,
representations and warranties will be made with respect to each Series 1996-1
Contract and 1996-1 Leased Vehicle to the effect described in the text of the
first paragraph under "The Series 1996-1 Contracts--Characteristics of the
Series 1996-1 Contracts--General", and certain other representations and
warranties will be made, including, among other things, that each such Series
1996-1 Contract and, to the extent applicable, the related Series 1996-1 Leased
Vehicle or Consumer Lessee: (a) was originated by a Dealer located in the United
States in the ordinary course of its business and in compliance with World
Omni's normal credit and collection policies and practices; (b) is owned by the
Origination Trustee, on behalf of the Origination Trust, free of all liens,
encumbrances or rights of others (other than the Administrative Lien); (c) was
originated in compliance with, and complies with, all material applicable legal
requirements; (d) all material consents, licenses, approvals or authorizations
of, or registrations or declarations with, any governmental authority required
to be obtained, effected or given by the originator of such Series 1996-1
Contract and the Origination Trustee in connection with (i) the origination of
such Series 1996-1 Contract, (ii) the execution, delivery and performance by
such originator of the Series 1996-1 Contract and (iii) the acquisition by the
Origination Trust of such Series 1996-1 Contract and 1996-1 Leased Vehicle, have
been duly obtained, effected or given and are in full force and effect as of
such date of creation or acquisition; (e) is the legal, valid and binding
obligation of the lessee; (f) to the knowledge of the Servicer, is not subject
to any right of rescission, setoff, counterclaim or any other defense of the
related lessee to pay the Outstanding Principal Balance due under such Series
1996-1 Contract and no such right of rescission, offset, defense or counterclaim
has been asserted or threatened; (g) the related Dealer, the Servicer and the
Origination Trustee have each satisfied all obligations required to be fulfilled
on its part with respect thereto; (h) is payable solely in United States dollars
in the United States; (i) the lessee thereunder is located in the United States
and is not (i) ALFI, ALFI L.P., the Seller or any of their respective affiliates
or (ii) the United States or any state or local government thereof, or any
agency, department or instrumentality of the United States or any state or local
government thereof; (j) requires the lessee to maintain insurance against loss
or damage to the related Series 1996-1 Leased Vehicle under an insurance policy
that names the Origination Trustee as loss payee; (k) the related certificate of
title therefor is registered in the name of the Origination Trustee (or a
properly completed application for such title has been submitted to the
appropriate titling authority); (l) is a closed-end lease that (i) requires
equal monthly payments to be made within 60 months of the date of origination of
such Series 1996-1 Contract and (ii) requires such payments to be made by the
lessee thereof within 30 days after the billing date for such payment; (m) is
fully assignable and does not require the consent of the lessee as a condition
to any transfer, sale or assignment of the rights of the originator; (n) has a
Residual Value that does not exceed an amount reasonably established by the
Servicer consistent with its policies and practices regarding the setting of
residual values as applied with respect to closed-end retail automobile and
light duty truck leases; (o) has never been extended by more than five months in
the aggregate or otherwise modified except in accordance with World Omni's
normal credit and collection policies and practices; (p) the lessee thereunder
has not made a claim under the Soldiers' and Sailors' Civil Relief Act of 1940;
(q) is not an Other SUBI Asset; (r) the Consumer Lessee thereunder is not
bankrupt or currently the subject of a bankruptcy proceeding; (s) is not more
than 60 days past due; (t) is a finance lease for accounting purposes; and (u)
is a "true lease" for applicable state law purposes. (SUBI Trust Agreement,
Section 10.01; Servicing Agreement, Sections 8.01 and 9.01).
56
<PAGE> 58
The Servicing Agreement will provide that upon the discovery by the
Origination Trustee, World Omni, the Owner Trustee, the Indenture Trustee, or
the Seller of a breach of any representation, warranty or covenant referred to
in the preceding paragraph that materially and adversely affects the owners of
interests in the 1996-1 SUBI or the Noteholders or Certificateholders in the
related Series 1996-1 Contract or Series 1996-1 Leased Vehicle, which breach is
not cured in all material respects within 60 days after World Omni discovers
such breach or is given notice thereof, then, World Omni will be required to
deposit (or cause to be deposited) into the Issuer Collection Account an amount
(the "Reallocation Payment") equal to the Discounted Principal Balance of such
Series 1996-1 Contract as of the last day of the Collection Period during which
the related cure period ended, plus an amount equal to any imputed lease charge
on such Series 1996-1 Contract at the related Lease Rate that was delinquent as
of the end of such Collection Period. The foregoing payment obligation will
survive any termination of World Omni as Servicer under the Servicing Agreement.
(Servicing Agreement, Sections 8.03 and 11.01).
MATURITY, PREPAYMENT AND YIELD CONSIDERATIONS
All of the Series 1996-1 Contracts will be prepayable, in whole or in
part, at any time without penalty. The prepayment experience with respect to the
Series 1996-1 Contracts will affect the life of the Notes.
In general, the rate of prepayments on the Series 1996-1 Contracts may
be influenced by a variety of economic, social, geographic and other factors.
The Origination Trust was formed and began to accept assignments of lease
contracts in November 1993. All of the lease contracts assigned to the
Origination Trust for allocation as 1996-1 SUBI Assets since that time have
been, and all of the lease contracts to be assigned to the Origination Trust
subsequent to the date of this Prospectus will be, assigned by Dealers using
World Omni's underwriting standards. Under its pro-active lease termination
program, World Omni actively encourages lessees under lease contracts with
remaining terms of less than one year to either buy, trade in or refinance the
related leased vehicles prior to the related scheduled maturities of such lease
contracts. World Omni estimates that on average over calendar years 1993, 1994
and 1995, and for the first nine months of 1996, an average of approximately %
of the number of retail automobile and light duty truck lease contracts in its
portfolio (including those owned by the Origination Trustee on behalf of the
Origination Trust and by certain special purpose finance subsidiaries of World
Omni) that were scheduled to mature during such period were terminated prior to
maturity, either because of voluntary prepayments or repossession of the leased
vehicles due to default by the lessees under the related lease contracts. World
Omni is not aware of any publicly available industry statistics that set forth
termination rates for retail closed-end automobile and light duty truck lease
contracts similar to the Series 1996-1 Contracts. The distribution of the Series
1996-1 Contracts by year of maturity is set forth under "The Series 1996-1
Contracts--Characteristics of the Series 1996- 1 Contracts--Distribution of the
Series 1996-1 Contracts by Maturity", and historical levels of lease contract
defaults, leased vehicle repossessions and losses and residual value losses are
discussed under "World Omni--Delinquency, Repossession and Loss Data". No
assurance can be given that the Series 1996-1 Contracts will experience the same
rate of prepayment or default or any greater or lesser rate than World Omni's
historical rate, or that the Residual Value experience of Series 1996-1 Leased
Vehicles related to Series 1996-1 Contracts that have reached their Maturity
Dates will differ from World Omni's historical residual value loss experience,
for all of the retail automobile and light duty truck lease contracts in its
portfolio (including those owned by the Origination Trustee on behalf of the
Origination Trust and by certain special purpose finance subsidiaries of World
Omni).
57
<PAGE> 59
The effective yield on, and average life of, the Notes will depend
upon, among other things, the amount of scheduled and unscheduled payments on or
in respect of the Series 1996-1 Contracts and the 1996-1 Leased Vehicles and the
rate at which such payments are paid to the Noteholders. The Noteholders
generally will receive 100% of the Discounted Principal Balance or outstanding
Principal Balance upon early termination of a Series 1996-1 Contract, but a
lesser portion of monthly payments and proceeds of the disposition of a Series
1996-1 Leased Vehicle following the scheduled termination of the related Series
1996-1 Contract. In the event of prepayments of the Series 1996-1 Contracts (and
payment of the Residual Value of the related Series 1996-1 Leased Vehicles),
Noteholders who receive such amounts may not be able to reinvest the related
payments of principal received on the Notes at yields as high as the Note Rate.
The timing of changes in the rate of prepayments on the Series 1996-1 Contracts
and payments in respect of the Series 1996-1 Leased Vehicles may also affect
significantly an investor's actual yield to maturity and the average life of the
Notes. A substantial increase in the rate of payments on or in respect of the
Series 1996-1 Contracts and 1996-1 Leased Vehicles (including prepayments and
liquidations of the Series 1996-1 Contracts) may shorten the final maturity of
and may significantly affect the yield on the Notes.
Additionally, although monies on deposit in the Issuer Collection
Account, the Payment Account, the Reserve Fund, and the Residual Value Support
Account will be invested in Permitted Investments, and all gain on other income
from such investments will be available for making the distributions described
under "Description of the Notes--Payments on the Notes--Payments of Interest",
no assurance can be made as to the rate of return that will be realized on such
Permitted Investments. Any reinvestment risk resulting from the rate of
prepayment of the Series 1996-1 Contracts (and payment of the Residual Value of
the related Series 1996-1 Leased Vehicles) and the making of the foregoing
investments will be borne entirely by the Noteholders and the
Certificateholders.
The yield to an investor who purchases Notes in the secondary market at
a price other than par will vary from the anticipated yield if the rate of
prepayment on the Series 1996-1 Contracts is actually different than the rate
anticipated by such investor at the time such Notes were purchased.
In sum, an investor's expected yield will be affected by the following
factors: (i) the price the investor paid for the Notes, (ii) the rate of
prepayments in respect of the Series 1996-1 Contracts and 1996-1 Leased Vehicles
and (iii) the investor's assumed reinvestment rate. These factors do not operate
independently, but are interrelated. For example, if the rate of prepayments on
or in respect of the Series 1996-1 Contracts and 1996-1 Leased Vehicles is
slower than anticipated, the investor's yield will be lower if interest rates
are higher than the investor anticipated and higher if interest rates are lower
than the investor anticipated. Conversely, if the rate of prepayments on or in
respect of the Series 1996-1 Contracts and 1996-1 Leased Vehicles is faster than
anticipated, the investor's yield will be higher if interest rates are higher
than the investor anticipated and lower if interest rates are lower than the
investor anticipated.
Prepayments on automobile lease contracts may be measured by a
prepayment standard or model. The prepayment model used with respect to the
Series 1996-1 Contracts is based on a prepayment assumption (the "Prepayment
Assumption") expressed in terms of percentages of ABS. "ABS" refers to a
prepayment model which assumes a constant percentage of the original number of
Series 1996-1 Contracts in a pool prepay each month. However, as used herein, a
100% Prepayment Assumption assumes that, based on the assumptions in the next
paragraph, the original Outstanding Principal Balance of a Series 1996-1
Contract will prepay as follows: (i) 0.55% ABS for the first six months of the
life of the Series 1996-1 Contract, (ii) 0.70% ABS for the seventh through
twelfth
58
<PAGE> 60
month of the life of the Contract, (iii) 0.85% ABS for the thirteenth through
eighteenth month of the life of the Contract, (iv) 1.15% ABS for the nineteenth
through twenty-fourth month of the life of the Contract and (v) 1.70% ABS
following the twenty-fourth month of the life of the Series 1996-1 Contract
until the original Outstanding Principal Balance of the Series 1996-1 Contract
has been paid in full. Neither ABS nor the Prepayment Assumption purports to be
a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of lease contracts, including the Series 1996-1
Contracts. There can be no assurance that the Series 1996-1 Contracts will
prepay at the indicated levels of the Prepayment Assumption or at any other
rate.
The following table was prepared on the basis of certain assumptions,
including that: (i) all Collections (including Monthly Payments and net sale
proceeds in respect of the 1996-1 Leased Vehicles relating to Matured Contracts)
are timely received, and that no Series 1996-1 Contracts are ever delinquent;
(ii) no Reallocation Payment is made in respect of any Series 1996-1 Contract;
(iii) the Seller does not exercise the Purchase Option as described herein; (iv)
all distributions of principal and interest on the Notes are made on the dates
specified herein; (v) the Servicing Fee is 1% per annum of the Aggregate Net
Investment Value; and (vi) all prepayments are full Prepayments; (vii) the
Series 1996-1 Contracts have assumed lease rates of % and were originated months
prior to the Cutoff Date.
No representation is made as to what the actual levels of losses and
delinquencies on the Series 1996-1 Contracts will be. Since the following table
was prepared on the basis of the foregoing assumptions, there will be
discrepancies between the characteristics of the Series 1996-1 Contracts that
actually will be allocated as 1996-1 SUBI Assets in respect of Principal
Collections and the characteristics of the Series 1996-1 Contracts assumed in
preparing the tables to be allocated as 1996-1 SUBI Assets in respect of
Principal Collections, as well as other discrepancies between the foregoing
assumptions and the actual experience in respect of the Series 1996-1 Contracts.
Any such discrepancy may increase or decrease the percentage of the Principal
Balance and the weighted average lives of the Notes set forth in the table. In
addition, since the Series 1996-1 Contracts will have characteristics which
differ from those assumed in preparing the table, distributions of principal on
the Notes may be made earlier or later than set forth in the table. Investors
are urged to make their investment decisions on a basis that includes their
determination as to anticipated prepayment rates under a variety of the
assumptions discussed herein.
The following table sets forth the percentages of the Initial Principal
Balance of the Notes that would be outstanding after each of the dates shown,
based on a rate equal to 0%, 50%, 100%, 150% and 200% of the Prepayment
Assumption. As used in the table, "0% Prepayment Assumption" assumes no
prepayments on a Contract, "50% Prepayment Assumption" assumes that a Contract
will prepay at 50% of the Prepayment Assumption, and so forth.
59
<PAGE> 61
PERCENTAGE OF INITIAL PRINCIPAL BALANCE REMAINING
AND WEIGHTED AVERAGE LIFE OF THE NOTES
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION
PAYMENT DATE 0% 50% 100% 150% 200%
- ------------ -- --- ---- ---- ----
<S> <C> <C> <C> <C> <C>
January 1997 % % % % %
July 1997
January 1998
July 1998
January 1999
July 1999
January 2000
July 2000
January 2001
July 2001
Weighted Average Life
(Years)(1) == === === === ==
</TABLE>
- ----------------------------
(1) The weighted average life of the Notes is determined by (i) multiplying
the amount of each principal payment by the number of years from the
Closing Date to the related Payment Date, (ii) adding the results and
(iii) dividing the sum by the Initial Principal Balance.
60
<PAGE> 62
NOTE FACTORS AND TRADING INFORMATION;
REPORTS TO NOTEHOLDERS
The "Note Factor", will each be a seven-digit decimal that the Servicer
will compute each month indicating the Principal Balance, as the case may be, as
of the close of business on the Payment Date in such month as a fraction of the
Initial Principal of the Notes. The Note Factor will initially be 1.0000000. The
Note Factor will decline to reflect reductions in the Principal Balance
resulting from distributions of principal and unreimbursed Note Principal Loss
Amounts, if any. The portion of the Note Balance for a given month allocable to
a Noteholder can be determined by multiplying the original denomination of the
holder's Note by the related Note Factor for that month.
Pursuant to the Indenture, the Indenture Trustee will provide to all
registered holders of the Notes (which shall be Cede as the nominee of DTC
unless Definitive Notes are issued under the limited circumstances described
herein) unaudited monthly reports concerning payments received on or in respect
of the Series 1996-1 Contracts and the Series 1996-1 Leased Vehicles, the
Aggregate Net Investment Value, the Note Factor and various other items of
information. Note Owners may obtain copies of such reports upon a request in
writing to the Indenture Trustee. In addition, Noteholders during each calendar
year will be furnished information for tax reporting purposes not later than the
latest date permitted by law. For further details concerning information
furnished to Noteholders and Note Owners, see "Description of the Notes--Reports
to Noteholders" and "--Book-Entry Registration".
DESCRIPTION OF THE NOTES
The Notes will be issued pursuant to the Indenture, a form of which,
together with forms of the SUBI Trust Agreement and the Servicing Agreement, has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. The following summaries of all material provisions of the foregoing
documents and the summaries of all material provisions included under "The
Issuer", "The Origination Trust--Property of the Origination Trust", "The Series
1996-1 Contracts--Characteristics of the Series 1996-1 Contracts--General" and
"--Representations, Warranties and Covenants", "Security for the Notes" and
"Additional Document Provisions" do not purport to be complete and are subject
to, and qualified in their entirety by reference to, the provisions of such
documents. Where particular provisions of or terms used in the Indenture, the
SUBI Trust Agreement and the Servicing Agreement are referred to, the actual
provisions (including definitions of terms and Section references) are
incorporated by reference as part of such summaries.
GENERAL
The Notes will be issued in denominations of $1,000 and integral
multiples thereof in book-entry form. (Indenture, Section ___). The Notes will
initially be represented by a single note registered in the name of Cede, the
nominee of DTC. No Note Owner will be entitled to receive a note in definitive
form except under the circumstances described below. Unless and until Notes are
issued in fully registered definitive form ("Definitive Notes"), all references
herein to payments, notices, reports and statements to record owners of Notes
(the "Noteholders") will refer to the same actions made with respect to DTC or
Cede, as the case may be, for the benefit of Note Owners in accordance with DTC
procedures. (Agreement, Section 4.09). See "Description of the Notes--Book-Entry
Registration" and "--Definitive Notes".
61
<PAGE> 63
The outstanding principal amount of the Notes at any time will be equal
to the initial principal amount of Notes, less all principal payments made on or
prior to such date allocable to principal. See "Description of the
Notes--Distributions on the Notes". Each Note will represent the right to
receive payments of interest at the Note Rate and payments of principal funded
from the Trust Estate. The Notes are recourse only to the Trust Estate.
Available Funds. On the fifteenth day of each month or, if such day is
not a Business Day, on the next succeeding Business Day, beginning ___________,
199_ (each, a "Payment Date"), payments of interest and principal on the Notes
will be made to he holders of record as of the day immediately preceding such
Payment Date or, if Definitive Notes are issued, the last day of the immediately
preceding calendar month (each such date, a "Record Date"). For each Payment
Date, payments will be made from amounts on deposit in the Payment Account,
after payment of certain expenses. See ________. Amounts on deposit in the
Payment Account will consist of (i) Available Funds and (ii) any amounts drawn
from the Residual Value Support Account or the Reserve Fund and deposited into
the Payment Account for such Payment Date. "Available Funds" will consist of (i)
payments made by or on behalf of the Lessee on the Master Lease (which is
secured by the Lessee Collection Account and the Master Lease Reserve Account)
with respect to the immediately preceding calendar month (or in the case of the
first Collection Period, the month of November 1996) and (ii) all amounts on
deposit in the Issuer Collection Account with respect to the Collection Period
relating to such Payment Date. On the Deposit Date with respect to any Payment
Date, the Indenture Trustee will determine the amount of Available Funds for
such Payment Date, and to the extent such amounts are insufficient to make
payments of interest and principal on the Notes, after payment of certain
expenses, will make a draw on the Residual Value Support Account, and, in the
amounts on deposit therein are insufficient, will withdraw any remaining amount
necessary to pay interest and principal on the Notes from the Reserve Fund. See
"Security for the Notes."
Interest. On each Payment Date, the Indenture Trustee will make
payments of interest for the related Interest Period to the Noteholders, based
on the Principal Balance as of the immediately preceding Payment Date (after
giving effect to reductions in such Principal Balance as of such immediately
preceding Payment Date) or, in the case of the first Payment Date, on the
Initial Principal Balance, at an annual percentage rate equal to [___]% (the
"Note Rate"). Interest on the Notes will accrue for the period from and
including the Payment Date in each month to but excluding the Payment Date in
the immediately succeeding month (or, in the case of the first Payment Date,
from and including ____ __, 1996) (each, an "Interest Period"). All such
payments will be calculated on the basis of a 360-day year consisting of twelve
30-day months.
Principal Payments. On each Payment Date, unless an Event of Default
shall have occurred on the Notes, principal will be paid on the Notes, to the
extent of amounts remaining in the Payment Account after payment of interest on
the Notes, in an amount equal to the Principal Payment Amount. The "Principal
Payment Amount" for any Payment Date prior to an Event of Default will equal the
sum of (i) a Scheduled Payment under "__________" and an "Accelerated Principal
Payment." The "Accelerated Principal Payment" will consist of (x) the aggregate
Outstanding Principal Balance of each Series 1996-1 Contract with respect to
which the Master Lease terminated, as a result of a Prepayment of the related
Series 1996-1 Contract, during the related Collection Period, (y) the Discounted
Principal Balance, as defined herein of any Series 1996-1 Contract as to which
the Master Lease terminated during the related Collection Period as a result of
any other early termination, and (z) the Outstanding Principal Balance of each
Series 1996-1 Contract as to which the Master Lease terminated during the
related Collection Period following the Maturity of the Series 1996-1 Contract.
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The Principal Payment Amount on any Payment Date will not be less than
the amount that would cause the Principal Balance of the Notes, after taking
into account such payment, to be no greater than [__%] of the Aggregate Net
Investment Value of the Issuer's interest in the 1996-1 SUBI as of the close of
the related Collection Period. See ______________.] The rate of payment of
principal on the Notes will depend, in part, upon the rate of Prepayments and
other terminations of the Series 1996- 1 Contracts. See ___________. In the
event that the Seller elects to purchase the 1996-1 SUBI from the Issuer (see
"Summary--Optional Purchase of the 1996-1 SUBI"), such purchase will cause the
Notes to be redeemed in full. The final scheduled Payment Date for the Notes
(the "Stated Maturity") will be the _________ Payment Date. A "Business Day"
means a day other than a Saturday or Sunday or a day on which banking
institutions in the States of Alabama, Delaware, Florida, Illinois or New York
are authorized or obligated by law, or executive order or government decree to
be closed.
On each Payment Date following the occurrence of and continuance of an
Event of Default were to occur under the Indenture, all amounts received with
respect to the 1996-1 SUBI during the related Collection Period would thereafter
be applied to repayment of the Notes. In addition, the Indenture Trustee would
have the right to exercise other remedies provided for under the Indenture,
including, under certain conditions, the right to accelerate the maturity date
of the Notes and the right to cause the Series 1996-1 Leased Vehicles to be
retitled.
If an Event of Default were to occur under the Indenture, subject to
certain rights of the Issuer, all amounts received by the Issuer with respect to
the 1996-1 SUBI (including all Master Lease Payments and all proceeds of the
deposition of Series 1996-1 Leased Vehicles), would thereafter be applied to
repayment of the Notes. In addition, the Indenture Trustee would have the right
to exercise other remedies provided for under the Indenture, including the right
to accelerate the maturity date of the Notes and foreclose on the 1996-1 SUBI,
subject to certain rights of the Issuer. See "The Indenture."
In the event that the Lessee elects to purchase the 1996-1 SUBI from
the Issuer (see "Summary--Optional Purchase of the 1996-1 SUBI") the proceeds of
such purchase, plus, if necessary, amounts on deposit in the Residual Value
Support Account and the Reserve Account, will be used to redeem the Notes. In
the event that the total amount of such funds in insufficient to repay accrued
interest on, and the Principal Balance of the Notes in full, the Noteholders
will suffer a loss. The final scheduled Payment Date for the Notes (the "Final
Scheduled Payment Date") which assumes that Lessee does not exercise its right
to purchase the 1996-1 SUBI and none of the Series 1996-1 Contracts is subject
to an early termination, will be the _________ Payment Date. A "Business Day"
means a day other than a Saturday or Sunday or a day on which banking
institutions in the States of Alabama, Delaware, Florida, Illinois or New York
are authorized or obligated by law, or executive order or government decree to
be closed.
SALE OF THE 1996-1 SUBI
On the Closing Date, pursuant to the Agreement, the Seller will deliver
the 1996-1 SUBI Certificate to the Indenture Trustee and transfer and assign to
the Indenture Trustee, without recourse, all of its right, title and interest in
and to the 1996-1 SUBI Certificate. The Indenture Trustee will, concurrently
with such delivery, transfer and assignment, execute, authenticate and deliver
the Notes to the Underwriter. (Agreement, Sections 2.02 and 4.02).
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Pursuant to the Agreement, the Seller will represent and warrant that
immediately prior to the transfer and assignment of the 1996-1 SUBI Certificate
to the Indenture Trustee, it had good title to, and was the sole legal and
beneficial owner of the 1996-1 SUBI Certificate, free and clear of liens and
claims. (Agreement, Section 5.01).
REALLOCATION PAYMENTS
As more fully described under "The Series 1996-1
Contracts--Representations, Warranties and Covenants" and "Additional Document
Provisions--The Servicing Agreement--Collections", under certain circumstances
World Omni will be required to make Reallocation Payments in respect of certain
Series 1996-1 Contracts (and the related Series 1996-1 Leased Vehicles)
discovered not to be in compliance with World Omni's representations or
warranties or Series 1996-1 Contracts as to which certain servicing procedures
have not been followed, in either case that materially and adversely affects the
interests of the owners of interests in the 1996-1 SUBI or the Noteholders in
the related Series 1996-1 Contract or Series 1996-1 Leased Vehicle. Upon any
such breach such Series 1996-1 Contract and the related Series 1996-1 Leased
Vehicle will no longer constitute 1996-1 SUBI Assets as they will be reallocated
and become UTI Assets. In connection with such reallocation, World Omni will be
required to deposit (or cause to be deposited) in the Issuer Collection Account
the Discounted Principal Balance of such Series 1996-1 Contract.
PAYMENTS ON THE NOTES
General
On the second Business Day prior to each Payment Date (each, a
"Determination Date"), the Servicer will inform the Indenture Trustee of the
amount of Available Funds for such Payment Date, of the amount of interest
required to be paid to Noteholders, the Principal Payment Amount, and the amount
on deposit in the Issuer Collection Account and the Servicing Fee and other
servicing compensation and other expenses payable to the Servicer, in each case
with respect to the Collection Period immediately preceding the Collection
Period in which such Determination Date occurs. To the extent that Available
Funds are insufficient to pay the amounts set forth in clauses (i) through (iii)
below, a draw for the shortfall will be made first, from the Residual Value
Support Account, to the extent of funds on deposit therein and, if such amounts
are insufficient, from the Reserve Fund. (Servicing Agreement, Section 10.01).
Payments to Noteholders
On each Payment Date (or at such earlier date as may be determined by
the Servicer, in the case of item (i)), unless an Event of Default shall have
occurred, the Indenture Trustee will make the following payments from amounts on
deposit in the Payment Account in the amounts and order of priority described
below:
(i) to the Indenture Trustee, the Owner Trustee, and the
Origination Trustee, fees payable to such persons by the Issuer, and to
the persons entitled thereto, the amount of any other Capped Trust
Administration Expenses;
(ii) to the Noteholders, interest accrued at the Note Rate for
the preceding Interest Period on the Notes;
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(iii) to the Noteholders, the Principal Distribution Amount
plus any portion of the Principal Distribution Amount for prior Payment
Dates that remains unpaid;
(iv) to the Reserve Fund, the amount by which the amount on
deposit therein is less than the Reserve Fund Cash Requirement;
(v) to the Residual Value Support Account, the sum of (x) the
excess, if any, of Matured Lease Vehicle Proceeds in excess of the
Residual Values of the related Series 1996-1 Leased Vehicles and (y)
the Support Account Deposit Amount, and any portion thereof not
deposited on prior Payment Dates;
(vi) to the Seller, in payment of accrued unpaid interest on
the WOALI Loan; and
(vii) the remainder to the Issuer, for distribution to the
Certificateholders.
If an Event of Default shall occur, all amounts remaining after payment
of the amounts specified in clause (iii) above shall be applied by the Indenture
Trustee to make payments on the Notes. In addition, if an Event of Default shall
occur, the Indenture Trustee shall have the right to accelerate the Notes and
take certain other actions with respect to the assets pledged to secure the
Notes. See "______________." (Indenture, Sections 1.01, 3.03 and 3.04). For
further details regarding the Reserve Fund, see "Summary--Security for the
Certificates--The Reserve Fund" and "Security for the Certificates--The
Accounts--The Reserve Fund".
STATEMENTS TO NOTEHOLDERS
On each Payment Date, the Indenture Trustee will include with each
distribution to each Noteholder as of the close of business on the related
Record Date (which, in the case of the Notes, shall be Cede as the nominee of
DTC unless Definitive Notes are issued under the limited circumstances described
herein) a statement, setting forth with respect to such Payment Date or the
related Collection Period, among other things, the following:
(i) the Collections allocable to the Series 1996-1 SUBI for
such Collection Period and the amount deposited in each of the Issuer
Collection Account and the Lessee Collection Account;
(ii) the amount being distributed to Noteholders (the "Note
Payment Amount");
(iii) the amount of the Note Payment Amount allocable to
interest and to principal on the Notes;
(iv) the Note Principal Balance, after giving effect to
distribution of the Note Payment Amount;
(v) the Servicing Fee;
(vi) the amount of any draws from the Residual Value Support
Account or the Reserve Fund included in the Note Payment Amount, the
balance on deposit in the Residual Value Support Account or the Reserve
Fund on such Payment Date, after giving effect to withdrawals
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therefrom and deposits thereto on such Payment Date, the change in such
balance from the immediately preceding Payment Date, and the Reserve
Fund Cash Requirement, if any;
(vii) the Aggregate Net Investment Value as of the end of such
Collection Period;
(viii) the aggregate amount of Payments Ahead on deposit in
the Lessee Collection Account and the change in such amount from the
immediately preceding Payment Date;
(ix) the amount of Advances made in respect of such Collection
Period and the amount of unreimbursed Advances on such Payment Date;
and
(x) the balance on deposit in the Residual Value Support
Account on the related Deposit Date, after giving effect to the change
in such balance from the immediately preceding Deposit Date, and the
aggregate amount of Residual Value Support deposited into or withdrawn
from the Residual Value Support Account on the related Deposit Date.
Each amount set forth pursuant to clauses (i) through (iv) above will
be expressed in the aggregate and as a dollar amount per $1,000 of original
principal balance of the Notes. Copies of such statements may be obtained by
Noteholders or Certificate Owners by a request in writing addressed to the
Indenture Trustee. In addition, within the prescribed period of time for tax
reporting purposes after the end of each calendar year during the term of the
Agreement, the Indenture Trustee will mail to each person who at any time during
such calendar year shall have been a Noteholder, a statement containing the sum
of the amounts described in clause (ii) above for the purpose of preparing such
person's federal income tax return. (Indenture, Section 3.06).
INDENTURE
Events of Default. The "Events of Default" in the Indenture consist of
(i) a default for five days or more in the payment of interest on any Note; (ii)
a default in the payment of principal of any Note at its Stated Maturity or on
such earlier date as may be specified for redemption; (iii) the occurrence and
continuance of an event of default under the Master Lease for a period of ____
days; (iv) a default in the observance or performance of any material covenant
or agreement, or any representation or warranty made in the Indenture or in any
certificate or writing delivered pursuant thereto proves to have been incorrect
in any material respect as of the time when made, and the continuation of such
default for a period of 60 days or in the case of a materially incorrect
representation or warranty, 30 days, after notice thereof is given to the Owner
Trustee by the Indenture Trustee or the Owner Trustee and the Indenture Trustee
by the holders of not less than 25% of the aggregate principal balance of the
Notes; (v) certain events of bankruptcy, insolvency, receivership or liquidation
of the Issuer or the Certificateholder; (vi) creation of any lien or encumbrance
not otherwise permitted on the 1996-1 SUBI Assets, which lien or encumbrance is
not released within 60 days of its creation; [(viii) the Seller, the Issuer or
the Origination Trust becomes subject to registration as an "investment company"
for purposes of the Investment Company Act of 1940, as amended;] [(ix) the
Series 1996-1 Vehicles shall be distributed from the Origination Trust] or (x)
an Event of Servicing Termination occurs unless, within ____ days, the Owner
Trustee shall cause a replacement servicer to be appropriated and shall have
obtained confirmation from the Rating Agencies that appointment of such
substitute Servicer shall not result in a downgrade withdrawal or qualification
of the ratings on the Notes. (Indenture, Section 5.1).
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In the event Lessee fails to make any rental payment when due under the
Lease and such failure shall not constitute the [ ] subsequent consecutive or
the [ ] or subsequent cumulative such failure, then the Certificateholders may
prevent such default from causing an Event of Default under the Indenture by
paying the Indenture Trustee an amount equal to but not less than all principal
and interest as shall then be due on the Notes, together with any overdue
interest, in which event the Indenture Trustee and the holder of the Note may
not [exercise any remedies otherwise available under] [terminate] the Indenture
or the Master Lease as the result of such failure to make such rental payment.
The Owner Trustee may also cure any other default by Lessee in the performance
of its obligations under the Lease. The cure rights described above will not
apply during any period during which Lessee is an Owner Participant or otherwise
controls the Owner Trustee.
The Indenture provides that the Indenture Trustee must, within 30 days
after any event resulting in the occurrence of an Indenture Default or any event
that would, with notice or the passage of time or both, be an Indenture Event of
Default, known by it, give notice hereof to the holders of the Notes.
If an Indenture Event of Default has occurred and is continuing, the
Indenture Trustee may, and upon the written request of the holders of not less
than a majority of the aggregate principal balance of the Notes shall, subject
to the condition described below and the Owner Trustee's rights to cure such
Indenture Default or to redeem or purchase such Note, exercise certain rights
and remedies available to it under the Lease, the Indenture and applicable law,
including the right to (a) take possession of the Trust Estate, either directly
or through an agent or court appointed receiver, and exclude the Owner Trustee,
(b) foreclose on the Trust Estate; provided that the Indenture Trustee may not
exercise any remedy against the Trust Estate seeking to deprive the Owner
Trustee of its interest therein unless a declaration of acceleration of such
Note has been delivered to the Owner Trustee. See "Description of the Lease --
Remedies."
Noteholders holding not less than a majority of the aggregate principal
balance of the Notes may waive any past default or Event of Default prior to the
declaration of the acceleration of the maturity of the Notes, except a default
(i) in payment of principal of or interest on any of the Notes or (ii) in
respect of any covenant or provision in the Indenture which cannot be modified
or amended without unanimous consent of the Noteholders. (Indenture, Section
5.12). Such a waiver could be treated, for federal income tax purposes, as a
constructive exchange of the Notes by the Noteholders for deemed new Notes upon
which gain or loss would be recognized if such waiver were to continue for a
period that exceeds two years and any additional period during which the
Noteholders conduct good faith negotiations.
Remedies. If an Event of Default should occur and be continuing, and
subject to, in the case of an Event of Default caused solely by the occurrence
of an Event of Default on the Master Lease, satisfaction of certain procedures
described herein, the Indenture Trustee or the holders of a majority of the
aggregate principal balance of the Notes may declare the principal of the Notes
to be immediately due and payable. Such declaration may be rescinded by the
holders of a majority of the aggregate principal balance of the Notes before a
judgment or decree for payment of the amount due has been obtained by the
Indenture Trustee if (i) the Issuer has deposited with the Indenture Trustee an
amount sufficient to pay (x) all interest on and principal of the Notes as if
the Event of Default giving rise to such declaration had not occurred and (y)
all amounts advanced by the Indenture Trustee and its costs and expenses and
(ii) all Events of Default (other than the nonpayment of principal of the Notes
that has become due solely by such acceleration) have been cured or waived.
(Indenture, Section 5.2).
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If the Notes have been declared due and payable following an Event of
Default, the Indenture Trustee may institute proceedings to collect amounts due,
exercise remedies as a secured party including foreclosure or sale of the Trust
Estate, or elect to maintain the Trust Estate and continue to apply proceeds
from the Trust Estate as if there had been no declaration of acceleration,
provided that, if the Event of Default shall arise solely as a result of a Lease
Event of Default the provisions set forth below shall apply. The Indenture
Trustee may not, however, unless it is required to sell the Trust Estate
pursuant to the Trust Agreement [as a result of the bankruptcy, insolvency or
termination of the ___________ or the bankruptcy or insolvency of
[____________], sell the Trust Estate following an Event of Default (other than
the occurrence of an Event of Default described in clauses (i) or (ii) above)
unless (i) 100% of the Noteholders consent thereto, (ii) the proceeds of such
sale are sufficient to pay in full the principal of and the accrued interest on
the then outstanding Notes or (iii) the Indenture Trustee determines that the
Trust Estate would not be sufficient on an ongoing basis to make all payments on
the Notes as such payments would have become due if such obligations had not
been declared due and payable, and the Indenture Trustee obtains the consent of
holders of 66-2/3% of the aggregate principal balance of the Notes. The
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
independent accountant or investment banking firm as to the sufficiency of the
Trust Estate to pay interest and principal on the Notes on an ongoing basis.
(Indenture, Section 5.4). Any sale of the Trust Estate, [other than a sale
resulting from the bankruptcy, insolvency or termination of __________,] is
subject to a requirement that an Opinion of Counsel be delivered to the effect
that such sale will not cause the Origination Trust or the Issuer to be
classified as an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes.
In the event of a sale of the Trust Estate, either as a result of the
bankruptcy, insolvency or termination of the Certificateholder or following the
occurrence of an Event of Default under the circumstances described in the
preceding paragraph pursuant to the direction of the Indenture Trustee or the
Noteholders, the proceeds of such sale will be distributed first to the
Indenture Trustee for amounts due as compensation or indemnity payments pursuant
to the terms of the Indenture; [second to the Servicer for reimbursement of all
outstanding Advances; third to the Servicer for amounts due in respect of unpaid
Servicing Fees; fourth to the Noteholders to pay interest which is due and
unpaid (including any overdue interest); and fifth to the Noteholders to pay
principal which is due and unpaid. Any remaining amounts will be distributed to
the Certificateholders (Indenture, Section 5.4).
Notwithstanding the foregoing, in connection with an Event of Default
that arises solely by reason of an Event of Default on the Master Lease, the
Indenture Trustee may not foreclose the lien of the Indenture or exercise any of
its rights and remedies under the Indenture that would result in the exclusion
of the Owner Trustee from the Trust Estate or any substantial part thereof
unless (a) the Indenture Trustee shall have exercised or shall be concurrently
exercising remedies under the Master Lease involving termination of the Master
Lease or of the Lessee's right to possession thereunder or (b) such Event of
Default on the Master Lease shall have continued for a period of at least ____
days and a stay prohibiting the exercise of such remedies shall be in effect as
of the expiration of such ____-day period.
So long as no Event of Default on the Master Lease shall have occurred
and be continuing, the Lessee is entitled to undisturbed possession of the
Series 1996-1 SUBI, even if an Indenture Default has occurred and is continuing.
Because the Indenture provides for certain Events of Default that are not caused
by an Event of Default on the Master Lease, there are circumstances in which the
Notes may be accelerated even if no default exists under the Lease. In such
case, notwithstanding any acceleration,
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the Lessee would not be obligated to pay more than the amounts of rent required
to be paid periodically under the Master Lease.
In the event of a bankruptcy of the Certificateholder, it is possible
that, notwithstanding that the Certificateholders interest in the Series 1996-1
SUBI is owned by the Owner Trustee in trust, the Series 1996-1 SUBI, the Master
Lease and the Notes might become affected by the bankruptcy proceedings. In such
event, payments under the Master Lease or on the Note might be interrupted and
the ability of the Indenture Trustee to exercise its remedies under the
Indenture might be restricted, although the Indenture Trustee would retain its
status as a secured creditor in respect to the Master Lease and the Series
1996-1 SUBI. The Trust Agreement requires that upon the occurrence of a
bankruptcy event with respect to the Certificateholder, the assets of the Issuer
be sold and the proceeds applied to pay the Notes.
Subject to the provisions of the Indenture relating to the duties of
the Indenture Trustee, in case an Event of Default occurs and is continuing with
respect to the Notes, the Indenture Trustee will be under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any of the Noteholders, if the Indenture Trustee reasonably
believes it will not be adequately indemnified against the costs, expenses and
liabilities which might be incurred by it in complying with such request.
Subject to such provisions for indemnification and certain limitations contained
in the Indenture, the holders of not less than a majority of the aggregate
principal balance of the Notes will have the right to direct the time, method
and place of conducting any proceeding or any remedy available to the Indenture
Trustee or exercising any trust power conferred on the Indenture Trustee, and
the holders of not less than a majority of the aggregate principal balance of
the Notes 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 the Indenture that cannot be modified without the
waiver or consent of all of the holders of the outstanding Notes. Until such
time, if any, as Definitive Notes have been issued, the Indenture Trustee will
act only in accordance with the instructions of Cede, as nominee for DTC.
However, under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC will act only in accordance with the instructions of the
Participants to whom Notes are credited, which will in turn act in accordance
with the instructions of persons holding beneficial interests in such Notes
through such Participants. Accordingly, although only Cede will be entitled to
vote under the Indenture, Note Owners will be entitled to instruct DTC as to the
manner in which to vote. (Indenture, Sections 5.11 and 5.12).
No Noteholder will have the right to institute any proceeding with
respect to the Indenture, unless (i) such Noteholder previously has given to the
Indenture Trustee written notice of a continuing Event of Default, (ii) the
holders of not less than 25% of the aggregate principal balance of the Notes
have made written request of the Indenture Trustee to institute such proceeding
in its own name as Indenture Trustee, (iii) such Noteholder or Noteholders have
offered the Indenture Trustee reasonable indemnity, (iv) the Indenture Trustee
has for 60 days failed to institute such proceeding and (v) no direction
inconsistent with such written request has been given to the Indenture Trustee
during such 60-day period by the holders of a majority of the aggregate
principal balance of the Notes. (Indenture, Section 5.6).
Limitation of Liability. Neither the Indenture Trustee nor the Owner
Trustee in their respective individual capacities, nor any holder of a
Certificate, nor any of their respective owners, beneficiaries, agents,
officers, directors, employees, successors or assigns will, in the absence of an
express agreement to the contrary, be personally liable for the payment of
interest on or principal of the Notes
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or for the agreements of the Issuer and the Owner Trustee, in its capacity as
trustee, contained in the Indenture.
Certain Covenants. The Issuer will not, among other things, (i) except
as expressly permitted by the Indenture, the Master Lease and the other
transaction documents, sell, transfer, exchange or otherwise dispose of any of
the assets of the Issuer, (ii) claim any credit on or make any deduction from
the principal and interest payable in respect of the Notes (other than amounts
withheld under the Code or applicable state law) or assert any claim against any
present or former Noteholder because of the payment of taxes levied or assessed
upon the Issuer or (iii) permit (x) the validity or effectiveness of the
Indenture to be impaired, (y) any person to be released from any covenants or
obligations with respect to the Notes under the Indenture except as may be
expressly permitted thereby or (z) any lien, charge, excise, claim, security
interest, mortgage or other encumbrance to be created on or extend to or
otherwise arise upon or burden the assets of the Issuer or any part thereof, or
any interest therein or the proceeds therefrom. (Indenture, Section 3.8).
The Issuer may not engage in any activities other than financing,
acquiring, owning, leasing (subject to the lien of the Indenture), pledging and
managing the SUBI as contemplated by the Indenture and the other transaction
documents. (Indenture, Section 3.12).
The Issuer will not incur, assume or guarantee any indebtedness other
than indebtedness incurred pursuant to the Notes, or otherwise in accordance
with the Basic Documents. (Indenture, Sec- tion 3.13).
The Issuer will or will cause the Servicer to deliver to the Indenture
Trustee on the second business day preceding each Payment Date the disbursement
and payment instructions as required pursuant to the Indenture. (Indenture,
Section 8.3).
Replacement of the Indenture Trustee. Noteholders holding not less than
a majority of the aggregate principal balance of the Notes may remove the
Indenture Trustee without cause by so notifying the Indenture Trustee and the
Owner Trustee, and following such removal may appoint a successor Indenture
Trustee. Any successor Indenture Trustee must at all times satisfy the
requirements of Section 310(a) of Trust Indenture Act of 1939, as amended and,
in addition, have a combined capital and surplus of at least $50,000,000 and a
long term debt rating of investment grade or better by each Rating Agency.
(Indenture, Sections 6.8 and 6.11).
The Indenture Trustee may resign at any time by so notifying the Owner
Trustee and the Noteholders. The Owner Trustee is required to remove the
Indenture Trustee if the Indenture Trustee (i) ceases to be eligible to continue
as the Indenture Trustee, (ii) is adjudged to be bankrupt or insolvent, or (iii)
otherwise becomes incapable of acting. Upon the resignation or required removal
of the Indenture Trustee, or the failure of the Noteholders to appoint a
successor Indenture Trustee following the removal without cause of the Indenture
Trustee, the Owner Trustee will be required promptly to appoint a successor
Indenture Trustee. (Indenture, Section 6.8).
Duties of Indenture Trustee. Except during the continuance of an Event
of Default, the Indenture Trustee will (i) perform such duties and only such
duties as are specifically set forth in the Indenture, (ii) rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
on certificates or opinions furnished to the Indenture Trustee which conform to
the requirements of the Indenture, and (iii) examine any such certificates and
opinions which are specifically
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required to be furnished to the Indenture Trustee by the Indenture to determine
whether or not they conform to the requirements of the Indenture. Upon the
continuance of an Event of Default, the Indenture Trustee will be required to
exercise the rights and powers vested in it by the Indenture and use the same
degree of care and skill in the exercise thereof as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs. (Indenture, Section 6.1).
Compensation and Indemnity. The Servicer will (i) pay to the Indenture
Trustee from time to time reasonable compensation for its services, (ii)
reimburse the Indenture Trustee for all expenses, advances and disbursements
reasonably incurred and (iii) indemnify the Indenture Trustee for, and hold it
harmless against, any and all losses, liability or expense (including attorneys'
fees) incurred by it in connection with the performance of its duties. The
Indenture Trustee will not be indemnified against any loss, liability or expense
incurred by it through its own willful misconduct, negligence or bad faith,
except that, the Indenture Trustee will not be liable (i) for any error of
judgment made by it in good faith unless it is proved that the Indenture Trustee
was negligent in ascertaining the pertinent facts, (ii) with respect to any
action it takes or omits to take in good faith in accordance with a direction
received by it from Noteholders in accordance with the terms of the Indenture,
and (iii) for interest on any money received by it except as the Indenture
Trustee and the Owner Trustee may agree in writing. The Indenture Trustee will
not be deemed to have knowledge of any event unless an officer of the Indenture
Trustee has actual knowledge thereof or has received written notice thereof in
accordance with the provisions of the Indenture. (Indenture, Sections 6.1 and
6.7).
Access to Noteholder Lists. If Definitive Notes are issued in the
limited circumstances set forth in "--Definitive Notes," and the Indenture
Trustee is not the Note Registrar, the Owner Trustee will furnish or cause to be
furnished to the Indenture Trustee a list of the names and addresses of the
Noteholders (i) as of each Record Date, within five days thereafter and (ii) as
of not more than 10 days prior to the time such list is furnished, within 30
days after receipt by the Owner Trustee of a written request therefor.
(Indenture, Section 7.1).
Annual Compliance Statement. The Issuer will be required to file
annually with the Indenture Trustee a written statement as to the fulfillment of
its obligations under the Indenture. (Indenture, Section 3.9).
Satisfaction and Discharge of Indenture. The Indenture will be
discharged with respect to the collateral securing the Notes upon the delivery
to the Indenture Trustee for cancellation of all the Notes or, with certain
limitations, including receipt of certain opinions with respect to tax matters,
upon deposit with the Indenture Trustee of funds sufficient for the payment in
full of all of the Notes (including interest and any fees due and payable to the
Owner Trustee or the Indenture Trustee). (Indenture, Section 4.1).
Notwithstanding the failure to pay in full amounts due on the Notes, the
Indenture will be terminated at such time as no assets remain in the Trust
Estate. Such an event could occur if (i) the Lessee were to exercise its
Purchase Option and the proceeds thereof, plus the other assets of the Issuer,
were insufficient to repay the Notes or (ii) the Indenture Trustee, on behalf of
the Issuer, were required to sell the Series 1996-1 SUBI, or the 1996-1 SUBI
Assets, upon a bankruptcy of ________ or ________, [ or upon a distribution of
the Series 1996-1 Vehicles from the Origination Trust upon a bankruptcy of
________.] The final distribution to any Noteholder will be made only upon
surrender and cancellation of such Noteholder's Note at an office or agency of
the Indenture Trustee specified in the notice of termination. Any funds
remaining that are payable in such final distribution to a Noteholder, after the
Indenture Trustee has taken certain measures to locate such
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Noteholder and such measures have failed, will be distributed to the United Way.
(Agreement, Sec- tion 7.01).
Notes Owned by Issuer, Seller, Servicer or their Affiliates. Any Notes
owned by the Issuer, the Seller, the Servicer or any of their affiliates will be
entitled to benefits under the Indenture equal and proportionate to the Notes
owned by others (if any), except that such Notes owned by the Issuer, the
Seller, the Servicer or any of their affiliates will be deemed not to be
outstanding for the purpose of determining whether the requisite percentage of
Noteholders have given any request, demand, authorization, direction, notice,
consent or other action under the Indenture and the other Basic Documents (other
than the commencement by the Issuer of a voluntary proceeding in bankruptcy as
described under "Additional Document Provisions--Bankruptcy
Provisions--Issuer").
BOOK-ENTRY REGISTRATION
Owners of Notes may hold through DTC (in the United States), or Cedel
or Euroclear (in Europe), which in turn hold through DTC, if they are
participants in such systems, or indirectly through organizations that are
participants in such systems ("Participants").
Cede, as nominee for DTC, will hold the Notes. Cedel and Euroclear will
hold omnibus positions on behalf of their Participants through customers'
securities accounts in the Depositaries which in turn will hold such positions
in customers' securities accounts in the Depositaries' names on the books of
DTC. Unless and until Definitive Notes are issued, it is anticipated that the
only Noteholder will be Cede, as the nominee of DTC. Note Owners will only be
permitted to exercise their rights indirectly through DTC.
Transfers between Participants in DTC ("DTC Participants") will occur
in accordance with DTC rules. Transfers between Participants in Cedel ("Cedel
Participants") and Participants in Euroclear ("Euroclear Participants") will
occur in accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of Cedel or Euroclear by its Depositary.
However, each such cross-market transaction will require delivery of
instructions to Cedel or Euroclear by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). Cedel or Euroclear will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the related Depositaries.
Because of time-zone differences, credits of securities received in
Cedel or Euroclear as a result of a transaction with a DTC Participant will be
made during subsequent securities settlement processing and dated the business
day following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Participants or Euroclear Participants on such business day. Cash received in
Cedel or Euroclear as a result of sales of Notes by or through a Cedel
Participant or Euroclear Participant to a DTC Participant will be received with
value
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on the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the UCC in effect in the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that DTC Participants deposit with DTC. DTC also facilitates
the clearance and settlement of securities transactions among DTC Participants
through electronic computerized book-entry changes in accounts of DTC
Participants, thereby eliminating the need for physical movement of securities
certificates. DTC Participants include securities brokers and dealers (including
the Underwriters), banks, trust companies, clearing corporations and certain
other organizations. Indirect access to the DTC system also is available to
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a DTC Participant, either directly or indirectly
(the "Indirect DTC Participants"). The rules applicable to DTC and DTC
Participants are on file with the Commission.
Note Owners that are not DTC Participants or Indirect DTC Participants
but that desire to purchase, sell or otherwise transfer ownership of, or an
interest in, Notes under the DTC System may do so only through DTC Participants
or Indirect DTC Participants. DTC Participants will receive a credit for the
Notes in DTC's records. The ownership interest of each Note Owner in turn will
be recorded on the DTC Participants' and Indirect DTC Participants' respective
records. Note Owners will not receive written confirmation from DTC of their
purchase, but Note Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the DTC Participant or Indirect DTC Participant through which the
Note Owner entered into the transaction. Transfers of ownership interests in the
Notes will be accomplished by entries made on the books of DTC Participants
acting on behalf of Note Owners.
To facilitate subsequent transfers, all Notes deposited by DTC
Participants with DTC will be registered in the name of Cede, as nominee of DTC.
The deposit of Notes with DTC and their registration in the name of Cede will
effect no change in beneficial ownership. DTC will have no knowledge of the
actual Note Owners and its records will reflect only the identity of the DTC
Participants to whose accounts such Notes are credited, which may or may not be
the Note Owners. DTC Participants and Indirect DTC Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC
Participants, by DTC Participants to Indirect DTC Participants and by DTC
Participants and Indirect DTC Participants to Note Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Principal and interest payments with respect to the Notes will be made
to DTC. DTC's practice is to credit DTC Participants' accounts on each Payment
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 Payment Date.
Payments by DTC Participants and Indirect DTC Participants to Note Owners will
be governed by standing instructions and customary practices, as in the case
with securities held for the accounts of customers in bearer form or registered
in "street name", and will be the responsibility of such DTC Participant and
Indirect DTC Participant and not of DTC, the Indenture Trustee, the
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Origination Trustee, the Servicer or the Seller, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal of and interest on the Notes to DTC will be the responsibility of the
Indenture Trustee, disbursement of such payments to DTC Participants will be the
responsibility of DTC and disbursement of such payments to Note Owners will be
the responsibility of DTC Participants and Indirect DTC Participants. As a
result, under the book-entry format, Note Owners may experience some delay in
their receipt of payments.
Because DTC can only act on behalf of DTC Participants, who in turn act
on behalf of Indirect DTC Participants and certain banks, the ability of a Note
Owner to pledge Notes to persons or entities that do not participate in the DTC
system, or otherwise take actions with respect to such Notes, may be limited due
to the lack of a physical certificate for such Notes.
Neither DTC nor Cede will consent or vote with respect to the Notes.
Under its usual procedures, DTC mails an "Omnibus Proxy" to the Indenture
Trustee as soon as possible after any applicable record date for such a consent
or vote. The Omnibus Proxy assigns Cede's consenting or voting rights to those
DTC Participants to whose accounts the Notes are credited on that record date
(identified in a listing attached to the Omnibus Proxy).
None of the Seller, the Servicer, the Origination Trustee nor the
Indenture Trustee will have any liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests of the Notes
held by Cede, as nominee of DTC, or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for Cedel Participants and facilitates the
clearance and settlement of securities transactions between Cedel Participants
through electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedel in any of 28 currencies, including United States dollars. Cedel
provides to Cedel Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedel interfaces with domestic markets in
several countries. As a professional depositary, Cedel is subject to regulation
by the Luxembourg Monetary Institute. Cedel Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. Indirect access to Cedel is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for Euroclear
Participants and to clear and settle transactions between Euroclear Participants
through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 32 currencies, including United States dollars. The Euroclear
System includes various other services, including securities lending and
borrowing, and interfaces with domestic markets in several countries generally
similar to the arrangements for cross-market transfers with DTC described above.
Euroclear is operated by the Brussels, Belgium office of Morgan Guaranty Trust
Company of New York (the "Euroclear Operator"), under contract with Euroclear
Clearance System S.C., a Belgian cooperative corporation (the "Cooperative").
All operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with the
Euroclear
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Operator, not the Cooperative. The Cooperative establishes policy for the
Euroclear System on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries. Indirect access to the Euroclear
System is also available to other firms that clear through or maintain a
custodial relationship with a Euroclear Participant, either directly or
indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Notes held through Cedel or Euroclear
will be credited to the cash accounts of Cedel Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such distributions will be subject to tax
reporting and withholding in accordance with relevant United States tax laws and
regulations. For further information in this regard, see "Certain Income Tax
Considerations--Federal Taxation--Federal Income Tax Consequences to Foreign
Investors" herein and "Global Clearance, Settlement and Tax Documentation
Procedures--Certain U.S. Federal Income Tax Documentation Requirements" in Annex
I hereto. Cedel or the Euroclear Operator, as the case may be, will take any
other action permitted to be taken by a Noteholder on behalf of a Cedel
Participant or Euroclear Participant only in accordance with its relevant rules
and procedures and subject to the related Depositary's ability to effect such
actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Notes among Participants of DTC,
Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
DEFINITIVE NOTES
Definitive Notes will be issued to Note Owners rather than to DTC only
if (i) DTC is no longer willing or able to discharge its responsibilities with
respect to the Notes, and neither the Indenture Trustee nor the Seller is able
to locate a qualified successor, (ii) the Seller, at its option, elects to
terminate the book-entry system through DTC or (iii) after an Event of Default,
Note Owners representing in the aggregate not less than 51% of the Voting
Interests of the Notes advise the Indenture Trustee through DTC or its successor
in writing that the continuation of a book-entry system through DTC or its
successor is no longer in the best interest of Note Owners.
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Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Indenture Trustee will be required to notify all Note
Owners, through Participants, of the availability through DTC of Definitive
Notes. Upon surrender by DTC of the certificates representing the related Notes
and the receipt of instructions for re-registration, the Indenture Trustee will
issue Definitive Notes to Note Owners, who thereupon will become Noteholders for
all purposes of the Agreement.
(Agreement, Section 4.11).
Payments on the related Notes will thereafter be made by the Indenture
Trustee directly to holders of such Notes in accordance with the procedures set
forth herein and to be set forth in the Agreement. Interest payments and any
principal payments on the Definitive Notes on each Payment Date will be made to
holders in whose names the Definitive Notes were registered at the close of
business on the Record Date with respect to such Payment Date. Payments will be
made by check mailed to the address of such holders as they appear on the
Certificate Register or, under the circumstances to be provided by the
Agreement, by wire transfer to a bank or depository institution located in the
United States and having appropriate facilities therefor. (Agreement, Section
3.03). The final payment on any Notes (whether Definitive Notes or global
certificates registered in the name of Cede representing the Notes), however,
will be made only upon presentation and surrender of such Definitive Notes or
global certificates at the office or agency specified in the notice of final
distribution to Noteholders. (Agreement, Section 7.01).
Definitive Notes will be transferable and exchangeable at the offices
of the Indenture Trustee or the Certificate Registrar to be set forth in the
Agreement. No service charge will be imposed for any registration of transfer or
exchange, but the Indenture Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection therewith.
(Agreement, Section 4.07).
SECURITY FOR THE NOTES
GENERAL
The property of the Issuer will consist primarily of the 1996-1 SUBI
evidenced by the 1996-1 SUBI Certificate, which is more fully described under
"The Issuer and the SUBI--The 1996-1 SUBI". The property of the Issuer will also
include such amounts as from time to time are held in the Reserve Fund, the
Residual Value Support Account, and the Payment Account. The Issuer will also
have the beneficial ownership of funds on deposit in the Issuer Collection
Account, the Contingent and Excess Liability Insurance Policies described below
and the Owner Trustee's rights as a third-party beneficiary of the SUBI Trust
Agreement and the Servicing Agreement.
As described under "Risk Factors--Structural Considerations", the
Issuer generally will be deemed to have ownership of the 1996-1 SUBI Certificate
and, through such ownership, an indirect beneficial ownership interest in the
Series 1996-1 Contracts and 1996-1 Leased Vehicles. If a court of competent
jurisdiction recharacterizes the transfer of the SUBI Interest to the Issuer as
a financing by the Seller rather than as a sale, the Owner Trustee may instead
be deemed to have a perfected security interest in the 1996-1 SUBI Certificate,
the Series 1996-1 Contracts and Contract Rights susceptible of perfection under
the UCC, but in no event will the Owner Trustee be deemed to have a perfected
security interest in the Series 1996-1 Leased Vehicles.
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THE MASTER LEASE
The Issuer will enter into the Master Lease with the Lessee, pursuant
to which the Lessee will lease the 1996-1 SUBI (and beneficial interests in the
Series 1996-1 Leased Vehicles and Series 1996-1 Contracts). The Issuer will
pledge to the Indenture Trustee its rights under the Master Lease. The Master
Lease will have a term of ____ months beginning December __, but will terminate
earlier with respect to each Series 1996-1 Leased Vehicle for which the
underlying Series 1996-1 Contract terminates (whether as a result of the
Maturity of a Series 1996-1 Contract or otherwise). Pursuant to the Master
Lease, the Lessee is required to make payments monthly in arrears of Master
Lease Payments, consisting of the Schedules Lease Payments and Termination
Payments. The "Scheduled Lease Payment" will equal the sum of (a) the scheduled
reduction in the Aggregate Net Investment Value of the Series 1996-1 Contracts;
and (b) the Aggregate Net Investment Value as of the beginning of the related
Collection Period multiplied by the decimal equal to one-twelfth of (x) for
months through of the Master Lease term, ____%; and for months through of the
Master Lease term, ____%.
The "Termination Payment" due on any Series 1996-1 Lease that
terminates other than at Maturity will equal the positive difference if any,
between (i) the Outstanding Principal Balance (in the case of a Prepayment, or
the Discounted Principal Balance, in the case of any other early termination) of
the Series 1996-1 Lease that terminated and (ii) the amount realized by the
Issuer with respect to the Series 1996-1 Leased Vehicle. Following the partial
termination of the Master Lease in connection with a termination (other than at
the Maturity of a Series 1996-1 Lease) of a Series 1996-1 Lease,the Scheduled
Lease Payments for future periods will be reduced in a manner specified in the
Master Lease; however, such reduction will not cause a reduction in Scheduled
Lease Payments below
[------------].
The obligation of the Lessee to make Master Lease Payments
will be secured by the Master Lease Reserve Account. The Master Lease Reserve
Account will be funded by the deposit therein on a monthly basis of the excess
of the amounts on deposit in the Lessee Collection Account for such Collection
Period over the Master Lease Payments required to be made for such Collection
Period. Investment earnings on amounts on deposit in the Master Lease Reserve
Account will be deposited therein.
During the term of the Master Lease, the Seller, as Lessee, will be
entitled to all Monthly Payments with respect to Series 1996-1 Contracts. Such
Monthly Payments will be deposited in the Lessee Collection Account and applied
on a monthly basis to make the Master Lease Payments. See "____________."
Amounts on deposit in the Master Lease Reserve Account will secure the Lessee's
obligation to make Master Lease Payments to the Issuer. The Master Lease will
terminate with respect to any Series 1996-1 Leased Vehicle upon the termination
of the related Series 1996-1 Contract and disposition of the related Series
1996-1 Vehicle, and will terminate in its entirety on _________. The Issuer,
rather than the Seller, will be entitled to receive the Sale Proceeds of Series
1996-1 Leased Vehicles. However, to the extent that the proceeds of sale of a
Series 1996-1 Leased Vehicle with respect to which the related Series 1996-1
Contract terminated prior to its scheduled termination date, the Master Lease
obligates the Lessee to make a Termination Payment.
Upon the occurrence of an event of default on the Master Lease (a
"Lease Event of Default") the Issuer will be entitled to terminate the Master
Lease, and upon such termination would be entitled to receive directly all
payments made thereafter on the Series 1996-1 Leased Vehicles. For so long as
the
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Notes are outstanding, the Indenture Trustee, as pledgee of the Master Lease,
will be entitled to exercise such rights, subject to certain rights of the
Issuer to cure such events of default. If the Master Lease were to be terminated
while the Notes remain outstanding,(and provided that the Indenture Trustee had
not accelerated the maturity date of the Notes or foreclosed upon the rights of
the Issuer to the SUBI) the Indenture Trustee, as pledgee of the Issuer, would
be entitled to receive distributions on the SUBI, and to apply such
distributions to payments then due on the Notes.
Defaults under the Master Lease include, among other things, (i)
failure by the Seller to pay the Master Lease Payment [for a period that
continues for _____ days after written notice thereof], (ii) failure of the
Lessee to pay any other amount required to be paid by the Lessee pursuant to the
Master Lease, which failure shall continue for 30 days after written notice
thereof; (iii) the breach of certain representation or warranty, the failure to
observe or perform certain covenants [which shall continue for 30 days or, if
Lessee is diligently attempting to cure such breach, 180 days] (iv) the
occurrence of certain events of bankruptcy or insolvency with respect to the
Lessee (v) the Lessee shall attempt to assign sublet, mortgage, or transfer its
rights as Lessee, or (vi) an event resulting in a change in control of WOALI
shall occur. See "Description of the Notes--Indenture." If, following an event
of default under the Master Lease, the Noteholders accelerate the maturity of
the Notes, the Indenture Trustee as assignee of the Issuer would be entitled to
demand that the Seller pay all unpaid Master Lease Payments. Upon payment of
such amounts, the Seller would be entitled to receive the 1996-1 SUBI.
An Event of Default under the Master Lease generally would also
constitute an Event of Default under the Indenture, which would, subject to the
following qualifications, permit the Noteholders to accelerate the maturity of
the Notes and in certain circumstances cause the sale of the Trust Estate.
However, pursuant to the Master Lease, an Event of Default on the Notes would
not occur and the Indenture Trustee would not be entitled to accelerate the
maturity of the Notes for so long as the Issuer continues to make required
payments of principal and interest on the Notes and the Event of Default under
the Master Lease has continued for a period of less than ____ days. In addition
provided that the Indenture Trustee may not exercise any remedy against the
Trust Estate seeking to deprive the Owner Trustee of its interests therein
unless a declaration of acceleration of such Note has been delivered to the
Owner Trustee and to the Lessee. See "Description of the Lease -- Remedies."
The Master Lease grants the Lessee the option to purchase the 1996-1
SUBI upon termination of the Master Lease on _______, provided that no Event of
Default on the Master Lease has occurred and is continuing, at a price equal to
(i) $________ (as adjusted to reflect terminations of Series 1996-1 Leases
during the term of the Master Lease, other than terminations of Series 19961-
Contracts at maturity provided that no such adjustment shall cause the Purchase
Price to be less than the Principal Balance of the Notes, plus accrued interest
thereon) or (ii) the fair market value of the SUBI Interest at such time. In the
event that the Lessee elects to exercise its purchase option, the purchase price
of the SUBI Interest will be applied on the next Payment Date to pay the
outstanding principal amount of the Notes together with the accrued interest
thereon. [In the event that the purchase price of the SUBI is not sufficient to
pay accrued interest on, and the outstanding Principal Amount of the Notes, a
draw will be made on the Residual Value Support Account or, if the amount on
deposit therein is insufficient, the Reserve Account, in the amount of the
shortfall. In the event that the amount on deposit in the Reserve Fund and the
Residual Value Support Account is insufficient to redeem the Notes in full, the
Noteholders will suffer a loss].
The Master Lease prohibits the Lessee from assigning its rights
thereunder, or subleasing such rights except pursuant to the Series 1996-1
Contracts existing on [November 1, 1996].
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THE ACCOUNTS
The Collection Accounts
On or prior to the Closing Date, the Origination Trustee will establish
two trust accounts owned by the Issuer (the "Issuer Collection Account") and the
Lessee (the "Lessee Collection Account") as holders of interests in the 1996-1
SUBI, into which collections on or in respect of the Series 1996-1 Contracts and
the 1996-1 Leased Vehicles generally will be deposited (each, a "Collection
Account"). (SUBI Trust Agreement, Section 12.01). The Lessee Collection Account
will be pledged to the Issuer to secure Master Lease Payments. The Issuer
Collection Account, and the rights of the Issuer as pledgee of the Lessee
Collection Account, will be pledged to the Indenture Trustee to secure payment
of the Notes.
Deposits into the Collection Accounts. Deposits into the Lessee
Collection Account will include, but will not be limited to, the following
payments made during the term of the Master Lease and in respect of the 1996-1
SUBI Assets: (i) Monthly Payments; (ii) Extension Fees; (iii) Payments Ahead;
and (iv) Advances made by the Servicer. Deposits into the Issuer Collection
Account will include, but will not be limited to, the following payments made in
respect of the 1996-1 SUBI Assets: (i) early payments of the Outstanding
Principal Balance of a Contract, including an amount equal to the Residual Value
of the related Series 1996-1 Leased Vehicle (each, a "Prepayment"); (ii)
proceeds from the disposition of Leased Vehicles relating to Matured Contracts,
including payments for excess mileage and excess wear and use ("Matured Leased
Vehicle Proceeds"), proceeds received in connection with the sale or other
disposition of Leased Vehicles that have been repossessed ("Repossessed Vehicle
Proceeds"); and (iii) Reallocation Payments by World Omni in respect of certain
Series 1996-1 Contracts as to which an uncured breach of certain representations
and warranties or certain servicing covenants has occurred and (iv) Net
Insurance Proceeds. (Servicing Agreement, Sections 2.02, 8.02, 9.02 and 9.04;
SUBI Trust Agreement, Section 12.01).
"Net Insurance Proceeds" will be deposited into the Lessee Collection
Account or the Issuer Collection Account, as applicable and include recoveries
pursuant to the Contingent and Excess Liability Insurance Policies and the
comprehensive, collision, public liability and property damage insurance policy
required to be obtained and maintained by the lessee pursuant to each Series
1996-1 Contract (or payment by the Servicer under the Servicing Agreement of
such amounts under the circumstances described in "Additional Document
Provisions--The Servicing Agreement--Insurance on Series 1996-1 Leased
Vehicles"), and amounts paid by any insurer under any other insurance policy
relating to the Series 1996-1 Contracts, the related lessees or the Series
1996-1 Leased Vehicles, in each case net of certain sums, if any, applied to the
repair of the related Series 1996-1 Leased Vehicles.
(SUBI Trust Agreement, Section 10.01).
Monthly Payments made by the Consumer Lessees normally will be paid by
mail and deposited into a lock box maintained by the Servicer, and then
deposited in the Lessee Collection Account (during the term of the Master Lease,
and thereafter, into the Issuer Collection Account) within two Business Days
after receipt. Within two Business Days after receipt by the Servicer of all
other payments on or in respect of the Series 1996-1 Contracts or the Series
1996-1 Leased Vehicles other than Security Deposits, including without
limitation any Monthly Payments delivered directly to the Servicer or World Omni
(in the event that World Omni is no longer the Servicer), Matured Leased Vehicle
Proceeds, Repossessed Vehicle Proceeds, Extension Fees, Payments Ahead and
Prepayments (regardless of whether made by lessees or other persons), such
payments shall be remitted to the Lessee Collection
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Account or the Issuer Collection Account, as the case may be. (Servicing
Agreement, Sections 2.02 and 9.02).
Notwithstanding the foregoing, the Servicer may remit all payments
collected or received by it on or in respect of the Series 1996-1 Contracts and
the Series 1996-1 Leased Vehicles to the applicable Collection Account on a less
frequent basis if (i) it obtains a letter of credit, surety bond or insurance
policy (collectively, the "Servicer Letter of Credit") under which demands for
payment may be made to secure timely remittance of monthly collections to the
Collection Accounts and (ii) the Indenture Trustee is provided with a letter
from each Rating Agency to the effect that the use of such alternative
remittance schedule will not result in the qualification, reduction or
withdrawal of its then-current rating of the Notes. (Servicing Agreement,
Section 9.02).
Net Deposits. So long as World Omni is the Servicer, the Servicer will
be permitted to deposit in the Payment Account only the net amounts payable to
the Indenture Trustee, the Owner Trustee, and the Lessee, as holders of the
beneficial interests in the 1996-1 SUBI, on the related Deposit Date. The
Servicer, however, will account to the Owner Trustee, the Indenture Trustee, the
Origination Trustee, the Lessee, the Noteholders and Certificateholders as if
all of the deposits and distributions described herein were made individually.
(Agreement, Section 3.05; Servicing Agreement, Section 9.02). This "net deposit"
provision will be for the administrative convenience of the parties involved and
will not affect amounts required to be deposited into the Accounts.
Withdrawals from the Collection Accounts. On the Business Day preceding
each Payment Date, collections on deposit in the Lessee Collection Account in
respect of the related Collection Period will be applied by the Servicer on
behalf of the Lessee (i) to pay the Servicing Fee and certain other reimbursable
expenses to the Servicer (ii) to make Master Lease Payments and to make required
deposits in the Master Lease Reserve Account. Master Lease Payments will be
deposited in the Payment Account maintained with the Indenture Trustee for the
benefit of the Noteholders. The Required Amount will be withdrawn from the
Reserve Fund, and any amount to be drawn from the Residual Value Support Account
will be withdrawn therefrom and deposited into the Payment Account on each
Deposit Date. All payments to Noteholders will be made from the Payment Account.
Any funds remaining in the Payment Account on a Payment Date in respect of the
related Collection Period following the payment of amounts required to be paid
therefrom will be deposited into the Reserve Fund until the amount on deposit
therein equals the Reserve Fund Cash Requirement, and thereafter generally will
be released to the Certificateholders. For further information regarding these
deposits and payments, see "Security for the Notes--The Accounts--The Payment
Account" and "--The Collection Account". (Agreement, Section 3.02; SUBI Trust
Agreement, Section 12.01; Servicing Agreement, Sections 2.02 and 4.01).
In the event that on any date the Servicer supplies the Origination
Trustee and the Indenture Trustee with an officer's certificate setting forth
the basis for such withdrawal, the Origination Trustee shall remit to the
Servicer, without interest and prior to any other distribution from the Issuer
Collection Account on such date, monies from the Issuer Collection Account
representing unreimbursed Matured Leased Vehicle Expenses, Repossessed Vehicle
Expenses; and from the Lessee Collection Account (i) upon recovery thereof,
delinquent Monthly Payments with respect to which the Servicer has made an
unreimbursed Advance; and (ii) an amount equal to any unreimbursed Advances that
the Servicer has concluded are Nonrecoverable Advances. (Servicing Agreement,
Section 9.02). For further information regarding Nonrecoverable Advances, see
"Additional Document Provisions--The Servicing Agreement--Advances".
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The Payment Account
On or prior to the Closing Date, the Seller will establish a trust
account with the Indenture Trustee for the exclusive benefit of the Noteholders
from which all payments with respect to the Notes will be made (the "Payment
Account"). (Agreement, Section 3.01). On each Deposit Date, the Master Lease
Payment, and all amounts on deposit in the Issuer Collection Account that relate
to the Collection Period ending in the preceding calendar month will be
deposited into the Payment Account and any required draws form the Residual
Value Support Account and Reserve Fund. Such deposits will be made from, among
other sources, (i) monies on deposit in the Lessee Collection Account (to the
extent of Master Lease Payments then due and payable), the Issuer Collection
Account, the Residual Value Support Account, or the Reserve Fund and (ii) the
Lessee in the case of exercise of its right to purchase the 1996-1 SUBI
Certificate upon termination of the Master Lease.
The Master Lease Reserve Account
The Master Lease Reserve Account will be owned by the Lessee and
pledged to the Issuer to secure the Lessee's obligations under the Master Lease.
The Issuer, in turn, will pledge its rights in the Master Lease Reserve Account
to the Indenture Trustee. On each Deposit Date, any amounts on deposit in the
Lessee Collection Account that are not required to make Master Lease Payments
will be deposited in the Master Lease Reserve Account. See "Security for the
Notes -- the Master Lease."
The Residual Value Support Account
On or prior to the Closing Date, the Owner Trustee will establish a
trust account into which all Residual Value Surplus with respect to a Collection
Period, plus will be deposited on the related Deposit Date (the "Residual Value
Support Account" and, together with the Payment, the Issuer Collection Account
and the Reserve Fund, the "Accounts"). (SUBI Trust Agreement, Section 12.03).
The Residual Value Support Account will be pledged to the Indenture Trustee to
secure payment of the Notes.
On each Deposit Date funds on deposit in the Residual Value Support
Account will be withdrawn and deposited in the Payment Account to the extent
that Available Funds for such Payment Date, after payment of certain expenses,
are less than the principal and interest payable to Noteholders for such Payment
Date. In the event that the Servicer supplies the Indenture Trustee and the
Owner Trustee with an officer's certificate setting forth the basis for such
withdrawal, funds will be withdrawn and paid to the Servicer in reimbursement
for any Matured Leased Vehicle Expenses incurred during such Collection Period,
but only to the extent that, after reimbursement of such Matured Leased Vehicle
Expenses (exclusive of any other reimbursement thereof), Net Matured Leased
Vehicle Proceeds would be no more than the aggregate of the Residual Values of
Series 1996-1 Leased Vehicles sold or otherwise disposed of from Matured Leased
Vehicle Inventory during such Collection Period.
The Reserve Fund
On or prior to the Closing Date, the Servicer will establish a trust
account with the Indenture Trustee for the exclusive benefit of the Noteholders
(the "Reserve Fund"). The monies on deposit in the Reserve Fund will, as
described below, be applied on each Payment Date to pay certain shortfalls in
respect of amounts available to the Indenture Trustee with respect to the
related Collection Period in the Payment Account. In addition, to the extent not
otherwise required to make any of the payments
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described under "Description of the Payments on the Payments of Interest,"
monies on deposit in the Reserve Fund will be available to make payments to the
Noteholders should Collections ultimately be insufficient to reduce the
Principal Balance of the Notes to zero. (Agreement, Sections 3.03 and 3.04).
The Reserve Fund Cash Requirement. The Reserve Fund will be created on
or prior to the Closing Date with the deposit by the Issuer of the Initial
Deposit, which will be funded by the WOALI Loan. On each Payment Date, the funds
in the Reserve Fund will be supplemented by (i) all income realized on the
investment of amounts on deposit in the Reserve Fund in Permitted Investments,
net of losses resulting from such investments, and (iii) the deposit of monies
in respect of the related Collection Period remaining in the Payment Account
after making all payments required to be made therefrom on such Payment Date
prior to such deposit, including monies that otherwise would be available for
distribution to Certificateholders, until the amount on deposit therein equals
the Reserve Fund Cash Requirement then in effect. Except as otherwise described
below, the "Reserve Fund Cash Requirement" with respect to any Payment Date will
equal of the initial Aggregate Net Investment Value of the Series 1996-1
Contracts. In the event that the amount on deposit in the Reserve Fund on any
Payment Date exceeds the Reserve Fund Cash Requirement, the excess will be
released from the Reserve Fund and deposited in the Payment Account. Any such
amounts distributed to the Certificateholders shall be free of any claim of the
Issuer, the Indenture Trustee or the Noteholders and thereafter shall not be
available to the Trustee or the Trust for the purpose of making deposits to the
Reserve Fund or making payments to the Noteholders, nor shall the Seller or the
Certificateholders be required to refund any amount properly received by it.
(Agreement, Sections 3.03 and 3.04). In the event that amounts on deposit in the
Reserve Fund, upon payment in full of the Notes are insufficient to repay
principal of and any outstanding interest on, the WOALI Loan, the
Certificateholders will be liable for repayment of such amounts.
Withdrawals from the Reserve Fund. On each Deposit Date, after making
any required draws from the Residual Value Support Account, the Indenture
Trustee shall withdraw from the Reserve Fund, to the extent available, and
deposit in the Payment Account an amount equal to the Required Amount. Amounts
on deposit in the Reserve Fund will also be available to make certain other
payments to Noteholders and the Seller as described under "Security for the
Notes--The Accounts--The Reserve Fund".
Maintenance of the Accounts
The Payment Account, the Residual Value Support Account, and the
Reserve Fund will be maintained with the Indenture Trustee and the Lessee
Collection Account and the Issuer Collection Account will be maintained with the
Trust Agent so long as either (i) the short-term unsecured debt obligations of
the Indenture Trustee or the Trust Agent, as the case may be, are rated at least
P-1 by Moody's and A-1+ by Standard & Poor's (the "Required Deposit Ratings") or
(ii) the Indenture Trustee or the Trust Agent, as the case may be, is a
depository institution or trust company having a long-term unsecured debt rating
from Moody's of at least Baa3 and corporate trust powers and the related Account
is maintained in a segregated trust account in the corporate trust department of
the Indenture Trustee or the Trust Agent, as the case may be. If the Indenture
Trustee or the Trust Agent at any time does not qualify under either of these
criteria, the Servicer shall, with the assistance of the Indenture Trustee or
the Trust Agent, as the case may be, as necessary, cause the related Account to
be moved to a depository institution organized under the laws of the United
States or any state thereof whose short-term unsecured debt obligations are
rated at least equal to the Required Deposit Ratings or moved to a segregated
trust account located in a corporate trust department of a depository
institution or
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trust company as described above. (Agreement, Sections 3.01 and 3.04; SUBI Trust
Agreement, Sections 12.01 and 12.03; Servicing Agreement, Section 9.02).
Permitted Investments
Upon receipt of directions from the Servicer, the Indenture Trustee or
the Trust Agent, as the case may be, shall invest funds on deposit in the
Accounts in one or more Permitted Investments maturing (i) no later than the
Business Day immediately preceding the Deposit Date immediately succeeding the
date of such investment, in the case of amounts on deposit in a SUBI Collection
Account, the Reserve Fund or the Residual Value Support Account or (ii) on the
Business Day immediately preceding the Payment Date immediately succeeding the
date of such investment in the case of amounts on deposit in the Payment
Account. Notwithstanding the foregoing, investments on which the entity at which
the related Account is located is the obligor may mature on the related Deposit
Date or Payment Date, as the case may be.
All income or other gain from the foregoing investments generally shall
be retained in the related Account with such gain in respect of funds in the
SUBI Collection Accounts and the Payment Account generally being treated as
Collections received in respect of the related Collection Period. Any loss
resulting from such investments shall be charged to the related Account. (SUBI
Trust Agreement, Sections 11.01 and 12.01; Agreement, Section 3.01; Servicing
Agreement, Section 9.02). "Permitted Investments" will be specified in the SUBI
Trust Agreement and will be limited to investments that meet the criteria of
each Rating Agency from time to time as being consistent with its then-current
rating of the Notes. (Agreement, Section 1.01).
THE CONTINGENT AND EXCESS LIABILITY INSURANCE POLICIES
In addition to the physical damage and liability insurance coverage
required to be obtained and maintained by the lessees pursuant to the Series
1996-1 Contracts, and as additional protection in the event that any lessee
fails to maintain all such required insurance, World Omni maintains contingent
liability insurance with Lexington Insurance Company which provides coverage of
up to $2.0 million per occurrence (with no annual or aggregate cap on the number
of claims thereunder) for bodily injury and property damage suffered by third
persons caused by any vehicle owned by any insured. World Omni also maintains
substantial amounts of excess insurance coverage for which the Origination
Trustee is an additional named insured (together with the aforementioned primary
contingent liability insurance policy, the "Contingent and Excess Liability
Insurance Policies"). These insurance policies collectively provide insurance
coverage in excess of $10 million per accident, and permit multiple claims in
any policy period. To the extent that such coverage were exhausted and damages
were assessed against the Origination Trust, claims could be imposed against the
assets of the Origination Trust. In such event, investors in the Notes could
incur a loss on their investment. However, the Origination Trustee will be an
additional named insured under the Contingent and Excess Liability Insurance
Policies and payments made thereunder will constitute 1996-1 SUBI Assets. To the
extent that payments under the Contingent and Excess Liability Insurance
Policies are made to third party claimants, they will reduce the Additional Loss
Amounts that otherwise would be required to be paid out of the 1996-1 SUBI
Assets. See "Risk Factors--Vicarious Tort Liability", "--Structural
Considerations--Allocation of Origination Trust Liabilities" and "--Third-Party
Liens on 1996-1 SUBI Assets" and "Certain Legal Aspects of the Series 1996-1
Contracts and the Series 1996-1 Leased Vehicles--Vicarious Tort Liability" for a
discussion of related risks.
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With respect to damage to the Series 1996-1 Leased Vehicles, each
lessee is required by the related Contract to maintain comprehensive and
collision insurance. As more fully described under "Additional Document
Provisions--The Servicing Agreement--Insurance on Series 1996-1 Leased
Vehicles", World Omni will be required to police the maintenance of
lessee-required insurance and, under certain circumstances, will be required to
make payments in respect thereof. In the event that all of the foregoing
insurance coverage were exhausted and no third-party reimbursement for such
damage to a Series 1996-1 Leased Vehicle were available, investors in the Notes
could incur a loss on their investment.
The Servicing Agreement will provide that so long as any Notes are
outstanding, neither the Origination Trustee nor World Omni may terminate or
cause the termination of any Contingent and Excess Liability Insurance Policy
unless a replacement insurance policy providing at least the same amount of
coverage and which does not provide for any annual or aggregate cap on payments
thereunder is obtained and each Rating Agency has delivered a letter to the
Indenture Trustee to the effect that the obtaining of any such replacement
insurance will not cause its then-current rating of the Notes to be qualified,
reduced or withdrawn. The foregoing obligations of World Omni will survive any
termination of World Omni as Servicer under the Servicing Agreement. (Servicing
Agreement, Section 9.10).
ADDITIONAL DOCUMENT PROVISIONS
THE INDENTURE
Certain provisions of the Indenture are described under "Description of
the Notes". The following summarizes certain additional provisions of the
Indenture.
No Petition
The Indenture Trustee will agree not to institute, or join in, any
bankruptcy or similar proceeding against the Seller, ALFI L.P., ALFI, the
Origination Trust or the Origination Trustee until one year and one day after
the later of (i) payment of the Notes in full and (ii) final payment of all
other financings involving interests in the Origination Trust (including the
transaction described herein and all other transactions involving the UTI and
each Other SUBI). (Indenture, Section 6.16).
Amendment
The Indenture may be amended by the Certificateholders (with the
consent of the Lessee) and the Indenture Trustee, without the consent of the
Noteholders, to cure any ambiguity, to correct or supplement any provision
therein which may be inconsistent with any other provision therein, to add any
other provisions with respect to matters or questions arising under the
Indenture which are not inconsistent with the provisions of the Indenture;
provided that any such action will not, in the good faith judgment of the
parties, materially and adversely affect the interest of any Noteholder and the
Indenture Trustee shall have been furnished with an opinion of counsel to the
effect that such amendment will not adversely and materially affect the interest
of any Noteholder. (Indenture, Section 9.01). See "Security for the Notes--The
Accounts--The Reserve Fund--The Reserve Fund Cash Requirement".
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The Indenture may also be amended from time to time by the
Certificateholders (with the consent of the Lessee) and the Indenture Trustee
(including with respect to changing the formula for determining the Reserve Fund
Cash Requirement, the manner in which the Reserve Fund or Residual Value Support
Account is funded, the need for the Residual Value Support Account, changing the
remittance schedule for collection deposits in the Payment Account or changing
the definition of Permitted Investments) if (a) the Indenture Trustee has been
furnished with a letter from each Rating Agency to the effect that such
amendment would not cause its then-current rating on the Notes to be qualified,
reduced or withdrawn or (b) the Indenture Trustee has received the consent of
the holders of Notes evidencing not less than 51% of the outstanding Principal
Balance of the Notes, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of the Indenture or of modifying
in any manner the rights of the Noteholders; provided, however, that (y) no such
amendment shall increase or reduce in any manner the amount of, or accelerate or
delay the timing of, collections of payments on the 1996-1 SUBI or the 1996-1
SUBI Certificate or distributions that shall be required to be made on the Notes
or the Note Rate and (z) no amendment of any type shall reduce the percentage of
the aggregate outstanding Principal Balance of the Notes required to consent to
any such amendment, in each case without the consent of all Noteholders.
Without the consent of the holder of each outstanding Note affected
thereby, however, no supplemental indenture may (i) change the Stated Maturity
of or interest on any 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 Note or any
interest thereon is payable, (ii) impair the right to institute suit for the
enforcement of certain provisions of the Indenture regarding payment, (iii)
reduce the percentage of the aggregate principal balance 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 the Indenture or of certain defaults thereunder and
their consequences as provided for in the Indenture, (iv) modify or alter the
provisions of the Indenture regarding the voting of Notes held by the Issuer,
the Seller, the Servicer, an affiliate of any of them or any obligor on the
Notes, (v) reduce the percentage of the aggregate principal balance of the Notes
the consent of the holders of which is required to direct the Indenture Trustee
to sell or liquidate the Trust Estate if the proceeds of such sale would be
insufficient to pay the principal balance and accrued but unpaid interest on the
Notes, (vi) decrease the percentage of the aggregate principal balance of the
Notes required to amend the sections of the Indenture which specify the
applicable percentage of the aggregate principal balance of the Notes necessary
to amend the Indenture or the other Basic Documents or (vii) permit the creation
of any lien ranking prior to or on a parity with the lien of the Indenture with
respect to any of the collateral for the Notes or, except as otherwise permitted
or contemplated in the Indenture, terminate the lien of the Indenture on any
such collateral or deprive the holder of any Note of the security afforded by
the lien of the Indenture. (Indenture, Section 9.2).
The Trust Agreement requires the Owner Trustee to give the
Certificateholders 30 days written notice of any proposed supplemental indenture
if it materially adversely affects the Certificateholders or if Noteholders'
consent is required and provides that the Owner Trustee will not enter into such
amendment unless Certificateholders holding 25% or more of the principal balance
of Certificates consent in writing. See "Additional Document Provisions--The
Trust Agreement."
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List of Noteholders
Upon a written request of the Servicer, the Indenture Trustee, as Note
Registrar, will provide to the Servicer within 15 days after receipt of such
request a list of the names and addresses of all Noteholders. In addition, three
or more Noteholders or holders of Notes evidencing not less than 25% of the
outstanding Principal Balance of the Notes, upon compliance by such Noteholders
with certain provisions of the Indenture, may request that the Indenture
Trustee, as Note Registrar, afford such Noteholders access during business hours
to the current list of Noteholders for purposes of communicating with other
Noteholders with respect to their rights under the Indenture. (Indenture,
Section 4.06). See "Description of the Notes--Book-Entry Registration" and
"--Definitive Notes".
The Indenture will not provide for the holding of any annual or other
meetings of Noteholders.
The Indenture Trustee
The Indenture Trustee will be the Trustee under the Indenture. The
Corporate Trust Office of the Indenture Trustee is located at Chicago, Illinois.
The Indenture Trustee is not affiliated with World Omni, although it does act as
a service provider to World Omni.
The Indenture Trustee may resign at any time, in which event the
Certificateholders will be obligated to appoint a successor Indenture Trustee.
The Certificateholders may also remove the Indenture Trustee if the Indenture
Trustee ceases to be eligible to continue as such under the Indenture, becomes
legally unable to act or becomes insolvent. In such circumstances, the Seller
will be obligated to appoint a successor Indenture Trustee. Any resignation or
removal of the Indenture Trustee and appointment of a successor Indenture
Trustee will not become effective until acceptance of the appointment by such
successor Indenture Trustee. (Indenture, Section 6.07).
The Indenture Trustee must be a corporation organized under the laws of
the state of Delaware, authorized to exercise corporate trust powers under those
laws, and subject to supervision or examination by federal or state laws, with a
combined capital and surplus of at least $50,000,000 and a long-term deposit
rating no lower than Baa3 by Moody's, or must be otherwise acceptable to each
Rating Agency. A co-trustee or separate trustee appointed as described above
need not meet these eligibility requirements. (Indenture, Sections 6.06 and
6.10).
Holders of Notes evidencing not less than 25% of the outstanding
Principal Balance of the Notes generally will have the power to direct any
proceeding for any remedy available to the Indenture Trustee under the
Indenture, and the exercise of any trust or power conferred on the Indenture
Trustee by the Indenture (including actions by the Indenture Trustee in its
capacity as a party to, or a third-party beneficiary of, the SUBI Trust
Agreement or the Servicing Agreement). However, the Indenture Trustee will not
be required to follow such a direction if, after being advised by counsel, it
concludes that the action is unlawful, or if it in good faith determines that
the proceedings directed would be illegal, would subject it to personal
liability or would be unduly prejudicial to the rights of other Noteholders.
(Indenture, Section 6.15).
A Noteholder may institute proceedings under the Indenture, but only if
such holder previously has given to the Indenture Trustee written notice of
default and unless the holders of Notes evidencing not less than 25% of the
outstanding Principal Balance of the Notes, have made written request upon the
Indenture Trustee to institute such proceeding in its own name as Indenture
Trustee and have
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offered to the Indenture Trustee reasonable indemnity and the Indenture Trustee
for 30 days has neglected or refused to institute any such proceeding.
(Indenture, Section 9.03). The Indenture Trustee will be under no obligation to
exercise any of the trusts or powers vested in it by the Indenture or to make
any investigation of matters arising thereunder or to institute, conduct or
defend any litigation thereunder or in relation thereto at the request, order or
direction of any of the Noteholders, unless such holders have offered to the
Indenture Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby. (Indenture, Section
6.02). Noteholders will have no express right to institute a proceeding directly
under the SUBI Trust Agreement or the Servicing Agreement.
Governing Law
The Indenture will be governed by the laws of the State of New York.
THE SUBI TRUST AGREEMENT
The 1996-1 SUBI, the Other SUBIs and the UTI
ALFI L.P. is the grantor and (as holder of the UTI) a beneficiary of
the Origination Trust. In its capacity as grantor, ALFI L.P. will from time to
time assign, transfer, grant and convey (or cause to be assigned, transferred,
granted and conveyed) to the Origination Trustee in trust the Origination Trust
Assets. (SUBI Trust Agreement, Section 2.01). ALFI L.P. will hold the UTI, which
represents a beneficial interest in all Origination Trust Assets other than the
1996-1 SUBI Assets and the Other SUBI Assets. (SUBI Trust Agreement, Section
4.01). ALFI L.P. has pledged (and may in the future pledge) the UTI as security
for obligations to third-party lenders, and has created and sold (and may in the
future create and sell or pledge) Other SUBIs in connection with financings
similar to the transaction described herein. Each holder or pledgee of the UTI
and any Other SUBI will be required to expressly disclaim any interest in the
Origination Trust Assets other than the UTI Assets or the Other SUBI Assets,
respectively, and to fully subordinate any claims to such other Origination
Trust Assets in the event that this disclaimer is not given effect. Except under
the limited circumstances described under "Risk Factors--Structural
Considerations--Allocation of Origination Trust Liabilities", the 1996-1 SUBI
Assets will not be available to make payments in respect of, or pay expenses
relating to, the UTI or any Other SUBIs, and the Other SUBI Assets evidenced by
any Other SUBIs will not be available to make payments on, or pay expenses
relating to, the 1996-1 SUBI, the UTI or any Other SUBI.
The 1996-1 SUBI will be created pursuant to a Supplement to the
Origination Trust Agreement (the "1996-1 SUBI Supplement") between the
Origination Trustee, ALFI, L.P., World Omni and the Owner Trustee. Each Other
SUBI will be created pursuant to a supplement to the Origination Trust Agreement
(each, an "Other SUBI Supplement") which will amend the Origination Trust
Agreement only with respect to the Other SUBI to which it relates. The 1996-1
SUBI Supplement will amend the Origination Trust Agreement only as it relates to
the 1996-1 SUBI and no Other SUBI Supplement will amend the Origination Trust
Agreement as it relates to the 1996-1 SUBI. (SUBI Trust Agreement, Section
4.02).
All Origination Trust Assets, including the 1996-1 SUBI Assets, will be
owned by the Origination Trustee on behalf of the beneficiaries of the
Origination Trust. The 1996-1 SUBI Assets will be segregated from the rest of
the Origination Trust Assets on the books and records of the Origination Trustee
and the Servicer and the holders of other beneficial interests in the
Origination
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Trust (including the UTI and any Other SUBIs) will have no rights to the 1996-1
SUBI Assets. Liabilities of the Origination Trust shall be allocated to the
1996-1 SUBI Assets, the UTI Assets or Other SUBI Assets, respectively, if
incurred with respect thereto, or will be allocated pro rata among all
Origination Trust Assets if incurred with respect to the Trust Assets generally.
(SUBI Trust Agreement, Section 7.01; Servicing Agreement, Section 2.02).
Additional Loss Amounts will be incurred in the event of any uninsured
liability to third parties (i.e., litigation risk) on the part of the
Origination Trust as ultimately is borne by the 1996-1 SUBI Assets, whether such
liability is incurred (i) with respect to the 1996-1 SUBI Assets and is
therefore allocated to the 1996-1 SUBI Assets pursuant to the SUBI Trust
Agreement, (ii) with respect to the Origination Trust Assets generally and
therefore a pro rata portion of such liability is allocated to the 1996-1 SUBI
Assets pursuant to the SUBI Trust Agreement or (iii) with respect to UTI Assets
or Other SUBI Assets if such UTI Assets or Other SUBI Assets are insufficient to
pay such liability. See "Risk Factors--Structural Considerations--Allocation of
Origination Trust Liabilities" and "--Third-Party Liens on 1996-1 SUBI Assets"
for a discussion of related risks. For purposes of making calculations with
respect to distributions on the Notes, "Additional Loss Amounts" will include
both losses incurred with respect to the foregoing uninsured liabilities and
monies reserved within the SUBI Collection Account against future losses in
respect of such liabilities by the Servicer on behalf of the Indenture Trustee.
(SUBI Trust Agreement, Sections 7.01 and 10.01).
Special Obligations of ALFI L.P. as Beneficiary and Grantor
ALFI L.P., as grantor, will be liable for all debts and obligations
arising with respect to the Origination Trust Assets or the operation of the
Origination Trust; provided, however, that its liability with respect to any
pledge of the UTI and any assignee or pledgee of the 1996-1 SUBI or 1996-1 SUBI
Certificate or Other SUBI or Other SUBI Certificate shall be as set forth in the
financing documents relating thereto. ALFI, as the general partner of ALFI L.P.,
the grantor, is required at all times to maintain a minimum net worth of $10
million. To the extent that ALFI L.P. shall have paid or suffered any liability
or expense with respect to the Origination Trust Assets or the operation of the
Origination Trust, ALFI L.P. shall be indemnified, defended and held harmless
out of the assets of the Origination Trust against any such liability or expense
(including reasonable attorneys' fees and expenses). (SUBI Trust Agreement,
Section 4.03).
Origination Trustee Duties and Powers; Fees and Expenses
Pursuant to the SUBI Trust Agreement, the Origination Trustee will be
required to, among other things, (i) apply for and maintain (or cause to be
applied for and maintained) all licenses, permits and authorizations necessary
and appropriate to accept assignments of the Series 1996-1 Contracts and the
Series 1996-1 Leased Vehicles and to carry out its duties as Origination
Trustee, including motor vehicle dealer licenses, and (ii) file (or cause to be
filed) applications for certificates of title as are necessary and appropriate
so as to cause the Origination Trustee to be recorded as the holder of legal
title of record to the Series 1996-1 Leased Vehicles. (SUBI Trust Agreement,
Section 5.01). In carrying out the foregoing duties, the Origination Trustee
will be required to exercise the same degree of care and skill as a prudent
person would exercise or use under the circumstances in the conduct of such
person's own affairs. (SUBI Trust Agreement, Section 5.02).
The Origination Trustee may be replaced by ALFI L.P. only if it ceases
to be qualified in accordance with the terms of the SUBI Trust Agreement and
shall be removed if certain representations
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and warranties made by the Origination Trustee therein prove to have been
materially incorrect when made, or in certain events of bankruptcy or
insolvency. (SUBI Trust Agreement, Section 6.03). The Indenture Trustee, as
holder of the 1996-1 SUBI Certificate, on behalf of the Noteholders may, or at
the direction of holders of Notes evidencing not less than 51% of the Voting
Interests of the Notes, will, exercise its powers under the Origination Trust
Agreement to cause the Trust Agent to be removed or replaced for a material
breach of its obligations. (SUBI Trust Agreement, Sections 5.03 and 10.02).
The Origination Trustee will make no representations as to the validity
or sufficiency of the 1996-1 SUBI, the 1996-1 SUBI Certificate (other than the
execution and authentication of the 1996-1 SUBI Certificate), or of any Series
1996-1 Contract, Series 1996-1 Leased Vehicle or related document, will not be
responsible for performing any of the duties of ALFI L.P. or the Servicer and
will not be accountable for the use or application by any owners of beneficial
interests in the Origination Trust Assets of any funds paid in respect of the
Origination Trust Assets, or the investment of any of such monies before such
monies are deposited into the accounts relating to the 1996-1 SUBI, the Other
SUBIs and the UTI. The Origination Trustee will not independently verify the
Series 1996-1 Contracts or the Series 1996-1 Leased Vehicles. (SUBI Trust
Agreement, Section 5.04). The duties of the Origination Trustee will generally
be limited to the acceptance of assignments of lease contracts, the titling of
the related leased vehicles in the name of the Origination Trustee, the creation
of the 1996-1 SUBI, the Other SUBIs and the UTI, the maintenance of the Issuer
Collection Account, the Residual Value Support Account, the Reserve Fund and
accounts relating to the Other SUBIs and the UTI and the receipt of the various
certificates, reports or other instruments required to be furnished to the
Origination Trustee under the SUBI Trust Agreement, in which case it will only
be required to examine them to determine whether they conform to the
requirements of the SUBI Trust Agreement. (SUBI Trust Agreement, Section 5.01).
The Origination Trustee will be under no obligation to exercise any of
the rights or powers vested in it by the SUBI Trust Agreement or to make any
investigation of matters arising thereunder or to institute, conduct or defend
any litigation thereunder or in relation thereto at the request, order or
direction of ALFI L.P., the Servicer or by the holders of a majority in interest
in the SUBI, unless such party or parties have offered to the Origination
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby. The reasonable expenses of
every such exercise of rights or powers or examination shall be paid by the
party or parties requesting such exercise or examination or, if paid by the
Origination Trustee, shall be a reimbursable expense of the Origination Trustee.
(SUBI Trust Agreement, Sections 5.03 and 6.08).
The Origination Trustee may enter from time to time into one or more
agency agreements (each, an "Agency Agreement") with such person or persons,
including without limitation any affiliate of the Origination Trustee (each, a
"Trust Agent"), as are by experience and expertise qualified to act in a trustee
capacity and otherwise acceptable to ALFI. The Origination Trustee has engaged
the Owner Trustee as the Trust Agent. Pursuant to the Agency Agreement, the
Trust Agent shall perform each and every obligation of the Origination Trustee
under the SUBI Trust Agreement. (SUBI Trust Agreement, Section 5.03).
The Origination Trustee shall be paid out of Origination Trust Assets
reasonable compensation and reimbursement of all reasonable expenses (including
reasonable attorneys' fees). (SUBI Trust Agreement, Section 6.08). However, with
regard to the 1996-1 SUBI Assets, this requirement is subject to the provisions
regarding Capped Origination Trust Administrative Expenses described under
"Description of the Notes--Distributions on the Notes--Distributions of
Interest".
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Indemnity of Origination Trustee and Trust Agents
The Origination Trustee and each Trust Agent will be indemnified and
held harmless out of and to the extent of the Origination Trust Assets with
respect to any loss, liability or expense, including reasonable attorneys' fees
and expenses (collectively "Claims"), arising out of or incurred in connection
with (i) any of the Origination Trust Assets (including without limitation any
Claims relating to lease contracts or leased vehicles of the Origination Trust,
any personal injury or property damage claims arising with respect to any such
leased vehicle or any claim with respect to any tax arising with respect to any
Origination Trust Asset) or (ii) the Origination Trustee's or the Trust Agent's
acceptance or performance of the trusts and duties contained in the Agreement or
any Agency Agreement. Notwithstanding the foregoing, neither the Origination
Trustee nor any Trust Agent will be indemnified or held harmless out of the
Origination Trust Assets as to any Claim (i) for which World Omni shall be
liable pursuant to the Servicing Agreement, (ii) incurred by reason of the
Origination Trustee's or such Trust Agent's willful misfeasance, bad faith or
negligence or (iii) incurred by reason of the Origination Trustee's or Trust
Agent's breach of its respective representations and warranties pursuant to the
SUBI Trust Agreement or the Servicing Agreement. Such indemnities may result in
Additional Loss Amounts to the extent payable in respect of the 1996-1 SUBI
Assets or allocated to the 1996-1 SUBI. (SUBI Trust Agreement, Section 5.05).
Termination
The Origination Trust and the respective obligations and
responsibilities of ALFI L.P. and the Origination Trustee shall terminate upon
the last to occur of (i) the payment to ALFI L.P. and each permitted purchaser,
assignee and pledgee of any of ALFI L.P.'s interests in the Origination Trust
(including the Indenture Trustee and the Owner Trustee, with respect to the
1996-1 SUBI) of all amounts and obligations required to be paid to them, and the
expiration or termination of all financings secured by the Origination Trust
Assets by their respective terms and (ii) the maturity or liquidation and the
disposition of all Origination Trust Assets and the disposition to or upon the
order of ALFI L.P. or any permitted purchaser, assignee or pledgee of all net
proceeds thereof. (SUBI Trust Agreement, Section 8.01).
No Petition
The Origination Trustee and the Trust Agent will agree not to
institute, or join in, any bankruptcy or similar proceeding against the Seller,
ALFI L.P. or ALFI until one year and one day after final payment of all
financings involving interests in the Origination Trust. (SUBI Trust Agreement,
Section 6.09). Each pledgee or assignee of any UTI or other SUBI must give a
similar non-petition covenant. (SUBI Trust Agreement, Sections 4.01 and 4.02).
Amendment
The SUBI Trust Agreement may be amended by written agreement between
ALFI L.P., the Origination Trustee and the Owner Trustee, with the approval of
the Indenture Trustee (which may be given in the circumstances described under
"Additional Document Provisions--Additional Agreement Provisions--Amendment").
To the extent that any such amendment relates to or affects the UTI or any Other
SUBI in addition to the 1996-1 SUBI, the 1996-1 SUBI Certificate or the 1996-1
SUBI Assets, such amendment may require certain other approvals. (SUBI Trust
Agreement, Sections 9.01 and 13.01).
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Governing Law
The SUBI Trust Agreement will be governed by the laws of the State of
Alabama. (SUBI Trust Agreement, Sections 9.02 and 13.02).
Trustee as Third-Party Beneficiary
As the holder of the 1996-1 SUBI Certificate, the Indenture Trustee
will be a third-party beneficiary of the SUBI Trust Agreement. Therefore, the
Indenture Trustee may, and, upon the direction of Noteholders representing at
least 51% of the outstanding Principal Balance of the Notes will, exercise any
right conferred by the SUBI Trust Agreement upon a holder of any interest in the
1996-1 SUBI. (SUBI Trust Agreement, Section 10.02).
THE SERVICING AGREEMENT
General
Pursuant to the Servicing Agreement, the Servicer will perform on
behalf of the Origination Trustee all of the obligations of the lessor under the
Series 1996-1 Contracts, including, but not limited to, collecting and posting
payments, responding to inquiries of the lessees, investigating delinquencies,
sending payment statements and reporting tax information to the lessees, paying
costs of disposition of Series 1996-1 Leased Vehicles related to Series 1996-1
Contracts which came into and continue in default and for which no satisfactory
arrangement can be made for collection of delinquent payments (the "Charged-off
Contracts"), Matured Contracts and Additional Loss Contracts and policing the
Series 1996-1 Contracts, commencing legal proceedings to enforce a Series 1996-1
Contract on behalf of the Origination Trust, administering the Series 1996-1
Contracts, including accounting for collections and furnishing monthly and
annual statements to the Origination Trustee with respect to distributions and
generating federal income tax information. The Origination Trustee will furnish
the Servicer with all powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out such servicing and
administrative duties under the Servicing Agreement, as supplemented. The
Indenture Trustee will be a third-party beneficiary of the Servicing Agreement.
(Servicing Agreement, Sections 2.01 and 12.12).
Custody of Contract Documents and Certificates of Title
To assure uniform quality in servicing the Series 1996-1 Contracts and
World Omni's own portfolio of automobile and light duty truck lease contracts
and to reduce administrative costs, the Origination Trustee will appoint World
Omni, as Servicer, to be its agent, bailee and custodian of the Series 1996-1
Contracts, the certificates of title relating to the Series 1996-1 Leased
Vehicles and insurance policies and other documents relating to the Series
1996-1 Contracts, the related Consumer Lessees and the Series 1996-1 Leased
Vehicles. Such documents will not be physically segregated from other automobile
and light duty truck lease contracts, certificates of title and insurance
policies and other documents relating to such lease contracts and leased
vehicles of World Omni, or those which World Omni services for others, including
those leased vehicles constituting Origination Trust Assets that are not
evidenced by the 1996-1 SUBI. The accounting records and computer systems of
World Omni will reflect the interests of the holders of interest in the 1996-1
SUBI in the Series 1996-1 Contracts, the Series 1996-1 Leased Vehicles and all
related Contract Rights, and "protective" UCC financing statements reflecting
certain interests in the Series 1996-1 Contracts and the Contract Rights
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will be filed, as more fully described under "Risk Factors--Structural
Considerations--Back-up Security Interest in Certain 1996-1 SUBI Assets" and
under "Certain Legal Aspects of the Series 1996-1 Contracts and Series 1996-1
Leased Vehicles--Back-up Security Interests". The Servicer will be responsible
for filing all periodic sales and use tax or property (real or personal) tax
reports, periodic renewals of licenses and permits, periodic renewals of
qualification to act as a trust and a business trust and other periodic
governmental filings, registration or approvals arising with respect to or
required of the Origination Trustee or the Origination Trust. (Servicing
Agreement, Section 2.01).
Collections
The Servicer will service, administer and collect all amounts due on or
in respect of the Series 1996-1 Contracts. The Servicer will make reasonable
efforts to collect all such amounts and, in a manner consistent with the
Servicing Agreement, will be obligated to service the Series 1996-1 Contracts
generally in accordance with customary and usual procedures of institutions
which service closed-end automobile and light duty truck lease contracts and, to
the extent more exacting, the procedures used by the Servicer in respect of
lease contracts serviced by it for its own account.
(Servicing Agreement, Sections 2.01 and 2.02).
Consistent with its usual procedures, the Servicer may, in its
discretion, extend the Maturity Date of any Contract by up to five months in the
aggregate, provided that no Series 1996-1 Contract may be extended more than
five times and that the new Maturity Date of any Contract so extended must not
be later than the last day of the month immediately preceding the month in which
the Final Scheduled Payment Date occurs. The amount of any Extension Fee
received by the Servicer in connection with the extension of a Contract will be
deposited into the Lessee Collection Account. In the event that the Servicer
extends a Series 1996-1 Contract in contravention of the foregoing, the
Servicing Agreement will require the Servicer to deposit into the Lessee
Collection Account an amount equal to the Reallocation Payment in respect of
such Series 1996-1 Contract on the Deposit Date relating to the Collection
Period in which such extension was granted, at which time such Series 1996-1
Contract and the related Series 1996-1 Leased Vehicle will no longer constitute
1996-1 SUBI Assets as they will be reallocated as UTI Assets. (Servicing
Agreement, Sections 2.02 and 9.02). See "World Omni--Collection, Repossession
and Disposition Procedures" for further details regarding collection procedures.
As more fully described under "Security for the Notes--The
Accounts--The SUBI Collection Account", unless the Servicer obtains a Servicer
Letter of Credit, the Servicer will deposit or cause to be deposited all
payments received on or in respect of the Series 1996-1 Contracts and the Series
1996-1 Leased Vehicles (other than Security Deposits) into the SUBI Collection
Account within two Business Days after receipt.
Notification of Liens and Claims
The Servicer will be required to notify the Seller (in the event that
World Omni is not acting as the Servicer), the Indenture Trustee and the
Origination Trustee as soon as practicable of all liens or claims of whatever
kind made by a third party that would materially adversely affect the interests
of, among others, the Seller, the Origination Trust or any SUBI Asset (with
respect to, among other things, any Series 1996-1 Contract or Series 1996-1
Leased Vehicle). Following its learning of any such lien or claim with respect
to any Series 1996-1 Leased Vehicle, the Servicer will take whatever actions it
deems reasonably necessary to cause such lien or claim to be removed. (Servicing
Agreement, Sections
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2.08 and 9.09). See "Risk Factors--Structural Considerations" for a discussion
of the risk of liens on 1996-1 SUBI Assets and other Origination Trust Assets.
Advances
On each Deposit Date, the Servicer will be obligated to make, by
deposit into the Lessee Collection Account, an advance in an amount equal to the
aggregate Monthly Payments due but not received during the related Collection
Period with respect to Series 1996-1 Contracts that are 31 days or more past due
as of the end of the related Collection Period, and the Servicer may (but shall
not be required to) make such an advance with respect to Series 1996-1 Contracts
that are one or more days, but less than 31 days, past due as of the end of the
related Collection Period (collectively, an "Advance"). (Servicing Agreement,
Section 9.04).
Notwithstanding the foregoing, the Servicer will not be required to
make an Advance to the extent that such Advance would constitute a
Nonrecoverable Advance. (Servicing Agreement, Section 9.04). A "Nonrecoverable
Advance" will be any Advance that, in the reasonable judgment of the Servicer,
may not be ultimately recoverable by the Servicer from Net Liquidation Proceeds
or otherwise. (Servicing Agreement, Section 6.01). In making Advances, the
Servicer will assist in maintaining a regular flow of scheduled principal and
interest payments on the Series 1996-1 Contracts, rather than to guarantee or
insure against losses. Accordingly, all Advances shall be reimbursable to the
Servicer, without interest, if and when a payment relating to a Series 1996-1
Contract with respect to which an Advance has previously been made is
subsequently received and will be netted out of Collections deposited in the
Lessee Collection Account. In addition, the Servicer will be reimbursed for all
Nonrecoverable Advances from collections on or in respect of the Series 1996-1
Contracts and Series 1996-1 Leased Vehicles in general. (Servicing Agreement,
Section 9.02).
Security Deposits
The Contract Rights will include all rights under the Series 1996-1
Contracts to the security deposits paid by the lessees at the time of
origination of the Series 1996-1 Contracts (the "Security Deposits"). As part of
its general servicing obligations, the Servicer will retain possession of each
Security Deposit remitted by the lessees as an agent for the Origination Trust
and will apply the proceeds of such Security Deposits in accordance with the
terms of the Series 1996-1 Contracts, its customary and usual servicing
procedures and applicable law. However, in the event that any Series 1996-1
Contract becomes a Charged-off Contract or the related Series 1996-1 Leased
Vehicle is repossessed, the related Security Deposit will, to the extent
provided by applicable law and such Contract, constitute Liquidation Proceeds.
(Servicing Agreement, Section 2.04). The Origination Trustee may not have an
interest in the Security Deposits that is enforceable against third parties
until such time as they are deposited into the SUBI Collection Account. The
Servicer will not be required to segregate Security Deposits from its own funds,
and any income earned from any investment thereof by the Servicer shall be for
the account of the Servicer as additional servicing compensation.
Insurance on Series 1996-1 Leased Vehicles
Each Consumer Lessee is required to maintain in full force and effect
during the term of a Series 1996-1 Contract a comprehensive collision and
physical damage insurance policy covering the actual cash value of the related
Series 1996-1 Leased Vehicle and naming the Origination Trustee, on behalf of
the Origination Trust, as loss payee. Each Consumer Lessee also is required to
maintain
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bodily injury and property damage liability insurance in amounts equal to the
greater of the amount prescribed by applicable state law or industry standards
as set forth in the related Series 1996-1 Contract and naming the Origination
Trustee, on behalf of the Origination Trust, as an additional insured.
(Servicing Agreement, Section 2.11). Since Consumer Lessee may choose their own
insurers to provide the required coverage, the specific terms and conditions of
their policies vary. If a Consumer Lessee fails to obtain or maintain the
required insurance, the related Series 1996-1 Contract will be in default. It is
the practice of World Omni not to obtain insurance on behalf of and at the
expense of the related lessee but rather to repossess the related Series 1996-1
Leased Vehicle. In the event that a required insurance policy has lapsed, has
not been maintained in full force and effect or the Servicer has failed to
maintain the right to receive the proceeds thereof for damage to or destruction
of the related Series 1996-1 Leased Vehicle, the Servicing Agreement will
require World Omni to pay promptly into the Lessee Collection Account all such
amounts as would otherwise have been recoverable as Insurance Proceeds. This
obligation will survive any termination of World Omni as Servicer under the
Servicing Agreement. (Servicing Agreement, Section 2.11).
World Omni does not require lessees to carry credit disability, credit
life or credit health insurance or other similar insurance coverage which
provides for payments to be made on the Series 1996-1 Contracts on behalf of
such lessees in the event of disability or death. To the extent that such
insurance coverage is obtained on behalf of a lessee, payments received in
respect of such coverage may be applied to payments on the related Series 1996-1
Contract to the extent that the lessee's beneficiary chooses to do so.
Realization Upon Charged-off Contracts
The Servicer will use commercially reasonable efforts to repossess and
liquidate the Series 1996-1 Leased Vehicle relating to Charged-off Contracts.
Such liquidation may be through repossession of such Series 1996-1 Leased
Vehicle and disposition at a public or private sale, or the Servicer may take
any other action permitted by applicable law. The Servicer may enforce all
rights under any such Series 1996-1 Contract, sell the Series 1996-1 Leased
Vehicle in accordance with the related Series 1996-1 Contract and commence and
prosecute any proceedings in connection with the Series 1996-1 Contract. In
connection with any such repossession, the Servicer will follow such practices
and procedures as it deems necessary or advisable and as are normal and usual
for responsible holders of closed-end automobile and light duty truck lease
contracts and, to the extent more exacting, the practices and procedures used by
the Servicer in respect of any such lease contracts serviced by it for its own
account, and in any event in compliance with all applicable laws. The Servicer
will be required to repair the related Series 1996-1 Leased Vehicle if it
reasonably determines that such repairs will increase the related Net
Repossessed Vehicle Proceeds. The Servicer will be responsible for all costs and
expenses incurred in connection with the sale or other disposition of Series
1996-1 Leased Vehicles related to Charged-off Contracts and other Series 1996-1
Contracts as to which a lessee has defaulted on the related Series 1996-1 Leased
Vehicles, but will be entitled to reimbursement to the extent that such costs
constitute Repossessed Vehicle Expenses or other Liquidation Expenses or
expenses recoverable under an applicable insurance policy. Proceeds from the
sale or other disposition of repossessed Series 1996-1 Leased Vehicles will
constitute Repossessed Vehicle Proceeds and will be deposited into the Issuer
Collection Account. The Servicer will be entitled to reimbursement of all
related Repossessed Vehicle Expenses from amounts on deposit in the Issuer
Collection Account, Residual Value Support Account or Reserve Fund upon
presentation to the Indenture Trustee of an officer's certificate of the
Servicer. (Servicing Agreement, Sections 2.06 and 9.02).
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Matured Leased Vehicle Inventory
Upon the scheduled maturity of a Contract, the related lessee has the
option to acquire the related Series 1996-1 Leased Vehicle for an amount equal
to its Residual Value plus any applicable taxes and all other incidental charges
which may be due under such Series 1996-1 Contract. If the lessee chooses not to
exercise this option but instead returns the Series 1996-1 Leased Vehicle to the
Servicer, such Series 1996-1 Leased Vehicle will be placed in Matured Leased
Vehicle Inventory, and the Servicer, acting on behalf of the Origination Trust,
will sell or otherwise dispose of the Series 1996- 1 Leased Vehicle in a manner
similar to that for a repossessed Series 1996-1 Leased Vehicle.
(Servicing Agreement, Section 2.06).
All related Matured Leased Vehicle Proceeds will be deposited into the
Issuer Collection Account. Related Matured Leased Vehicle Expenses may be paid
from the Payment Account or released from amounts on deposit in the Issuer
Collection Account or the Residual Value Support Account upon presentation of an
officer's certificate by the Servicer. Any Residual Value Surplus for a
Collection Period will be deposited into the Residual Value Support Account.
(SUBI Trust Agreement, Section 10.01; Servicing Agreement, Section 9.02).
Records, Servicer Determinations and Reports
The Servicer will retain or cause to be retained all data (including,
without limitation, computerized records, operating software and related
documentation) relating directly to or maintained in connection with the
servicing of the Series 1996-1 Contracts. Upon the occurrence and continuance of
an Event of Servicing Termination and termination of the Servicer's obligations
under the Servicing Agreement, the Servicer will use commercially reasonable
efforts to effect the orderly and efficient transfer of the servicing of the
Series 1996-1 Contracts to a successor servicer. (Servicing Agreement, Sections
2.03 and 9.03).
The Servicer will perform certain monitoring and reporting functions on
behalf of the Seller, the Indenture Trustee, the Owner Trustee, the Origination
Trustee and Noteholders, including the preparation and delivery to the Indenture
Trustee, the Origination Trustee and each Rating Agency of a monthly
certificate, on or before each Determination Date, setting forth all information
necessary to make all distributions required in respect of the related
Collection Period (the "Servicer's Certificate"), and the preparation and
delivery of monthly statements setting forth information described under
"Description of the Notes--Statements to Noteholders", and an annual officer's
certificate specifying the occurrence and status of any Event of Servicing
Termination. (Servicing Agreement, Section 10.01).
Evidence as to Compliance
The Servicing Agreement will provide that a firm of nationally
recognized independent accountants will furnish to the Indenture Trustee on or
before April 30 of each year, beginning April 30, 1998, a statement as to
compliance by the Servicer during the preceding twelve months ended December 31
(or since the Closing Date in the case of the first such statement) with certain
standards relating to the servicing of the Series 1996-1 Contracts, the
Servicer's accounting records and computer files with respect thereto and
certain other matters. (Servicing Agreement, Sections 3.02 and 10.02).
The Servicing Agreement will also provide for delivery to the Indenture
Trustee, on or before April 30 of such year, beginning April 30, 1998, of a
certificate signed by an officer of the Servicer
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stating that the Servicer has fulfilled its obligations under the Servicing
Agreement throughout the preceding twelve months ended December 31 (or since the
Closing Date in the case of the first such certificate) or, if there has been a
default in the fulfillment of any such obligation, describing each such default.
(Servicing Agreement, Sections 3.03 and 10.03).
Copies of such statements and certificates may be obtained by Note
Owners or Noteholders by a request in writing addressed to the Indenture Trustee
at its Corporate Trust Office. (Agreement, Section 3.06).
[Compliance with ERISA
On or before each Determination Date, the Servicer shall provide the
Indenture Trustee and each Rating Agency with an officer's certificate stating
that none of SET, JMFE, World Omni nor any of their respective affiliates for
purposes of ERISA (i) maintains an ERISA plan which, as of its last valuation
date, had unfunded current liability, (ii) anticipates that the value of the
assets of any ERISA plan it maintains would not be sufficient to cover any
current liability and (iii) is contemplating benefit improvements with respect
to any plans then maintained or the establishment of any new ERISA plans, either
of which would cause it to maintain an ERISA plan with unfunded current
liability (the "ERISA Compliance Test"). In the event that the Servicer does not
timely make the foregoing certifications, or any such certification is
incorrect, all Servicing Fees to be paid to the Servicer will instead be
withdrawn from the Lessee Collection Account and will be deposited into the
Master Lease Reserve Fund until the ERISA Compliance Test is satisfied. On the
Payment Date following the date on which such failure is cured, monies on
deposit in the Reserve Fund in excess of the Reserve Fund Cash Requirement shall
be distributed to the Seller (or to the Noteholders to the extent allocable to
the Accelerated Principal Distribution Amount). See "Security for the Notes--The
Accounts--The Reserve Fund--The Reserve Fund Cash Requirement" for a more
complete description of the Reserve Fund Cash Requirement. (Servicing Agreement,
Section 10.03; Agreement, Sections 1.01, 3.03 and 3.04).]
Servicing Compensation
The Servicer will be entitled to compensation for the performance of
its servicing obligations under the Servicing Agreement. The Servicer will be
entitled to receive on each Payment Date, the Servicing Fee in respect of the
related Collection Period equal to one-twelfth of the product of 1.00% and the
Aggregate Net Investment Value as of the first day of the month preceding the
month in which such Payment Date occurs (or, in the case of the first Payment
Date, as of the Cutoff Date). The Servicing Fee will be calculated and paid
based upon a 360-day year consisting of twelve 30-day months.
The Servicer will also be entitled to additional servicing compensation
in the form of late fees and other administrative fees or similar charges paid
with respect to the Series 1996-1 Contracts, and earnings from the investment of
Security Deposits as described above under "Additional Document Provisions--The
Servicing Agreement--Security Deposits". The Servicer will not be entitled to
retain any Extension Fees paid in connection with extended Contracts as such
amounts will be required to be deposited into the Lessee Collection Account. The
Servicer will pay all expenses incurred by it in connection with its servicing
activities under the Servicing Agreement, including the payment of Uncapped
Administrative Expenses allocable to the 1996-1 SUBI, and will not be entitled
to reimbursement of such expenses except to the extent any such expenses
constitute Liquidation Expenses in respect of a Series 1996-1 Contract or Series
1996-1 Leased Vehicle or reasonable issuance expenses under an
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applicable insurance policy, or to the extent that Uncapped Administrative
Expenses are reimbursed out of the Payment. (Servicing Agreement, Sections 2.05
and 9.06).
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of the Series 1996-1 Contracts as an agent
for the Origination Trustee under the Servicing Agreement, including collecting
and posting payments, responding to inquiries of lessees on the Series 1996-1
Contracts, investigating delinquencies, sending payment statements and reporting
tax information to lessees, paying costs of sale or other disposition of Series
1996-1 Leased Vehicles relating to defaulted Series 1996-1 Contracts and Series
1996-1 Leased Vehicles included in Matured Series 1996-1 Leased Vehicle
Inventory, policing the 1996-1 SUBI Assets, administering the Series 1996-1
Contracts, including making Advances, accounting for collections, furnishing
monthly and annual statements to the Owner Trustee and the Indenture Trustee
with respect to distributions and generating federal income tax information.
(Servicing Agreement, Section 2.05).
Servicer Resignation and Termination
The Servicer may not resign from its obligations and duties under the
Servicing Agreement unless it determines that its duties thereunder are no
longer permissible by reason of a change in applicable law or regulations. No
such resignation will become effective until a successor servicer has assumed
the Servicer's obligations under the Servicing Agreement. The Servicer may not
assign the Servicing Agreement or any of its rights, powers, duties or
obligations thereunder except as otherwise provided therein or except in
connection with a consolidation, merger, conveyance, transfer or lease made in
compliance with the Servicing Agreement. (Servicing Agreement, Sections 2.10 and
9.11).
The rights and obligations of the Servicer under the Servicing
Agreement may be terminated following the occurrence and continuance of an Event
of Servicing Termination, as described under "Additional Document
Provisions--The Servicing Agreement--Rights Upon Event of Servicing
Termination". (Servicing Agreement, Sections 4.01 and 11.01).
Indemnification by the Servicer
The Servicer will indemnify the Indenture Trustee and the Owner Trustee
and their agents for any and all liabilities, losses, damages and expenses that
may be incurred by them as a result of any act or omission by the Servicer in
connection with the performance of its duties under the Servicing Agreement.
(Servicing Agreement, Section 9.08).
Events of Servicing Termination
"Events of Servicing Termination" under the Servicing Agreement with
respect to the 1996-1 SUBI Assets will consist of, among other things: (i) any
failure by the Servicer to deliver to the Owner Trustee for distribution to
holders of interests in the 1996-1 SUBI or to the Indenture Trustee for
distribution to the Noteholders any required payment, which failure continues
unremedied for five Business Days after discovery of such failure by an officer
of the Servicer or receipt by the Servicer of notice thereof from the Owner
Trustee, the Indenture Trustee or holders of Notes evidencing not less than 25%
of the outstanding Principal Balance of the Notes; (ii) any failure by the
Servicer duly to observe or perform in any material respect any other of its
covenants or agreements in the Servicing Agreement which failure materially and
adversely affects the rights of holders of interests in the 1996-1 SUBI or the
Noteholders and which continues unremedied for 60 days after written notice of
such
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failure is given as described in clause (i) above; (iii) failure by the Servicer
to deliver to the Indenture Trustee or the Owner Trustee any report required to
be delivered to the Indenture Trustee or the Owner Trustee pursuant to the
Servicing Agreement within ten Business Days after the date such report is due;
(iv) any representation, warranty or statement of the Servicer made in the
Servicing Agreement or any other document relating to the Origination Trust to
which the Servicer is a party or by which it is bound or any certificate, report
or other writing delivered pursuant to the Servicing Agreement shall prove to be
incorrect in any material respect as of the time when the same shall be made
which continues unremedied for 30 days after written notice of such failure is
given as described in clause (i) above; (v) failure by the Servicer to pay when
due the premium in respect of any Contingent and Excess Liability Insurance
Policy; and (vi) the occurrence of certain Insolvency Events relating to the
Servicer. Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (i) above for a period of ten Business Days, referred
to under clause (ii) for a period of 90 days, referred to under clause (iii) for
a period of 20 Business Days, or referred to under clause (iv) for a period of
60 days, shall not constitute an Event of Servicing Termination if such failure
or delay was caused by act of God or other similar occurrence. Upon the
occurrence of any such event, the Servicer shall not be relieved from using all
commercially reasonable efforts to perform its obligations in a timely manner in
accordance with the terms of the Servicing Agreement and the Servicer shall
provide to the Trustee, the Origination Trustee and the Noteholders prompt
notice of such failure or delay by it, together with a description of its
efforts to so perform its obligations. (Servicing Agreement, Sections 4.01 and
11.01).
Rights Upon Event of Servicing Termination
As long as an Event of Servicing Termination remains unremedied, the
Origination Trustee, upon the direction of the Owner Trustee or the Indenture
Trustee or holders of Notes evidencing not less than 51% of the outstanding
Principal Balance of the Notes, may terminate all of the rights and obligations
of the Servicer under the Servicing Agreement with respect to the 1996-1 SUBI
Assets. In the event of such a termination affecting the 1996-1 SUBI Assets, the
Trust Agent generally will succeed to the rights, powers, responsibilities,
duties and liabilities of the Servicer under the Servicing Agreement with
respect to the 1996-1 SUBI Assets (excluding certain specific obligations listed
in the Servicing Agreement) or provide for a new Servicer to be approved by each
Rating Agency. The Trust Agent or other new Servicer, will receive substantially
the same servicing compensation to which the Servicer otherwise would have been
entitled. If, however, a bankruptcy trustee or similar official has been
appointed for the Servicer, and no Event of Servicing Termination other than
such appointment has occurred, such trustee or official may have the power to
prevent the Origination Trustee, the Trustee or such Noteholders from effecting
a transfer of servicing. Notwithstanding the termination of the Servicer's
rights and powers in such event, the Servicer will remain obligated to perform
certain specific obligations listed in the Servicing Agreement and to reimburse
the Trust Agent for any losses incurred in performing certain such obligations,
and will be entitled to payment of certain amounts payable to it for services
rendered prior to such termination. (Servicing Agreement, Sections 4.01 and
11.01).
The holders of Notes evidencing not less than 51% of the outstanding
Principal Balance of the Notes, with the consent of the Owner Trustee and the
Indenture Trustee (which consents shall not be unreasonably withheld) may waive
any default by the Servicer in the performance of its obligations under the
Servicing Agreement and its consequences with respect to the 1996-1 SUBI Assets,
other than a default in making any required deposits to or payments from an
Account in accordance with the Servicing Agreement or in respect of a covenant
or provision of the Servicing Agreement that cannot be modified or amended
without the consent of each Noteholder (in which event the related waiver will
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require the approval of holders of all of the Notes). No such waiver will impair
the rights of the Noteholders with respect to subsequent defaults. (Servicing
Agreement, Section 4.01; Agreement, Sections 8.02 and 9.03).
No Petition
The Servicer will agree not to institute, or join in, any bankruptcy or
similar proceeding against the Seller, ALFI L.P., the Origination Trustee or the
Origination Trust until one year and one day after final payment of all
financings involving interests in the Origination Trust. (Servicing Agreement,
Section 5.14).
Amendment
The Servicing Agreement may be amended from time to time in a writing
signed by the Origination Trustee, the Owner Trustee, the Indenture Trustee and
the Servicer, with the approval of the Indenture Trustee (which approval may be
given in the circumstances described under "Additional Document
Provisions--Additional Agreement Provisions--Amendment"). Any such amendment
relating to the UTI or any Other SUBI may require certain other approvals.
(Servicing Agreement, Sections 5.02 and 12.02).
Termination
The Servicing Agreement shall terminate upon the earlier to occur of
(i) the termination of the Origination Trust, (ii) the discharge of the Servicer
in accordance with its terms or (iii) the termination of the Indenture.
(Servicing Agreement, Section 5.01).
Governing Law
The Servicing Agreement will be governed by the laws of the State of
Alabama.
CERTAIN LEGAL ASPECTS OF THE ORIGINATION TRUST AND THE 1996-1 SUBI
THE ORIGINATION TRUST
The Origination Trust may be deemed to be a business trust under
Alabama law. In an Alabama business trust, the trust property is managed for the
profit of the beneficiaries, as opposed to a common "asset preservation" trust,
in which the trustee is charged with the mere maintenance of trust property. The
principal requirement for the formation of a business trust in Alabama is the
filing of the trust instrument with the appropriate state authority. The
Origination Trust Agreement has been, and the SUBI Trust Agreement will be, so
filed. The Origination Trust also has been qualified as a business trust
authorized to transact business in certain other states where it is required to
be qualified.
Because the Origination Trust has been registered as a business trust
for Alabama and other state law purposes, like a corporation, it may be eligible
to be a debtor in its own right under the United States Bankruptcy Code, as
further described under "Risk Factors--Insolvency of World Omni; Substantive
Consolidation with World Omni".
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THE 1996-1 SUBI
The 1996-1 SUBI will be issued pursuant to the SUBI Trust Agreement and
will evidence a beneficial interest in the 1996-1 SUBI Assets. The 1996-1 SUBI
will not represent a direct interest in the 1996-1 SUBI Assets, nor will it
represent an interest in any Origination Trust Assets other than the 1996-1 SUBI
Assets. Except under the limited circumstances described under "Risk
Factors--Structural Considerations--Allocation of Origination Trust
Liabilities", payments made on or in respect of such other Origination Trust
Assets will not be available to make payments on the Certificates or to cover
expenses of the Origination Trust allocable to the 1996-1 SUBI Assets, as
further described under "The Trust and the SUBI--The 1996-1 SUBI".
INSOLVENCY RELATED MATTERS
As described under "Risk Factors--Structural Considerations--Allocation
of Origination Trust Liabilities", each holder or pledgee of the UTI and any
Other SUBI will be required to expressly disclaim any interest in the 1996-1
SUBI Assets, and to fully subordinate any claims to the 1996-1 SUBI Assets in
the event that this disclaimer is not given effect. Although no assurance can be
given, in the unlikely event of a bankruptcy of ALFI L.P., the Seller believes
that the 1996-1 SUBI Assets would not be treated as part of ALFI L.P.'s
bankruptcy estate and that, even if they were so treated, the subordination by
holders and pledgees of the UTI and Other SUBIs should be enforceable. In
addition, as described under "Risk Factors--Insolvency of World Omni;
Substantive Consolidation with World Omni", the Seller has taken steps in
structuring the transactions contemplated hereby that are intended to make it
unlikely that the voluntary or involuntary application for relief by World Omni
under any Insolvency Laws will result in consolidation of the assets and
liabilities of ALFI, ALFI L.P., the Seller, the Origination Trust or the Trust
with those of World Omni. If, however, (i) a court concluded that the assets and
liabilities of ALFI, ALFI L.P., the Seller, the Origination Trust or the Trust
should be consolidated with those of World Omni in the event of the application
of applicable Insolvency Laws to World Omni, (ii) a filing were made under any
Insolvency Law by or against ALFI, ALFI L.P., the Seller, the Origination Trust
or the Trust or (iii) an attempt were made to litigate any of the foregoing
issues, delays in payments on the Notes and possible reductions in the amount of
such payments could occur.
CERTAIN LEGAL ASPECTS OF THE
SERIES 1996-1 CONTRACTS AND THE SERIES 1996-1 LEASED VEHICLES
BACK-UP SECURITY INTERESTS
The Series 1996-1 Contracts are "chattel paper" as defined in the UCC.
Pursuant to the Alabama UCC, when a debtor's chief executive office is in
Alabama, a non-possessory security interest in or transfer of chattel paper may
be perfected by filing a UCC-1 financing statement with the Alabama Department
of State. The chief executive offices of the Origination Trust are located in
Alabama.
As described under "Risk Factors--Structural Considerations--Back-up
Security Interest in Certain 1996-1 SUBI Assets", if the Master Lease was to be
recharacterized as a loan secured by the 1996-1 SUBI Assets, the Owner Trustee
will be deemed to have a perfected security interest in certain 1996-1 SUBI
Assets, including the Series 1996-1 Contracts. On or prior to the Closing Date,
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"protective" UCC-1 financing statements will be filed in the States of Alabama,
Delaware, Florida and Illinois to effect this perfection. The Owner Trustee's
security interest in that circumstance could be subordinate to the interest of
certain other parties who take possession of the Series 1996-1 Contracts before
the filing described above has been completed. Specifically, the Owner Trustee's
security interest in a Contract could be subordinate to the rights of a
purchaser of such Contract who takes possession thereof without knowledge or
actual notice of the Owner Trustee's security interest. The Series 1996-1
Contracts will not be stamped to reflect the foregoing back-up security
arrangements.
Any perfected security interest of the Owner Trustee in the Series
1996-1 Contracts will be unaffected by any change of location of any lessee,
since, under the UCC, this back-up security interest will be perfected by the
filing of a UCC-1 financing statement in the jurisdiction in which the chief
executive office of the "debtor" (in this case, the Origination Trust) is
located, not the location of any lessee.
VICARIOUS TORT LIABILITY
Although the Origination Trust will own the Series 1996-1 Leased
Vehicles, they will be operated by the lessees and their respective invitees.
State laws, including the laws in the Five State Area, differ as to whether
anyone suffering injury to person or property involving a leased vehicle may
bring an action against the owner of the vehicle merely by virtue of that
ownership.
In Alabama and Georgia, a victim of such an accident has no such cause
of action against the owner of a leased vehicle arising from the negligent
operation of such leased vehicle unless the owner has negligently entrusted or
negligently continues to entrust the vehicle to an inappropriate lessee.
In Florida, under Section 324.021(9)(b), Florida Statutes, the owner of
a motor vehicle that is subject to a lease having an initial term of at least
one year is exempt from liability arising out of an accident in which the leased
vehicle is involved if the lessee is required under the lease to maintain
certain specified levels of insurance and such insurance is in effect. In 1991,
in a case involving finance leases, the Florida Supreme Court ruled that this
statute is constitutional and that a Florida owner/lessor that complies with the
statute will not be deemed the owner of the leased vehicle for purposes of
financial responsibility for liability or tort claims arising out of the
negligent operation of the leased vehicle or the negligent acts of the operator.
In 1992, the Florida Supreme Court held that this statute is applicable to true
leases as well as finance leases. In March 1996, the Florida Supreme Court
strictly interpreted the requirements of Section 324.021(9)(b), ruling that the
existence of a lessor's blanket contingent liability insurance policy did not
satisfy the statutory requirement that the lessee have insurance in effect at
the time of the accident and denying the lessor the liability exemption provided
in the statute. However, effective with respect to actions brought on or after
June 1, 1996, the statute was amended to provide that a lessor's blanket
contingent liability insurance policy with certain required policy limits will
be deemed to satisfy the statute's requirements for the liability exemption. The
Origination Trust's insurance coverage meets these requirements.
In North Carolina, a lessor of a motor vehicle generally is not
responsible to injured parties for a lessee's negligent use of the leased
vehicle when all control has been relinquished to the lessee, unless the lessor
knew or in the exercise of reasonable care should have known that the leased
vehicle was defective or unsafe at the time of delivery to the lessee and the
defect or unsafe condition caused injury, or if the lessor negligently entrusted
the vehicle to an incompetent lessee.
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As more fully described under "Risk Factors--Vicarious Tort Liability",
following an accident involving a Series 1996-1 Leased Vehicle, under certain
circumstances the Origination Trust may be the subject of an action for damages
as a result of its ownership of such Series 1996-1 Leased Vehicle. To the extent
that applicable state law permits such an action, the Origination Trust and the
Origination Trust Assets may be subject to liability. However, the laws of many
States, including each of the States in the Five State Area, either do not
permit such suits, or the lessor's liability is capped at the amount of any
liability insurance that the lessee was required to, but failed to, maintain.
Although the Origination Trust's insurance coverage is substantial, in the event
that all applicable insurance coverage were exhausted and damages were assessed
against the Origination Trust, claims could be imposed against the assets of the
Origination Trust, including the Series 1996-1 Leased Vehicles. However, such
claims would not take priority over any 1996-1 SUBI Assets to the extent that
the Trustee has a prior perfected security interest therein (such as would be
the case, in certain limited circumstances, with respect to the Series 1996-1
Contracts) as further described under "Risk Factors--Structural
Considerations--Back-up Security Interest in Certain 1996-1 SUBI Assets". If any
such claims were imposed against the assets of the Origination Trust, investors
in the Notes could incur a loss on their investment.
REPOSSESSION OF SERIES 1996-1 LEASED VEHICLES
In the event that a default by a Consumer Lessee has not been cured
within a certain period of time after notice, the Servicer will ordinarily
retake possession of the related leased vehicle. Some jurisdictions require that
the Consumer Lessee be notified of the default and be given a time period within
which to cure the default prior to repossession. Generally, this right to cure
may be exercised on a limited number of occasions in any one-year period. In
these jurisdictions, if the Consumer Lessee objects or raises a defense to
repossession, an order must be obtained from the appropriate state court, and
the vehicle must then be repossessed in accordance with that order. Other
jurisdictions permit repossession without notice (although in Florida, Georgia
and North Carolina a course of conduct in which the lessor has accepted late
payments has been held to create a right of the Consumer Lessee to receive prior
notice), but only if the repossession can be accomplished peacefully. If a
breach of the peace cannot be avoided, judicial action is required.
In Georgia, a leased vehicle may be repossessed without notice, but
only if the repossession can be accomplished without a breach of the peace. If a
breach of the peace cannot be avoided, the lessor must seek a writ of possession
in a state court action or pursue other judicial action to repossess such leased
vehicle.
After the Servicer has repossessed a Series 1996-1 Leased Vehicle, it
may provide the related Consumer Lessee with a period of time within which to
cure the default under the related Series 1996-1 Contract. If by the end of such
period the default has not been cured, the Servicer will attempt to sell the
Series 1996-1 Leased Vehicle. The Net Repossessed Vehicle Proceeds therefrom may
be less than the remaining amounts due under the Series 1996-1 Contract at the
time of default by the related Consumer Lessee.
DEFICIENCY JUDGMENTS
The proceeds of sale of a leased vehicle generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the amounts due under the related lease contract. While some states impose
prohibitions or limitations on deficiency judgments if the net proceeds from
resale
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of a leased vehicle do not cover the full amounts due under the related lease
contract, a deficiency judgment can be sought in those states (including each of
the States in the Five State Area) that do not prohibit directly or limit such
judgments. However, in some states (including Florida), a lessee may be allowed
an offsetting recovery for any amount not recovered at resale because the terms
of the resale were not commercially reasonable. In any event, a deficiency
judgment would be a personal judgment against the lessee for the shortfall, and
a defaulting lessee would be expected to have little capital or sources of
income available following repossession. Therefore, in many cases, it may not be
useful to seek a deficiency judgment. Even if a deficiency judgment is obtained,
it may be settled at a significant discount.
In Georgia, amounts recoverable by the lessor of a leased vehicle from
a lessee upon default or early termination are not considered to be "deficiency
judgments", but damages for breach or early termination of the related lease
contract. In the case of liquidated damages provided for in the Series 1996-1
Contracts, the only limitation or prohibition on such damages is that they are
reasonable in light of the anticipated harm caused by the default. Georgia law
does not require that any excess proceeds from disposition of a leased vehicle
be paid to a lessee. Under the Georgia Motor Vehicle Warranty Rights Act,
however, where a lessor or lessee has exercised its rights against the
manufacturer and obtained a replacement vehicle and the lessor realizes a gain
from disposition of the replacement vehicle, the lessor must refund to the
lessee the lesser of any offset for use paid by the lessee to the manufacturer
or the gain realized by the lessor.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws impose requirements
upon lessors and servicers involved in consumer leasing. The federal Consumer
Leasing Act of 1976 and Regulation M, issued by the Board of Governors of the
Federal Reserve System, for example, require that a number of disclosures be
made at the time a vehicle is leased, including the amount of any down payment,
a description of the lessee's liability at the end of the lease term, the amount
of any periodic payments and the circumstances under which the lessee may
terminate the lease prior to the end of the lease term. The various consumer
protection laws would apply to the Origination Trustee as a "co-lessor" of the
Series 1996-1 Contracts and may also apply to the Trust as holder of a
beneficial interest in the Series 1996-1 Contracts. The failure to comply with
such consumer protection laws may give rise to liabilities on the part of the
Servicer, the Origination Trust and the Origination Trustee, including
liabilities for statutory damages and attorneys' fees. In addition, claims by
the Servicer, the Origination Trust and the Origination Trustee may be subject
to set-off as a result of such noncompliance.
Courts have applied general equitable principles in litigation relating
to repossession and deficiency balances. These equitable principles may have the
effect of relieving a lessee from some or all of the legal consequences of a
default.
In several cases, consumers have asserted that the self-help remedies
of lessors violate the due process protection provided under the Fourteenth
Amendment to the Constitution of the United States. Courts have generally found
that repossession and resale by a lessor do not involve sufficient state action
to afford constitutional protection to consumers.
Many states, including each State in the Five State Area, have adopted
laws (each, a "Lemon Law") providing redress to consumers who purchase or lease
a vehicle that remains out of conformance with its manufacturer's warranty after
a specified number of attempts to correct a problem or after a
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specific time period. Should any Series 1996-1 Leased Vehicle become subject to
a Lemon Law, a lessee could compel the Origination Trust to terminate the
related Contract and refund all or a portion of payments that previously have
been paid. Although the Origination Trust may be able to assert a claim against
the manufacturer of any such defective Series 1996-1 Leased Vehicle, there can
be no assurance any such claim would be successful.
Historically, less than one-half of one percent of all automobiles and
light duty trucks leased by World Omni (including lease contracts owned by the
Origination Trustee on behalf of the Origination Trust or by certain special
purpose subsidiaries of World Omni) have become the subject of an action under
any of the Lemon Laws of any jurisdiction. As noted below, World Omni will
represent and warrant to the Owner Trustee as of the Cutoff Date that none of
the Series 1996-1 Leased Vehicles is out of compliance with any law, including a
Lemon Law. Nevertheless, there can be no assurance that one or more Series
1996-1 Leased Vehicles will not become subject to return (and the related Series
1996-1 Contract terminated) in the future under a Lemon Law.
Representations and warranties will be made in the SUBI Trust Agreement
that each Series 1996-1 Contract complies with all requirements of law in all
material respects. If any such representation and warranty proves to be
incorrect with respect to any Series 1996-1 Contract, and is not timely cured,
World Omni will be required under the Servicing Agreement to deposit an amount
equal to the Reallocation Payment in respect of such Series 1996-1 Contract into
the Issuer Collection Account unless the breach is cured. See "Additional
Document Provisions--The SUBI Trust Agreement--The 1996-1 SUBI, the Other SUBIs
and the UTI" and "The Series 1996-1 Contracts--Representations, Warranties and
Covenants" for further information regarding the foregoing representations and
warranties.
OTHER LIMITATIONS
In addition to laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including applicable Insolvency Laws, may
interfere with or affect the ability of a lessor to enforce its rights under an
automobile or light duty truck lease contract. For example, if a lessee
commences bankruptcy proceedings, the lessor's receipt of rental payments due
under the lease contract is likely to be delayed. In addition, a lessee who
commences bankruptcy proceedings might be able to assign the lease contract to
another party even though the lease prohibits assignment.
FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a summary of certain United States federal income
tax consequences of the purchase, ownership and disposition of the Notes. This
discussion is based upon current provisions of the Internal Revenue Code of
1986, as amended (the "Code"), existing and proposed Treasury Regulations
thereunder, current administrative rulings, judicial decisions and other
applicable authorities in effect as of the date hereof, all of which are subject
to change, possibly with retroactive effect. There can be no assurance that the
Internal Revenue Service ("IRS") will not challenge the conclusions reached
herein, and no ruling from the IRS has been or will be sought on any of the
issues discussed below.
This summary does not purport to deal with all aspects of federal
income taxation that may be relevant to Note Owners or Noteholders in light of
their personal investment circumstances nor, except
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for certain limited discussions of particular topics, to certain types of Note
Owners or Noteholders subject to special treatment under the federal income tax
laws (e.g., financial institutions, broker-dealers, life insurance companies and
tax-exempt organizations). This information is directed to Note Owners or
Noteholders who hold the Notes as "capital assets" within the meaning of Section
1221 of the Code.
GENERAL
Tax Status of the Notes. On the Closing Date, Skadden, Arps, Slate,
Meagher & Flom LLP ("Special Tax Counsel"), will render its opinion that for
federal income tax purposes under existing law, and subject to the assumptions
and qualifications therein, the Notes will be treated as debt.
Stated Interest. Stated interest on the Notes will be taxable as
ordinary income for federal income tax purposes when received or accrued in
accordance with a Note Owner's method of tax accounting.
Original Issue Discount. A Note will be treated as issued with Original
Issue Discount ("OID") if the excess of the Note's "stated redemption price at
maturity" over its issue price equals or exceeds a de minimis amount equal to
1/4 of 1 percent of the Note's stated redemption price at maturity multiplied by
the number of complete years (based on the anticipated weighted average life of
a Note) to its maturity. [The Notes will be issued with de minimis OID.]
Generally, the issue price of a Note should be the first price at which a
substantial amount of the Notes included in the issue of which the Note is a
part is sold to other than bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters, placement agents or
wholesalers. The stated redemption price at maturity of a Note is expected to
equal the principal amount of the Note. Any amount not treated as OID because it
is de minimis OID must be included in income as principal payments are received
on the Notes in the proportion that each such payment bears to the original
principal balance of the Note.
If the Notes are treated as issued with OID, a Note Owner will be
required to include OID in income before the receipt of cash attributable to
such income using the constant-yield method. The amount of OID includible in
income is the sum of the daily portions of OID with respect to a Note for each
day during the taxable year or portion of the taxable year in which the Note
Owner holds the Note. The amount of OID includible in income by a Note Owner of
a Note will be computed by allocating to each day during a taxable year a pro
rata portion of the OID that accrued during the relevant "accrual period." Such
OID is generally equal to the product of the yield to maturity of the Note
(adjusted for the length of the accrual period) and its adjusted issue price at
the beginning of the accrual period, reduced by any payments of "qualified
stated interest." Accrual periods with respect to a Note may be any set of
periods (which may be of varying lengths) selected by the Note Owner as long as
(i) no accrual period is longer than one year and (ii) each scheduled payment of
interest or principal on the Note occurs on either the final or first day of an
accrual period.
The adjusted issue price of a Note is the sum of its issue price plus
prior accruals of OID, reduced by the total payments made with respect to such
Note in all prior periods, other than "qualified stated interest payments."
Qualified stated interest payments are interest payments on the Notes that are
unconditionally payable at least annually at a single fixed rate applied to the
outstanding principal amount of the obligation.
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Market Discount. The Notes, whether or not issued with original issue
discount, will be subject to the "market discount rules" of section 1276 of the
Code. In general, these rules provide that if the Note Owner purchases a Note at
a market discount (that is, a discount from its stated redemption price at
maturity or, if the Notes were issued with OID, its original issue price plus
any accrued original issue discount, that exceeds a de minimis amount specified
in the Code) and thereafter (a) recognizes gain upon a disposition, or (b)
receives payments of principal, the lesser of (i) such gain or principal
payment, or (ii) the accrued market discount, will be taxed as ordinary interest
income. Generally, the accrued market discount will be the total market discount
on the Note multiplied by a fraction, the numerator of which is the number of
days the Note Owner held the Note and the denominator of which is the number of
days from the date the Note Owner acquired the Note until its maturity date. The
Note Owner may elect, however, to determine accrued market discount under the
constant-yield method.
Limitations imposed by the Code which are intended to match deductions
with the taxation of income may defer deductions for interest on indebtedness
incurred or continued, or short-sale expenses incurred, to purchase or carry a
Note with accrued market discount. A Note Owner may elect to include market
discount in gross income as it accrues and, if such Note Owner makes such an
election, is exempt from this rule. Any such election will apply to all debt
instruments acquired by the taxpayer on or after the first day of the first
taxable year to which such election applies. The adjusted basis of a Note
subject to such election will be increased to reflect market discount included
in gross income, thereby reducing any gain or increasing any loss on a sale or
taxable disposition.
Election to Treat All Interest as Original Issue Discount. A Note Owner
may elect to include in gross income all interest that accrues on a Note using
the constant-yield method described above under the heading "--Original Issue
Discount," with modifications described below. For purposes of this election,
interest includes stated interest, OID, de minimis original issue discount,
market discount, de minimis market discount and unstated interest, as adjusted
by any amortizable bond premium (described below under "--Amortizable Bond
Premium") or acquisition premium.
In applying the constant-yield method to a Note with respect to which
this election has been made, the issue price of the Note will equal the electing
Note Owner's adjusted basis in the Note immediately after its acquisition, the
issue date of the Note will be the date of its acquisition by the electing Note
Owner, and no payments on the Note will be treated as payments of qualified
stated interest. This election will generally apply only to the Note with
respect to which it is made and may not be revoked without the consent of the
IRS. Note Owners should consult with their own tax advisers as to the effect in
their circumstances of making this election.
Amortizable Bond Premium. In general, if a Note Owner purchases a Note
at a premium (that is, an amount in excess of the amount payable upon the
maturity thereof), such Note Owner will be considered to have purchased such
Note with "amortizable bond premium" equal to the amount of such excess. Such
Note Owner may elect to amortize such bond premium as an offset to interest
income and not as a separate deduction item as it accrues under a constant-yield
method over the remaining term of the Note. Such Note Owner's tax basis in the
Note will be reduced by the amount of the amortized bond premium. Any such
election shall apply to all debt instruments (other than instruments the
interest on which is excludible from gross income) held by the Note Owner at the
beginning of the first taxable year for which the election applies or thereafter
acquired and is irrevocable without the consent of the IRS. Bond premium on a
Note held by a Note Owner who does not elect to amortize the premium will
decrease the gain or increase the loss otherwise recognized on the disposition
of the Note.
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Disposition of Notes. A Note Owner's adjusted tax basis in a Note will
be its cost, increased by the amount of any OID, market discount and gain
previously included in income with respect to the Note, and reduced by the
amount of any payments on the Note that is not qualified stated interest and the
amount of bond premium previously amortized with respect to the Note. A Note
Owner will generally recognize gain or loss on the sale or retirement of a Note
equal to the difference between the amount realized on the sale or retirement
and the tax basis of the Note. Such gain or loss will be capital gain or loss
(except to the extent attributable to accrued but unpaid interest or as
described above under "--Market Discount") and will be long-term capital gain or
loss if the Note was held for more than one year.
WAIVERS AND AMENDMENTS
The Indenture permits the Noteholders to waive an Event of Default in
some circumstances upon a vote of the requisite percentage of Noteholders. Such
a waiver, if it were to continue for a period that exceeds two years and any
additional period during which the Noteholders conduct good faith negotiations,
or certain amendments to the terms of the Notes, would be treated for federal
income tax purposes as a constructive exchange by a Noteholder of the Notes for
new notes, upon which gain or loss would be recognized.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Indenture Trustee will be required to report annually to the IRS,
and to each Note Owner, the amount of interest paid on the Notes (and the amount
withheld for federal income taxes, if any) for each calendar year, except as to
exempt recipients (generally, corporations, tax-exempt organizations, qualified
pension and profit-sharing trusts, individual retirement accounts, or
nonresident aliens who provide certification as to their status). Each Note
Owner (other than Note Owners who are not subject to the reporting requirements)
will be required to provide, under penalties of perjury, a certificate
containing the Note Owner's name, address, correct federal taxpayer
identification number (which includes a social security number) and a statement
that the Note Owner is not subject to backup withholding. Should a non-exempt
Note Owner fail to provide the required certification or should the IRS notify
the Indenture Trustee or the Issuer that the Note Owner has provided an
incorrect federal taxpayer identification number or is otherwise subject to
backup withholding, the Indenture Trustee will be required to withhold (or cause
to be withheld) 31% of the interest otherwise payable to the Note Owner, and
remit the withheld amounts to the IRS as a credit against the Note Owner's
federal income tax liability.
TAX CONSEQUENCES TO FOREIGN INVESTORS
The following information describes the U.S. federal income tax
treatment of investors that are not U.S. persons (each, a "Foreign Person"). The
term "Foreign Person" means any person other than (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity organized in
or under the laws of the United States or any political subdivision thereof or
(iii) an estate or trust the income of which is includible in gross income for
U.S. federal income tax purposes, regardless of its source.
(a) Interest paid or accrued to a Foreign Person that is not
effectively connected with the conduct of a trade or business within
the United States by the Foreign Person, will generally be considered
"portfolio interest" and generally will not be subject to United States
federal
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income tax and withholding tax, as long as the Foreign Person (i) is
not actually or constructively a "10 percent shareholder" of the Issuer
or a "controlled foreign corporation" with respect to which the Issuer
is a "related person" within the meaning of the Code, and (ii) provides
an appropriate statement (Form W-8), signed under penalties of perjury,
certifying that the Note Owner is a Foreign Person and providing that
Foreign Person's name and address. If the information provided in this
statement changes, the Foreign Person must so inform the Indenture
Trustee within 30 days of such change. The statement generally must be
provided in the year a payment occurs or in either of the two preceding
years. If such interest were not portfolio interest, then it would be
subject to United States federal income and withholding tax at a rate
of 30 percent unless reduced or eliminated pursuant to an applicable
income tax treaty.
(b) Any capital gain realized on the sale 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) the 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 and certain
other requirements are met.
(c) If the interest, gain or income on a Note held by a
Foreign Person is effectively connected with the conduct of a trade or
business in the United States by the Foreign Person, the Note Owner
(although exempt from the withholding tax previously discussed if a
duly executed Form 4224 is furnished) generally will be subject to
United States federal income tax on the interest, gain or income at
regular federal income tax rates. In addition, if the Foreign Person is
a foreign corporation, it may be subject to a branch profits tax equal
to 30 percent of its "effectively connected earnings and profits"
within the meaning of the Code for the taxable year, as adjusted for
certain items, unless it qualifies for a lower rate under an applicable
tax treaty.
On April 15, 1996, the IRS issued proposed Treasury regulations (the
"Proposed Regulations") which, if enacted in their proposed form, would
substantially revise some aspects of the current system for withholding on, and
reporting of, amounts paid to Foreign Persons. For example, the certification
procedures described above (i.e., Forms W-8, 4224, etc.) would be unified and
combined into a single form (Form W-8) under the Proposed Regulations. As a
general rule, the Proposed Regulations are proposed to be effective for payments
to Foreign Persons made after December 31, 1997. There is no assurance that the
Proposed Regulations will be adopted or, if adopted, will be adopted in their
proposed form.
STATE INCOME TAXATION
The Florida Administrative Code includes a rule (the "Loan Rule"),
promulgated under the Florida Income Tax Code, which provides that a financial
organization earning or receiving interest from loans secured by tangible
property located in Florida will be deemed to be conducting business or earning
or receiving income in Florida, and will be subject to Florida corporate income
tax irrespective of the place of receipt of such interest. A "financial
organization" is defined to include any bank, trust company, savings bank,
industrial bank, land bank, safe deposit company, private banker, savings and
loan association, credit union, cooperative bank, small loan company, sales
finance company or investment company. If the Loan Rule were to apply to an
investment in the Notes, then a financial
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organization investing in the Notes would be subject to Florida corporate income
tax on a portion of its income at a maximum rate of 5.5%, and would be required
to file an income tax return in Florida, even if it has no other Florida
contacts. English, McCaughan & O'Bryan, P.A., special Florida counsel to the
Issuer, is of the opinion that if the matter were properly presented to a court
having jurisdiction, and assuming interpretation of relevant law on a basis
consistent with existing authority, such court would hold that the Loan Rule
should not apply to an investment in the Notes or the receipt of interest
thereon by a financial organization with no other Florida contacts.
Consequently, prospective investors are urged to consult their own tax advisers
as to the applicability of Florida taxation to their investments in the Notes
and to their ability to offset any such Florida tax against any other state tax
liabilities that such investors might have.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and/or Section 4975 of the Code, prohibit a pension,
profit-sharing or other employee benefit plan, as well as individual retirement
accounts and Keogh Plans (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. Title
I of ERISA also requires that fiduciaries of a Benefit Plan subject to ERISA
make investments that are prudent, diversified (except if prudent not to do so)
and in accordance with governing plan documents.
Certain transactions involving the Issuer might be deemed to constitute
prohibited transactions under ERISA and the Code if assets of the Issuer were
deemed to be assets of a Benefit Plan. Under a regulation issued by the United
States Department of Labor (the "Plan Assets Regulation"), the assets of the
Issuer would be treated as plan assets of a Benefit Plan for purposes of ERISA
and the Code only if the Benefit Plan acquires an "Equity Interest" in the
Issuer and none of the exceptions contained in the Plan Assets Regulation
(discussed below) is applicable. An "Equity Interest" is defined under the Plan
Assets Regulation as an interest other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features. The Seller believes that the Notes should be treated as indebtedness
without substantial equity features for purposes of the Plan Assets Regulation.
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
Benefit Plan could be considered to give rise to a prohibited transaction if the
Issuer, the Owner Trustee, the Indenture Trustee, the Origination Trust Trustee,
any Note, or any of their respective affiliates, is or becomes a party in
interest or a disqualified person with respect to such Benefit Plan. In such
case, certain exemptions from the prohibited transaction rules could be
applicable depending on the type and circumstances of the plan fiduciary making
the decision to acquire a Note. Included among these exemptions are: Prohibited
Transaction Class Exemption ("PTCE") 90-1, which exempts certain transactions
involving insurance company pooled separate accounts; PTCE 95-60, which exempts
certain transactions involving insurance company general accounts; PTCE 91-38,
which exempts certain transactions involving bank collective investment funds;
PTCE 96-23, which exempts certain transactions effected on behalf of a Benefit
Plan by an "in house" asset manager; and PTCE 84-14, which exempts certain
transactions effected on behalf of a Benefit Plan by a "qualified professional
asset manager."
Employee benefit plans that are 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 ERISA requirements.
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A plan fiduciary considering the purchase of Notes should consult its
tax and/or legal advisors regarding whether the assets of the Issuer would be
considered plan assets, the possibility of exemptive relief from the prohibited
transaction rules and other issues and their potential consequences.
UNDERWRITING
Under the terms and subject to the conditions contained in an
Underwriting Agreement dated December, 1996 (the "Underwriting Agreement"),
Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter"), has
agreed to purchase the entire principal amount of the Notes from the Owner
Trustee.
The Underwriting Agreement provides that the obligations of the
Underwriter are subject to certain conditions precedent that the Underwriter
will be obligated to purchase all the Notes if any are purchased.
The Seller has been advised that the Underwriter proposes to offer the
Notes to the public initially at the public offering price set forth on the
cover page of this Prospectus and to certain dealers at such price less a
concession of ____%, of the principal amount per Note, and the Underwriter and
such dealers may allow a discount of _____% of such principal amount per Note,
on sales to certain other dealers. After the initial public offering, the public
offering price and concessions and discounts to dealers may be changed by the
Underwriter.
The Seller and World Omni have jointly and severally agreed to
indemnify the Underwriter against certain liabilities, including civil
liabilities under the Securities Act, or contribute to payments which the
Underwriter may be required to make in respect thereof.
Upon receipt of a request by an investor who has received an electronic
Prospectus from an Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
the Seller or the Underwriter will promptly deliver, or cause to be delivered,
without charge, a paper copy of the Prospectus.
RATINGS OF THE NOTES
It is a condition of issuance that at least two Rating Agencies rate
the Notes in their highest rating category. The ratings of the Notes will be
based primarily upon the value of the Series 1996-1 Contracts, the Reserve Fund,
the Residual Value Support Account and the terms of the Notes. There is no
assurance that any such rating will not be lowered or withdrawn by the assigning
Rating Agency if, in its judgment, circumstances so warrant. In the event that a
rating with respect to the Notes is qualified, reduced or withdrawn, no person
or entity will be obligated to provide any additional credit enhancement with
respect to the Notes.
The ratings of the Notes should be evaluated independently from similar
ratings on other types of securities. A rating is not a recommendation to buy,
sell or hold the related Notes, inasmuch as such rating does not comment as to
market price or suitability for a particular investor. The ratings of the Notes
addresses the likelihood of the payment of principal of and interest on such
Notes pursuant to their terms.
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There can be no assurance as to whether any rating agency other than
the Rating Agencies will rate the Notes, or, if one does, what rating will be
assigned by such other rating agency. A rating on any Class of Notes by another
rating agency, if assigned at all, may be lower than the ratings assigned to
such Notes by each Rating Agency.
LEGAL MATTERS
Certain legal matters with respect to the Notes (including certain
federal income tax matters) will be passed upon for the Seller by Skadden, Arps,
Slate, Meagher & Flom LLP. Certain other legal matters will be passed upon for
the Seller with respect to Illinois law by Skadden, Arps, Slate, Meagher & Flom
(Illinois), with respect to Alabama law, by Hand Arendall, L.L.C., Birmingham,
Alabama and with respect to Florida law, by English, McCaughan & O'Bryan, P.A.,
Fort Lauderdale, Florida. Brown & Wood LLP, San Francisco, California, will act
as special counsel to the Underwriter and as special tax counsel to the Seller
with respect to the status of the Origination Trust.
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INDEX OF CAPITALIZED TERMS
Set forth below is a list of the capitalized terms used in this
Prospectus and the pages on which the definitions of such terms may be found.
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C> <C>
ABS................................................................................................................ 58
Accelerated Principal Payment ..................................................................................... 13, 62
Accounts .......................................................................................................... 81
Additional Loss Amounts ........................................................................................... 88
Administrative Lien ............................................................................................... 40
Administrative Lienholders ........................................................................................ 40
Advance ........................................................................................................... 23, 93
Agency Agreement .................................................................................................. 89
Aggregate Net Investment Value .................................................................................... 16
ALFI .............................................................................................................. 8
ALFI L.P. ......................................................................................................... 8
Available Funds ................................................................................................... 12, 62
Benefit Plan ...................................................................................................... 109
Business Day ...................................................................................................... 14, 63
Cede .............................................................................................................. 14
Cedel ............................................................................................................. 14
Cedel Participants ................................................................................................ 72
Certificates ...................................................................................................... 2
Charged-off Contracts ............................................................................................. 91
Claims ............................................................................................................ 90
Closing Date ...................................................................................................... 2, 12
Code .............................................................................................................. 104
Collection Account................................................................................................. 79
Collections ....................................................................................................... 19
Commission ........................................................................................................ 3
Consumer Lessee ................................................................................................... 9
Contingent and Excess Liability Insurance Policies ................................................................ 83
Contract Rights ................................................................................................... 29
Cooperative ....................................................................................................... 74
Cutoff Date ....................................................................................................... 9
Deerfield Office .................................................................................................. 42
Dealers ........................................................................................................... 8
Definitive Notes .................................................................................................. 61
Deposit Date ...................................................................................................... 20
Depositaries ...................................................................................................... 14
Determination Date ................................................................................................ 64
Discounted Contract ............................................................................................... 17
Discounted Principal Balance ...................................................................................... 17
Draw Amount ....................................................................................................... 21
DTC ............................................................................................................... 3, 14
DTC Participants .................................................................................................. 72
Early Termination Charge .......................................................................................... 52
Equity Interest ................................................................................................... 109
</TABLE>
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<TABLE>
<S> <C>
ERISA ............................................................................................................. 109
ERISA Compliance Test ............................................................................................. 96
Euroclear ......................................................................................................... 14
Euroclear Operator ................................................................................................ 74
Euroclear Participants ............................................................................................ 72
Events of Servicing Termination ................................................................................... 97
Exchange Act ...................................................................................................... 3
Extension Fee ..................................................................................................... 45
Fair, Isaac ....................................................................................................... 43
Final Scheduled Payment Date ...................................................................................... 63
Financial Organization ............................................................................................ 108
First Bank ........................................................................................................ 39
Five State Area ................................................................................................... 11
Foreign Person .................................................................................................... 107
Full Termination Ratio ............................................................................................ 46
Global Securities ................................................................................................. A-1
Indenture ......................................................................................................... 1
Indenture Trustee ................................................................................................. 10
Indirect DTC Participants ......................................................................................... 73
Initial Principal Balance ......................................................................................... 12
Insolvency Event .................................................................................................. 32
Insolvency Laws ................................................................................................... 32
Interest Period ................................................................................................... 12, 62
IRS ............................................................................................................... 104
Issuer ............................................................................................................ 1, 8
Issuer Collection Account ......................................................................................... 19, 79
JMFE .............................................................................................................. 11
Lease Event of Default ............................................................................................ 19, 37, 77
Lease Rate ........................................................................................................ 16
Lemon Law ......................................................................................................... 103
Lessee ............................................................................................................ 1
Lessee Collection Account ......................................................................................... 19, 79
Liquidation Expenses .............................................................................................. 21
Liquidation Proceeds .............................................................................................. 20
Loan Rule ......................................................................................................... 108
Master Lease Payments ............................................................................................. 10, 19
Matured Contract .................................................................................................. 17
Matured Leased Vehicle Expenses ................................................................................... 20
Matured Leased Vehicle Inventory .................................................................................. 17
Matured Leased Vehicle Proceeds ................................................................................... 20, 70
Maturity Date ..................................................................................................... 54
Mobile Center ..................................................................................................... 42
Monthly Payments .................................................................................................. 16
Net Insurance Proceeds ............................................................................................ 79
Net Matured Leased Vehicle Proceeds ............................................................................... 21
Nonrecoverable Advance ............................................................................................ 93
1996-1 SUBI ....................................................................................................... 1, 8
1996-1 SUBI Assets ................................................................................................ 2, 9, 34
1996-1 SUBI Certificate ........................................................................................... 15
1996-1 SUBI Supplement ............................................................................................ 87
</TABLE>
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<TABLE>
<S> <C>
Note Factor ....................................................................................................... 61
Noteholders ....................................................................................................... 61
Note Owner ........................................................................................................ 14
Note Payment Amount ............................................................................................... 65
Note Rate ......................................................................................................... 12, 62
Notes ............................................................................................................. 1
OID ............................................................................................................... 105
Omnibus Proxy ..................................................................................................... 74
Origination Trust ................................................................................................. 1, 8
Origination Trust Agreement ....................................................................................... 15
Origination Trust Assets .......................................................................................... 1, 39
Origination Trustee ............................................................................................... 8
Other SUBI Assets ................................................................................................. 27, 28
Other SUBI Certificates ........................................................................................... 38
Other SUBI Supplement ............................................................................................. 87
Other SUBI ........................................................................................................ 8
Owner Trust Agreement ............................................................................................. 10
Owner Trustee ..................................................................................................... 1, 10
Participants ...................................................................................................... 72
Payment Account ................................................................................................... 81
Payment Ahead ..................................................................................................... 19
Payment Date ...................................................................................................... 2, 12, 62
PBGC .............................................................................................................. 28
Permitted Investments ............................................................................................. 83
Plan Assets Regulation ............................................................................................ 109
Prepayment ........................................................................................................ 79
Prepayment Assumption ............................................................................................. 59
Principal Payment Amount .......................................................................................... 13, 62
Proposed Regulations .............................................................................................. 108
PTCE .............................................................................................................. 109
Purchase Option ................................................................................................... 11
Rating Agency ..................................................................................................... 2
Realized Value .................................................................................................... 52
Reallocation Payment .............................................................................................. 57
Record Date ....................................................................................................... 12, 61
Registration Statement ............................................................................................ 3
Repossessed Vehicle Expenses ...................................................................................... 20
Repossessed Vehicle Proceeds ...................................................................................... 20, 79
Required Deposit Ratings .......................................................................................... 82
Reserve Fund ...................................................................................................... 81
Reserve Fund Cash Requirement ..................................................................................... 23, 82
Residual Value .................................................................................................... 16
Residual Value Surplus ............................................................................................ 21
Residual Value Support Account .................................................................................... 81
Schedule of Series 1996-1 Contracts and Series 1996-1 Leased Vehicles ............................................. 55
Scheduled Lease Payment ........................................................................................... 18, 77
Securities Act .................................................................................................... 3
Security Deposits ................................................................................................. 93
</TABLE>
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<TABLE>
<S> <C>
Seller ............................................................................................................ 1, 8
Series 1996-1 Contracts ........................................................................................... 2, 9
Series 1996-1 Leased Vehicles ..................................................................................... 9
Servicer .......................................................................................................... 12
Servicer Letter of Credit ......................................................................................... 80
Servicer's Certificate ............................................................................................ 95
Servicing Agreement ............................................................................................... 11
Servicing Fee ..................................................................................................... 23
SET ............................................................................................................... 11, 41
Special Tax Counsel ............................................................................................... 105
Stated Maturity ................................................................................................... 14, 63
SUBI Supplement ................................................................................................... 15
SUBI Trust Agreement .............................................................................................. 76
Support Account Deposit Amount .................................................................................... 21
Termination Payment ............................................................................................... 18, 77
Terms and Conditions .............................................................................................. 77
TMS ............................................................................................................... 42
Trust ............................................................................................................. 1
Trust Agent........................................................................................................ 15, 39, 89
Trust Estate ...................................................................................................... 10, 35
UCC ............................................................................................................... 29
Underwriter ....................................................................................................... 110
Underwriting Agreement ............................................................................................ 110
U.S. Person ....................................................................................................... A-4
UTI ............................................................................................................... 8
UTI Assets ........................................................................................................ 27
UTI Certificates .................................................................................................. 38
WOALI Loan ........................................................................................................ 22
World Omni ........................................................................................................ 1, 8
</TABLE>
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ANNEX 1
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Notes
(the "Global Securities") will be available only in book-entry form. Investors
in the Global Securities may hold such Global Securities through any of DTC,
Cedel or Euroclear. The Global Securities will be tradeable as home market
instruments in both the European and U.S. domestic markets. Initial settlement
and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedel and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the
name of Cede, as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to conventional eurobonds, except
that there will be no temporary global security and no "lock-up" or restricted
period. Investor securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in the
same-day funds.
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Secondary Market Trading
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to book-entry
securities in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear Purchaser. When
Global Securities are to be transferred from the account of a DTC Participant to
the accounts of a Cedel Participant or a Euroclear Participant, the purchaser
will send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depositary, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date, on the basis of actual days elapsed and a
360 day year. Payment will then be made by the respective Depositary to the DTC
Participant account against delivery of the Global Securities. After settlement
has been completed, the Global Securities will be credited to the respective
clearing system and by the clearing system, in accordance with its usual
procedures, to the Cedel Participant's or Euroclear Participant's account. The
Global Securities credit will appear the next day (European time) and the cash
debit will be back-valued to, and the interest on the Global Securities will
accrue from, the value date (which would be the preceding day when settlement
occurred in New York). If settlement is not completed on the intended value date
(i.e., the trade fails), the Cedel or Euroclear cash debit will be valued
instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit
to them, Cedel Participants or Euroclear Participants can elect not to
pre-position funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, Cedel Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day, assuming
they cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the value
date. Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although this result will depend on each Cedel
Participant's or Euroclear Participant's particular cost of funds.
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Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global Securities
to the respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participants a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Cedel Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing systems,
through the respective Depositaries, to a DTC Participant. The seller will send
instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. In these cases, Cedel
or Euroclear will instruct the respective Depositaries, as appropriate, to
deliver the bonds to the DTC Participant's account against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date on the basis of actual
days elapsed and a 360 day year. The payment will then be reflected in the
account of the Cedel Participant or Euroclear Participant the following day, and
receipt of the cash proceeds in the Cedel Participant's or Euroclear
Participant's account would be back-valued to the value date (which would be the
preceding day, when settlement occurred in New York). Should the Cedel
Participant or Euroclear Participant have a line of credit with its respective
clearing system and elect to be in debit in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
charges incurred over that one-day period. If settlement is not completed on the
intended value date (i.e., the trade fails), receipt of the cash proceeds in the
Cedel Participant's or Euroclear Participant's account would instead be value as
of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedel Participants or
Euroclear Participants should note that these trades would automatically fail on
the sale side unless affirmative action were taken. At least three techniques
should be readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until
the purchase side of the day trade is reflected in their Cedel or
Euroclear accounts) in accordance with the clearing system's customary
procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would give
the Global Securities sufficient time to be reflected in their Cedel or
Euroclear account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of
the trade so that the value date for the purchase from the DTC
Participant is at least one day prior to the value date for the sale to
the Cedel Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such
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beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes one
of the following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global
Securities that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 or the Tax Certificate changes, a new Form W-8
or Tax Certificate, as the case may be, must be filed within 30 days of such
change.
Exemption for non-U.S. Person with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are beneficial owners of Global
Securities residing in a country that has a tax treaty with the United States
can obtain an exemption or reduced tax rate (depending on the treaty terms) by
filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the
treaty provides only for a reduced rate, withholding tax will be imposed at that
rate unless the filer alternatively files Form W-8. Form 1001 may be filed by
the Certificate Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includible in gross income for United States tax
purposes, regardless of its source. This summary does not deal with all aspects
of U.S. Federal income tax withholding that may be relevant to foreign holders
of the Global Securities. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of the
Global Securities.
A-4
<PAGE> 121
- ------------------------------------------------------------------
- ------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER OR THE UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF THE SELLER SINCE SUCH DATE.
------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................................................................................... 3
Reports to Noteholders.................................................................................. 3
Index .................................................................................................. 4
Overview of Transaction................................................................................. 7
Summary................................................................................................. 8
Risk Factors............................................................................................ 25
The Issuer.............................................................................................. 34
Property of the Issuer.................................................................................. 35
The Origination Trust................................................................................... 38
Use of Proceeds......................................................................................... 41
The Seller.............................................................................................. 41
World Omni.............................................................................................. 41
The Series 1996-1 Contracts............................................................................. 51
Maturity, Prepayment and Yield Considerations........................................................... 57
Note Factors and Trading Information; Reports to
Noteholders........................................................................................ 61
Description of the Notes................................................................................ 61
Security for the Notes.................................................................................. 76
Additional Document Provisions.......................................................................... 84
Certain Legal Aspects of the Origination Trust and the
1996-1 SUBI........................................................................................ 99
Certain Legal Aspects of the Series 1996-1 Contracts and the Series
1996-1 Leased Vehicles............................................................................. 100
Federal Income Tax Considerations....................................................................... 104
State Income Taxation................................................................................... 109
ERISA Considerations.................................................................................... 109
Underwriting............................................................................................ 110
Ratings of the Notes.................................................................................... 110
Legal Matters........................................................................................... 111
Index of Capitalized Terms.............................................................................. 112
Global Clearance, Settlement and Tax Documentation Procedures........................................... A-1
</TABLE>
UNTIL ________ ___, 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE
NOTES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. UPON RECEIPT OF A REQUEST BY AN INVESTOR WHO
HAS RECEIVED AN ELECTRONIC PROSPECTUS OR A REQUEST BY SUCH INVESTOR'S
REPRESENTATIVE WITHIN THE PERIOD DURING WHICH THERE IS A PROSPECTUS DELIVERY
OBLIGATION, THE SELLER OR THE UNDERWRITERS WILL PROMPTLY DELIVER, OR CAUSE TO BE
DELIVERED, WITHOUT CHARGE, A PAPER COPY OF THE PROSPECTUS.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
WORLD OMNI VEHICLE 1996-1
OWNER TRUST
$----------------
____% LEASE ASSET BACKED NOTES
WORLD OMNI AUTO LEASING, INC.
Seller
WORLD OMNI FINANCIAL CORP.
Servicer
----------------------------------------------------------------
PROSPECTUS
----------------------------------------------------------------
----------------------------------------------------------------
MERRILL LYNCH & CO.
DECEMBER __, 1996
------------------------------------------------------------------
<PAGE> 122
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND PAYMENT.
Expenses in connection with the offering of the Notes being registered
herein are estimated as follows:
<TABLE>
<S> <C>
SEC registration fee $ *
Legal fees and expenses *
Accounting fees and expenses *
Blue sky fees and expenses *
Rating agency fees *
Fees and Expenses of the Owner Trustee *
Fees and Expenses of the Indenture Trustee *
Printing *
Miscellaneous *
------
Total $ *
</TABLE>
- -----------------
* To be filed by Amendment
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 3803 of the Delaware Business Trust Statute provides as
follows:
3803. Liability of Beneficial Owners and Trustees.
(a) Except to the extent otherwise provided in the governing instrument
of the business trust, the beneficial owners shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the general corporation law of the
State.
(b) Except to the extent otherwise provided in the governing instrument
of a business trust, a trustee, when acting in such capacity, shall not be
personally liable to any person other than the business trust or a beneficial
owner for any act, omission or obligation of the business trust or any trustee
thereof.
(c) Except to the extent otherwise provided in the governing instrument
of a business trust, an officer, employee, manager or other person acting
pursuant to Section 3806(b)(7), when acting in such capacity, shall not be
personally liable to any person other than the business trust or a beneficial
owner for any act, omission or obligation of the business trust or any trustee
thereof.
Section 3817 of the Delaware Business Trust Statute provides as
follows:
3817. Indemnification.
II-1
<PAGE> 123
(a) Subject to such standards and restrictions, if any, as are set
forth in the governing instrument of a business trust, a business trust shall
have the power to indemnify and hold harmless any trustee or beneficial owner or
other person from and against any and all claims and demands whatsoever.
(b) The absence of a provision for indemnity in the governing
instrument of a business trust shall not be construed to deprive any trustee or
beneficial owner or other person of any right to indemnity which is otherwise
available to such person under the laws of this State.
Section 2.7 of the Trust Agreement of World Omni Vehicle Lease 1996-1
Owner Trust provides as follows:
Section 2.7 Liability and Indemnification. The Seller shall indemnify,
defend and hold harmless the Owner Trustee, including its successors, assigns,
officers, directors, shareholders, employees and agents for all Liabilities,
penalties and taxes (other than income taxes relating to the fees paid to it
hereunder) incurred by it in connection with the administration of the Owner
Trust (including attorneys' fees) and the performance of its duties thereunder;
provided, however, that in no event shall the Owner Trustee be indemnified or
held harmless for any Liabilities incurred (i) by reason of the Owner Trustee's
willful misconduct, bad faith or negligence or (ii) incurred by reason of the
Owner Trustee's breach of its representations and warranties set forth in
Section 6.6. The Owner Trustee shall notify the Seller promptly of any claim for
which the Owner Trustee may seek indemnity. Failure by the Owner Trustee to so
notify the Seller shall not relieve the Seller of its obligations hereunder. If
necessary, to the extent not otherwise reimbursed, the Owner Trustee shall be
entitled to indemnification from amounts on deposit in the [Issuer] Collection
Account for any claims against the Owner Trustee the indemnification for which
is provided pursuant to this Section 2.7. Any claim against the Owner Trustee
shall be defended by the Seller and the Owner Trustee shall be entitled to
separate counsel, the fees and expenses of which shall be paid by the Seller.
The indemnities contained in this Section 2.7 shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. Any
amounts paid to the Owner Trustee pursuant to this Section 2.7 shall be deemed
not to be part of the Owner Trust Estate immediately after such payment. The
Owner Trustee acknowledges that funds may be deposited in the [Issuer]
Collection Account only as specifically provided in the Basic Documents, and
that certain funds paid to World Omni Vehicle Lease 1996-1 Owner Trust in
respect of the Series 1996-1 Certificates have been pledged to the Indenture
Trustee on behalf of Noteholders in accordance with the terms of the Basic
Documents.
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
II-2
<PAGE> 124
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending a civil, criminal, administrative or investigative action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including attorneys'
fees) incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
II-3
<PAGE> 125
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee, or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
Article Ninth of the Certificate of Incorporation of World Omni Auto
Leasing, Inc. provides as follows:
(a) 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, 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 (including an
Independent Director), officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the Corporation to the fullest extent legally permissible under
the General Corporation Law of the State of Delaware, as amended from time to
time, against all expenses,
II-4
<PAGE> 126
liabilities and losses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding.
(b) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in paragraph (a) of this Article IX, or
in defense of any claim, issue or matter therein, he shall be indemnified by the
Corporation against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith without the necessity of any action
being taken by the Corporation other than the determination, in good faith, that
such defense has been successful. In all other cases wherein indemnification is
provided by this Article IX, unless ordered by a court, indemnification 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 specified in this Article IX. Such determination shall be made (i) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (ii) if such a
quorum is not obtainable, or even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion or (iii)
by the holders of a majority of the shares of capital stock of the Corporation
entitled to vote thereon.
(c) 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 seeking
indemnification 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. Entry of a judgment by consent as part of
a settlement shall not be deemed a final adjudication of liability for
negligence or misconduct in the performance of duty, nor of any other issue or
matter.
(d) Expenses (including attorneys' fees) incurred by an officer or
director in defending any 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 as authorized by the Board
of Directors in the specific case upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation. Expenses
(including attorneys' fees) incurred by other employees or agents of the
Corporation in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
(e) No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Section 1(e) to
Article IX shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment.
(f) The indemnification and advancement of expenses provided by this
Article IX shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement may be
II-5
<PAGE> 127
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in an 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, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such person.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
a. Exhibits:
<S> <C> <C>
1.1 -- Form of Underwriting Agreement*
3.1 -- Articles of Incorporation of World Omni Auto Leasing, Inc.
3.2 -- Bylaws of World Omni Auto Leasing, Inc.
4.1 -- Form of Trust Agreement of World Omni Vehicle Lease 1996-1 Owner Trust between
the Seller and the Owner Trustee (including forms of Notes)*
4.2 -- Form of Trust Indenture Between the Owner Trustee and the Indenture Trustee*
5.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to legality*
8.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to certain federal
income tax matters*
8.2 -- Opinion of English, McCaughan & O'Bryan, P.A., with respect to certain Florida tax
matters*
10.1 -- Second Amended and Restated Trust Agreement among Auto Lease Finance L.P., VT
Inc. and First Bank National Association (as successor to Bank of America Illinois),
dated as of July 1, 1994*
10.2 -- Form of Supplement 1996-1 to Trust Agreement among Auto Lease
Finance L.P., VT Inc. and First Bank National Association (including
form of the 1996-1 SUBI Certifi- cate)*
10.3 -- Second Amended and Restated Servicing Agreement between VT Inc. and World Omni
Financial Corp., dated as of July 1, 1994*
10.4 -- Form of Supplement 1996-1 to Servicing Agreement among VT Inc., World Omni
Financial Corp., the Owner Trustee and World Omni Auto Leasing, Inc.*
10.5 -- Articles of Incorporation of Auto Lease Finance, Inc.*
</TABLE>
II-6
<PAGE> 128
<TABLE>
<C> <C> <C>
10.6 -- Bylaws of Auto Lease Finance, Inc.*
10.7 -- Amended and Restated Agreement of Limited Partnership between Auto Lease Finance,
Inc. and World Omni Financial Corp., dated as of July 1, 1994*
10.8 -- Amendment No. 1 to Second Amended and Restated Trust Agreement among Auto
Lease Finance L.P., VT Inc. and First Bank National Association (as successor to Bank
of America Illinois), dated as of November 1, 1994*
10.9 -- Second Amended and Restated Assignment Agreement among World Omni Financial
Corp., Auto Lease Finance L.P. and VT Inc., dated as of July 1, 1994*
10.10 -- Amendment No. 1 to Second Amended and Restated Assignment Agreement among
World Omni Financial Corp. and World Omni Auto Leasing, Inc., dated as of Novem-
ber 1, 1996*
23.1 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included as part of Exhibit
5.1)*
23.2 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included as part of Exhibit
8.1)*
23.3 -- Consent of English, McCaughan & O'Bryan, P.A. (included as part of Exhibit 8.2)*
23.4 -- Consent of Hand Arendall L.L.C.*
24.1 -- Power of Attorney (included on page II-9)
25.1 -- Form T-1 of First Bank National Association*
</TABLE>
* To be filed by Amendment
b. Financial Statement Schedules:
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
(a) To provide to the Underwriters at the closing date specified in the
Underwriting Agreement Notes in such denominations and registered in such names
as required by the Underwriters to provide prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is
II-7
<PAGE> 129
therefore unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of such Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act will be deemed to be part of this registration statement as of the
time it was declared effective.
(d) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus will be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
II-8
<PAGE> 130
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL
OF THE REQUIREMENTS FOR FILING ON FORM S-1 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF DEERFIELD BEACH AND THE STATE OF FLORIDA ON THE 7TH
DAY OF NOVEMBER, 1996.
WORLD OMNI AUTO LEASING, INC.
By: /s/ A. Tucker Allen
-------------------------------------------
A. Tucker Allen
Vice President and Corporate Treasurer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-1 TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
DEERFIELD BEACH AND STATE OF FLORIDA, ON THE 7TH DAY OF NOVEMBER, 1996.
WORLD OMNI VEHICLE LEASE 1996-1 OWNER TRUST
By: WORLD OMNI AUTO LEASING, INC.,
as Seller and Originator
of the Registrant
By: /s/ A. Tucker Allen
----------------------------------------
Name: A. Tucker Allen
Title: Vice President and Corporate
Treasurer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints each of A. Tucker Allen, Patrick C. Ossenbeck and Jeffrey L. Hayman his
true and lawful attorney-in-fact with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement and to cause the same to be filed, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby granting to said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing whatsoever requisite or desirable to be done in and
about the premises, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all acts and things
that said attorneys-in-fact and agents, or either of them, or their substitutes
or substitute, may lawfully do or cause to be done by virtue hereof.
II-9
<PAGE> 131
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT ON FORM S-1 HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
/s/ A. Tucker Allen
- ---------------------
A. Tucker Allen Director and Vice President and Corporate
Treasurer of the Originator of
the Registrant (Principal Financial
and Accounting Officer) November 7, 1996
/s/ Lawrence S. Rich
- --------------------------
Lawrence S. Rich Director of the Originator of
the Registrant November 7, 1996
/s/ Jeffrey B. Shapiro
- --------------------------
Jeffrey B. Shapiro Director of the Originator of
the Registrant November 7, 1996
/s/ Christopher C. Wheeler
- --------------------------
Christopher C. Wheeler Director of the Originator of
the Registrant November 7, 1996
/s/ Daryl P. Smith
- --------------------------
Daryl P. Smith Director and President of the
Originator of the Registrant
(Principal Executive Officer) November 7, 1996
</TABLE>
II-10
<PAGE> 132
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement*
3.1 -- Articles of Incorporation of World Omni Auto Leasing, Inc.
3.2 -- Bylaws of World Omni Auto Leasing, Inc.
4.1 -- Form of Trust Agreement of World Omni Vehicle Lease 1996-1
Owner Trust between the Seller and the Owner Trustee
(including forms of Notes)*
4.2 -- Form of Trust Indenture Between the Owner Trustee and the Indenture Trustee*
5.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to legality*
8.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to certain federal
income tax matters*
8.2 -- Opinion of English, McCaughan & O'Bryan, P.A. with respect to certain Florida tax matters*
10.1 -- Second Amended and Restated Trust Agreement among Auto Lease Finance L.P., VT Inc.
and First Bank National Association (as successor to Bank of America Illinois), dated as of
July 1, 1994*
10.2 -- Form of Supplement 1996-1 to Trust Agreement among Auto Lease Finance L.P., VT Inc.
and First Bank National Association (including form of the 1996-1 SUBI Certificate)*
10.3 -- Second Amended and Restated Servicing Agreement between VT Inc. and World Omni
Financial Corp., dated as of July 1, 1994*
10.4 -- Form of Supplement 1996-1 to Servicing Agreement between VT Inc., World Omni Finan-
cial Corp., the Owner Trustee and World Omni Auto Leasing, Inc.*
10.5 -- Articles of Incorporation of Auto Lease Finance, Inc.*
10.6 -- Bylaws of Auto Lease Finance, Inc.*
10.7 -- Amended and Restated Agreement of Limited Partnership between Auto Lease Finance, Inc.
and World Omni Financial Corp., dated as of July 1, 1994*
10.8 -- Amendment No. 1 to Second Amended and Restated Trust Agreement among Auto Lease
Finance L.P., VT Inc. and First Bank National Association (as successor to Bank of America
Illinois), dated as of November 1, 1994*
</TABLE>
II-11
<PAGE> 133
<TABLE>
<S> <C> <C>
10.9 -- Second Amended and Restated Assignment Agreement among World Omni Financial Corp.,
Auto Lease Finance L.P. and VT Inc., dated as of July 1, 1994*
10.10 -- Amendment No. 1 to Second Amended and Restated Assignment Agreement among World
Omni Financial Corp. and World Omni Auto Leasing, Inc., dated as of November 1, 1996*
23.1 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included as part of Exhibit 5.1)*
23.2 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included as part of Exhibit 8.1)*
23.3 -- Consent of English, McCaughan & O'Bryan, P.A. (included as part of Exhibit 8.2)*
23.4 -- Consent of Hand Arendall L.L.C.*
24.1 -- Power of Attorney (included on page II-9)
25.1 -- Form T-1 of First Bank National Association*
* To be filed by Amendment
</TABLE>
II-12
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
WORLD OMNI AUTO LEASING, INC.
ARTICLE I
NAME AND REGISTERED OFFICE
The name of the Corporation is World Omni Auto Leasing, Inc.,
and the registered office of the Corporation in the State of Delaware is 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.
ARTICLE II
PURPOSE
The purpose of the Corporation is to engage in only the
following activities:
(a) to act as settlor or grantor of one or more trusts (each a
"Securitization Trust") formed pursuant to a trust agreement or other agreement
for the purpose of acquiring beneficial interests in one or more other trusts
(each an "Origination Trust" and the beneficial interests in which are
"Origination Trust Interests"), which Origination Trust Interests represent
beneficial interests in various retail closed-end lease contracts of motor
vehicles, the related leased vehicles and other related rights and assets, which
Securitization Trusts may issue notes ("Notes") and/or certificates
("Certificates") of beneficial interest in the assets of such Securitization
Trust;
(b) to acquire, own, hold, sell, transfer, convey, lease,
sublease, dispose of, pledge, assign, borrow money against, finance, refinance
or otherwise deal with (including the borrowing of money to facilitate any of
the activities listed above), publicly or privately and whether with unrelated
third parties or with
<PAGE> 2
affiliated entities, Origination Trust Interests, including without limitation
any special units of beneficial interest ("SUBIs") or undivided trust interests
("UTIs") created with respect to the Origination Trust, Notes and Certificates;
(c) to loan or otherwise invest funds received as a result of
the Corporation's interest in any Origination Trust Interests or Certificates
and any other income, as determined by the Corporation's Board of Directors from
time to time;
(d) to enter into underwriting or other agreements in the
nature of a revolving loan agreement with one or more financial institutions to
whom the Corporation may sell Notes and/or Certificates representing fluctuating
interests in the assets of trusts described above;
(e) to hold, pledge, transfer or otherwise deal with Notes
and/or Certificates, including Notes and/or Certificates representing a
subordinated or residual interest in Receivables ("Subordinated Interests");
(f) to loan or otherwise invest proceeds from Receivables,
funds received in respect of Notes and/or Certificates or Subordinated Interests
and any other income, as determined by the Corporation's Board of Directors; and
(g) 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 or convenient for
the accomplishment of the foregoing purposes.
ARTICLE III
CAPITAL STOCK
The maximum number of shares of stock that the Corporation is
authorized to issue is one hundred (100) shares of Common Stock each having a
par value of One Dollar ($1.00).
2
<PAGE> 3
ARTICLE IV
CORPORATE EXISTENCE
The Corporation is to have perpetual existence.
ARTICLE V
SECTION 203 ELECTION
The Corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
ARTICLE VI
INITIAL BOARD OF DIRECTORS
The names and addresses of the initial directors of the
Corporation are:
Name Address
Lawrence S. Rich 100 N.W. 12th Avenue
Deerfield Beach, FL 33442
Daryl P. Smith 100 N.W. 12th Avenue
Deerfield Beach, FL 33442
A. Tucker Allen 100 N.W. 12th Avenue
Deerfield Beach, FL 33442
Jeffrey B. Shapiro 801 Brickell Ave., Suite 1501
Miami, FL 33131
Christopher C. Wheeler 225 Glades Road, Suite 340-W
Boca Raton, FL 33431
The initial directors shall hold office until the first Annual meeting of
Shareholders and until their successors shall have been duly elected and
qualified, or until their earlier resignation, removal from office or death. The
number of directors may be either increased or decreased from time to time in
accordance with the Bylaws of the Corporation, but shall never be fewer than
three (3) nor
3
<PAGE> 4
more than five (5). At all times, at least two (2) of the directors of the
Corporation shall be Independent Directors. "Independent Director" shall mean a
director of the Corporation who shall not at present nor at any time during the
preceding five years be (i) a director, officer, employee or former employee of
any Affiliate, (ii) a natural person related to any director or officer of any
Affiliate, (iii) a holder (directly or indirectly) of more than 5% of any voting
securities of any Affiliate, or (iv) a natural person related to a holder
(directly or indirectly) of more than 5% of any voting securities of any
Affiliate. "Affiliate" shall mean any entity other than the Corporation or any
similarly organized special purpose finance subsidiary of an Affiliate (i) which
owns, beneficially, directly or indirectly, more than 10% of the outstanding
shares of the common stock of the Corporation, (ii) which is in control of the
Corporation, as defined under Section 230.405 of the Rules and Regulations of
the Securities and Exchange Commission, 17 C.F.R. ss.230.405, (iii) of which 10%
or more of the outstanding shares of its common stock is owned, beneficially,
directly or indirectly, by any entity described in clause (i) or (ii) above, or
(iv) which is controlled by an entity descried in clause (i) or (ii) above, as
defined under Section 230.405 of the Rules and Regulations of the Securities and
Exchange Commission, 17 C.F.R. ss.230.405.
ARTICLE VII
DIRECTORS PROTECTED
(a) A director shall be fully protected in relying in good
faith upon the books of account or other records of the Corporation or
statements prepared by any of its officers or by independent public accountants
or by an appraiser selected with reasonable care by the Board of Directors as to
the value and amount of the assets, liabilities and/or net profits of the
Corporation, or any other facts pertinent to the existence and amount of surplus
or other funds from which dividends might properly be declared and paid, or with
which the Corporation's capital stock might properly be purchased or redeemed.
(b) A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stock-
4
<PAGE> 5
holders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the State of Delaware, or (iv) for any
transactions from which the director derived any improper personal benefit. No
amendment to or repeal of the provisions set forth in the preceding sentence
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal.
ARTICLE VIII
TRANSACTIONS WITH DIRECTORS AND OFFICERS
No contract or transaction between the Corporation and one or
more of its directors or officers, or between the Corporation and any other
corporation, partnership, association or other organization in which one or more
of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
board or committee thereof which authorizes the contract or transaction, or
solely because his or their votes are counted for such purpose, if (a) the
material facts as to his relationship or interest as to the contract or
transaction are disclosed or are known to the Board of Directors or the
committee, and the Board of Directors or the committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum, or (b) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders, or (c) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified by the Board of Directors, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
5
<PAGE> 6
ARTICLE IX
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS
(a) 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, 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 (including an
Independent Director), officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the Corporation to the fullest extent legally permissible under
the General Corporation Law of the State of Delaware, as amended from time to
time, against all expenses, liabilities and losses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding.
(b) To the extent that a director, officer, employee or agent
of the Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in paragraph (a) of this Article IX,
or in defense of any claim, issue or matter therein, he shall be indemnified by
the Corporation against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith without the necessity of any
action being taken by the Corporation other than the determination, in good
faith, that such defense has been successful. In all other cases wherein
indemnification is provided by this Article IX, unless ordered by a court,
indemnification 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 specified in this Article IX. Such determination
shall be made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (ii) if such a quorum is not obtainable, or even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (iii) by the holders of a majority of the shares of capital stock of
the Corporation entitled to vote thereon.
6
<PAGE> 7
(c) 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
seeking indemnification 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. Entry of a judgment
by consent as part of a settlement shall not be deemed a final adjudication of
liability for negligence or misconduct in the performance of duty, nor of any
other issue or matter.
(d) Expenses (including attorneys' fees) incurred by an
officer or director in defending any 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 as
authorized by the Board of Directors in the specific case upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
by the Corporation. Expenses (including attorneys' fees) incurred by other
employees or agents of the Corporation in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
Corporation upon such terms and conditions, if any, as the Board of Directors
deems appropriate.
(e) No director shall be personally liable to the Corporation
or its stockholders for monetary damages for any breach of fiduciary duty by
such director as a director. Notwithstanding the foregoing sentence, a director
shall be liable to the extent provided by applicable law (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Section 1(e) to
Article IX shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment.
7
<PAGE> 8
(f) The indemnification and advancement of expenses provided
by this Article IX shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement may be entitled under any Bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in an 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, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
ARTICLE X
CORPORATE RESTRICTIONS
Notwithstanding any other provision of this Certificate of
Incorporation and any provision of law that otherwise so empowers the
Corporation, the Corporation shall not, without the affirmative vote or consent
of 100% of the members of the Board of Directors (including, in each case, the
two Independent Directors), do any of the following:
(a) engage in any business or activity other than those set
forth in Article II;
(b) dissolve or liquidate, or take corporate action in
furtherance of any such action;
(c) consolidate or merge with or into any other entity or
convey or transfer its properties and assets substantially as an entirety to any
entity, unless:
(i) the entity (if other than the Corporation) formed
or surviving the consolidation or merger or which acquires the
properties and assets of the Corporation is organized and existing
under the laws of any State of the United States or the District of
Columbia, expressly assumes the due and punctual payment or performance
of any and all obligations of the Corporation, including those
obligations of the Corporation under any Agreement or Indenture, and
has a Certificate of Incorporation containing provi-
8
<PAGE> 9
sions substantially identical to the provisions of Article II, this
Article X and Article XII;
(ii) immediately after giving effect to the
transaction, no default or event of default has occurred and is
continuing under any indebtedness of the Corporation or any agreements
relating to such indebtedness; and
(iii) such action shall be authorized by the
affirmative vote of a majority of the stockholders of the Corporation
entitled to vote thereon;
(d) institute proceedings to be adjudicated bankrupt or
insolvent, or consent to the institution of bankruptcy or insolvency proceedings
against it, or file a petition seeking or consent to reorganization or relief
under any applicable federal or state law relating to bankruptcy, or consent to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Corporation or of a substantial part of its
property, or make any assignment for the benefit of creditors, or admit in
writing its inability to pay its debts generally as they become due, or take
corporate action in furtherance of any such action;
(e) delete, amend, supplement or otherwise modify any
provision of this Certificate of Incorporation; or
(f) increase or reclassify the capital stock of the
Corporation or issue any additional shares of capital stock of the Corporation.
ARTICLE XI
RESERVATION OF RIGHT TO AMEND
CERTIFICATE OF INCORPORATION
Subject to the limitations set forth in Article X, the
Corporation reserves the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by the law of the State of Delaware, and all rights of the
stockholders herein are granted subject to this reservation; provided, however,
that (a) the Corpora-
9
<PAGE> 10
tion shall not amend, alter, change or repeal any provision of Articles SIXTH,
TWELFTH and FOURTEENTH (the "Restricted Articles") except as follows: (i) as to
Articles SIXTH and FOURTEENTH, with at least the majority vote of the entire
Board of Directors, including the vote of at least two Independent Directors (as
defined below) to specifically approve and authorize such amendment, alteration,
change or repeal, and (ii) as to Article TWELFTH, with the vote of the entire
Board of Directors, (b) the Corporation shall not amend, alter, change or repeal
any other Article without the majority vote of the full Board of Directors, and
(c) the Corporation shall not amend, alter or change any Article so as to be
inconsistent with the Restricted Articles.
ARTICLE XII
CORPORATE PROCEDURES;
MAINTENANCE OF SEPARATE BUSINESS
The Corporation shall at all times (a) maintain the
Corporation's books, accounting records and other corporate documents and
records separate from those of its affiliates or any other entity, (b) not
commingle the Corporation's assets with those of any affiliate or any other
entity, and not hold itself out as being liable for the debts of another, (c)
maintain the Corporation's books of account separate from those of any affiliate
of the Corporation, (d) act solely in its corporate name and through its own
authorized officers and agents, and will not send out any correspondence or any
written communication in the name of the Corporation on the letterhead of any
Affiliate or other entity, (e) separately manage the Corporation's liabilities
from those of any its affiliates and pay its own liabilities, from its own
separate assets, provided that the Corporation's stockholder or other affiliates
may pay certain of the organizational costs and transactional expenses of the
Corporation, (g) pay from the Corporation's assets all obligations and
indebtedness of any kind incurred by the Corporation and (h) operate in such a
manner that it would not be substantively consolidated with any other entity.
The Corporation shall abide by all corporate formalities, including the
maintenance of current minute books, and the Corporation shall keep books and
records in a manner that indicates the separate existence of the Corporation and
its assets and liabilities. The Corporation shall not assume the liabilities of
any affiliate, and shall not guarantee the liabilities of any
10
<PAGE> 11
affiliate. The officers and directors of the Corporation (as appropriate) shall
make decisions with respect to the business and daily operations of Corporation
independent of and not dictated by any affiliate of the Corporation.
ARTICLE XIII
INCORPORATOR
The name and address of the incorporator of the Corporation
is:
Name Address
Deborah M. Reusch P.O. Box 636
Wilmington, Delaware 19899
ARTICLE XIV
VOLUNTARY BANKRUPTCY
Without the affirmative vote of the entire Board of Directors
of the Corporation (including the affirmative vote of all Independent
Directors), the Corporation will not (a) dissolve or liquidate, in whole or in
part, or institute proceedings to be adjudicated bankrupt or insolvent, (b)
consent to the institution of bankruptcy or insolvency proceedings against it,
(c) file a petition seeking, or consent to, reorganization or relief under any
applicable federal or state law relating to bankruptcy, (d) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Corporation or a substantial part of its property, (e)
make a general assignment for the benefit of creditors, (f) admit in writing its
inability to pay its debts generally as they become due, or (g) take any
corporate action in furtherance of the actions set forth in clauses (a) through
(f) above, provided, however, that no director may be required by any
shareholder of the Corporation to consent to the institution of bankruptcy or
insolvency proceedings against the Corporation so long as it is solvent. In the
event of the insolvency of the Corporation and with regard to any action
contemplated by the preceding sentence, no Independent Director will owe a
fiduciary duty to any shareholder of the Corporation (except as may be
specifically required by applicable law),
11
<PAGE> 12
but such Independent Director's fiduciary duty with regard to such action shall
be owed instead to the creditors of the Corporation. No Independent Director
shall serve as a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Corporation, any Affiliate of the Corporation, or a
substantial part of its respective property.
ARTICLE XV
VOTING AGREEMENTS
No shareholder of the Corporation shall enter into a voting
agreement or any other type of agreement vesting in another person the authority
to exercise the voting power of any or all of the shareholder's shares.
I, the undersigned, being the 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 of Incorporation, hereby
declaring and certifying that the facts herein stated are true and, accordingly,
have hereunto set my hand this 1st day of November, 1996.
---------------------------
Deborah M. Reusch
Incorporator
12
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
WORLD OMNI AUTO LEASING, INC.
A DELAWARE CORPORATION
ARTICLE I
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The Annual Meeting of Shareholders
of the Corporation shall be held in or out of the State of Delaware during the
month of May each year at such date and time as shall be designated for any such
meeting by the Board of Directors for the purpose of electing Directors and for
the transaction of any proper business. The Board of Directors may designate in
the notice of Annual Meeting any place, either in or out of the State of
Delaware, as the place of meeting for any Annual Meeting of the Shareholders. If
not so designated in the notice of Annual Meeting the meeting shall be held at
the Corporation's principal office.
SECTION 2. SPECIAL MEETINGS. Special meetings of the
Shareholders shall be held if (a) called by the Board of Directors or (b) the
holders of not less than ten percent (10%) of all the votes entitled to be cast
on any issue proposed to be considered at the special meeting sign, date and
deliver to the Corporation's Secretary one or more written demands for the
meeting describing the purpose or purposes for which it is to be held. No
business shall be transacted at any special meeting unless such business is
stated in the notice of the meeting as one of the purposes of that special
meeting. The Board of Directors (for special meetings called by the Board of
Directors) or an Officer of the Corporation (for special meetings called by the
Shareholders) may designate in the notice of special meeting any place, either
in or out of the State of Delaware, as the place of meeting for such special
meeting of the Shareholders. If not so designated in the notice of special
meeting, the meeting shall be held at the Corporation's principal office.
<PAGE> 2
SECTION 3. NOTICE OF MEETING. Notice of each Annual Meeting
and special meeting of the Shareholders stating the date, time and place of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called shall be delivered to each Shareholder of record entitled
to vote at such meeting, no fewer than one (1) nor more than sixty (60) days
before the date of the meeting, either in person, by telegraph, telephone,
teletype, facsimile or other form of electronic communication, or by mail or
courier service, by or at the direction of the president, the Secretary, or the
other person(s) calling the meeting. If mailed, such notice must be by first
class mail, except if mailed thirty (30) days or more before the date of the
meeting, in which case it may be done by a class other than first class. Such
notice shall be deemed to be delivered when deposited in the United States Mail
addressed to the Shareholder at his/her address as it appears on the stock
transfer books of the Corporation, with postage thereon prepaid. All other forms
of notice shall be effective when received.
SECTION 4. NOTICE OF ADJOURNED MEETING. If an Annual Meeting
or special meeting of the Shareholders is adjourned to a different date, time or
place, it shall not be necessary to give any notice of the adjourned meeting if
the date, time and place to which the meeting is adjourned are announced at the
meeting at which the adjournment is taken, and any business may be transacted at
the adjourned meeting that might have been transacted on the original date of
the meeting. If a meeting is adjourned to a date more than thirty (30) days
after the date fixed for the original meeting, or the Board of Directors fixes a
new record date for the adjourned meet- ing, notice of the adjourned meeting
must be given to persons who are Shareholders as of the new record date who are
entitled to vote at the meeting.
SECTION 5. WAIVER OF NOTICE. A Shareholder may waive any
notice required by any statute, the Certificate of Incorporation or these Bylaws
before or after the date and time stated in the notice. The waiver must be in
writing signed by the Shareholder entitled to such notice, and delivered to the
Corporation. Neither the business to be transacted at, nor the purpose of, any
Annual Meeting or special meeting of the Shareholders need be specified in any
written waiver of notice.
2
<PAGE> 3
Attendance of a Shareholder at a meeting shall constitute a waiver of notice of
such meeting, unless the Shareholder objects, at the beginning of the meeting,
to the transaction of any business. Attendance shall also constitute a waiver of
objection to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice, unless the
Shareholder objects to considering the matter when it is presented.
SECTION 6. VOTING ENTITLEMENT OF SHARES. Each outstanding
share, regardless of class, is entitled to one (1) vote on each matter submitted
to a vote at a meeting of Shareholders.
Notwithstanding the foregoing, and subject to compliance with
applicable law, the shares of the Corporation are not entitled to be voted if
they are:
(a) owned, directly or indirectly, by a second Corporation,
domestic or foreign, and the first Corporation owns, directly or indirectly, a
majority of the shares entitled to be voted for directors of the second
Corporation; or
(b) redeemable shares, after notice of redemption is mailed to
the holders thereof and a sum sufficient to redeem such shares has been
deposited with a bank, trust company, or other financial institution upon an
irrevocable obligation to pay the holders the redemption price upon surrender of
the shares.
The Corporation may vote any shares held by it in a fiduciary
capacity.
SECTION 7. PROXIES. A Shareholder, other person entitled to
vote on behalf of a Shareholder or attorney-in-fact may vote the Shareholder's
share in person or by proxy.
A Shareholder may appoint a proxy to vote or otherwise act for
such Shareholder by signing an appointment form, either personally or by the
Shareholder's attorney-in-fact. A telegram or cablegram appearing to have been
transmitted by such person, or a photographic, photostatic, or equivalent
reproduction of an appointment form is a sufficient appointment form. An
appointment of
3
<PAGE> 4
a proxy is effective when received by the Secretary or other officer or agent
authorized to tabulate votes, and is valid for up to eleven (11) months unless a
longer period is expressly provided in the appointment form, regardless of the
death or incapacity of the Shareholder appointing a proxy (unless notice of the
death or incapacity is received by the Secretary or other officer or agent
authorized to tabulate votes before the proxy exercises the Shareholder's
authority under the appointment).
An appointment of a proxy is revocable by the Shareholder
unless the appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest.
SECTION 8. SHAREHOLDER QUORUM AND VOTING. A majority of the
shares entitled to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of Shareholders. This quorum requirement can be changed only
by an amendment to the Corporation's Certificate of Incorporation. When a
specified item of business is required to be voted on by a class or series of
stock, a majority of the shares of such class or series shall constitute a
quorum for the transaction of such item of business by that class or series.
If a quorum exists, action on a matter other than the election
of Directors is approved if the votes cast by the holders of the shares
represented at the meeting and entitled to vote on the subject matter favoring
the action exceed the votes cast opposing the action.
After a quorum has been established at a meeting of the
Shareholders, the subsequent withdrawal of Shareholders, so as to reduce the
number of shares entitled to vote at the meeting below the number required for a
quorum, shall not affect the validity of any action taken at the meeting before
or after such withdrawal, or at any adjournment thereof.
If a quorum does not exist, the holders of a majority of the
shares represented, and who would be entitled to vote at a meeting if a quorum
were present, may adjourn such meeting from time to time.
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SECTION 9. RECORD DATE AND SHAREHOLDER LIST. The Board of
Directors of the Corporation shall fix a record date to determine the
Shareholders entitled to notice of a meeting of the Shareholders, to vote, or to
take any other action. Such record date may not be more than sixty (60) days
before the meeting or action requiring a determination of Shareholders and may
not be less than one (1) days before the date of such meeting nor be a date
preceding the date upon which the resolution fixing the record date is adopted.
After fixing a record date for a meeting, the Corporation
shall prepare an alphabetical list of the names arranged by voting group of all
the Shareholders who are entitled to notice of a meeting of the Shareholders,
with the address of, and the number and class and series, if any of shares held
by, each such Shareholder.
The Shareholder list must be available for inspection by any
Shareholder for a period of ten (10) days prior to the meeting or such shorter
time as exists between the record date and the meeting and continuing through
the meeting, at a place identified in the meeting notice and located in the city
where the meeting will be held, or if no such place of inspection is specified,
at the place where the meeting is to be held. A Shareholder or her/his agent or
attorney is entitled on written demand to inspect the list during regular
business hours and at the Shareholder's expense, during the period it is
available for inspection, on the conditions that: (a) the Shareholder's
demand is made in good faith and for a proper purpose, (b) the Shareholder
describes with reasonable particularity the Shareholder's purpose and the
records the Shareholder desires to inspect and (c) the records are directly
connected with the Shareholder's purpose.
The Corporation shall make the Shareholder list available at
the meeting, and any Shareholder or her/his agent or attorney is entitled to
inspect the list at any time during the meeting or any adjournment.
The Shareholder list is prima facie evidence of the identity
of Shareholders entitled to examine the Shareholder list or to vote at a meeting
of Shareholders.
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If the requirements of this section have not been
substantially complied with or if the Corporation refuses to allow a Shareholder
or her/his agent or attorney to inspect the Shareholder list before or at the
meeting, the meeting shall be adjourned until such requirements are complied
with on the demand of any Shareholder in person or by proxy who failed to get
such access.
Refusal or failure to comply with the requirements of this
section shall not affect the validity of any action taken at such meeting.
SECTION 10. ACTION BY SHAREHOLDERS WITHOUT A MEETING. Any
action required or permitted to be taken at any Annual Meeting or special
meeting of the Shareholders may be taken without a meeting, without prior notice
and without a vote. To be effective, the action must be taken by the holders of
outstanding stock of each voting group entitled to vote thereon, having not less
than the minimum number of votes with respect to each voting group that would be
necessary to authorize or take such action at a meeting at which all voting
groups and shares entitled to vote thereon were present and voted. To be
effective, the action must also be evidenced by one or more written consents
describing the action taken, dated and signed by approving Shareholders having
the requisite number of votes of each voting group entitled to vote thereon, and
delivered to the Corporation at its registered office in the State of Delaware,
its principal place of business, the Secretary of the Corporation, or another
officer or agent of the Corporation having custody of the book in which
proceedings of meetings of Shareholders are recorded. Delivery may be made by
hand, by certified or registered mail, return receipt requested, or by telecopy
or facsimile transmission with original simultaneously delivered by hand or by
first class mail, provided, that delivery to the Corporation's registered office
may be made by hand or by certified or registered mail, return receipt requested
only.
Any written consent may be revoked prior to the date that the
Corporation receives the required number of consents to authorize the proposed
action. No revocation is effective unless in writing and until received by the
Corporation at its registered office in the State of Delaware or its principal
place of business, or received
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by the Secretary of the Corporation or other officer or agent of the Corporation
having custody of the book in which proceedings of meetings of Shareholders are
recorded.
A consent signed under this section has the effect of a
meeting vote and may be described as such in any document, and shall be filed
with the minutes of proceedings of Shareholders. If the action to which the
Shareholders consent is such as would have required the filing of a certificate
if such action had been voted on by Shareholders at a meeting thereof, the
certificate filed shall state that written consent has been given in accordance
with the provisions of this section.
Within ten (10) days after obtaining such authorization by
written consent, notice must be given to those Shareholders who have not
consented in writing or who are not entitled to vote in the action. The notice
shall fairly summarize the material features of the authorized action and, if
the action be a merger, consolidation or sale or exchange of assets, the notice
shall contain a clear statement of the right of Shareholders dissenting there
from to be paid the fair value of their shares upon compliance with the
provisions of the Delaware General Corporation Law regarding the rights of
dissenting Shareholders.
ARTICLE II
DIRECTORS
SECTION 1. REQUIREMENT FOR AND DUTIES OF BOARD OF DIRECTORS.
Except as otherwise provided by the Corporation's Certificate of
Incorporation, all corporate powers shall be exercised by or under the authority
of, and the business and affairs of the Corporation shall be managed under the
direction of, the Board of Directors.
SECTION 2. QUALIFICATIONS AND NUMBER OF DIRECTORS. Directors
must be natural persons who are eighteen (18) years of age or older, but need
not be residents of the State of Delaware or Shareholders of the Corporation.
From time to time, the number of Directors may be increased or decreased by
resolution of the Board of Directors, but the composition of the Board of
Directors shall
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at all times conform with the requirements set forth in the Corporation's
Certificate of Incorporation including, but not limited to the requirement that
the Board of Directors shall never consist of fewer than three (3) nor more than
five (5) Directors. For purposes of these Bylaws, "entire Board of Directors"
means the total number of directors which the Corporation would have if there
were no vacancies.
SECTION 3. ELECTION AND TERMS OF DIRECTORS. Directors shall be
elected by a plurality of the votes cast by the shares entitled to be voted at
the first Annual Meeting of Shareholders and at each Annual Meeting thereafter.
The terms of the initial Directors of the Corporation expire
at the first Annual Meeting of Shareholders. The terms of all other Directors
expire at the next Annual Meeting of Shareholders following their election.
Despite the expiration of a Director's term, she/he continues to serve
until the Director's successor is elected and qualified or until there is
a decrease in the number of Directors.
SECTION 4. RESIGNATIONS OF DIRECTORS. A Director of the
Corporation may resign at any time by delivering written notice to the Board of
Directors, the Chairman of the Board of Directors, or the Corporation. Such
resignation shall take effect when the notice is delivered unless the notice
specifies a later effective date. If a resignation is made effective at a later
date, the Board of Directors may fill the pending vacancy before the effective
date if the Board of Directors provides that the successor does not take office
until the effective date.
SECTION 5. REMOVAL OF DIRECTORS. Any Director may be removed
with or without cause at a meeting of the Shareholders, by the holders of a
majority of the shares then entitled to vote at an election of directors,
provided the notice of the meeting states that the purpose, or one of the
purposes, of the meeting is removal of the Director.
SECTION 6. VACANCIES. Any vacancy occurring in the Board of
Directors, including any vacancy created by reason of an increase in the number
of Directors, may
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be filled by the affirmative vote of a majority of the remaining Directors,
though less than a quorum of the Board of Directors, or by the Shareholders. The
term of a Director elected to fill a vacancy expires at the next meeting of the
Shareholders at which Directors are elected.
SECTION 7. COMPENSATION OF DIRECTORS. The Board of Directors
may pay each Director a stated salary as such or a fixed sum for attendance at
meetings of the Board of Directors or any committee thereof, or both, and may
reimburse each Director for her/his expenses of attendance at each meeting. The
Board of Directors may also pay to each such Director rendering services to the
Corporation not ordinarily rendered by Directors, as such, special compensation
appropriate to the value of such services, as determined by the Board of
Directors, from time to time. None of these payments shall preclude any Director
from serving the Corporation in any other capacity and receiving compensation
therefor. The Board of Directors may determine the compensation of a Director
who is also an Officer for service as an Officer as well as for service as a
Director.
SECTION 8. MEETINGS. The Board of Directors may hold regular
or special meetings in or out of the State of Delaware. Notice of any adjourned
meeting shall be given to the Directors who were not present at the time of the
adjournment and, unless the time and place of the adjourned meeting are
announced at the time of adjournment, to the other Directors. Meetings of the
Board of Directors may be called by the Chairman of the Board, the President or
any two (2) Directors. Directors shall be deemed present at a meeting of the
Board of Directors if a conference telephone or similar communications equipment
is used by means of which all persons participating in the meeting may
simultaneously hear each other.
SECTION 9. ACTION BY DIRECTORS WITHOUT A MEETING. Any action
required or permitted to be taken by the Board of Directors at a Board of
Directors' meeting may be taken without a meeting if a consent in writing,
setting forth the action so taken (a "Consent"), shall be signed by all of the
Directors and filed with the minutes of proceedings of the Board of Directors. A
signed Consent has the effect of a meeting vote and may be described as such in
any document. Any such action taken
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is effective when the last Director signs the Consent, unless the Consent
specifies a different effective date.
SECTION 10. NOTICE OF MEETINGS. Regular meetings of the Board
of Directors may be held without notice of the date, time, place, or purpose of
the meeting. Special meetings of the Board of Directors must be preceded by at
least one (1) day's notice of the date, time, and place of the meeting.
The notice need not describe the purpose of the special meeting. Notice may be
communicated in person or by telephone (where oral notice is reasonable under
the circumstances), by telecopy, telegraph, teletype or other form of electronic
communication, or by mail. Written notice is effective at the earlier of receipt
or five (5) days after deposit in the United States mail.
SECTION 11. WAIVER OF NOTICE. A Director may waive the
requirement of notice of a special meeting of the Board of Directors by signing
a waiver of notice either before or after the meeting. The attendance of a
director at a meeting shall constitute a waiver of notice of such meeting and a
waiver of any and all objections to the place or time of such meeting or the
manner in which it has been called or convened, except when, at the beginning of
the meeting or promptly upon arrival at the meeting, the director states any
objection to the transaction of business because the meeting is not lawfully
called or convened.
SECTION 12. QUORUM AND VOTING. A majority of the Directors,
which majority must include both Independent Directors, shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors;
but if less than such majority is present at the meeting, a majority of the
Directors present may adjourn such meeting to another time and place without
further notice.
The affirmative vote of the majority of the Directors present
at a meeting at which a quorum is present and where a vote is taken shall be the
act of the Board of Directors. A Director who is present at a meeting of the
Board of Directors at which corporate action is taken is presumed to have
assented to the action taken unless the Director votes against or abstains from
such action or objects at the beginning of the meeting (or
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promptly upon his/her arrival) to holding such meeting or transacting specified
business at the meeting.
SECTION 13. COMMITTEES. The Board of Directors, by resolution
adopted by a majority of the entire Board of Directors, may designate from among
its members an executive committee and one (1) or more other committees each of
which must have two (2) members and, to the extent provided in such resolution,
shall have and may exercise all the authority of the Board of Directors, except
as limited by law. Sections of these Bylaws which govern meetings, notice and
waiver of notice, and quorum and voting requirements of the Board of Directors
apply to committees and their members as well. Action required or permitted to
be taken at a committee meeting may be taken without a meeting if the action is
taken by all members of the committee. The action must be evidenced by one (1)
or more written consents describing the action taken and signed by each
committee member and filed with the minutes of the proceedings of the committee.
Committee members shall be deemed present at a committee meeting if a conference
telephone or similar communications equipment is used by means of which all
persons participating in the meeting may simultaneously hear each other. The
Board, by resolution adopted by a majority of the entire Board of Directors, may
designate one (1) or more Directors as alternate members of any such committee
who may act in the place and stead of any absent member or members at any
meeting of such committee.
SECTION 14. GENERAL STANDARDS FOR DIRECTORS. A Director shall
perform her/his duties as a Director, including her/his duties as a member of a
committee: (a) in good faith, (b) in a manner the Director reasonably believes
to be in the best interest of the Corporation, and (c) with the care an
ordinarily prudent person in a like position would exercise under similar
circumstances. In performing her/his duties, a Director is entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, if prepared or presented by:
(i) One or more Officers or employees of the Corporation who
the Director reasonably believes to be reliable and competent in the matters
present and who has been selected with reasonable care by or on behalf of the
Corporation,
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(ii) Legal counsel, public accountants, or other persons as to
matters which the Director reasonably believes are within such person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Corporation, or
(iii) A committee of the Board of Directors of which the
Director is not a member if the Director reasonably believes the committee
merits confidence.
A Director shall not be considered to be acting in good faith if the Director
has knowledge concerning the matter in question that would cause such reliance
described above to be unwarranted. In performing her/his duties, a Director may
consider such factors as the Director deems relevant, including the long-term
prospects and interests of the Corporation and its Shareholders, and the social,
economic, legal, or other effects of any action on the employees, suppliers, and
customers of the Corporation or its subsidiaries, the communities and society in
which the Corporation or its subsidiaries operate, and the economy of the state
and the nation.
SECTION 15. DIRECTOR CONFLICTS OF INTEREST. No contract or
other transaction between the Corporation and one (1) or more of its Directors
or any other Corporation, firm, association or entity in which one (1) or more
of its Directors are directors or officers or have a financial interest, shall
be either void or voidable solely because of such relationship or interest or
solely because such Director or Directors are present at the meeting of the
Board of Directors or committee thereof that authorizes, approves or ratifies
such contract or transaction or because her/his/their votes are counted for such
purpose if:
(a) The fact of such relationship or interest is disclosed or
known to the Board of Directors or committee that authorizes, approves or
ratifies the contract or transaction by a vote or consent sufficient for the
purpose without counting the votes or consents of such interested Directors; or
(b) The fact of such relationship or interest is disclosed or
known to the Shareholders entitled to vote, and they authorize, approve or
ratify such contract or transaction by vote or written consent; or
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(c) The contract or transaction is fair and reasonable as to
the Corporation at the time it is authorized by the Board of Directors, a
committee or the Shareholders.
Common or interested Directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or a committee thereof that
authorizes, approves or ratifies such contract or transaction. A conflict of
interest transaction is authorized, approved, or ratified if it receives the
vote of a majority of the shares entitled to be counted under this section.
Shares owned by or voted under the control of a Director who has a relationship
or interest in a conflict of interest transaction may not be counted in a vote
of Shareholders to determine whether to authorize, approve, or ratify a conflict
of interest transaction. A majority of the shares, whether or not present, that
are entitled to be counted in a vote on a conflict of interest transaction
constitutes a quorum for the purpose of taking action under this section.
SECTION 16. LOANS TO OFFICERS, DIRECTORS, AND EMPLOYEES;
GUARANTY OF OBLIGATIONS. The Corporation may lend money to, guarantee any
obligation of, or otherwise assist any Officer, Director, or employee of the
Corporation or any of its subsidiaries, whenever, in the judgment of the Board
of Directors, such loan, guaranty, or assistance may reasonably be expected to
benefit the Corporation. The loan, guaranty, or other assistance may be with or
without interest and may be unsecured or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the Corporation.
SECTION 17. LIABILITY FOR UNLAWFUL DISTRIBUTIONS. A Director
who votes for or assents to a distribution made in violation of the Certificate
of Incorporation or an unlawful distribution as defined in this section is
personally liable to the Corporation for the amount of the distribution that
exceeds what could have been distributed without violating the Certificate of
Incorporation or without constituting an unlawful distribution if it is
established that she/he did not adhere to the general standards for Directors.
An "unlawful distribution" is one that would have the result that (a)
the Corporation would not be able to pay its debts as they
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become due in the usual course of business or (b) the Corporation's total
assets would be less than the sum of its total liabilities plus the amount that
would be needed, if the Corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
Shareholders whose preferential rights are superior to those receiving the
distribution.
ARTICLE III
OFFICERS
SECTION 1. OFFICERS. The Officers of the Corporation shall
include a president, a Secretary, and a Treasurer, each of whom shall be
appointed by the Board of Directors. The Board of Directors, at its discretion,
may also choose a Chairman of the Board of Directors (who must be a Director).
Such other officers, assistant officers and agents as may be deemed necessary
may be appointed by the Board of Directors. The Board of Directors shall
delegate to one of the Officers the responsibility for preparing minutes of the
meetings of the Shareholders or Directors and for authenticating records of the
Corporation. Any two or more offices may be held by the same person.
SECTION 2. APPOINTMENT AND TERM OF OFFICE. The Officers of the
Corporation shall be appointed at the Organizational Meeting and at each Annual
Meeting of the Shareholders following the appointment of Directors. Each Officer
shall hold office until the appointment of Directors at the next Annual Meeting
of the Shareholders. Despite the expiration of an Officer's term, such
Officer will continue to serve until her/his successor is appointed and
qualified, or until her/his earlier resignation or removal.
SECTION 3. RESIGNATION AND REMOVAL OF OFFICERS. An Officer may
resign at any time by delivering notice to the Corporation. A resignation is
effective when the notice is delivered unless the notice specifies a later
effective date. If a resignation is made effective at a later date and the
Corporation accepts the future effective date, the Board of Directors may fill
the pending vacancy before the effective date if the
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Board of Directors provides that the successor does not take office until the
effective date. The Board of Directors may remove any Officer at any time with
or without cause. The appointment of an Officer does not itself create rights.
An Officer's removal does not affect the Officer's contract rights,
if any, with the Corporation. An Officer's resignation does not affect the
Corporation's contract rights, if any, with the Officer.
SECTION 4. VACANCIES. A vacancy in any office may be filled by
the Board of Directors for the unexpired portion of the term.
SECTION 5. SALARIES. The salaries of the Officers shall be
fixed by the Board of Directors and no Officer shall be prevented from receiving
such salary by reason of the fact that the Officer is also a Director of the
Corporation.
SECTION 6. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of
the Board of Directors, if one has been appointed by the Board of Directors,
shall preside, when available, at all meetings of the Shareholders and the Board
of Directors. He shall have general executive powers as well as the specific
powers conferred by these Bylaws and he shall also have and may exercise such
further powers and duties as from time to time may be conferred upon or assigned
to him by the Board of Directors.
SECTION 7. PRESIDENT. The President shall be the chief
executive officer of the Corporation, and, under the direction of the Board of
Directors, shall have general responsibility for the management and direction of
the business, properties and affairs of the Corporation. The President shall
have general executive powers, including all powers required by law to be
exercised by a president of a Corporation as such, as well as the specific
powers conferred by these Bylaws or by the Board of Directors.
SECTION 8. VICE PRESIDENT. In the absence of the president or
in the event of her/his death, inability or refusal to act, the Vice President,
if one has been appointed by the Board of Directors (or in the event there is
more than one (1) Vice President, the Vice
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Presidents in the order of their appointment), shall perform the duties of the
President, and when so acting shall have all the powers of, and be subject to
all the restrictions upon, the President.
Each Vice President shall have general executive powers as
well as the specific powers conferred by these Bylaws. Each Vice President shall
also have such further powers and duties as may from time to time be conferred
upon, or assigned to, her/him by the Board of Directors or the President.
SECTION 9. SECRETARY. The Secretary shall (a) keep the minutes
of the proceedings of the Board of Directors and the Shareholders in one (1) or
more books provided for that purpose, (b) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law, (c) be
custodian of the corporate records and affix the corporate seal to all documents
authorizing the use of the corporate seal, (d) be the registrar of the
Corporation and keep a register of the mailing address of each Shareholder,
which address shall be furnished to the Secretary by the Shareholders, (e) have
charge of the stock transfer books of the Corporation, and (f) in general
perform all duties incident to the office of Secretary and such other duties
assigned to the Secretary by the President or by the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall (a) have charge and
custody of and be responsible for all funds and securities of the Corporation,
(b) receive and give receipts for monies due and payable to the Corporation from
any source whatsoever, and deposit all such monies in the name of the
Corporation in such banks, trust companies or other depositaries as the Board of
Directors may select, and (c) in general perform all of the duties assigned to
the Treasurer by the President or by the Board of Directors. If required by the
Board of Directors, the Treasurer shall give a bond for the faithful discharge
of her/his duties in such sum and with such surety or sureties as the Board of
Directors shall determine.
SECTION 11. ASSISTANT SECRETARIES AND ASSIS- TANT TREASURERS.
If appointed, the Assistant Secretaries and Assistant Treasurers shall perform
such duties as
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shall be assigned to them respectively by the President or by the Board of
Directors.
ARTICLE IV
SHARE CERTIFICATES
SECTION 1. SHARE CERTIFICATES. Certificates representing
shares of the Corporation shall be in such form as shall be determined by the
Board of Directors in accordance with the Delaware General Corporation Law. The
share certificates shall state the name of the Corporation and that the
Corporation is organized under the laws of the State of Delaware; the name of
the person to whom issued; and the number and class of shares and the
designation of the series, if any, the certificate represents. The certificates
shall be signed (either manually or in facsimile) by the President or a Vice
President and by the Secretary or an Assistant Secretary and may be sealed with
the corporate seal or a facsimile thereof. The name and address of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the stock transfer books of the Corporation.
No certificate shall be issued for any share until such share is fully paid.
Consideration in the form of a promise to pay money or to perform services is
received by the Corporation at the time of the making of the promise, unless the
agreement specifically provides otherwise.
SECTION 2. TRANSFER OF SHARES. The Corporation or its duly
authorized agent shall register a share certificate presented to it for transfer
if (a) the certificate is endorsed or the instruction was originated by the
appropriate person or persons, (b) reasonable assurance is given that those
endorsements or instructions are genuine and effective, (c) the Corporation or
its duly authorized agent has no duty as to adverse claims or has discharged the
duty, (d) any applicable law relating to the collection of taxes has been
complied with, and (e) the transfer is in fact rightful or is to a purchaser for
value in good faith and without notice of any adverse claim. Any new certificate
shall be issued only upon surrender of the old certificate, which shall be
cancelled upon the issuance of the new certificate. The person whose name
appears as Shareholder on the books of the
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Corporation shall be deemed by the Corporation to be the owner of the shares for
all purposes.
SECTION 3. LOST DESTROYED AND STOLEN SHARE CERTIFICATES. If
the owner of a share certificate claims the share certificate has been lost,
destroyed or wrongfully taken, the Corporation or its duly authorized agent
shall issue a new share certificate in the place of the original share
certificate if the owner (a) requests the issuance of a new share certificate
before the Corporation or its duly authorized agent has notice that the share
certificate has been acquired by a purchaser for value in good faith and without
notice of any adverse claim, (b) files with the Corporation or its duly
authorized agent a sufficient indemnity bond, and (c) satisfies any other
reasonable requirements imposed by the Corporation or its duly authorized agent.
ARTICLE V
RECORDS AND REPORTS
SECTION 1. CORPORATE RECORDS. The Corporation shall keep, at a
location within or without the State of Delaware as determined by the Board of
Directors in accordance with applicable law, as permanent records, its
Certificate of Incorporation or Restated Certificate of Incorporation and all
amendments to them currently in effect, its Bylaws or Restated Bylaws and all
amendments to them currently in effect, minutes of all meetings of its
Shareholders and Board of Directors, a record of all actions taken by the
Shareholders or Board of Directors without a meeting, and a record of all
actions taken by a committee of the Board of Directors in place of the Board of
Directors on behalf of the Corporation.
The Corporation shall maintain, at a location within or
without the State of Delaware as determined by the Board of Directors in
accordance with applicable law, accurate accounting records and a record of its
Shareholders in a form that permits preparation of a list of the names and
addresses of all Shareholders in alphabetical order by class of shares and
showing the number and series of shares held by each. The Corporation shall
maintain its records in written form or in another form
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capable of conversion into written form within a reasonable time.
ARTICLE VI
SECTION 1. FISCAL YEAR. The fiscal year of the Corporation
shall begin on January 1 of each calendar year and end on December 31 of the
same calendar year.
SECTION 2. DIVIDENDS. The Board of Directors may from time to
time declare, and the Corporation may pay, dividends on its outstanding shares
in the manner and upon the terms, conditions and limitations provided by the
Delaware General Corporation Law.
SECTION 3. CORPORATE SEAL. The Board of Directors shall obtain
a corporate seal, which shall be circular in form and shall have inscribed
thereon the name of the Corporation and the state of incorporation, or shall
obtain a facsimile of the seal.
SECTION 4. EXECUTION OF INSTRUMENTS. All bills, notes, checks,
other instruments for the payment of money, agreements, indentures, mortgages,
deeds, conveyances, transfers, certificates, declarations, receipts, discharges,
releases, satisfactions, settlements, petitions, schedules, accounts,
affidavits, bonds, undertakings, proxies and other instruments or documents may
be signed, executed, acknowledge, verified, delivered or accepted on behalf of
the Corporation by the President, any Vice President, the Secretary or the
Treasurer of the Corporation. Any such instruments may also be signed, executed,
acknowledged, verified, delivered or accepted on behalf of the Corporation in
such other manner and by such other Officers, employees or agents of the
Corporation as the Board of Directors may direct.
SECTION 5. INDEMNIFICATION OF OFFICERS, DIRECTORS EMPLOYEES
AND AGENTS. The Corporation will indemnify Officers, Directors, employees or
agents of the Corporation to the maximum extent permitted under Section 145 of
the Delaware General Corporation Law.
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ARTICLE VII
BANKRUPTCY
Without the affirmative vote or consent of 100% of the members
of the Board of Directors of the Corporation (which must include the affirmative
vote of all duly appointed Independent Directors, as required by the Certificate
of Incorporation), the Corporation will not (a) dissolve or liquidate, in whole
or in part, or institute proceedings to be adjudicated bankrupt or insolvent,
(b) consent to the institution of bankruptcy or insolvency proceedings against
it, (c) consent to or file a petition seeking reorganization or relief under any
applicable federal or state law relating to bankruptcy, (d) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Corporation for a substantial part of its property, (e)
make a general assignment for the benefit of creditors, (f) admit in writing its
inability to pay its debts generally as they become due, or (g) take any
corporate action in furtherance of the actions set forth in clauses (a) through
(f) above, provided, however, that no Director may be required by any
Shareholder of the Corporation to consent to the institution of bankruptcy or
insolvency proceedings against the Corporation so long as it is solvent.
ARTICLE VIII
AMENDMENTS
These Bylaws or any provisions hereof may be amended, altered,
or repealed in any particular, and new Bylaws or provisions, not inconsistent
with any provision of the Certificate of Incorporation or any provisions by law,
may be adopted only pursuant to a unanimous vote of the Board of Directors, and
both of the two Independent Directors must specifically approve and authorize
such amendment, alteration or repeal.
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